Sharecrop landlord total annual expenses
-property taxes
-irrigation repairs & maintenance
-landlord's share of irrigation water expenses
-management fee
Net income
Gross Income - Total Expenses
Indicated Property Value
Annual net income/capitalization rate
Total Economic Life
Effective Age + Remaining Economic Life
Contributory Value
Replacement Cost New - Accrued Depreciation
Accrued Depreciation
Replacement Cost New X (Effective Age/Total Economic Life)
Accrued Physical Depreciation (percent)
(Effective Age/Total Economic Life) x 100%
Functional Obsolescence
Reproduction Cost New- Contributory Value -Total Accrued Physical Depreciation
Total Accrued Physical Depreciation
Reproduction Cost New x Accrued Physical Depreciation (%)
A crack in a building exterior wall that causes water seepage into the
basement is an example of:
Physical Deterioration
In the cost approach to value, land is valued as though vacant and added to:
physically depreciated replacement cost of improvements
The right to acquire private property for public use is
eminent domain
The act or process of acquiring private property for public use is
condemnation
The difference between physically depreciated reproduction cost new and contributory value is
functional obsolescence
Which of the following is not part of criteria used for estimating the highest and best use of land?
a. typical crops and normal acres
b. economic feasibility
c. physical possibility
d. legal permissibility
e. none of the above
a. typical crops and normal acres
The capitalized value of a property will increase, decrease, or not change when: Typical crop yields increase by 20 percent:
Increase
The capitalized value of a property will increase, decrease, or not change when: Property taxes increase by 10 percent:
Decrease
The capitalized value of a property will increase, decrease, or not change when: A neighbor decides to expand production of a new crop on an experimental basis:
No change
You observe that the dairy industry in your market area has undergone substantial change, and small dairy farms have ceased to be economically viable. There are no active processing plants in the area, and nearly all milk production has relocated to anoth
external obsolescence
A property owner developed a property to a modern and efficient orchard with desirable varieties. Total cost for the entire property (land, orchard development, etc.) was $2,400,000. Shortly after the orchard development was completed the property sold at
entrepreneurial profit
What interests does a property owner hold if their entire property has been leased to a tenant?
Leased fee estate
What is the primary reason capitalization rates differ between the three types of property owner operations (owner-operator, sharecrop landlord, and cash rent landlord)?
Financial risk
What is the period of time during which permanent plantings contribute value to a property?
economic life
When a property is leased to a tenant:
the lessor leases the property to the lessee
A leasehold estate is the property interest that belongs to:
lessee
A leased fee estate is the property interest that belongs to:
lessor
When a sandwich lease exists:
a. making rent payments is never required
b. the lessee leases the property from a sub-tenant
c. the lessor leases the property to a sub-tenant
d. all of the above
e. none of the above
e. none of the above
An agricultural conservation easement is:
a property encumbrance that continues in perpetuity
A benefit of conservation easements:
a. assists in preserving property resources and characteristics
b. provides the property owner with cash or tax credits
c. can be a tool to assist with financial and estate planning
d. all of the above
d. all of the above
A bargain sale of a conservation easement:
involves both cash payment and a donation
Regarding marketing of undivided partial ownership interests in real property:
buyers are typically all-cash buyers
Regarding undivided partial ownership interests in real property, a partition is:
a legal action to divide property into separate ownerships
What are the four criteria for Highest and Best Use
Legally Permissible
Financially Possible
Physically Feasible
Maximally Productive
A previous owner with the right to occupy and use a portion of a property for the duration of his/her life is called a
Life tenant
A person who owns property subject to a previous owner's right to
occupy and use a portion of a property for the duration of his/her life is called a
Remainderman
Permanent plantings:
a. are special use properties with economic life expectancy that is usually several years
b. usually require a number of years to reach maturity
c. usually require specialized management, labor, equipment, water
applications, drainage
d. all of the above
Regarding California agricultural water rights:
a new water diversion application must include a statement of water use
The Income Approach is based on the Principle of
Anticipation
Write an accurate description of the Principle of Anticipation as it applies to the Income Approach.
Anticipation is the perception that value is created by the expectation of benefits to be derived in the future
What is the basic formula for the Income Approach using the direct capitalization method?
Value = Income/Rate
The Cost Approach is based on the Principle of
Substitution
Write an accurate description of the Principle of Substitution as it applies to the Cost Approach.
A rational buyer would not pay more for a property than the cost to acquire a similar site and construct improvements of equal desirability and utility without undue delay.
What is the basic formula for the Cost Approach?
Replacement or Reproduction Cost New of Improvements
- All Forms of Accrued Depreciation
= Depreciated Value of Improvements (same as Contributory Value)
+ Land Value
= Value Indicated by Cost Approach
What three deductions (forms of depreciation) might reduce the present value of an improvement below current Reproduction cost?
Physical Depreciation Functional Obsolescence External Obsolescence
Regarding undivided partial ownership interests in real property, a partition is:
a legal action to divide property into separate ownerships
California water rights regulations began in
1914
California appropriative water rights:
-must identify a point of diversion
-must identify a place for non-use
-can be abandoned for non-use
In eminent domain, severance damages are
damages occurring to the remaining property
honey bees are placed in orchards during bloom season to
pollinate blossoms