Section 5 - Estimating Value

What's the approximate price per square foot of a home that's 1,492 square feet, and was purchased for $150,000?

$100

Using the income approach, determine the value of a property that has a net operating income of $15,000 and a cap rate of 15%.

$100,000

A buyer with a 15,000-acre ranch is considering purchasing adjacent land to pasture a herd of cattle. The perimeter of the pasture measures 89,760 feet. How much will it cost the buyer to enclose the pasture with a barbed wire fence if the fencing costs $1.48 per foot?

$132,844.80

The GRM for Sunny Hills is 147. If a three-bedroom, one-bath house in Sunny Hills rents for $820 monthly and sold for $125,000, what is the suggested value of a house that leases for $1,000 monthly based on the GRM?

$147,000

A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value?

$200,000

Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income?

$345,103

What's the estimated value of a 3,240-square-foot home that's comparable to one with a price per square foot of $285?

$923,400

Which of the following statements about appraisal activities is true?

Appraisers' activities are highly regulated, especially when a federally related transaction is involved.

What type of value is of interest to taxing authorities?

Assessed value

Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?

Busy street

Who typically performs an appraisal?

Certified appraiser

Which of the following is defined as what it would take to recreate that property if it disappeared off the face of the earth today?

Cost

Fewer buyers in a higher price range would create what kind of pressure on housing prices?

Downward

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

Financing terms and cash equivalency

Another term for a valuation is ______.

Formal appraisal

Rico is an appraiser who is performing a valuation on a property. What's another term for what Rico is doing?

Formal appraisal

Homes in a new home development have been built with a floor plan that doesn't appeal to today's buyers. In a cost approach valuation of the houses, what sort of depreciation will the appraiser apply?

Functional obsolescence

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property.

What does the income approach to value rely on when valuing properties that are five or more units?

Gross income multiplier

An investor is analyzing a three-unit property by looking at its ability to produce future income. Which of the following would most likely be used to determine this value?

Gross rent multiplier

Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated

Which of the following is the price a lender believes the property will bring at a foreclosure sale?

Mortgage value

The best way to start comparative market analysis data collection is to use properties that sold within which timeframe?

No later than three to six months ago

Trudy loved her new neighbors. The investor couple bought every available house on Trudy's block and was working hard to renovate them and increase their value. Trudy decided that she'd sit back, relax, and let her property's value go up, too, thanks to ______.

Progression

Many market conditions impact housing prices. Which of the following is a true statement?

Reduced consumer confidence makes new buyers wary of purchasing and homeowners hesitant to trade up.

Which economic principle says that a property's value is determined by what it would cost to purchase a similar property?

Substitution

A fire destroyed Meredith's house. Meredith contacted her insurance company, and she was shocked to learn her insurance policy didn't fully cover what she paid for the property. How does the insurance company determine the replacement value of her home?

The amount it would cost to completely replace her home

In pricing a property, what might expired listings tell the real estate professional?

The price at which a property won't sell

There are a lot more sellers than buyers in the current market. How does this demand influence value?

Value is pushed downward.

An investor is analyzing a property by looking at its ability to produce future income. The

property is a 10-unit apartment building. Which of the following would be used to determine this value? Gross income multiplier