Valuation - Quiz 2 (Bob Brooks)
You would determine living area of a home by using: Select one: a. Exterior dimensions excluding garage. b. Exterior dimensions including garage. c. Interior dimensions from inside walls. d. Interior dimensions of rooms and halls.
a. Exterior dimensions excluding garage.
The market data approach is based on the principle of: a. Substitution b. Change c. Anticipation d. Conformity
a. Substitution
Jim Jackson wanted to have a 14% return on his building which he valued at $140,000. What kind of monthly rent should be charged? a. $19,600 b. $1,633 c. $1,000 d. $1,233
b. $1,633
Rental income from an office building is now $800.00 less per month since street parking was made illegal. Assuming a capitalization rate of 8%, the building suffered a loss in value of: a. $10,000 b. $120,000 c. $100,000 d. A change in rents doesn't affect value.
b. $120,000
The investor's rate of return is the: a. Debt Service b. Capitalization Rate c. Rent Multiplier d. Net present value.
b. Capitalization Rate
A method used by brokers and salespeople to determine the value of a property in order to place it on the market is: a. Income approach b. Competitive market analysis c. GRM d. Cost approach
b. Competitive market analysis
All of the following are methods of appraising EXCEPT a. Income approach b. Competitive market analysis c. Cost approach d. Market data approach
b. Competitive market analysis
A separate value for the land must be computed for: a. Market approach b. Cost approach c. Capitalization approach d. Income approach.
b. Cost approach
The best method for appraising new properties or properties that are unique is the: a. Income approach b. Cost approach c. Market Data approach d. Assemblage approach
b. Cost approach
Which of the following determines the gross rent multiplier: a. Multiplying the capitalization rate by the net income. b. Dividing the sales price by the gross rents. c. Multiplying the gross rents by the capitalization rate. d. Dividing the net income by the capitalization rate.
b. Dividing the sales price by the gross rents.
When using the income approach, the appraiser divides the capitalization rate into: a. Gross income b. Net income c. Effective gross income d. Operating expense
b. Net income
The art of analyzing and effectively weighing the findings under the cost, market and income approach is: a. Plottage b. Reconciliation c. Assemblage d. Emblements
b. Reconciliation
The annual net income for a property is $30,000. If the owner realizes an 8% return on his investment, the value of the building would be: a. $160,000 b. $315,000 c. $375,000 d. $325,000
c. $375,000
A property with a market value of $140,000 and the annual net income of $19,600 would have a capitalization rate of: a. 12% b. 7% c. 14% d. 17%
c. 14%
Of the following, which applies to the Market Data Approach of appraising? a. Based on how many days the property has been on the market. b. Based on the income the property can produce. c. Based on the principle of substitution. d. Based on the cost to rebuild the building.
c. Based on the principle of substitution.
When an appraiser assigns value to the rights to future income he is most likely using the: a. Market data approach b. Cost approach c. Capitalization approach d. Future forecast approach
c. Capitalization approach
The formula for the cost approach is replacement cost minus _________ plus land value = property value. a. Tax value b. Original cost c. Depreciation d. Sales price.
c. Depreciation
A residential property GRM would use: a. Gross annual rent b. Net monthly rent c. Gross monthly rent d. Net annual rent
c. Gross monthly rent
The first step in the appraisal process is: a. Collection of the data. b. Analysis of the data. c. Inspection of property Incorrect. d. Definition of the problem.
d. Definition of the problem.
To determine the annual gross rent multiplier: a. Monthly rent divided into the sales price. b. Sales price divided by the monthly rent. c. Annual rent divided into the sales price. d. Sales price divided by the annual rent.
d. Sales price divided by the annual rent.