Valuation and Market Analysis

How many acres are in a lot that is 1⁄4 of a mile wide by 1⁄4 of a mile long?

40 acres 1⁄4 mi. x 1⁄4 mi. = 1⁄16 1⁄16 x 640 = 40

The direct sales comparison (market data) approach would be MOST appropriate for establishing the value of a:

5-year-old single-family house

A real estate appraisal is limited to what period of time?

A given date

What does unearned increment mean?

An increase in value to real property due to some change in the area rather than an improvement in the property itself

What is a fee appraiser:

An independent appraiser who works on a fee basis

The effectiveness of the market data approach is limited most by which of the following factors?

Economic conditions that rapidly change

The effectiveness of the market data approach of appraising would be limited most by which of the following?

Economic conditions that rapidly change.

The primary survey line running east to west in the rectangular survey system is the:

base line

In arriving at an effective gross income figure, an appraiser of income property makes a deduction for:

Vacancy

What does BPO stand for in real estate?

brokers price opinion

A metes and bounds legal description must:

commence and finish at the same identifiable point.

Timothy owns a 20-unit income property in Madison, Wisconsin and he added a pool. He also has a 20-unit income property in Yuma, Arizona and he added a pool there as well. Because of the climate, the pool had a greater effect on the net income in Yuma than it did in Madison. This is an example of the:

principle of contribution

A recorded subdivision plat is used in the:

lot and block system.

Economic obsolescence in a property is generally:

a type of depreciation that is incurable.

The system of legal description that defines a parcel of land by tracing its perimeter is known as:

metes and bounds.

One part of the process used in the income approach to determine value is to:

apply the capitalization rate.

A state certified appraiser is conducting an appraisal of a library building surrounded by several acres of land belonging to the property. In determining the value of the land itself, the appraiser will most likely use the

sales comparison approach

Reconciliation is an appraisal term used to describe

the appraiser's analysis and weighing of the findings of all three appraisal approaches

Of the following, which would affect supply?

the labor force construction costs government controls

A board-foot is:

144 cubic inches

An appraiser who uses improper methods to appraise a property for a government backed loan may be guilty of:

A felony

An appraiser is appraising a single-family residence, and notices an abandoned gas station next door. The appraiser would logically recommend which of the following:

A toxic waste report from the EPA

What is the best way to appraise the land value of a property?

Allocation

Which of the following is not one of the four important elements of value:

Appreciation. *REMEMBER: STUD*

Which of the following is described as the process of expressing anticipated future benefits of ownership in dollars, and discounting them to a present worth at a rate which is attracting purchase capital to similar investments?

Capitalization

The value of a swimming pool or other property amenities is determined by the principle of:

Contribution

If an appraiser is appraising a special purpose property he would probably use the:

Cost approach

If an appraiser is estimating the value of a property using the cost approach, which of these describes what the appraiser should do?

Estimate the replacement cost of the improvements

Which of the following can be achieved by dividing the price of the property by the rent that is produced?

Gross rent multiplier

What would be most important to an appraiser in assessing the value of a vacant lot?

Highest and best use

An appraiser was contracted to determine the value of a large apartment building for a potential investor client. Which appraisal method is the MOST useful for this type of property?

Income approach

Which appraisal method uses a rate of investment return in estimating a property's value?

Income approach

Which of the following statements about the income approach to value is CORRECT?

It determines an investment property's value based on its return

Definitions of market value are least concerned with:

Market cost

The position of a building on its site in relationship to its surroundings is normally referred to as its:

Orientation.

Which of the following is not a method of providing for depreciation?

Obsolescence

Which of the following would be classified as external depreciation?

Poorly maintained properties in the neighborhood

A homeowner constructs an eight-bedroom brick house with a tennis court, a greenhouse, and an indoor pool in a neighborhood of modest two-bedroom and three-bedroom frame houses on narrow lots. The value of this house is MOST likely to be affected by what principle?

Regression

The Seddon family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered that the value of their home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an example of the principle of:

Regression

Land value is estimated on the basis of:

Selling price of comparables

If there is a discrepancy between a residential lot size quoted in a listing contract and the actual lot size, the actual lot size that will prevail in a sales transaction will be found in the

Survey

An appraiser is using the market data approach comparing the prices of comparable properties to the subject property. If the comparable properties have a feature that is not present in the subject property, the value of that feature will be:

Subtracted from the sales price of the comparables;

The most accurate determination of the age of a house can be made by inspecting the:

Tax assessor's records

When an appraiser is appraising a property he usually considers all of the following except:

The assessed value

Which of the following is the best definition of a "commercial acre":

The building portion of an acre after deductions for streets, curbs and sidewalks.

Lucy was contemplating opening a hardware store or a post office. She did not want to invest in a property with a high cap rate. She would probably want:

The post office because it is a lower risk.

When an appraiser contrasts "reproduction costs" with "replacement cost", the term "replacement costs" is more closely associated with which of the following concepts?

The present cost to replace the building with another building having the same utility

What is the basis of the market data approach to appraisal?

The principle of substitution

Reconciliation is best described as:

analyzing the results obtained from the three approaches to value.

A developer experiences success and good profits in a recent real estate project. What principle of value indicates that her experience will attract others to engage in similar projects in the same area?

competition

What does CMA stand for in real estate?

competitive market analysis

Which approach to value would require the value of the land to be calculated separately from the value of the improvements?

cost approach

Which of the following approaches to value estimate tends to set the upper limits of value:

cost replacement

When using the cost approach to estimate the value of a residential dwelling, a listing broker SHOULD:

determine replacement value less depreciation

A developer grants a local power company the right to install necessary transmission lines. The developer has granted the power company a(n):

easement in gross

The ability of a community to attract income and business is known as the community's:

economic base

A homeowner builds a $200,000 house among $100,000 homes. A loss in value suffered by the expensive home would be best attributed to:

economic obsolescence.

The sales comparison approach to value is MOST important when estimating the value of a(n)

existing residence

Rising mortgage rates are an example of:

external obsolescence.

Economic, environmental, and external obsolescence refer to

factors outside of the property lines that affect the property's value.

When appraising a commercial property, the appraiser is MOST concerned with the

income generated by the property.

An increase in the appraised value of property which is considered unearned increment would most probably result from:

increase in population

The listing or asking price of a property in the marketplace should be its:

market value

The objective value of a property is closest to:

market value

Which of the following is not a proper charge in determining net income for capitalization purposes:

mortgage interest

In general, when the supply of a certain commodity increases:

price tends to drop.

When the supply decreases while demand remains the same

price tends to rise

The income approach to appraising is MOST important in determining the value of a(n):

office building

orientation refers to;

position on site

A formal estimate of a property's market value, based on established methods and using a licensed professional, is performed by a

real estate appraiser

An appraiser determines that the cost approach is the most reliable approach in determining the value of an older government building. In estimating the value, the appraiser will MOST likely start by determining the:

replacement cost

All of the following are physical characteristics of land EXCEPT:

scarcity

All of the following would require an appraisal EXCEPT:

seller-carry loan

A competitive market analysis includes the price of homes currently on the market, which can assist a seller's agent with:

setting a listing price with the seller in competition with similar properties currently on the market.

Small apartment buildings in an area were selling for $500,000. A buyer walked into a 10-unit apartment building and offered the owner $500,000. The buyer is operating on the principle of:

substitution

Rents have gone up in the area. The principle that BEST describes this increase is

supply and demand

In MOST market areas, rents are determined by:

supply and demand factors

An appraisal differs from a competitive market analysis conducted by a broker in that an appraisal is based solely on an analysis of properties:

that have actually sold.

When an appraiser uses the phrase "effective age," he is referring to:

the age of the property based upon its condition.

Using which of the following would require the value of the land to be calculated separately from the value of the improvements?

the cost approach

Physical deterioration is considered curable whenever:

the cost to correct the issue is less than the resulting value increase.

The market price of a parcel of real estate is

the price it sells for

A pizza parlor rents space in a retail shopping center. The business owner bolts a large iron pizza oven to the floor to cook the pizzas. The oven is a(n):

trade fixture

When evaluating the data in a neighborhood market survey, a residential property manager will be most concerned with:

trends in population composition.

A metes-and-bounds legal description:

uses descriptions moving in a clockwise direction.

The relationship between a property and a prospective purchaser is known as:

value

Which of the following factors are not considered a cause of obsolescence:

wear and tear