Real Estate Chapter 14

When appraising an income property, which of the following would not be used as a deduction in arriving at the net income? A. Interest on a mortgage B. Vacancy allowance C. Reserve for replacements D. Management costs

A.

The cubic foot, square foot, quantity survey and unit in place method are terms most directly related to real estate:

Appraisal

Which of the following is the best example of functional obsolescence? A. Rotten mud sill B. Massive cornices in an apartment building C. Decline of the neighborhood D. Adverse zoning across the street from the property

B. Old fashion architecture such as massive cornices, would be classified as functional obsolescence.

Which of the following would be considered incurable functional obsolescence when appraising an old store building? A. Inefficient lighting B. Closely spaced internal columns C. Unattractive store front D. No air conditioning system

B. Since it would be quite costly to reconstruct the building to eliminate the internal columns, we would have to consider this incurable functional obsolescence.

A condition that results in a loss in value that would be classified as functional obsolescence would be: A. Physical deterioration B. Adverse zoning in the area C. Outdated design D. Poor maintenance

C.

An appraiser would most likely use a depth table when he is confronted with a value program involving:

Commercial Property

The best appraisal method to use in appraising a city library would be the:

Cost

The period for which an improvement is worth maintaining is defined as its:

Economic life

A flight pattern to a nearby airport was changed so that planes would pass over a single-family residential neighborhood. Any loss in value to these properties caused by excessive noise would be attributed to:

Economic obsolescence

In real estate the word amenities refers to:

Factors of convenience, location, beauty or utility

The reason an appraiser must take a site analysis is to determine the:

Highest and Best Use

When interest rates on real estate loans increase, capitalization rates on income properties tend to:

Increase

The amount of rent that can be charged for space in a commercial building is best determined by:

Market comparison

The appraisal method that is most often used to appraise amenity type properties is the:

Market data method

In the appraisal of residential property, the cost approach is most appropriate in the case of:

New property

Market value would most nearly be reflected by the:

Price at which the buyer and seller eventually agreed upon

Which of the appraisal approaches tends to set the upper limit of value?

Replacement

In appraising a home, one of the key factors which would affect the appraised value is the:

Size of the structure

Two appraisers in appraising the same apartment property used the same net income but one appraiser used a capitalization rate of 9% while the other used a capitalization rate of 7%. The reason the one appraiser used a higher capitalization rate was probably due to:

The higher risk

The gross multiplier method of appraisal would least likely be used when estimating the value of:

Vacant land