Valuation and Market Analysis

Which of the following would one normally depreciate? A » A building only B » Land only C » Land and a building D » The difference between land and a building

A » A building only

Which of the following would be considered functional obsolescence? A » A poor lay-out design B » Termite damage C » Wear and tear D » Adverse economic conditions

A » A poor lay-out design

Capitalization refers to which valuation approach? A » Income B » Market data C » Cost D » Gross rent multiplier

A » Income

In the cost approach to value, which of the following would LEAST affect depreciation? A » Land value going down B » Physical deterioration to a building C » Functional obsolescence on a property D » Exterior obsolescence where a property is next to a toxic dump site

A » Land value going down

Three properties all built side by side and identical to each other were for sale. Assuming constant demand, which one would sell for the lowest price? A » The one sold first B » The one sold second C » The one sold last D » There is not enough information to determine the answer

A » The one sold first

A person may depreciate property for tax purposes when the property is: A » a rental property held for investment B » sold C » a second home D » exchanged for a smaller property

A » a rental property held for investment

An appraiser considers the conditions of a neighborhood to determine: A » economic obsolescence B » functional obsolescence C » curable obsolescence D » physical obsolescence

A » economic obsolescence

Which approach to value would an appraiser be using when one adds the land value to the depreciated replacement cost of a property? A » Market Data B » Cost C » Income D » Gross Rent Multiplier

B » Cost

Which approach to value would be best for an apartment complex? A » Market data approach B » Income approach C » Cost approach D » Sales comparison approach

B » Income approach

Which of the following indicates functional obsolescence? A » Deterioration of the foundation walls B » Inherent inadequacies of the property C » Exterior surroundings lowering the value D » It is caused by deferred maintenance

B » Inherent inadequacies of the property

An appraiser should lend most validity to the market data approach on which of the following properties? A » Oil refinery B » Vacant land C » Gas station D » Hotel

B » Vacant land

The best way to estimate value for a residential property is with: A » the owner's opinion B » an appraisal C » what the owner originally paid factoring in a multiplier D » an estoppel certificate

B » an appraisal

When an owner takes the original cost of real property and takes tax deductions over the life of the property, this is referred to as: A » appreciation B » depreciation C » physical life D » economic life

B » depreciation

The purpose of an appraisal is to estimate: A » market price B » market value C » book value D » assessed value

B » market value

When a real estate agent is preparing a competitive market analysis (CMA) for a client, how many comparable properties would make for a good evaluation of value? A » 1 other B » 2 C » 3-5 D » A minimum of 5

C » 3-5

What is the best way to determine a list price for a residential property? A » Mortgage value B » Assessed value C » Competitive market analysis (CMA) D » Appraised value

C » Competitive market analysis (CMA)

In appraising a property, which of the following items would have the greatest impact on value? A » Method of determining square footage B » Method of compensation for the appraiser C » Local economic conditions D » The assessed valuation

C » Local economic conditions

Which is usually closest to market value? A » Replacement cost B » Reproduction cost C » Purchase price D » Assessed value

C » Purchase price

In using the cost approach to value on an older building, which type of cost would be best? A » Reproduction cost B » Reasonable cost C » Replacement cost D » Reserve cost

C » Replacement cost

Which approach to value is best to use in estimating the value of vacant land? A » Income approach B » Cost approach C » Sales comparison approach D » Rent approach

C » Sales comparison approach

Some out-of-towners had inherited some property. They contacted a local broker to sell the property. The out of town owners wanted to list the property for $50,000. The broker knew that similar properties in that area were selling for $80,000. What should the broker do? A » Buy the property personally because of the profit potential B » List the property for $50,000 as a broker must be obedient to a client C » Suggest a market analysis for the seller to estimate the current value of the property D » Require a professional appraisal be done before listing the broker

C » Suggest a market analysis for the seller to estimate the current value of the property

A house with outdated plumbing fixtures would be an example of: A » physical deterioration B » economic obsolescence C » curable functional obsolescence D » incurable functional obsolescence

C » curable functional obsolescence

A buyer purchases three properties. After the buyer combines all three properties, the entire parcel is now more valuable than before. This is called: A » being in the right place at the right time B » increasing returns C » plottage D » anticipation

C » plottage

The direct sales or market data approach is based upon the principle of: A » competition B » anticipation C » substitution D » conformity

C » substitution

The principle of progression in the selling of a property would be best illustrated when the other homes in the neighborhood: A » had adequate maintenance and repairs B » are not as nice as the sold property C » were nicer than the sold property D » were mostly rental properties

C » were nicer than the sold property

What is it called when a person takes the cost of purchase and then recaptures this amount? A » A sinking fund B » Escrow C » Profit D » Depreciation

D » Depreciation

What does an appraisal actually do? A » Assure value B » Guarantee value C » Determine value D » Estimate value

D » Estimate value

What is the purpose of an appraisal? A » This is a scientific inexact way of determining value B » To give an average value derived from various sources C » To give a determination of value D » To give an estimate of value

D » To give an estimate of value

Which of the following properties would an appraiser NOT depreciate? A » Improvements on real property over 50 years old B » Improvements on real property less than 10 years old C » Rental property of less than 5 rental units D » Vacant land to be used for commercial property

D » Vacant land to be used for commercial property

A property was in an area with a lot of smoke and soot from nearby factories. It suffers from: A » physical depreciation B » functional obsolescence C » locational depreciation D » economic (external) obsolescence

D » economic (external) obsolescence

A salesperson, in doing a competitive market analysis (CMA) for a seller, should NOT tell the seller: A » what the property might sell for in price B » the probable list price for the area C » the maximum selling price D » that this is a professional appraisal

D » that this is a professional appraisal