Final Review Quiz

market

"A place where goods and services are exchanged" is the definition of a: retail district market neighborhood store

governmental

A change in a community's zoning ordinance would be considered a(n) ___________ force affecting values. environmental economic social governmental

economic

A change in local employment and income levels would be considered a(n) ___________ force affecting values. environmental economic social governmental

368

A community's total employment is 52,220. The number of total core industry employees is 37,300. If the core industry adds 920 more jobs, how many additional jobs will be generated in the community? 653 328 404 368

a surplus land

A home is situated on a two-acre site, in an area where one-acre sites are common. The home is directly in the center of the property, and it is not possible to subdivide off and develop a one-acre site from the subject site. This situation is best described as _______ situation an excess land a surplus land a non-conforming use an interim use

principle of anticipation

A person purchases a four-plex because it has a strong income stream. This is an example of the principle of: principle of competition principle of anticipation definition of externalities definition of market analysis

incurable

A property suffers from functional obsolescence because it has outdated single-pane windows. Installation of new multipane windows would cost $24,000 and would increase the value of the property by $20,000. This functional obsolescence is: curable incurable it cannot be determined from the information provided

Commercial use

A single-family home is situated on a commercially-zoned lot. It would not be financially feasible to convert the home to commercial use, because there is not enough demand for commercial properties at this time. Demand for industrial property is very strong; however, a zoning change is unlikely. Demand for commercial properties is expected to increase as the community grows. What is the ultimate highest and best use for this property? Industrial use Commercial use Residential use Not enough information has been provided

continue use as a single-family home

A single-family residence is located in a commercially-zoned area. Residential sale prices in the area range from $80-90 per square foot. The residence could be converted to offices at a cost of $25 per square foot. Office space in this area is selling at $90-100 per square foot. What is the highest and best use of this property? convert the residence into offices raze the residence and build a new office continue use as a single-family home determine what the owner wants to do with the property

Consistent Use

An appraiser must value the land and the improvements based on the same use. Which economic principle or theory does this demonstrate? Lowest and Best Use Externalities Balance Consistent Use

an opinion

An appraiser's highest and best use conclusion is always: a fact an opinion an assumption an educated guess

Property B

An informed buyer is considering two properties, but will only purchase one of them. They are substantially equivalent, and each has an annual net operating income of $18,000. Property A has a listing price of $199,000, while Property B is listed at $189,000. Which property is the investor MOST likely to purchase? Property A Property B There is not enough information to determine

Substitution

An investor is looking at two properties, but will only purchase one of them. Each is similar in utility and location, and has an annual net operating income of $20,000. One has a listing price of $220,000, while the other is listed at $200,000. The investor purchases the $200,000 property. Which economic principle is demonstrated in this example? Regression Externalities Substitution Contribution

ad valorem value

Assessed value is also known as: market value value in use ad valorem value investment value

primary data

Data that is gathered personally by the appraiser is: secondary data unverified data primary data market data

absorption rate

How would an appraiser estimate the estimated length of time it will take to sell the existing available inventory in a market? absorption rate standard deviation expired listing ratio coefficient of deviation

Fee simple

If a party has all their ownership rights intact, what type of ownership is this? Leasehold Fee simple Leased fee Going concern

stable

If the market achieves balance, or equilibrium, it is considered to be: growing declining stable none of these

a seller's market

If there are not enough homes available in a market to satisfy demand, this is known as __________. a buyer's market a seller's market equilibrium contribution

they will increase

If there are not enough homes available in a market to satisfy demand, what will happen to home prices? they will increase they will decrease they will stay the same

the one with the lower price

If two substantially similar homes are offered for sale in a neighborhood at the same time, which one will sell first? the one with the higher price the one with the lower price they will sell randomly the one that is closer to the freeway

increasing property values

In a "seller's market", an appraiser is likely to find: increasing marketing times balance increasing property values large inventories of available properties

home prices remain stable

In a market that has maintained a state of equilibrium, what would an appraiser expect to see? properties sell faster than normal home prices remain stable rapid price appreciation there are more sellers than buyers

the homeowners association

In a typical subdivision, who is responsible for enforcing the deed covenants? the municipal code enforcement officer the homeowners association a designated state government agency local zoning officials

all of these

In analyzing the segmented market area, an appraiser might utilize: list-to-sale ratios absorption rates expiration ratios all of these

the use that results in the highest land value

In highest and best use analysis, how do we determine maximum productivity? the use that results in the highest property tax the use that results in the highest land value the use that is the most acceptable to local residents the use that is acceptable to the local zoning board

a visual inspection of the subject property

In most appraisal situations, what is the appraiser's best source for data about the subject property's physical characteristics? government maintained deed and assessment records MLS data a visual inspection of the subject property USPAP

slower than

In most markets, supply changes ________ demand. slower than faster than at the same rate in a ratio relationship to

No, but it still may be necessary for credible assignment results

Is an opinion of highest and best use required in an appraisal that is NOT based on market value? Yes, it is required in all appraisals No, but it still may be necessary for credible assignment results No, it is never required in non-market value appraisal assignments

primary data source

Most specific data are gathered from a: primary data source MLS secondary data source purchased data source

isolating the information that is relevant to the assignment

Once the appraiser has gathered all the data, the next step in the process is: double-checking to see if there is any data that was missed writing the appraisal report isolating the information that is relevant to the assignment producing a value opinion for the subject property

financially feasible

Only those uses which produce a positive return are considered _________. physically possible legally permissible financially feasible socially acceptable

Conformity

People tend to purchase homes in areas with amenities and facilities, and where they feel insulated from adverse property conditions. This is an example of the principle of: Conformity Substitution Change Competition

physical depreciation

Perceived benefits from the ownership of income-producing property would include all of the following EXCEPT: income to be received appreciation physical depreciation tax shelter

$150,000

The market value of a property is $200,000 and the loan-to-value ratio is 75%. What is the loan value for this property? $150,000 $50,000 $160,000 $175,000

an informed buyer will not spend more for a property than the cost of acquiring an equivalent property

The principle of substitution states: only one of the four agents of production can be replaced an informed buyer will not spend more for a property than the cost of acquiring an equivalent property when a property is inferior to those surrounding it, its value is enhanced value is based on the assumption of future benefits from property ownership

all of these

The real estate life cycle applies to: entire communities individual properties subdivisions all of these

as vacant and as improved

The two types of highest and best use analysis are: as vacant and as improved as is and subject to proposed improvements illegal and legal complete and limited

The value of all homes in the area will decline.

There is a significant oversupply of high-value homes on the market in Community A, and demand for these homes has not increased. Which statement is FALSE? The value of high-value homes will decline. The value of all homes in the area will decline. This will likely create a buyer's market for high-value homes.

use the Internet to research data or contact other appraisers for data

Today, if an appraiser has an "oddball" appraisal assignment and there is no local data, the appraiser can: use the Internet to research data or contact other appraisers for data make up the data, and use the Internet to make it seem more realistic use Internet data to create a smaller submarket within the local market withdraw from the assignment and use the Internet to find another appraiser to do it

liquidation value

Typical marketing times for single-family homes in the subject's area are 6-9 months. An appraiser is asked how much of a discount it would take in order to sell a particular property within 30 days. What type of value would this be? book value liquidation value going concern value market value

value in use

What type of value is based on the property's current use? assessed value value in use market value investment value

whether a proposed project is feasible for the market place at this time

When a client asks for a feasibility analysis, what do they want to know? how many houses have gone into foreclosure in the area in the last year when the market will start to decline how long it will be before the current oversupply of homes will be absorbed whether a proposed project is feasible for the market place at this time

Who owns the property?

When an appraiser is analyzing the subject property's market area, which question is LEAST likely to be asked? Where is the property located? What defines the boundaries of the property's neighborhood? Who owns the property? What are the trends for this neighborhood?

the highest and best use

When appraising a property for market value, an appraiser must determine: how long it will take to market the property how much the client thinks the property may be worth the cost of any repairs needed the highest and best use

market conditions ("time")

When appraising in a "seller's market", an appraiser is most likely to make adjustments for: declining property values location and condition balance market conditions ("time")

replacement cost

When insuring a property, what is the cost of producing a functional equivalent of the insured improvement, using modern materials and techniques? cost to cure replacement cost market value reproduction cost

maximally productive

When testing for highest and best use, which criterion (or test) is applied last? physically possible legally permissible financially feasible maximally productive

the rights of ownership

When valuing a piece of real property, the appraiser is really valuing: the land and minerals land, all improvements, minerals, and timber the deed itself the rights of ownership

tenants in common

Which form of ownership allows for unequal ownership shares? ownership in severalty single tenant tenants by the entirety tenants in common

physically possible

Which highest and best use criterion would require an appraiser to consider excavation or filling that may be required in order for a site to accommodate an improvement? physically possible legally permissible financially feasible maximally productive

financially feasible

Which highest and best use criterion would require an appraiser to consider the need for the land use, or how many similarly-used land areas are in the market area? physically possible legally permissible financially feasible maximally possible

surrogate method

Which of these is NOT an accepted method of estimating site value? allocation technique capitalization of ground rent sales comparison approach surrogate method

any of these

Which of these would be considered special purpose properties? fire stations school buildings places of worship any of these

growth Growth translates into increased supply to satisfy the demand for a certain type of housing in a particular area. Growth translates into the demand for more social services to be supplied by the community.

Which period in a neighborhood's life cycle will mean a demand for more social services to be supplied by the community? stability growth decline all of these

Market participants create value.

Which statement is TRUE about real property value? Value is not created; it is inherent. Appraisers create value. Market participants create value. Real property is worth more than personal property.

It is the sole responsibility of the appraiser.

Which statement is TRUE regarding the scope of work decision in an appraisal assignment? It is the sole responsibility of the appraiser. It is the sole responsibility of the client. It is a decision that is made jointly by the appraiser and the client. It is the appraiser's decision; however the client can exercise veto power over it.

The greater the down payment, the less chance the borrower will default.

Which statement is true about property purchase loans and down payments? The greater the down payment, the more chance the borrower will default. The greater the down payment, the less chance the borrower will default. The greater the down payment, the higher the interest rate. There is no correlation between down payment and likelihood of default.

the appraiser

Who determines the appropriate level of analysis for appraisal assignment? the client the appraiser the state appraisal board the Appraisal Standards Board

land typically cannot be destroyed

Why does insurance value typically not include the value for the land? land typically cannot be destroyed most of the property value is in the improvements this is a tradition that dates back to England in the 1800's land is worthless without improvements