Sales Comparison Approach

Appraiser Harvey is appraising the fee simple interest of a house in a suburban neighborhood. He is unsure about the adjustment to use for a fireplace in the subject neighborhood but doesn't have the data necessary to perform a paired set analysis. He has acquired the following data: Feature Sale A Sale B Sale Price $300,000 $295,000 Fireplace 1 FP 0 FP Garage 1 Car Garage No Garage Deck Deck Deck Patio Patio None If: a Garage bay = $5,000 Deck = $1,000 Patio = $ 0 What is the indicated value of a fireplace in the subject neighborhood?

$0 If a garage is worth $5,000, add $5,000 to Comp B. A patio has no contributory value. Therefore, $295,000 + $5,000 = $300,000; the same as Comp A. Therefore, based on these paired sales, a fireplace has no contributory value in this neighborhood.

Use the following sales prices of 11 houses to answer the question. $67,300; $73,000; $102,000; $102,000; $102,000; $104,000; $104,000; $110,000; $112,500; $116,000; $220,600. The median of these 11 sales is:

$104,000

An appraiser is trying to extract a GLA adjustment from market data. She has two sales: Columbus Street has 1,375 square feet and sold for $360,000. Petunia Lane sold for $375,000 and has 1,514 square feet. What is the appropriate GLA adjustment per square foot? A$93.78 B$44.4 C$61.82 D$107.91

$107.91 The difference in square footage between the two properties is 139 square feet (1,514 - 1,375). The difference in price is $15,000 (375,000 - 360,000). The difference in price divided by the difference in square footage equals a $107.91 per square foot adjustment ($15,000 ÷ 139).

A 2,100 sf parcel sold for $104/sf; a 1,500 sf parcel sold for $112/sf; and a 1,800 sf parcel sold for $108/sf. Using extrapolation, the anticipated unit of comparison for a 1,200 sf parcel is A$116/sf B$118/sf C$120/sf D124

$116/sf There is often an economy of scale when using units of comparison: the larger a parcel, the less it sells for per unit (in this case, per square foot). The unit of comparison was dropping $4/sf per increase of 300 sf.

Sally Appraiser is appraising the fee simple estate of a brick ranch in an urban neighborhood. The intended use is asset valuation for mortgage lending. Through her research she extracts the following adjustment factors: Fireplace: $2,000; Central Air Conditioning: $3,000; Basement: $10,000; Fourth bedroom: $15,000. What is the indicated value range of the subject property? Click here to open image. A$145,000 - 160,000 B$150,000 - 160,000 C$135,000 - 155,000 D$145,000 - 150,000

$145,000 - 160,000 Always adjust the comp, never the subject. If the comp is inferior to the subject, add. If superior, subtract. The underlying principles are: contribution (when ascertaining adjustments); and substitution (when making the adjustments). Sale A requires a negative adjustment for FP and a positive adjustment for CAC. B requires a positive adjustment for crawl. And C requires a positive adjustment for crawl and a negative adjustment for a fourth bedroom. The net adjustments: A (+1,000); B (+10,000); C (-5,000). The indicated (adjusted) values: A: $151,000; B: $160,000; C: $145,000.

Appraiser Henrietta, who has been a residential appraiser for 30 years, is appraising a four-bedroom condominium unit. She is nearly finished with her appraisal, but has yet to ascertain what a fourth bedroom is worth in her subject market. Two sales, identical in many ways, are used in a paired set analysis: Sale A has 3 bedrooms and rents for $1,500/month. Sale B has 4 bedrooms and rents for $1,700/month. Analysis of other sales in the subject market indicate that investors expect a monthly multiplier of 120 when purchasing rental condos in the subject market. What is the indicated value of a fourth bedroom in the subject market? A$200 B$10,000 C$24,000 D$28,800

$24,000 Sale A rents for $1,500/month with only 3 bedrooms, whereas Sale B rents for $1,700/month with 4 bedrooms. The extra bedroom generates an extra $200/month. $200/month x 120 = $24,000. The extra income translates into an extra $24,000 of value, which can be used as an adjustment factor in a sales comparison approach.

Suppose a comparable property is 12% inferior to the subject property and sold 2 weeks ago for $260,000. What is the adjusted price of this comparable? A$291,200 B$228,800 C$260,000 D$325,000

$260,000 x (1 + 0.12) = 291,200.

A comparable sold 1 year ago for $300,000. Since then, values have declined 8%. The comparable had creative financing that is recognized in the market and in favor of the buyer by 5%. Time Adjustment: -8% Financing Adjustment: -5% What is the adjusted sales price of this comparable? A$262,200 B$289,800 C$307,800 D$340,200

$262,200 Since the comp is superior in both regards, adjust it negatively for the financing and market condition differences. $300,000 x (1 - 0.05) x (1 - 0.08). Cash equivalency is always adjusted first, then time.

Warren is appraising a tract house. The subject is 3-bedroom 2-bath, with a 3-car garage, and 1,671 square feet. Most houses in the subject's market have 2-car garages. Warren determines that a garage bay is worth $6,000. In this particular development, there are no association dues, but there is a private clubhouse with tennis courts and a pool. Membership is optional and is open only to residents of the subdivision. Adjustments for gross living area for houses between 1,200 square feet and 2,000 square feet are based on a $40 factor. For increments of living area greater than 2,000 square feet, the value per square foot is $30. Warren has a comparable to analyze: Comparable 2, which sold for $300,000, is 1,496 square feet, 3 bed 2 bath, 2-car garage, and the sale included a $2,500 seller concession towards the buyer's closing costs that affected the sale price by the full amount of $2,500. What should Warren calcul

$300,000 sales price - $2,500 closing cost concession + $7,000 for square footage adjustment (1,671 - 1,496 = 175 x $40 factor = $7,000) + $6,000 garage adjustment = $310,500 adjusted sales price.

Mike is appraising a house in a newer subdivision. The subject is a 3-bedroom, 2-bath house with a 3-car garage, and is 1,671 square feet. Most houses have 2-car garages, but a 3-car garage space is worth a premium of $6,000. In this particular development, there are no association dues, but there is a private clubhouse with tennis courts and a pool. Membership is optional and is open only to residents of the subdivision. Adjustments for gross living area for houses between 1,200 square feet and 2,000 square feet are based on a $40 factor. For increments of living area greater than 2,000 square foot, the value per square foot is $30. Mike has a comparable to analyze: Comparable 1, which sold for $330,000, is 1,911 square feet, 3 bed 2 bath, 3-car garage, and the sale terms included the seller-paid concessions of $8,000 which affected the sale price by the full amount of $8,000. What is the appropriate adjusted sale p

$330,000 sales price - $8,000 for seller concessions = $322,000 - $9,600 for square footage adjustment (1,911 - 1,671 = 240 x $40 factor) = $312,400 adjusted sales price.

The subject property is a single-family residence with 3 bedrooms. The effective date is current (now). Comparable A is similar in all ways to the subject property except it has four bedrooms and sold one year ago. Comparable A sold for $320,000 in an arm's-length transaction. A fourth bedroom in the subject market is valued at $5,000. The market is appreciating 10% per annum. Given the data above, what is the indicated value of the subject property? $315,000 B$346,500 $347,000 D$352,000

$347,000 The date of sale/market conditions adjustment is a percentage. According to the sequence of adjustments, market conditions adjustments are made before adjustments for physical characteristics. $320,000 x 1.10 = $352,000 (the time adjusted normal sales price, or TANSP). A negative adjustment of $5,000 is then made for the 4th bedroom. Therefore, $352,000 - $5,000 = $347,000. If the sequence is reversed, the (erroneous) answer of $346,500 is achieve

A comparable sold 1 year ago for $400,000. Since then, values have declined 8%. The comparable had creative financing that is recognized in the market and in favor of the buyer by 5%. Market conditions Adjustment: -8% Financing Adjustment: -5% What is the adjusted sales price of this comparable? A$349,600 B$348,000 C$357,800 D$340,200

$349,600 Since the comp is superior in both regards, adjust it negatively for the financing and market condition differences. $400,000 x (1 - 0.05) x (1 - 0.08). Cash equivalency is always adjusted first, then time.

The subject property is a 2,400 square foot, 5-year-old, single-family tract home with a typical view, stucco exterior, 10 rooms, 4 bedrooms, 3 baths, and 3-car garage. The property is in good condition and house prices have been increasing at a compounded rate of 1% a month. What is the market conditions adjustment that should be made to a comparable property that sold 4 months ago for $380,000? A$15,200 B$395,200 C$14,444 D$15,430

$380,000 compounded monthly grows to $395,429. There are three ways you can solve this problem. 1) 380,000 X 1.01 X 1.01 x 1.01 X 1.01 = 395,430 - 380,000 = 15,430; 2) on the HP12C use the first key, second row [yx] -- 1.01 [enter] 4 [yx] = 1.040604 - 1 = 0.040604 X 380,000 = 15,430; or 3) on the HP12C 4 [n] s [i] 380000 [PV] [FV] = -395,430 [RCL] [PV] + = -15,430.

Appraiser Bob is appraising a single-unit residence for mortgage lending purposes. After conducting his market research, he compiles the following data: Features Property A Property B Property C Sales Price $300,000 $270,000 $260,000 Personal Property Yes No Yes Bedroom Count 3 4 3 Barn Yes Yes No Contributory Values: Bedroom = $10,000 Barn = $40,000 Given the data above, what is the contributory value of personal property?

$40,000 If $10,000 is subtracted from Sale B for the 4th bedroom an adjusted price of $260,000 is reached. If $40,000 is added for a barn for Sale C, an adjusted price of $300,000 is reached. The adjusted prices of Sales A and C are $300,000. The difference of $40,000 between Sales A and C on the one hand, and Sale B on the other, is attributed to the lack of personal property in B.

An appraiser is appraising vacant lots in a new subdivision and is trying to extract a lot size adjustment from market data. She has two sales: Shasta Street is 8,125 square feet and sold for $340,000. Superior Lane is 8,687 square feet, on a cul-de-sac, and sold for $390,000. Because Superior Lane is on a cul de sac, it enhances the value by about $25,000. What is the appropriate lot size adjustment per square foot? A$41.85 B$42.02 C$26.69 D$44.48

$44.48 The difference in square footage between the two properties is 562 square feet (8,687 - 8,125). Since Superior Lane is located in a cul de sac, a $25,000 adjustment is made to the price in relation to Shasta Street ($390,000 - $25,000 = $365,000). The difference in price is $25,000 (365,000 - 340,000). The difference in price divided by the difference in square footage equals a $44.48 per square foot adjustment ($25,000/ 562).

Use the following information to answer the question. -Property A sold six months ago for $80,000, which at that time was 10% above market value. -Property B sold 3 months ago for $83,000. The buyer paid cash, and the sale price included a $5,000 tax lien absorbed by the buyer. -Property C sold 1 year ago for $72,000, which at that time was 10% under market value due to foreclosure on the property. -Residential property is currently increasing 8% per year The current market value for Property B is: A$74,736 B$79,560 C$75,636 D$76,410

$79,560 Subtract the tax lien from the price of the property to get the market value 3 months ago. $83,000 - $5,000 = $78,000. Add 2% to the old market value to get the current market value (8% per year multiplied by 1/4 year). $78,000 x 1.02 = $79,560.

A comparable property sold for $868,000 six months ago. Values in the area are increasing on a 5% per year basis. What would be the market conditions adjustment to this sale if it were used in an appraisal with a current effective date? AAn upward adjustment of $43,400 BA downward adjustment of $43,400 CA downward adjustment of $21,700 DAn upward adjustment of $21,700

((5% per year basis/12 months) x 6 months) x $868,000 = $21,700 upward since values are increasing.

The subject property is 2,400 square feet and is located in a market that generally values differences in gross living area at $45 per square foot. What would the adjustment be to a comparable with 2,150 square feet? A$10,500 upward B$10,500 upward C$11,250 downward D$11,250 upward

(2,400 - 2,150) x $45 = $11,250 for an upward adjustment since the comparable sale's gross living area is inferior to the subject's gross living area.

Aaron is appraising a house on the waterfront where some houses have private boat docks. The subject is 2,913 square feet, 3 bed 2 bath, 2-car garage, and boasts a waterfront location with a boat dock. The market-based adjustment for living area is $60 per square foot, a 3-car garage space is valued at $6,000 per garage bay, and the private dock is valued at $150,000. The waterfront amenity is worth about $200,000. One of the comps Aaron has selected is: Comparable 3, which recently sold for $1,590,000, is a 2,711 square feet, 4 bed 2.5 bath, 2-car garage, water frontage, and a boat dock. The house was once configured as a 3-bedroom, but the floor plan was redesigned 12 years ago after some minor fire damage. What is the GLA adjustment that should be made to Comparable 3? A$1,212 B$162,120 C$14,920 D$12,120

(2,913 - 2,711) x $60 per square foot = $12,120.

The comparable land sale is described as the NW1/4 of the SE1/4 and the S1/2 of the NE1/4 of Section 7, Township 4 North, Range 3 East of the Third Principal Meridian, all located in Hannah County, Illinois. The subject property is 100 acres. Land is valued at $10,000/acre. The indicated size adjustment is A-$200,000 B$200,000 C$300,000 D-$400,000

-$200,000 Every section of land is 640 acres. Therefore, the size of the sale is: ¼ x ¼ x 640 = 40 acres; plus ½ x ¼ x 640 = 80 acres. 40 + 80 = 120 acres. The subject site is 100 acres. The difference is 20 acres x $10,000/acre = $200,000. The adjustment would be negative because the sale is larger than the subject.

The mean sales price in a suburban subdivision 12 months ago was $150,000. The mean sales price in the same subdivision is now $125,000. The subject property is being appraised with a current effective date. Sale A sold for $130,000 four months ago. The market conditions adjustment made to Sale A is A$7,280 B-$7,280 C-$8,671 D$8,671

-$7,280 The original mean sales price is $150,000. The current average is $125,000. The difference is -$25,000. The percent change is $-25,000/$150,000 = -16.7% per year (-1.4% per month). Sale A sold for $130,000 four months ago. Assuming a steadily declining market, 4 months x -1.4% per month = -5.6% x $130,000 = -$7,280 market condition adjustment. Be aware of declining markets. Market condition adjustments can be negative.

A comparable property sold a week ago for $165,000. The property had previously sold for $175,000 six months ago. What is the annual change in market conditions indicated by this sale and re-sale? A-5.71% B-11.43% C5.71% D11.43%

-11.43% The current sale price is $165,000 less the previous sale price of $175,000 = -$10,000. -$10,000/$175,000 = .0571 x 2 (to annualize the 6 month rate) = -.1143, or -11.43%.

You are appraising a property in order to establish its listing price and have found an identical comparable to use in your appraisal. The comparable sold six months ago for $134,000. You must make an adjustment for the difference in time between the two sales. You find a paired sale of two other houses, one of which sold one year ago for $100,000 and the other sold yesterday for $110,000. What is the adjusted value for the comparable? A$140,700 B$127,300 C$147,400 D$140,000

140700 Based on the paired sales, property is appreciating 10% in one year. Since the difference in time between the subject property and the comparable is only six months, the sales price should be adjusted half of 10% or 5%. Multiply the sales price of the comparable by 1.05 which equals $140,700 ($134,000 x 1.05).

The subject property is on 1 acre and has a 1-car garage. Use the following information to determine the value of the subject property. Comp 1 - 1 acre 2-car garage $51,000 Comp 2 - 0.5 acre 1-car garage $46,000 Comp 3 - 0.5 acre 2-car garage $49,000. A$45,000 B$47,000 C$48,000 D$50,000

48000 A matched pair analysis between Comp 2 and Comp 3 shows a $3,000 adjustment for a garage bay; which is then applied to Comp 1 to result in an adjusted value for the Subject Property of $48,000. An analysis of Comp 1 and Comp 3 shows a $2,000 adjustment for the difference in site area. When applied to Comp 2 this also indicates an adjusted value for the Subject Property of $48,000.

An appraiser is trying to extract a GLA adjustment from market data. He has two sales: Monte Carlo Street has 2,146 square feet and sold for $330,000 while Porto Fino Lane sold for $365,000 and has 2,632 square feet. What is the market-extracted GLA adjustment per square foot? A$35,000 B$54 C$154 D$72

72 The difference in square footage between the two properties is 483 square feet (2,632 - 2,146). The difference in price is $35,000 (365,000 - 330,000). The difference in price divided by the difference in square footage equals a $72.02 or $72 per square foot adjustment ($35,000/486).

A parcel is 500' x 1,000' and is functioning as a farm. A developer obtains an option on the farm for 3 years. The developer hires an appraiser to perform a highest and best use analysis of the farm. Two years after obtaining the option, the developer exercises the option and purchases the farm. The developer applies for and obtains a 5-year straight mortgage (interest-only) for $20,000,000. The monthly payments are $133,000 interest only. A balloon is due in 60 months. The projected lots will be 5,000 square feet each. The street will consume 32,000 SF. There will be common elements (park, softball field, greenbelt) that will take up 100,000 SF. What is the maximum number of lots this project could yield for the developer? A70 B73 C74 D82

73 The parcel is 500' x 1000' = 500,000 SF. The street will be 32,000 SF, and the common areas 100,000 SF, for a total of 132,000 SF. 500,000 - 132,000 SF = 368,000 SF net developable are 368,000/5,000 (area per lot) = 73.6. However, the extra .4 lot required to round up is not available to the developer. Therefore, the answer is rounded down to the next whole number, 73 lots.

Cynthia is appraising a single-unit residence for the purpose of appealing the ad valorem assessment. The client is the property owner. Intended users are the owner and the assessor. The subject property is a brick Georgian with 4 bedrooms, 2 bathrooms, no central air, and a basement. She chooses a comparable sale that sold for $300,000 with a brick exterior, 4 bedrooms, 1.5 bathrooms, central air, and a basement. Brick is valued at $20,000; a 4th bedroom $10,000; a ½ bathroom $5,500; central air $3,000; and a basement at $20,000. After making the appropriate adjustments, what is the gross adjustment to this comparable sale? A$2,500 B-$2,500 C-$8,500 D$8,500

8500 The gross adjustment is derived after making the appropriate line adjustments to the comparable, converting all adjustments to positive numbers, and adding them. The only two differences requiring adjustments are half bathroom ($5,500) and central air ($3,000). Thus, $5,500 + $3,000 = $8,500 is the gross adjustment. The net adjustment would be +$2,500.

A comparable property sold for $365,000 nine months ago. Values in the area are decreasing on a 5% per year basis. What would be the market conditions adjustment to this sale if it were used in an appraisal with a current effective date? AAn upward adjustment of $18,250 BA downward adjustment of $18,250 CAn upward adjustment of $13,688 DA downward adjustment of $13,688

A downward adjustment of $13,688 ((5% per year basis/12 months) x 9 months) x $365,000 = $13,687.5 or $13,688 downward since values are decreasing.

What kind of an adjustment must be made when a comparable sale is superior to the subject property? AA plus (+) adjustment to the comparable BA minus (-) adjustment to the comparable CA plus (+) adjustment to the subject DA minus (-) adjustment to the subject

A minus (-) adjustment to the comparable

In a given situation, what is the best comparable? AA listing that has been on the market for five days BA sale located in an adjacent city and half the age of the subject CA sale that is timely and has been verified with a party to the transaction DA sale that was provided by the client

A sale that is timely and has been verified with a party to the transaction

Which of the following situations would result in the best comparable? AA parent who sold the family home to one of her children BA seller who has relocated to a more expensive home CA corporation that transferred an employee and bought their home DAn owner who sold his home quickly to avoid foreclosure

A seller who has relocated to a more expensive home

A parcel in a lakefront community with no lake view sells for $100,000, while a parcel in the same community with a lake view sells for 25% more. If you appraised a square lot in this community that measures 10,000 square feet and has a view of the lake, what would be the price of the lot on a front foot basis? A$125 B$1,250 C$1,200 D$1,500

A square lot implies 100 x 100 square feet dimensions (100 x 100 = 10,000 square feet). Therefore, the lot has 100 front feet. Premium parcels sell for $125,000 ($100,000 x 1.25 = $125,000). So $125,000/ 100 = $1,250.

Janet is appraising a house in an equestrian area. In order for a property to have a horse, it must be at least 20,000 square feet. Each additional 10,000 square feet allows the owner to have one more additional horse. Buyers typically pay a premium to board a horse on a residential property of about $75,000. In a neighborhood were most of the lots are between 20,000 and 25,000 square feet and sell for about $300,000, how should Janet handle the adjustment for a subject property with a 19,400 square foot lot if there are no other properties that closely resemble the subject? AAdjust the difference in site area at a $12 to $15 per square foot rate BA downward adjustment only for increments of 10,000 square feet CRefer the assignment to an appraiser who specializes in equestrian properties DAdjust for the horse premium based on a market derived $75,000

Adjust for the horse premium based on a market derived $75,000 The subject property does not contain enough square footage to have the horse boarding option so a $75,000 adjustment for the premium is necessary.

Which of the following is true regarding the paired sales technique? AAdjustments should be made by dollar amounts or percentages, depending on how the adjustment is derived from the market BThe paired sales technique is best used with dissimilar properties to provide a diverse example of property values CThe paired sales technique is best used when there is a limited quantity of data available DAdjustments are necessary only if the properties being analyzed are located in dissimilar areas

Adjustments should be made by dollar amounts or percentages, depending on how the adjustment is derived from the market

Karen, an appraiser, is reviewing the following data: The subject property has air-conditioning and a two car garage. Sale X, a comparable property, sold recently for $240,000 and has a similar garage, but no air-conditioning (A/C is worth $3,000). Sale Y, another comparable property, recently sold for $220,000 and has air-conditioning, but not a two-car garage (valued at $9,000). Sale Z, another comparable property, recently sold for $275,000, has the identical amenities and features to the subject except that it is located in a better neighborhood. What is the best adjustment Karen could make to comparable X? AAn adjustment for the garage, $9,000 BAn adjustment for the superior location, $35,000 CAn adjustment for the air conditioning, $3,000 DAn adjustment for the time, $5,000

An adjustment for the air conditioning, $3,000

Jared, an appraiser, is reviewing the following data: The subject property has air-conditioning and a two-car garage. Sale X, a comparable property, sold recently for $250,000 and has a garage, but not air-conditioning (worth $5,000). Sale Y, another comparable property, recently sold for $220,000 and has air-conditioning, but not a two-car garage (valued at $8,000). Sale Z, another comparable property, recently sold for $275,000 and has the identical features of the subject except that it is located in a better neighborhood. What would be the best adjustment Jared could make to Comparable Y? AAn adjustment for the air conditioning, $5,000 BAn adjustment for the superior location, $25,000 CAn adjustment for the garage, $8,000 DAn adjustment for the time, $5,000

An adjustment for the garage, $8,000

The sales comparison approach would be least effective if applied to which of the following? AAn inactive market BA slowly appreciating market CA stable market DA rapidly declining market

An inactive market

A comparable property sold for $465,000 nine months ago. Values in the area are increasing on a 5% per year basis. What would be the market conditions adjustment to this sale if it were used in an appraisal with a current effective date? AA downward adjustment of $17,438 BAn upward adjustment of $23,240 CA downward adjustment of $23,240 DAn upward adjustment of $17,438

An upward adjustment of $17,438 ((5% per year basis/12 months) x 9 months) x $465,000 = $17,437 or $17,438 upward since values are increasing.

Which of the following is an ideal situation for the sales comparison approach to produce the most credible results? AAppraisal of a fraternal organization's lodge meeting hall BAppraisal of a historic Frank Lloyd Wright house in a rural area CAppraisal of a 12-story mixed use high rise with varying lease terms DAppraisal of a condominium in a development with many recent sales

Appraisal of a condominium in a development with many recent sales

Comparable property A has a bedroom, valued at $10,000, that the subject lacks. Comparable property B lacks a bathroom, valued at $10,000, that the subject has. Comparable C is fifty years older than the subject. The age difference is valued at $10,000. All three comparables sold for $400,000 in the last six months. Which property has an adjusted value of $390,000? AComparable A BComparable B CComparable C DThe subject

Comparable A Comparable A has an adjusted value of $390,000 because adjustments are made to the comparables, not the subject property. Comparables B and C require upward adjustments resulting in an adjusted value of $410,000. Comp A requires a downward adjustment of $10,000 resulting in an adjusted value of $390,000.

Comparable property A has a garage, valued at $15,000, that the subject lacks. Comparable property B lacks a bathroom, valued at $15,000, that the subject has. Comparable C is in a superior location. The location difference is valued at $15,000. All three comparables sold for $400,000 in the last six months. Which property has an adjusted value of $415,000? AComparable A BComparable B CComparable C DThe subject

Comparable B Value adjustments are always made to the comparables, not the subject property. Comparables A and C require downward adjustments resulting in an adjusted value of $385,000. Comparable B requires an upward adjustment of $15,000 resulting in an adjusted value of $415,000.

You determine that houses in the subject property's neighborhood have appreciated 5% per year for the last five years. An identical comparable property in the neighborhood sold 4 years ago for $100,000. What would be the current indicated value for the subject, based on this comparable? A$122,500 B$150,000 C$121,550 D$175,520

Compound the interest, or appreciation rate, as 1.05 to the 4th power and multiply the result by the comparable's sales price. 1.05 x 1.05 x 1.05 x 1.05 = 1.2155 x 100,000 = 121,550.

An appraiser is using the sales comparison approach and must eliminate sales that do not meet the minimum criteria for being a legitimate comparable. What is usually the most important consideration during this process? AConditions of sale BLocation CTime of sale DAge of improvements

Conditions of sale

Harry is appraising a single-unit residence for lending purposes. The client is a bank, and another intended user is Fannie Mae. The subject property is a brick veneer ranch with 3 bedrooms, 1 bathroom, central air, and a crawl space. He chooses a comparable sale at 123 Main St as Sale 1. This sale sold for $200,000 and is a wood-sided ranch with 4 bedrooms, 2 bathrooms, central air, and a basement. Brick veneer is valued at $10,000; a 4th bedroom $5,000; a 2nd bathroom $7,500; central air $3,000; and a basement at $20,000. After making the appropriate adjustments, what is the net adjustment to Sale 1? A$22,500 B$25,500 C-$22,500 D-$25,500

Derive the net adjustment by adding (or subtracting) all line item adjustments. Central air does not need an adjustment, as both the subject and the sale possess this feature. Thus: frame (+10,000); 4th bedroom (-$5,000); bathroom (-$7,500); and basement (-$20,000). $10,000 - $5,000 -$7,500 - $20,000 = -$22,500.

Which of the following adjustments should be made first? AFinancing BLocation CConditions of sale DPhysical characteristics

Financing

When making adjustments as part of the sales comparison approach, which of the following adjustments should be made first? AConditions of sale BMarket conditions CFinancing terms DLocation

Financing terms

Which adjustment converts the transaction price of a comparable into a cash equivalent? AProperty rights conveyed BFinancing terms CLocation DCondition of sale

Financing terms

You select a comparable sale that recently sold for $50 per square foot. You study the market and determine you need to make the following adjustments to the price of the comparable: Market conditions adjustment +8% Physical adjustment -5% Age adjustment -6% What is the value of the comparable sale per square foot? A$48.60 B$50.60 C$48.06 D$52.50

First, calculate the adjustment for time. $50 x 1.08 = $54.00. Next, calculate the adjustment for the physical and age differences. The two negative adjustments add up to 11%. Subtract this from 1.00 (100%) to get 0.89. $54 x 0.89 = $48.06, the value of the comparable per square foot.

An appraiser selects a comparable property that sold one year ago for $125,000. Today, this comparable is worth 10 percent more than the subject property. Property values in the market area have appreciated 5 percent annually. What is the indicated value of the subject property? A$121,330 B$129,350 C$119,318 D$135,375

First, find the appreciated value of the comparable. $125,000 x 1.05 = $131,250. Next, find the value of the subject property by dividing the value of the comparable by the amount it exceeds the subject property. $131,250 / 1.10 = $119,318, the value of the subject property.

What should an appraiser do if he is analyzing a comparable sale that sold for more than the listing price and learns that the transaction included some appliances and a golf cart? He should find other comparables with the same inclusions He should not use the property as a comparable for the subject because it does not have the same conditions of sale He should add the value of the personal property to the market value of the subject He should adjust the comparable for the contributory value of the personal property

He should adjust the comparable for the contributory value of the personal property

Adam is appraising a house on the waterfront where some houses have private boat docks. The subject is 2,713 square feet, 3 bed 2 bath, 2-car garage, and boasts a waterfront location without a boat dock. The market-based adjustment for living area is $60 per square foot, a 3-car garage space is valued at $6,000 per garage bay, and the private dock is valued at $100,000. The waterfront amenity is worth about $150,000. One of the comps Adam selected is: Comparable 1, which recently sold for $1,320,000, is 2,978 square feet, 3 bed 2 bath, 3-car garage. The house is across the street from the waterfront, but has nice views from the second story. There is a fenced side yard suitable for the storage of a boat. A golf cart worth $1,150 was included in the sale. What is the indicated net adjustment amount for Comparable 1? A$4,920 B$173,050 C$1,446,950 D$126,950

In Comparable 1, $150,000 for the waterfront - $15,900 for the square footage adjustment (2,978 - 2,713 = 265 x 60) - $6,000 for 3-car garage - $1,150 for golf cart = $126,950 in net adjustments.

Appraiser Jo has many sales from which to choose for the house appraisal she has accepted. Unfortunately, Jo has no good candidates for a paired sales analysis. Jo wonders, "How will I ever derive individual adjustments for my sales comparison grid?" Jo organizes the sales into clusters: Group A (houses with central air conditioning): n = 21; x = $124,392; Group B (houses without central air conditioning): n = 18; x = $121,462. There are various other differences between Groups A and B, but Jo thinks those differences will offset, and cancel each other out. The subject property lacks central air conditioning. The property Jo is using as Sale One sold for $130,000, and has central air conditioning. What is the adjusted value of Sale One? (round to the nearest thousand) A$121,000 B$130,000 C$133,000 D$127,000

Instead of using two sales in a paired set, the appraiser can use two data sets (or clusters) of sales. This is called grouped data analysis. All the sales in Group A had one thing in common: central air conditioning (CAC). There were other differences, (e.g., one such difference could have been one sale had a crawl space, and all others had basements), but in the end, all such differences wash out. Similarly, Group B had one trait in common: No CA Again, all differences washed out. The difference between Groups A and B was: $124,392 - $121,462 = $2,930, rounded to $3,000. Since Sale One had CAC, and subject did not, a negative adjustment of $3,000 was called for. Therefore, $130,000 - $3,000 = $127,000.

What should an appraiser consider to qualify the recent sale of a house within the subject's neighborhood as a comparable? AIt must have been within a one-mile radius BIt must have sold relatively close to the subject's value CIt must have been a market competitor and an open market sale DIt must have sold within the past six months

It must have been a market competitor and an open market sale

A comparable has a feature that the subject property does not. In the sales comparison grid, what should the appraiser do? AMake a negative adjustment to the comparable if the market recognizes the value of the feature BMake a negative adjustment regardless of the value of the feature CMake an adjustment to the comparable only if the feature is not present in any other comparable DMake a positive adjustment to the subject's sale price based on the estimated cost of the feature

Make a negative adjustment to the comparable if the market recognizes the value of the feature

A comparable property was sold subject to a special assessment. The subject property is not subject to such an assessment. What should the appraiser do? AMake no adjustment BMake an adjustment to the comparable property CMake an adjustment if the assessment is greater than 5% of the sale price DMake an adjustment to the subject

Make an adjustment to the comparable property

Which of the following adjustments should be made last? APhysical characteristics BFinancing CMarket conditions DConditions of sale

Physical characteristics

Which of the following often requires more than one adjustment in the sales comparison approach? AFinancing terms BPhysical characteristics CSpecial conditions DLocation

Physical characteristics

When using the sales comparison approach, what is the proper sequence for making adjustments?

Property rights, financing terms, conditions of sale, market conditions, location, and physical characteristics.

When appraising a new house based on plans provided by the builder, what should the appraiser do regarding upgrades such as flooring and security systems? AReconcile these upgrades in the identifiable market and determine the impact, if any, on value BAsk the salesperson how much the buyer paid for the upgrades and use that figure as the adjustment for those items CDo not consider the upgrades because upgrades do not affect market value DNote the upgrades but do not adjust for them because all of the comparables should be new homes from the same development

Reconcile these upgrades in the identifiable market and determine the impact, if any, on value

The subject property is a 20-year-old Georgian style residence that is being refinanced. Sale A is also a residence. While it is a different style, Sale A is very similar to the subject property in many features. Sale B is exactly identical to the subject property physically, but is located in a different neighborhood that is rather different from the subject property. Which sale should be used in the sales comparison grid? ASale B should be used because it is physically the same as the subject BSale A should be used because it is next door to the subject, and is similar in physical features CSale B should be used because the different location does not play a role in comparable sale selection DNeither sale should be used because each one has too many differences. A better sale should be found

Sale A should be used because it is next door to the subject, and is similar in physical features

Appraiser Bertha is appraising a parcel of vacant land with an area of one acre. She collects sales data for site sales in the subject neighborhood. She finds two sales that appear to be identical to each other in every way. Sale A $60,000 Sale B $70,000 Bertha discovers a difference in the zoning of the two lots. The zoning for Sale A is R-1 (single family residential), with a minimum buildable lot size of .75 acres. The zoning for Sale B is R-2 (single family residential), with a minimum buildable lot size of .50 acres. Bertha concludes the difference in sales prices is due to ASale A actually has a larger useable lot area because of its zoning BSale B can accommodate only one house; the remainder of the lot is excess land CSales A and B have different floor area ratios DSale B can be subdivided and each resultant lot can accommodate one house

Sale B can be subdivided and each resultant lot can accommodate one house

Which of the following property characteristics is least important when selecting a comparable to use ASale price BSimilar features CRecent sale DLocated closest to the subject property

Sale price

An appraiser should consider and perhaps make downward adjustments for what type of sale term? AAn all cash sale BExtended marketing time CSeller-paid points DA cash equation

Seller-paid points

An appraiser is appraising a house in an exclusive golf course development. She is using one comparable from an older, less desirable golf course neighborhood. How should she handle this situation? AShe should only use the comparable from other neighborhood if it is within ½ mile of the subject BThe comparable likely warrants an adjustment for construction quality if it is in an inferior development CThe appraiser should use comparables only in the subject's development regardless of whether they have golf course frontage DShe should extract a location adjustment and apply it to the comparable

She should extract a location adjustment and apply it to the comparable

Appraiser Zeke is appraising a single-unit residence for estate planning purposes. The subject property is located in a federally-designated flood zone that actively floods. In the flood zone there is buyer resistance to properties with a basement. Such properties typically sell for less than similar properties with crawl spaces. Zeke's research indicates that a third bedroom is worth $10,000. The market has been stable for the past 6 months. Basements are deleterious, and have a negative impact of 10% of value/sales price. What is the indicated value of the subject property? Click here to open image. A$200,000 B$210,000 C$198,000 D$180,000

Since Sale A has a crawl space, it is superior to the subject property and requires a negative adjustment of .10 x $220,000 = $22,000, resulting in an indicated value of $198,000. Sale B has 2 bedrooms and requires a positive adjustment of $10,000, resulting in an indicated value of $198,000.

You are appraising a residential property with a swimming pool in the Sweet Meadow neighborhood. In this neighborhood, swimming pools are considered to add value to a property. You have found comparable sales in the same neighborhood; however they are larger houses than the subject and do not have swimming pools. What should you do? ASubtract from the subject property for the difference in size and the value of the pool BAdd to the subject property for the difference in size and subtract the value of the pool CSubtract from the comparable for the difference in size and add for the value of the pool DSubtract from the comparable for the value of the pool and add for the difference in size

Subtract from the comparable for the difference in size and add for the value of the pool

A residential subdivision has 400 units for sale. The developer and appraiser estimate an absorption rate of 6 units per month. Interest rates, employment, and other economic indicators are predicted to be stable for the next year. The appraiser is concerned about the impact of absorption on factors that might affect the sales and income approaches for individual units. She analyzes the absorption rate and absorption period. What is the anticipated absorption period? A4.5 years B18.0 years C18.0 quarters D22.2 quarters

The absorption rate is 6 units/month x 3 = 18 units per quarter. 400 units/18 units per quarter = 22.2 quarters.

How should an appraiser determine when to apply adjustments to comparable sales for differences such as square footage and a pool, and how much those adjustments should be? AThe appraiser should comply with Fannie Mae guidelines BThe appraiser should should ask the client what they usually accept CThe appraiser should follow the instructions given by his/her supervisor and the report form DThe appraiser should extract the adjustments based on the actions of buyers and sellers in the market

The appraiser should extract the adjustments based on the actions of buyers and sellers in the market

A comparable property sold two days ago for $175,000. The same property previously sold for $165,000 six months ago. What is the indicated annual appreciation rate indicated by this sale and re-sale? A6.06% B12.12% C3.03% D4.04%

The current sale price is $175,000 less the previous sale price of $165,000 = $10,000. $10,000/$165,000 = .0606 x 2 (to annualize the 6 month rate) = .1212, or 12.12%.

A property is currently valued at $53,280 and sold 2 years ago for $36,000. What is the monthly rate of appreciation? A3% B4% C2% D10%

The difference between the two values is $53,280 - $36,000 = $17,280. Divide the difference by the original sales price to determine the amount of change: $17,280/ $36,000 = 0.48 or 48%. Divide 48% by 24 (the number of months in two years) to get the monthly rate of increase: 2%.

A $400,000 sale had the following adjustments: fireplace (-$5,000); 4th bedroom (+$25,000); 2nd bathroom (-$10,000). The gross adjustment percentage is 10 8 6.67 2.5

The gross adjustment is: $25,000 + $5,000 + $10,000 = $40,000. The percentage is $40,000/$400,000 = .10, or 10%. Remember, you ignore the positive/negative sign in calculation gross adjustment and use the absolute value of the adjustment number.

Appraiser Arnold is researching trends in his market. He notes that property values have been declining over the last 6 months because a major employer filed bankruptcy. The mean sales price 6 months ago was $150,000 for a 1,200-squaree-foot ranch. Currently the mean sales price is $140,000. What is the monthly percentage decline in value in Arnold's market? A1.1% B1.2% C1.3% D1.4%

The impact of a declining market is measured by where you were, versus where you are now. The average dollar loss is $10,000. Therefore $10,000/$150,000 = 6.67%/6 months = 1.1% loss per month.

Use the following information to answer the question: Property A sold six months ago for $80,000, which at that time was 10% above market value. Property B sold 3 months ago for $83,000. The buyer paid cash and absorbed a $5,000 tax lien. Property C sold 1 year ago for $72,000, which at that time was 10% under market value due to foreclosure on the property. Residential property is currently increasing 8% per year. What is the current market value for Property A? A$74,736 B$75,636 C$76,410 D$79,560

The market value for Property A 6 months ago, plus 10%, equals $80,000. So X multiplied by 1.10 = $80,000 or X = $80,000 divided by 1.10 = 72,727, the market value of Property A 6 months ago. Add 4% for 6 months of appreciation. (8% per year divided in half). $72,727 multiplied by 1.04 = $75,636, the current market value for Property A.

Given the following sales prices: $75,000; $92,000; $81,000; and $84,000. The median is A$86,500 B$78,000 C$82,500 D$84,000

The median of a sample is taken by first ordering the variates into an array: 92,000; 84,000; 81,000; and 75,000. Since this is an even-numbered array, the average of the 2 center numbers is the median. Take the 2 center numbers, add them, and then divide by 2. So, ($81,000 + $84,000)/2 = $82,500.

A $400,000 sale had the following adjustments: fireplace (-$5,000); 4th bedroom (+$25,000); 2nd bathroom (-$10,000). The net adjustment percentage is A10 B-10 C-2.5 D2.5

The net adjustment is: $25,000 - $5,000 -$10,000 = $10,000. The percentage is $10,000/$400,000 = .0255, or +2.50%.

An appraiser is extracting adjustments in a neighborhood where houses are relatively similar except for the following features: a 2-bedroom house sold for $280,000, a 3-bedroom house sold for $310,000, and a 4-bedroom house sold for $330,000. What is the contributory value of a fourth bedroom? A$25,000 B$30,000 CIt depends how many bedrooms the subject has D$20,000

The price differential between the 4-bedroom house and the 3-bedroom house would give the marginal value for the fourth bedroom ($330,000 - $310,000 = $20,000).

Appraiser Tom notes that one of his comparable sales had a seller pay 2 discount points for the buyer. If the sale price was $130,000 one year ago, and the market has appreciated 5% per year, what is the adjusted sale price of the comparable property? The LTV (loan-to-value) reported for the sale was 80%. Assume that seller-paid points have full contributory value in the subject market. Round to the nearest hundred. A$130,000 B$136,500 C$134,300 D$134,400

The seller concession is adjusted first: $130,000 x 80% = $104,000 x .02 = $2,080. Since it is a seller concession, the price is adjusted downward, making the cash equivalent sales price $127,920. The market condition analysis is then undertaken: $127,920 x 1.05 = $134,316 rounded to $134,300.

Two properties sell simultaneously. They both sell for the same price and both sellers pay normal closing costs. However, one sale is an all cash transaction and the other uses an 80% loan with a 20% down payment. Which of the following is true? The sellers net the same amount The buyers' costs are the same The sellers' discount points are the same The sellers net different amounts

The sellers net the same amount

The indicated (adjusted) values of three sales in a sales comparison approach are: $400,000; $410,000; and $420,000. The appraiser wants to weigh the $400,000 number the most, and assigns it a weight of 5. The $410,000 will be weighted the least at 1, and the $420,000 figure will be weighted at 2. What is the weighted average for the three sales? Round to the nearest thousand. A$406,000 B$410,000 C$412,000 D$415,000

The weighted average of the three figures is: $400,000 x 5 = $2,000,000. $410,000 x 1 = $410,000. $420,000 x 2 = $840,000. ($2,000,000 + $410,000 + $820,000 = $3,230,000/8 (the weighting factor) = $406,250, rounded to $406,000. This technique can be used to render an opinion of value (reconciliation) once all adjustments have been made in the sales comparison approach.

Which of the following is true regarding comparables? AThey should be the most similar to the subject property BThey should be located within 1 mile of the subject property CThey should not require adjustments for market conditions DThey should have sales prices within 10% of the sales price of the subject property

They should be the most similar to the subject property

Which of the following is normally true of houses that are listed substantially above market price? AThey will sell before other competing properties BThey will not sell despite adequate market exposure and time CThey will eventually sell given enough time on the open market DThey will not be subject to the principle of substitution

They will not sell despite adequate market exposure and time

Why do appraisers use bracketing in the sales comparison approach? AIt is a Fannie Mae guideline BTo provide empirical proof that an appraisal is valid CTo estimate the upper and lower limits of the value range DTo establish the dataset for paired sales analysis

To estimate the upper and lower limits of the value range

What should an appraiser do to obtain necessary information about comparables? AMake accurate physical measurements BUse accurate information sources and verify the data CRely on the recorded facts of the sale and analyze the data DInspect the comparables and interview the lender

Use accurate information sources and verify the data

Given the data below, what is the indicated square foot adjustment? C1 C2 C3 C4 sale price: 300000 305500 305000 322250 sale: 2800 sf 2900 sf 3000 sf 3250 sf Bedrooms: 5 5 5 6 Bathrooms: 3 4 3 5

Using the paired set of C1 and C3, the difference in sales price is $5,000; the difference in area is 200 sf. $5,000/200 sf = $25/sf.

Which of the following statements is correct regarding the sales comparison approach? AWhen selecting comparable sales, the appraiser does not consider the age of the property BAn appraiser should never use comparable sales that are more than six months old CWhen using the sales comparison approach, the appraiser adjusts the comparable properties to the subject property DThe sales prices of comparables are always conclusive evidence of market value in the area

When using the sales comparison approach, the appraiser adjusts the comparable properties to the subject property

Appraiser Edward is appraising a small townhouse owned in condominium in a rural community. The intended use is for mortgage lending purposes. The client, a small-town bank, has indicated to Edward that the mortgage will be sold into the secondary mortgage market. As Edward researches sales in the subject market, he realizes there are only four sales of condominium townhomes over the past five years. Three sales are from the past year; the fourth sale is the subject property itself. Edward wants to use that sale as a fourth comparable sale. "What could be a better comp than the subject itself?" Is using the subject property as its own comparable allowed? AYes, state licensing agencies allow this practice as long as it is required BYes, as long as the intended users allow it, and the appraiser explains the necessity CNo, USPAP does not allow this practice DNo, Fannie Mae and Freddie Mac do not allow this practice

Yes, as long as the intended users allow it, and the appraiser explains the necessity

A comparable has a pool, valued at $25,000, and the subject property does not. The comparable property sold 6 months ago for $250,000. In the past year, the market has appreciated 10%. What is the adjusted sales price of this comparable? A$237,500 B$212,500 C$250,000 D$236,250

You must adjust for the pool. $250,000 x 1.05 (6 months appreciation) - $25,000 = 237,500.

An appraiser is using the sales comparison approach to value a residential property. He completed his initial reconciliation and determined that the quantity and quality of the comparable sales are insufficient to develop the sales comparison approach. To solve this problem, the appraiser should seek data from all of the following except: Aa different property type. Ba greater geographic area. Ca longer time frame. Da wider price range.

a different property type.

An appraiser using the sales comparison approach must adjust for differences between the subject property and the comparables. The dollar value of a positive feature present in the subject property but not present in a comparable is __________, while the dollar value of a positive feature present in a comparable but not present in the subject property is _________. Asubtracted, added Bsubtracted, subtracted Cadded, subtracted Dadded, added

added, subtracted

Theresa is appraising a parcel of land under contract for $470,000. She finds a similar parcel that sold for $500,000. However, her research shows the buyer of the sale allocated $25,000 for site preparation, to be spent after the closing, for grading and elevation work. Theresa's subject does not require such modification. If Theresa uses the site sale as a comparable, she should Aadjust the sale upward $25,000 Badjust the sale downward $25,000 Cadjust the subject site upward $25,000 Dadjust the subject site downward $25,000

adjust the sale upward $25,000

Qualitative analyses, such as relative comparison analysis, can be used in the sales comparison approach after quantitative analysis is concluded. The purpose of such qualitative analyses is to Agenerate percentage adjustments Breplace quantitative analyses because quantitative analyses are less precise Callow for imprecisions in the subject market Dbe used when analyzing dollar adjustments

allow for imprecisions in the subject market

An appraiser is using six sales in the sales comparison approach. The sales prices are: $100,000; $125,000; $105,000; $95,000; $119,000; and $99,000. To calculate the median, the appraiser must organize the sales into a(n) Agrid Bpopulation Csample Darray

array

Appraiser Patricia is performing a sales comparison approach. She has chosen sales that are inferior to her subject, as well as sales that are superior. She assumes the sales, once adjustments are made, will surround the value of the subject property. This process is known as Abracketing Bencircling Csurrounding Dextrapolating

bracketing

Appraiser trainee Emilie is performing market research for her supervisory appraiser. The subject property is a mixed use property located in an urban area. Her instructions are to find sales that are both comparable and competitive with the subject property. A competitive property Acompetes head-to-head with the subject property Bmay possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested the sale Chas the exact same features as the subject Dmust have sold within the last six months

competes head-to-head with the subject property

In the following list of possible adjustments, which one would be made first? Conditions of sale Location Physical features (condition, room count, etc.) Market conditions Aconditions of sale Blocation Cphysical features Dmarket conditions

conditions of sale

When ascertaining the value of an adjustment, the appraisal principle being applied is ______________. When making the adjustment, the appraisal principle being applied is ______________. Acontribution; substitution Bbalance; anticipation Cregression; progression Dcontribution; application

contribution; substitution

"Mary watches various fixer-upper shows on television. Convinced that "I can do that, too!" she buys a single-family home for $92,000. The house requires substantial repairs to the foundation, roof, and frame. Mary spends $75,000 on the repairs, but is confident she will get back "...more than I spend." Mary has the house appraised for mortgage lending purposes and is shocked when the value is rendered: $125,000. Mary then protests the appraisal to the lender, and threatens to report the appraiser to the state licensing agency. The appraiser explains that the market value of the subject property is based on market sales which average around $145,000 in the subject market. Although Mary repaired quite a bit, there was still much left to be done. Which appraisal principle best illustrates what happened to Mary?" Aincreasing return on investment Bdeclining return on investment Canticipation Dbalance

declining return on investment Mary spent more in repairs, than the value increase she received. This illustrates a declining return on investment. She should have been better prepared by performing a market analysis before purchase.

A residential subdivision is currently being developed. The developer and appraiser are concerned about rising interest rates and how they might affect factors that influence the sales and income approaches for individual units. The appraiser starts to analyze the absorption rate and absorption period with the scenario of rising interest rates. The appraiser indicates that if interest rates rise the absorption rate will ______________ and the absorption period will ________________. Adecrease; lengthen Bincrease; shorten Cdecrease; shorten Dincrease; lengthen

decrease; lengthen

Appraiser Simpson has plotted the results of research for land sales in the subject market. His subject site size lies outside the range of the known data. The process of drawing conclusions that extend outside the given range of data (either higher or lower) is known as Ainterpolation Bordering the array Cextrapolation Dqualitative adjustment

extrapolation

A comparable with the same site size as the subject would warrant a positive site adjustment: Aif the comparable had views superior to the subject property. Bdepending on whether the comparable sold in summer or winter. Cif the comparable's site was partially in a flood plain, limiting usability. Dfor no reason because the site of the comparable is the same size as the site of the subject.

if the comparable's site was partially in a flood plain, limiting usability.

Patrick is appraising a duplex for estate planning purposes. Patrick has collected sales data for the subject neighborhood. He has ordered his data in an array for analysis. He notes a straight-line, inverse relationship between sales price and living area: the larger the building, the lower the price per square foot. If Patrick's conclusion of value for the subject property is within the range of data, his analysis is called Aextrapolation Binterpolation Cstandard deviation Dstraight-line regression

interpolation

Appraiser John has received an assignment in a residential subdivision where one entity owns all the land. Homeowners rent the land their houses sit on, that is, the homeowners are tenants of the landowner. John is appraising one of the houses in this subdivision. John is appraising the Aleasehold estate Bfreehold estate Cleased fee estate Dlessee estate

leasehold estate

While researching comparables, an appraiser finds a sale that resulted when the buyer exercised an option that had been agreed upon three years previously. The sales price of this sale: Awould increase the subject property's indicated value. Bmay not be typical of the current market. Cwould have no affect on the appraisal. Dmay not be the correct sales price.

may not be typical of the current market.

Appraiser Dixie is performing research in the subject market. She is examining sales in the MLS and sorting out which ones might be comparable or which might be competitive with her subject property. A comparable property Acompetes head-to-head with the subject property Bmay possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested in buying the comparable property Chas the exact same features as the subject property Dmust have sold within the last six months

may possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested in buying the comparable property

Appraiser Ted is analyzing the local market as part of his research in conducting a sales comparison approach. He is interested in the range of sales (low to high) and the mean, median, and mode of his sample. The mean, median, and mode are collectively known as Ameasures of distribution Bmeasures of deviation Csum of the differences Dmeasures of central tendency

measures of central tendency

Which method estimates the value of an adjustment by using data from two sales where only one difference is present? Apercentage adjustments Bpaired sales analysis Cregression analysis Dreconciliation

paired sales analysis The matched pairs method of determining adjustment value uses two sales from the market that have one defining difference between them. The difference in their sales price is then attributed to that difference.

Appraiser Sam has been asked to appraise a parcel of land that is under contract for purchase. The grantor has reserved the mineral, oil, and gas rights. Sam will not appraise these subsurface rights. Sam is appraising a(n) Adefeasible estate Bmineral rights Cpartial interest Dundivided remainder estate

partial interest

Allie is appraising a 4-unit apartment building on an urban lot. She will perform a sales comparison approach and an income approach. The intended use is for listing the subject property. The client is the owner; another intended user is the listing broker who will use the appraisal to provide guidance for the list price. The broker will also produce a comparative market analysis (CMA) to help the broker and owner set a list price. Allie will most probably make market-derived adjustments in her sales comparison approach. In addition, she will use units of comparison in her analysis. Which unit of comparison will Allie most probably use for a 4-unit apartment building? Aprice per apartment unit Bprice per cubic foot Cprice per linear foot Dprice per square foot of lot area

price per apartment unit

Which adjustment takes into account the differences in ownership between the subject property and the comparable? Alocation Bproperty rights conveyed Cfinancing terms Dphysical characteristics

property rights conveyed

An appraiser can extract an adjustment for market conditions by: Acalculating the property's age. Bstudying an amortization table. Cstudying the sale and resale prices of the property. Dfirst making an adjustment for location, then comparing adjusted sale prices.

studying the sale and resale prices of the property.

Appraiser Sarah is performing a sales comparison approach for a residential appraisal. She has chosen four comparable sales based on style, age, size, location, and a variety of other features. Adjustments are made based on market extraction and data pulled from workfiles of properties that are similar to her subject property. The appraisal principle that is most likely being emphasized by Sarah is Aanticipation Bconformity Csubstitution Dprogression and regression

substitution

Bob owns a buildable lot in a suburban area. He has purchased a vacant lot that is adjacent, and has built a house that occupies both lots. The house is a typical size for the neighborhood, but his (now combined) lot is 40% larger than the average lot. Bob wishes to refinance. His lender hires an appraiser. Upon searching for comparable sales in the neighborhood, Appraiser Donald notes that the highest and best use of Bob's extra land is "landscaping." Donald tries to find comparable sales that (like the subject property) contain Asurplus land Bexcess land Cbuildable land Dpartitioned land

surplus land

All of the following would make good comparables, EXCEPT a sale: Awith typical mortgage financing. Bto a relative at below market price. Cby a willing seller to a willing buyer, free from compulsion. Dwith reasonable market exposure.

to a relative at below market price.

Each sale used as a comparable in an appraisal report should Ahave occurred in the past three months. Bhave occurred within the past 3 years. Cuse data that was verified by the buyer, seller or broker of each sale. Dhave been appraised by the subject property's appraiser to ensure the same appraisal procedures and standards.

use data that was verified by the buyer, seller or broker of each sale.

An appraiser must verify _________ before a sale may be used as a comparable property. Athe date the comparable property was originally constructed Bwhether any special concessions were granted by either party Cthe number of times the comparable has sold in the last three years Dwhether the comparable had been previously appraised

whether any special concessions were granted by either party