Apprasial 2

The Principle of Super adequacy is the principle of _____________. A. Over-improvement B. Timing C. Highest and best use D. Conformity

Rationale: The correct answer is A. Over-improvement. Over-improvement is also called functional obsolescence. These over-improvements to the real property is rendered useless or non-functional due to its higher-than-necessary use, for which its cost will be greater than its perceived market value (example: a newly constructed custom home in a neighborhood of small rental homes).

What principle causes the prices of real property to go up or down? A. Principle of supply and demand B. Principle of progression C. Principle of over improvement D. Principle of timing

Rationale: The correct answer is A. Principle of supply and demand. Demand is characterized as necessity of product and the capacity to purchase the given product. Supply is made up of inventory which is capable of being bought and sold. If demand is greater than supply, prices increase. If supply is greater than demand, prices decrease. In balance, prices are stable.

The Appraisal Institute, American Society of Appraisers, and The National Association of Independent Fee Appraisers offer their members: A. Various designations B. Various licenses C. Various certifications D. All of the above

Rationale: The correct answer is A. Various designations. These non-profit organizations offer its membership various designations to both identify and designate their level of attainment and/or competence.

Are appraisers used in the condemnation process? A. Yes, they are. B. No, they are not. C. They are used only if the property has been acquired by a lender. D. They are used in emergency situations.

Rationale: The correct answer is A. Yes. Yes, the value of the property must be determined by an appraiser if property is being taken via eminent domain through the process of condemnation.

Appraisals _________________ someone in making a decision. A. Defer B. Assist C. Challenge D. Deter

Rationale: The correct answer is B. Assist. Appraisals can help people make decisions about buying and selling.

The continuing effects of economic, social, and governmental forces on the property and its environment is the principle of: A. Progression B. Change C. Timing D. Anticipation

Rationale: The correct answer is B. Change. Although change is inevitable and continuous, the process may be gradual and not easily discernable. At other times, however, change may be abrupt and frustrating. One thing for certain. Change is constant in inevitable.

What is the perception that real property is a continually appreciating asset? A. Principle of change B. Principle of timing C. Principle of anticipation D. Principle of progression

Rationale: The correct answer is C. Principle of anticipation. In the real estate market, the current value of a property usually is not based on its historical prices or the cost of creation. Value is based on market participants' expectations of future acquisition benefits. The value of an owner-occupied property is based primarily on expected advantages, amenities, and pleasures of ownership and occupancy.

Homeowners can use appraisers for all of the following reasons EXCEPT: A. When the owner needs to insure the house B. To dispute property tax assessments C. To assist in a feasibility study prior to a renovation or remodel D. To circumvent the lender

Rationale: The correct answer is D. To circumvent the lender. Homeowners would have no purpose to try to circumvent a lender.