General Appraiser Market Analysis Highest and Best Use
What would be the value of the property after completion of conversion to multi-family use?
$1,078,000
What would be the total cost of property acquisition and conversion to mixed commercial/apartment use?
$1,107,500
What is the amount of the initial investment needed to sponsor a home for Habitat for Humanity?
$100,000
As vacant, what would be the value of the property if used as two 2.5-acre homesites?
$110,000
What is the net cost to raze and remove the buildings, under Option 3?
$15,000
As currently improved, what is the value of the property under Alternative 1, which is its current use as a home and 5-acre site?
$180,000
As currently improved, what is the total value of the property under Alternative 2, which proposes to subdivide off a 2.5 acre homesite
$210,000
What is the likely value of the subject 25,000 square foot site?
$218,750
An appraiser is valuing a one-acre site, which is improved with a building that is in very poor condition and not financially feasible to repair. The appraiser estimates that the value of the vacant site is $250,000. It will cost $25,000 to demolish and remove the building. What is the "as is" value of the property?
$225,000
What are the operating expenses of the subject property under its current use?
$23,040
An old apartment building will cost $80,000 to demolish. The salvage value of the building components is $25,000. The value of the vacant site is $350,000. What is the "as is" value of the property?
$295,000
According to Table 1.25, what is the total of annual retail sales in the Huntingdon-Ashland MSA?
$3,530,000,000
What are the operating expenses of the subject property, as modernized under Option 2?
$34,214
What is the net operating income of the subject property under its current use?
$34,560
An old school building will cost $55,000 to demolish. The salvage value of the building components is $20,000. The value of the vacant commercial site is $440,000. What is the net cost to raze and remove the building?
$35,000
Approximately one-half of households in the City of Ashland have incomes of less than:
$35,000
What would the value of the property be if the home was razed and removed?
$350,000
What is the estimated value of the property under its current use as a duplex?
$352,000
What is the net indicated value of the subject's site, including demolition costs?
$377,000
What is the capitalized value of the subject property under its current use?
$384,000
What is the indicated sale price per acre of Sale 3?
$39,375
What is the indicated sale price per acre of Sale 2?
$39,815
What is the average of the indicated price per acre of sales 1 - 3 (the low rise office site sales)?
$39,909
What is the indicated value of the subject's site?
$392,000
What is the indicated sale price per acre of Sale 1?
$40,536
What is the indicated sale price per acre of Sale 6?
$40,645
What is the indicated sale price per acre of Sale 4?
$40,909
What is the net value under Option 2, considering the cost of modernization?
$404,644
An old school building will cost $55,000 to demolish. The salvage value of the building components is $20,000. The value of the vacant commercial site is $440,000. What is the "as is" value of the property?
$405,000
What is the average of the indicated price per acre of sales 4 - 6 (the industrial/flex building site sales)?
$41,222
What is the net operating income of the subject property, as modernized under Option 2?
$41,818
What is the indicated sale price per acre of Sale 5?
$42,111
What is the indicated sale price per acre of Sale 6?
$42,111
What is the capitalized value of the subject property, as modernized under Option 2?
$464,644
What is the indicated sale price per acre of Sale 8?
$47,222
How many dollars in annual sales is generated by retail businesses in the City of Ashland?
$473,000,000
What would be the indicated discount for the subject property based on 14% for 3 years?
$5.46
What is the average of the indicated price per acre of sales 7 - 9 (the house of worship building site sales)?
$50,881
What is the indicated sale price per acre of Sale 9?
$50,889
What is the estimated NOI of the property as a commercial property?
$53,100
What is the indicated sale price per acre of Sale 7?
$54,531
An old apartment building will cost $80,000 to demolish. The salvage value of the building components is $25,000. The value of the vacant site is $350,000. What is the net cost of razing and removing the building?
$55,000
What is the effective gross income of the subject property under its current use?
$57,600
What is the estimated future value of the property as a commercial property (without any subtractions or discounts)?
$590,000
What is the site value per square foot indicated by the three sales?
$6.00
What would be the indicated discount for the subject property based on 14% for 5 years?
$7.06
What would be the indicated discount for the subject property based on 12% for 5 years?
$7.92
What is the potential gross income of the subject property under its current use?
$72,000
What is the effective gross income of the subject property, as modernized under Option 2?
$76,032
As vacant, what would be the value of the property if used as a 5-acre homesite?
$80,000
What is the potential gross income of the subject property, as modernized under Option 2?
$86,400
Using the limited information that was given, what would be the approximate value of the subject property for rental apartment use?
$9,600,000
As currently improved, what is the net value of the property under Alternative 3, which proposes to raze the improvements and subdivide into two 2.5-acre homesites?
$90,000
What would be the total cost of property acquisition and conversion to multi-family use?
$932,500
What is the interest rate charged by Habitat for Humanity for a home mortgage?
0%
When choosing a trendline, the best fitting line will have an R-squared value that is closest to:
1
Using the employment density ratio of 2.3 persons per 1,000 square feet of building area, how many square feet of occupied industrial space exists within the City of Ashland?
1,400,000
There are 2,100 new jobs in finance, insurance, and real estate projected over the next five years. 75% of these jobs are in offices. The average office worker requires 150 square feet of office space. How many new office workers are projected during the next five years in this employment classification?
1,575
How many housing units are available in Sylvan Beach?
1,974
If you have a USPAP-related highest and best use question, which Standards Rule should you consult?
1-3
What is the minimum rear yard requirement in the CCG-2 zone?
10 feet
In a traditional pie chart, the sum of the observations should add up to:
100%
There are 2,100 new jobs in finance, insurance, and real estate projected over the next five years. 75% of these jobs are in offices. The average office worker requires 150 square feet of office space. 50% of workers in this classification work in Class A office buildings. How many square feet of new Class A office space will be required for these new workers?
118,125
Berry Developers leased 25,000 square feet in their new 80,000 square foot retail complex last year. In the local market area, 200,000 square feet of retail space was leased. What is the capture rate for Berry Developers?
12.5%
What is the rate of return on Alternative 4, mixed commercial/apartment use?
12.9%
What percentage of the population in the City of Ashland has a bachelor's degree or greater?
14%
What is the rate of return on Alternative 3, multi-family use?
15.6%
In the Oakdale market area, there were 80 new condominium units sold last year. The Leaf Estates development sold 15 units. What is the capture rate for Leaf Estates?
18.75%
How many housing units are required for Sylvan Beach residents?
2,506
Salty Dog Developers sold 12 homes in Palmdale and 28 homes in Mapletown last year. The total number of new homes sold in Mapletown last year was 124. What is Salty Dog's capture rate in the Mapletown market?
22.6%
There are 2,100 new jobs in finance, insurance, and real estate projected over the next five years. 75% of these jobs are in offices. The average office worker requires 150 square feet of office space. How many square feet of new office space will be required for these new workers?
236,250
Over the last year in Highland Falls, there have been 84 sales of single-family homes. Currently, there are 168 homes on the market. How long will it take the market to absorb this inventory?
24 months
There are 800 new jobs in transportation projected over the next five years. 25% of these jobs are in offices. The average office worker requires 120 square feet of office space. How many square feet of new office space will be required for these new workers?
24,000
How many retail businesses are located within 1.5 miles of the mall?
247
If 200 new homes are sold in Newtown in a single year, and XYZ Homes sold 50 of them, what is XYZ's capture rate?
25%
In the Oakdale market area, there were 80 new condominium units sold last year. Treetop Gardens development, with 40 units available, sold 22 units. What is the capture rate for Treetop Gardens?
27.5%
Which of the four alternative uses is (are) considered financially feasible?
3 and 4 only
What is the limit of housing costs for a Habitat for Humanity family?
30% of their gross monthly income
How many new owner-occupied housing units were added to inventory in the City of Ashland between 1990 and 2000?
339
How many fundamental tests are in the highest and best use analysis?
4
In the town of Woodlake, 60,000 square feet of Class A office space is leased per year. The Cedars, a Class A office building, just opened with 48,000 square feet of space to lease. It is projecting a 20% capture rate. How long will it take this building to reach 100% occupancy?
4 years
How many acres of land designated for industrial use exist within the City of Ashland?
458
In the City of Ashland, what percentage of the workforce travels less than 15 minutes to work?
56%
In the town of Woodlake, 60,000 square feet of Class A office space is leased per year. The Pines, an older Class A office building, has 36,000 square feet of space for lease. It is projecting a 10% capture rate. How long will it take this building to reach 100% occupancy?
6 years
According to author and educator Joseph Rabianski, what term should replace "probability of rezoning" in appraisal literature?
"Rezoning justification analysis"
What is the minimum lot size that is legally permissible?
7,500 square feet
What is the mode of this set of gross rent multipliers: 77, 88, 72, 69, 77, 91?
77
Calculate the mean of this set of gross rent multipliers: 77, 88, 72, 69, 77, 91.
79
For the year 2002, how many owner-occupied housing units in the City of Ashland have an estimated value of over $500,000?
8
A regional market area is defined as a radius between _____ and_____ miles from the epicenter of the market area.
8, 12
A convincing highest and best use conclusion is necessary for:
A credible opinion of market value
What is The Appraisal Foundation?
A non-profit educational organization
2 of 10What is the best way for an appraiser to determine if there is potential environmental contamination on a property?
A phase one environmental report
An appraiser is developing an opinion of highest and best use on a single-family home that was converted to multi-family use, which is located in an industrial area. After applying all four test constraints, what should the appraiser expect?
A single highest and best use will be indicated.
An appraiser's research indicates that 200 condominium units will be sold in the subject's market within the next year. This number refers to:
Absorption
Measures of demand that are often used in the appraisal process include:
Absorption rate
The _______________ is the rate at which properties for sale have been sold or rented within a specific market area.
Absorption rate
A thorough description of the subject site should contain:
All of the above
Besides income, other factors considered by investors purchasing multi-family properties include:
All of the above
Knowledge of the property's ______________ is essential to an appraisal.
All of the above
Which of the following is a consideration (are considerations) of a market analysis?
All of the above
Going-concern value is often used in appraising what type of property?
All of these
What is the highest and best use of the property, as improved?
Alternative 2
Which alternative represents the highest and best use of the subject property?
Alternative 3 - Convert to multi-family home
What tool on the Census Bureau's website provides three different tables and thematic map functions?
American Fact Finder
When an appraiser is appraising a property where there is a reasonable probability that the current zoning can be modified, ___________ may be necessary to analyze the highest and best use of the property.
An extraordinary assumption
Which step in the scientific method involves experimental tests to ensure validity of the first three steps?
Analysis
The present worth of revenue or other benefits expected in the future is referred to as:
Anticipation
Local authorities base their zoning decisions on
Any of the above
What can cause a property to become a legal non-conforming use?
Any of the above
What source might a valuation professional use to obtain comparable sales data for raw land parcels?
Any of these
In deciding which highest and best use test constraint to apply first, an appraiser may find it helpful to:
Apply the more restrictive constraint first
__________ utilize a market analysis to understand the target market's preferences for specific amenities.
Architects
Part of a property has been identified as a wetland. Development of this property will require filling in part of the wetland area. Which entity would issue a permit for this activity?
Army Corps of Engineers
What two types of highest and best use are developed in market value appraisal assignments?
As vacant and as improved
A(an) __________ is when consumers are interviewed about their preferences regarding certain characteristics in order to determine demand for a property.
Attitudinal survey
Deed restrictions or covenants are sometimes only found by:
Attorneys
According to NCREIF, which is NOT a step in demand analysis?
Base local demand projections solely on U.S. macroeconomic factors
An Economic Base Analysis divides employment into two categories. What are they?
Basic and Non-basic
Why is the scientific method useful in the appraisal process?
Because it attempts to diminish bias
Why is the income approach of primary importance in appraising a multi-tenant office building?
Because potential buyers would be concerned with the property's income potential
According to NCREIF, in completing a supply analysis, the total office space inventory is described by:
Both quality and quantity
Projections of future employment are provided by:
Bureau of Economic Analysis
A true market segment meets all of the following criteria EXCEPT:
Can be combined with other related segments
When an appraiser is considering reasonably probable modifications to land use regulations, what is he or she essentially asking?
Can the zoning be changed?
When the condominium market returns to supply/demand equilibrium, will the highest and best use of the property be for condominium conversion?
Cannot determine
What is the term used to describe the estimated percentage of the total potential market that is sold or leased by one entity or development?
Capture rate
What two measures are typically used in descriptive statistics?
Central tendency and dispersion
The sources for the inventory information used in the analysis include U.S. Census Bureau and ______________.
Claritas, Inc.
The highest quality buildings that are located in the best areas of their markets are usually considered ___________ office buildings.
Class A
An appraiser is analyzing a parcel of vacant land, which has a variety of uses that are physically possible, legally permissible, and financially feasible. For residential use, its value is $75,000. For commercial use, its value is $85,000. For multi-family use, its value is $80,000. What is the maximally productive use?
Commercial
Within the market delineation process, the appraiser identifies:
Competing and complementary properties
When analyzing highest and best use, USPAP requires an appraiser to:
Consider reasonably probable modifications of land use regulations
An appraiser is responsible under USPAP to:
Consider reasonably probable modifications of zoning
What principle requires the land and improvements to be valued based on the same use?
Consistent use
Which principle holds that it is not appropriate to value land based on one use while valuing improvements on the basis of another use?
Consistent use
Data in the site description section of the appraisal report should be:
Consistent with other data in the report
A manufacturing company can purchase a site in an industrial park for $75,000. It plans to construct a 20,000 square foot industrial building at a cost of $600,000. When the building is completed, the value of the total property will be $650,000. Which statement is true regarding the highest and best use of this property?
Construction of this building is not financially feasible.
According to NCREIF, which of these is NOT required to be considered in developing demand analysis for multi-family residential properties?
Consumer purchasing habits and debt
When analyzing legal permissibility, what should an appraiser consider?
Covenants, conditions, and restrictions
A highest and best use can be:
Current use or Prospective use based on future utility
If a property lacks market acceptance, how can the demand for the property be increased?
Decrease the price
When analyzing legal permissibility, what should an appraiser consider?
Deed restrictions
What is the first step in the Six-Step Process?
Define the product
When an existing improvement no longer adds value to a property, an appraiser may need to consider_____________ when valuing the property.
Demolition cost
What is the study of methods and tools for collecting data and mathematical models to describe and interpret data?
Descriptive Statistics
What are the two categories of statistics?
Descriptive and inferential
What is the purpose of this analysis?
Determine the range of potential land uses that can be accommodated in the city
How can census data be used in appraising restaurant properties?
Determine whether sales will support the rent
According to NCREIF, what is the purpose of demand analysis?
Develop historical relationships as a basis for forecasting future demand
What type of market participant would be most likely to construct a new multi-family apartment building?
Developer
Deed restrictions or covenants are often established by:
Developers
__________ utilize a market analysis to determine if the location is appropriate for the project according to the needs of the community.
Developers
A big-box retailer is considering a commercially-zoned property as a potential site for a new store. The property's width is not sufficient for the retailer to place one of its prototypical buildings. What is the retailer most likely to do?
Dismiss the property outright as a potential site
Special-purpose properties would include all of the following EXCEPT:
Duplex
A developer is constructing a high-end luxury apartment building. While the building is under construction, the major employer in the area consolidates its operations and moves most of its executives out of state. When the building opens, occupancy reaches 40% and remains at that level. This would be an example of _____________ forces that affect real estate.
Economic
Which of these is NOT a type of study specific to a decision?
Economic Base Analysis
Which type of market analysis studies a specific macroeconomic market area and the supply and demand factors for a specific property type, while dividing employment into two categories: basic and nonbasic?
Economic Base Analysis
As vacant, what would be the physically possible and legally permissible use(s) for the subject property?
Either of these
In developing a highest and best use conclusion, one way to avoid bias is to:
Employ standard procedures such as the scientific method
A thorough description of the subject site is:
Essential to an appraisal report
Highest and best use is a key factor in:
Estimating land value in the cost approach & Selecting land sale comparables
A market analysis might be used for all of the following purposes EXCEPT:
Estimating the cost of new construction
Applications for GIS software include:
Evaluation of places for location of new stores
How often is a complete U.S. Census conducted?
Every ten years
Which economic principle states that factors located outside the boundaries of a property can have a positive or negative effect on value?
Externalities
Census data should be analyzed according to standard methodology.
False
If the improvements do not represent the highest and best use of the property, the appraiser should value the property under its current use.
False
In an appraisal report, the data and information in the highest and best use section stands alone; it need not be consistent with data that appears elsewhere in the report.
False
In the subject property's market area, there is a significant demand for single-tenant office buildings.
False
Much of the inventory of available, existing retail property in Ashland is functionally adequate.
False
Office buildings are rated Class A, Class B, and Class C based on an international standard for office building classification.
False
Retail businesses are of little importance to the overall economic health of Ashland.
False
There is no substitute for the developer's instinct when considering a real estate development project.
False
When analyzing a property's highest and best use, a valuation professional should rely on the highest and best use conclusions of architects or land planners.
False
When appraising small income properties that are managed by the owner, the income and expenses are often more of a reflection of the quality of the property than the quality of the management.
False
When developing an opinion of highest and best use, an appraiser should not give consideration to any possible adaptations or modifications to the property that might increase its value.
False
Which of these is NOT a type of market condition study?
Feasibility Analysis
In reference to categorizing business and office space, the acronym FIRE stands for:
Finance, Insurance, and Real Estate
What can be manipulated and used as a "barrier to entry" for entities who wish to enter the market to purchase real property?
Financial feasibility
An appraiser is inspecting a parcel of commercially-zoned property in a rural location. The owner tells the appraiser that the property is perfect for a franchise fast-food operation. The appraiser notes that none of the surrounding uses is used for fast-food; in fact, most of the surrounding commercial properties are vacant. The few properties that are improved have small home occupations and craft stores. Which highest and best use test constraint is exemplified in this situation?
Financially feasible
The appraiser must not only assess the level of demand at the time of the appraisal, but also
Forecast future demand
Knowledge of the property's ______________ is essential to an appraisal.
Functionality, Compatibility with its surroundings, & Physical characteristics
Which type of analysis forecasts demand based on specific information, and may include the appraiser using capitalization rates to forecast the value of the subject?
Fundamental analysis
Market delineation defines the _____________ demand for a specific property.
Geographic
What type of value includes personal property, trade fixtures, and business value along with the real property?
Going-concern value
A local municipality issues a moratorium on building permits because of concerns that local sewage systems are draining into a local waterway. This is an example of a/an _____________ force affecting real estate.
Governmental
Stairways, hallways, and storage areas would be included in _________.
Gross building area
A 20-story office building would be considered a ___________ office building.
High-rise
If valued under its present use, a legal non-conforming use will have a value that is _________ than its value under the current zoning.
Higher or lower
According to the article Land Valuation in the Raw, what are the two parts of the valuation process?
Highest and best use analysis, applying the appropriate valuation technique
A parcel of raw land is being analyzed. A housing advocate believes the best use is as a low-income housing project, while a commercial developer believes a strip shopping center is the best use. What principle does this demonstrate?
Highest and best use is often a matter of perspective
Which use indicates the greatest land value for the subject property?
House of worship
A demand analysis might include all of these activities, EXCEPT:
Identifying seller motivations
Which statement is TRUE regarding valuation of land and improvements?
Improvements are valued based on their contributing value to the land.
Benefits to the property owner for placing a conservation easement on the property include:
Income tax deduction & Reduction in property taxes
Any factor or amenity that increases net income to the owner without sacrificing tenant satisfaction will:
Increase the property's value
A Level A market analysis would be considered:
Inferred analysis
Which type of analysis is also known as trend analysis?
Inferred analysis
Which type of analysis is not specific to a particular subject property?
Inferred analysis
A farm is no longer financially feasible to operate. The property owner rents the property to recreational campers, with the long-term goal of developing the land as a residential subdivision when public sewage becomes available in the next 3-4 years. What would the property's current use as a campsite be considered?
Interim use
A property adjacent to a residential subdivision is used as a farm, because public sewage is not available. The local municipality announces that public sewage will be available to the property within 3-4 years. The property's current use as a farm would be considered a(n) ___________.
Interim use
The use to which a property is put until the time it achieves its eventual highest and best use is
Interim use
Which of the following is NOT a type of market condition study?
Investment Analysis
Members of NCREIF include:
Investment managers, CPAs, & Consultants
__________ typically require a market analysis to determine if a project will be financially successful.
Investors
Which of the following might be a consideration of a market analysis?
Is the market analysis too optimistic without potential forewarning?
According to NCREIF, development of demand analysis for industrial properties:
Is the same as office demand analysis
Why can it be important to report the value of the property both under its current zoning and under a prospective future zoning change?
It gives the owner important information that can be used in the decision to seek rezoning.
Why is the absorption rate useful in an appraisal?
It helps determine supply and demand trends
Why is a market analysis essential to an appraisal?
It incorporates primary and secondary data which is used in determining highest and best use.
What happens to the value conclusion if an appraiser's highest and best use analysis is inaccurate?
It is not credible or appropriate
In analyzing the highest and best use of a vacant land property located in an area where there is a significant oversupply of similar properties:
It is possible that the highest and best use of the property is to remain vacant
What is the problem in determining what is legal?
It is subject to manipulation by local officials
According to David Lennhoff and Richard Parli, why should the term "adequately supported" be removed from the definition of highest and best use?
It is too weak and vague
What happens when a real property improvement reaches the end of its economic life?
It no longer contributes value to the site
What are the observations and conclusions regarding abandoned, dilapidated housing in the city?
It should be razed, and the land banked
In calculating a capture rate, what must an appraiser consider if the subject property is superior to its competition?
It will "steal" occupants from existing facilities
An improved property is rented for $2,000 per month. Through research, the appraiser is able to determine that $1,200 of the income is attributable to the building. The remainder ($800 per month) is attributable to the
Land
An improved property is rented for $2,000 per month. Through research, the appraiser is able to determine that $1,200 of the income is attributable to the building. The remainder ($800 per month) is attributable to the:
Land
An appraiser is trying to compile a list of potential legal uses for a piece of vacant property. What problem might he encounter in making this determination?
Legality is subject to manipulation by local officials
An appraiser is analyzing an improved property and discovers that its existing use is "grandfathered." Which highest and best use test constraint is being considered?
Legally permissible
An appraiser is considering the subject property's deed restrictions when analyzing its highest and best use. Which highest and best use test constraint is being considered?
Legally permissible
__________ typically require a market analysis to determine if a project will be financially successful.
Lenders
According to NCREIF, additional knowledge leads to a better appraisal product, and also to:
Less liability
Which level of market analysis would be the least detailed?
Level A
Which level of market analysis is focused on demonstrating demand for the property type based on trends in the area and general development patterns?
Level B analysis
Which level of market analysis would be the most detailed?
Level D
An urban land use study would likely be an example of which level of market analysis?
Level D analysis
In the valuation of a local convenience store near a residential subdivision, the _________ would be the most significant factor in the valuation.
Local economy
__________ use a market analysis to determine public acceptability and the financial impact upon the community.
Local governments
Which branch of economics deals with performance, structure, and behavior of the national or regional economy as a whole?
Macroeconomics
A government agency is renting space in a multi-tenant office building. The agency is more likely to be considered a _________ tenant.
Major
A ________________ studies supply and demand for a specific property in a specific market
Market analysis
According to the study, what is the process of gathering, analyzing, and observing data about the interaction of supply and demand?
Market analysis
What type of market condition study analyzes supply and demand for a specific property type in a particular market, which helps determine the highest and best use of the property?
Market analysis
What type of analysis defines the geographic demand for a specific property?
Market delineation
A highest and best use opinion is required in ____________ appraisals.
Market value
Which of these would be MOST important when determining the optimum use of a property?
Market value definition
What type of market condition study often begins with a vast macroeconomic market analysis and then reduces the analysis to the individual submarket?
Marketability analysis
An appraiser is analyzing a parcel of land in a community which has no zoning ordinance, and very little land-use regulation. The appraiser determines that for residential purposes, the site is worth $50,000. As a multi-family building site, it is worth $60,000. As a retail commercial site, it is worth $65,000. Which highest and best use test criteria is exemplified in this situation?
Maximally productive
How might an appraiser explain the extent to which individual data values have departed from the mean?
Measures of dispersion
A 10-story office building would be considered a ___________ office building.
Mid-rise
NCREIF is the:
National Council of Real Estate Investment Fiduciaries
In the valuation of a regional electrical power co-generation plant, the _________ would be the most significant factor in the valuation.
National economy
Market analysis should relate and focus the ___________ to the value of the subject property.
National, regional, and local information
Which technique estimates a retail trade area after an investigation of population, income, and socioeconomic status?
Nelson technique
A vacant, 2-acre residentially zoned property is worth $45,000 as a residential site. If it could be rezoned to commercial, it would be worth $25,000 per acre. The cost of the rezoning will be $8,000 to $10,000. Would the rezoning be financially feasible?
No
Is Alternative 3, which proposes to raze the improvements and subdivide into two 2.5-acre homesites, considered financially feasible?
No
Is Option 3 (raze and redevelop) considered financially feasible?
No
Is razing and removing the home considered financially feasible?
No
Is the renovation of the home for single-family use considered financially feasible?
No
An appraiser is valuing a single-family home situated on a commercial site. The appraiser values the home using comparable sales of single-family residences in residential areas, and then makes a $50,000 adjustment to each sale for the value difference between the subject's commercial site and the comparable's residential site. Is this appropriate?
No, because the land and improvements are valued for different uses
The steps in the scientific method are:
Observation, formulation, prediction, analysis
If no soil borings have been done, how might an appraiser obtain information regarding the suitability to support construction on a property?
Observe the development on neighboring parcels or Consult soil maps from the Department of Agriculture
Market segmentation defines and subdivides a large homogenous market into segments, such as:
Office, Residential, and Lodging
Based on the information provided in the case study, which option represents the highest and best use of the property as improved?
Option 2 - modernize
When appraising office buildings, an appraiser often categorizes these buildings into classes (Class A, Class B, Class C). This is example of_________ measurement.
Ordinal
A non-conforming use may be an:
Over-improvement or Under-improvement
In an appraisal, why is it important to identify the likely motivation of a purchaser?
Owners/occupants typically pay more than investor purchasers
A question regarding availability of utilities would be applicable to which highest and best use test constraint?
Physically possible
When appraising a piece of industrial property, an appraiser believes a property's topography affects the types of buildings that can be placed on it. Which highest and best use test constraint is exemplified in this situation?
Physically possible
Which would be an IMPROPER order for applying the four test constraints for highest and best use?
Physically possible, financially feasible, maximally productive, legally permissible
Which step in the scientific method relates most closely to the research and analyses in an appraisal assignment?
Prediction
When preparing a report of a market study, an appraiser should:
Provide a location map showing the subject property and its competitors
What is the objective of this analysis?
Provide market-based information to enable city officials to develop future plans
____________ is the study of consumer behaviors within a market, segmenting by factors such as level of education, income, occupation, familial status, age, sex, race, etc.
Psychographics
In most markets, multi-family investors are more likely to:
Purchase an existing building
When analyzing an apartment building, an appraiser notes that it is located in a busy urban location, near a bus line. This is an example of _______ data.
Qualitative
What kind of data is observed, but not measured?
Qualitative data
When analyzing an industrial building, an appraiser notes that it has 25,000 square feet. This is an example of _______ data.
Quantitative
What kind of data is measured?
Quantitative data
USPAP requires an appraiser to consider land use regulations as well as:
Reasonably probable modifications of land use regulations
Appraisers of what types of properties can use census information in their analyses?
Restaurants, Multi-family properties, & Self-storage facilities
What is the highest and best use of the subject property?
Retail use within the next 3-5 years
If we opine that the highest and best use of this property is for a house of worship building site, which comparables should the appraiser use in the sales comparison approach for the subject property?
Sales 7-9 (House of worship site sales)
A ____________ is a subset of the population.
Sample
When using the U.S. Bureau of Labor Statistics as a source for employment and wage estimates, an appraiser should be aware that ____________ are not included in the estimates.
Self-employed persons
An interim use is typically of ________ duration, often _________.
Short, 5 years or less
A convenience store conforms to zoning, but is located in a rural residential area. What term best describes this use?
Single use
Which of these improved properties is LEAST likely to require a going-concern value as a component of an appraisal?
Single-family home
An appraiser is valuing a six-unit property, and is having trouble obtaining and verifying expense data. Why is market-based income and expense data often more difficult to obtain on a smaller income property?
Smaller properties are more often managed by the owner, and management quality may be lacking
Habitat for Humanity is what kind of enterprise?
Social
The four test constraints of highest and best use include all of the following EXCEPT:
Socially acceptable
Data that relates directly to the subject property is identified as:
Specific data
An appraiser is performing a market analysis to determine if a new office building is needed in an area. The appraiser plots existing office buildings, delineates where workers live, and the current drive times to existing office buildings. This is an example of ____________.
Spotting technique
When reporting an extraordinary assumption, the appraiser must state the use of the extraordinary assumption and ____________.
State that its use might have affected the assignment results
What helps appraisers understand and apply accurate analysis in the evaluation of real estate?
Statistical techniques
According to NCREIF, what is an example of "hidden" space?
Sublet space
Which principle applies equally to residential and commercial properties?
Substitution
Examining and analyzing current competitive properties and their characteristics, as well as proposed or potential future development, is part of which step in the Six-Step Process?
Supply Analysis
To make accurate predictions based on census data, real estate professionals should:
Take local and economic impacts into consideration
Who is vital in determining the financial feasibility of a property?
The appraiser
What is the result of your analysis regarding the supply of housing units compared to the demand?
The community needs an additional 532 housing units
An appraiser is analyzing an improved property, and is considering that the building may be at the end of its economic life. In determining highest and best use, what should the appraiser consider?
The cost to raze the building
If it is not physically possible to develop a property:
The highest and best use may be for the property to remain vacant
What is the typical result when an improvement does not represent the highest and best use of the land as vacant?
The improvement suffers functional obsolescence
Why is salvage value becoming more important for appraisers?
The increased use of recycled materials in buildings
In multi-tenant office buildings, rental rates are determined by __________.
The location of space in the building
Which phrase best describes equilibrium price?
The market price that is set by interaction of supply and demand
What is the principal factor considered by an investor purchasing a multi-family property?
The net income
Even if the subject property is not subject to an interim use, an appraiser should be aware of:
The possibility of interim uses of the comparable sales
In a feasibility analysis, what is concluded if the cost of a proposed project (including entrepreneurial profit) exceeds value?
The project is not financially feasible
What is the appraiser's opinion of site value based on?
The property's highest and best use
What factor is most important in valuing an apartment building?
The quality & quantity of the income
The value of a multi-family property is influenced by two factors - the owner's desire to keep the property, and:
The tenant's desire to pay rent
What is the "heat island effect"?
The tendency for urban areas to retain the heat of the day in the pavement and hardscape
The definition of highest and best use requires that the use be maximally productive. What does this mean?
The use produces the maximum land value
The definition of highest and best use requires that the use be maximally productive. What does "maximally productive" mean?
The use produces the most income to the land.
If there are 50 condominium units for sale in a market area, and units are selling at a rate of five per month:
There is a 10-month supply of inventory currently on the market
What is the difference in the test constraints between analyzing the highest and best use of an improved property and a vacant site?
There is no difference; the process is essentially the same
When reporting the results of highest and best use analysis in an appraisal report:
There is no generally-accepted format to be used
The definition of highest and best use requires that the use be appropriately supported. What does this mean?
There is sufficient demand to ensure financial feasibility.
Which of these statements is FALSE about a property's optimum use?
There may be more than one optimum use at a given time.
According to the required reading, how many definitions of highest and best use appear in The Appraisal of Real Estate?
Three
Typically, how does Habitat for Humanity obtain building sites?
Through receiving private and local government donations
When analyzing physical possibility, what should an appraiser consider?
Topography
An appraiser cannot change the authority of a local jurisdiction to impose a zoning ordinance or to allow a rezoning.
True
Census information can help an appraiser formulate a highest and best use analysis.
True
Consideration of rumors can be important in the valuation of real property.
True
Despite their non-conformity with the neighborhood, in most cases, single use properties conform to zoning.
True
It is common that buildings in average condition are razed just because the owner or developer desires a more productive or intensive use.
True
It is possible that a property may have two different highest and best uses - one as vacant, and another as improved.
True
The city's inventory of available, existing retail property is functionally obsolete.
True
There are several ways in which an appraiser can estimate demand.
True
Typically, Habitat for Humanity building sites are in-fill lots that do not represent commercially viable development opportunities for private builders.
True
When analyzing a property's highest and best use, a valuation professional should ignore the conclusions of development proposals by architects or land planners, and provide an objective analysis.
True
As vacant, what would be the highest and best use for the subject property?
Two 2.5-acre homesites
A farm is no longer financially feasible to operate. The property owner rents the property to recreational campers, with the long-term goal of developing the land as a residential subdivision when public sewage becomes available in the next 3-4 years. What would the property's eventual use as a residential subdivision be considered?
Ultimate highest and best use
A non-conforming single-family residence located in a commercially-zoned area would be considered an:
Under-improvement
The four agents of production DO NOT include:
Value
A property owner makes a special request to the local municipality to allow him to expand his commercial enterprise. The municipality grants his request; however, the request applies only to the current owner for the specific purpose requested. What is this called?
Variance
Measures of central tendency include all of the following EXCEPT:
Variance
The general relationship between legally permissible, physically possible, and financially feasible uses can be depicted in a:
Venn diagram
How might an appraiser guard against inaccurate data being used in a market analysis?
Verify data, to the extent it is possible
A property is a legal non-conforming use as a retail store. The local municipality states that if the property is sold, it is no longer permitted to be used as a store, and must be converted to residential use. What question would an appraiser need to consider in appraising this property?
Who is the most likely buyer?
An opinion of highest and best use needs to answer all of these questions EXCEPT:
Why is this highest and best use analysis necessary?
What is the fundamental question to be answered in order to determine financial feasibility?
Will the site as improved have a market value that justifies the cost and provides a sufficient entrepreneurial return?
A vacant, 2-acre residentially zoned property is worth $45,000 as a residential site. If it could be rezoned to commercial, it would be worth $35,000 per acre. The cost of the rezoning will be $8,000 to $10,000. Would the rezoning be financially feasible?
Yes
Does it appear to be feasible to construct new housing units in Sylvan Beach?
Yes
Is Alternative 2, which proposes to subdivide the property into two 2.5-acre sites and keep the improvements, considered financially feasible?
Yes
Is Option 2 (modernize) considered financially feasible?
Yes
Is the City of Ashland considered an employment hub?
Yes
Is the inventory of office and industrial space in the City adequate to serve its current and future needs?
Yes
Would conversion to mixed commercial/apartment use be considered financially feasible?
Yes
Would conversion to multi-family use be considered financially feasible?
Yes
Who is most likely to move into a vacant storeroom in downtown Ashland?
a small local merchant
While the City of Ashland is losing owner occupants in its housing, the competitive market is ___________.
adding owner occupants to its housing
Who would be the most likely purchaser for this property?
an investor who would maintain the current use as rental apartments
What analytical methodologies have been used in this analysis?
basic quantitative methods
What is the main competition for households in the Ashland MSA?
between choices in the City versus choices outside the City
Market analysis is a:
both of these
What is reflected by the lack of residents in the age 20-24 age group in the City of Ashland?
children have left home for school and/or employment in other locales and will not return to Ashland
Which of these is NOT a factor to be considered when defining a retail market?
consumer interest rates
What is the third-largest category of employment in the City of Ashland?
durable goods manufacturing
Where is the need for future office and industrial space in Ashland projected to come from?
enterprises already located in the community
How should revitalization and redevelopment efforts be focused?
entire neighborhoods
What is the analyst's projection for retail sales in Ashland?
increases in sales volumes will probably only keep pace with inflation
What has been the population trend in the City of Ashland between 1990 and 2000?
it has declined
What effect does vacant, functionally obsolescent retail space have on the market for retail property?
it is an impediment
What is the analyst's conclusion regarding the competitiveness of the City's housing stock?
it may not be competitive in the local marketplace
What is necessary in order for the City to maintain its economic health?
it must compete aggressively even if it means an adjacent community may lose
What is the significance of the segment of the population between ages 25 and 54?
it represents the bulk of the workforce
What is the significance of the age bracket of the population between ages 25 and 34?
it represents the upwardly mobile segment, and those in their family formation years
What is the analyst's projection for the market for office and industrial space in the City of Ashland?
it will remain stable
How does the study characterize the opportunities for new residential development within the city of Ashland?
limited
What is a fundamental prerequisite to the future economic health of the City?
maintaining and/or enhancing the employment base
According to the study, what is the key to competitiveness in the local marketplace in the future?
market ready retail land
How does the study suggest the city limit the number of single-family homes that are converted to multi-family rental properties?
modifications of zoning codes
According to the study, where should the introduction of new housing units in the City be focused?
neighborhoods where owner-occupancy is relatively high
What is the analyst's conclusion about preserving buildings that have a low probability of productive reuse?
preserving these buildings runs counter to all economic development objectives
How might the City introduce new housing units into its inventory?
redevelopment of sites that may currently be improved with obsolescent buildings
If a vacant industrial building is considered a "worn out empty building", what does the analyst recommend be done with it?
remove it from the landscape
The primary conclusions of this market analysis focus on vitality maintenance and ___________.
selective "right sizing" of inventory of properties
What is a crucial prerequisite in the expansion of the office and health care market segment?
the ability to utilize existing space or develop new space
What factor contributes to the intensity of Ashland's retail hub?
the intersection of two major highways
Which comparable sales should be used for the subject?
the ones that were purchased for use as rental apartments
What is the analyst's conclusion about the rate of population decline in the City of Ashland from 1990-2000 as compared to 1980-1990?
the rate of population loss has slowed between 1990-2000 as compared to 1980-1990
A parcel of land is zoned for either restaurant or retail use. Constructing a $450,000 restaurant building on the site would result in a property value of $725,000. Constructing a $750,000 retail strip center would result in a property value of $1,000,000. What is the highest and best use of this property?
the restaurant building because it produces the highest land value
Which of these is NOT an area of market influence?
voting district
Every market analysis takes place:
within the context of a defined study time period