Ch. 16 Appraising and estimating market value

If the monthly rent of a property is $3,000, and the gross rent multiplier (GRM) is 80, what is the value of the property?

$240,000

If net income on a property is $20,000 and the cap rate is 5%, the value of the property using the income capitalization method is...

$400,000

A roof of a property cost $10,000. The economic life of the roc is 20 years. Assuming the straight-line method of depreciation, what is the depreciated value of the roof after 3 years?

$8,500

In appraisal, loss of value in a property from any cause is referred to as...

depreciation

The first two steps in the cost approach are to estimate the value of the land and the cost of the improvements. The remaining steps are...

estimate depreciation, subtract depreciation from cosy and add back the land value

The steps in income capitalization approach are:

estimate gross income, multiply times the gross income multiplier

An office building lacks sufficient cooling capability to accommodate modern computer equipment. this is an example of..

functional obsolescence

As a component of real estate value, the principle of substitution suggest that...

if two similar properties are for sale, a buyer will purchase the cheaper of the two

A home is located in a neighborhood where homeowners on the block have failed to maintain their properties. This is an example of...

incurable economic obsolescence

One weakness of the cost approach for appraising market value is that...

market value is not always he same as what the property cost

The principal shortcoming of the gross rent multiplier approach to estimating value is that...

numerous expenses are not taken into account

Highest and best use of a property is..

physically and financially feasible, legal, and the most productive

Net operating income is equal to...

potential gross income minus vacancy and credit loss minus expenses

The cost of contracting a functional equivalent of a subject property is known as...

replacement cost

The steps in the market data approach are...

select comparable properties, adjust the comparable, estimate the value

A significant difference between an appraisal and a broker's opinion of value is...

the broker may not be a disinterested party

The concept of market value is best described as...

the price that a willing, informed, and unpressured seller and buyer agree upon for a property assuming a cash price and the property's reasonable exposure to the market

In the sales comparison approach, an adjustment is warranted if...

the seller offers below-market seller financing

A notable weakness of the sales comparison approach to value is that...

there may be no recent sale price data in the market

The income capitalization approach to appraising value is most applicable for which property type?

underdeveloped land

To complete the sales comparison approach, the appraiser...

weighs the comparables