APPRAISAL FINAL EXAM
Using the information provided, calculate the value of an apartment building using direct capitalization: Annual income = $150,000; Monthly Expenses = $2,000; Capitalization Rate = 9%
a. $1,134,000 b. $1,400,000 c. $1,644,444 d. $1,666,667 ***ANSWER: B Find the net operating income by subtracting annual expenses ($2,000 x 12) from the annual income: $150,000 - $24,000. then divide income by the cap rate to find value $126,000 / .09 = $1,400,000.
If the gross monthly rent multiplier is 180 and monthly rent is $600, what's the value of the subject?
a. $108,000 b. $110,000 c. $160,000 d. $180,000 ANSWER: A
Using the following information, calculate the annual depreciation of a house using the age-life method; Current Building Cost = $200,000; Effective Age = 25 years; Actual Age = 40 years; Expected Useful Life = 50 years
a. $2,500 b. $5,000 c. $8,000 d. $10,000 ***ANSWER: A First, find the depreciation percentage: Effective age / Economic life: 25/50 = 50%. Multiply the depreciation percentage by the current cost of the building: .50 x $200,000 = $100,000. Finally, divide the total depreciation by the actual age of the house to find annual depreciation: $100,000 / 40 = $2,500
An appraiser is asked to appraise a vacant residential site. The neighborhood is about 75% build up. Most lots in the area are 55' to 65' wide. The vacant lot is 60' wide. Comparable sales indicate lots are selling from $180 to $225 per front foot. What is the estimate for the subject lot?
a. $7,100-$10,125 b. $9,900-$11,400 c. $10,800 - $13,500 d. $13,500-$16,500 ANSWER: C
In the sales comparison approach, assume Sale #1 sold for $60,000 and, in the appraiser's opinion, it is 15% superior to the subject property. What is the value of the subject:
a. $9,000 b. $51,000 c. $55,000 d. $69,000 ANSWER: B
A house rents unfurnished for $500 per month. Using the gross monthly rent multiplier method, the appraiser estimates value of the subject at $80,000. What's the monthly gross rent mulitiplier
a. .16 b. 1.60 c. 16.0 d. 160.0 ANSWER: D
A 25-year-old property sells for $125,000. If the site is worth $25,000 and the building would cost $200,00 to replace today, what is the annual rate of depreciation?
a. .5% b. 1.0% c. 2.0% d. 5.0% **ANSWER: C Land never depreciates, so first determine the value of the structure: $125,000 - $25,000 = $100,000. Using straight-line depreciation, you can determine the building has depreciated by $100,00 since it was built ($200,000-$100,000), which equates to $4,000 per year ($100,000/25=$4,000). Finally, divide the annual depreciation by the value of the structure to find the annual rate of depreciation: $4,000 / $200,000 = 2%
If a property's effective gross income is $14,351.40 and vacancy is calculated at 6.2%, what is the potential gross income
a. 15,2000 b. 15,241.19 c. 15,267.45 d. 15,300 ***ANSWER: D EGI is PGI minus vacancy loss. Therefore, if you know the EGI, to find PGI, you ned to add back in the vacancy loss. If the vacancy loss is 6.2%, you know that $14,351.40 is 93.8% of the PGI (100%-6.2%. Now you can divide $14,351.40 by .938 to find PGI of $15,300.00
A rectangular parcel of land containing five acres has 600 feet of road frontage. Depth is _____feet
a. 363 b. 495 c. 661 d. none of the above ANSWER: A 43,560 (Acre) x 5 / 600
An external obsolescence pertains to
a. a family room located in the basement b. the placement of bedrooms in relation to the bathroom c. a railroad track running along side the lot d. the size of the kitchen ANSWER: C
In analyzing comparable sales, an appraiser should
a. adjust the comparable sales to the subject property b. adjust the subject property to the comparable sales c. average all of the comparable sales and adjust the subject accordingly d. none of the above ANSWER: A
The increase or decrease in value that helps estimate market value of a property by comparing its features to those of comparable sales is referred to as an
a. adjustable comparison b. adjusted basis c. adjustment d. none of the above ***ANSWER: C
Physical differences and their affect on the value of land or site can be determined only by the
a. adjustments shown for the date of sale b. land development method c. market's reaction in terms of dollars d. rules of excess depth. *****ANSWER: C An appraiser must consider the reaction of the market when determining the effect that physical features have on the value of property
The single most important value factor is
a. age b. condition c. location d. size ANSWER: C
In residential appraisals, a commonly utilized method of depreciation is the ___________ method.
a. age-life b. quantity of survey c. square foot d. unit in place ANSWER: A
The land valuation method that uses a ratio of land to improved value is called
a. allocation b. capitalization c. extraction d. land residual ***ANSWER: A
Replacement cost new and reproduction cost new are
a. always the same b. only different in custom-built homes c. only the same in new construction d. none of the above. ANSWER: C
After freeway construction, the volume of business on a street decreased by 50%. This is considered a(n)
a. amenity b. appurtenance c. external obsolescence d. functional obsolescence ANSWER: C
Adjustments to the sale price of comparable sale properties are measured by the
a. amount a typical buyer will pay for an item b. cost per square foot c. principle of conformity d. quantity survey method ANSWER: A
The second bedroom of a house must be accessed through the first bedroom. This is considered
a. an amenity b. an aversion c. eminent domain d. functional obsolescence ANSWER: D
A trade fixture can best be describes as
a. an item attached to real estate for business purposes b. items that were once personal property but are now real property c. lights and plumbing items attached to the real estate d. all of the above ANSWER: A
A document also referred to as a tax or assessors map is a(n)
a. assemblage plan b. plat map c. plottage map d. none of the above ****ANSWER: B
Which is a functional obsolescence?
a. broken A/C unit b. clogged drain c. inoperable faucet d. no heating source ANSWER: D
Replacement cost refers to estimating the cost of a
a. building of the same age b. replica building c. rural appurtenance d. similar building using modern materials. ANSWER: D
Which approach would be most appropriate in the appraisal of a uniquely designed and recently constructed public library building?
a. building residual approach b. cost approach c. income approach d. sales comparison approach ANSWER: B
Real estate markets are said to be imperfect because
a. buyers and sellers are not always well informed b. most properties are alike c. property is easily and quickly developed d. all of the above ANSWER: A
When using the income approach, appraisers assume that
a. buyers estimate the duration of income when buying income property b. future income is always less valuable than present income c. value is directly related to income d. all of the above. ANSWER: D
The maximum a typical buyer will pay for a property feature is related to the theory of
a. change b. conformity c. progression d. substitution ***ANSWER: D
Which would be considered an external obsolescence
a. changes in zoning b. normal wear and tear c. poor architectural design d. termite and pest control ANSWER: A
An appraiser is performing an appraisal of an older apartment building in an established neighborhood for which he has data on several similar apartment buildings. However, none have sold in the past five years. Which approach will be concluded as the most credible?
a. comparative unit b. cost c. income d. sales comparison ANSWER: C
The most detailed method of estimating a reproduction cost for a structure is
a. comparative unit b. index c. quantity survey d. square foot ANSWER: C
The capitalization approach using a GMRM means to
a. convert net income into a value estimate b. divide the cost of the building by annual rent c. divide the net income by the rate d. multiply the gross rent by a mulitiplier **ANSWER: D
Which value approach would most likely be emphasized for an apartment building in an established neighborhood?
a. cost approach b. income approach c. sales comparison approach d. all three approaches would be averaged ANSWER: B
Which approach to value deals primarily with the amount of money an owner can receive from a rental property?
a. cost approach b. income approach c. sales comparison method d. square foot method ANSWER: B
For the appraisal of an older single-family residential dwelling, where should the appraiser put his reliance?
a. cost conclusions b. market rents c. recent listing d. recent sales ANSWER: D
In applying the gross monthly rent multiplier to the subject property, the appraiser would use _____rent
a. current actual b. gross market c. historic d. net market ANSWER: B
As the depth of the lot increased, the value per front footage
a. decreases b. decreased, and then begins to increase c. increases at a decreasing rate d. increased in direct proportion to the depth. ANSWER: C
The value most often sought in an appraisal is:
a. depreciated value b. market value c. replacement value d. value in use ANSWER: B
In the cost approach, an opinion of value is developed by adding the
a. depreciation cost new of improvements to depreciated site value b. depreciated cost new of improvements to estimated site value c. new cost of the improvements to the depreciated site value d. new cost of the improvements to the estimated site value. ****ANSWER: B
Which characteristics create value in real estate?
a. durability and transferability b. immobility and durability c. scarcity and utility d. utility and immobility ANSWER: C
The data required for a site analysis includes
a. economic characteristics of the neighborhood and community b. physical characteristics of the site c. zoning information d. all of the above ANSWER: D
The area that a structure's foundation rests upon is called a
a. footer b joist c. pier d. slab ***ANSWER: A
In addition to sale price, what other sales data should be confirmed for the sales comparison approach?
a. gross living area b. property condition at the time of the sale c. terms and circumstances of the sale d. all of the above ANSWER: D
A functional problem (or obsolescence) in a home pertains to
a. items outside the boundary of the subject b. location c. proximity to shopping d. the utility of the property, such as a room layout ANSWER: D
Which is NOT a recognized method of site valuation?
a. land residual b. plottage comparison c. sales comparison d. subdivision analysis ANSWER: B
Which circumstance might cause a transaction NOT to be arm's length?
a. market conditions are known by seller b. Property has been adequately exposed c. seller was not influenced by hast or duress d. seller was not knowledgeable of value ANSWER: D
You would expect market price to equal market value if the
a. parties to the sale were related b. sale was a foreclosure c. sale was made with an anticipation of change in use (zoning change) d. transaction was arm's length ANSWER: D
Market value is the most
a. probable annual income b. probable selling price c. recent annual rent d. recent transfer price ANSWER: B
Which is an example of general data on a subject property?
a. school district b. site topography c. utility source d. view ANSWER: A
Prior to inspecting the site, an appraiser should obtain information on the
a. size and shape of the parcel b. utilities and soil type c. zoning and easements d. all of the above ANSWER: D
