Valuation and Market Analysis (Appraisal)
A fee appraiser: A. works full time for a lender. B. works full time for a broker. C. is a self-employed appraiser, who, for a fee, appraises property. D. assesses land for the government.
C
An appraiser received a $300 fee from Jones for appraising Brown's property. The appraiser may discuss the details of the appraisal with: A. Brown. B. no one. C. Jones. D. anyone.
C
An increase in value, resulting from improved usability where one or more contiguous lots are joined together under single ownership, would be a definition most appropriately applied to: A. severalty ownership. B. appurtenance. C. plottage. D. assemblage.
C
Functional utility in a dwelling is dependent upon: A. zoning in the area. B. the condition of heating system. C. the desires of its occupants. D. its floor plan and equipment.
C
In determining the value of income-producing property, an appraiser may use which appraisal technique?: A. Building residual technique B. Land residual technique C. All of these D. Property residual technique
C
In the narrative form of appraisal report, where would the property value be stated?: A. Description of use B. Description of the neighborhood C. Purpose of the appraisal D. Legal description of the property
C
In the valuation process, an appraiser would be LEAST concerned with the: A. definition of value. B. identification of the property rights being appraised. C. assessed value. D. identification of real estate.
C
On hot days, customers prefer to walk in the shade. Certain locations, due to the sun's fading effect on display window clothing, are the least desirable. Which is the least desirable side of the street for a clothing retailer?: A. Southeast B. Northwest C. Northeast D. Southwest
C
Silverman is going to make extensive improvements on an old apartment building. Which is MOST important for Silverman to take into account?: A. Area B. Cost C. Net income D. Land value
C
Smith built a $250,000 house in a neighborhood in which houses are valued between $75,000 and $85,000. Any resulting loss of value would be an example of: A. physical obsolescence. B. functional obsolescence. C. economic and functional obsolescence. D. physical depreciation.
C
The amount an appraiser charges for an appraisal is established by the: A. Federal Housing Authority. B. real estate commissioner. C. agreement between the appraiser and the client. D. Office of Real Estate Appraisers.
C
The best definition of capitalization is: A. the highest rate of return on an investment. B. the relationship between value and net worth. C. the result of dividing net income by a percentage rate of return to determine value. D. the minimum rate of return on an investment.
C
The expansion and contraction of available space to meet demand is stimulated most by market fluctuations of: A. permanence of residence. B. elasticity of demand. C. prices and rents. D. financing terms.
C
The fluctuations (activities) of the money market are extremely important to the real estate business. When interest rates go up and the income of a property is fixed, capitalized value of the property will: A. be unaffected in the short term. B. increase. C. decrease. D. tend to stabilize
C
The most difficult step for an appraiser in the sales comparison approach is to: A. analyze data. B. collect data. C. adjust the comparable to the subject property. D. average data.
C
The prudent buyer, in purchasing a new home in a new subdivision tract, would most likely choose a home located: A. across from the shopping center. B. near a bus stop. C. in the center of the tract. D. on a key lot.
C
The terms quantity survey, unit-in-place, and square foot and cubic foot are all methods of arriving at a value estimate that are used in the: A. sinking fund approach. B. market data approach. C. cost approach. D. income approach.
C
To analyze a leased property, an appraiser would consider: A. none of these. B. covenants, right of assignment, option for renewal and provisions for disaster, condemnation, improvements, and repairs. C. both of these. D. rent and other charges, date, parties, security, and term.
C
When comparing physical life to economic life, the economic life usually: A. is greater. B. depends on the improvement. C. is lesser. D. is the same.
C
Which would LEAST likely affect the stabilization of value on a single-family residence in a residential neighborhood?: A. Private restrictions B. Availability of public transportation C. Newness D. Zoning
C (Newness in itself would not be a stabilizing influence. Zoning regulations and private restrictions generally have as their primary function the protection and stabilization of property values. Availability of public transportation has always been a significant factor influencing property values in most residential areas.)
An income property showed a value of $800,000 when capitalized at a rate of 9%. A new investor wishing to purchase the same property engaged an appraiser who used a capitalization rate of 12%. According to the appraiser, the value would be: A. $300,000.00 B. $224,000.00 C. $600,000.00 D. $800,000.00
C (R x V = I0.09 x $800,000 = I0.09 x $800,000 = $72,000 (net operating income) 0.12 x V = $72,000V = $72,000 ÷ 0.12 = $600,000)
A recommendation for the best appraisal method to be used to estimate the value of a vacant parcel of land would be: A. the income approach. B. the cost approach. C. the sales comparison approach. D. an average of the first two methods.
C (The sales comparison approach lends itself well to the appraisal of land, residences, and other types of improvements that exhibit a high degree of similarity, and for which a ready market exists.)
While appraising a single-family residence that is renting for $640 per month, the appraiser finds that the home across the street recently sold for $90,000 and had been renting at the time of sale for $600 per month. Based on this data, the appraised value would be: A. $90,000.00 B. $124,000.00 C. $96,000.00 D. $110,000.00
C (The use of a gross monthly multiplier indicates a subject property value of $96,000. $90,000 ÷ $600 = 150; 150 x $640 = $96,000)
A nice yard, beautiful trees, and good neighbors usually increase the value of residential property. These things are known as: A. bilaterals.B. tangibles. C. coordinates. D. amenities
D
A prudent buyer would not pay more for a parcel of real estate than he would have to pay for another similar parcel based on the principle of: A. highest and best use. B. balance. C. supply and demand. D. substitution.
D
All of these statements about depreciation are true EXCEPT: A. it can be a loss of value due to wear and tear. B. it includes all influences that reduce the value of property below replacement cost. C. it is a loss of value from any cause. D. it always is concerned with intrinsic factors but never with extraneous factors.
D
An apartment house under construction has many prospective renters. The city now wants to widen the street. This change results in a 10% loss of renters. This loss would be an example of: A. physical deterioration. B. physical obsolescence. C. functional obsolescence. D. economic obsolescence.
D
An appraiser determines the accrual for depreciation in the use of: A. the sales comparison approach. B. none of these. C. the cost approach. D. the income approach.
D
An appraiser determines the accrual for depreciation in using: A. market data. B. cost. C. none of these. D. the income approach.
D
An appraiser using the replacement cost approach on an older residential property would use all of these EXCEPT: A. depreciation. B. land value. C. cost of improvements new. D. capitalization of income.
D
An investment that would best hold its value as a hedge against inflation would be a(n): A. investment similar to an annuity. B. no risk investment. C. investment that has a high degree of liquidity. D. income-producing investment that would maintain its value.
D
Functional obsolescence would NOT be attributable to: A. lack of air-conditioning. B. items of surplus utility. C. eccentric design. D. proximity of nuisances.
D
In order to arrive at an effective gross income for rental properties, an appraiser should deduct what from gross income?: A. Repairs B. Real property taxes C. Depreciation D. Vacancies and collection losses
D
In the capitalization of net income, the most difficult item for an appraiser to establish is the: A. determination of gross income. B. effective gross income. C. selection of a capitalization rate. D. determination of net income.
D
Productivity is a direct function of: A. demand. B. use.C. supply. D. value.
D
The approach in which income is projected to a future date and discounted to today's rates to attract investors relates to a technique known as: A. unearned increment. B. equity formulation. C. income projection. D. capitalization of income.
D
The easiest way for an appraiser to calculate the present value of a building would be by: A. a unit-in-place cost method. B. a quantity survey. C. a review of the building permit records. D. market data.
D
The greatest cause of loss of value to real property and the improvements thereon is: A. wear and tear. B. lack of maintenance. C. deterioration. D. obsolescence.
D
The gross multiplier is LEAST likely to be used in the appraisal of: A. apartment buildings. B. a residence. C. commercial property. D. vacant land.
D
The process of determining market value, investment value, or insurance value as of a specific date would be: A. evaluation. B. highest and best use. C. depreciation. D. valuation.
D
The recognized definition of highest and best use includes the term: A. multiple units. B. income production. C. effective gross income. D. net return.
D
These paragraph headings, Introduction, Description of General Neighborhood, Market Value & Economic Factors, and Final Estimate of Value, would be present in which type of appraisal?: A. Letter (restricted) B. None of these C. Form (summary) D. Narrative (self-contained or summary)
D
To find the details of the subfloor, such as size and dimensions of concrete piers, footings, and other detailed construction measurements, a real estate licensee would examine the: A. floor plan. B. elevation plan. C. plot plan. D. foundation plan.
D
Usefulness of the cost approach is limited when appraising: A. in an unusually active real estate market. B. a new structure on an appropriate site. C. for construction. D. an older property with many functional deficiencies.
D
Which is NOT an element of value?: A. Utility B. Scarcity C. Transferability D. Expectation
D
A two story commercial building measures 46′ × 80′ at its base. The height of the first story is 16′ and the height of the second story is 14′. Replacement cost of the first story is calculated at $1.60 per cubic foot; the second story cost is $1.20 per cubic foot. Based on this information, the replacement cost of the building would be: A. $61,824.00 B. $94,208.00 C. $184,824.00 D. $156,032.00
D (First story: 46′ × 80′ × 16′ = 58,880 cu. ft. × $1.60/cu. ft. = $94,208 Second story: 46′ × 80′ × 14′ = 51,520 cu. ft.)
A roof that slopes upward from all four sides and is joined at the ridge is called a: A. hip roof. B. gable roof. C. mansard roof. D. gambrel roof.
A
An appraiser is employed to advise an apartment owner of the economic feasibility of construction of a swimming pool. The appraiser would be most concerned with which valuation principle?: A. Contribution B. Integration C. Substitution D. Regression
A
An appraiser would consider all of these as contributing to the stability of a neighborhood EXCEPT: A. increased density and rapid turnover of population. B. homogeneity of buildings, people, and uses. C. many families with children going to school. D. residence in the path of urban directional growth.
A
An increase in the appraised value of property that is considered an unearned increment would most probably result from: A. increase in population. B. increase in amenities. C. capital improvements. D. management expenses.
A
An investment property is appraised at $400,000 based on a net income of $36,000 and a 9% capitalization rate. The value of the property based on a 12% capitalization rate would be: A. $300,000.00 B. $450,000.00 C. $250,000.00 D. $423,000.00
A
An owner has a 100-unit apartment house. Which item would be deductible from the gross income in determining net operating income?: A. Wages for part time gardeners and maintenance personnel B. Mortgage payments of principal and interest C. Income tax D. Depreciation
A
Appraisers have the most difficulty in determining the value of: A. accrued depreciation. B. replacement cost new. C. basic cost data. D. capitalized income.
A
If an appraiser does not adhere to appraisal standards (USPAP) for the purpose of defrauding an FDIC insured lender, the appraiser could be guilty of: A. a felony. B. violating Bureau of Real Estate rules and regulations. C. an ethics violation. D. a misdemeanor.
A
In appraising a property using the market data approach, how would an appraiser treat a feature value found in the comparable property but not found in the subject property?: A. Subtract the value of the amenity from the sales price of the comparable property B. Add the value of the amenity to the subject property C. Disregard the feature value as no two properties are exactly alike D. Treat the amenity as not included in the valuation
A
In arriving at an estimate of value based on selling prices, the appraiser is most interested in the date the: A. buyer and seller agreed on the price. B. deed was recorded. C. sale went into escrow. D. deed was signed.
A
In which appraisal approach may an appraiser be asked to predict the future value of a property?: A. Capitalization B. Summation C. Market D. Cost
A
It is known that a prudent buyer will not pay more for a property than the price of another suitable property if there is no undue delay in acquiring the other property. This is considered the principle of: A. substitution. B. contribution. C. competition. D. anticipation.
A
Land value is estimated whenever possible on the basis of: A. sales price of comparable sites. B. size, location, and utility. C. purchase price plus the cost of making onsite and offsite improvements. D. original cost plus the expense of making it usable.
A
Of the four appraisal terms listed, which one has the LEAST relation to the others?: A. Reconciliation B. Comparable C. Comparative D. Sales
A
Smith owns an older apartment building and is considering the merits of an expensive remodeling plan. The deciding factor that would be instrumental on his final decision would be the: A. effect of the plan on the net income. B. potential increases in the real property taxes. C. wishes of the tenants. D. cost of the plan.
A
The expenditure of dollars necessary for the creation of an improved residential property is called its: A. cost.B. value.C. price.D. investment.
A
The fluctuations (activities) of the money market are extremely important to the real estate business. When interest rates go up and the income of a property is fixed, the capitalized value of the property will: A. decrease. B. increase. C. be unaffected in a short term. D. tend to stabilize.
A
The gross rent multiplier is developed by dividing the: A. sales price by the gross monthly income. B. gross monthly income by the sales price. C. gross monthly income by the assessed value. D. gross monthly income by the market value.
A
The standards that a state-licensed or state-certified appraiser must follow are found in the: A. USPAP B. URAR C. MAI D. NAR
A
To determine the square footage of a house, measure the: A. outside of house. B. inside of the house. C. outside of house and garage. D. inside dimensions of rooms.
A
What is improved value?: A. Market value of land and improvements B. Difference between economic and contract rent C. Cost of reproduction less depreciation D. Market value divided by total rents
A
What is the first step in the appraisal process?: A. Define the appraisal problem B. Classify the data C. Organize the data program D. Make a preliminary survey and appraisal plan
A
What would contribute to the functional obsolescence of a building?: A. Massive cornices on a building B. Rotten mud sills C. Adverse zoning across the street from the property D. Declining neighborhood
A
When applied as a deduction from gross income, the vacancy factor is known to: A. vary both in locality and from time to time. B. be impossible for the appraiser to estimate with any accuracy. C. be constant. D. generally discourage prospective purchasers.
A
Which criterion would NOT be used to determine net income for an income property?: A. Mortgage interest B. Management fees C. Maintenance costs D. Vacancies
A
Which is the most expensive and difficult type of appraisal?: A. Quantity survey B. Square-foot cost C. Development D. Unit-in-place cost
A
Which statement is NOT true with respect to depreciation as determined by an appraiser?: A. It is inherent in the property and not created by outside influences. B. It can be computed for both past and future. C. It can be determined by more than one method of appraisal. D. It is loss of value from any cause.
A
Which would LEAST likely protect a single-family residential neighborhood from losing value?: A. Introduction of average-priced homes in an area of better quality properties of the same type B. Minor change in zoning regulations C. Most families are from the same religious and ethnic group D. Residents in the area have the same income
A
menities are the attractive or desirable features of a home or neighborhood. These may be physical attributes or perhaps the neighborhood's attitude toward schools, well- kept lawns, et cetera. These may be tangible or intangible qualities measurable on the market.: A. appraise for highest and best use and deduct the cost of demolition. B. appraise for highest and best use and disregard the cost of demolition. C. add the salvage value of the building. D. ignore the building.
A
If the gross annual income is $56,400 and the yearly net income is 15% of that amount, the monthly net income is: A. $705.00 B. $638.00 C. $683.00 D. $819.00
A ($56,400 gross annual income x 0.15 = $8,460 annual net income $8,460.00 ÷ 12 months = $705.00)
A comprehensive method of estimating a building cost including labor, material, overhead, and profit is considered in which method?: A. All of these B. Quantity survey C. Unit-in-place D. Comparative cubic or square foot measurements
B
A salesperson obtained a listing and the salesperson stated that his broker will later appraise the property to verify the listing price. Which statement is correct?: A. The broker cannot legally appraise the property. B. The broker may make an appraisal only if the broker is also a state-licensed or state-certified appraiser. C. The broker can make the appraisal but must charge a separate fee for this activity. D. The broker can make the appraisal if he prepares a narrative report that sets forth his extensive qualifications.
B
Amenities of residential real estate are: A. related to its capacity to provide shelter effectively. B. measurable on the market. C. the property's physical attributes D. not considered by appraisers because they are intangible qualities.
B
If there is a transition from a buyer's market to a seller's market, what would be the result?: A. Sales prices would decrease because of a decrease in demand and an increase in supply. B. Sales prices would increase because of an increase in demand and a lag in supply. C. It would have no effect on the price. D. It would cause a decrease in land development and construction of new homes.
B
In appraisal, all of these are recognized methods for the valuation of land EXCEPT: A. development method. B. economic method. C. abstract method. D. the comparative method.
B
In determining the market value of a property, the appraiser considers: A. the bundle of rights. B. all of these. C. utility. D. the physical land and improvements thereon.
B
In doing a feasibility study for residential development, taking into consideration local economic conditions, all of these items would be necessary EXCEPT: A. local zoning codes. B. specific data related to the proposed project. C. analysis of economic basis. D. target markers.
B
In establishing an estimate of value by appraisal, it is very important to differentiate between the purpose of the appraisal and the: A. amenities to the owner. B. function for which the appraisal is being made. C. principles of appraisal. D. appraisal process.
B
In planning a shopping center in a suburban community, which would be the most important consideration?: A. Amenities B. Purchasing power C. Weather D. Proximity of shipping and warehousing facilities
B
In the appraisal of property, the principle of substitution would apply to: A. the cost approach. B. any of these. C. the sales comparison approach. D. the income approach.
B
Original cost adjusted to today's cost-of-living-index: A. Original cost adjusted to today's cost-of-living-index B. Today's cost of replacement C. Cost-of-living index for 1910 D. Original cost of materials in 1910
B
Price is the amount: A. an informed seller asks for a property. B. that a property actually does bring in the open market. C. an informed buyer offers for a property. D. that a property might bring on the open market.
B
The basic economic characteristic that best expresses real estate value is: A. high replacement cost. B. maximum utility of available resources. C. the prospect of speculative gain. D. proximity to high rentals.
B
The capitalization rate in the valuation of income property would least likely provide for: A. return of investment. B. taxes. C. return on investment. D. depreciation.
B
The value measures applied by an appraiser to establish value of industrial land are: A. acre and front foot. B. acre and square foot. C. square foot and front foot. D. none of these.
B
To an investor in real property, cash flow means: A. income left after deducting taxes from net income. B. monies left after deducting operating expenses, interest, and principal payments from gross income. C. net income used for capitalization purposes. D. gross income less an allowance for vacancies.
B
Two houses were built on two adjacent lots of equal value. Construction costs and maintenance were the same. One house is appraised to be of higher value. What is most likely the reason?: A. One house had more wear and tear. B. One house was considered to have functional obsolescence. C. Both houses were across the street from a nonconforming house that resulted in economic obsolescence. D. One house had more economic obsolescence.
B
Under the cost approach, the replacement cost is distinguished from the reproduction cost because replacement cost is defined as the cost of constructing an improvement with: A. neither of these. B. substantially the same utility as the property being appraised. C. either of these. D. the same materials as were used in the original construction.
B
When property tax increases and all other items remain the same, an income property: A. increases in value by the amount of the taxes. B. decreases in value by more than the amount of the taxes. C. decreases in value by the amount of the taxes. D. increases in value by more than the amount of the taxes.
B
Which approach to a value estimate tends to set the upper limit of value?: A. Income B. Replacement cost C. Comparative sales D. Market comparison
B
The maximum possible income an income property can yield is: A. net spendable income. B. gross scheduled income. C. effective gross income. D. net income.
B (Among the choices presented, gross scheduled income would yield the maximum possible income an income property can yield. "Scheduled income" represents the rent currently in effect on the property in question as if the property were fully occupied. If the property has space available, the gross scheduled income would be at the rent levels currently obtainable for the space in the local market. This represents the maximum income the property could achieve.)
What is the indicated value of a property that produces a gross monthly income of $2,400 and an appropriate (annual) multiplier of 10.72?: A. $225,000 B. $308,000 C. $108,000 D. $25,000
B (Gross monthly income $2,400 x 12 months = $28,800/year Gross multiplier x Gross income = Value estimate 10.72 x $28,800 = $308,736 Closest $308,000)
In appraisal, all of these are recognized methods for the valuation of land EXCEPT the: A. development method. B. economic method. C. abstraction method. D. comparative method.
B (There are four basic procedures for the valuation of land: comparative, abstraction, development, and land residual. The term economic is not used in designating a recognized method.)
