CG Exam Prep

Question 62 WHICH OF THE FOLLOWING IS NOT A COMMON ROOF STYLE? 1. GAMBREL. 2. BARREL. 3. HIP. 4. GABLE.

Correct Answer: B Barrel roof style is very uncommon.

Question 452 WHICH OF THE FOLLOWING IS MORE DIFFICULT TO MEASURE? 1. BUILDING COVERAGE RATIO GREATER THAN 10:1. 2. UNDULATING TOPOGRAPHY OF THE SITE. 3. USE OF A LOT AND BLOCK LEGAL DESCRIPTION. 4. ELEVATION OF THE LOT ABOVE SEA LEVEL.

Correct Answer: B The greater the undulations found in the site, the less reliable a measurement of length and width becomes.

Question 151 WHAT IS THE MEDIAN? 1. $41.00 2. $40.00 3. $38.00 4. $37.50

Correct Answer: B The median is a measurement of central tendency that represents the mid point of the data. First, rank the sample in sequential order.

Question 505 WHAT IS THE REMAINING LOAN BALANCE OF A $100,000 MORTGAGE LOAN PAYABLE AT 9.85% PER ANNUM WITH MONTHLY PAYMENTS OF $955.10 FOR 20 YEARS AT THE END OF THE SEVENTH YEAR? 1. $61,613 2. $82,701 3. $83,852 4. $86,222

Correct Answer: C 13 gn 9.85 gi 955.10 PMT PV = 83,852

Question 53 WHICH OF THE FOLLOWING IS NOT A TYPE OF SOIL? 1. LOESS. 2. AEOLIAN. 3. MEADOW. 4. GUMBO.

Correct Answer: C Meadow describes vegetation. Loess is windblown silt, aeolian soil is deposited by wind, and gumbo is soil primarily comprised of clay.

Question 302 AN APPRAISER HAS AN ASSIGNMENT TO VALUE A FOUR-FAMILY RESIDENTIAL APARTMENT UNIT. HOW FAR BACK MUST PRIOR SALES OF THIS PROPERTY BE CONSIDERED AND ANALYZED? 1. ONE YEAR. 2. TWO YEARS. 3. THREE YEARS. 4. FOUR YEARS.

Correct Answer: C Minimum time for researching prior sales of the subject as per USPAP.

Question 252 A COMPARABLE PROPERTY SOLD FOR $50,000.00. THE COMPARABLE PROPERTY IS JUDGED TO BE FIVE PERCENT INFERIOR TO THE SUBJECT PROPERTY DUE TO LOCATION. WHAT ADJUSTMENT SHOULD BE MADE TO THE COMPARABLE PROPERTY? a. -$2,421 b. -$2,500 c. +$2,500 d. +$2,631

Correct Answer: D 1 / .95 = 1.0526316 1.0526316 X 50,000 = 52,631 52,631 - 50,000 = 2,631

Question 616 WHAT IS THE PROJECTED EQUITY PAYBACK PERIOD FOR AN INVESTMENT WITH THE FOLLOWING CHARACTERISTICS? EFFECTIVE GROSS INCOME - $50,000.00 OPERATING EXPENSES - $30,000.00 ANNUAL DEBT SERVICE - $15,000.00 EQUITY - $60,000.00 VACANCY LOSS - $ 2,000.00 a. 4 YEARS. b. 6 YEARS. c. 8 YEARS. d. 12 YEARS.

Correct Answer: D D. 50,000 - 30,000 = 20,000 20,000 - 15,000 = 5,000 60,000 / 5,000 = 12

Question 559 IF THE OVERALL RATE OF CAPITALIZATION EXCEEDS THE MORTGAGE CAPITALIZATION RATE: 1. LEVERAGE IS POSITIVE. 2. LEVERAGE IS NEGATIVE. 3. LEVERAGE IS ZERO. 4. INSUFFICIENT INFORMATION IS GIVEN.

Correct Answer: A

Question 75 THE MOST RELIABLE SOURCE OF DATA FOR AN APPRAISER IS THE: 1. REAL ESTATE BROKER. 2. SELLER. 3. BUYER. 4. APPRAISER'S OWN FILES.

Correct Answer: D Information contained in the appraiser's own files should have already been verified for accuracy when initially researched.

Question 250 AN APPRAISER HAS AN ASSIGNMENT TO VALUE VACANT LAND. SALES COMPARABLE TO THE SUBJECT HAVE BEEN LOCATED AND THE FOLLOWING DATA COLLECTED. BASED ON THE DATA BELOW, WHAT IS THE INDICATED PRICE PER ACRE IF EACH SALE IS EQUALLY WEIGHTED AND NO ADJUSTMENTS ARE NECESSARY? (ROUNDED TO THE NEAREST $100) SUBJECT COMPARABLE A COMPARABLE B COMPARABLE C PRICE $1,675,000 $1,100,000 $1,200,000 DIMENSIONS 575' X 1000' 600' X 1076' 545' X 750' 500' X 1120' a. $107,900.00 b. $101,000.00 c. $98,500.00 d. $96,000.00

Correct Answer: A

Question 330 A MORTGAGE LOAN IN THE AMOUNT OF $70,000 HAS BEEN GRANTED. THE LOAN AMORTIZES MONTHLY WITH EQUAL PAYMENTS. THE FIRST YEAR'S PAYMENT OF PRINCIPAL WAS $120. WHAT PERCENTAGE OF THE PRINCIPAL BALANCE WAS PAID DURING THE FIRST YEAR? 1. .17% 2. .92% 3. 2.01% 4. 3.33%

Correct Answer: A 120 / 70,000 = .001714286

Question 188 ACCORDING TO THE 4-3-2-1 RULE, A STANDARD LOT THAT IS VALUED AT $120,000 HAS WHAT AMOUNT OF VALUE IN THE FIRST QUARTER OF ITS DEPTH? 1. $48,000 2. $36,000 3. $24,000 4. $12,000

Correct Answer: A 120,000 X .40 = 48,000 40% of value in the first quarter, 30% in the second, 20% in the third, and 10% in the last quarter of depth.

Question 481 A HOME WAS BUILT IN JUNE 1922. A TOTAL RENOVATION WAS COMPLETED IN JUNE 2001. AN APPRAISAL IS BEING CONDUCTED IN JUNE OF 2008. WHAT IS THE CHRONOLOGICAL AGE OF THE IMPROVEMENT? 1. 86 YEARS. 2. 79 YEARS. 3. 7 YEARS. 4. CAN NOT BE DETERMINED WITHOUT PHYSICAL INSPECTION.

Correct Answer: A CHRONOLOGICAL AGE (ACTUAL AGE) IS THE DIFFERENCE BETWEEN THE ORIGINAL CONSTRUCTION DATE AND THE EFFECTIVE APPRAISAL DATE. 2008-1922=86

Question 447 WHICH OF THE FOLLOWING IS NOT A GOVERNMENTAL INFLUENCE ON VALUE? 1. CENSUS INFORMATION. 2. POLICE PROTECTION. 3. ZONING. 4. BUILDING CODES.

Correct Answer: A Census data is a social value influence.

Question 301 WHICH OF THE FOLLOWING IS CORRECT CONCERNING ANY CURRENT AGREEMENT OF SALE, OPTION, OR LISTING OF THE SUBJECT? 1. MUST BE CONSIDERED AND ANALYZED. 2. MUST BE IGNORED AS IT WOULD BIAS THE APPRAISAL RESULT. 3. MUST NOT BE CONSIDERED UNTIL THE PROPERTY ACTUALLY SELLS. 4. MUST BE CONSIDERED AND ANALYZED ONLY IF RELATIVE TO THE FUNCTION OF THE ASSIGNMENT.

Correct Answer: A This is a requirement of USPAP.

Question 251 A SALE HAS OCCURRED BETWEEN A FATHER AND HIS DAUGHTER. WHICH OF THE FOLLOWING IS CORRECT? 1. THIS SALE SHOULD NOT BE USED AS A COMPARABLE SINCE IT IS NOT AT ARM'S LENGTH. 2. THIS SALE MAY BE USED AS A COMPARABLE AS LONG AS NO OTHER ADJUSTMENTS ARE REQUIRED. 3. THIS SALE MAY BE USED AS A COMPARABLE IF IT IS LOCATED IN THE SUBJECT'S NEIGHBORHOOD. 4. THIS SALE MAY BE USED AS A COMPARABLE AS LONG AS IT IS TRADED IN THE SUBJECT'S MARKET.

Correct Answer: A This is likely not a real sale, and as a result should not be used.

Question 78 THE PURCHASE AND RENOVATION OR REHABILITATION OF HOUSES IN OLDER NEIGHBORHOODS BY MIDDLE AND UPPER-INCOME PEOPLE THEREBY DISPLACING OLDER RESIDENTS IS REFERRED TO AS: 1. GENTRIFICATION. 2. FENESTRATION. 3. HYPOTHECATION. 4. RESTRUCTURING.

Correct Answer: A This is the definition of gentrification.

Question 534 WHICH OF THE FOLLOWING IS LEAST IMPORTANT IN THE ANALYSIS OF AN OFFICE PROPERTY? 1. LEASE TERMS. 2. MERCHANDISING PROGRAM. 3. PARKING RATIO. 4. TENANT SERVICES.

Correct Answer: B B.

Question 239 AN APPRAISER IS VALUING RESIDENTIAL PROPERTY THAT IS CURRENTLY ZONED COMMERCIAL. THREE COMPARABLE PROPERTIES ARE UTILIZED, ALL WITH RESIDENTIAL ZONING. AN UPWARD ADJUSTMENT IS MADE ON ALL COMPARABLES FOR THE SUBJECT'S COMMERCIAL ZONING. IF THE APPRAISER MAKES NO ADJUSTMENT FOR THE IMPROVEMENT, THE APPRAISER: 1. IGNORED THE PRINCIPLE OF BALANCE. 2. IGNORED THE PRINCIPLE OF CONSISTENT USE. 3. IGNORED THE PRINCIPLE OF CONFORMITY. 4. SHOULD HAVE USED THE COST APPROACH.

Correct Answer: B Without such an adjustment land and improvements would not be valued on the same conclusion of highest and best use.

Question 561 THE PROBABILITY THAT FORESEEN EVENTS WILL NOT OCCUR IS: 1. RISK. 2. UNCERTAINTY. 3. PROBABILITY. 4. CHANCE.

Correct Answer: A

Question 379 A MARKET HAS MANY BUYERS AND MANY SELLERS. IT IS EASY TO FIND COMPARABLE SALE PROPERTIES. THIS MAY BE TERMED A: 1. BUYER'S MARKET. 2. SELLER'S MARKET. 3. BROAD MARKET. 4. LEAN MARKET.

Correct Answer: C With many buyers and sellers, this is the definition of a broad market.

Question 148 WITH WHAT CERTAINTY CAN ANY ONE OBSERVATION BE EXPECTED TO FALL WITHIN ONE STANDARD DEVIATION OF THE MEAN IN A NORMAL DISTRIBUTION? 1. 99 PERCENT. 2. 95 PERCENT. 3. 68 PERCENT. 4. 54 PERCENT.

Correct Answer: C Within two standard deviations is 95%, within three 99%.

Question 238 ANALYZING SALES DATA REVEALS THAT THE FURTHER AWAY FROM THE LAKE, THE LOWER THE VALUE. THIS DEMONSTRATES: 1. CORRELATION. 2. SOCIAL INFLUENCE. 3. TOPOGRAPHICAL FEATURES. 4. LEGAL INFLUENCE.

Correct Answer: A In regression, correlation explains the relationship between a characteristic of a property and total property value.

Question 347 WHICH OF THE FOLLOWING DOES NOT INVOLVE FEE SIMPLE OWNERSHIP? 1. CONDOMINIUM. 2. PLANNED UNIT DEVELOPMENT. 3. TIME-SHARE. 4. LEASEHOLD.

Correct Answer: D Leaseholds belong to tenants, not the property owner.

Question 540 DISCOUNT RATES ARE COMPOSED OF THE: 1. COST OF MONEY AND RISK. 2. COST OF MONEY AND SINKING FUND FACTOR. 3. SINKING FUND FACTOR AND RISK. 4. COST OF MONEY AND RECAPTURE RATE.

Correct Answer: A

Question 560 IN DISCOUNTED CASH FLOW ANALYSIS, THE REVERSION IS TREATED AS A(AN): 1. CASH FLOW. 2. FIXED EXPENSE. 3. OPERATING EXPENSE. 4. PERCENTAGE OF ANNUAL INCOME.

Correct Answer: A

Question 584 ANALYZING A BUSINESS FROM A FINANCIAL POINT OF VIEW, WHICH OF THE FOLLOWING IS USED TO DETERMINE WHETHER A CORPORATION CAN COVER ITS SHORT-TERM OBLIGATIONS? 1. QUICK RATIO. 2. DEBT-TO-VALUE RATIO. 3. OPERATING EXPENSE RATIO. 4. NET INCOME RATIO.

Correct Answer: A

Question 600 THE MARKET INDICATED EQUITY YIELD RATE IS 12%. THE SUBJECT PROPERTY HAS CONTRACT RENT WHICH IS IN EXCESS OF MARKET RENT. THE REMAINING LEASE TERM IS FIVE YEARS. WHAT IS THE APPROXIMATE EQUITY YIELD RATE? 1. 14% 2. 12% 3. 11% 4. 8%

Correct Answer: A

Question 604 WHICH OF THE FOLLOWING IS LEAST IMPORTANT IN THE COMPETITIVE ANALYSIS OF A RETAIL PROPERTY? 1. CEILING HEIGHTS. 2. MERCHANDISING PROGRAM. 3. PARKING RATIOS. 4. TRAFFIC COUNT.

Correct Answer: A

Question 618 WHICH OF THE FOLLOWING FACTORS STRONGLY INFLUENCE THE SELECTION OF DISCOUNT RATES? I. RELATIONSHIP BETWEEN CONTRACT RENT AND MARKET RENT. II. CREDIT RATING OF THE TENANT. III. QUANTITY OF INCOME. a. I AND II. b. II AND III. c. I AND III. d. I, II, AND III.

Correct Answer: A

Question 281 AN INDUSTRIAL BUILDING IS 12 YEARS OLD. TOTAL ECONOMIC LIFE OF THE BUILDING IS PROJECTED TO BE 100 YEARS. ITEMS OF INCURABLE SHORT-LIVED PHYSICAL DEPRECIATION HAVE BEEN IDENTIFIED AND LISTED BELOW. COMPONENT COST NEW LIFE EXPECTANCY ACTUAL AGE FLOORING $880 15 8 ROOF $1,600 20 12 PLUMBING $1,800 30 10 ELECTRICAL $400 30 10 HEATING $5,980 20 10 CARPET $2,200 8 4 IF THE TOTAL REPRODUCTION COST NEW FOR THE IMPROVEMENT IS $100,000, WHAT IS THE ANNUAL RATE OF DEPRECIATION ATTRIBUTED TO THESE ITEMS? a. .52% b. 1.04% c. 6.28% d. 10.00%

Correct Answer: A 8/15=.5333 12/20=.60 10/30=.3333 10/30=.3333 10/20=,50 4/8=.50 .5333x880=469.33 .60x1600=960 .3333x1800=599.99 .3333x400=133.33 .50x5980=2990 .50x2200=1100 469.33+960+599.99+133.33+2990+1100=6252.65 6252.65/100000=.625265 .625265/12=.00521

Question 145 THE SUBJECT NEIGHBORHOOD IS COMPOSED 30 PERCENT OF RENTAL HOMES AND 10 PERCENT OF NEW CONSTRUCTION. BASED ON THE FOLLOWING RESULTS OF THE APPLICATION OF THE THREE APPRAISAL TECHNIQUES, WHAT IS THE INDICATED VALUE? SALES COMPARISON - $79,000.00 COST DEPRECIATION - $76,000.00 INCOME - $77,000.00 a. $78,100.00 b. $77,900.00 c. $77,300.00 d. $77,100.00

Correct Answer: A .30 x 77000 = 23100 .10 x 76000 = 7600 .60 x 79000 = 47400 23100 + 7600 + 47400 = 78100 An example of weighted mean calculation.

Question 240 AN APPRAISER ESTIMATES FUNCTIONAL OBSOLESCENCE OF FIVE PERCENT, PHYSICAL DEPRECIATION OF EIGHT PERCENT, AND EXTERNAL OBSOLESCENCE OF THREE PERCENT. WHAT IS THE TOTAL ACCRUED DEPRECIATION? 1. 15.22% 2. 16.00% 3. 84.00% 4. 84.78%

Correct Answer: A 1 - .08 = .92 .92 X .05 = .046 .92 - .046 = .874 .874 X .03 = .02622 .874 - .02622 = .84778 1 - .84778 = .1522 Follows the sequence of measuring depreciation. The cost is assumed to be one dollar with the cost reduced as each measurement of depreciation is taken. The reduction in cost is necssary to avoid double counting depreciation.

Question 166 A 110 X 150 FOOT WAREHOUSE IS TO BE CONSTRUCTED WITH EXTERIOR WALLS 25 FEET HIGH AND INCLUDES 10% OFFICE SPACE. INTERIOR CEILINGS ARE TO BE 22 FEET HIGH WITH A CLEAR SPAN. THE ROOF IS FLAT. CONSTRUCTION COSTS BASED ON THE INTERIOR OF SIMILAR WAREHOUSES BUT WITHOUT OFFICE SPACE IS $.62 PER CUBIC FOOT. WHAT WOULD THE COST OF THE SUBJECT PROPERTY BE WITHOUT OFFICE SPACE? 1. $225,060 2. $276,375 3. $279,270 4. $284,475

Correct Answer: A 110 X 150 = 16,500 16,500 X 22 = 363,000 363,000 X .62 = 225,060 Volume measurement involving height.

Question 430 118 121 125 130 130 130 130 130 131 136 FROM THE ABOVE LIST OF GROSS INCOME MULTIPLIERS, WHAT IS THE STANDARD DEVIATION? 1. 5.28 2. 5.35 3. 5.75 4. 6.55

Correct Answer: A 118 E+ 121 E+ 125 E+ 130 E+ 130 E+ 130 E+ 130 E+ 130 E+ 131 E+ 136 E+ g s = 5.2799

Question 342 COMPARABLE A SOLD FOR $600,000. THE IMPROVEMENT HAS 12,000 SQUARE FEET AND IS SIX YEARS OLD. LAND IS VALUED AT $75,000. COMPARABLE B SOLD FOR $400,000. THE IMPROVEMENT HAS 7,500 SQUARE FEET AND IS EIGHT YEARS OLD. LAND IS VALUED AT $85,000. IF REPRODUCTION COST NEW IS ESTIMATED TO BE $50 PER SQUARE FOOT, WHAT WAS THE PERCENTAGE OF ANNUAL DEPRECIATION? 1. 2% 2. 3% 3. 4% 4. 6%

Correct Answer: A 12,000 x 50 = 600,000 600,000 - 75,000 = 525,000 600,000 - 525,000 = 75,000 75,000/600,000 = .125 .125/6 = .0208 7,500 x 50 = 375,000 400,000 - 85,000 = 315,000 375,000 - 315,000 = 60,000 60,000/375,000 = .16 .16/8 = .02

Question 485 THE EXISTING SITE IS BELOW STREET GRADE AND MUST BE FILLED IN AT A COST OF $1,000 AND A PUBLIC WALK MUST BE INSTALLED AT A COST OF$900. THERE ARE THREE COMPARABLE SITES IN THE SUBDIVISION THAT ARE FULLY IMPROVED AND READY FOR CONSTRUCTION. THEY HAVE RECENTLY SOLD FOR $18,000 EACH. THE ANNUAL INFLATION RATE IS SIX PERCENT. WHAT IS THE INDICATED VALUE OF THE SUBJECT? 1. $16,000 2. $16,550 3. $18,000 4. $19,900

Correct Answer: A 18,000 - 1,000 - 900 = 16,100

Question 254 A DEVELOPER IN AN EFFORT TO MAKE HOMES IN HIS SUBDIVISION MORE ATTRACTIVE TO PURCHASERS, CONTRIBUTED $5,000.00 TOWARD THE COST OF NEW FINANCING. A NEW HOME SOLD FOR $190,000.00 WITH 80 PERCENT FINANCING FOR 30 YEARS AMORTIZING MONTHLY AT 10 PERCENT INTEREST. AFTER THE DEVELOPER'S CONTRIBUTION, WHAT WAS THE EFFECTIVE INTEREST RATE? 1. 9.6% 2. 9.8% 3. 9.9% 4. 10.2%

Correct Answer: A 190,000 X .80 = 152,000 30 gn 152,000 - 5,000 = 147,000 10 gi 147,000 PV PMT = 1,290.03 152,000 PV i = .8006197 12 X = 9.60743

Question 214 What appraisal report option prescribes the minimum level of reporting necessary for an assignment that has any intended user(s) in addition to the client? a. Appraisal Report b. Self-Contained Report c. Restricted Appraisal Report d. Summary Report

Correct Answer: A 2014 - 2015 USPAP requirement

Question 407 A DEVELOPER IS MARKETING A SUBDIVISION CONSISTING OF 100 LOTS. IT WAS PREVIOUSLY ESTIMATED THAT ALL LOTS COULD BE SOLD WITHIN THREE YEARS. THERE HAVE BEEN 26 LOTS SOLD IN 24 MONTHS. WHAT IS THE INDICATED MONTHLY ABSORPTION RATE? 1. 1.08% 2. 2.6% 3. 5.7% 4. 6.01%

Correct Answer: A 26 / 24 = 1.083 1.083 / 100 = .010833

Question 350 IN A STABLE COMMUNITY THAT IS EXPERIENCING NO CHANGE IN TOTAL POPULATION, A DECREASE IN THE AVERAGE SIZE OF HOUSEHOLDS IN THE COMMUNITY WOULD CAUSE AN INCREASE IN DEMAND IN: 1. ALL TYPES OF HOUSING. 2. SINGLE FAMILY HOUSING ONLY. 3. APARTMENTS ONLY. 4. THERE WOULD BE NO INCREASE IN DEMAND.

Correct Answer: A If the average size of households is declining, more households will be required.

Question 352 THE FOLLOWING DATA HAS BEEN COLLECTED ON A FOUR- UNIT APARTMENT BUILDING. WHAT IS THE POTENTIAL GROSS INCOME? MONTHLY RENT - UNIT A $385 UNIT B $375 UNIT C $365 UNIT D $380 MONTHLY RENT FROM VENDORS- LAUNDRY COKE MACHINE $385 $15 ANNUAL EXPENSES - TAXES $2,400 INSURANCE $850 MAINTENANCE $2,200 MANAGEMENT $4,500 a. $22,860.00 b. $18,060.00 c. $12,910.00 d. $8,110.00

Correct Answer: A 385 + 375 + 365 + 380 + 385 + 15 = 1,905 1,905 x 12 = 22,860

Question 480 THE REPLACEMENT COST OF THE HOUSE IS $42,000. MARKET VALUE OF THE LOT IS $2,500. THE HOUSE IS ESTIMATED TO BE 10% DEPRECIATED. WHAT IS THE PRESENT VALUE OF THE HOUSE? 1. $37,800. 2. $45,450. 3. $46,300. 4. $55,000.

Correct Answer: A 42,000 x .10 = 4,200 42,000 - 4,200 = 37,800

Question 116 THREE SALES OF COMPARABLE PROPERTIES HAVE BEEN IDENTIFIED IN A NEIGHBORHOOD. COMPARABLE A SOLD ONE YEAR AGO FOR $66,000.00. COMPARABLE B SOLD LAST WEEK FOR $56,000.00. COMPARABLE C SOLD TWO YEARS AGO FOR $60,000.00. WHAT ADJUSTMENT SHOULD BE MADE TO COMPARABLE C TO YIELD AN ESTIMATED CURRENT VALUE? 1. -6.67% 2. -6.5% 3. +10.7% 4. +17.6%

Correct Answer: A 60,000 - 56,000 = 4,000 4,000 / 60,000 = .0667

Question 299 AN APARTMENT BUILDING HAS FOUR UNITS THAT RENT FOR $600.00 EACH. VACANCY AND COLLECTION LOSS IS ESTIMATED TO BE FOUR PERCENT OF POTENTIAL GROSS INCOME AND MANAGEMENT EXPENSE IS FOUR PERCENT OF EFFECTIVE GROSS INCOME. THE OWNER'S ANNUAL NET INCOME STATEMENT INCLUDED THE ITEMS LISTED BELOW. REAL ESTATE PROPERTY TAXES $2,100.00 MORTGAGE INTEREST $11,000.00 MAINTENANCE $800.00 UTILITIES $1,500.00 DEPRECIATION $1,900.00 INCOME TAX $700.00 HAZARD INSURANCE $600.00 GARBAGE SERVICE $450.00 BASED ON A RECONSTRUCTED STATEMENT, WHAT IS THE NET OPERATING INCOME? a. $21,092.00 b. $20,392.00 c. $9,392.00 d. $7,402.00

Correct Answer: A 600 x 4 = 2400 2400 x 12 = 28800 28800 x .04 = 1152 28800 - 1152 = 27648 27648 x .04 = 1106 1106 + 2100 + 800 + 1500 + 600 + 450 = 6556 27648 - 6556 = 21092

Question 134 AN EIGHT YEAR OLD HOME JUST SOLD FOR $62,000.00. LAND IS VALUED AT $12,000.00 AND REPLACEMENT COST IS $60,000.00. BASED ON THIS INFORMATION, WHAT IS THE ANNUAL RATE OF DEPRECIATION? 1. 2.1% 2. 2.8% 3. 3.4% 4. 3.8%

Correct Answer: A 62,000-12,000=50,000 60,000-50,000=10,000 10,000/8=1,250 1,250/60,000=.0208 An example of straight-line depreciation. Please note the rounding of answer choices.

Question 119 WHILE PERFORMING A MARKET ANALYSIS, AN APPRAISER FINDS THAT THE W1/2 OF THE NE1/4 OF SECTION 8, R22E, T32S WAS SOLD FOR $800.00 PER ACRE. A DEVELOPER SUBDIVIDED THE LAND INTO 100 LOTS. TOTAL COST OF THE DEVELOPMENT WAS OVER $16,000.00. LOTS THEN SOLD FOR $1,100.00 EACH. WHAT WAS THE DEVELOPER'S APPROXIMATE PROFIT? 1. <$30,000.00 2. ($30,000.00) 3. >$22,000.00 4. ($22,000.00)

Correct Answer: A 80 X 800 = 64,000 64,000 + 16,000 = 80,000 1,100 X 100 = 110,000 110,000 - 80,000 = 30,000 Since the cost of development was over 16,000, the profit is less than 30,000.

Question 168 GIVEN THE SAME SQUARE FOOTAGE FOR EACH CONFIGURATION, WHICH OF THE FOLLOWING IS MOST COST EFFICIENT? 1. SQUARE. 2. RECTANGULAR. 3. TRIANGULAR. 4. IRREGULAR.

Correct Answer: A A square shape building requires less wall to be constructed than other shapes and as a result is more cost efficient.

Question 321 IF A REVIEW APPRAISER IS ABLE TO DELIVER A VALUE CONCLUSION DIFFERENT THAN THE ORIGINAL APPRAISER, WHAT TYPE OF REVIEW HAS BEEN CONDUCTED? 1. TECHNICAL. 2. ADMINISTRATIVE. 3. ANALYTICAL. 4. EMPIRICAL.

Correct Answer: A A technical review is also know as a field review and may contain a value conclusion different from that reached by the original appraiser. An administrative (desk) review tests the logic and techniques used by the appraiser.

Question 548 IF THE MORTGAGE CONSTANT IS .098762, THE LOAN TO VALUE RATIO IS 80 PERCENT, AND THE OVERALL CAPITALIZATION RATE IS 12 PERCENT, WHAT IS THE EQUITY DIVIDEND RATE? 1. 20.50% 2. 18.20% 3. 16.80% 4. 14.20%

Correct Answer: A A. .098762 X .80 = .079 .12 - .07901 = .04099 .04099/.20 = .20495

Question 608 A PROPERTY IS SOLD FOR $100,000.00 AND ANALYSIS OF THE TRANSACTION INDICATES A NET OPERATING INCOME OF $10,000.00, AN EQUITY INVESTMENT OF $25,000.00, AND A MORTGAGE OF $75,000.00 PAYABLE IN ANNUAL INSTALLMENTS OF $7,125.00. LEVERAGE IS: 1. POSITIVE. 2. NEGATIVE. 3. EQUAL. 4. INSUFFICIENT INFORMATION IS GIVEN.

Correct Answer: A A. 10,000 / 100,000 = .10 7,125 / 75,000 = .095 10,000 - 7,125 = 2,875 2,875 / 25,000 = .115

Question 601 NET OPERATING INCOME IS PROJECTED TO BE $12,000.00 FOR EACH OF THE NEXT FIVE YEARS. AT THE END OF THE THREE YEAR HOLDING PERIOD THE MORTGAGE BALANCE IS $86,500.00. THE CAPITALIZATION RATE FOR THE REVERSION IS 10 PERCENT AND THE DISCOUNT RATE IS NINE PERCENT. WHAT IS THE PRESENT VALUE OF THE EQUITY REVERSION AT THE TIME OF DISPOSITION? 1. $25,868.00 2. $27,798.00 3. $30,375.00 4. $33,500.00

Correct Answer: A A. 12,000 / .10 = 120,000 3 n 120,000 - 86,500 = 33,500 9 i 33,500 FV PV = 25,868

Question 556 THE SUBJECT PROPERTY PRODUCES $50,000.00 ANNUALLY IN NET OPERATING INCOME. THE BUILDING CAPITALIZATION RATE IS 12 PERCENT AND THE LAND CAPITALIZATION RATE IS 10 PERCENT. THE VALUE OF THE BUILDING IS $300,000.00. USING THE LAND RESIDUAL METHOD, WHAT IS THE VALUE OF THE PROPERTY? 1. $440,000.00 2. $360,000.00 3. $154,000.00 4. $140,000.00

Correct Answer: A A. 300,000 X .12 = 36,000 50,000 - 36,000 = 14,000 14,000 / .10 = 140,000 140,000 + 300,000 = 440,000

Question 545 LAST YEAR A 20 UNIT APARTMENT BUILDING HAD TOTAL GROSS INCOME OF $25,575.00. THE ONE-BEDROOM APARTMENTS RENTED FOR $125.00 PER MONTH. THE FIVE TWO-BEDROOM APARTMENTS RENTED FOR $150.00 PER MONTH. WHAT WAS THE SCHEDULED RENT AND INCOME LOSS DUE TO VACANCY AND COLLECTION FOR THE YEAR? 1. $31,500.00 AND $5,925.00 2. $29,400.00 AND $6,235.00 3. $28,200.00 AND $7,692.00 4. $27,900.00 AND $8,720.00

Correct Answer: A A. 5 X 150 = 750 15 X 125 =1875 750 + 1,875 = 2,625 2,625 X 12 = 31,500 31,500 - 25,575 = 5925

Question 588 THE SUBJECT PROPERTY IS LEASED FOR $45,000.00 ANNUALLY. THE REMAINING TERM OF THE LEASE IS FIVE YEARS AND THE PROPERTY OWNER IS RESPONSIBLE FOR PAYMENT OF ALL OPERATING EXPENSES. IF OPERATING EXPENSES ARE $15,000.00 AND ARE PROJECTED TO INCREASE THREE PERCENT ANNUALLY, WHAT IS THE PROJECTED NET OPERATING INCOME FOR THE FINAL YEAR OF THE LEASE? 1. $27,610.00 2. $22,320.00 3. $19,868.00 4. $17,389.00

Correct Answer: A A. 5 n 45,000 - 17389 = 27,610 3 I 15,000 PV FV = 17,389

Question 574 A PROPERTY GENERATES NET OPERATING INCOME OF $50,000.00 AND ANNUAL DEBT SERVICE IS $43,264.00. IF THE MORTGAGE CONSTANT IS .1565 AND THE LOAN TO VALUE RATIO IS 75 PERCENT, WHAT IS THE RATE OF CAPITALIZATION? 1. .1356 2. .1327 3. .1298 4. .1116

Correct Answer: A A. 50,000 / 43,264 = 1.1556 1.1556 X .1565 X .75 = .1356

Question 598 THE SUBJECT PROPERTY PRODUCES $50,000.00 IN ANNUAL NET OPERATING INCOME AS PER THE TERMS OF AN EXISTING NET LEASE. THE LEASE IS CONSIDERED TO BE AT MARKET AND IT IS ANTICIPATED THAT THE PROPERTY MAY BE RELEASED AT $60,000.00 IN ANNUAL NET OPERATING INCOME AT THE END OF THE CURRENT LEASE. THE CURRENT LEASE HAS FOUR YEARS REMAINING. IF THE DISCOUNT RATE IS 10 PERCENT AND THE TERMINAL CAPITALIZATION RATE IS 12 PERCENT, WHAT IS THE ANTICIPATED PRESENT VALUE OF THE REVERSION AT THE END OF THE FOURTH YEAR? 1. $341,506.00 2. $392,072.00 3. $421,671.00 4. $500,000.00

Correct Answer: A A. 60,000 / .12 = 500,000 4 n 10 i 500,000 FV PV = 341,506

Question 553 AN INVESTMENT PROPERTY IS LEASED FOR $8,200.00 ANNUALLY. VACANCY AND COLLECTION LOSS IS ESTIMATED TO BE FOUR PERCENT. OPERATING EXPENSES INCLUDING RESERVE FOR REPLACEMENT IS $3,500.00 ANNUALLY. ANNUAL DEBT SERVICE IS $4,000.00. WHAT IS THE DEBT COVERAGE RATIO FOR THIS PROPERTY? 1. 1.09 2. 1.2 3. 1.22 4. 1.3

Correct Answer: A A. 8,200 X .04 = 328 8,200 - 328 = 7,872 7,872 - 3,500 = 4,372 4,372 / 4,000 = 1.093

Question 132 ZONING, EMINENT DOMAIN, AND POLICE POWER ARE EXAMPLES OF WHAT TYPE OF VALUE INFLUENCE? 1. GOVERNMENTAL. 2. ECONOMIC. 3. SOCIAL. 4. ENVIRONMENTAL.

Correct Answer: A All are governmental value influences.

Question 355 WHICH OF THE FOLLOWING IS NOT A COVENANT? 1. BUILDING CODE. 2. DEED RESTRICTION. 3. BEAM RIGHT AGREEMENT. 4. PARTY WALL AGREEMENT.

Correct Answer: A All covenants are agreements. Building codes are legally imposed without agreements.

Question 496 WHICH OF THE FOLLOWING WOULD BE CLASSIFIED AS INCURABLE PHYSICAL DETERIORATION IN THE CALCULATION OF ACCRUED DEPRECIATION OF A RESIDENCE? 1. PERMANENT FLOOR STRUCTURE. 2. CLOSE PROXIMITY TO AN ENVIRONMENTAL HAZARD. 3. POORLY DESIGNED FLOOR PLAN. 4. DESIGN, APPEAL, AND QUALITY OF CONSTRUCTION.

Correct Answer: A All other choices do not exhibit physical depreciation.

Question 331 AN APPRAISER IS UNABLE TO LOCATE COMPARABLE LAND SALES, HOWEVER, SALES OF IMPROVED PROPERTIES ARE PLENTIFUL. WHICH OF THE FOLLOWING APPRAISAL TECHNIQUES IS APPROPRIATE? 1. ALLOCATION. 2. ANTICIPATED USE. 3. SUBDIVISION DEVELOPMENT. 4. IDEAL NEIGHBORHOOD.

Correct Answer: A Allocation uses a percentage of land value to total property value multiplied by the comparable sale price to identify the portion of the sale price that represents land value. This land value becomes an artificially created land sale to be used in sales comparison.

Question 488 WHICH OF THE FOLLOWING ARE CONSIDERED REPLACEMENT RESERVES? 1. OUTLAY, ON A PRO RATA BASIS, FOR THE ESTIMATED SERVICE LIFE OF SHORT-LIVED COMPONENTS. 2. PERIODIC MAINTENANCE EXPENDITURES. 3. CHARGES FOR PROPERTY TAXES AND COMPREHENSIVE HAZARDS. 4. COST OF HEATING AND REPAIRS.

Correct Answer: A Answer (a) is a good description of a replacement reserve.

Question 483 WHICH OF THE FOLLOWING IS THE BASIC PRINCIPLE UNDERLYING THE SALES COMPARISON APPROACH? 1. SUBSTITUTION. 2. CONTRIBUTION. 3. CONSTITUTION. 4. ANTICIPATION.

Correct Answer: A Anytime comparisons are made, the principle of substitution applies.

Question 463 UNDER WHAT CONDITION IS ADVOCACY PERMITTED? 1. SUPPORT OF ASSIGNMENT RESULTS. 2. PERFORMING CONSULTING ASSIGNMENTS. 3. DEVELOPING VALUE OPINIONS. 4. IDENTIFYING HIGHEST AND BEST USE.

Correct Answer: A Appraisers may advocate for their assignment results.

Question 184 THE TAKING OF PUBLIC PROPERTY FOR PRIVATE USE IS: I. APPROPRIATION. II. EXPROPRIATION. III. EMINENT DOMAIN. a. I ONLY. b. I AND II. c. II AND III. d. I, II, AND III.

Correct Answer: A Appropriation is stealing. Expropriation and eminent domain relate to the right to take privately held property for the use of the public.

Question 175 WHAT APPRAISAL CONCEPT STATES THAT THE VALUE OF A SUPERIOR PROPERTY IS ADVERSELY AFFECTED BY ITS ASSOCIATION WITH AN INFERIOR PROPERTY OF THE SAME TYPE? 1. REGRESSION. 2. PROGRESSION. 3. INTERDEPENDENCE. 4. CORRELATION.

Correct Answer: A Association with a superior property will bring positive pressure on value. Positive pressure is known as progression.

Question 517 WHICH OF THE FOLLOWING WILL OFTEN SET THE UPPER LIMIT FOR AN IMPROVEMENT'S VALUE? 1. COST ESTIMATE. 2. INCOME APPROACH. 3. SALES COMPARISON. 4. MARKET ABSTRACTION.

Correct Answer: A Based on the premise that supports the cost approach, a person should pay no more than the cost of building a substitute for the subject improvement.

Question 513 ALL OF THE FOLLOWING ARE TYPICAL EXAMPLES OF ZONING RESTRICTIONS EXCEPT: 1. BUILDING CODES. 2. BUILDING SETBACKS. 3. MINIMUM SITE DEPTH. 4. MINIMUM SITE SIZE.

Correct Answer: A Builiding codes are not regulated as part of zoning ordinances.

Question 165 WHICH OF THE FOLLOWING IS AN INDIRECT COST? 1. CONSTRUCTION FINANCING. 2. PERFORMANCE BONDS. 3. WATCHMEN. 4. CONTRACTOR'S PROFIT.

Correct Answer: A Indirect costs are the lot owner's responsibility. Direct costs are found as part of the contractor's construction contract.

Question 490 A PROPERTY APPEARS TO BE EARNING ABOVE NORMAL RETURNS. IN ORDER TO PROPERLY ESTIMATE FUTURE CASH FLOWS, THE APPRAISER SHOULD PERFORM A DETAILED ANALYSIS OF: 1. COMPETITION. 2. CONFORMITY. 3. SUBSTATIONS. 4. SURPLUS PRODUCTIVITY.

Correct Answer: A Competitive properties would indicate the above normal cash flows exist and likely a higher value for this property as well.

Question 224 A certified appraiser has appraised the same property multiple times within the prior three years. Which of the following best describes compliance with USPAP disclosure requirements? a. The number of prior appraisal assignments. b. Only the fact that prior services were performed. c. The number of prior appraisal assignments and the date of each assignment. d. The number of prior appraisal assignments, the date, and the client identity.

Correct Answer: A Conduct Section of the Ethics Rule USPAP

Question 366 WHICH OF THE FOLLOWING IS CORRECT CONCERNING CONSEQUENTIAL DAMAGES? 1. WILL NOT BE PAID. 2. MAY BE PAID AS A RESULT OF THE TAKING OF ANOTHER'S PROPERTY. 3. REPRESENTS THE DECLINE IN MARKET VALUE OF THE REMAINDER AS A RESULT OF THE TAKING. 4. COMPENSATION DUE THE OWNER OF THE PROPERTY AS THE RESULT OF THE TAKING.

Correct Answer: A Consequential damages would result from a loss in traffic for a retail store because of new highway construction. Consequential damages are not compensable.

Question 225 WHICH OF THE FOLLOWING FORMS OF DEPRECIATION SHOULD BE THE FIRST COUNTED? 1. CURABLE PHYSICAL. 2. INCURABLE FUNCTIONAL. 3. INCURABLE PHYSICAL. 4. ECONOMIC.

Correct Answer: A Curable physical depreciation is the measured based upon the cost to cure the deficiency and is therefore the easiest depreciation to measure. By measuring the easiest to measure first, the cost basis of the improvement is reduced, making any inaccuracy in later more difficult measurements smaller.

Question 180 AN APPRAISER ANALYZES SALES OF IMPROVED PROPERTIES TO ESTABLISH A TYPICAL RATIO OF SITE VALUE TO TOTAL PROPERTY VALUE AND MULTIPLIES THIS RATIO BY THE IMPROVED PROPERTY SALES PRICES. THIS PROCEDURE IS: 1. ALLOCATION. 2. EXTRACTION. 3. EXTRAPOLATION. 4. AGGLOMERATION.

Correct Answer: A Defines the land valuation technique of allocation.

Question 105 ELEMENTS OF COMPARABILITY FOR SITE VALUATION BY THE SALES-COMPARISON APPROACH INCLUDE ALL OF THE FOLLOWING EXCEPT: 1. PRICE PAID. 2. PHYSICAL CHARACTERISTICS. 3. SHAPE. 4. SIZE.

Correct Answer: A Elements of comparison are potential adjustment categories. Price paid is not an adjustment category, it is that which would be adjusted.

Question 464 EXTRAORDINARY ASSUMPTIONS MAY BE USED IN AN APPRAISAL ASSIGNMENT ONLY WHEN: 1. NECESSARY TO PRODUCE CREDIBLE RESULTS. 2. REQUIRED BY LAW. 3. APPROVED BY THE CLIENT. 4. APPROVED BY THE BORROWER.

Correct Answer: A Extraordinary assumptions are made when the typical buyer would also have made the same assumption. Extraordinary assumptions are made about items that likely do exist.

Question 372 WHICH OF THE FOLLOWING HAS STRICT REQUIREMENTS REGARDING CONSTRUCTION AND INSURES LOANS? 1. FHA 2. FHLBB 3. FNMA 4. GNMA

Correct Answer: A FHA insures lenders that originate loans on improvements that meet their construction guidelines.

Question 371 WHAT PORTION OF THE INDIVIDUAL CONDOMINIUM OR PUD UNIT FORM REPORT IS TO BE COMPLETED BY THE LENDER? 1. LOAN CHARGES TO BE PAID BY THE SELLER. 2. ESTIMATE OF DEFINED VALUE. 3. BUDGET ANALYSIS. 4. COST APPROACH.

Correct Answer: A FNMA requires that the lender inform the appraiser of financing concessions by the seller.

Question 222 A GREATER CAPACITY IN A COMPONENT THAN A PRUDENT PURCHASER WOULD PAY FOR UNDER CURRENT MARKET CONDITIONS IS A(AN): 1. SUPERADEQUACY. 2. OVERIMPROVEMENT. 3. SURPLUS PRODUCTIVITY. 4. SURPLUS PROFIT.

Correct Answer: A Greater capacity in a component of construction is a superadequacy. Excess capacity in an improvement is an overimprovement.

Question 296 WHICH OF THE FOLLOWING TRANSACTIONAL CHARACTERISTICS MAY REQUIRE AN ADJUSTMENT FOR CONDITIONS OF SALE? I. KNOWLEDGE OF MARKET BY BUYERS AND SELLERS. II. TIME ON THE MARKET PRIOR TO SALE. III. DOWN PAYMENT REQUIREMENTS. IV. INTEREST RATES. a. I AND II. b. I, III, AND IV. c. II, III, AND IV. d. I, II, III, AND IV.

Correct Answer: A Interest rates and down payment requirements are financing issues, not conditions of sale.

Question 267 UNDER WHAT CONDITION(S) WOULD INTERNAL RATE OF RETURN BE AN INAPPROPRIATE MEASURE OF INVESTMENT PERFORMANCE? I. NO INVESTMENT REQUIRED. II. NEGATIVE NET PRESENT VALUE AT ZERO RATE OF RETURN. III. IRREGULAR INCOME STREAM. IV. NO REVERSION AT THE TERMINATION OF THE INVESTMENT. a. I AND II. b. II, III, AND IV. c. I, II, AND III. d. III AND IV.

Correct Answer: A Internal rate of return is the return on investment capital. With no investment or no return, there is no return on the investment.

Question 341 A PARCEL OF LAND IS VACANT AND READY TO BE DEVELOPED TO ITS HIGHEST AND BEST USE. ZONING AND UTILITY ARE CONSIDERED APPROPRIATE FOR THE TYPICAL PURCHASER. THIS PARCEL SHOULD BE VALUED AS: 1. VACANT AND AVAILABLE FOR DEVELOPMENT TO ITS HIGHEST AND BEST USE. 2. IMPROVED WITH THE MOST FEASIBLE USE. 3. IMPROVED WITH THE MOST PROBABLE USE. 4. IMPROVED WITH THE MAXIMALLY PRODUCTIVE USE.

Correct Answer: A Land is valued as though vacant and available for development to its highest and best use.

Question 414 AN INVESTOR OWNS TWO CONTIGUOUS LOTS. BOTH LOTS ARE 55' BY 125' AND ARE BUILDABLE ACCORDING TO ZONING. THE MARKET PREFERS LOTS MORE IN CONFORMITY WITH THE NEIGHBORHOOD WHICH IS 100' BY 125'. HOW SHOULD THESE LOTS BE APPRAISED FOR MARKET VALUE? 1. AS ONE LOT. 2. AS TWO SEPARATE LOTS. 3. AS ONE AND A HALF LOTS. 4. AS ONE LOT WITH EXCESS LAND.

Correct Answer: A Market appears that the market would treat this as one lot and as such this is how it should be appraised. The two lots should be assembled into one.

Question 193 A COUNTRY'S WEALTH AND WELFARE IS DETERMINED BY THE EXTENT TO WHICH THE COUNTRY COULD DEVELOP A FAVORABLE TRADE RELATION WITH OTHER NATIONS WAS THE ECONOMIC DOCTRINE PROMOTED BY THE: 1. MERCANTILISTS. 2. INSTITUTIONALISTS. 3. PHYSIOCRATS. 4. KEYNESIANISTS.

Correct Answer: A Mercantilists focused on the aspects of economic base and the importance of basic industries.

Question 208 A DISTRICT IS CHARACTERIZED BY: 1. HOMOGENEOUS USES. 2. COMPLEMENTARY USES. 3. SIMILAR USES. 4. ALL OF THE ABOVE.

Correct Answer: A Neighborhoods are comprised of complementary uses.

Question 337 AN APPRAISER IS UTILIZING COST MANUALS TO PREPARE AN ESTIMATE OF REPRODUCTION COST FOR A VICTORIAN HOME. USING THE COMPARATIVE-UNIT METHOD, HOW WOULD OBSOLESCENCE BE MEASURED? 1. UNIT-IN-PLACE COSTS. 2. AGE-LIFE FORMULA. 3. STRAIGHT-LINE. 4. BREAKDOWN.

Correct Answer: A Obsolete construction components would not be part of the benchmark cost from the cost manual. Actual construction cost (unit-in-place)must be used for the obsolete items.

Question 104 THE VALUE OF A SITE'S LOCATION IS JUDGED: 1. IN RELATION TO COMPARABLE PROPERTIES. 2. ACCORDING TO AN INDUSTRY STANDARD. 3. BY EVALUATING ITS SIZE AND SHAPE. 4. ON THE CONDITION OF ITS IMPROVEMENTS.

Correct Answer: A Quality of location can only be judged against other locations, either superior or inferior. There is no industry standard. Size and shape, and condition of improvements, have nothing to do with the value of a location.

Question 124 THE MOST PRECISE ESTIMATE OF REPRODUCTION COST THAT ALSO REQUIRES THE MOST TECHNICAL EXPERTISE IS THE: 1. QUANTITY SURVEY METHOD. 2. UNIT-IN-PLACE METHOD. 3. COMPARATIVE UNIT METHOD. 4. SEGREGATED COST METHOD.

Correct Answer: A Quantity survey breaks the subject into its smallest components. Estimating cost in this manner requires expertise but the reward is a higher level of precision when done properly.

Question 364 WHICH OF THE FOLLOWING WOULD HAVE THE LEAST INFLUENCE ON THE VALUE OF A MULTI-FAMILY RESIDENTIAL PROPERTY? 1. DECREASE IN TRAFFIC COUNT. 2. QUALITY OF ON-SITE MANAGEMENT. 3. ADEQUACY OF LINKAGES. 4. UNIT TYPE MIXES.

Correct Answer: A Residential properties do not rely on traffic count for their value.

Question 363 WHICH OF THE FOLLOWING WOULD YIELD THE MOST RELIABLE INDICATION OF VALUE FOR COMMERCIALLY ZONED VACANT LAND? 1. VACANT LAND SALES IN AN ADJACENT NEIGHBORHOOD. 2. ABSTRACT FROM IMPROVED SALES IN THE SUBJECT'S NEIGHBORHOOD. 3. EXTRACT FROM IMPROVED SALES IN THE SUBJECT'S NEIGHBORHOOD. 4. ESTIMATE THE GROSS PROCEEDS OF THE SALE OF VACANT LOTS LESS DEVELOPMENT COSTS.

Correct Answer: A Sales comparison will yield the most reliable value indication of vacant land as long as comparables are available, even in a different neighborhood.

Question 140 THE RENT THAT PROPERTY WOULD COMMAND IF IT WERE TO BE LEASED TODAY AT THE PREVAILING RATE IS: 1. MARKET RENT. 2. CONTRACT RENT. 3. SCHEDULED RENT. 4. GROSS RENT.

Correct Answer: A Scheduled rent and contract rent are synonymous terms. They represent the rent appearing in a lease.

Question 459 BASED ON THE FOLLOWING DATA, WHAT IS THE WEIGHTED MEAN PERCENTAGE OF DEPRECIATION? A B C DEPRECIATION 40% 50% 45% WEIGHTING 3 1 2 a. 42% b. 43% c. 44% d. 45%

Correct Answer: B 40 E+ 40 E+ 40 E+ 50 E+ 45 E+ 45 E+ g x = 43.3333

Question 320 AN APPRAISER WHO SIGNS A REAL ESTATE APPRAISAL REPORT PREPARED BY ANOTHER, EVEN AS A REVIEW APPRAISER: 1. MUST ACCEPT FULL RESPONSIBILITY FOR THE CONTENTS OF THE REPORT. 2. MUST HAVE PHYSICALLY INSPECTED THE PROPERTY. 3. MUST HAVE CONTRIBUTED AT LEAST 50 PERCENT TO THE REPORT. 4. IS PARTIALLY RESPONSIBLE FOR THE CONTENTS OF THE REPORT.

Correct Answer: A Signing an appraisal report makes the appraiser responsible for the entire report content.

Question 109 HOW SHOULD PERCENTAGE ADJUSTMENTS BE HANDLED WHEN PERFORMING A COMPARABLE SALES ANALYSIS? 1. RELATIONSHIP OF THE SUBJECT TO THE COMPARABLE SHOULD BE STATED. 2. RELATIONSHIP OF THE COMPARABLE TO THE SUBJECT SHOULD BE STATED. 3. ADJUSTMENTS MAY BE MADE WITHOUT REGARD TO SEQUENCE. 4. ADJUSTMENTS ARE MADE TO THE PRICE OF THE SUBJECT PROPERTY.

Correct Answer: A Since the value of the subject is unknown, mathematically it is much easier to state the realtionship of the subject to the comparable. For example, the subject is 10% superior to the comparable instead of the comparable is 10% inferior to the subject. Inferior by 10% to what amount?

Question 319 AN APPRAISER ACCEPTS AN ASSIGNMENT TO APPRAISE A PROPERTY IN AN AREA WHERE CRIME ACTIVITY HAS BEEN RECENTLY PUBLICIZED. WHICH OF THE FOLLOWING REFLECTS THE MOST ACCEPTABLE TERMINOLOGY DESCRIBING THIS ACTIVITY IN THE APPRAISAL REPORT? 1. ONE CRIME REPORTED ANNUALLY PER 1,000 POPULATION. 2. HIGH CRIME AREA. 3. UNSAFE LIVING CONDITIONS. 4. SPORTING OPPORTUNITIES AVAILABLE.

Correct Answer: A Statistical references minimize the chance that the characteristics of an area will be left to interpretation.

Question 479 INVESTMENT IN REAL ESTATE DIFFERS FROM INVESTMENT IN STOCKS AND BONDS IN THAT: 1. REAL ESTATE IS LESS LIQUID THAN STOCKS AND BONDS. 2. STOCKS AND BONDS MUST BE MANAGED. 3. STOCKS AND BONDS GENERALLY REQUIRE LARGER CASH OUTLAYS. 4. REAL ESTATE ASSETS ARE HOMOGENEOUS.

Correct Answer: A Stocks and bonds are highly marketable. Real estate is likely more difficult to convert to cash.

Question 435 WHAT APPRAISAL CONCEPT IS USED IN ALL THREE APPRAISAL APPROACHES? 1. SUBSTITUTION. 2. ALLOCATION. 3. EXTRACTION. 4. UNIT-IN-PLACE.

Correct Answer: A Substitution is whenever a comparison is made. There are comparisons made throughout the valuation process.

Question 329 IN WHICH OF THE FOLLOWING APPRAISAL TECHNIQUES IS THE INCOME ATTRIBUTED TO THE IMPROVEMENTS DEDUCTED FROM TOTAL NET OPERATING INCOME? 1. LAND RESIDUAL. 2. BUILDING RESIDUAL. 3. ALLOCATION. 4. EXTRACTION.

Correct Answer: A Subtracting improvement income from net operating income leaves residual land income.

Question 143 THE CONTENT AND TYPE OF AN APPRAISAL REPORT IS NEVER INFLUENCED BY THE: 1. APPRAISER'S FEE. 2. CLIENT REQUIREMENTS. 3. NATURE OF THE PROBLEM. 4. SUBJECT OF THE ASSIGNMENT.

Correct Answer: A The appraiser's fee may be based on the time and difficulty of the assignment, not the type of the report (communication) or what was written in the report (content).

Question 376 WHICH OF THE FOLLOWING WOULD NOT INFLUENCE THE USEABLE SQUARE FOOTAGE OF A SITE? 1. BUILDING RATIO. 2. TREE RATIO. 3. SET-BACK REQUIREMENTS. 4. TERRAIN.

Correct Answer: A The building ratio states the maximum size of the improvement, not the size of the site.

Question 292 WHICH OF THE FOLLOWING MAY INFLUENCE THE ECONOMIC BASE OF A COMMUNITY? I. ECONOMIC ISSUES. II. EMPLOYMENT CENTERS. III. POLITICAL STABILITY. IV. ECONOMIC POLICIES. a. I, II, III, AND IV. b. I, II, AND IV. c. II AND III. d. III ONLY.

Correct Answer: A The economic base is the ability of an industry to attract wealth. All answers may influence the health of an industry and its ability to attract wealth.

Question 531 BASED ON DIMENSIONS PROVIDED OF N45E 660', THENCE N20E 1,260', THENCE S45W 660', WHAT IS THE MISSING ELEMENT? 1. S20W 1,260' 2. S20E 660' 3. S20W 660' 4. S20E 1,260'

Correct Answer: A The final element must return to the original point of beginning. This is an application of the metes and bounds (surveyor's method).

Question 186 THE RIGHT OF AN OWNER OF LAND WHICH HAS A CONTIGUOUS SHORELINE TO ITS USE AND ENJOYMENT IS A(AN): 1. LITTORAL RIGHT. 2. RIPARIAN RIGHT. 3. ALLODIAL RIGHT. 4. EASEMENT.

Correct Answer: A The is the definition of littoral right.

Question 233 WHICH OF THE FOLLOWING IS ALSO KNOWN AS THE GOVERNMENT SURVEY SYSTEM? 1. RECTANGULAR SURVEY. 2. GEODETIC SURVEY. 3. LOT AND BLOCK SYSTEM. 4. PLAT METHOD.

Correct Answer: A The lot and block and plat method are synonomous describing the technique of legal description used in subdivisions. Geodetic survey is used to produce quadrangles (topographic maps).

FOR THE FOLLOWING FIVE QUESTIONS: A SAMPLE OF SEVEN RECENT SIMILAR SALES SHOWS THE FOLLOWING PRICES PER SQUARE FOOT: $40.00 $42.50 $37.50 $41.00 $37.50 $38.00 $41.00 • WHAT IS THE MEAN? 1. $39.64 2. $39.52 3. $39.42 4. $39.17

Correct Answer: A The mean is the mathematic average.

Question 549 WHAT IS THE INDICATED CAPITALIZATION RATE IF THE ANNUAL DEBT SERVICE IS $14,365.00 ON A PROPERTY WITH A 75% LOAN-TO-VALUE RATIO MORTGAGE OF $96,500.00 AND A REQUIRED EQUITY DIVIDEND RATE OF 18 PERCENT? 1. 19.26% 2. 15.66% 3. 14.69% 4. 14.62%

Correct Answer: B B. 14,365 / 96,500 = .14886 .14886 X .75 = .111645 .18 X .25 = .045 .111645 + .045 = .156645

Question 425 THE SUBJECT PROPERTY HAS SIX ROOMS INCLUDING THREE BEDROOMS, ONE AND A HALF BATH, TWO CAR GARAGE, A FULL BASEMENT, AND CONTAINS 1500 SQUARE FEET. WHICH OF THE FOLLOWING FOUR COMPARABLES IS THE BEST? ROOMS BEDROOMS GARAGE SIZE SALE 1 6 3 2 1,600 SQUARE FT. SALE 2 6 4 2 1,500 SQUARE FT. SALE 3 6 4 1 1,550 SQUARE FT. SALE 4 6 4 2 1,450 SQUARE FT. a. SALE 1. b. SALE 2. c. SALE 3. d. SALE 4.

Correct Answer: A The number of bedrooms is most often the criteria used by purchasers in making buying decisions.

Question 358 WHEN ANALYZING COMPARABLE RENTAL DATA, WHICH OF THE FOLLOWING IS LEAST IMPORTANT? 1. NUMBER OF BUILDINGS. 2. NUMBER OF UNITS PER BUILDING. 3. VACANCY RATE. 4. QUALITY OF CONSTRUCTION.

Correct Answer: A The number of buildings should not influence rental data significantly.

Question 516 AN ACCURATE METES AND BOUNDS LEGAL DESCRIPTION WILL BE FOUND IN A/AN: a. CURRENT CERTIFIED SURVEY. b. PREVIOUS APPRAISAL. c. GEODETIC SURVEY. d. TAX ASSESSOR'S OFFICE.

Correct Answer: A The other answer selections would be getting their information from the current survey.

Question 448 AN APPRAISER MAY DISCUSS DETAILS OF THE APPRAISAL WITH THE: 1. PARTY WHO ORDERED THE APPRAISAL. 2. PARTY PAYING THE APPRAISER'S FEE. 3. HOMEOWNER. 4. NO ONE.

Correct Answer: A The party who ordered the appraisal is the appraiser's client.

Question 245 THE CITY PLANS TO INSTALL A SEWER LINE ON A RESIDENTIAL SITE WITHIN FIVE FEET OF THE PROPERTY LINE. THE SITE HAS A MINIMUM TEN FOOT SETBACK REQUIREMENT. THE CITY WILL PAY FOR ANY MAINTENANCE REQUIRED AND NO MAINTENANCE IS ANTICIPATED. WHAT IS THE VALUE PENALTY TO THE SITE? 1. 0-4% 2. 5-9% 3. 10-20% 4. OVER 20%

Correct Answer: A There should be no value penalty.

Question 391 THE STATE HIGHWAY DEPARTMENT IS CONDEMNING A PROPERTY WITH A HOUSE. THE PROPERTY INCLUDING THE HOUSE IS VALUED AT $70,000.00. SELLING EXPENSES ARE ESTIMATED TO BE EIGHT PERCENT OF PROPERTY VALUE AND RESIDENTS OF SIMILAR PROPERTIES IN THE SAME MARKET INCUR $2,500.00 IN MOVING EXPENSES. WHAT IS THE VALUE OF THE TAKING? 1. $70,000.00 2. $72,500.00 3. $75,600.00 4. $78,100.00

Correct Answer: A There will be no selling expenses incurred in a taking. Moving expenses are not compensable.

Question 492 WHICH OF THE FOLLOWING IS A GOOD SOURCE OF TOPOGRAPHICAL INFORMATION? 1. U.S. GEOLOGICAL SURVEY QUADRANGLE MAPS. 2. FEMA FLOOD MAPS. 3. GOVERNMENT LAND OFFICE. 4. ABSTRACTS.

Correct Answer: A These quadrangles are also called topographic maps.

Question 419 FOR FEDERALLY-RELATED PURPOSES, AN APPRAISAL REPORT MUST BE a. WRITTEN b. ORAL c. WRITTEN OR ORAL d. NONE OF THE ABOVE

Correct Answer: A This is a requirement established by USPAP.

Question 243 THE COVENANT OF QUIET ENJOYMENT SUGGESTS THAT THE GRANTOR GRANTS TO THE GRANTEE: a. CONTROL OF THE USE OF THE PROPERTY FREE FROM INTERFERENCE. b. RIGHTS OF OWNERSHIP FREE FROM OUTSIDE FACTORS LIMITED ONLY TO GOVERNMENT POWERS. c. UNINTERRUPTED USE AND CONTROL OF LAND IN ANY MANNER CONSISTENT WITH LOCAL LAW. d. ABILITY TO SELL, DEDICATE, GIVE AWAY, AND MORTGAGE ALL OR ANY PORTION OF THE PROPERTY.

Correct Answer: A This is the description of the covenant of quiet enjoyment.

Question 221 WHAT CONDITION IS INDICATED IF THE VACANCY RATIO IS 12 PERCENT? 1. BUYER'S MARKET. 2. SELLER'S MARKET. 3. EQUILIBRIUM POINT. 4. TRANSITIONAL MARKET.

Correct Answer: A This vacancy ratio appears to be high enough to constitute a buyer's market. A very low vacancy ratio would indicate a seller's market.

Question 285 ACCORDING TO FNMA, WHICH OF THE FOLLOWING ADJUSTMENTS FOR CASH EQUIVALENCY IS NEVER APPROPRIATE? I. POSITIVE ADJUSTMENTS. II. NEGATIVE ADJUSTMENTS. III. NO ADJUSTMENTS. a. I ONLY. b. I AND II. c. II AND III. d. III ONLY.

Correct Answer: A To make a sale appear to have sold all cash at the lowest possible price, negative adjustments must be made. Or, it is possible that no adjustment is required.

Question 315 When intended users include parties other the client, what type of report must the appraiser provide? a. Appraisal Report b. Self-Contained Report c. Summary Report d. Restricted Report

Correct Answer: A USPAP Rule 2-2

Question 495 A RELATIVELY NEW NEIGHBORHOOD IN THE AREA HAS BECOME QUITE POPULAR. SALE PRICES HAVE BEEN INCREASING ON NEWLY CONSTRUCTED HOMES AS WELL AS RESALES. THERE ARE MANY DESIRABLE UNSOLD LOTS FOR DEVELOPMENT. YOU HAVE LIVED IN THE AREA FOR SEVERAL MONTHS, BUT HAVE RECENTLY RECEIVED A NOTICE OF JOB TRANSFER WITHIN THE NEXT SIX MONTHS. YOU EXPECT TO BEGIN MARKETING YOUR HOME IMMEDIATELY. WHICH OF THE FOLLOWING SUGGESTS THE UPPER LIMIT OF VALUE YOU MAY ANTICIPATE TO RECEIVE FOR YOUR HOME? a. MARKET. b. INVESTMENT. c. COST. d. LIQUIDATION.

Correct Answer: A With the level of demand indicated by the conditions in this neighborhood and the job transfer six months away, there does not appear to be any particular factor that would interfere with a market value sale.

Question 112 THE USEFULNESS OF THE SALES-COMPARISON APPROACH DEPENDS ON THE AVAILABILITY OF AN ADEQUATE NUMBER OF: 1. COMPARABLE SALES. 2. COMPARABLE RENTALS. 3. SIMILAR PROPERTIES. 4. SINGLE FAMILY RESIDENCES.

Correct Answer: A You must have adequate data to make the sales comparison approach work.

Question 551 ASSUMING A YIELD OF 11 PERCENT, WHAT IS THE VALUE OF A PROPERTY WHICH HAS ANNUAL CASH FLOWS OF $12,000.00 FOR THE FIRST YEAR, $15,000.00 FOR THE SECOND YEAR, $13,000.00 FOR THE THIRD YEAR, AND $75,000.00 FOR THE FOURTH YEAR INCLUDING THE REVERSION? 1. $66,696.00 2. $81,895.00 3. $90,791.00 4. $110,652.00

Correct Answer: B B. 11 I 12,000 g CFJ 15,000 g CFJ 13,000 g CFJ 75,000 g CFJ f NPV = 81,895

Question 202 A BUYER AGREED TO PAY $70,000.00 FOR A SINGLE-FAMILY HOME HAVING AN EXISTING LOAN WITH AN OUTSTANDING BALANCE OF $41,561.00. THE LOAN IS FOUR YEARS OLD AND HAD AN ORIGINAL TERM OF 25 YEARS, MONTHLY PAYMENTS AT EIGHT PERCENT INTEREST, WITH A FACE AMOUNT OF $44,000.00. THE BUYER PAYS CASH TO THE EXISTING LOAN, WHICH HE ASSUMES, WHEN MARKET INTEREST RATES ON NEW HOME LOANS ARE 11 PERCENT, WITH 80 PERCENT LOAN-TO-VALUE RATIOS, FOR 25 YEAR TERMS, WITH MONTHLY PAYMENTS. THE BUYER COULD EXPECT TO EARN 10 PERCENT ON ALTERNATIVE INVESTMENTS. IF THE BUYER AND SELLER SHARE EQUALLY IN THE WORTH OF THE SAVINGS CAUSED BY THE NONMARKET FINANCING FOR FIVE YEARS, HOW MUCH IS THE INDICATED ADJUSTMENT FOR CASH EQUIVALENCY? a. $2,022.00 b. $2,667.00 c. $4,044.00 d. $5,335.00

Correct Answer: A market loan amount 70,000 x .80 = 56,000 additional down payment required for assumed mortgage 56,000 - 41,561 = 14,439 annual cost of market financing 25gn 11gi 56,000PV PMT = 548.86 12 x = 6,586.32 annual cost of assumed financing 25gn 8gi 44,000PV PMT = 339.60 12 x = 4,075.19 annual lost opportunity cost of additional down payment 14,439 x .10 = 1,444 total annual cost of assumed mortgage loan 4,075 + 1,444 = 5,519 net annual savings from assumed mortgage 6,586 - 5,519 = 1,067 savings discounted for five years 5n 10i 1,067PMT PV = 4,044 savings shared equally 4,044/2 = 2,022

Question 114 THE TOTAL OF GROSS ADJUSTMENTS FOR AN IDEAL COMPARABLE SHOULD NOT EXCEED: 1. 25% 2. 20% 3. 15% 4. ZERO

Correct Answer: A FNMA guideline. Net adjustments should not exceed 15% of the unadjusted comparable sale price. Individual line item adjustments should not exceed 10% of the unadjusted sale price.

Question 282 UNSTABLE SOIL FORMED FROM MATERIALS TRANSPORTED BY FLOWING WATER IS: 1. ALLUVIAL. 2. AEOLIAN. 3. RELICTION. 4. LOESS.

Correct Answer: A The definition of alluvial soil. Soil deposited by wind is aeolian. Wind-blown silt is loess. When lakes dry exposing more shoreline, reliction occurs.

Question 244 WHILE UTILIZING THE SALES COMPARISON APPROACH, WHAT IS THE MINIMUM NUMBER OF COMPARABLE SALES REQUIRED BY FNMA? 1. ONE. 2. THREE. 3. FIVE. 4. SIX.

Correct Answer: B

Question 537 IF PROPERTY IS EXPECTED TO APPRECIATE, THE APPROPRIATE CAPITALIZATION RATE WOULD CONSIST OF WHICH OF THE FOLLOWING COMPONENTS? 1. DISCOUNT RATE PLUS RECAPTURE RATE. 2. DISCOUNT RATE LESS RECAPTURE. 3. DISCOUNT RATE ONLY. 4. RECAPTURE RATE ONLY.

Correct Answer: B

Question 538 RETURN ON INVESTMENT IS REPRESENTED BY THE: 1. RECAPTURE RATE. 2. DISCOUNT RATE. 3. SINKING FUND FACTOR. 4. ALL OF THE ABOVE.

Correct Answer: B

Question 562 THE PROBABILITY THAT UNFORESEEN EVENTS WILL OCCUR IS: 1. RISK. 2. UNCERTAINTY. 3. PROBABILITY. 4. CHANCE.

Correct Answer: B

Question 563 INDUSTRIAL BUILDINGS ARE MEASURED IN TERMS OF: 1. GLA 2. GBA 3. GMA 4. GTA

Correct Answer: B

Question 564 IN AN OFFICE BUILDING WHERE THERE ARE A NUMBER OF DIFFERENT TENANTS, WHICH OF THE FOLLOWING RATIOS DEFINES THE AMOUNT OF NET RENTABLE AREA TO THE TOTAL GROSS AREA? 1. NET INCOME RATIO. 2. EFFICIENCY RATIO. 3. USE RATIO. 4. NET EFFICIENCY RATIO.

Correct Answer: B

Question 565 WHICH OF THE FOLLOWING EXPLANATIONS APPLIES TO THE TERM BASE RENT? 1. RENT SPECIFIED IN A LEASE. 2. MINIMUM RENT PAYABLE UNDER A PERCENTAGE LEASE. 3. TYPICAL RENT PAID FOR COMPARABLE PROPERTIES. 4. MINIMUM RENT MULTIPLIED BY AN INDEX TO FIND THE ACTUAL RENT IN AN INDEX LEASE.

Correct Answer: B

Question 569 PERSONAL PROPERTY THAT IS OWNED AND ATTACHED TO A RENTED SPACE OR BUILDING BY A TENANT AND USED IN CONDUCTING A BUSINESS IS A: 1. FIXTURE. 2. TRADE FIXTURE. 3. CHATTELS PERSONAL. 4. CHATTELS REAL.

Correct Answer: B

Question 573 UNDER WHAT APPRAISAL FUNCTION WOULD A PROVISION BE MADE IN THE CAPITALIZATION RATE FOR THE PAYMENT OF REAL ESTATE PROPERTY TAXES? I. ESTABLISH LOAN AMOUNT. II. PROTEST TAX ASSESSMENT. III. ESTIMATE MARKET VALUE. a. I ONLY. b. II ONLY. c. I AND II. d. I, II, AND III.

Correct Answer: B

Question 590 WHICH OF THE FOLLOWING IS CONSIDERED TO BE A VARIABLE OPERATING EXPENSE OF THE PROPERTY? I. DEPRECIATION. II. MAINTENANCE. III. MANAGEMENT. IV. UTILITIES. a. I, II, III, AND IV. b. II, III, AND IV. c. III AND IV. d. IV.

Correct Answer: B

Question 593 WHICH OF THE FOLLOWING LEASE PROVISIONS IS GENERALLY FAVORABLE TO THE TENANT? I. RENEWAL OPTIONS. II. EXPENSE-STOP CLAUSE. III. PURCHASE OPTIONS. IV. TAX-STOP CLAUSE. a. I, II, III, AND IV. b. I AND III. c. I AND IV. d. II AND IV.

Correct Answer: B

Question 605 WHEN VALUING THE LEASED FEE, UNDER WHAT CONDITION WOULD THE DISCOUNT RATE BE INCREASED DUE TO RISK? 1. CONTRACT RENT EXCEEDS MARKET RENT AND MARKET RENT IS UTILIZED BY THE APPRAISER. 2. CONTRACT RENT EXCEEDS MARKET RENT AND CONTRACT RENT IS UTILIZED BY THE APPRAISER. 3. MARKET RENT EXCEEDS CONTRACT RENT AND CONTRACT RENT IS UTILIZED BY THE APPRAISER. 4. MARKET RENT EXCEEDS CONTRACT RENT AND MARKET RENT IS UTILIZED BY THE APPRAISER.

Correct Answer: B

Question 129 THE ANNUAL DISCOUNT RATE IS 13%. WHAT IS THE FIRST MONTH'S DISCOUNT RATE? 1. .9927 2. .9892 3. .8827 4. .8333

Correct Answer: B .13/12=.010833333 1+.010833333=1.010833333 1/1.010833333=.98928277

Question 137 WHAT IS THE ACCRUED DEPRECIATION OF A BUILDING THAT HAS A TOTAL ECONOMIC LIFE OF 75 YEARS AND AN EFFECTIVE AGE OF 10 YEARS IF THE REPRODUCTION COST IS $150,000.00? 1. $10,000.00 2. $20,000.00 3. $30,000.00 4. $50,000.00

Correct Answer: B 10 / 75 = .1333 .1333 X 150,000 = 20,000

Question 192 THREE ADJACENT LOTS ARE VALUED AT $10,000.00 EACH. IF THE LOTS ARE ASSEMBLED UNDER ONE OWNERSHIP AND THE TOTAL PARCEL IS WORTH $38,000.00, PLOTTAGE VALUE IS: 1. $2,600.00 2. $8,000.00 3. $12,600.00 4. $38,000.00

Correct Answer: B 10,000 X 3 = 30,000 38,000 - 30,000 = 8,000 Plottage value is the gain in value as a result of assemblage.

Question 460 TOTAL PURCHASE PRICE OF A RESIDENTIAL DUPLEX WAS $120,000. OF THE TOTAL, LAND WAS VALUED AT $45,000. WHAT IS THE INDICATED BOOK VALUE OF THIS PROPERTY AFTER FIVE YEARS? 1. $98,180 2. $106,365 3. $108,465 4. $110,510

Correct Answer: B 120,000 - 45,000 = 75,000 75,000 / 27.5 = 2727.27 2727 X 5 = 13636 75,000 - 13636 = 61,364 61,364 + 45,000 = 106,364

Question 397 REFLECTIVE INSULATION INCLUDES: 1. ASBESTOS. 2. FOIL. 3. FOAM. 4. URETHANE.

Correct Answer: B Foil reflects heat away from living area.

Question 523 The appraisal assignment is a residential property in a residential/commercial zone. Initial research indicates the contributory value of the improvements is $150,000 extracted from residential sales. The commercial lot value is $230,000. Residential lots sell for $100,000. Demolition costs are $15,000. What is the highest and best use? a. Interim use residential/future use commercial b. Residential c. Combination commercial/residential d. Commercial

Correct Answer: B 150,000 + 100,000 = 250,000 total residential value 250,000 - 15,000 = 235,000 value as if vacant

Question 384 A COMPARABLE SOLD ONE YEAR AGO FOR $180,000. PROPERTY VALUES HAVE INCREASED 10 PERCENT SINCE THE SALE. THE LOCATION OF THE SUBJECT IS 15 PERCENT INFERIOR TO THE COMPARABLE. WHAT IS THE INDICATED VALUE OF THE SUBJECT? 1. $171,000 2. $168,300 3. $165,100 4. $162,000

Correct Answer: B 180,000 X 1.10 = 198,000 198,000 X .85 = 168,300

Question 266 AN EXISTING STRUCTURE MAY BE USED FOR RETAIL, OFFICE, OR RESTAURANT SPACE. THE CAPITAL INVESTMENT IS ESTIMATED TO BE $125,000.00 AND NO CAPITAL EXPENDITURES ARE REQUIRED FOR EITHER ALTERNATIVE USE. THE FOLLOWING INFORMATION IS PROVIDED. WHAT IS THE HIGHEST AND BEST USE OF THIS IMPROVED PROPERTY? EFFECTIVE GROSS INCOME OPERATING EXPENSES RETAIL $19,875 RETAIL $5,000 OFFICE $17,625 OFFICE $2,000 RESTAURANT $15,500 RESTAURANT $2,300 a. RETAIL. b. OFFICE. c. RESTAURANT. d. INSUFFICIENT INFORMATION.

Correct Answer: B 19,875 - 5,000 = 14,875 17,625 - 2,000 = 15,625 15,500 - 2,300 = 13,200

Question 280 IN APPRAISING A VACANT COMMERCIAL SITE ALONG AN ARTERIAL HIGHWAY, IT IS DETERMINED THAT PRICE PER FRONT FOOT IS A RELEVANT UNIT OF COMPARISON. BASED ON THE COMPARABLE DATA BELOW, WHAT IS THE INDICATED VALUE OF THE SUBJECT PROPERTY ON A FRONT FOOT BASIS? SUBJECT COMPARABLE A COMPARABLE B COMPARABLE C PRICE $200,000 $180,000 $205,000 DIMENSIONS 95' X 500' 100' X 600' 90' X 450' 110' X 600' a. $182,798 b. $185,682 c. $192,322 d. $195,000

Correct Answer: B 200,000/100=2,000 180,000/90=2,000 205,000/110=1,863 2,000+2,000+1863=5,863 5,863/3=1,954.33 1,954.33x95=185,661

Question 396 A SINGLE FAMILY RESIDENCE WAS SOLD FOR $110,000.00. A DOWN PAYMENT OF $25,000 WAS MADE AND THE SELLER FINANCED THE BALANCE WITH A PURCHASE MONEY MORTGAGE OF $85,000.00 FOR A 20 YEAR TERM WITH MONTHLY PAYMENTS AT 10 PERCENT INTEREST. IF THE MARKET INTEREST RATE IS 13 PERCENT AND THE MORTGAGOR TYPICALLY HOLDS THE MORTGAGE FOR SEVEN YEARS, WHAT IS THE CASH EQUIVALENT SALE PRICE? a. $97,900 b. $100,500 c. $102,250 d. $107,000

Correct Answer: B 20gn 10gi 85,000 PV PMT = 820.2683 monthly debt service 7gn 13gi 820.27 PMT PV = 45,089 discounted value of the payments made 13gn 10gi 820.27 PMT PV = 71,461.5466 loan balance after 7 years of payments 7n 13i 71,461.5466 FV PV = 30,375.49 discounted value of the loan balance 45,089 + 30,375 + 25,000 = 100,464

Question 117 A MORTGAGE LOAN HAS BEEN GRANTED WITH A 25 YEAR TERM AT 12% INTEREST. IF THE LOAN AMORTIZES MONTHLY, WHAT IS THE ANNUAL LOAN CONSTANT? 1. .130455521 2. .126386897 3. .070962072 4. .010532241

Correct Answer: B 25 gn 12 gi 1 PV PMT = .010532241 12 X = .126386897 The mortgage constant is the payment per dollar of loan amount.

Question 157 IF AN INVESTMENT IS WORTH $200,000.00 AFTER THREE YEARS AT A COMPOUND GROWTH RATE OF FOUR PERCENT, WHAT WAS THE ORIGINAL INVESTMENT? 1. $180,000.00 2. $178,000.00 3. $175,000.00 4. $172,000.00

Correct Answer: B 3 n 4 i 200,000 FV PV = 177,799

Question 276 THE SUBJECT SOLD 12 MONTHS AGO FOR $186,500. BASED THE FOLLOWING DATA, WHAT IS THE INDICATED CURRENT VALUE OF THE SUBJECT? COMPARABLE 1ST SALE DATE 2ND SALE 1 186,000 16 MONTHS 189,000 2 187,000 18 MONTHS 195,000 3 193,000 14 MONTHS 197,000 4 183,000 20 MONTHS 186,000 5 191,000 12 MONTHS 196,000 a. $191,800. b. $190,000. c. $189,700. d. $189,500.

Correct Answer: B 3,000 / 16 = 187.50 187.50 + 444.44 + 285.71 + 150 + 416.67 = 1,484.32 8,000 / 18 = 444.44 1,484.32 / 5 = 296.864 4,000 / 14 = 285.71 296.864 X 12 = 3,562 3,000 / 20 = 150 186,500 + 3,562 = 190,062 5,000 / 12 = 416.67

Question 279 GIVEN THE FOLLOWING DATA, WHAT IS THE OPERATING EXPENSE RATIO? PRICE $150,000 POTENTIAL GROSS INCOME $10,000 OPERATING EXPENSES $3,150 DEBT SERVICE $6,200 EFFECTIVE GROSS INCOME $9,000 NET OPERATING INCOME $5,850 a. 31.5% b. 35% c. 53.8% d. 83.5%

Correct Answer: B 3,150/9,000=.35

Question 286 WHAT IS THE AMOUNT REQUIRED FOR A BUYDOWN OF AN $80,000.00 MORTGAGE LOAN FROM THE CURRENT MARKET RATE OF 10 PERCENT TO EIGHT PERCENT FOR THREE YEARS IF THE LOAN AMORTIZES MONTHLY AND THE LOAN TERM IS 30 YEARS? 1. $3,432.22 2. $3,565.41 3. $3,671.31 4. $3,708.91

Correct Answer: B 30 gn 10 gi 80,000 PV PMT = 702.057 30 gn 8 gi 80,000 PV PMT = 587.011 702.057 - 587.011 = 115.046 115.046 PMT 10 gi 3 gn PV = 3,565.41

Question 106 A PARCEL THAT MEASURES 357 FEET SQUARE CONTAINS A TWO ACRE POND. THE MARKET RENT FOR THE PARCEL IS $.06 PER SQUARE FOOT OF DRY LAND PER YEAR. IF THE OPERATING EXPENSES ARE $400.00 ANNUALLY AND THE CAPITALIZATION RATE IS 11.5%, WHAT IS THE PARCEL'S CURRENT VALUE? a. $17,250 b. $17,500 c. $17,750 d. $17,900

Correct Answer: B 357 X 357 = 127,449 2 X 43,560 = 87,120 127,449 - 87,120 = 40,329 40,329 X .06 = 2,419.74 2,419.74 - 400 = 2,019.74 2,019.74/.115 = 17,562.95

Question 147 WHAT IS THE PRESENT VALUE OF $1,000.00 RECEIVED QUARTERLY FOR ONE YEAR AT 12 PERCENT? 1. $3,661.00 2. $3,717.00 3. $3,909.00 4. $3,951.00

Correct Answer: B 4 n 3 i 1,000 PMT PV = 3,717 Four payments of 1,000 during the year.

Question 178 A 10 year old duck farm with a capacity of 50,000 ducks sold recently for $400,000. The cost to replace the improvements is $4.50 per duck. The land is 40 acres valued at $7,000 per acre. What is the economic life of the improvements rounded to the nearest year? a. 18 years b. 21 years c. 29 years d. 42 years

Correct Answer: B 40 x 7,000 = 280,000 land value 400,000 - 280,000 = 120,000 improvement value 450 x 50,000 = 225,000 replacement cost 225,000 - 120,000 = 105,000 depreciation 105,000/10 = 10,500 annual depreciation 225,000/10,500 = 21.42 years

Question 500 BASED ON THE DATA PROVIDED, WHAT IS THE ESTIMATED VALUE OF THE SUBJECT? PRICE RENT UTILITIES DEBT SERVICE SALE 1 $41,200 $380 $150 $210 SALE 2 $42,500 $380 $140 $205 SALE 3 $44,000 $400 $140 $230 SALE 4 $44,500 $395 $135 $220 SUBJECT $390 $130 $255 a. $42,000 b. $42,900 c. $43,500 d. $43,900

Correct Answer: B 41,200 / 380 = 108.42 42,500 / 380 = 111.84 44,000 / 400 = 110 44,500 / 395 = 112.65 108 + 111 + 110 + 112 = 441 441 / 4 = 110.25 110 x 390 = 42,900

Question 420 THE FOLLOWING DATA HAS BEEN COLLECTED ON THREE COMPARABLE LOT SALES. WHAT IS THE INDICATED VALUE OF A .3 ACRE LOT? SALE 1 75 X 100 $1.56/S.F. SALE 2 67 X 100 $1.55/S.F. SALE 3 80 X 105 $1.57/S.F. a. $19,700.00 b. $20,400.00 c. $22,100.00 d. $24,200.00

Correct Answer: B 43,560 X .30 = 13,068 13,068 X 1.56 = 20,386

Question 405 A COMMUNITY HAS A TOTAL ASSESSED PROPERTY VALUE OF $960,000,000. THERE ARE 2,400 HOMES ELIGIBLE FOR THE $25,000 HOMESTEAD TAX EXEMPTION. IF THE COMMUNITY HAS A BUDGETARY REQUIREMENT OF $48,000,000 AND REVENUE FROM OTHER SOURCES OF $30,000,000, WHAT IS THE TAX RATE? 1. 18.75 MILLS. 2. 20 MILLS. 3. 22 MILLS. 4. 22.5 MILLS.

Correct Answer: B 48,000,000 - 30,000,000 = 18,000,000 25,000 X 2,400 = 60,000,000 960,000,000 - 60,000,000 = 900,000,000 18,000,000 / 900,000,000 = .02

Question 370 WHAT ARE THE DIMENSIONS OF A PARCEL DESCRIBED BY THE NORTH 200 FEET OF THE E1/2 OF THE SW1/4 OF THE SE1/4 OF SECTION 6, R15E, T22S? 1. 200' X 460' 2. 200' X 660' 3. 200' X 880' 4. 200' X 1320'

Correct Answer: B 5,280/2=2,640 2,640/2=1,320 1,320/2=660

Question 383 A TWO STORY BUILDING MEASURES 50 X 100 FEET AND RENTS FOR $.65 PER SQUARE FOOT EACH MONTH. WHAT IS THE ANNUAL RENT? 1. $117,000.00 2. $78,000.00 3. $39,000.00 4. $24,000.00

Correct Answer: B 50 X 100 = 5,000 5,000 X 2 = 10,000 10,000 X .65 = 6,500 6,500 X 12 = 78,000

Question 167 WHAT IS THE SQUARE FOOTAGE OF A SITE DESCRIBED BY THE LEGAL DESCRIPTION, BEGINNING AT THE NW CORNER OF SECTION 8, T29S, R15E, THENCE E 1450 FEET TO THE POB, S 0 E 150 FEET, THENCE N 90 E 50 FEET, THENCE N 0 E 100 FEET, THENCE N 45 W 70.71 FEET TO THE POB? 1. 9,200 2. 6,250 3. 5,750 4. 5,250

Correct Answer: B 50 X 100 = 5,000 50 X 50 = 2,500 2,500 / 2 = 1,250 1,250 + 5,000 = 6,250 Measuring size on a property described using metes and bounds.

Question 344 THE SUBJECT PROPERTY HAS CONTRACT RENT IN THE AMOUNT OF $35,000 ANNUALLY. MARKET RENT FOR THE PROPERTY IS JUDGED TO BE $50,000. REVERSIONARY VALUE IS PROJECTED TO BE $400,000. IF THE LEASE TERM IS 15 YEARS AND THE DISCOUNT RATE IS 10 PERCENT, WHAT IS THE VALUE OF THE LEASEHOLD INTEREST? a. $95,756.00 b. $114,091.00 c. $209,848.00 d. $266,212.00

Correct Answer: B 50,000 - 35,000 = 15,000 15n 10i 15,000 PMT PV = 114,091

Question 394 ASSUMING PAYMENTS ARE MADE IN ADVANCE, WHAT IS THE PRESENT VALUE OF AN ORDINARY ANNUITY CONSISTING OF CASH FLOWS OF $1,000.00 PER YEAR FOR THE FIRST FIVE YEARS, $2,000.00 PER YEAR FOR THE NEXT FIVE YEARS, AND $3,000.00 PER YEAR FOR THE FINAL FIVE YEARS IF A DISCOUNT RATE OF SIX PERCENT IS APPROPRIATE? 1. $17,564.30 2. $18,618.15 3. $19,011.12 4. $19,898.57

Correct Answer: B 6 i 1,000 g Cfo 1,000 g Cfj 4 g Nj 2,000 g Cfj 5 g Nj 3,000 g Cfj 5 g Nj f NPV = 18,618.15

Question 146 A SITE CONTAINS 12,000 SQUARE FEET. USING REGRESSION ANALYSIS IT IS DETERMINED THAT THE MARGINAL CONTRIBUTION OF AN EXTRA SQUARE FOOT IS $1.98. THE MINIMUM VALUE OF PROPERTY IN THIS SUBDIVISION IS $6,000.00 REGARDLESS OF SIZE. WHAT IS THE INDICATED PROPERTY VALUE? 1. $32,960.00 2. $29,760.00 3. $24,620.00 4. $18,420.00

Correct Answer: B 6,000 + (12,000 X 1.98) = 29,760 Simple linear regression.

Question 142 THE BUYER MAKES A $15,000 DOWN PAYMENT FINANCING THE BALANCE OF THE PROPERTY WITH A $60,000 LOAN. THE LENDER CHARGED FOUR POINTS IN DISCOUNT WHICH THE SELLER AGREED TO PAY. WHAT IS THE CASH EQUIVALENT PRICE OF THIS SALE? 1. $72,000 2. $72,600 3. $75,000 4. $77,400

Correct Answer: B 60,000 X .04 = 2,400 60,000 + 15,000 = 75,000 75,000 - 2,400 = 72,600 This seller's concession was built into the asking price.

Question 136 AN APARTMENT COMPLEX WITH 100 UNITS WAS CONSTRUCTED WITHOUT AIR CONDITIONING. AS A RESULT, EACH APARTMENT IS RENTED FOR $75.00 PER MONTH LESS THAN OTHER COMPARABLE UNITS WITH THIS FEATURE. IF THE APPROPRIATE CAPITALIZATION RATE FOR THIS TYPE OF INVESTMENT IS 12 PERCENT AND COST OF AIR CONDITIONING AT THE TIME OF CONSTRUCTION WAS $500,000.00, WHAT IS THE FUNCTIONAL OBSOLESCENCE ATTRIBUTABLE TO THIS DEFICIENCY? 1. $90,000.00 2. $250,000.00 3. $750,000.00 4. $900,000.00

Correct Answer: B 75 X 100 = 7,500 7,500 X 12 = 90,000 90,000 / .12 = 750,000 750,000 - 500,000 = 250,000

Question 269 A SAMPLE OF 100 HOUSE SALES HAS BEEN TAKEN. DATA HAS BEEN GATHERED ON SALES PRICE (Y), SQUARE FOOT AREA (X1), AGE (X2), LOCATION (X3), NUMBER OF BATHS (X4), AND NUMBER OF GARAGE STALLS (X5). THE RESULTING LINEAR MULTIPLE REGRESSION EQUATION IS: Y = 84,790 + 2.45X1 - 950X2 + 2100X3 + 700X4 + 650X5 THE PROPERTY BEING APPRAISED IS A 12 YEAR OLD RESIDENCE WITH 3.5 BATHS AND TWO GARAGE STALLS. IT CONTAINS 1900 SQUARE FEET OF AREA. THE LOCATION RATING IS FOUR ON A SCALE OF ONE TO FIVE. WHAT IS YOUR ESTIMATE OF THE MOST PROBABLE SALES PRICE? a. $99,505.00 b. $90,195.00 c. $88,895.00 d. $82,695.00

Correct Answer: B 84,790 + (2.45 X 1900) - (950 X 12) + (2,100 X 4) + (700 X 3.5) + (650 X 2) = 90,195

Question 138 A PROPERTY RENTS FOR $750.00 IN AN AREA WHERE NOISE FROM A NEARBY AIRPORT IS CONSIDERED A NUISANCE. SIMILAR PROPERTIES THAT ARE NOT AFFECTED BY THE NOISE RENT FOR $900.00 PER MONTH. ASSUMING A GRM OF 110 AND A LAND-TO-BUILDING RATIO OF 1:3, WHAT IS THE EXTERNAL OBSOLESCENCE ATTRIBUTABLE TO THE IMPROVEMENT? 1. $9,900.00 2. $12,375.00 3. $13,000.00 4. $16,500.00

Correct Answer: B 900 - 750 = 150 150 X 110 = 16,500 16,500 X .75 = 12,375 Count external obsolescence only on the improvement.

Question 179 AN APPRAISER IS ABLE TO ESTIMATE THE DEPRECIATED COST OF THE IMPROVEMENTS AND THEN DEDUCTS THIS AMOUNT FROM THE TOTAL SALES PRICE TO OBTAIN AN ESTIMATE OF THE VALUE OF LAND. THIS PROCEDURE IS: 1. ALLOCATION. 2. EXTRACTION. 3. EXTRAPOLATION. 4. AGGLOMERATION.

Correct Answer: B A deduction of construction cost from the sale price suggests extraction. Allocation multiplies a land ratio by the sale price to identify the value of land. Extrapolation suggests that conclusions are reached about the characteristics of the whole group by studying the characteristics of a small group (sample). Agglomeration is synonomous with assemblage (combine).

Question 258 A FAMILIAL RELATIONSHIP EXISTS BETWEEN THE PARTIES OF A SALE. IN ORDER TO USE THIS SALE AS A COMPARABLE, THE APPRAISER MAY ANTICIPATE AN ADJUSTMENT FOR: 1. MARKET CONDITIONS. 2. CONDITIONS OF SALE. 3. PROPERTY RIGHTS. 4. FINANCING TERMS.

Correct Answer: B A familial relationship suggests this a sale between family members requiring consideration of a conditions of sale adjustment.

Question 270 AN APPRAISER FORECASTS THE PRESENT VALUE OF THE TOTAL DEVELOPMENT COSTS AND DEDUCTS THOSE COSTS FROM THE PRESENT VALUE OF THE SALES PROCEEDS. THIS PROCEDURE IS: I. DEVELOPMENT COST. II. ANTICIPATED USE. III. SALES COMPARISON. a. I, II, AND III. b. I AND II. c. I AND III. d. II AND III.

Correct Answer: B Also may be referred to as the subdivision analysis method.

Question 494 ACCORDING TO USPAP, AN APPRAISER MUST: I. MAINTAIN A CONFIDENTIAL RELATIONSHIP WITH THE CLIENT. II. PERFORM THE ASSIGNMENT ETHICALLY. III. BE COMPETENT TO PERFORM THE ASSIGNMENT. IV. FOLLOW ALL INSTRUCTIONS OF THE CLIENT. a. I, II, III, AND IV. b. I, II, AND III. c. II, III, AND IV. d. III AND IV.

Correct Answer: B An appraiser should not follow inappropriate instructions from a client.

Question 194 WHAT APPRAISAL CONCEPT IS VIOLATED WHEN AN APPRAISER VALUES THE SITE AS A COMMERCIAL USE AND THE IMPROVEMENTS AS A RESIDENTIAL USE? 1. CONFORMITY. 2. CONSISTENT USE. 3. HIGHEST AND BEST USE. 4. BALANCE.

Correct Answer: B An example of a violation of the principle of consistent use.

Question 374 A CERTIFIED APPRAISER APPRAISED A PROPERTY FOUR YEARS AGO. THE APPRAISAL WAS THE SUBJECT OF RECENT LITIGATION. HOW LONG FOLLOWING THE CLOSE OF LITIGATION MUST THE APPRAISER KEEP SUPPORTING DOCUMENTS AND RECORDS? 1. ONE YEAR. 2. TWO YEARS. 3. THREE YEARS. 4. FIVE YEARS.

Correct Answer: B As required by USPAP.

Question 388 HOW WOULD AN APPRAISER TREAT ANTIQUE CARS OR ITEMS OF FINE ART IN AN APPRAISAL THAT INCLUDES BOTH REAL AND PERSONAL PROPERTY? 1. VALUE REAL AND PERSONAL PROPERTY TOGETHER. 2. IDENTIFY AND SEPARATELY VALUE PERSONAL PROPERTY. 3. PERSONAL PROPERTY MAY NOT BE INCLUDED IN AN APPRAISAL. 4. DEDUCT THE VALUE OF PERSONAL PROPERTY FROM THE VALUE OF THE REAL PROPERTY.

Correct Answer: B As required by USPAP.

Question 557 A PROPERTY UNDER APPRAISAL HAS 80 PERCENT OF ITS VALUE ALLOCATED TO THE BUILDING AND 20 PERCENT ALLOCATED TO THE LAND. IF THE BUILDING CAPITALIZATION RATE IS 11.5 PERCENT AND THE LAND CAPITALIZATION RATE IS 9.5 PERCENT, WHAT IS THE OVERALL CAPITALIZATION RATE? 1. 21 PERCENT. 2. 11.1 PERCENT. 3. 9.2 PERCENT. 4. 7.6 PERCENT.

Correct Answer: B B. .80 X .115 = .092 .20 X .095 = .019 .092 + .019 = .111

Question 555 WHAT IS THE AFTER TAX EQUITY REVERSION OF A $1,500,000.00 OFFICE BUILDING WITH A REMAINING MORTGAGE BALANCE OF $890,675.00 WHEN THE SELLING EXPENSES ARE 11 PERCENT AND THE TAX DUE ON SALE IS $130,000.00? 1. $149,325.00 2. $314,325.00 3. $395,325.00 4. $444,325.00

Correct Answer: B B. 1,500,000 X .11 = 165,000 1,500,000 - 165,000 - 890,000 - 130,000 = 314,325

Question 578 A 261 UNIT HOTEL IS BEING APPRAISED. COMPARABLES HAVE BEEN LOCATED THAT YIELD THE FOLLOWING DATA. WHAT IS THE INDICATED VALUE OF THE SUBJECT PROPERTY ON A PRICE PER ROOM BASIS IF NO ADJUSTMENTS ARE NECESSARY AND EACH SALE IS EQUALLY WEIGHTED? (ROUNDED TO THE NEAREST $100) COMPARABLEA COMPARABLEB COMPARABLEC COMPARABLE D PRICE $15,160,000 $62,620,000 $6,200,000 $9,900,000 ROOMS 393 1076 203 261 a. $8,991,000.00 b. $10,782,000.00 c. $12,675,000.00 d. $23,470,000.00

Correct Answer: B B. 15,160,000 / 393 = 38,575 62,620,000 / 1,076 = 58,197 6,200,000 / 203 = 30,541 9,900,000 / 261 = 37,931 38,575 + 58197 + 30,541 + 37,931 = 165,244 165,244 / 4 = 41,311 41,311 X 261 = 10,782,171

Question 607 FINANCING IS ACQUIRED FOR $100,000 AT A 12 PERCENT COST. A DOWN PAYMENT IN THE AMOUNT OF $100,000 IS MADE. A TEN PERCENT RETURN IS EARNED ON THE $200,000 INVESTMENT. WHAT IS THE INDICATED RETURN ON EQUITY? 1. 7 PERCENT. 2. 8 PERCENT. 3. 9 PERCENT. 4. 10 PERCENT.

Correct Answer: B B. 200,000 X .10 = 20,000 100,000 X .12 = 12,000 20,000 - 12,000 = 8,000 8,000 / 100,000 = .08

Question 580 GIVEN THE FOLLOWING DATA, WHAT IS THE OPERATING EXPENSE RATIO? TRANSACTION PRICE - $120,000 POTENTIAL GROSS INCOME - 10,000 OPERATING EXPENSES - 3,150 DEBT SERVICE - 6,200 EFFECTIVE GROSS INCOME - 9,000 NET OPERATING INCOME - 5,850 a. 31.5% b. 35% c. 53.8% d. 83.5%

Correct Answer: B B. 3,150 / 9,000 = .35

Question 585 A LANDLORD HAS AGREED TO PURCHASE DENTAL CHAIRS IN A SPACE RENTED BY A DENTIST. THE LEASE IS FOR FIVE YEARS AND THE CONTRACT RENTAL RATE IS $1,700.00 PER MONTH. THE LANDLORD PURCHASED THE CHAIRS FOR $15,800.00. IF THE APPROPRIATE FINANCING RATE FOR THE CHAIRS WAS 11.5 PERCENT AMORTIZING MONTHLY, WHAT IS THE EFFECTIVE RENT PAYMENT? 1. $1,339.00 2. $1,353.00 3. $1,398.00 4. $1,453.00

Correct Answer: B B. 5 g n 1,700 - 347 = 1353 11.5 g I 15,800 PV PMT = 347.48

Question 594 THE SUBJECT PROPERTY IS FINANCED WITH A FULLY AMORTIZING MORTGAGE LOAN IN THE AMOUNT OF $60,000.00 THE ANNUAL LOAN CONSTANT IS .105. IF NET OPERATING INCOME IS $7,000.00 AND THE EQUITY DIVIDEND RATE IS 10 PERCENT, WHAT IS THE VALUE OF THE EQUITY? 1. $6,600.00. 2. $7,000.00 3. $7,800.00 4. $8,200.00

Correct Answer: B B. 60,000 X .105 = 6,300 7,000 - 6,300 = 700 700 / .10 = 7,000

Question 579 AN APPRAISER HAS IDENTIFIED COMPARABLE SALES FOR THE SUBJECT APARTMENT COMPLEX. COMPARABLE A AND COMPARABLE B BOTH REQUIRE NEGATIVE TWO PERCENT ADJUSTMENTS FOR NONMARKET FINANCING. WHAT IS THE INDICATED VALUE OF THE SUBJECT ON A PER UNIT BASIS? COMPARABLE COMPARABLE COMPARABLE SUBJECT A B C PRICE $7,475,000 $7,700,000 $7,500,000 UNITS 325 275 310 375 a. $7,558,300.00 b. $7,689,500.00 c. $7,802,200.00 d. $7,920,100.00

Correct Answer: B B. 7,475,000 X .02 = 149,500 7,475,000 - 149,500 = 7,325,500 7,325,500 / 275 = 26,638 7,700,000 X .02 = 154,000 7,700,000 - 154,000 = 7,546,000 7,546,000 / 310 = 24,341 7,500,000 / 375 = 20,000 26,638 + 24,341 + 20,000 = 70,979 70,979 / 3 = 23,660 23,660 X 325 = 7,689,500

Question 619 WHAT IS THE NET OPERATING INCOME FOR A PROPERTY WITH THE FOLLOWING CHARACTERISTICS? EFFECTIVE GROSS INCOME $72,000 OPERATING EXPENSE RATIO 40% DEBT SERVICE $35,000 DEPRECIATION $ 8,000 a. $72,000.00 b. $43,200.00 c. $8,200.00 d. $200.00

Correct Answer: B B. 72,000 X .40 = 28,800 72,000 - 28,800 = 43,200

Question 576 A PROPERTY IS LEASED ON A NET BASIS FOR $30,000.00 PER YEAR FOR 20 YEARS. MARKET RENT FOR THIS SAME PROPERTY IS $35,000.00. IF THE APPROPRIATE DISCOUNT RATE IS 10 PERCENT AND THE PROPERTY IS EXPECTED TO BE WORTH $40,000.00 AT THE END OF THE LEASE PERIOD, WHAT IS THE CURRENT VALUE OF THE LEASED FEE? 1. $255,407.00 2. $261,353.00 3. $297,975.00 4. $303,921.00

Correct Answer: B B. see above solution

Question 524 A POTENTIAL NEW CLIENT HAS CONTACTED YOU AND HAS REQUESTED A REVIEW OF A PORTFOLLIO OF YOUR APPRAISALS. WHICH OF THE FOLLOWING IS CORRECT? 1. AS LONG AS THE IMPORTANT INFORMATION IS REDACTED, THE APPRAISALS MAY BE FORWARDED TO THE NEW CLIENT. 2. THIS APPRAISER WILL NEED AUTHORIZATION OF THE ORIGINAL CLIENT PRIOR TO REVEALING THIS INFORMATION. 3. THE ORIGINAL CLIENT'S IDENTITY MUST BE CONCEALED PRIOR TO DELIVERY OF APPRAISALS FOR REVIEW. 4. A REVIEW OF THE APPRAISALS MUST BE COMPLETED PRIOR TO DELIVERY TO THE NEW CLIENT.

Correct Answer: B Based on the Confidentiality Rule in USPAP.

Question 246 AN APPRAISER IS ANALYZING SALES COMPARABLE TO THE SUBJECT APARTMENT BUILDING. ONE COMPARABLE HAS A SLIGHTLY LOWER RENT PER ROOM THAN THE SUBJECT AND THE OTHER COMPARABLES. IF THIS PARTICULAR SALE HAS A HIGHER POTENTIAL GROSS INCOME MULTIPLIER THAN ANY OF THE OTHER COMPARABLES, WHAT CONDITION MAY BE INDICATED? 1. BUYERS ANTICIPATED REDUCING RENT. 2. BUYERS ANTICIPATED INCREASING RENT. 3. SELLER SOLD UNDER DURESS. 4. ALL CASH TRANSACTION.

Correct Answer: B Based on the mathematics of gross rent multipliers, it appears that the sale price was too high for the current income. A plausible explanation is that the buyers thought the rent did not represent what it should and anticipated a rent increase.

Question 255 WHAT IS A PRIMARY REASON TO IDENTIFY BOTH HIGHEST AND BEST USE OF LAND AS THOUGH VACANT AND HIGHEST AND BEST USE OF THE PROPERTY AS IMPROVED? 1. ESTIMATE LAND VALUE. 2. IDENTIFY COMPARABLE SALES. 3. IDENTIFY THE USE THAT SHOULD BE MADE TO AN IMPROVED PROPERTY. 4. DETERMINE THE USE OF PROPERTY THAT GENERATES THE HIGHEST OVERALL RATE OF RETURN.

Correct Answer: B Both tests in higest and best use would be used to qualify comparable sales.

Question 181 WHICH OF THE FOLLOWING IS NOT A PROFESSIONAL APPRAISER DESIGNATION? 1. MAI 2. CPM 3. RM 4. SRA

Correct Answer: B CPM is Certified Property Manager

Question 273 CLOSING OF THE REGION'S ONLY MAJOR INDUSTRY WOULD LIKELY CREATE A: I. BUYER'S MARKET. II. SELLER'S MARKET. III. TECHNICAL OVERSUPPLY. IV. TECHNICAL UNDERSUPPLY. a. I AND IV. b. I AND III. c. II AND IV. d. NONE OF THE ABOVE.

Correct Answer: B Closing of the major employer creates unemployment and the desire of the umemployed to relocate to a different area.

Question 218 Arce appraised 230 Oak Drive for Independent Bank in December 2013. Arce agreed with Independent Bank to not reveal the completion of the prior appraisal assignment. Arce was then offered an assignment to appraise 230 Oak Drive for Opportunistic Bank in February 2014. Which of the following best applies? a. Arce may reappraise 230 Oak Drive with no disclosure. b. Arce will not be able to appraise 230 Oak Drive for three years following the completion of the original appraisal. c. Arce may accept the February 2014 assignment and must make the required disclosure of the prior assignment. d. The instruction of Independent Bank is a violation of USPAP and should be reported to the Appraisal Standards Board.

Correct Answer: B Comment on the Conduct Section of the Ethics Rule

Question 438 THE SUBJECT IS A 50 YEAR OLD HOME TRADED IN AN ACTIVE MARKET WHERE THERE ARE PLENTY OF SALES OF SIMILAR PROPERTIES. THERE ARE NO RENTAL HOMES IN THE MARKET. WHAT APPRAISAL APPROACH WILL LIKELY PROVIDE THE MOST RELIABLE INDICATOR OF MARKET VALUE FOR THIS SUBJECT? 1. COST. 2. SALES COMPARISON. 3. INCOME. 4. REGRESSION.

Correct Answer: B Considering the age of the improvement and lack of a rental market, the cost and income approaches are not applicable. Based on the fact there are plenty of sales of similar properties, sales comparison is the most reliable indicator of market value.

Question 211 A DEED PLACED ON PUBLIC RECORD EFFECTS: 1. ACTUAL NOTICE. 2. CONSTRUCTIVE NOTICE. 3. INQUIRY NOTICE. 4. ACKNOWLEDGED NOTICE.

Correct Answer: B Constructive notice, also known as legal notice, has the impact as if the entire public has been shown a copy of the document recorded.

Question 182 WHAT TYPE OF ESTATE IS VALUED WHEN PROJECTED CONTRACT RENT IS DISCOUNTED TO PRESENT VALUE AND THEN ADDED TO THE PRESENT VALUE OF THE PROPERTY REVERSION? 1. LEASEHOLD. 2. LEASED FEE. 3. FEE SIMPLE REVERSION. 4. FEE SIMPLE ABSOLUTE.

Correct Answer: B Contract rent converts to the value of the landlord's estate (leased fee).

Question 215 DATA IS ALL OF THE FOLLOWING EXCEPT: 1. VARIABLE. 2. UNIVERSAL. 3. LOGICAL. 4. DEFENSIBLE.

Correct Answer: B Data requirements vary from one appraisal assignment to the next. Data is not universally applicable.

Question 427 WHICH OF THE FOLLOWING IS/ARE CORRECT REGARDING A DE MINIMUS PUD? I. MINIMAL AMOUNT OF COMMON PROPERTY. II. COMMON PROPERTY HAS AN INSIGNIFICANT IMPACT ON THE VALUE OF THE PROPERTY THAT SECURES THE UNIT MORTGAGE. III. MULTI-DWELLING UNITS REPRESENT THE SECURITY FOR A SINGLE MORTGAGE. a. I AND III. b. I AND II. c. II AND III. d. I, II, AND III.

Correct Answer: B De minimus PUD will have commonly owned property in combination with individual ownership. The commonly owned property contributes insignificantly to the value and buying decision.

Question 334 AN EXAMINATION OF WHICH OF THE FOLLOWING WILL GENERALLY INDICATE THE APPROXIMATE SALE PRICE OF A PROPERTY? 1. PROPERTY CARD. 2. DOCUMENTARY TAXES ON THE DEED. 3. WRITING ON THE DEED. 4. ASSESSMENT ROLL.

Correct Answer: B Documentary taxes are paid based on the sale price at a rate of .70 per $100.

Question 229 A MAJOR SHIFT IN MORTGAGE LOAN INTEREST RATES RESULTS IN: 1. LOCATIONAL OBSOLESCENCE. 2. ECONOMIC OBSOLESCENCE. 3. ENVIRONMENTAL OBSOLESCENCE. 4. EXTERNAL OBSOLESCENCE.

Correct Answer: B Economic obsolescence is the type of external obsolescence that impacts the whole market. Locational and enviromental obsolescence are synonomous terms describing external obsolescence that is due to the property's poor location.

Question 170 WHICH OF THE FOLLOWING ARE ONE IN THE SAME? 1. CONTRACT RENT/ECONOMIC RENT. 2. CONTRACT RENT/SCHEDULED RENT. 3. CONTRACT RENT/MARKET RENT. 4. ECONOMIC RENT/SCHEDULED RENT.

Correct Answer: B Economic rent and market rent would be the same.

Question 465 THE COST OF CONSTRUCTION AT CURRENT PRICES OF A BUILDING HAVING UTILITY EQUIVALENT TO THE BUILDING BEING APPRAISED BUT BUILT WITH MODERN MATERIALS ACCORDING TO CURRENT STANDARDS, DESIGN, AND LAYOUT IS: 1. REPRODUCTION COST. 2. REPLACEMENT COST. 3. COST-IN-PLACE. 4. COST OF DEVELOPMENT.

Correct Answer: B Equivalent utility is the basis for replacement cost estimates. The cost to build a duplicate of the subject improvement is found in reproduction cost.

Question 439 WHICH OF THE FOLLOWING WOULD INFLUENCE MARKET VALUE OF THE LEASED FEE? 1. MARKET RENT. 2. ESTATE FOR YEARS. 3. TENANCY AT WILL. 4. TENANCY AT SUFFERANCE.

Correct Answer: B Estate for years is created by a lease that will survive a sale. Surviving a sale is essential to impacting the most probable sale price, market value. Tenacy at will is a rental agreement with no written lease, tenancy at sufferance is unauthorized occupancy (trespassing), and market rent converts to the value of a fee simple estate, not a leased fee (landlords estate).

Question 289 WHICH OF THE FOLLOWING PROPERLY REPRESENTS THE ORDER OF THE FOUR CRITERIA FOR HIGHEST AND BEST USE? I. FINANCIALLY FEASIBLE. II. PHYSICALLY POSSIBLE. III. LEGALLY PERMISSIBLE. IV. MAXIMALLY PRODUCTIVE. a. I, II, III, IV. b. III, II, I, IV. c. II, I, III, IV. d. III, I, II, IV.

Correct Answer: B Evaluating uses that are legally permitted first eliminates more alternatives from consideration than any other test. The mazximally productive use must be the final criteria considered.

Question 522 EXAMINATION OF PRIOR SALES OF THE SUBJECT WOULD BE PERFORMED TO PROTECT AGAINST WHICH OF THE FOLLOWING? 1. MORAL TURPITUDE. 2. PROPERTY FLIPPING. 3. ADVOCACY. 4. DISCLOSURE OF CONFIDENTIAL INFORMATION.

Correct Answer: B Examining prior sales may uncover evidence of paper transactions that are designed to inflate the appearance of value increases.

Question 338 As of the effective appraisal date, the position is taken that no environmental contamination exists on the subject based on inspection that revealed no such concerns to be manifest. This best represents a(an): 1. assumption 2. extraordinary assumption 3. hypothetical condition 4. violation of USPAP

Correct Answer: B Extraordinary assumptions presume as fact uncertain information about the subject as of the effective appraisal date. If found to be false, it could alter the appraiser's opinions or conclusions. Hypothetical conditions are contrary to known conditions.

Question 130 YOU HAVE PROVIDED ASSISTANCE IN AN APPRAISAL ASSIGNMENT, BUT YOU DID NOT SIGN THE REPORT OR CERTIFICATION. ARE YOU OBLIGATED BY USPAP TO MAINTAIN A WORKFILE, AND IF SO, FOR HOW LONG? 1. YES, FOR A MAXIMUM OF FIVE YEARS 2. YES, FOR A MINIMUM OF FIVE YEARS 3. NO, THIS IS A STATE REQUIREMENT 4. NO, THIS IS NOT A REQUIREMENT UNDER ANY CIRCUMSTANCES

Correct Answer: B For a full overview of this topic, see AO-31 in USPAP.

Question 293 WHICH OF THE FOLLOWING IS A CHARACTERISTIC OF REAL PROPERTY? I. FIXITY OF LOCATION. II. SLOW RESPONSE TO CHANGES IN DEMAND. III. HETEROGENEOUS PRODUCTS. IV. FUNGIBLE. a. I, II, III, AND IV. b. I, II, AND III. c. I AND II. d. I ONLY.

Correct Answer: B Fungible means highly liquid. Real property is not easily converted to cash, not highly liquid. All other choices are characteristics of real property.

Question 204 WHAT SECTION IS LOCATED SOUTH OF SECTION 31, T22S, R13E? 1. SECTION 36, T22S, R14E 2. SECTION 6, T23S, R13E 3. SECTION 36, T23S, R13E 4. SECTION 6, T22S, R14E

Correct Answer: B Government survey legal description.

Question 231 BASE LINES ARE: 1. MERIDIANS. 2. EAST-WEST LINES. 3. NORTH-SOUTH LINES. 4. TOWNSHIP EAST JOINS TOWNSHIP NORTH.

Correct Answer: B Government survey legal description. The north-south lines are meridians, also known as range lines.

Question 400 THE SUBJECT PROPERTY HAS RENTS HIGHER THAN ALL COMPARABLES. WHAT APPRAISAL PRINCIPLE SHOULD BE CONSIDERED? 1. BALANCE. 2. COMPETITION. 3. CONFORMITY. 4. CONSISTENT USE.

Correct Answer: B Higher rents suggest a higher value. Competition says that better properties will sell for more.

Question 207 A NEIGHBORHOOD IS BEST DESCRIBED AS AN AREA WITH: 1. HOMOGENEOUS USES. 2. COMPLEMENTARY USES. 3. SIMILAR USES. 4. ALL OF THE ABOVE.

Correct Answer: B Homogeneous uses are characteristic of a district.

Question 133 THE COST-DEPRECIATION APPROACH TENDS TO BE MORE ACCURATE IF: 1. REPRODUCTION COSTS ARE APPLIED TO RELATIVELY OLDER BUILDINGS. 2. THE SITE AS THOUGH VACANT AND THE PROPERTY AS IMPROVED ARE AT THEIR HIGHEST AND BEST USES. 3. IT IS CONFINED TO THE VALUATION OF SPECIAL-PURPOSE BUILDINGS. 4. THE BUILDING HAS BEEN DEPRECIATED BY GREATER THAN 50 PERCENT OF ITS ORIGINAL BOOK VALUE.

Correct Answer: B If the site is at its highest and best use, no depreciation is present. Book value is based on accounting practices and is tied to how the tax code applies to the property.

Question 359 WHAT IMPACT DOES AN INCREASE IN THE RESERVE REQUIREMENT BY THE FEDERAL RESERVE SYSTEM HAVE ON THE AVAILABILITY OF CREDIT? 1. INCREASES. 2. DECREASES. 3. MULTIPLIES. 4. STABILIZES.

Correct Answer: B Increasing the reserve requirement increases the amount of money the lender would have to retain in house which reduces the amount of loanable funds.

Question 212 WHAT TERM APPLIES TO A LEASE THAT REQUIRES THE LESSOR TO PAY ALL OPERATING EXPENSES ASSOCIATED WITH THE REAL ESTATE? 1. INDEX LEASE. 2. GROSS LEASE. 3. NET LEASE. 4. PASSTHROUGH LEASE

Correct Answer: B Index leases tie the rent to an agreed upon index. The tenant pays operating expenses in a net lease. Passthrough lease is a fabricated term.

Question 432 A 40 acre parcel of land is in a multipurpose zone near an interstate highway requiring either 10 acre lots for residential, 10 acre lots for industrial, or 20 acre lots for motels. The land is currently being utilized to grow fruit trees. The current owner sells 5 acres of trees each year, 500 trees per acre at $20 per tree. Residential lots sell for $75,000 each and the absorption rate would be on lot per year. Industrial lots sell for $150,000 each and will sell in the tenth year. Motel sites sell for $300,000 each but the nearest projected need is 10 years. The discount rate is 10%. What is the highest and best use of the property? a. Industrial b. Residential c. Motel d. Current use

Correct Answer: B Industrial - legally permitted use 40/10 = 4 lots 4 x 150,000 = 600,000 10n 10i 600,000 FV PV = 231,325 Residential - legally permitted use 40/10 = 4 lots 4n 10i 75,000 PMT PV = 237,739 Motel - legally permitted use 40/20 = 2 2 x 300,000 = 600,000 10n 10i 600,000 FV PV = 231,325 Current use - not a legally permitted use

Question 510 WHICH OF THE FOLLOWING IS USUALLY ACCOMPLISHED DURING THE DEFINITION OF THE PROBLEM PHASE OF THE VALUATION PROCESS? 1. DETERMINING LOCAL CONDITIONS. 2. IDENTIFYING PROPERTY RIGHTS TO BE VALUED. 3. COLLECTING RELEVANT DATA. 4. ANALYZE THE MARKET.

Correct Answer: B Knowledge of the property rights to be valued will insure that the correct market is identified and analyzed and that the correct data is collected.

Question 458 APPLICABILITY OF INCOME CAPITALIZATION IS LIMITED BY: 1. IRREGULAR INCOME PATTERN. 2. LACK OF RENTAL MARKET. 3. SUBJECT IS IMPROVED. 4. IMPROVEMENTS ARE OVER 70 YEARS OLD.

Correct Answer: B Lack of a rental market suggests that the subject is not traded based on income production. If there is no data to support it, income capitalization is not applicable.

Question 141 SHIRLEY APPRAISAL COMPANY PURCHASED BRANDON APPRAISAL COMPANY. THE PURCHASE INCLUDED A TRANSFER OF ALL TANGIBLE AND INTANGIBLE ITEMS OF THE APPRAISAL BUSINESS OF BRANDON. IS THIS A VIOLATION OF USPAP? 1. YES, IT WOULD VIOLATE THE MANAGEMENT RULE SINCE APPRAISAL FIRMS CAN NOT BE SOLD BECAUSE THEY HAVE NO VALUE. 2. YES, THIS SALE WOULD VIOLATE THE CONFIDENTIALITY SECTION OF THE ETHICS RULE. 3. NO, ANY INTERFERENCE IN THIS SALE WOULD CONSTITUTE A RESTRAINT OF TRADE. 4. NO, APPRAISAL FIRMS ARE NOT REGULATED.

Correct Answer: B Since all assets of the appraisal firm were purchased, one must assume that the sale included Brandon's workfiles. The workfiles would have confidential information that should not be disclosed to another appraiser.

Question 313 Certified Appraiser Joe has accepted an assignment to appraise a single-family home that is currently tenant occupied. The assignment calls for Joe to develop a market value of a fee simple interest. The existing lease is significantly below market, runs for another 24 months following the effective appraisal date, and will survive a sale. Joe must: a. Consider the impact of the lease in the valuation. b. Develop a projection of market rent if income capitalization is judged applicable. c. Measure contract rent and convert it into market value. d. Place little emphasis on the results of income capitalization.

Correct Answer: B Market rent is considered, analyzed, and ultimately converts into the value of a fee simple estate. In a fee simple estate, the owner is assumed to possess the maximum rights in real property, in other words the right to occupy has been retained by the property owner. See USPAP FAQ 128.

Question 121 An older residential improvement is located in an area now zoned commercial. As commercial land, the value of the site is $60,000 based on recent similar sales. A similar improved residential property recently sold for $80,000. Nearby residential sites have a land value of 20% of the total property value. The current demolition cost of the residential improvement is $5,000. What is the market value of the site? A. $80,000 B. $60,000 C. $16,000 D. $11,000

Correct Answer: B Market value is the most probable sale price. Any appraisal for market value must assume a sale as of the effective appraisal date. The legal use of the land vacant is commercial as of the effective appraisal date. Based on the appraisal principle of consistent use, land and improvements must be valued on the basis of the same conclusion of highest and best use.

Question 173 WHAT IS THE MOST EFFICIENT PARKING CONFIGURATION FOR A GARAGE? 1. 45 DEGREE ANGLE. 2. 90 DEGREE ANGLE. 3. DOUBLE. 4. SINGLE.

Correct Answer: B More parking is available with straight-in parking.

Question 120 RECONCILIATION SHOULD BE REGARDED AS WHAT TYPE OF PROCESS? 1. AVERAGING. 2. WEIGHTED AVERAGING. 3. CORRELATING. 4. JUSTIFYING.

Correct Answer: B More weight is placed on the result that best represents the value of the subject.

Question 332 WHICH IS CORRECT REGARDING MORTGAGE INSURANCE (MIP)? 1. INSURES VETERANS IN DEFAULT ON MORTGAGE OBLIGATIONS. 2. INSURES THE TOP 20% OF THE LOAN. 3. INSURES THE BORROWER IN THE EVENT OF DEATH. 4. INCREASES YIELD ON FEDERALLY RELATED FINANCING.

Correct Answer: B Mortgage insurance insures lenders who have accepted a high level of risk in loan origination.

Question 356 WHICH OF THE FOLLOWING IS THE BEST SOURCE FOR CONFIRMING A CLOSING DATE? 1. LISTING REALTOR. 2. RECORDING OFFICE. 3. BUILDER. 4. LENDER.

Correct Answer: B Most deeds are recorded with the date being available.

Question 174 AN INFORMED PURCHASER WILL PAY NO MORE FOR A PROPERTY THAN THE COST OF ACQUIRING AN ACCEPTABLE SUBSTITUTE DESCRIBES THE PRINCIPLE OF: 1. COMPETITION. 2. OPPORTUNITY COST. 3. BALANCE. 4. ANTICIPATION.

Correct Answer: B Once money is spent to acquire one investment, the opportunity to purchase an alternative is lost. The principles of opportunity cost and substituition are virtually indestinguishable.

Question 509 AN INVESTOR OWNS AN INTEREST IN A 50 UNIT BUILDING LOCATED ON THE BEACH. WHICH OF THE FOLLOWING WOULD INDICATE THAT THE INVESTOR'S INTEREST IS A TIME-SHARE OWNERSHIP? 1. EACH SHARE OWNER HOLDS A PROPRIETARY LEASE TO A SPECIFIED UNIT. 2. EACH OWNER HAS OWNERSHIP OF A SPECIFIC UNIT FOR A SPECIFIC PERIOD. 3. EACH OWNER OWNS AN INDIVIDUAL UNIT AND HAS INTEREST IN THE COMMON AREAS. 4. EACH OWNER LEASES A UNIT ONE WEEK AT A TIME AND THE MANAGEMENT RESERVES TWO WEEKS ANNUALLY FOR REPAIRS.

Correct Answer: B Periodic ownership rights are consistent with the concept of time-sharing.

Question 196 WHY ARE PHOTOGRAPHS INCLUDED IN AN APPRAISAL REPORT? 1. PROVES APPRAISER VISITED THE SUBJECT. 2. ASSISTS COMMUNICATION OF VISUAL CONSIDERATIONS. 3. JUSTIFIES FEES CHARGED. 4. PROVES CONFORMANCE WITH BUILDING CODES.

Correct Answer: B Photographs visually communicate the appraiser's findings. A photo is worth "one thousand words".

Question 226 AN ACCOMPLISHED, HISTORICAL FACT INVOLVING NO ASSUMPTION OF PRUDENT CONDUCT BY THE PARTIES OR ABSENCE OF UNDUE STIMULUS REFLECTING THE TRANSACTION IS: 1. MARKET VALUE. 2. MARKET PRICE. 3. LIQUIDATION VALUE. 4. SALVAGE VALUE.

Correct Answer: B Price is the amount paid. It is factual.

Question 426 A NEW HOUSE IS BUILT AND A CERTIFICATE OF OCCUPANCY IS GRANTED ON JANUARY 31. REAL ESTATE PROPERTY TAXES FOR THAT YEAR ARE ASSESSED ON THE: I. IMPROVEMENTS AND LAND. II. VACANT LAND ONLY. a. I ONLY. b. II ONLY. c. I AND II. d. NEITHER I NOR II.

Correct Answer: B Property is assessed and taxed based upon the property as it appears as of January 1 each year.

Question 518 AN APPRAISER USES RECONCILIATION FOR WHICH OF THE FOLLOWING PURPOSE? 1. INCREASE THE VALUE ESTIMATE TO ACHIEVE THE CLIENT'S OBJECTIVES. 2. WEIGHT RESULTS TO OBTAIN A SINGLE ESTIMATE OF VALUE. 3. BRING CALCULATIONS IN LINE IF THE WRONG APPROACHES WERE USED. 4. ADJUST ANY APPROACHES TO VALUE THAT ARE APPROPRIATE FOR THE TYPE OF PROPERTY BEING APPRAISED.

Correct Answer: B Reconciliation is a process of placing more weight on that result that seems to best represent the value of the subject.

Question 404 WHICH OF THE FOLLOWING IS CORRECT REGARDING THE PAYMENT OF FEES OR COMMISSIONS? 1. INTRA-COMPANY PAYMENTS TO EMPLOYEES FOR BUSINESS DEVELOPMENT IS UNETHICAL. 2. PAYMENT OF UNDISCLOSED REFERRAL FEES FOR THE PROCUREMENT OF APPRAISAL ASSIGNMENTS IS UNETHICAL. 3. FINANCIAL INCENTIVES SHOULD BE THE PRIMARY CONSIDERATION FOR AWARDING AN ASSIGNMENT. 4. ALL OF THE ABOVE.

Correct Answer: B Requirement of the Management Section of the Ethics Rule in USPAP.

Question 361 WHICH OF THE FOLLOWING IS NOT A MEASURE OF CENTRAL TENDENCY? 1. MEAN. 2. MEDIAN. 3. MODE. 4. STANDARD DEVIATION.

Correct Answer: D Measurements of central tendency identify the mid-point of a sample. Standard deviation measures average distance from the mean.

Question 340 A SALE HAS OCCURRED BETWEEN A FATHER AND HIS DAUGHTER. THE SALE APPEARS TO BE $10,000 BELOW MARKET. WHICH OF THE FOLLOWING IS CORRECT? 1. THIS SALE SHOULD NOT BE UTILIZED AS A COMPARABLE. 2. THIS SALE MAY BE USED AS A COMPARABLE SINCE THE AMOUNT OF ADJUSTMENT IS KNOWN. 3. THIS SALE MAY BE UTILIZED AS A COMPARABLE AS LONG AS NO OTHER ADJUSTMENTS ARE REQUIRED. 4. THIS SALE MAY BE USED AS A COMPARABLE AS LONG AS IT IS LOCATED IN THE SUBJECT'S NEIGHBORHOOD.

Correct Answer: B Since it appears that the appropriate amount of adjustment can be determined, this sale may be used.

Question 123 USE OF REPLACEMENT COST WOULD TEND TO ELIMINATE THE NEED TO ESTIMATE SOME ITEMS OF: 1. PHYSICAL DEPRECIATION. 2. FUNCTIONAL OBSOLESCENCE. 3. CURABLE OBSOLESCENCE. 4. ECONOMIC OBSOLESCENCE.

Correct Answer: B Since replacement cost estimates are not obilgated to include the same design and materials as the subject, good design and adequate materials may be estimated replacing poor design and superadequate materials.

Question 484 WHICH OF THE FOLLOWING IS CONSIDERED REAL PROPERTY? 1. REFRIGERATOR. 2. BUILT-IN BOOKCASE. 3. WINDOW UNIT AIR-CONDITIONER. 4. DRAPERIES.

Correct Answer: B Since the bookcase is built-in, it appears more permanent than the other choices.

Question 461 IMPROVEMENTS HAVE BEEN MADE TO THE STREET, SIDEWALKS, AND SEWERS THAT HAVE CAUSED AN INCREASE IN PROPERTY VALUE. THE COST OF THESE IMPROVEMENTS MAY BE PAID BY: 1. AD VALOREM TAXES. 2. SPECIAL ASSESSMENT. 3. APPROPRIATION. 4. DISTRIBUTION.

Correct Answer: B Special assessments are additional property taxes used to pay for improvements by those who will benefit.

Question 290 WHICH OF THE FOLLOWING IS CONSIDERED SPECIFIC DATA? I. IRS TAX CODE. II. ZONING REQUIREMENTS. III. SET-BACK RESTRICTIONS. IV. EASEMENTS. a. I, II, III, AND IV. b. II, III, AND IV. c. III AND IV. d. IV ONLY.

Correct Answer: B Specifc data relates to characteristics of subject property.

Question 108 WHAT IS THE MOST COMMONLY USED UNIT OF COMPARISON IN THE APPRAISAL OF SINGLE FAMILY RESIDENCES? 1. NUMBER OF ROOMS. 2. SQUARE FEET. 3. LIVING UNITS. 4. CUBIC FEET.

Correct Answer: B Specifically, price per square foot of gross living area. This will minimize the necessity of having to make a size adjustment and is recommended whenever working with comparables and subject are different sizes.

Question 417 WHICH OF THE FOLLOWING PUBLISH DATA FOR ESTIMATING THE CURRENT COST OF IMPROVEMENTS? I. MARSHALL AND SWIFT PUBLICATION COMPANY. II. F.W. DODGE CORPORATION. III. STANDARD AND POOR'S CORPORATION. IV. BOECKH PUBLICATIONS. a. II, III, AND IV. b. I, II, AND IV. c. I, II, AND III. d. I, II, III, AND IV.

Correct Answer: B Standard and Poor provides information concerning the performance of bond markets.

Question 236 UPON INSPECTION OF THE SUBJECT PROPERTY, AN APPRAISER NOTES A MALFUNCTIONING SEPTIC SYSTEM. WHICH OF THE FOLLOWING INDICATES THIS CONDITION? 1. LACK OF WATER PRESSURE. 2. STANDING WATER OVER THE DRAIN FIELD. 3. BACTERIA IN THE TANK. 4. HEALTHY VEGETATION GROWTH.

Correct Answer: B Standing water suggests that the drain field is not functioning properly.

Question 177 LAND NOT NEEDED TO ACCOMMODATE THE SITE'S HIGHEST AND BEST USE IS: 1. PLOTTAGE. 2. SURPLUS LAND. 3. SUPERADEQUACY. 4. OVERIMPROVEMENT.

Correct Answer: B Surplus land suggests that more land is present than that demanded by the market, but not enough to have two sites. If enough was there to have two or more lots, the condition would be excess land.

Question 433 WHAT IS THE BEST APPROACH TO VALUE IN THE CASE OF A BUILDING IN WHICH THE TENANTS ARE IN COMPETITION? 1. COST APPROACH. 2. INCOME APPROACH. 3. SALES COMPARISON APPROACH. 4. NONE OF THE ABOVE.

Correct Answer: B Tenants will pay rent based on how many potential tenants are interested in the same type property. More competition between tenants will result in a higher amount of rent paid.

Question 275 THE MOST RELIABLE DATE TO USE IN THE COMPARISON OF SALES IS THE: 1. DEED DATE. 2. SALES CONTRACT DATE. 3. LISTING DATE. 4. DATE THE FEE IS COLLECTED.

Correct Answer: B The date that the sales contract agreement is reached, the sale price matches the conditions of how the property is traded in the market. Until closing the agreed price does not change, however the market may. It is important that the appraiser can measure those changes.

Question 162 THE LOSS OR REDUCTION IN MARKET VALUE WHICH MAY OCCUR TO THE REMAINDER IN A PARTIAL TAKING IS: 1. SPECIAL BENEFITS. 2. SEVERANCE DAMAGES. 3. REMAINDER DAMAGES. 4. COST TO CURE.

Correct Answer: B The definition of severance damages.

Question 197 A FINANCING ARRANGEMENT WHEREBY THE SELLER RETAINS TITLE TO THE PROPERTY WHILE PAYMENTS ARE BEING MADE WITH TITLE TRANSFERRED UPON SATISFACTION OF THE DEBT IS A(AN): 1. WRAPAROUND MORTGAGE. 2. INSTALLMENT LAND CONTRACT. 3. PURCHASE MONEY MORTGAGE. 4. ALL OF THE ABOVE.

Correct Answer: B The description of an installment or land contract, also known as a contract for deed. A wraparound mortgage requires one payment that incorporates more than one debt. A purchase money mortgage is used to finance the purchase of real property.

Question 201 WHAT IS THE BEST WAY TO DETERMINE THE APPROPRIATE ADJUSTMENT FOR CHANGES IN MARKET CONDITIONS? 1. COMPARE SIMILAR PROPERTIES THAT HAVE SOLD RECENTLY, BUT WHICH HAVE DIFFERENT LOCATIONAL CHARACTERISTICS. 2. ANALYZE SUCCESSIVE SALE PRICES OF SIMILAR PROPERTIES THAT HAVE RECENTLY SOLD TWO OR MORE TIMES. 3. CONSULT THE CONSUMER PRICE INDEX FOR CHANGES RELATIVE TO THE TIME IN QUESTION. 4. SUBTRACT THE ANNUAL COST OF THE ACTUAL FINANCING FROM THE ANNUAL COST OF MARKET FINANCING.

Correct Answer: B The difference in the two properties sale prices should indicate the change in market conditions since the properties are similar in other respects. Changes in the consumer price index may give an indirect indication of a change in real estate markets.

Question 373 A HOUSE WAS PURCHASED FOR $50,000. A POOL WAS ADDED LATER AT A COST OF $10,000. THE BEST OFFER RECEIVED AFTER CONSTRUCTION OF THE POOL WAS $57,000. THIS REPRESENTS: 1. ECONOMIC OBSOLESCENCE. 2. OVERIMPROVEMENT. 3. PHYSICAL DEPRECIATION. 4. INTERIM USE.

Correct Answer: B The home is now overimproved since the pool is worth less than its cost of contruction.

Question 381 WHICH OF THE FOLLOWING MORTGAGE REPAYMENT PLANS RESULTS IN THE PAYMENT OF THE LEAST AMOUNT OF INTEREST? 1. BIWEEKLY. 2. GROWING EQUITY. 3. GRADUATED PAYMENT. 4. ADJUSTABLE RATE.

Correct Answer: B The increasing amount of payment required in a growing equity mortgage significantly reduces the amount of total interest paid.

Question 131 THE ESTIMATED PERIOD OVER WHICH IMPROVEMENTS CONTINUE TO CONTRIBUTE TO PROPERTY VALUE IS: 1. TOTAL PHYSICAL LIFE. 2. REMAINING ECONOMIC LIFE. 3. REMAINING PHYSICAL LIFE. 4. PERIOD OF DIMINISHING UTILITY.

Correct Answer: B The key word is continue which implies that some life has already been used.

Question 431 THE TENANT HAS AGREED TO PAY ALL OPERATING EXPENSES OF THE PROPERTY IN ADDITION TO STIPULATED RENT. THIS IS AN EXAMPLE OF A(AN): 1. GROSS LEASE. 2. NET LEASE. 3. OVERAGE LEASE. 4. PERCENTAGE LEASE.

Correct Answer: B The landlord pays operating expenses in a gross lease. A percentage lease has rent payments based on the gross sales proceeds of the tenant. Overage rent is the rent payable in addition to the base amount of rent in a percentage lease.

Question 171 WHAT TYPE OF STUDY FOCUSES ON SPECIFIC INVESTMENT OBJECTIVES FOR AN INVESTOR TO DETERMINE THE OPTIMUM USE(S) FOR SPECIFIED REAL ESTATE? 1. HIGHEST AND BEST USE. 2. FEASIBILITY. 3. MARKETABILITY. 4. MARKET.

Correct Answer: B The market drives highest and best use and marketability studies. To judge the feasibility of an investment, goals and objectives of the investor must be considered.

Question 399 WHAT STATISTICAL MEASUREMENT IS NOT AFFECTED BY THE VALUE OF THE EXTREMES IN A SAMPLE? 1. MEAN. 2. MEDIAN. 3. MODE. 4. STANDARD DEVIATION.

Correct Answer: B The median is determined by the number of observations in a sample, not by the values found at the extremes.

Question 525 A CERTIFIED APPRAISER HAS JUST COMPLETED AN APPRAISAL FOR THE STATE HIGHWAY DEPARTMENT. YOUR INSTRUCTIONS HAVE INCLUDED THE DIRECTION NOT TO USE THE COST APPROACH. THIS IS AN EXAMPLE OF (A/AN): a. APPLICATION OF THE JURISDICTIONAL EXCEPTION RULE. b. SCOPE OF WORK CONSIDERATION. c. SUPPLEMENTAL STANDARD. d. POOR APPRAISAL PRACTICE.

Correct Answer: B The omission of an appraisal approach will be a scope of work issue.

Question 514 WALTER HAS A HOUSE ON WALNUT STREET. HE HAS LEASED IT FOR ONE YEAR TO SMITH. WHICH OF THE FOLLOWING REFERS TO THE OWNER'S INTEREST IN THE PROPERTY? 1. UNENCUMBERED FEE SIMPLE ESTATE. 2. LEASED FEE ESTATE. 3. LEASEHOLD ESTATE. 4. LESSEE ESTATE.

Correct Answer: B The owner's interest is the leased fee, the tenant's interest is the leasehold.

Question 487 ALL OF THE FOLLOWING ARE APPROPRIATE OPERATING EXPENSE DEDUCTIONS IN THE CALCULATION OF NET OPERATING INCOME IN AN OWNER-OCCUPIED QUADRAPLEX EXCEPT: 1. MANAGEMENT. 2. DEBT-SERVICE. 3. REPLACEMENT RESERVE. 4. MAINTENANCE.

Correct Answer: B The property is worth the same amount whether it is financed or not. As a result debt service is never treated as an operating expense in an appraisal.

Question 160 AN APPRAISAL OF A PROPERTY INDICATES THAT THE TOTAL PROPERTY VALUE IS $100,000.00. A PORTION OF THE PROPERTY IS BEING CONDEMNED. THE CONDEMNED PORTION IS APPRAISED FOR $20,000.00. IF AN AFTER-APPRAISAL INDICATES THE RESIDUE TO BE WORTH $85,000.00, WHAT IS THE TOTAL COMPENSATION DUE TO THE OWNER? 1. $15,000.00 2. $20,000.00 3. $85,000.00 4. $100,000.00

Correct Answer: B The property owner is entitled to the value of the condemned property. Benefits that result do not offset the value of the taking.

Question 327 AN APPRAISER HAS ACCEPTED AN ASSIGNMENT THAT REQUIRES TRAVEL TO A GEOGRAPHIC AREA WHERE THE APPRAISER HAS NO RECENT EXPERIENCE. WITHOUT SPENDING SUFFICIENT TIME TO UNDERSTAND THE NUANCES OF THE LOCAL MARKET AND THE SUPPLY AND DEMAND FACTORS RELATING TO THE SPECIFIC PROPERTY TYPE AND LOCATION INVOLVED VIOLATES: 1. DEPARTURE PROVISIONS. 2. COMPETENCY PROVISIONS. 3. ECONOMIC PROVISIONS. 4. LOCATIONAL PROVISIONS.

Correct Answer: B This appraiser would violate the Competency Rule of USPAP.

Question 247 FOR EACH DOLLAR OF GROSS INCOME COLLECTED, PROPERTY VALUE INCREASES BY A CONSTANT INCREMENT. THIS DESCRIBES THE: 1. RATE OF CAPITALIZATION. 2. GROSS RENT MULTIPLIER. 3. OPERATING EXPENSE RATIO. 4. NET OPERATING INCOME.

Correct Answer: B This describes the mathematics of the gross rent multiplier.

Question 362 AN ATTIC BEDROOM IS ACCESSED THROUGH A STAIRWAY FROM THE FIRST FLOOR BEDROOM. IT IS NOT COST EFFECTIVE TO CORRECT THIS PROBLEM. THIS IS AN EXAMPLE OF: 1. CURABLE FUNCTIONAL OBSOLESCENCE. 2. INCURABLE FUNCTIONAL OBSOLESCENCE. 3. CURABLE PHYSICAL DEPRECIATION. 4. INCURABLE PHYSICAL DEPRECIATION.

Correct Answer: B This is a poor design element that financially should not be corrected.

Question 126 THE DIFFERENCE BETWEEN AN IMPROVEMENT'S CURRENT MARKET VALUE AND ITS REPRODUCTION COST IS THE: 1. DEVELOPER'S PROFIT. 2. ACCRUED DEPRECIATION. 3. SELLING PRICE. 4. COST OF SALE.

Correct Answer: B This is the definition of depreciation.

Question 457 THE TRANSFER OF FUNDS FROM A LOW YIELD INVESTMENT TO A HIGHER YIELD INVESTMENT IS: 1. INTERMEDIATION. 2. DISINTERMEDIATION. 3. CORRELATION. 4. MEDIATION.

Correct Answer: B This is the definition of disintermediation.

Question 176 THE GRADUAL RECESSION OF WATER FROM THE USUAL WATER MARK IS TERMED: 1. ACCRETION. 2. RELICTION. 3. RIPARIAN. 4. ALLUVION.

Correct Answer: B This is the definition of reliction. Accretion is the opposite of erosion. Riparian rights are the rights to use water that does not belong to you. Alluvion is soil deposited by flowing water.

Question 187 THE RIGHT OF AN OWNER WHOSE LAND BORDERS ON A STREAM OR RIVER TO USE THE WATER WHICH PASSES OVER AND ALONG HIS LAND IS A(AN): 1. LITTORAL RIGHT. 2. RIPARIAN RIGHT. 3. ALLODIAL RIGHT. 4. EASEMENT.

Correct Answer: B This is the definition of riparian right.

Question 227 THE AMOUNT OBTAINABLE FOR ALL OR SOME PARTS OF A BUILDING FOR REMOVAL FROM THE SITE FOR USE OR ASSEMBLY ELSEWHERE IS: 1. SCRAP VALUE. 2. SALVAGE VALUE. 3. MARKET VALUE. 4. LIQUIDATION VALUE.

Correct Answer: B This is the definition of salvage value. Without the intention to use components elsewhere, the answer would be scrap value.

Question 234 THE ORIGIN OF SETTLEMENT OF A CITY, WHICH GENERALLY INFLUENCES SUBSEQUENT LAND USE AND GROWTH PATTERNS IS: 1. SITUS. 2. SITING FACTOR. 3. SITUAE. 4. SITE ORIENTATION.

Correct Answer: B This is the definition of the term siting factor. Situs says property is worth what it is worth based on its location.

Question 228 A SCHEMATIC DIAGRAM OF THE SITE SHOWING PROPERTY LINES, BUILDING LINES, EASEMENTS, PLACEMENT OF IMPROVEMENTS, AND SITE MEASUREMENTS ARE FOUND ON: 1. TOPOGRAPHIC DRAWINGS. 2. PLOT PLANS. 3. QUADRANGLES. 4. ORTHOGRAPHIC PROJECTIONS.

Correct Answer: B Topographic drawings and quadrangles are the same.

Question 380 Underworld Bank requires certified appraisers to notify them of final value conclusions via text message. The text will be followed by an appraisal report. Which of the following is applicable to the text? 1. USPAP prohibits communication of assignment results via text. 2. Communication of assignment results via text must comply with reporting requirements of USPAP. 3. Electronic transmission of assignment results are not subject to USPAP reporting requirements. 4. Final value conclusions are not assignment results, therefore there are no USPAP reporting requirements applicable to text messages.

Correct Answer: B USPAP FAQ 265

Question 408 USPAP REQUIRES ALL APPRAISALS OF REAL PROPERTY TO INCLUDE WHICH OF THE FOLLOWING? 1. ANALYSIS OF PRIOR SALES OF COMPARABLE PROPERTIES USED IN THE SALES COMPARISON APPROACH. 2. ANALYSIS OF A SUBJECT THAT TRANSFERRED BY DEED IN LIEU OF FORECLOSURE 18 MONTHS PRIOR TO THE EFFECTIVE APPRAISAL DATE. 3. APPRAISER'S QUALIFICATIONS. 4. DISCLOSURE OF A PROPERTY ONCE USED AS A COMPARABLE THAT IS NOW THE SUBJECT.

Correct Answer: B USPAP FAQ 31; 228;229;288

Question 256 A STATE CERTIFIED APPRAISER MUST RETAIN ORIGINAL OR TRUE COPIES OF ALL EMPLOYMENT CONTRACTS, CERTIFIED APPRAISAL REPORTS, AND SUPPORTING DATA FOR AT LEAST FIVE YEARS FROM THE: 1. PAYMENT OF THE FEE. 2. SUBMISSION OF THE REPORT TO THE CLIENT. 3. EFFECTIVE DATE OF THE APPRAISAL. 4. DATE OF THE REPORT.

Correct Answer: B USPAP Record Keeping Rule

Question 318 YOU HAVE BEEN ASKED TO QUOTE ON AN ANNUAL CONTRACT TO PROVIDE APPRAISAL SERVICES. AS PART OF THE AGREEMENT, THE CLIENT IS REQUESTING A REBATE AT THE END OF THE YEAR BASED ON THE NUMBER OF ASSIGNMENTS YOU COMPLETE. WHICH OF THE FOLLOWING BEST APPLIES? 1. THE APPRAISER SHOULD NOTIFY THE DEPARTMENT OF BANKING AND FINANCE REGARDING THIS ATTEMPTED EXTORTION. 2. A REBATE OF THIS NATURE MUST BE DISCLOSED. 3. THE APPRAISAL SERVICES SHOULD BE DISCOUNTED TO ELIMINATE THE MOTIVATION FOR THE REBATE. 4. PAYMENT OF SUCH A REBATE IS A VIOLATION OF UNIFORM STANDARDS.

Correct Answer: B USPAP requires that if an appraiser is paying for appraising assignments (rebate). The payment must be disclosed in the appraisal report.

Question 346 PRODUCTIVITY OF AN INDUSTRY IN A TYPICAL AREA IS 2.19 PERCENT OF GROSS PRODUCTION. THE SAME INDUSTRY IN THIS AREA IS AT 1.19 PERCENT OF GROSS PRODUCTION. THIS INDUSTRY IS: 1. BASIC. 2. NON-BASIC. 3. EXPORT. 4. IMPORT.

Correct Answer: B With the below average productivity of this industry in this area, wealth is not flowing into the area making this a non-basic (service) industry. If the opposite were true, wealth would be attracted and the industry would be basic.

Question 450 AN APPRAISAL WAS DELIVERED FOUR YEARS AGO. A TRIAL INVOLVING THE APPRAISAL IS SCHEDULED TO BEGIN NEXT WEEK. HOW LONG MUST THE WORKFILE BE RETAINED? 1. ONE MORE YEAR 2. TWO YEARS FOLLOWING TRIAL DISPOSITION 3. FIVE YEARS AFTER TRIAL DISPOSITION 4. FIVE YEARS

Correct Answer: B Workfile requirements established by USPAP

Question 392 ASSUMING PAYMENTS ARE MADE IN ADVANCE, WHAT IS THE PRESENT VALUE OF AN ORDINARY ANNUITY OF $1,000.00 PER MONTH FOR 10 YEARS IF AN ANNUAL DISCOUNT RATE OF SIX PERCENT IS APPROPRIATE? 1. $90,073.45 2. $90,523.82 3. $90,724.67 4. $90,889.81

Correct Answer: B g 7 10 gn 6 gi 1000 PMT PV = 90,523.82

Question 532 THE STATE HIGHWAY DEPARTMENT IS TAKING A PORTION OF A 40,000 SQUARE FOOT CORNER LOT. THE TAKING IS MEASURED FROM THE NORTHEAST CORNER OF THE LOT ON A RADIUS OF 25'. IF THE HIGHWAY DEPARTMENT PAYS $5.00 PER SQUARE FOOT FOR THE TAKING, WHAT IS THE COMPENSATION DUE THE PROPERTY OWNER? 1. $9,812 2. $4,906 3. $2,453 4. $1,852

Correct Answer: C 25 x 25 = 625 625 x 3.14 = 1,962.5 1,962.5/4 = 490.625 490.625 x 5 = 2,453.125

Question 389 THE DEPARTMENT OF TRANSPORTATION IS TAKING A FIVE ACRE TRACT FOR HIGHWAY RIGHT OF WAY AND IS LEAVING A REMAINDER WITH A BUILDING ON IT. HOW IS THE VALUE OF THE TAKE AND DAMAGES TO THE REMAINDER DETERMINED? 1. VALUE THE ENTIRE TRACT AND VALUE THE FIVE ACRES AND SUBTRACT IT FROM THE WHOLE. 2. VALUE THE ENTIRE TRACT AND VALUE THE REMAINDER AND SUBTRACT IT FROM THE WHOLE. 3. VALUE THE FIVE ACRE TRACT AND VALUE THE BUILDING AND ADD THE TWO TOGETHER. 4. VALUE THE FIVE ACRE TRACT ONLY.

Correct Answer: B By valuing the entire property and then valuing the property that remains, the value of the taking and any damages to the remainder will be determined.

Question 440 THE TIME PERIOD FOR REASONABLE EXPOSURE IN MARKET VALUE APPRAISALS IS PRESUMED TO OCCUR: 1. AFTER THE EFFECTIVE DATE OF THE APPRAISAL. 2. PRIOR TO THE EFFECTIVE DATE OF THE APPRAISAL. 3. EITHER AFTER OR PRIOR TO THE EFFECTIVE DATE OF THE APPRAISAL. 4. REASONABLE EXPOSURE IS NOT A CONSIDERATION IN MARKET VALUE APPRAISALS.

Correct Answer: B For the property to be assumed to have sold as of the effective appraisal date, it would have to have been marketed prior to that date.

Question 533 WHAT TYPE OF LEASE WOULD REQUIRE A PERIODIC APPRAISAL OF THE PROPERTY WITH RENT BASED ON ITS RESULT? 1. INDEX. 2. GRADUATED. 3. REVALUATION. 4. INTERVAL.

Correct Answer: C

Question 539 THE TOTAL INCOME ANTICIPATED FROM ALL OPERATIONS OF THE PROPERTY AFTER VACANCY AND COLLECTION LOSSES IS: 1. EQUITY INCOME. 2. ESCALATOR INCOME. 3. EFFECTIVE GROSS INCOME. 4. POTENTIAL GROSS INCOME.

Correct Answer: C

Question 568 WHAT IS THE RELATIONSHIP BETWEEN THE OVERALL CAPITALIZATION RATE AND THE PROPERTY YIELD RATE IF A PROPERTY'S NOI AND VALUE ARE NOT EXPECTED TO CHANGE OVER THE HOLDING PERIOD? 1. OVERALL RATE > YIELD RATE. 2. OVERALL RATE < YIELD RATE. 3. OVERALL RATE = YIELD RATE. 4. INSUFFICIENT INFORMATION GIVEN.

Correct Answer: C

Question 570 NOI IS: 1. OPERATING EXPENSES - INCOME. 2. VALUE - RATE. 3. VALUE X RATE. 4. RATE - VALUE.

Correct Answer: C

Question 591 WHAT IS PERCENTAGE RENT? 1. RENT PAID OVER AND ABOVE THE GUARANTEED MINIMUM RENT. 2. THE AMOUNT BY WHICH CONTRACT RENT EXCEEDS MARKET RENT AT THE TIME OF APPRAISAL. 3. RENT DERIVED FROM RETAIL STORE TENANTS ON THE BASIS OF THEIR SALES. 4. THE AMOUNT BY WHICH MARKET RENT EXCEEDS CONTRACT RENT AT THE TIME OF APPRAISAL.

Correct Answer: C

Question 602 IN THE CALCULATION OF BEFORE TAX CASH FLOW, WHICH OF THE FOLLOWING SHOULD THE APPRAISER ADD TO NET OPERATING INCOME? 1. VACANCY AND COLLECTION LOSS. 2. DEBT SERVICE. 3. RESERVE FOR REPLACEMENT. 4. INCOME TAX.

Correct Answer: C

Question 603 THE COST-BENEFIT RELATIONSHIP OF AN ECONOMIC ENDEAVOR IS A/AN: 1. CASH FLOW ANALYSIS. 2. INVESTMENT ANALYSIS. 3. FEASIBILITY ANALYSIS. 4. MARKET ANALYSIS.

Correct Answer: C

Question 623 WHERE WOULD A PARTICULAR FLOOR'S LOCATION IN A BUILDING BE FOUND? a. TOPOGRAPHIC MAP b. FLOOD MAP c. BUILDING SURVEY d. TAX ASSESSOR'S MAP

Correct Answer: C

Question 475 A COMPARABLE PROPERTY SOLD 11 MONTHS AGO FOR $137,500. WHAT IS THE ADJUSTED SALE PRICE IF THE COMPARABLE INCREASED IN VALUE AN AVERAGE OF 6% PER YEAR DURING THE LAST TWO YEARS, THE PROPERTY IS ESTIMATED TO BE $9,000 SUPERIOR TO THE SUBJECT DUE TO BETTER LOCATION AND $7,500 INFERIOR TO THE SUBJECT DUE TO PHYSICAL CHARACTERISTICS? 1. $145,500 2. $144,500 3. $143,500 4. $142,500

Correct Answer: C .06/12 = .005 .005 x 11 = .055 137,500 x .055 = 7,562 137,500 + 7,562 = 145,062 145,062 - 9,000 = 136,062 136,062 + 7,500 = 143,562

Question 453 BASED ON THE FOLLOWING INFORMATION, WHAT IS THE INDICATED NET ADJUSTMENT TO BE MADE TO THE COMPARABLE? FINANCING -5% MARKET CONDITIONS +10% LOCATION -5% PHYSICAL CONDITION -5% a. +6%. b. +5%. c. -6%. d. -5%.

Correct Answer: C 1-.05=.95 .95x.10=.095 .95+.095=1.045 1.045x.10=.1045 1.045-.1045=.9405 1-.9405=.0595

Question 606 A LEASE CALLS FOR ANNUAL RENT IN THE AMOUNT OF $5,000.00 FOR THE FIRST FIVE YEARS, $8,000.00 FOR THE NEXT FIVE YEARS, AND $4,000.00 FOR THE FINAL FIVE YEARS. IF THE VALUE OF THE REVERSION AT THE END OF THE LEASE TERM IS PROJECTED TO BE $60,000.00, WHAT IS THE VALUE OF THE LEASED FEE IF A DISCOUNT RATE OF 10 PERCENT IS APPROPRIATE? a. $52,651.00 b. $56,688.00 c. $57,994.00 d. $58,233.00

Correct Answer: C 10 i 5,000 g CFJ 5 g NJ 8,000 g CFJ 5 g NJ 4,000 g CFJ 4 g NJ 64,000 g CFJ f NPV = 57,993

Question 386 THE COMPARABLE SOLD FOR $100,000. THE APPRAISER HAS DETERMINED THAT IT SHOULD BE ADJUSTED DOWNWARD $2,500 FOR FINANCING. THE MARKET IS $1000 BETTER NOW THAN WHEN THE COMPARABLE SOLD. THE SUBJECT IS $5000 SUPERIOR IN PHYSICAL CONDITION AND THE COMPARABLE IS $2,500 INFERIOR DUE TO LOCATION. WHAT IS THE VALUE OF THE SUBJECT? 1. $108,500 2. $107,000 3. $106,000 4. $103,500

Correct Answer: C 100,000 - 2,500 = 97,500 97,500 + 1,000 = 98,500 98,500 + 5,000 = 103,500 103,500 + 2,500 = 106,000

Question 268 PROPERTY IS PURCHASED FOR AN EQUITY INVESTMENT OF $100,000.00. IF THE FOLLOWING CASH FLOWS ARE PROJECTED, WHAT IS THE INDICATED INTERNAL RATE OF RETURN? YEAR 1 $7,900.00 YEAR 2 $6,200.00 YEAR 3 $10,900.00 YEAR 4 $5,200.00 YEAR 5 $125,500.00 a. 8.98% b. 9.21% c. 10.49% d. 11.56%

Correct Answer: C 100,000 CHS g CFo 7,900 g CFj 6,200 g CFj 10,900 g CFj 5,200 g CFj 125,500 g CFj f IRR = 10.49

Question 353 A STRUCTURE HAS MANY SUPERADEQUACIES. WHAT APPRAISAL PRINCIPLE APPLIES? 1. SUPPLY AND DEMAND. 2. SUBSTITUTION. 3. INCREASING RETURNS. 4. DECREASING RETURNS.

Correct Answer: D Money has been spent on components that will not be returned in the market. This represents money spent beyond the point of diminishing returns.

Question 395 A $100,000.00 MORTGAGE LOAN AMORTIZES MONTHLY AT AN ANNUAL INTEREST RATE OF NINE PERCENT. THE LOAN TERM IS 30 YEARS AND THE BORROWER PAID THREE POINTS IN DISCOUNT. WHAT IS THE LENDER'S EFFECTIVE YIELD IF THE LOAN IS PAID OFF IN FIVE YEARS? a. 9.38% b. 9.52% c. 9.77% d. 9.98%

Correct Answer: C 100,000 X .03 = 3,000 discount 100,000 - 3,000 = 97,000 effective loan amount 30 gn 9 gi 100,000 PV PMT = 804.6226 monthly debt service 60 f amort = 44,157.60 interest paid for 5 years RCL PV = 95,880.1362 principal balance at the end of 5 years 5gn loan holding period 97,000 PV effective loan amount 804.6226 CHS PMT (enter as a negative since borrower owes) 95,880.1362 CHS FV principal balance at the end of five years (enter as a negative) i = .814509 monthly effective rate 12x = 9.774 annual effective rate

Question 304 A BORROWER OBTAINS A MONTHLY AMORTIZING MORTGAGE LOAN IN THE AMOUNT OF $100,000 AT 11% INTEREST FOR A 30 YEAR TERM. THE BORROWER PAYS FOUR POINTS IN DISCOUNT. WHAT DOES THE BORROWER NET AT CLOSING? 1. $104,000. 2. $100,000. 3. $96,000. 4. $92,000.

Correct Answer: C 100,000 X .04 = 4,000 100,000 - 4,000 = 96,000

Question 294 ANALYSIS OF THREE COMPARABLE SALES HAS YIELDED THE FOLLOWING RESULTS. WHAT IS THE INDICATED VALUE? SALE A - $101,000.00 - 20% SALE B - $106,000.00 - 40% SALE C - $105,000.00 - 40% a. $103,900.00 b. $104,000.00 c. $104,600.00 d. $105,000.00

Correct Answer: C 101,000x.20=20,200 106,000x.40=42,400 105,000x.40=42,000 20,200+42,400+42,000=104,600

Question 413 The subject is a mixed use undeveloped property with 3 acres zoned commercial, 5 acres zoned multi unit, and 2 acres zoned single unit. A similar 10 acre property sold for $1.80 per sf with 4 acres zoned commercial, 4 acres zoned multi unit, and 2 acres zoned single unit residential. Based on this sale, what is the per sf value of the commercial land if multi unit land typically sells for 40% of commercial land prices, and single unit residential land sells for 20% of commercial land prices? a. $3.25 b. $3.15 c. $3.00 d. $2.85

Correct Answer: C 10ac (43,560sf/ac) = 435,600 435,600sf (1.80sf) = 784,080 4ac (43,560sf/ac)(x) + 4ac (43,560)(0.4)(x) + 2ac (43,560)(0.2)(x) = 784,080 261,360sf(x) = 784,080 x = 784,080/261,360sf = 3.00

Question 369 A SHORT TERM NOTE OF 11 YEARS WAS ORIGINATED AT AN INTEREST RATE OF 7.25 PERCENT. THE LOAN AMORTIZED MONTHLY WITH TOTAL INTEREST OF $13,600 DUE. WHAT WAS THE ORIGINAL LOAN AMOUNT? 1. $20,000 2. $25,000 3. $30,000 4. $35,000

Correct Answer: C 11 gn 7.25 gi 30,000 PV PMT = 330.4682 132 X = 43,621 43,621 - 30,000 = 13,621 By process of elimination of the answer choices. The answer that requires a total of $13,600 interest to be paid is correct

Question 328 A $27,000 MORTGAGE LOAN AT 11 PERCENT INTEREST IS GRANTED. THE LOAN AMORTIZES MONTHLY WITH A PAYMENT OF $257.13. WHAT PART OF THE THIRD MONTH'S PAYMENT IS PRINCIPAL? a. $9.63 b. $9.71 c. $9.80 d. $9.89

Correct Answer: C 11gi 27,000 PV 257.13 CHS PMT n = 360 1f amort (interest 1st month) 1f amort (interest 2nd month) 1f amort (interest 3rd month) x<>y = 9.80

Question 436 THE COMPARABLE SOLD ONE YEAR AGO FOR $137,000 WHEN THE CPI WAS 110. AT THE EFFECTIVE APPRAISAL DATE OF THE SUBJECT, THE CPI WAS 121. WHAT IS THE ADJUSTED COMPARABLE SALE PRICE FOR MARKET CONDITIONS? 1. $159,300. 2. $152,070. 3. $150,700. 4. $146,200.

Correct Answer: C 121 / 110 = 1.10 1.10 X 137,000 = 150,700

Question 437 USING A COMPARABLE THAT SOLD ONE YEAR AGO, MAKE THE APPROPRIATE ADJUSTMENTS. LAND VALUE $25,000 SALE PRICE $125,000 STONE FASCIA WHERE THE SUBJECT HAS WOOD -$6,000 SUBJECT HAS A FIREPLACE +$3,000 IMPROVEMENT IN MARKET CONDITIONS +20% a. $153,000. b. $150,000. c. $147,000. d. $141,000.

Correct Answer: C 125,000 X .20 = 25,000 125,000 + 25,000 - 6,000 + 3,000 = 147,000

Question 135 A FIVE YEAR OLD 15,000 SQUARE FOOT WAREHOUSE RECENTLY SOLD FOR $250,000.00. LAND VALUE IS ESTIMATED TO BE $70,000.00. COST TO CONSTRUCT SIMILAR WAREHOUSES IS CURRENTLY $16.00 PER SQUARE FOOT. WHAT IS THE PERCENTAGE OF TOTAL ACCRUED DEPRECIATION? 1. 4% 2. 24% 3. 25% 4. 33%

Correct Answer: C 15,000 x 16 = 240,000 250,000 - 70,000 = 180,000 240,000 - 180,000 = 60,000 60,000 / 240,000 = .25

Question 530 THREE YEARS AGO A HOMEOWNER INSTALLED A POOL VALUED AT $20,000. PRIOR TO INSTALLING THE POOL, THE HOME WAS VALUED AT $195,000. THE USEFUL LIFE OF THE POOL IS TEN YEARS. IF THE MARKET IS INCREASING 5% ANNUALLY, WHAT IS THE PRESENT VALUE OF THE HOME? a. $215,900 b. $222,900 c. $242,900 d. $248,900

Correct Answer: C 195,000 + 20,000 = 215,000 3n 5i 215,000 PV FV = 248,889 20,000/10 = 2,000 2,000 x 3 = 6,000 248,889 - 6,000 = 242,889

Question 163 THE OWNER OF A TWENTY YEAR LEASEHOLD IN AN APARTMENT BUILDING PAYS MONTHLY RENT OF $2,000.00. IN TURN, THE LEASEHOLDER SUBLETS THE SAME UNIT AT A NET RENTAL RATE OF $2,500.00 PER MONTH. WHAT IS THE VALUE OF THIS LEASEHOLD IF A DISCOUNT RATE OF 10% IS APPROPRIATE? 1. $42,500.00 2. $45,000.00 3. $51,000.00 4. $60,000.00

Correct Answer: C 2,500 - 2,000 = 500 20 gn 10 gi 500 PMT PV = 51,812 Finding the value of the tenant's interest (leasehold)requires the calcualtion to be based on deficit rent. Deficit rent exists when the market rent exceeds contract rent.

Question 118 A DEVELOPER HAS PURCHASED 20 ACRES OF VACANT LAND. THE COUNTY HAS BEEN DEEDED 20 PERCENT OF THE LAND FOR STREETS AND A RECREATION AREA. ZONING RESTRICTIONS ALLOW FIVE LOTS PER ACRE AND DEED RESTRICTIONS REQUIRE THAT EACH LOT HAVE A MINIMUM OF 8,000 SQUARE FEET. HOW MANY LOTS MAY BE DEVELOPED FROM THIS PARCEL? 1. 100 2. 90 3. 80 4. 60

Correct Answer: C 20 X .80 = 16 16 X 5 = 80 Zoning is more limiting than deed restrictions in this example.

Question 336 A HOUSE LOCATED NEAR RAILROAD TRACKS RENTS FOR $200 PER MONTH LESS THAN OTHER COMPARABLE PROPERTIES NOT AFFECTED BY THIS INFLUENCE. CONSIDERING A LAND TO BUILDING RATIO OF 1:3 AND A GRM OF 100, WHAT AMOUNT OF EXTERNAL OBSOLESCENCE IS ATTRIBUTED TO THE IMPROVEMENT? 1. $12,000.00 2. $13,300.00 3. $15,000.00 4. $20,000.00

Correct Answer: C 200 X 100 = 20,000 20,000 X .75 = 15,000

Question 325 THE SALE PRICE OF AN IMPROVED PROPERTY IS $250,000. REPLACEMENT COST OF THE IMPROVEMENT ON THE DATE OF SALE IS $200,000 AND DEPRECIATION IS ESTIMATED TO BE $50,000. BASED ON EXTRACTION, WHAT IS THE INDICATED LAND VALUE? 1. $200,000. 2. $150,000. 3. $100,000. 4. $50,000.

Correct Answer: C 200,000-50,000=150,000 250,000-150,000=100,000

Question 520 FUNCTIONAL OBSOLESCENCE MAY DIMINISH THE VALUE OF A NEW HOME DUE TO: 1. BUILDER'S POOR REPUTATION. 2. IMPROPERLY INSTALLED APPLIANCES. 3. PROPOSED ZONING CHANGES. 4. SUPERADEQUATE AIR CONDITIONER.

Correct Answer: D The builder's poor reputation is external to the property as is a change in zoning, and the appliances are likely personal property items.

Question 158 A ROOF MUST BE REPLACED IN THREE YEARS. THE ANNUAL YIELD ON RESERVES IS FIVE PERCENT. HOW MUCH SHOULD BE CONTRIBUTED ANNUALLY TO MEET THIS GOAL IF THE ROOF WILL COST $50,000.00? 1. $18,110.00 2. $17,690.00 3. $15,860.00 4. $12,350.00

Correct Answer: C 3 n 5 i 50,000 FV PMT = 15,860

Question 248 BASED ON THE FOLLOWING INFORMATION, WHAT IS THE RANGE OF VALUE INDICATED BY THE POTENTIAL GROSS INCOME MULTIPLIER? SUBJECT COMPARABLEA COMPARABLE B COMPARABLE C PRICE $3,720,000 $4,524,000 $4,500,000 APARTMENTS 250 210 350 280 POTENTIAL GROSS INCOME $620,000 $600,000 $780,000 $750,000 a. $3,321,250 TO $4,428,000 b. $3,770,000 TO $4,500,000 c. $3,596,000 TO $3,844,000 d. $3,317,600 TO $4,125,000 "

Correct Answer: C 3,720,000 / 600,000 = 6.2 4,524,000 / 780,000 = 5.8 4,500,000 / 750,000 = 6 6.2 X 620,000 = 3,844,000 5.8 X 620,000 = 3,596,000

Question 308 A MORTGAGE LOAN WAS ORIGINATED IN THE AMOUNT OF $100,000 AMORTIZING MONTHLY FOR A 30 YEAR TERM AT AN ANNUAL INTEREST RATE OF 10.5 PERCENT. WHAT IS THE REMAINING PRINCIPAL BALANCE AFTER 60 PAYMENTS HAVE BEEN MADE? 1. $95,100. 2. $96,037. 3. $96,881. 4. $97,642.

Correct Answer: C 30 gn 10.5 gi 100,000 PV PMT = 914.74 60 f amort = 51,766 RCL PV = 96,881

Question 159 WHAT IS THE ANNUAL DEBT SERVICE ON A MORTGAGE LOAN OF $78,000.00 AT 11 PERCENT INTEREST IF THE TERM OF THE LOAN IS 30 YEARS AND THE LOAN IS AMORTIZED MONTHLY? 1. $8,275.32 2. $8,875.44 3. $8,913.74 4. $8,971.92

Correct Answer: C 30 gn 11 gi 78,000 PV PMT = 742.8122 12 X = 8,913.7469 Make sure your calculation reflects monthly payments, then convert to annual debt service.

Question 474 A LOAN IN THE AMOUNT OF $60,000 AT 9% FOR 30 YEARS (AMORTIZING MONTHLY) HAS BEEN GRANTED. WHAT IS THE SECOND MONTH'S INTEREST? 1. $33 2. $180 3. $450 4. $483

Correct Answer: C 30 gn 9 gi 60,000 PV PMT = 482.77 1 f amort = 450 1 f amort = 449.75

Question 287 WHAT RANGE OF VALUE IS INDICATED BY THE FOLLOWING COMPARABLE SALES ON A FRONT FOOT BASIS? COMPARABLE COMPARABLE COMPARABLE SUBJECT A B C PRICE $39,000 $19,000 $27,000 DIMENSIONS 125' X 300' 150' X 400' 90' X 250' 110' X 290' a. $31,740 TO $24,375 b. $32,500 TO $30,625 c. $32,500 TO $26,375 d. $39,000 TO $28,300

Correct Answer: C 39,000 / 150 = 260 19,000 / 90 = 211 27,000 / 110 = 245 260 X 125 = 32,500 211 X 125 = 26,375

Question 411 A HOUSE SOLD FOR $84,500.00 FOUR YEARS AGO. THE MARKET INDICATED THAT PROPERTY VALUES HAVE BEEN INCREASING FIVE PERCENT PER YEAR OVER THE PAST FIVE YEARS. IF A MARKET CONDITIONS ADJUSTMENT IS MADE TO THE COMPARABLE, WHAT IS THE ADJUSTED SALE PRICE? 1. $99,000.00 2. $101,000.00 3. $103,000.00 4. $108,000.00

Correct Answer: C 4 n 5 i 84,500 PV FV = 102,710

Question 154 WHAT IS THE STANDARD DEVIATION? 1. $.23 2. $.89 3. $1.994 4. $7.886

Correct Answer: C 40.00 E+ 42.50 E+ 37.50 E+ 41.00 E+ 37.50 E+ 38.00 E+ 41.00 E+ g s = 1.994

Question 153 WHAT IS THE RANGE? 1. $39.64 2. $47.50 3. $5.00 4. $4.00

Correct Answer: C 42.5 - 37.5 = 5 The range is the difference between the highest and lowest value in a sample.

Question 200 AN APPRAISER HAS BEEN ASKED TO VALUE A 1,000 SQUARE FOOT STRIP THAT IS BEING CONDEMNED FROM THE FRONT OF AN 11,000 SQUARE FOOT SITE. IF THE APPRAISER ESTIMATES THE 11,000 SQUARE FOOT SITE TO BE WORTH $44,000.00 PRIOR TO THE TAKING, WHAT IS THE VALUE OF THE TAKING? 1. $3,200.00 2. $3,600.00 3. $4,000.00 4. $4,400.00

Correct Answer: C 44,000 / 11,000 = 4 4 X 1000 = 4,000

Question 343 THE W1/2 OF THE NE1/4 OF THE NE1/4 OF THE SW1/4 WAS VALUED AT $1.50 PER SQUARE FOOT. WHAT IS THE VALUE OF THE PROPERTY? 1. $217,800 2. $248,300 3. $326,700 4. $352,200

Correct Answer: C 5 X 43,560 = 217,800 217,800 X 1.50 = 326,700

Question 614 USING THE SIMPLE MORTGAGE-EQUITY TECHNIQUE, ESTIMATE THE DISCOUNT RATE GIVEN THE FOLLOWING INFORMATION. LOAN AMOUNT - $80,000.00 COST OF PROPERTY - $100,000.00 MORTGAGE INTEREST RATE - .09 INVESTOR'S EQUITY RATE - - .15 LOAN TERM - 30 YEARS a. .091 b. .099 c. .102 d. .113

Correct Answer: C 80,000 / 100,000 = .80 .80 X .09 = .072 .20 X . 15 = .03 .072 + .03 = .102

Question 257 TWO SITES ARE EXPECTED TO BE READY FOR HIGH-RISE OFFICE BUILDING CONSTRUCTION IN ABOUT FIVE YEARS. ONE SITE HAS A COMMERCIAL INTERIM USE THAT PRODUCES $40,000 MORE NET OPERATING INCOME PER YEAR THAN THE OTHER PROPERTY, WHICH HAS A PARKING LOT AS ITS INTERIM USE. THE PRESENT VALUE OF THE FUTURE COST TO DEMOLISH THE COMMERCIAL BUILDING IS $50,000 AND THE PARKING LOT WILL ENTAIL NO DEMOLITION COST. BASED ON A DISCOUNT RATE OF 10.5 PERCENT, WHAT IS THE DIFFERENCE IN VALUE OF THESE TWO INTERIM USES? 1. $150,000 2. $125,000 3. $100,000 4. $50,000

Correct Answer: C 5 n 10.5 i 40,000PMT PV = 149,714 149,714 - 50,000 = 100,000

Question 216 CARPETING WILL REQUIRE REPLACEMENT IN FIVE YEARS. IF THE REPLACEMENT COST IS ANTICIPATED TO BE $12,000 AND THE RESERVE ACCOUNT WILL EARN SIX PERCENT, WHAT IS THE NECESSARY ANNUAL CONTRIBUTION? 1. $2,989 2. $2,433 3. $2,129 4. $2,098

Correct Answer: C 5 n 6 i 12,000 FV PMT = 2,129

Question 622 A DISCOUNT RATE OF TEN PERCENT IS APPROPRIATE, WHICH OF THE FOLLOWING ALTERNATIVES REPRESENTS THE HIGHEST AND BEST USE? USE NOI COST ECONOMIC LIFE OFFICE $175,000 $375,000 50 YEARS STRIP CENTER $169,000 $200,000 40 YEARS LIQUOR LOUNGE $205,000 $400,000 30 YEARS GARAGE $120,000 $100,000 40 YEARS a. OFFICE. b. STRIP CENTER. c. LIQUOR LOUNGE. d. GARAGE.

Correct Answer: C 50 n 40 n 10 I 10 I 175,000 PMT 169,000 PMT PV = 1,735,092 PV = 1,652,659 1,735,092 - 375,000 = 1,360,092 1,652,659 - 200,000 = 1,452,659 30 n 40 n 10 I 10 I 205,000 PMT 120,000 PMT PV = 1,932,515 PV = 1,173,486 1,932,517 - 400,000 = 1,532,517 1,173,486 - 100,000 = 1,073,486

Question 526 A PROPERTY HAS BEEN ASSESSED BY THE LOCAL TAXING AGENCY FOR $50,000. THE ASSESSMENT RATIO IS 50%. IF THE MILLAGE RATE IS .017, WHAT IS THE VALUE OF THIS PROPERTY? 1. $170,000 2. $150,000 3. $100,000 4. $50,000

Correct Answer: C 50,000/.50=100,000

Question 422 AN INVESTMENT IS PROJECTED TO PRODUCE THE FOLLOWING CASH FLOWS. WHAT IS THE INDICATED INTERNAL RATE OF RETURN FOR THE FIVE YEAR HOLDING PERIOD? EQUITY INVESTMENT $500,000 YEAR 1 38,000 YEAR 2 42,000 YEAR 3 -11,800 YEAR 4 48,000 YEAR 5 56,000 EQUITY REVERSION $575,000 a. 7.89% b. 8.68% c. 9.25% d. 10.13%

Correct Answer: C 500,000 CHS g Cfo 38,000 g Cfj 42,000 g Cfj 11,800 CHS g Cfj 48,000 g Cfj 575,000 Enter 56,000 + g Cfj f IRR = 9.25

Question 469 • PROPERTY WITH A GROSS INCOME OF $600 EACH MONTH IS BEING APPRAISED. IF THE LOCAL MARKET DATA REVEALS AN ANNUAL GROSS RENT MULTIPLIER OF 8.2 AND A CAPITALIZATION RATE OF 11.5%, WHAT IS THE INDICATED MARKET VALUE OF THE SUBJECT (ROUNDED TO THE NEAREST $1,000)? 1. $49,000 2. $55,000 3. $59,000 4. $64,000

Correct Answer: C 600 x 12 = 7200 7200 x 8.2 = 59,040

Question 365 The interior of a building measures 65'x 100'. The interior wall height is 20'. If a gallon of paint will cover 400 square feet and paint costs $26 per gallon, what is the cost of paint required to paint the interior walls including the ceiling? A. $234 B. $442 C. $858 D. $925

Correct Answer: C 65 x 20 x 2 = 2600 100 x 20 x 2 = 4000 65 x 100 = 6500 2600 + 4000 + 6500 = 13100 13100 / 400 = 32.75 33 x 26 = 858

Question 298 WHAT IS THE ACCRUED DEPRECIATION ON A 10 YEAR OLD HOME THAT RECENTLY SOLD FOR $65,500 HAVING 1900 SQUARE FEET OF GROSS LIVING AREA IF REPLACEMENT COST NEW IS ESTIMATED TO BE $33 PER SQUARE FOOT AND LAND VALUE IS $5,600? 1. $3,400 2. $3,200 3. $2,800 4. $2,000

Correct Answer: C 65,500 - 5,600 = 59,900 33 X 1,900 = 62,700 62,700 - 59,900 = 2,800

Question 515 PRICE LIVING AREA BED/BATH GARAGE SITE $66,900 1,520 3/2 2 CAR 65X130 $65,900 1,460 3/2 1 CAR 90X130 $69,300 1,540 3/2 2 CAR 65X130 $68,900 1,520 3/2 2 CAR 90X130 $69,300 1,540 4/2 2 CAR 65X130 $67,700 1,460 3/2 2 CAR 90X130 SUBJECT 1,460 3/2 2 CAR 65X130 ALL OF THE COMPARABLES SHOWN ABOVE ARE LOCATED IN THE SUBJECT'S SUBDIVISION. WHAT IS THE INDICATED ADJUSTMENT PER SQUARE FOOT IN SIZE FOR THE LIVING AREA? a. $7.50 b. $15.00 c. $30.00 d. $45.00

Correct Answer: C 66,900 Enter 1,520 E+ 65,900 Enter 1,460 E+ 69,300 Enter 1,540 E+ 68,900 Enter 1,520 E+ 69,300 Enter 1,540 E+ 67,700 Enter 1,460 E+ 1g2 25,435.96 0g2 25,407.69 25,435.96 - 25,407.69 = 28.27

Question 253 AN APPRAISER HAS AN ASSIGNMENT TO VALUE A SITE. COMPARABLE SALES HAVE BEEN LOCATED AND THE FOLLOWING DATA COLLECTED. BASED ON THE DATA PROVIDED, WHAT IS THE VALUE OF THE SUBJECT PROPERTY ON A PER ACRE BASIS IF EACH SALE IS EQUALLY WEIGHTED AND NO ADJUSTMENTS ARE NECESSARY? (ROUNDED TO THE NEAREST $100) SUBJECT COMPARABLE A COMPARABLE B COMPARABLE C PRICE $665,000 $520,000 $640,000 SIZE 60 ACRES 72 ACRES 52 ACRES 70 ACRES a. $608,300 b. $595,400 c. $567,600 d. $562,300

Correct Answer: C 665,000 / 72 = 9,236 9,236 E+ g 0 = 9,459 520,000 / 52 = 10,000 10,000 E+ 9,459 X 60 = 567,540 640,000 / 70 = 9,142 9,142 E+

Question 482 AN APPRAISER IN AN ATTEMPT TO VALUE A SITE WITH THREE EQUALLY COMPARABLE SALES WERE LOCATED WITH THE FOLLOWING DATA PROVIDED. WHAT IS THE VALUE OF THE SUBJECT ON A PER ACRE BASIS IF NO ADJUSTMENTS ARE NECESSARY? (ROUNDED TO THE NEAREST $1,000) SUBJECT -X- 60 ACRES COMPARABLE A $665,000 72 ACRES COMPARABLE B $520,000 52 ACRES COMPARABLE C $640,000 70 ACRES a. $608,000 b. $595,000 c. $567,000 d. $562,000

Correct Answer: C 665,000 / 72 = 9236 520,000 / 52 = 10000 640,000 / 70 = 9142 9236 + 10000 + 9142 = 28378 28378 / 3 = 9459 9459 x 60 = 567,540

Question 377 A PROPOSED DWELLING MEASURES 60' X 30'. IT IS TO BE CONSTRUCTED ON A SITE THAT HAS UNSTABLE SOIL CONDITIONS TO A DEPTH OF ABOUT 4'. IN ORDER TO CONSTRUCT THE DWELLING, THE SITE MUST BE EXCAVATED AND REFILLED TO A DEPTH OF 4.5' FOR THAT PORTION THAT INCLUDES THE FLOOR AREA AND 4' BEYOND ALL PERIMETER WALLS. EXCAVATION COSTS ARE ESTIMATED AT $2.50 PER CUBIC YARD AND REFILLING WILL COST $4.00 PER CUBIC YARD. WHAT IS THE TOTAL COST OF EXCAVATION AND REFILL? 1. $1,950.00 2. $2,488.00 3. $2,799.00 4. $2,991.00

Correct Answer: C 68 X 38 = 2,584 2,584 X 4.5 = 11,628 11,628 / 27 = 430.6667 430.6667 X 6.50 = 2,799

Question 609 A 100 UNIT APARTMENT BUILDING HAS A RATIO OF ONE BEDROOM UNITS TO TWO BEDROOM UNITS OF 3:1. THE ONE BEDROOM UNITS MEASURE 1,000 SQUARE FEET. THE TWO BEDROOM UNITS MEASURE 1,300 SQUARE FEET. THE RENT FOR ALL UNITS IS $.65 PER SQUARE FOOT PER MONTH. WHAT IS THE POTENTIAL GROSS INCOME FOR THE BUILDING? 1. $436,000 2. $585,000 3. $838,500 4. $920,200

Correct Answer: C 75 X 1,000 = 75,000 107,500 X .65 = 69,875 25 X 1,300 = 32,500 69,875 X 12 = 838,500 75,000 + 32,500 = 107,500

Question 242 A SINGLE FAMILY RESIDENCE IS BEING APPRAISED IN MARCH 1994. A SIMILAR PROPERTY IN THE SAME NEIGHBORHOOD SOLD IN JULY 1993 FOR $89,000.00 AND AGAIN IN MARCH 1994 FOR $98,000.00. IF NO OTHER ADJUSTMENTS ARE NECESSARY, WHAT IS THE INDICATED COMPOUND MONTHLY RATE OF CHANGE? 1. 1.39% 2. 1.32% 3. 1.21% 4. 1.19%

Correct Answer: C 8 n 89,000 PV 98,000CHS FV i = 1.21

Question 367 LOCAL GOVERNMENT HAS A BUDGETARY REQUIREMENT OF $12,000,000 FOR THE COMING YEAR. TOTAL ASSESSED VALUE IS $800,000,000. TAX EXEMPTIONS TOTAL $50,000,000 AND GOVERNMENT OWNED PROPERTIES AMOUNT TO $25,000,000. WHAT IS THE INDICATED MILLAGE RATE? 1. 14 MILLS. 2. 15 MILLS. 3. 16 MILLS. 4. 17 MILLS.

Correct Answer: C 800,000,000 - 50,000,000 = 750,000,000 12,000,000 / 750,000,000 = .016

Question 429 IF THE MARKET RENT OF A RESIDENTIAL PROPERTY IS $878.00 PER MONTH AND THE MOST RECENT SURVEY OF COMPARABLE RENTAL PROPERTIES INDICATE THE FOLLOWING GIM'S, WHAT IS THE INDICATED VALUE OF THE SUBJECT? 118 121 125 130 130 130 130 130 131 136 a. $112,000.00 b. $113,000.00 c. $114,000.00 d. $115,000.00

Correct Answer: C 878x130=114,140

Question 597 THE SUBJECT PROPERTY PRODUCES $42,000 IN NET OPERATING INCOME DURING THE INITIAL YEAR OF THE INVESTMENT. NET OPERATING INCOME IS PROJECTED TO INCREASE THREE PERCENT FOR EACH SUBSEQUENT YEAR IN THE FIVE YEAR PROJECTION PERIOD. NET OPERATING INCOME FOR THE SIXTH YEAR IS PROJECTED TO BE THREE PERCENT GREATER THAN THE FIFTH YEAR. THE APPROPRIATE DISCOUNT RATE IS NINE PERCENT AND THE VALUE OF THE REVERSION IS ESTIMATED BY CAPITALIZING THE PROJECTED INCOME OF YEAR SIX AT 12 PERCENT. WHAT IS THE INDICATED VALUE OF THE SUBJECT ROUNDED TO THE NEAREST $1,000? 1. $271,000 2. $379,000 3. $436,000 4. $498,000

Correct Answer: C 9 i 42,000 g CFj 43,260 g CFj 44,558 g CFj 45,894 g CFj 47,271 g CFj f NPV = 172,585 48,689/.12 = 405,741 5 n 9 i 405,741 FV PV = 263,703 172,585 + 263,703 = 436,288

Question 149 WHAT IS THE INDICATED VALUE OF THE SUBJECT PROPERTY IF THE SUBJECT PRODUCES $9,000 IN NET OPERATING INCOME AND THE FOLLOWING DATA ON COMPARABLE PROPERTIES HAS BEEN COLLECTED? SALES PRICE $88,900.00 $87,850.00 $91,000.00 NET OPERATING INCOME $8,180.00 $9,170.00 $9,200.00 a. $89,250.00 b. $89,750.00 c. $90,750.00 d. $91,250.00

Correct Answer: C 9,000 / .099164956 = 90,757 Using an average cap rate to measure the value of the suject. The rate is calculated by taking the net operating income and dividing by the sale price.

Question 241 A SINGLE-FAMILY RESIDENCE IS BEING APPRAISED IN MARCH 1994. A SIMILAR PROPERTY IN THE SAME NEIGHBORHOOD SOLD IN JULY 1993 FOR $89,000.00 AND AGAIN IN MARCH 1994 FOR $98,000.00. IF NO OTHER ADJUSTMENTS ARE NECESSARY, WHAT IS THE INDICATED AVERAGE MONTHLY RATE OF CHANGE? 1. 1.79% 2. 1.38% 3. 1.26% 4. 1.14%

Correct Answer: C 98,000 - 89,000 = 9,000 9,000 / 89,000 = .1011235 .1011235 / 8 = .0126

Question 183 WHAT APPRAISAL PRINCIPLE IS VIOLATED BY THE PRESENCE OF AN "EARTH HOME" IN A NEIGHBORHOOD OF CONVENTIONAL HOUSES? 1. MARGINAL PRODUCTIVITY. 2. CONTRIBUTION. 3. CONFORMITY. 4. BALANCE.

Correct Answer: C A home built below grade in an area of conventional housing violates the appraisal principle of conformity.

Question 210 THE TIME IN WHICH IMPROVEMENTS CONTRIBUTE TO VALUE IS THE: 1. ACTUAL LIFE. 2. PHYSICAL LIFE. 3. ECONOMIC LIFE. 4. CHRONOLOGICAL LIFE.

Correct Answer: C Actual life, physical life, and chronological life all refer to how long the improvement will physically exist.

Question 291 WHAT TYPE OF MORTGAGE REPAYMENT PLAN IS CHARACTERIZED BY INCREASING MONTHLY PAYMENTS? I. ADJUSTABLE RATE MORTGAGE. II. VARIABLE RATE MORTGAGE. III. GROWING EQUITY MORTGAGE. IV. GRADUATED PAYMENT MORTGAGE. a. I, II, III, AND IV. b. I, III, AND IV. c. III AND IV. d. IV ONLY.

Correct Answer: C Adjustable rate and variable rate mortgages may have rates that adjust upward, downward, or stay the same. Growing equity and graduated payment mortgages have payments that only increase.

Question 317 WHAT IS ETHICAL? 1. HAVING NO KNOWLEDGE OF THE MARKET WITHOUT INFORMING THE CLIENT. 2. INFORMING THE CLIENT THAT THE APPRAISAL FEE IS BASED ON MARKET VALUE. 3. ADVERTISING THAT THE APPRAISER DOES BUSINESS IN A PARTICULAR NEIGHBORHOOD. 4. ACCEPTING AN ASSIGNMENT BASED ON THE AGREEMENT TO DELIVER A MINIMUM VALUE.

Correct Answer: C Advertising is considered ethical behavior.

Question 385 WHICH OF THE FOLLOWING IS NOT ENFORCEABLE AS A PORTION OF UNIFORM STANDARDS? 1. SCOPE OF WORK RULE. 2. STATEMENTS. 3. ADVISORY OPINIONS. 4. COMPETENCY RULE.

Correct Answer: C Advisory opinions are not part of USPAP and are not enforceable.

Question 288 WHICH OF THE FOLLOWING MAY INFLUENCE AN APPRAISER'S ESTIMATE OF VACANCY AND COLLECTION LOSS? I. QUALITY OF TENANTS. II. SUPPLY AND DEMAND RELATIONSHIPS. III. LOCAL ECONOMIC CONDITIONS. IV. TYPE OF PROPERTY. a. I, II, AND III. b. II, III, AND IV. c. I, II, III, AND IV. d. I, III, AND IV.

Correct Answer: C All are concerns of vacancy and collection losses.

Question 477 WHICH OF THE FOLLOWING REPRESENTS A TECHNIQUE TO MEASURE DEPRECIATION? I. ECONOMIC AGE-LIFE. II. MODIFIED AGE-LIFE. III. BREAKDOWN. IV. SALES COMPARISON. a. I AND II. b. I, II, AND III. c. I, II, III, AND IV. d. IV ONLY.

Correct Answer: C All are methods that may be used to measure depreciation.

Question 503 BASED ON THE FOLLOWING DATA SET, WHAT IS THE EQUILIBRIUM POINT? 60,000 70,000 80,000 90,000 100,000 110,000 1. 90,000 2. 87,500 3. 85,000 4. 82,500

Correct Answer: C An equilibrium point may be established by statistical measurements of central tendency. For this data set, the mean and median is 85,000. 60,000E+ 70,000E+ 80,000E+ 90,000E+ 100,000E+ 110,000E+ g0=85,000 Mean n+1/2 6+1=7 7/2=3.5 Median position

Question 521 INVESTMENT VALUE IS: 1. TRUE POTENTIAL FOR A PROPERTY TO EARN MONEY. 2. TAX SHELTER FOR HIGH INCOME PERSONS. 3. WORTH OF A PROPERTY TO A PARTICULAR INDIVIDUAL. 4. WORTH OF A PROPERTY DEFINED BY THE MARKETPLACE.

Correct Answer: C Answer (c) is a short definition of investment value.

Question 161 FOR EACH MILE FROM THE LAKE, A CORRESPONDING DECREASE IS FOUND IN PROPERTY VALUE. THE INDICATED CORRELATION COEFFICIENT IS: 1. +1.0 2. 0.0 3. -1.0 4. NONE OF THE ABOVE.

Correct Answer: C Answer C represents a linear inverse relationship. Answer A represents a linear positive relationship. Answer B indicates no realtionship.

Question 511 IN THE ABSENCE OF LITIGATION, HOW LONG MUST A CERTIFIED OR LICENSED APPRAISER RETAIN ORIGINALS OR TRUE COPIES OF EMPLOYMENT CONTRACTS? 1. 90 DAYS. 2. 2 YEARS. 3. 5 YEARS. 4. NO REQUIREMENT TO RETAIN EMPLOYMENT CONTRACTS.

Correct Answer: C As required by Chp 475 II FS

Question 390 WHICH OF THE FOLLOWING TYPES OF INSULATION MAY HAVE A DANGEROUS CHEMICAL AS A COMPONENT? 1. ASBESTOS. 2. FOIL. 3. FOAM. 4. FIBER.

Correct Answer: C Asbestos is a mineral fiber, not a chemical. Formaldehyde was used in foam insulation manuafactured prior to April 1984.

Question 310 A RESIDENTIAL PROPERTY HAS BEEN ZONED COMMERCIAL. AS A RESIDENTIAL PROPERTY, THE SITE IS WORTH $30,000 AND THE IMPROVEMENTS ARE WORTH $90,000. AS A COMMERCIAL PROPERTY, THE SITE IS WORTH $80,000 AND THE IMPROVEMENTS ARE WORTH $50,000. THE IMPROVEMENTS REQUIRE $10,000 IN DEMOLITION AND RENOVATION COSTS TO REALIZE COMMERCIAL POTENTIAL. HOW SHOULD THIS PROPERTY BE CONSIDERED IN A MARKET VALUE APPRAISAL? 1. COMMERCIAL SITE AND RESIDENTIAL IMPROVEMENT. 2. RESIDENTIAL SITE AND RESIDENTIAL IMPROVEMENT. 3. COMMERCIAL SITE AND COMMERCIAL IMPROVEMENT. 4. RESIDENTIAL SITE AND COMMERCIAL IMPROVEMENT.

Correct Answer: C Based on the principle of consistent use, land and improvements must be valued based on the same conclusion of highest and best use.

Question 357 THE SUBJECT IS A QUADRAPLEX WITH ONE EFFICIENCY, TWO ONE BEDROOM UNITS, AND ONE TWO BEDROOM UNIT. ALL COMPARABLES ARE QUADRAPLEXES WITH FOUR ONE BEDROOM UNITS. WHICH OF THE FOLLOWING IS THE LEAST APPROPRIATE UNIT OF COMPARISON? 1. GRM. 2. VALUE PER ROOM. 3. VALUE PER UNIT. 4. VALUE PER SQUARE FOOT.

Correct Answer: C Because the units are all different, the value per unit may be unreliable.

Question 423 AN APPRAISER SHOULD INVESTIGATE AN ATTIC AND CRAWL SPACE FOR EVIDENCE OF: I. INSULATION. II. LEAKS AND INFESTATION. a. I ONLY. b. II ONLY. c. I AND II. d. NEITHER I NOR II.

Correct Answer: C Both are goals of attic and crawl space inspections.

Question 274 WHICH OF THE FOLLOWING IS/ARE CORRECT? I. BUYERS COMPETE WITH SELLERS. II. BUYERS COMPETE WITH BUYERS. III. SELLERS COMPETE WITH SELLERS. a. I ONLY. b. I, II, AND III. c. II AND III. d. NONE OF THE ABOVE.

Correct Answer: C Buyers and sellers do not compete.

Question 497 THE PRINCIPLE OF ANTICIPATION HAS THE GREATEST IMPORTANCE AT WHAT STAGE OF THE VALUATION PROCESS? 1. ESTIMATING ACCRUED DEPRECIATION. 2. CHOOSING COMPARABLE SALES. 3. APPLICATION OF INCOME CAPITALIZATION. 4. CALCULATION OF REPLACEMENT COST.

Correct Answer: C Buyers make buying decisions based on a projection of future benefits which is seen when projecting future income in application of income capitalization techniques.

Question 536 WHICH OF THE FOLLOWING IS CONSIDERED TO BE A BUSINESS OR PERSONAL EXPENSE OF THE OWNER AND THEREFORE IS INCLUDED IN NET OPERATING INCOME? 1. MANAGEMENT. 2. COLLECTION LOSS. 3. DEBT SERVICE. 4. VACANCY LOSS.

Correct Answer: C C.

Question 615 GIVEN THE FOLLOWING INFORMATION, WHAT IS THE OVERALL CAPITALIZATION RATE USING THE BAND OF INVESTMENT TECHNIQUE? BUILDING CAPITALIZATION RATE: 11 PERCENT LAND CAPITALIZATION RATE: 9 PERCENT LAND VALUE: 35 PERCENT a. .097 b. .100 c. .103 d. .110

Correct Answer: C C. .35 X .09 = .0315 .65 X .11 = .0715 .0315 + .0715 = .103

Question 542 WHAT IS THE INDICATED CAPITALIZATION RATE FOR A PROPERTY THAT HAS AN ANNUAL GROSS INCOME MULTIPLIER OF 8.0 AND AN OPERATING EXPENSE RATIO OF 40 PERCENT? 1. 5% 2. 6.4% 3. 7.5% 4. 7.9%

Correct Answer: C C. 1 - .40 = .60 .60 / 8 = .075

Question 546 THE BUILDING VALUE IS $100,000.00. NET OPERATING INCOME IS $20,000.00. RETURN ON EQUITY IS 10%. THE BUILDING HAS A 25 YEAR LIFE. WHAT IS THE TOTAL PROPERTY VALUE USING THE LAND RESIDUAL TECHNIQUE? 1. $100,000.00 2. $120,000.00 3. $160,000.00 4. $180,000.00

Correct Answer: C C. 1 / 25 = .04 .04 + .10 = .14 100,000 X .14 = 14,000 20,000 - 14,000 = 6,000 6,000 / .10 = 60,000 60,000 + 100,000 = 160,000

Question 550 A PROPERTY HAS NET INCOME OF $50,000.00 AND A LAND VALUE OF $150,000.00. WHAT IS THE INDICATED TOTAL PROPERTY VALUE ASSUMING A 12 PERCENT RETURN ON INVESTMENT AND A 50 YEAR ECONOMIC LIFE OF THE BUILDING? 1. $323,400.00 2. $346,200.00 3. $378,500.00 4. $399,000.00

Correct Answer: C C. 1 / 50 = .02 .12 + .02 = .14 150,000 X .12 = 18,000 50,000 - 18,000 = 32,000 32,000 / .14 = 228,571 228,571 + 150,000 = 378,571

Question 613 NET OPERATING INCOME HAS BEEN ESTIMATED TO BE $50,000.00 DURING EACH YEAR OF THE 10 YEAR HOLDING PERIOD. PROPERTY VALUE IS ANTICIPATED TO DECLINE 20 PERCENT DURING THE SAME PERIOD. APPRAISE THE PROPERTY TO YIELD 14 PERCENT. 1. $385,000.00 2. $357,000.00 3. $333,000.00 4. $328,000.00

Correct Answer: C C. 10 n .14 + .010342 = .150342 14 I 50,000 / .150342 = 332,575 1 FV PMT = .05171354 .05171345 X .20 = .010342708

Question 599 NET OPERATING INCOME IS ANTICIPATED TO BE $8,000.00 FOR EACH OF THE FIVE YEARS IN THE PROJECTION PERIOD. THE SIXTH YEAR'S NET OPERATING INCOME IS ANTICIPATED TO BE $10,000.00. THE TERMINAL CAPITALIZATION RATE IS 12 PERCENT. IF THE APPROPRIATE DISCOUNT RATE IS NINE PERCENT, WHAT IS THE PRESENT VALUE OF THE GROSS PROCEEDS OF SALE? 1. $31,117.00 2. $37,079.00 3. $54,158.00 4. $83,333.00

Correct Answer: C C. 10,000 / .12 = 83,333 5 n 9 I 83,333 FV PV = 54,160

Question 571 PROVIDED WITH THE FOLLOWING INFORMATION, WHAT IS THE BUILDING CAPITALIZATION RATE FOR THE SUBJECT PROPERTY? LAND VALUE - $60,000.00 NET OPERATING INCOME - $25,000.00 LAND CAPITALIZATION RATE - 8 PERCENT OVERALL CAPITALIZATION RATE - 9 PERCENT a. 8.3 PERCENT. b. 8.4 PERCENT. c. 9.3 PERCENT. d. 10.9 PERCENT.

Correct Answer: C C. 25,000 / .09 = 277,777 277,777 - 60,000 = 217,777 60,000 X .08 = 4,800 25,000 - 4,800 = 20,200 20,200 / 217,777 = .09275

Question 586 CARPET WILL REQUIRE REPLACEMENT IN THREE YEARS. THE CURRENT REPLACEMENT COST FOR THE CARPET IS $10,000.00. IT IS ANTICIPATED THAT THIS COST WILL INCREASE FOUR PERCENT EACH YEAR. IF THE RESERVE ACCOUNT EARNS SIX PERCENT, WHAT ANNUAL CONTRIBUTION IS REQUIRED TO PAY FOR THE CARPET AT ITS SCHEDULED TIME FOR REPLACEMENT? 1. $3,251.00 2. $3,432.00 3. $3,533.00 4. $3,749.00

Correct Answer: C C. 3 n 3 n 4 I 6 I 10,000 PV 11,248 FV FV = 11,248 PMT = 3,533

Question 587 CURRENT NET OPERATING INCOME IS $120,000.00. IF NET OPERATING INCOME IS PROJECTED TO GROW FIVE PERCENT ANNUALLY, WHAT IS THE ANTICIPATED NET OPERATING INCOME FOR THE FOURTH YEAR OF THE HOLDING PERIOD? 1. $139,990.00 2. $141,810.00 3. $145,860.00 4. $152,240.00

Correct Answer: C C. 4 n 5 I 120,000 PV FV = 145,860

Question 543 A THREE FAMILY RESIDENCE RECENTLY SOLD FOR $435,000. THE SITE IS VALUED AT $125,000. THE REMAINING ECONOMIC LIFE OF THE RESIDENCE IS ESTIMATED TO BE 25 YEARS. IF NET OPERATING INCOME IS $57,000, WHAT IS THE DISCOUNT RATE? 1. 9.25% 2. 9.75% 3. 10.25% 4. 10.75%

Correct Answer: C C. 435,000 - 125,000 = 310,000 1 / 25 = .04 310,000 X .04 = 12,400 57,000 - 12,400 = 44,600 44,600 / 435,000 = .1025

Question 547 IF NET OPERATING INCOME IS $45,000.00, ANNUAL DEBT SERVICE IS $25,000.00, AND THE EQUITY INVESTMENT IS $100,000.00, WHAT IS THE EQUITY DIVIDEND RATE? 1. 16% 2. 18% 3. 20% 4. 22%

Correct Answer: C C. 45,000 - 25,000 = 20,000 20,000 / 100,000 = .20

Question 582 GIVEN THE FOLLOWING DATA, WHAT IS THE CASH BREAK-EVEN RATIO? TRANSACTION PRICE - $180,000 DEBT SERVICE - 18,200 OPERATING EXPENSES - 6,000 RESERVE FOR REPLACEMENT - 2,000 GROSS INCOME - 30,000 NET OPERATING INCOME - 24,000 a. 60 PERCENT. b. 68 PERCENT. c. 74 PERCENT. d. 80 PERCENT.

Correct Answer: C C. 6,000 - 2,000 + 18,200 = 22,200 22,200 / 30,000 = .74

Question 232 THE NATIONAL REGISTRY OF STATE CERTIFIED APPRAISERS IS MAINTAINED BY: 1. FREAB. 2. DEPARTMENT OF BANKING AND FINANCE. 3. APPRAISAL SUBCOMMITTEE. 4. APPRAISAL STANDARDS BOARD.

Correct Answer: C Can be seen in Chp 475 II FS

Question 506 AN INVESTOR IS CONSIDERING PURCHASING A FOUR-UNIT APARTMENT BUILDING. THE INCOME AND EXPENSE STATEMENTS FOR THE PROPERTY HAVE BEEN REVIEWED FOR THE PREVIOUS THREE YEARS AND THEY HAVE BEEN FOUND TO BE REASONABLE. IF THE COMMUNITY AND NEIGHBORHOOD SHOWS PROPERTY VALUES AND RENTS TO BE INCREASING, WHICH OF THE FOLLOWING PRINCIPLES WOULD BE MOST APPLICABLE TO THE APPRAISAL OF THIS PROPERTY? 1. FUTURE USE. 2. BALANCE AND SUBSTITUTION. 3. CHANGE AND ANTICIPATION. 4. CONTRIBUTION AND COMPETITION.

Correct Answer: C Change and anticipation suggest that buyers purchase future benefits and those benefits may be different from those experienced in the past.

Question 110 COMPARABLE PROPERTIES MUST HAVE WHICH OF THE FOLLOWING IN COMMON WITH THE SUBJECT? 1. NEIGHBORHOOD. 2. DISTRICT. 3. MARKET AREA. 4. COUNTY.

Correct Answer: C Comparables must be competitive with the subject. Competitive properties are traded in the same market and do not have to be located in the same neighborhood, district, or county

Question 284 WHICH OF THE FOLLOWING ARE CORRECT CONCERNING THE SELECTION OF COMPARABLE SALES? I. LOCATED IN THE SAME NEIGHBORHOOD AS THE SUBJECT. II. TRADED IN THE SAME MARKET AS THE SUBJECT. III. HAS THE SAME OR SIMILAR HIGHEST AND BEST USE AS THE SUBJECT. a. I, II, AND III. b. I AND III. c. II AND III. d. I AND II.

Correct Answer: C Competitive properties (comparables)although highly desirable, do not have to located in the subject's neighborhood.

Question 489 ALL OF THE FOLLOWING ELEMENTS SUGGEST GOOD FUNCTIONAL DESIGN EXCEPT: 1. PLACEMENT OF WINDOWS AND DOORS. 2. LOCATION OF ELECTRICAL OUTLETS. 3. CONDITION OF PLUMBING. 4. GOOD PATTERN OF TRAFFIC FLOW.

Correct Answer: C Condition of the plumbing is a physical depreciation issue.

Question 311 An appraiser must disclose any prior services performed on a property within three years: a. of the effective date of the current appraisal. b. of the effective date of the prior appraisal. c. immediately preceding acceptance of the current assignment. d. immediately preceding acceptance of the appraisal fee.

Correct Answer: C Conduct Section Ethics Rule USPAP

Question 206 A LINE DRAWN FROM A POINT N90 E RUNS: 1. NORTHEAST. 2. NORTH. 3. EAST. 4. WEST.

Correct Answer: C With 360 degrees in a circle, 90 degrees is 1/4 of the distance around the circumference of the circle from north. The line is then drawn from the center of the corcle to the established point.

Question 312 State Certified Appraiser Jennifer has accepted an assignment to appraise 230 Oak Road. Jennifer used 230 Oak Road as a comparable sale in an appraisal assignment of 911 Sailfish Street she completed last year. Jennifer has never appraised 230 Oak Road. Which is Jennifer's required course of action? a. Disclose the prior service involving 230 Oak Road. b. Not appraise 230 Oak Road because of its prior use as a comparable. c. Disclosure of the use of 230 Oak Road as a comparable is not required. d. Attempt to buy 230 Oak Road since she is so familiar with the property.

Correct Answer: C Conduct Section of the Ethics Rule USPAP

Question 262 WHAT TYPE OF DEPRECIATION IS POSSIBLE WHEN THE PROPERTY IS DETERMINED TO BE AT ITS HIGHEST AND BEST USE AS IMPROVED? 1. CURABLE PHYSICAL. 2. CURABLE FUNCTIONAL. 3. INCURABLE. 4. ALL OF THE ABOVE.

Correct Answer: C Considering an improvement that is already in existence, the only type of depreciation that could exist at maximum value would be that which you economically can not correct.

Question 446 WITH NO CHANGE IN DEMAND, WHAT IS THE MOST LIKELY RESULT WHEN HOUSING STARTS INCREASE? 1. VACANCIES FALL, VALUES RISE. 2. VACANCIES RISE, VALUES RISE. 3. VACANCIES RISE, VALUES FALL. 4. VACANCIES FALL, VALUES FALL.

Correct Answer: C Construction starts increase supply causing an increase in vacancy and a decline in value.

Question 335 WHICH OF THE FOLLOWING IS DESCRIPTIVE OF OWNERSHIP OF A TIMESHARE? 1. OWNERSHIP OF STOCK IN A CORPORATION, OCCUPANCY BY MEANS OF A PROPRIETARY LEASE. 2. ESTATE FOR YEARS WITH A LATER TENANCY IN COMMON. 3. TITLE FOR A SPECIFIC PART OF A YEAR. 4. FEE OWNERSHIP OF SEPARATE UNITS COMBINED WITH TENANCY IN COMMON.

Correct Answer: C Cooperatives are described by answer (a). Condominiums are described by (d).

Question 471 WHICH OF THE FOLLOWING IS USED AS THE STARTING POINT IN MEASURING ACCRUED DEPRECIATION? 1. ORIGINAL COST. 2. ACQUISITION COST. 3. REPLACEMENT COST. 4. MARKET ABSTRACTION.

Correct Answer: C Current replacement cost would be estimated to provide the basis for measuring depreciation.

Question 424 THE BOOK AND PAGE NUMBER WHERE A DEED CAN BE LOCATED IS OFTEN FOUND IN THE: I. GRANTOR/GRANTEE INDEX. II. PROPERTY APPRAISER'S OFFICE. a. I ONLY. b. II ONLY. c. BOTH I AND II. d. NEITHER I NOR II.

Correct Answer: C Deeds may be located through both the index of buyers and sellers and the property appraiser's office.

Question 172 WHICH OF THE FOLLOWING IS AN EXAMPLE OF A DIRECT COST? I. HAZARD INSURANCE. II. PERFORMANCE BOND. III. MORTGAGE INTEREST. IV. APPRAISAL FEE. a. I AND II. b. III AND IV. c. II ONLY. d. NONE OF THE ABOVE.

Correct Answer: C Direct construction costs are borne by the contractor, indirect costs are the responsibility of the property owner.

Question 198 WHAT TERM BEST DESCRIBES THAT AREA IN WHICH PROPERTIES EFFECTIVELY COMPETE WITH THE SUBJECT PROPERTY IN THE MINDS OF POTENTIAL PURCHASERS? 1. DISTRICT. 2. NEIGHBORHOOD. 3. MARKET. 4. TRACT.

Correct Answer: C Districts are comprised of homogeneous property uses. Neighborhoods are comprised of property uses that are interrelated and are complementary to each other. Properties traded in the same market are competitive with each other.

Question 127 THE EFFECTIVE AGE OF A BUILDING WILL BE LESS THAN ITS ACTUAL AGE WHEN: 1. NORMAL MAINTENANCE IS PRACTICED. 2. MAINTENANCE IS DEFERRED. 3. ABOVE AVERAGE MAINTENANCE IS PRACTICED. 4. FRAME RATHER THAN BRICK CONSTRUCTION IS UTILIZED.

Correct Answer: C Effective age is based on the observed condition of the subject. When typical maintenance is observed, actual age and effective age are equal.

Question 444 WHICH OF THE FOLLOWING SUGGESTS AN INCREASE IN THE VALUE OF A LEASED FEE INTEREST? 1. OVERAGE RENT. 2. SURPLUS RENT. 3. EXCESS RENT. 4. CONTRACT RENT.

Correct Answer: C Excess rent suggests that contract rent paid by the tenant is greater than market rent.

Question 277 WHICH OF THE FOLLOWING IS CONSIDERED GENERAL DATA? I. CENSUS TRACTS. II. COMPARABLE SALES. III. CONSTRUCTION STARTS. a. I ONLY. b. I AND II. c. I AND III. d. II AND III.

Correct Answer: C General data explains value. Specific data relates to the characteristics of the subject and is used to measure value.

Question 203 WHAT SECTION IS LOCATED IN THE SOUTHWEST CORNER OF A TOWNSHIP? 1. 1 2. 6 3. 31 4. 36

Correct Answer: C Government survey legal description.

Question 102 WHICH OF THE FOLLOWING METHODS OF SITE VALUATION WOULD BE APPROPRIATE ONLY FOR VALUING A LARGE TRACT OF LAND THAT IS READY TO BE CONVERTED FROM AGRICULTURAL TO SUBDIVIDED USE? 1. COMPARABLE SALES. 2. LAND RESIDUAL. 3. DEVELOPMENT COST. 4. INCOME CAPITALIZATION.

Correct Answer: C Gross sale proceeds from the sale of developed lots less all costs of development will give the best indication of value. This proceedure simulates the behavior of a developer who appears to be the most likely purchaser. This technique is also called the subdivision development or subdivision analysis technique.

Question 190 VALUES IN A RESIDENTIAL NEIGHBORHOOD MAY BE ENHANCED BY: 1. ARRANGING STREETS TO FACILITATE TRAFFIC FLOW. 2. PROVISION OF DECELERATION AND ACCELERATION LANES TO EASE INGRESS AND EGRESS. 3. AMENITIES SUCH AS LIGHTING AND RECREATION FACILITIES. 4. LOWER THAN TYPICAL TAX ASSESSMENT.

Correct Answer: C Heavy traffic is normally injurious to residential neighborhoods. Lower than typical tax assessments result from lower than typical values.

Question 326 Which of the following would be an example of a hypothetical condition? a. Appraisal of proposed improvements as of the date of completion. b. Appraisal of a property as if it were free of environmental contamination when it is not known to be contaminated. c. Appraising a site as if the zoning were different. d. Appraising a site as if adequate water supply is available when there is no evidence that water is not available.

Correct Answer: C Hypothetical conditions are contrary to known facts. Extraordinary assumptions are positions taken that are likely to be true, but if found to be false could alter the assignment results.

Question 375 WHICH OF THE FOLLOWING CONSTITUTES A COMPLETE LEGAL DESCRIPTION? 1. MONUMENT AND POINT OF BEGINNING. 2. LOT NUMBER AND SUBDIVISION NAME. 3. SECTION, RANGE, AND TOWNSHIP. 4. STREET NUMBER AND COUNTY.

Correct Answer: C Identifying section, range, and township is a complete legal description for a property that exactly fits a township.

Question 103 TO TEST FOR FUNCTIONAL UTILITY, AN APPRAISER EXAMINES: 1. LAYOUT. 2. ADEQUACY. 3. MARKETABILITY. 4. MAINTENANCE.

Correct Answer: C If there is resistance in the marketplace to the purchase of the property, functional obsolescence or some other form of depreciation or obsolescence exists.

Question 259 A FEE OWNER LEAVES A WILL THAT GIVES LAND TO HIS WIDOW FOR HER REMAINING LIFETIME AND, AT HER DEATH, THE LAND IS PASSED ON TO THEIR CHILDREN. THE WIDOW HAS A: 1. TENANCY BY THE ENTIRETY. 2. FEE SIMPLE ESTATE. 3. LIFE ESTATE. 4. TENANCY IN SEVERALTY.

Correct Answer: C Illustration of a life estate. Tenancy in severalty is ownership by one entity.

Question 345 WHICH OF THE FOLLOWING IS NOT TRUE REGARDING AN APPRAISAL FOR INSURANCE PURPOSES? 1. ANALYSIS OF COST OF REPLACEMENT LESS DEPRECIATION. 2. COST APPROACH IS EMPHASIZED. 3. ESTIMATE OF MARKET VALUE. 4. SITE VALUE IS IGNORED.

Correct Answer: C Insurable value would be measured, not market value.

Question 441 SPECIFIC INVESTMENT REQUIREMENTS IS THE BASIS OF: 1. GOING-CONCERN VALUE. 2. USE VALUE. 3. INVESTMENT VALUE. 4. MARKET VALUE.

Correct Answer: C Investment value is value based on specific investor goals and objectives. Measuring utility is found in use value, going-concern value in corporates a business interest, and market value is the most likely selling price that requires a transaction between the typical buyer and typical seller.

Question 107 A BUSINESS PURCHASED AN ADJACENT SITE TO BE USED FOR ADDITIONAL PARKING. THE PURCHASE WAS NECESSITATED BY EXPANSION. IN ORDER TO USE THIS TRANSACTION AS A COMPARABLE SALE, AN APPRAISER WOULD EXPECT AN ADJUSTMENT FOR: 1. MARKET CONDITIONS. 2. FINANCING. 3. CONDITIONS OF SALE. 4. PHYSICAL CHARACTERISTICS.

Correct Answer: C It appears this purchaser has something greater than typical motivation.

Question 378 WHICH OF THE FOLLOWING IS NOT A COMMON COMPONENT OF ROOF CONSTRUCTION? 1. JOIST AND RAFTER. 2. TRUSS. 3. LINTEL. 4. BUG.

Correct Answer: C Lintels are headers above window and door openings. BUG is the acronym for built up gravel roof covering.

Question 297 UNDER WHAT CONDITION WOULD THE USE OF MARKET RENT BE PREFERABLE TO CONTRACT RENT FOR APPRAISAL PURPOSES? I. VACANT SPACE. II. OWNER-OCCUPIED SPACE. III. FEE SIMPLE ASSIGNMENT. IV. LEASED FEE ASSIGNMENT. a. I AND III. b. II AND III. c. I, II, AND III. d. I, II, III, AND IV.

Correct Answer: C Market rent can be converted into the value of a fee simple estate. Contract rent converts into the value of a leased fee estate. For vacant space and owner-occupied space, no contract rent is available.

Question 382 WHEN CONSIDERING FUNCTIONAL UTILITY OF A SINGLE-FAMILY HOME, WHICH OF THE FOLLOWING IS THE LEAST IMPORTANT? 1. INTERIOR LAYOUTS. 2. BEDROOM/BATHROOM RATIOS. 3. PARKING RATIOS. 4. SECURITY FEATURES.

Correct Answer: C Most single-family home markets will not be sensitive to the amount of available parking.

Question 368 WHICH OF THE FOLLOWING RESIDENTIAL DESIGNS IS CHARACTERIZED BY THE LACK OF A FOYER LEADING TO THE LIVING AREA? 1. BI-LEVEL 2. SPLIT PLAN. 3. OPEN FORMAT. 4. RANCH.

Correct Answer: C Open format designs allow the front door to open directly into the living area.

Question 491 NET OPERATING INCOME IS OBTAINED BY APPLYING WHICH OF THE FOLLOWING FORMULAS? 1. GROSS INCOME MINUS OPERATING EXPENSES AND DEBT SERVICE. 2. GROSS INCOME MINUS VACANCY AND COLLECTION EXPENSE. 3. EFFECTIVE GROSS INCOME MINUS OPERATING EXPENSES AND RESERVES. 4. GROSS INCOME DIVIDED BY INTEREST RATE MULTIPLIED BY VALUE.

Correct Answer: C Part of the income formula.

Question 478 OF THE FOLLOWING, WHICH IS THE MOST ACCURATE DESCRIPTION OF EFFECTIVE GROSS INCOME? 1. INCOME AFTER DEDUCTION OF NET OPERATING COSTS AND POTENTIAL GROSS INCOME. 2. INCOME AFTER DEDUCTION OF VACANCY AND COLLECTION LOSSES AND NET OPERATING INCOME. 3. INCOME ANTICIPATED AFTER DEDUCTION OF VACANCY AND COLLECTION LOSSES. 4. INCOME AFTER COST OF MORTGAGE LOAN IS DEDUCTED.

Correct Answer: C Potential gross income less vacancy and collection allowances equals effective gross income.

Question 360 ACCORDING TO ITS CLASSICAL DEFINITION, REAL ESTATE IS: 1. SCARCE AND IMMOBILE. 2. SCARCE AND TANGIBLE. 3. TANGIBLE AND IMMOBILE. 4. TANGIBLE AND INDESTRUCTIBLE.

Correct Answer: C Real estate is plentiful, tangible, and immobile. Improvements may be destroyed.

Question 122 USE OF REPRODUCTION COST RESULTS IN AN ESTIMATE BASED ON: 1. SAME MATERIALS/DIFFERENT UTILITY. 2. DIFFERENT MATERIALS/SAME UTILITY. 3. SAME MATERIALS/SAME UTILITY. 4. DIFFERENT MATERIALS/DIFFERENT UTILITY.

Correct Answer: C Reproduction cost is based on duplicating the subject improvement. Replacement cost is based upon the cost of constructing an improvement with utility equivalent to the subject.

Question 322 What is the minimum format for an oral appraisal report? a. Restricted b. Letter c. Appraisal d. Narrative

Correct Answer: C Requirement of USPAP SR 2-4

Question 401 WHAT IS THE BEST WAY TO ESTIMATE THE VALUE OF A VACANT LOT IN AN ACTIVE MARKET WITH NO OTHER VACANT LOTS? 1. SUBDIVISION DEVELOPMENT. 2. SALES COMPARISON. 3. EXTRACTION. 4. GROUND RENT CAPITALIZATION.

Correct Answer: C Sales comparison is not available with no other vacant lot sales. With an active market, there must be sales of improved properties. The value of improvements may be subtracted from sale prices to obtain calculated land values in extraction.

Question 101 THE MOST RELIABLE PROCEDURE FOR ESTIMATING THE MARKET VALUE OF LAND IS BY APPLICATION OF WHICH APPROACH? 1. COST-DEPRECIATION. 2. LAND COMPARISON. 3. SALES-COMPARISON. 4. INCOME CAPITALIZATION.

Correct Answer: C Sales comparison is the most reliable way to measure market value of any type of property that is not purchased for investment benefits. Sales comparison best represents how the market operates.

Question 235 IMPROVEMENTS IN A NEIGHBORHOOD THAT WERE CONSTRUCTED DURING THE SAME PERIOD ACCORDING TO SIMILAR PLANS IS AN APPLICATION OF THE PRINCIPLE OF: 1. CONSISTENT USE. 2. MARGINAL PRODUCTIVITY. 3. CONFORMITY. 4. SUPPLY AND DEMAND.

Correct Answer: C Similar construction plans should result in improvements that are similar which is an application of the principle of conformity. Value of improvements are maximized when they conform to the rest of their environment. Consistent use says that land and improvements must be valued based on the same conclusion of highest and best use.

Question 139 ALL OF THE FOLLOWING ARE EXAMPLES OF INCURABLE LONG-LIVED COMPONENTS OF PHYSICAL DETERIORATION EXCEPT: 1. WALLS. 2. FOOTINGS. 3. ROOF COVERING. 4. FLOOR CONSTRUCTION.

Correct Answer: C Since roof coverings are replaced periodically during the life of a building they are considered short-lived items.

Question 454 WHICH OF THE FOLLOWING IS AN EXAMPLE OF SPECIFIC DATA? 1. LIMITING CONDITIONS. 2. ECONOMIC BASE. 3. GROSS LIVING AREA. 4. UNEMPLOYMENT RATE.

Correct Answer: C Specific data relates to the characteristics of the subject and is used to measure value. General data explains value influences.

Question 230 WHICH OF THE FOLLOWING TERMS BEST DESCRIBES THE NATURE OF REAL PROPERTY TAXES? 1. LEVY. 2. SUPERADEQUATE. 3. AD VALOREM. 4. POLICE POWER.

Correct Answer: C Taxes are based on the value of the property. The latin term ad valorem means per value.

Question 387 FEDERAL OVERSIGHT OF STATE REGULATORY AUTHORITIES IS PROVIDED BY: 1. APPRAISAL QUALIFICATIONS BOARD. 2. APPRAISAL STANDARDS BOARD. 3. APPRAISAL SUBCOMMITTEE. 4. APPRAISAL FOUNDATION.

Correct Answer: C The Appraisal Foundation, Qualifications Board, and Standards Board do not have regulatory or enforcement authority.

Question 195 ALL OF THE FOLLOWING ARE ADVANTAGES OF THE URAR FORM EXCEPT: 1. LOGICAL PRESENTATION OF DATA. 2. EASE OF INTERPRETATION. 3. APPLICABILITY FOR INCOME PROPERTIES. 4. STANDARDIZATION OF FORMAT.

Correct Answer: C The URAR form is designed for single family owner-occupied residential property. It is not designed for income properties.

Question 434 IF AN APPRAISER ACCEPTS AN ASSIGNMENT IN AN AREA WHERE HE HAS NO PRIOR EXPERIENCE, HE MUST: 1. WRITE A LETTER TO THE CLIENT EXPLAINING THE LACK OF EXPERIENCE. 2. HIRE ANOTHER APPRAISER WHO HAS EXPERIENCE IN THAT MARKET. 3. DISCLOSE IN THE APPRAISAL REPORT THE LACK OF EXPERIENCE AND THE STEPS TAKEN TO REMEDY THE SITUATION. 4. JUST TELL THE CLIENT.

Correct Answer: C The appraiser must disclose any lack of competence to the client prior to accepting the assignment. If the client wishes the appraiser continue the assignment, the appraiser must disclose in the report the lack of experience and the steps taken to remedy the situation as required by the Competency Rule of USPAP.

Question 164 THE USE OF BENCHMARK STRUCTURES IS COMMON TO WHAT METHOD OF ESTIMATING REPLACEMENT COST? 1. QUANTITY SURVEY. 2. UNIT-IN-PLACE. 3. COMPARATIVE UNIT. 4. ALL OF THE ABOVE.

Correct Answer: C The benchmark is a known reference point. In this case a comparable's construction cost is known and then applied to a subject built in a similar way.

Question 442 CONSIDERING THE FOLLOWING THREE INVESTMENTS WITH THREE YEAR CASH FLOWS, WHICH WOULD A PRUDENT INVESTOR CHOOSE? A B C YEAR 1 $0 $0 $1,500 YEAR 2 $500 $500 $500 YEAR 3 $1,500 $0 $0 a. A. INVESTMENT A. b. B. INVESTMENT B. c. C. INVESTMENT C. d. D. ALL INVESTMENTS ARE EQUALLY DESIRABLE.

Correct Answer: C The best investment pays benefits early in the investment period so that the investor has the use of his money sooner.

Question 467 The building capitalization rate for a commercial building is 11%. The rate of land appreciation is 3% and the yield rate is 7%. What is the useful life of the building? a. 10 years b. 14 years c. 25 years d. 30 years

Correct Answer: C The building capitaliztion rate includes return on investment (yield) as well as return of investment (capital recapture otherwise known as depreciation). The difference between the capitaliztion rate rate and yield rate represents the annual rate of depreciation. 11 - 7 = 4 So, if the building depreicates 4% each year, it will be totally depreciated in 25 years. 100/4 = 25

Question 261 HIGHEST AND BEST USE OF THE SUBJECT PROPERTY IS A RESTAURANT CONTINGENT UPON ACQUIRING ADDITIONAL PARKING WHICH IS AVAILABLE ACROSS THE STREET. THE VALUE ENHANCEMENT ACHIEVED BY THIS ACQUISITION IS: 1. ASSEMBLAGE. 2. EXCESS LAND. 3. PLOTTAGE. 4. SURPLUS LAND.

Correct Answer: C The combination of these properties is assemblage, but the value enhancement is plottage.

Question 502 The subject property is a 5,000 sf single tenant office building that is currently leased for $9 per square foot per year with three years remaining on the lease. The current lease is assignable. Typical vacancy loss for this type of property is 10% annually. Owner operating expenses are typically found to be 25% of effective gross income. Market rent rates are $12 per square foot per year. Overall capitalization rates are 9.5%. A sale of a leasehold interest sold for $29,000 with a net leasehold income of $12,000 per year with three years remaining. What is the value of the leasehold estate, rounded to the nearest $1,000? a. $45,000 b. $38,000 c. $36,000 d. $34,000

Correct Answer: C The difference in rent between market rent and contract rent is attributed to the leasehold estate. 12 - 9 = 3/sf 3 x 5,000 = 15,000 12,000/29,000 = .4137 cap rate for the leasehold estate 15,000/.4137 = 36,258

Question 333 BUILDING CODES REQUIRE CONSTRUCTION IN A SUBDIVISION SUFFICIENT TO WITHSTAND HURRICANE-FORCE WINDS UP TO 120 MPH. ACTUAL CONSTRUCTION IS SUFFICIENT TO WITHSTAND WIND SPEEDS UP TO 200 MPH. THIS CONSTRUCTION REPRESENTS: 1. EXTERNAL OBSOLESCENCE. 2. PHYSICAL OBSOLESCENCE. 3. FUNCTIONAL SUPERADEQUACY. 4. ENVIRONMENTAL OBSOLESCENCE.

Correct Answer: C The excessive construction represents a superadequacy. Superadequacies are items of functional obsolecence.

Question 476 WHICH OF THE FOLLOWING IS TRUE REGARDING FIXED-RATE MORTGAGES? 1. INTEREST RATE IS HIGH DURING THE FIRST FEW YEARS. 2. INTEREST INCOME IS A TAX DEDUCTION. 3. PRINCIPAL PAYMENTS ARE LOW DURING THE FIRST FEW YEARS. 4. MONTHLY INTEREST PAYMENTS INCREASE EVERY MONTH.

Correct Answer: C The fixed-rate mortgage is characterized by a constant interest rate that would require the initial payments to be mostly interest with little principal paid. Interest expense may be a tax deduction.

Question 323 WHAT TYPE OF DEED DOES THE GRANTEE PREFER TO RECEIVE? 1. QUIT-CLAIM. 2. SPECIAL WARRANTY. 3. GENERAL WARRANTY. 4. NONE OF THE ABOVE.

Correct Answer: C The grantee prefers to receive the deed with the greatest number of promises made by the grantor, the general warranty deed. Quit-claim deeds make no promises whatsoever and are the deeds that most grantors prefer to deliver.

Question 445 WHICH OF THE FOLLOWING IS AN EXAMPLE OF A BUILDING'S INFRASTRUCTURE? 1. FRAMING. 2. FOOTINGS. 3. UTILITIES. 4. BUG.

Correct Answer: C The infrastructure consists of the mechanical systems in the building. Built-up gravel (BUG roof covering) and framing is part of the superstructure. Footings are a component of the substructure.

Question 199 WHICH OF THE FOLLOWING DESCRIBES A TEN ACRE TRACT IN THE LOWER RIGHT-HAND CORNER OF A SECTION? 1. NE1/4 OF THE NE1/4 OF THE NW1/4. 2. NW1/4 OF THE NW1/4 OF THE NE1/4. 3. NE1/4 OF THE SW1/4 OF THE SE1/4. 4. NE1/4 OF THE SW1/4 OF THE SW1/4.

Correct Answer: C The lower right hand corner is the southeast quarter. Each of the answer choices has 10 acres.

Question 468 ALL OF THE FOLLOWING ARE FACTORS OF PRODUCTION EXCEPT: 1. CAPITAL. 2. MANAGEMENT. 3. VALUE. 4. LABOR.

Correct Answer: C The missing factor of production is land.

Question 144 VALUE INDICATIONS SHOULD BE ROUNDED TO REFLECT THE: 1. CLIENT'S INTEREST. 2. LOCATION OF THE PROPERTY. 3. IMPRECISION OF DATA. 4. LACK OF VALUATION EXPERTISE.

Correct Answer: C The more precise the data, less rounding is required. The less precise the data, more rounding is required.

Question 169 THE MORTGAGE CONSTANT IS NOT INFLUENCED BY THE: 1. LOAN TERM. 2. INTEREST RATE. 3. CAPITALIZATION RATE. 4. AMORTIZATION SCHEDULE.

Correct Answer: C The mortgage constant is the payment per dollar of loan amount. Anything that influences the payment will influence the mortgage constant.

Question 306 WHICH OF THE FOLLOWING PERIODICALS, PUBLISHED BY THE UNITED STATES DEPARTMENT OF COMMERCE, BUREAU OF ECONOMIC ANALYSIS, IS A SOURCE FOR DATA ON THE CONSUMER PRICE INDEX, THE WHOLESALE PRICE INDEX, MORTGAGE DEBT, AND THE VALUE OF NEW CONSTRUCTION? 1. ECONOMIC REPORT OF THE PRESIDENT. 2. STATISTICAL ABSTRACT OF THE UNITED STATES. 3. SURVEY OF CURRENT BUSINESS. 4. THE APPRAISAL JOURNAL.

Correct Answer: C The only document on the list published by the Department of Commerce.

Question 403 WHAT SYSTEM OF LEGAL DESCRIPTION UTILIZES MERIDIANS AND BASE LINES? 1. METES AND BOUNDS. 2. SURVEYOR'S. 3. RECTANGULAR. 4. MONUMENTS.

Correct Answer: C The rectangular survey system is also known as the government survey system. Meridian (range lines) run north and south. Base lines (township lines) run east and west.

Question 223 WHICH OF THE FOLLOWING IS NOT A COMPONENT OF A SEPTIC SYSTEM? 1. SANITARY TEE. 2. ABSORPTION FIELD. 3. WATER METER. 4. DISTRIBUTION BOX.

Correct Answer: C The water meter measures the quantity of water flowing into the improvement and is not associated with waste water treatment.

Question 617 CURRENT NOI IS $49,000 AND THE SALE PRICE IS $500,000. INCOME AND PROPERTY VALUE ARE PROJECTED TO DECLINE AT 2% ANNUALLY OVER THE NEXT 10 YEARS. WHAT IS THE APPROPRIATE YIELD RATE? a. 7.8% b. 8.8% c. 9.8% d. 11.8%

Correct Answer: C The yield rate (return on investment) will remain the same as the relationship between income and value will not be changing. The capitalization rate (return on and return of investment) would be 11.8% (frozen cap rate). $49,000/500,000 = .098

Question 348 ALL OF THE FOLLOWING ARE REQUIRED OF AN APPRAISAL PERFORMED BY A STATE-CERTIFIED APPRAISER EXCEPT A(AN): 1. EXPLANATION OF THE APPROACHES TO VALUE NOT USED. 2. DESCRIPTION OF THE SCOPE OF THE APPRAISAL. 3. COPY OF THE DEED. 4. DEFINITION OF THE INTENDED USE-FUNCTION OF THE APPRAISAL.

Correct Answer: C There is no requirement that copies of deeds have to be included in an appraisal.

Question 412 A HOUSE IS DESIGNED WHERE ONE MUST PASS THROUGH A BATHROOM TO GET TO THE MASTER BEDROOM. DEPRECIATION FOR THIS TYPE OF PROBLEM IS: 1. PHYSICAL INCURABLE DEPRECIATION. 2. FUNCTIONAL CURABLE OBSOLESCENCE. 3. FUNCTIONAL INCURABLE OBSOLESCENCE. 4. EXTERNAL INCURABLE OBSOLESCENCE.

Correct Answer: C This is a poor design that would appear to be difficult to correct.

Question 237 WHAT TERM IS USED TO DESCRIBE HEATING SYSTEMS BASED ON THE PUMPING OF HOT WATER THROUGH PIPES AND RADIATORS? 1. STEAM. 2. RADIANT. 3. HYDRONIC. 4. CIRCULATORY.

Correct Answer: C This is the definition of a hydronic system.

Question 191 CORNER LOTS IN A SUBDIVISION ARE SELLING FOR $25,000.00. INTERIOR LOTS ARE SELLING FOR $18,000.00. THE $7,000.00 DIFFERENCE IS: 1. DEVELOPER'S PROFIT. 2. PLOTTAGE. 3. CORNER INFLUENCE. 4. AGGLOMERATION.

Correct Answer: C This is the definition of corner influence.

Question 466 THE AMOUNT OF GOODS AND SERVICES AN INFORMED PURCHASER WOULD OFFER IN TRADE FOR AN ECONOMIC GOOD UNDER GIVEN MARKET CONDITIONS IS: 1. INVESTMENT VALUE. 2. VALUE IN USE. 3. VALUE IN EXCHANGE. 4. INSURABLE VALUE.

Correct Answer: C This is the definition of value in exchange which is essentially the same as market value.

Question 217 WHAT METHOD OF ESTIMATING A REPLACEMENT COST USES THE TOTAL SQUARE FOOTAGE OF THE SUBJECT IMPROVEMENT AND MULTIPLIES THIS TOTAL BY A CURRENT COST PER SQUARE FOOT OF A BENCHMARK STRUCTURE? 1. QUANTITY SURVEY. 2. UNIT-IN-PLACE. 3. COMPARATIVE UNIT. 4. COST-INDEX.

Correct Answer: C This is the description of the comparative unit method.

Question 213 THE PROPER SEQUENCE FOR ADJUSTMENTS IN THE SALES COMPARISON APPROACH IS: 1. PROPERTY RIGHTS, CONDITIONS OF SALE, MARKET CONDITIONS, FINANCING, LOCATION AND PHYSICAL CHARACTERISTICS. 2. FINANCING, CONDITIONS OF SALE, MARKET CONDITIONS, PROPERTY RIGHTS, LOCATION AND PHYSICAL CHARACTERISTICS. 3. PROPERTY RIGHTS, FINANCING TERMS, CONDITIONS OF SALE, MARKET CONDITIONS, LOCATION AND PHYSICAL CHARACTERISTICS. 4. PHYSICAL CHARACTERISTICS, LOCATION, PROPERTY RIGHTS, FINANCING, CONDITIONS OF SALE AND MARKET CONDITIONS.

Correct Answer: C This sequence must be followed when using percentage adjustments. The intention is to make all of the adjustments necessary to bring the sale into the current market first so that the property characteristics of the sale can be made as of the same (current) date.

Question 189 A STREET OPEN ONLY AT ONE END HAVING AN ENLARGED TURN-AROUND AREA AT THE CLOSED END IS A: 1. BIVOUAC. 2. CADILLAC. 3. CUL-DE-SAC. 4. DEAD END.

Correct Answer: C This the definition of a cul-de-sac. Without an enlarged turn-around area, the result is a dead end.

Question 314 Which of the following is a violation of USPAP? a. Use of a pending sale as a comparable sale with a disclosure of the fact that the sale is pending. b. Use of a recent sale of the subject as a comparable sale. c. No disclosure of a foreclosure sale of the subject two years prior to the effective appraisal date. d. Consideration of a prior offer to purchase the subject.

Correct Answer: C USPAP FAQ 220

Question 402 WHO IS RESPONSIBLE FOR MAINTAINING THE WORKFILE WHEN A SUPERVISOR WHO IS A CERTIFIED GENREAL APPRAISER AND HER TRAINEE BOTH PARTICIPATED IN THE APPRAISAL? 1. SUPERVISOR 2. TRAINEE 3. SUPERVISOR AND TRAINEE 4. SECRETARY

Correct Answer: C USPAP FAQ 83 AND 84

Question 316 A property is being appraised for a condemnation hearing in a state which has a statute requiring appraisal fees for these assignments be based on the appraised value of the property. In order to comply with this statute, which part of USPAP would be applicable? a. Scope of Work b. Ethics Rule c. Jurisdictional Exception d. Competency Rule

Correct Answer: C USPAP Jurisdictional Exception Rule is applicable when a statute is in conflict with the requirements of USPAP.

Question 354 A trainee participated in the inspection and based on his experience and competency, completed the cost estimate of the subject. The trainee did not sign any portion of the appraisal report. In order to remain in compliance with USPAP, which of the following best applies? 1. Since the trainee participated in the assignment, he must be named in the certification and letter of transmittal and the description of his participation must be set forth in the certification. 2. Since the trainee participated in the assignment, he must be named in the certification and the description of his participation must be set forth in the certification. 3. Since the trainee participated in the assignment, he must be named in the certification and the description of his participation must be set forth in the report. 4. Since the trainee participated in the assignment, he must be named in the letter of transmittal and in the certification and the description of his work must appear in the report.

Correct Answer: C USPAP SR 2- 2 (a) vii and (b) vii and Advisory Opinion 31.

Question 462 THE MINIMUM REPORT FORMAT RECOGNIZED UNDER UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE IS THE: 1. LETTER OPINION OF VALUE. 2. LIMITED ASSIGNMENT. 3. RESTRICTED USE REPORT. 4. SUMMARY REPORT.

Correct Answer: C USPAP Standard 2

Question 115 WHICH OF THE FOLLOWING IS NOT A UNIT OF COMPARISON? 1. SQUARE FOOTAGE. 2. CUBIC FOOTAGE. 3. VACANCY RATIO. 4. GROSS RENT MULTIPLIER.

Correct Answer: C Units of comparison state the sale price as a unit price. The vacancy ratio does not invole the sale price.

Question 278 AN APPRAISER IS ASKED TO APPRAISE A 75 YEAR OLD HOME WITH A VALUABLE SITE WHERE MOST OF THE HOMES HAVE HAD SIGNIFICANT RENOVATIONS. WHAT IS THE BEST APPROACH TO VALUE? 1. COST-DEPRECIATION. 2. CASH FLOW ANALYSIS. 3. SALES COMPARISON. 4. INCOME APPROACH.

Correct Answer: C The age of the improvement makes the cost approach unreliable. Most homes are not rental properties so that income capitalization approaches would be considered unreliable.

Question 624 IF OPERATING EXPENSES ARE RISING, WHICH OF THE FOLLOWING FAVORS THE TENANT? 1. LEASEHOLD 2. NET LEASE 3. GROSS LEASE 4. TRIPLE NET LEASE

Correct Answer: C The landlord pays operating expenses in a gross lease. The tenant will not be affected by the increase in operating expenses.

Question 455 WHICH OF THE FOLLOWING IS EVALUATED IN THE QUALITY AND CONDITION SURVEY OF A RESIDENCE? 1. FLOOR PLAN FUNCTIONALITY. 2. NUMBER OF BEDROOMS. 3. LOCATION OF NEIGHBORHOOD. 4. DEFERRED MAINTENANCE.

Correct Answer: D

Question 541 WHICH OF THE FOLLOWING CONDITIONS WOULD CAUSE AN INCREASE IN THE DISCOUNT RATE? 1. INCREASE IN THE QUANTITY OF INCOME. 2. DECREASE IN THE QUANTITY OF INCOME. 3. IRREGULAR INCOME STREAM. 4. INCREASE IN RISK.

Correct Answer: D

Question 566 OVERAGE RENT REFERS TO: 1. THE AMOUNT BY WHICH MARKET RENT EXCEEDS CONTRACT RENT. 2. THE AMOUNT BY WHICH CONTRACT RENT EXCEEDS MARKET RENT. 3. EXCESSIVE RENT REQUIRED BY A LANDLORD. 4. RENT PAID ABOVE A BASE AMOUNT.

Correct Answer: D

Question 567 WHICH OF THE FOLLOWING IS A TYPE OF YIELD RATE? I. INTERNAL RATE OF RETURN. II. DISCOUNT RATE. III. OVERALL CAPITALIZATION RATE. IV. INTEREST RATE. a. I AND II. b. I AND IV. c. II AND IV. d. I, II, AND IV.

Correct Answer: D

Question 572 WHICH OF THE FOLLOWING IS NOT CONSIDERED "OTHER INCOME" WHEN CALCULATING NET OPERATING INCOME? I. PARKING FEES. II. TELEPHONE SWITCHBOARD CHARGES. III. CABLE TELEVISION FEES. IV. LEASE ESCALATION CLAUSES. a. I, II, AND III. b. II, III, AND IV. c. I AND IV. d. IV.

Correct Answer: D

Question 577 THE DIFFERENCE BETWEEN THE TOTAL INCOME ATTRIBUTABLE TO REAL PROPERTY AT 100% OCCUPANCY BEFORE OPERATING EXPENSES ARE DEDUCTED AND THE INCOME GENERATED FROM ALL OPERATIONS OF THE REAL PROPERTY IS: 1. POTENTIAL GROSS INCOME. 2. EFFECTIVE GROSS INCOME. 3. FIXED EXPENSES. 4. VACANCY AND COLLECTION LOSS.

Correct Answer: D

Question 589 WHICH OF THE FOLLOWING IS CONSIDERED TO BE A FIXED EXPENSE OF THE PROPERTY? I. VACANCY LOSS. II. MANAGEMENT. III. DEBT SERVICE. IV. PROPERTY TAXES. a. I, II, III, AND IV. b. II, III, AND IV. c. III AND IV. d. IV.

Correct Answer: D

Question 595 THE SUBJECT PROPERTY IS LEASED FOR $2,400.00 PER MONTH. IF AVAILABLE FOR RENT TODAY, THE SUBJECT WOULD RENT FOR $2,000.00 PER MONTH. THE $400.00 DIFFERENCE IS: 1. DEFICIT RENT. 2. SURPLUS RENT. 3. OVERAGE RENT. 4. EXCESS RENT.

Correct Answer: D

Question 596 UNDER WHICH OF THE FOLLOWING CONDITIONS WOULD THE VALUE OF THE LEASED FEE EXCEED THE VALUE OF THE PROPERTY UNENCUMBERED BY THE LEASE? 1. MARKET RENT EXCEEDS CONTRACT RENT AND THE TENANT HAS A LOW CREDIT RATING. 2. CONTRACT RENT EXCEEDS MARKET RENT AND THE TENANT HAS A LOW CREDIT RATING. 3. MARKET RENT EXCEEDS CONTRACT RENT AND THE TENANT IS A MAJOR BUSINESS ENTITY WITH A TRIPLE A CREDIT RATING. 4. CONTRACT RENT EXCEEDS MARKET RENT AND THE TENANT IS A MAJOR BUSINESS ENTITY WITH A TRIPLE A CREDIT RATING.

Correct Answer: D

Question 610 IN THE APPRAISAL OF A BOWLING ALLEY, THE ALLEYS AND PIN SETTERS ARE CONSIDERED: 1. REAL PROPERTY. 2. PERSONAL PROPERTY. 3. TRADE FIXTURES. 4. BOTH B AND C.

Correct Answer: D

Question 621 WHICH OF THE FOLLOWING CAPITALIZATION TECHNIQUES MAY BE APPLIED TO ANY PATTERN OF REGULAR OR IRREGULAR INCOME? I. AKERSON FORMAT. II. ELLWOOD FORMULA. III. DISCOUNTED CASH FLOW ANALYSIS. a. I, II, AND III. b. I AND II. c. II ONLY. d. III ONLY.

Correct Answer: D

Question 111 THE LOCATION OF THE SUBJECT PROPERTY IS 10 PERCENT INFERIOR TO THAT OF THE COMPARABLE. MARKET CONDITIONS INDICATE AN INCREASE IN SALES PRICES OF 1/2 PERCENT PER MONTH FOR THE PAST 12 MONTHS SINCE THE COMPARABLE SOLD. THE NET ADJUSTMENT TO THE COMPARABLE WOULD BE: 1. -4% 2. +4% 3. +4.6% 4. -4.6%

Correct Answer: D .005 X 12 = .06 1 + .06 = 1.06 1.06 X .10 = .106 1.06 - .106 = .954 1 - .954 = .046 One must follow the required sequence of adjustments!

Question 583 A 100 UNIT APARTMENT COMPLEX GENERATES THE FOLLOWING DATA. HOW MANY UNITS MUST BE RENTED FOR THE YEAR FOR THIS COMPLEX TO BREAK EVEN? DEBT SERVICE - $190,000 OPERATING EXPENSES - 115,000 REPLACEMENT RESERVES - 5,000 GROSS INCOME - 400,000 NET OPERATING INCOME - 280,000 a. 88 UNITS. b. 82 UNITS. c. 77 UNITS. d. 75 UNITS.

Correct Answer: D 115,000 - 5,000 + 190,000 = 300,000 300,000 / 400,000 = .75 .75 X 100 = 75

Question 456 A DUPLEX WAS CONSTRUCTED IN 1992 AT A COST OF $90,000. THE COST INDEX AT THE TIME OF CONSTRUCTION WAS 102.4. IF THE CURRENT COST INDEX IS 128, WHAT IS THE INDICATED COST OF BUILDING THE DUPLEX IN TODAY'S MARKET? 1. $113,760 2. $113,250 3. $112,800 4. $112,500

Correct Answer: D 128 / 102.4 = 1.25 1.25 X 90,000 = 112,500

Question 416 REPLACEMENT COST OF A BUILDING IS $180,000.00. LAND IS VALUED AT $35,000.00. CURABLE DEPRECIATION AMOUNTS TO $2,500.00. AFTER ACCOUNTING FOR ALL CURABLE DEPRECIATION, THE ECONOMIC LIFE OF THE BUILDING IS ESTIMATED TO BE 70 YEARS AND THE BUILDING'S EFFECTIVE AGE IS 12 YEARS. USING THE MODIFIED AGE-LIFE METHOD, WHAT IS THE DEPRECIATED VALUE OF THIS PROPERTY? 1. $176,650.00 2. $179,150.00 3. $181,650.00 4. $182,100.00

Correct Answer: D 180,000 - 2,500 = 177,500 12 / 70 = .171428 177,500 X .171428 = 30,428.57 177,500 - 30,428 = 147,072 147,072 + 35,000 = 182,072

Question 575 A PROPERTY IS LEASED ON A NET BASIS FOR $30,000.00 PER YEAR FOR 20 YEARS. MARKET RENT FOR THE SAME PROPERTY IS $25,000.00. IF THE APPROPRIATE DISCOUNT RATE IS 10 PERCENT AND THE PROPERTY IS EXPECTED TO BE WORTH $40,000.00 AT THE END OF THE LEASE PERIOD, WHAT IS THE CURRENT VALUE OF THE LEASED FEE? a. $212,839.00 b. $218,335.00 c. $255,407.00 d. $261,353.00

Correct Answer: D 20 n 20 n 255,406 + 5,945 = 261,353 10 I 10 i 30,000 PMT 40,000 FV PV = 255,406.91 PV = 5,945.75

Question 529 WHAT IS THE ANNUAL RATE OF DEPRECIATION ON AN IMPROVEMENT THAT HAS AN ACTUAL AGE OF 20 YEARS, AN EFFECTIVE AGE OF 15 YEARS, AND A REMAINING ECONOMIC LIFE OF 40 YEARS? 1. 1.92% 2. 1.875% 3. 1.666% 4. 1.25%

Correct Answer: D 20+40=60 15/60=.25 .25/20=.0125

Question 558 NET OPERATING INCOME OF THE SUBJECT PROPERTY IS $20,000.00. THE APPROPRIATE DISCOUNT FACTOR IS 10 PERCENT AND THE ECONOMIC LIFE OF THE BUILDING IS EXPECTED TO BE 25 YEARS. IF THE SITE IS PROJECTED TO BE WORTH $90,000.00 AT THE END OF THE BUILDING'S ECONOMIC LIFE, WHAT IS THE ESTIMATED TOTAL PROPERTY VALUE USING THE PROPERTY RESIDUAL TECHNIQUE? a. $160,000.00 b. $170,000.00 c. $180,000.00 d. $190,000.00

Correct Answer: D 25 n 25 n 181,540 + 8,306 = 189,846 10 I 10 i 20,000 PMT 90,000 FV PV = 181,540 PV = 8,306

Question 309 A MORTGAGE LOAN WAS ORIGINATED IN THE AMOUNT OF $100,000 AMORTIZING MONTHLY FOR A 30 YEAR TERM AT AN ANNUAL INTEREST RATE OF 10.5 PERCENT. HOW MUCH PRINCIPAL AND INTEREST IS DUE FOR THE FIRST THREE MONTHS? 1. $3,782.22 AND $199.22 2. $3,521.92 AND $194.62 3. $3,476.01 AND $182.95 4. $2,623.95 AND $120.27

Correct Answer: D 30 gn 10.5 gi 100,000 PV PMT = 914.74 3 f amort = 2,623.95 x<>y = 120.264

Question 155 WHAT IS THE ANNUAL PERCENTAGE RATE ON A FULLY AMORTIZING MORTGAGE LOAN WITH MONTHLY PAYMENTS IF THE BEGINNING BALANCE IS $150,000.00, THE TERM IS 30 YEARS, THE INTEREST RATE IS 12 PERCENT AND THE LENDER CHARGES FOUR POINTS? 1. 12.02% 2. 12.08% 3. 12.12% 4. 12.55%

Correct Answer: D 30 gn 12 gi 150,000 PV PMT = 1,542.9188 144,000 PV i = 1.04619 12 X = 12.55428

Question 339 WHAT IS THE ANNUAL DEBT SERVICE FOR A 30 YEAR $92,000 MORTGAGE LOAN AMORTIZING MONTHLY AT 11 PERCENT? 1. $10,120 2. $10,582 3. $13,187 4. NONE OF THE ABOVE.

Correct Answer: D 30gn 11gi 92,000 PV PMT = 876.1375 monthly debt service 12 x = 10,513 annual debt service

Question 449 AN APPRAISER IS ANALYZING AN EIGHT ACRE TRACT THAT IS READY TO BE DEVELOPED INTO A RESIDENTIAL SUBDIVISION. IT IS ANTICIPATED THAT 32 LOTS REPRESENT THE HIGHEST AND BEST USE OF THE LAND AS THOUGH VACANT. THE ANTICIPATED GROSS SALE PRICE OF THE DEVELOPED LOTS IS $800,000 ($25,000 x 32 LOTS). THE COST OF DEVELOPMENT WILL BE $510,000. IT IS ESTIMATED THAT THE DEVELOPER WILL SELL ON THE AVERAGE OF ONE LOT PER MONTH. IT IS ASSUMED THAT THE DEVELOPMENT MUST BE COMPLETED PRIOR TO THE SALE OF ANY LOTS. BASED ON A DISCOUNT RATE OF 10 PERCENT, WHAT IS THE INDICATED LAND VALUE? 1. $699,674 2. $422,853 3. $195,342 4. $189,674

Correct Answer: D 32 n 699,674 - 510,000 = 189,674 10 gi 25,000 PMT PV = 699,674

Question 156 A PROPERTY IS PURCHASED FOR $120,000.00 TODAY. THE PROPERTY IS EXPECTED TO INCREASE IN VALUE BY FIVE PERCENT ANNUALLY. HOW MUCH IS THE PROPERTY PROJECTED TO BE WORTH AT THE END OF FIVE YEARS? 1. $145,000.00 2. $147,000.00 3. $150,000.00 4. $153,000.00

Correct Answer: D 5 n 5 i 120,000 PV FV = 153,153

Question 528 A PROPERTY THAT IS SUBJECT TO A PARTIAL TAKING IN EMINENT DOMAIN HAS BEEN VALUED AT $60 PER SQUARE FOOT. THE PART THAT IS BEING TAKEN IS BEING USED TO EXPAND A TURN LANE AND NO DAMAGES ARE ANTICIPATED TO THE REMAINDER. THE PART TO BE TAKEN HAS BEEN MEASURED FROM THE NORTHWEST CORNER OF THE PROPERTY ON A RADIUS OF 50 FEET. THE TOTAL PROPERTY MEASURES 100' X 300'. WHAT IS THE COMPENSATION DUE THE OWNER AS A RESULT OF THIS TAKING? 1. $1,800,000 2. $1,328,760 3. $471,240 4. $117,810

Correct Answer: D 50x50=2500 2,500x3.1416=7854 7854/4=1963.5 1,963.5x60=117,810

Question 406 HOW MANY ACRES ARE DESCRIBED BY THE LEGAL DESCRIPTION W1/2 OF THE SW1/4 OF THE NE1/4 AND E1/2 OF THE SE1/4 OF THE NW1/4? 1. 10 2. 20 3. 30 4. 40

Correct Answer: D 640/4=160 160/4=40 40/2=20 20x2=40

Question 125 A SQUARE PARCEL OF PROPERTY MEASURES 20 CHAINS FOR EACH BOUNDARY. HOW MANY ACRES ARE CONTAINED IN THIS PARCEL? 1. 10 2. 20 3. 30 4. 40

Correct Answer: D 66 X 20 = 1320 1320 X 1320 = 1,742,400 1,742,400 / 43,560 = 40 66 feet per chain

Question 219 A PROPERTY WAS PURCHASED FOR $100,000. A $25,000 DOWN PAYMENT WAS MADE AND A MORTGAGE WITH A REMAINING BALANCE OF $75,000 WAS ASSUMED WITH AN INTEREST RATE OF 9.5 PERCENT, MONTHLY PAYMENTS OF $630.64 AND A REMAINING TERM OF 29 YEARS. MARKET FINANCING IS AT AN INTEREST RATE OF 11 PERCENT WITH MONTHLY PAYMENTS OF $714.24. WHAT IS THE INDICATED CASH EQUIVALENT SALE PRICE? 1. $99,286 2. $96,228 3. $93,775 4. $91,260

Correct Answer: D 714.24 - 630.64 = 83.60 29 gn 11 gi 83.60 PMT PV = 8,739 100,000 - 8,739 = 91,260

Question 415 A TWO BEDROOM ONE BATHROOM SUBJECT PROPERTY HAS BEEN ESTIMATED TO HAVE A MARKET VALUE OF $80,200.00 AS IS. THE MARKET PREFERS THREE BEDROOM TWO BATH HOMES THAT TYPICALLY SELL FOR $86,700.00. IT WOULD NOW COST $5,200.00 TO CONSTRUCT THE THIRD BEDROOM AND ANOTHER $2,750.00 TO ADD A BATH. IF THIS WORK HAD BEEN INCLUDED IN THE ORIGINAL CONSTRUCTION THE THIRD BEDROOM WOULD HAVE COST $4,700.00 AND THE SECOND BATH $1,800.00. IF THIS WORK WERE TO BE PERFORMED, THE SUBJECT WOULD COMPARE IN VALUE TO THE STANDARD FOR THE NEIGHBORHOOD. THIS IS AN EXAMPLE OF: 1. INCURABLE PHYSICAL DEPRECIATION. 2. CURABLE PHYSICAL DEPRECIATION. 3. CURABLE FUNCTIONAL OBSOLESCENCE. 4. INCURABLE FUNCTIONAL OBSOLESCENCE.

Correct Answer: D 86,700 - 80,200 = 6,500 5,200 + 2,750 = 7,950

Question 283 BASED ON THE FOLLOWING, WHAT IS THE PER SQUARE FOOT ADJUSTMENT FOR THE SUBJECT PROPERTY? PRICE SQUARE FEET $87,000 1,000 $82,500 1,100 $87,000 1,200 $87,000 1,400 a. $20.00 b. $17.30 c. $9.50 d. $3.86

Correct Answer: D 87,000 Enter 1,000 E+ 82,500 Enter 1,100 E+ 87,000 Enter 1,200 E+ 87,000 Enter 1,400 E+ 1 g2 = 81,346.71 0 g2 = 81,342.85 81,346.71 - 81342.85 = 3.86

Question 349 WHICH OF THE FOLLOWING IS THE LEAST RELIABLE METHOD FOR VERIFICATION OF A SALE PRICE? 1. APPRAISER'S FILES. 2. MLS SALE DATA. 3. PROPERTY APPRAISER'S RECORDS. 4. CONTRACT FOR PENDING SALE.

Correct Answer: D A pending sale contract may never reach closing.

Question 472 WHICH OF THE FOLLOWING IS DONE TO DETERMINE THE EXISTENCE OF ANY EASEMENTS OR ENCROACHMENTS? 1. EXAMINE SALES HISTORY. 2. EXAMINE TITLE RECORDS. 3. CONSULT AN ATTORNEY. 4. ANALYZE THE SURVEY.

Correct Answer: D A survey of the boundaries of the property should illustrate the existence of any easements or encroachments.

Question 263 WHICH OF THE FOLLOWING RIGHTS ARE AVAILABLE TO A LIFE TENANT IN REAL PROPERTY? I. USE. II. CONTROL. III. OCCUPANCY. a. I AND II. b. II AND III. c. I AND III. d. I, II, AND III.

Correct Answer: D A tenant has rights of use, control, and occupancy.

Question 272 WHICH OF THE FOLLOWING CHARACTERISTICS OF THE REAL ESTATE MARKET VIOLATES A REQUISITE OF A PERFECT MARKET? I. FEW BUYERS AND SELLERS FOR A GIVEN PROPERTY AT ANY GIVEN TIME. II. ENTRY TO THE MARKET REQUIRES CONSIDERABLE CAPITAL AND/OR CREDIT. III. MARKET PARTICIPANTS ARE NOT EQUALLY KNOWLEDGEABLE. a. I AND II. b. I AND III. c. II AND III. d. I, II, AND III.

Correct Answer: D All are characteristics of real estate markets that do not match perfect market requirements.

Question 498 ACCORDING TO USPAP, AN APPRAISAL REPORT DEVELOPED FOR THE MARKET VALUE OF A SINGLE-FAMILY HOME MUST INCLUDE WHICH OF THE FOLLOWING? 1. HIGHEST AND BEST USE ANALYSIS. 2. SIGNED CERTIFICATION. 3. STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS. 4. ALL OF THE ABOVE.

Correct Answer: D All are required by USPAP.

Question 421 WHICH OF THE FOLLOWING IS CORRECT? I. ONE LINK EQUALS .66 OF A FOOT. II. ONE CHAIN HAS 100 LINKS. III. ONE CHAIN HAS 66 FEET. a. I ONLY. b. II ONLY. c. I AND II. d. I, II, AND III.

Correct Answer: D All are true concerning measurements in chains.

Question 264 WHICH OF THE FOLLOWING IS CORRECT CONCERNING THE VALUATION OF UNDIVIDED PARTIAL INTERESTS? I. SINCE NO PARTY CAN EXERCISE COMPLETE CONTROL, THE INTEREST OF EACH PARTY IS USUALLY LESS THAN THE CORRESPONDING FRACTION OF THE PROPERTY'S VALUE. II. THE COST OF PARTITION IS A MEASURE OF VALUE DIMINUTION. III. A SALE IN PARTITION DOES NOT REFLECT FREE MARKET ACTION. IV. LEGAL ACTION TO DIVIDE THE PROPERTY IS KNOW AS PARTITION. a. I AND II. b. I, II, AND IV. c. II, III, AND IV. d. I, II, III, AND IV.

Correct Answer: D All characteristics of partial interests.

Question 271 WHICH OF THE FOLLOWING IS ESSENTIAL FOR A PRODUCT TO HAVE MARKET VALUE? I. SCARCITY. II. TRANSFERABILITY. III. UTILITY. IV. DEMAND. a. I AND IV. b. I, III, AND IV. c. III ONLY. d. I, II, III, AND IV.

Correct Answer: D All of the choices are required for market value of any product.

Question 295 IN DEVELOPING A REAL ESTATE FEASIBILITY ANALYSIS, AN ANALYST MUST OBSERVE ALL OF THE FOLLOWING SPECIFIC ANALYSIS GUIDELINES WHEN APPLICABLE EXCEPT TO: I. PREPARE A COMPLETE MARKET ANALYSIS. II. CONSIDER AND ANALYZE THE PROBABLE COSTS OF EACH ALTERNATIVE. III. CONSIDER AND ANALYZE THE PROBABLE OUTCOME OF EACH ALTERNATIVE. IV. PREPARE AN ESTIMATE OF MARKET VALUE. a. I AND III. b. I, II, III, AND IV. c. I, II, AND III. d. IV.

Correct Answer: D An estimate of market value is characteristic of an appraisal, not a feasiblity study. The other selections are required by USPAP.

Question 508 INTERIM USE IS BEST DESCRIBED AS A/AN: 1. EXISTING USE THAT RECEIVES THE HIGHEST AND BEST USE. 2. BUILDING USE THAT ENHANCES THE VALUE OF LAND. 3. TEMPORARY ZONING CHANGE THAT REDUCES LAND VALUE. 4. INCREMENT OF VALUE GAINED DURING A PERIOD OF TRANSITION.

Correct Answer: D An interim use does not fully explain the motivation of buyers and sellers in the market, but may contribute something to value.

Question 527 A TRAINEE APPRAISER IS PARTICIPATING IN AN APPRAISAL ASSIGNMENT TO FACILITATE A LOAN ORIGINATION IN A NEW PURCHASE. THE TRAINEE IS DIRECTED BY HER SUPERVISOR TO NOT WASTE HER TIME PREPARING A WORKFILE SINCE THE TRANSACTION WOULD NOT LIKELY CLOSE. WHICH OF THE FOLLOWING IS CORRECT? 1. THE TRAINEE MUST FOLLOW THE SUPERVISOR'S INSTRUCTIONS AND NOT PREPARE A WORKFILE. 2. A WORKFILE IS NOT REQUIRED UNLESS THE TRANSACTION CLOSES, AND IF IT DOES, THE WORKFILE MAY BE DEVELOPED AT THAT TIME. 3. THE TRAINEE DOES NOT NEED TO MAINTAIN A WORKFILE SINCE THIS IS THE RESPONSIBILITY OF THE SUPERVISOR ANYWAY. 4. A WORKFILE IS NEEDED IN ALL VALUATION ASSIGNMENTS.

Correct Answer: D As required by USPAP, all appraisers must prepare a workfile in support of appraisal assignments. The fact that a transaction closes or not is not relevant.

Question 428 IN DEVELOPING AN APPRAISAL OF CERTAIN TYPES OF FINE ART, WHEN APPLICABLE, THE APPRAISER SHOULD CONSIDER AND ANALYZE THE EFFECT ON VALUE OF: I. ANY RELEVANT DAMAGE OR IMPERFECTIONS. II. THE IMPORTANCE OF THE OBJECT(S) AS COMPARED TO OTHER ITEMS OF THE SAME TYPE AND CLASSIFICATION, OR AS RELATING TO AN ARTIST'S TOTAL WORK, OR AS ENHANCING OTHER PARTS OF A SPECIFIC COLLECTION. a. I ONLY. b. II ONLY. c. NEITHER I NOR II. d. BOTH I AND II.

Correct Answer: D As required by USPAP.

Question 470 IN COLLECTION OF NEIGHBORHOOD DATA, AN APPRAISER NOTICED A REASONABLE DEGREE OF SIMILARITY TO THE SUBJECT WITH RESPECT TO ARCHECTECTURAL DESIGN, LEVEL OF VALUE IN THE MARKET, AND THE INFLUENCE OF NOISE POLLUTION FROM A NEARBY MAJOR INTERSTATE HIGHWAY. WHICH PRINCIPLE OF VALUE BEST APPLIES? 1. BALANCE. 2. SUPPLY AND DEMAND. 3. CONSISTENT USE. 4. CONFORMITY.

Correct Answer: D Conformity suggests that the subject tends to match the environment in which it is traded. Consistent use says that land and improvements must share the same conclusion of highest and best use. Balance suggests that value is maximized when the factors of production are at their appropriate level of contribution.

Question 209 IN WHAT STAGE OF A NEIGHBORHOOD'S LIFE CYCLE IS CONSTRUCTION NOT HOMOGENEOUS? 1. GROWTH. 2. STABILITY. 3. DECLINE. 4. REVITALIZATION.

Correct Answer: D Construction is found during both the growth and revitalization stages. A revitalizing neighborhood will produce some new construction following demolition and some renovation of existing improvements.

Question 409 TO BE CONSIDERED HIGHEST AND BEST USE, WHICH OF THE FOLLOWING IS CORRECT? 1. PHYSICALLY POSSIBLE AND MARGINALLY PRODUCTIVE. 2. LEGALLY PERMITTED AND APPROPRIATELY FINANCED. 3. FINANCIALLY FEASIBLE AND MARGINALLY PRODUCTIVE. 4. PHYSICALLY POSSIBLE AND FINANCIALLY FEASIBLE.

Correct Answer: D Criteria for highest and best use is legally permitted, physically possible, finacially feasible, and maximally productive.

Question 554 MORTGAGE FINANCING IS AVAILABLE AT AN 80 PERCENT LOAN-TO-VALUE RATIO WITH A MORTGAGE CONSTANT OF .144451. THE PORTION OF THE LOAN PAID OVER THE PROJECTED 10 YEAR HOLDING PERIOD IS .0961 AND THE PROPERTY IS EXPECTED TO DEPRECIATE IN VALUE FIVE PERCENT. THE EQUITY YIELD RATE IS 15 PERCENT WITH A SINKING FUND FACTOR FOR THE PROJECTION PERIOD OF .049252. WHAT IS THE INDICATED OVERALL RATE OF CAPITALIZATION? 1. 13.43% 2. 13.68% 3. 14.18% 4. 14.42%

Correct Answer: D D. .144451 X .80 = .11556 .15 X .20 = .03 .80 X .0961 X .049252 = .003786 .11556 + .03 - .003786 = .141774 (-.05) X .049252 = -.0024626 .141774 - (-.0024626) = .1442

Question 581 GIVEN THE FOLLOWING DATA, WHAT IS THE NET INCOME RATIO? TRANSACTION PRICE - $150,000 POTENTIAL GROSS INCOME - 22,000 OPERATING EXPENSES - 5,200 EFFECTIVE GROSS INCOME - 20,800 DEBT SERVICE - 6,800 NET OPERATING INCOME - 15,600 a. 25 PERCENT. b. 33 PERCENT. c. 43 PERCENT. d. 75 PERCENT.

Correct Answer: D D. 15,600 / 20,800 = .75

Question 552 EQUITY IN THE PROPERTY BEING APPRAISED IS $20,000.00, NET OPERATING INCOME IS $15,000.00 AND THE EQUITY CAPITALIZATION RATE IS 12 PERCENT. IF THE ANNUAL LOAN CONSTANT IS .124395, WHAT IS THE VALUE OF THE PROPERTY? 1. $89,820.00 2. $99,620.00 3. $101,290.00 4. $121,290.00

Correct Answer: D D. 20,000 X .12 = 2,400 15,000 - 2,400 = 12,600 12,600 / .124395 = 101,290 101,290 + 20,000 = 121,290

Question 612 WHAT IS THE INDICATED OVERALL CAPITALIZATION RATE OF A PROPERTY HAVING A $185,000.00 MORTGAGE, NET OPERATING INCOME OF $27,980.00, AND DEBT SERVICE OF $24,680.00 IF THE DESIRED EQUITY DIVIDEND RATE IS 15 PERCENT? 1. 12% 2. 12.5% 3. 13% 4. 13.5%

Correct Answer: D D. 27,980 - 24,680 = 3,300 185,000 + 22,000 = 207,000 3,300 / .15 = 22,000 27,980 / 207,000 = .135169

Question 620 WHAT IS THE PRE-TAX CASH FLOW OF THE SUBJECT PROPERTY BASED ON THE FOLLOWING INCOME AND EXPENSE DATA? OPERATING EXPENSES $18,000 MORTGAGE INTEREST 6,300 MORTGAGE PRINCIPAL 1,200 NET OPERATING INCOME 8,200 VACANCY LOSS 450 a. $9,350.00 b. $2,350.00 c. $1,900.00 d. $700.00

Correct Answer: D D. 8,200 - 6,300 = 1,900 1,900 - 1,200 = 700

Question 592 THE SUBJECT PROPERTY IS FINANCED WITH A $74,000.00 MORTGAGE LOAN. ANNUAL DEBT SERVICE IS $7,476.00. IF NET OPERATING INCOME IS $9,000.00 AND THE EQUITY DIVIDEND RATE IS 12 PERCENT, WHAT IS THE VALUE OF THE PROPERTY? 1. $78,000.00 2. $79,200.00 3. $83,400.00 4. $86,700.00

Correct Answer: D D. 9,000 - 7,476 = 1,524 1,524 / .12 = 12,700 12,700 + 74,000 = 86,700

Question 486 WHICH OF THE FOLLOWING FACTORS WOULD NOT BE IMPORTANT IN COMPARING PROPERTIES WITHIN THE SALES COMPARISON APPROACH? 1. DIFFERENCE IN DATE OF SALE. 2. DIFFERENCE IN REAL ESTATE TAXES. 3. DIFFERENCE IN APPEARANCES. 4. DIFFERENCE IN ORIGINAL COST.

Correct Answer: D Differences in original construction cost is not a consideration in application of the sales comparison approach.

Question 185 THE RIGHT OF GOVERNMENT TO TAKE PRIVATE PROPERTY FOR PUBLIC USE IS: I. APPROPRIATION. II. EXPROPRIATION. III. EMINENT DOMAIN. IV. CONDEMNATION. a. I, II, AND III. b. I, III, AND IV. c. II, III, AND IV. d. II AND III.

Correct Answer: D Expropriation and eminent domain are synonomous terms.

Question 443 WHAT IS THE PRIMARY FUNCTION OF FNMA? 1. INSURES RESIDENTIAL MORTGAGE LOANS. 2. GUARANTEES RESIDENTIAL MORTGAGE LOANS. 3. REGULATES INTEREST RATES ON RESIDENTIAL MORTGAGE LOANS. 4. INFLUENCES THE SECONDARY MORTGAGE MARKET.

Correct Answer: D FNMA's function is to purchase loans in the secondary mortgage market.

Question 473 HIGHEST AND BEST USE OF THE SITE AS THOUGH VACANT IS APPLICABLE TO THE MEASUREMENT OF MARKET VALUE FOR WHICH OF THE FOLLOWING? 1. VACANT SITE. 2. IMPROVED RESIDENTIAL SITE. 3. IMPROVED MULTI-FAMILY SITE. 4. ALL OF THE ABOVE.

Correct Answer: D Highest and best use is the motivation of buyers and sellers in the marketplace and is applicable to all market value appraisals.

Question 393 A POINT ESTIMATE WOULD BE LEAST APPROPRIATE FOR: 1. DEPRECIATION DEDUCTIONS. 2. CONDEMNATION. 3. REAL ESTATE TAXES. 4. BID ON PROPERTY.

Correct Answer: D If the use of the appraisal is to bid on property at auction, a range of value would tell the bidder when to begin bidding and when to stop.

Question 307 WHICH OF THE FOLLOWING CONDITIONS WOULD INDICATE AN UPWARD TREND FOR MORTGAGE INTEREST RATES? I. ANTICIPATED INFLATION. II. INCREASED DEMAND FOR MORTGAGE MONEY. III. COMPETITION BY LENDERS FOR MONEY MARKET FUNDS. IV. GROWING FEDERAL DEFICIT. a. I AND IV. b. II, III, AND IV. c. I, II, AND III. d. I, II, III, AND IV.

Correct Answer: D Mortgage rates include a provision for the cost of money and the risk of the investment.

Question 451 THE PRINCIPLE OF OPPORTUNITY COST STATES: 1. WHEN SEVERAL SIMILAR PROPERTIES ARE AVAILABLE, THE ONE WITH THE LOWEST PRICE SELLS FIRST. 2. MAXIMUM VALUE IS SUSTAINED WHEN EACH FACTOR OF PRODUCTION IS AT ITS OPTIMUM LEVEL OF CONTRIBUTION. 3. THE CAUSE AND EFFECT RELATIONSHIP AMONG THE FORCES THAT INFLUENCE REAL PROPERTY VALUE. 4. INVESTMENTS WILL BE SELECTED TO PROVIDE THE HIGHEST RATE OF RETURN AT THE LOWEST LEVEL OF RISK.

Correct Answer: D Once money is spent on one investment, it can not be used for another. Therefore, the best investment must be selected first.

Question 512 WHICH OF THE FOLLOWING IS DEFINED AS THE TOTAL ANNUAL INCOME FROM ALL SOURCES THAT A PROPERTY WOULD PRODUCE IF FULLY RENTED? 1. EFFECTIVE GROSS INCOME. 2. RESIDUAL GROSS INCOME. 3. NET GROSS INCOME. 4. POTENTIAL GROSS INCOME.

Correct Answer: D Potential gross income is the amount that would be produced with no vacancies and no collection loss.

Question 324 WHICH OF THE FOLLOWING BEST FITS A PROSPECTIVE APPRAISAL? 1. THE MARKET VALUE IS... 2. THE MARKET VALUE WAS... 3. THE MARKET VALUE COULD BE... 4. THE MARKET VALUE IS EXPECTED TO BE...

Correct Answer: D Prospective appraisals have effective dates established for the future. Retrospective appraisals have effective dates established as of some past date. Grammar used should match the time frame of the appraisal.

Question 205 QUADRANGLES ILLUSTRATE ALL OF THE FOLLOWING EXCEPT: 1. HIGHWAYS. 2. ELEVATIONS. 3. RIVERS. 4. ZONING.

Correct Answer: D Quadrangles are topographical maps. Zoning would be researched from a zoning map.

Question 113 WHICH OF THE FOLLOWING LIMITS THE APPLICABILITY OF THE SALES-COMPARISON APPROACH? 1. INCOME INCREASES AND DECREASES IN AN IRREGULAR PATTERN. 2. THE SUBJECT PROPERTY IS A SITE. 3. IMPROVEMENTS ARE OVER 25 YEARS OLD. 4. ECONOMIC CONDITIONS ARE RAPIDLY CHANGING.

Correct Answer: D Rapidly changing economic conditions make it difficult to apply sales comparison since this approach is based on the analysis of historical data. In a changing market, what happened in the past may never happen again.

Question 504 WHICH OF THE FOLLOWING CHARACTERISTICS OF A SINGLE-FAMILY RESIDENCE DISTINGUISH IT FROM OTHER ECONOMIC GOODS? 1. TRADED ON A FREE OPEN MARKET AND ARE NOT REGULATED BY THE GOVERNMENT. 2. AVAILABLE IN A CENTRAL MARKET PLACE AS A STANDARDIZED PRODUCT DRIVEN BY FINANCING. 3. SALES ARE NOT CONFINED BY SEASONAL OR CYCLICAL ACTIVITY. 4. VALUE IS DETERMINED BY FIXITY OF LOCATION, LONG-LIFE, AND INTERDEPENDENCE OF PUBLIC AND PRIVATE PROPERTY OWNERSHIP.

Correct Answer: D Real estate has no central market, is government influenced, and it is impacted by seasonal variations.

Question 519 ACCORDING TO UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE, AN APPRAISER IS REQUIRED TO ISSUE EACH OF THE FOLLOWING EXCEPT: 1. A STATEMENT TO ACKNOWLEDGE SUBSTANTIAL ASSISTANCE IN PREPARATION OF THE APPRAISAL. 2. LIMITING CONDITIONS AFFECTING THE APPRAISAL CONCLUSION. 3. A STATEMENT IN REGARDS TO MAKING A PERSONAL INSPECTION. 4. THE ABSTRACT OF THE PROPERTY INDICATING ANY POSSIBLE CLOUDS ON TITLE.

Correct Answer: D Requirements of USPAP

Question 128 DURING THE INVESTIGATION OF A PROPERTY, THE DRIVEWAY IS FOUND TO ENCROACH ON THE NEIGHBORING PROPERTY BY TWO INCHES. THE BEST WAY TO DETERMINE THE IMPACT OF THIS ENCROACHMENT ON VALUE IS BY: 1. SALES COMPARISON. 2. COST-DEPRECIATION. 3. INCOME CAPITALIZATION. 4. COST TO CURE.

Correct Answer: D Since it is unlikely that comparables with and without similar characteristics will be able to be located, one must rely on the cost to correct this problem.

Question 418 IN DEVELOPING A REAL ESTATE APPRAISAL, AN APPRAISER MUST OBSERVE WHICH OF THE FOLLOWING GUIDELINES? I. LAND IS APPRAISED AS THOUGH VACANT AND AVAILABLE FOR DEVELOPMENT TO ITS HIGHEST AND BEST USE. II. VALUATION OF IMPROVEMENTS IS BASED ON THEIR ACTUAL CONTRIBUTION TO THE SITE. III. VALUE THE WHOLE BY ADDING TOGETHER THE INDIVIDUAL VALUES OF THE VARIOUS ESTATES OR COMPONENT PARTS. IV. CONSIDER AND ANALYZE ANY EFFECT ON VALUE OF ASSEMBLAGE OF THE VARIOUS ESTATES OR COMPONENT PARTS. a. I, II, III, AND IV. b. I, II, AND III. c. II, III, AND IV. d. I, II, AND IV.

Correct Answer: D Since sometimes components may be worth more or less when combined with other components, component values can not simply be added together and be expected to reliably indicate the value of the total.

Question 260 WHAT TYPE OF CO-OWNERSHIP MAY NEVER BE HELD BY MORE THAN TWO INDIVIDUALS? 1. TENANCY FOR YEARS. 2. TENANCY IN COMMON. 3. JOINT TENANCY. 4. TENANCY BY THE ENTIRETIES.

Correct Answer: D Tenancy by the entireties is reserved for married couples. Only two people may be married at one time. Tenancy for years is created by a lease, there is no ownership. Tenancy in common and joint tenancy may be ownership by two or more.

Question 305 WHICH OF THE FOLLOWING INTERESTS WOULD BE SUBJECT TO THE HIGHEST DISCOUNT RATE DUE TO RISK? 1. LEASED FEE. 2. LEASEHOLD. 3. SUBLESSOR. 4. SUBLESSEE.

Correct Answer: D The further away from the title holder, the more entities are depended upon for their proper behaviour and therefore, the higher the level of risk.

Question 152 WHAT IS THE MODE? 1. $37.50 2. $38.00 3. $41.00 4. $37.50 AND $41.00

Correct Answer: D The mode is the predominate (most often observed)value.

Question 493 ALL OF THE FOLLOWING IS A CHARACTERISTIC OF A LEASED FEE ESTATE EXCEPT: 1. RIGHT OF OWNERSHIP OF LEASED PROPERTY. 2. RIGHT TO RECEIVE UNENCUBERED PROPERTY AT THE END OF THE LEASE. 3. RIGHT TO COLLECT RENT DURING THE TERM OF THE LEASE. 4. RIGHT TO USE PROPERTY FOR A SPECIFIC PERIOD OF TIME UPON PAYMENT OF RENT.

Correct Answer: D The tenant (leasehold) pays rent for the use of the property during the lease term.

Question 303 WHAT BASIC ECONOMIC CONCEPT IS REFLECTED IN THE VALUE OF AN EASEMENT? 1. CHANGE. 2. CONFORMITY. 3. COMPETITION. 4. CONTRIBUTION.

Correct Answer: D The value of an easement (and anything else for that matter except for land) is based on its contribution to value.

Question 507 WHICH OF THE FOLLOWING STATEMENTS DESCRIBE THE CHARACTERISTICS OF BUYERS AND SELLERS WHO ENTER THE HOUSING MARKET? I. WELL INFORMED BUYERS. INFORMED BECAUSE OF THE EXTENSIVE NUMBER OF TRANSACTIONS IN WHICH THEY HAVE PARTICIPATED. II. AT ANY POINT IN TIME, FOR ANY PARTICULAR PROPERTY, THERE ARE A GREAT NUMBER OF INDIVIDUALS OPERATING AS BUYERS AND SELLERS IN THE MARKET. a. I ONLY. b. II ONLY. c. BOTH I AND II. d. NIETHER I OR II.

Correct Answer: D There are typically few buyers and few sellers in the market at any one time and they are not well informed because of the infrequency that they are participating in the market.

Question 501 ALL OF THE FOLLOWING STATEMENTS ARE TRUE REGARDING EMINENT DOMAIN EXCEPT: 1. AN APPRAISER MUST ESTIMATE MARKET VALUE TO JUDGE JUST COMPENSATION. 2. THE FEDERAL GOVERNMENT HAS THE RIGHT TO ACQUIRE PRIVATE PROPERTY FOR PUBLIC USE WITHOUT CONSENT OF THE OWNER. 3. THE FEDERAL GOVERNMENT MAY DELEGATE POWER OF EMINENT DOMAIN TO UTILITY COMPANIES AND OTHER PRIVATE FIRMS. 4. THE CONSTITUTION LIMITS THE AMOUNT OF JUST COMPENSATION THE PROPERTY OWNER MAY RECEIVE.

Correct Answer: D There is no limit placed on the compensation that a property owner may receive.

Question 220 ALL LEGAL RIGHTS THAT "GO WITH THE LAND" WHEN TITLE TO THE LAND IS TRANSFERRED ARE KNOWN AS: 1. ENCROACHMENTS. 2. EASEMENTS. 3. ENCUMBRANCES. 4. APPURTENANCES.

Correct Answer: D This is the definiton of an appurtenance.

Question 499 WHICH OF THE FOLLOWING DOCUMENTS IS DESIGNED TO PROVIDE DETAILS OF MATERIALS COMPOSITION OF A SINGLE-FAMILY RESIDENCE'S PHYSICAL CONSTRUCTION? 1. QUANTITY SURVEY ANALYSIS. 2. UNIT-IN-PLACE BREAKDOWN. 3. COST SERVICE PUBLICATION. 4. BUILDING PLANS AND SPECIFICATIONS.

Correct Answer: D This is the purpose of building plans and specifications.

Question 249 WHICH OF THE FOLLOWING IS A UNIT OF COMPARISON? I. GROSS INCOME MULTIPLIER. II. CAPITALIZATION RATE. III. PRICE PER SQUARE FOOT. IV. PRICE PER APARTMENT. a. III. b. III AND IV. c. I, III, AND IV. d. I, II, III, AND IV.

Correct Answer: D Units of comparison exist whenever a sale price is part of a division into characteristics of a property.

Question 300 VALUE IN USE REQUIRES: I. SCARCITY. II. TRANSFERABILITY. III. UTILITY. IV. DEMAND. a. I, III, AND IV. b. II AND III. c. III AND IV. d. III ONLY.

Correct Answer: D Utility is the only component measured when estimating value in use.

Question 398 A VICTORIAN HOUSE HAS AN EFFECTIVE AGE OF FIFTY YEARS AND IS LOCATED NEAR A HIGHWAY. WHAT KIND OF DEPRECIATION IS FOUND? 1. PHYSICAL. 2. FUNCTIONAL. 3. EXTERNAL. 4. ALL OF THE ABOVE.

Correct Answer: D Victorian design exhibits functional obsolescence, effective age exhibits physical depreciation, and location near a highway suggests external obsolescence.

Question 410 ACCORDING TO THE REQUIREMENTS OF UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE, AN APPRAISER MUST PROVIDE WHICH OF THE FOLLOWING IN EACH APPRAISAL REPORT? 1. WHO, WHAT, WHERE, WHY. 2. WHAT, WHERE, WHO, WHEN. 3. WHY, WHAT, WHERE, WHO. 4. WHEN, WHAT, WHO, WHY.

Correct Answer: D Who identifies the client, what identifies the property, and when identifies the effective date. All are requirements of USPAP. It does not matter where the work of the appraisal is done.

Question 265 WHAT TYPE OF DEPRECIATION IS POSSIBLE WHEN AN IMPROVEMENT REPRESENTS THE HIGHEST AND BEST USE OF A SITE AS THOUGH VACANT? I. EXTERNAL. II. FUNCTIONAL. III. PHYSICAL. a. I ONLY. b. II AND III. c. I, II, AND III. d. NONE OF THE ABOVE.

Correct Answer: D With the site vacant, an improvement that is generating maximum value will have a cost that is equal to its value. No depreciation is possible.

Question 611 A PROPERTY WAS PURCHASED FOR $90,000.00. WHAT IS THE TOTAL AMOUNT SUBJECT TO CAPITAL GAINS TAXATION IF CAPITAL IMPROVEMENTS WERE MADE AT A COST OF $10,000.00, DEPRECIATION DEDUCTIONS WERE $60,000.00, AND THE PROPERTY SOLD FOR $100,000.00? 1. $10,000.00 2. $40,000.00 3. $50,000.00 4. $60,000.00

Correct Answer: D purchase price plus improvements 90,000 + 10,000 = 100,000 subtract depreciation deductions 100,000 - 60,000 = 40,000 sale price less tax basis equals capital gain 100,000 - 40,000 = 60,000

Question 351 The subject has an outdated elevator that does not meet market standards and must be replaced. The reproduction cost of the existing elevator is $46,000 and it is 35% physically depreciated. There is no salvage value. The current cost of installing a modern elevator system is $57,000 which includes the cost of the equipment installation and building modifications. The building modifications will be $5,000. If the elevator is installed when the subject is under construction, the cost will be $55,000. The newer faster elevator is expected to allow for a $10,000 increase of effective gross income. A study of similar building sales finds an effective gross income multiplier of 6.5. What is the functional obsolescence for the elevator? a. $31,900 curable b. $46,250 curable c. $31,900 incurable d. $46,250 incurable

Correct Answer: a 46,000 x .35 = 16,100 46,000 - 16,100 = 29,900 29,900 + 57,000 = 86,900 86,900 - 55,000 = 31,900 10,000 x 6.5 = 65,000 value gain 65,000>57,000 (curable)

Question 544 A property is currently worth $460,000 and is leased for $50,000 per year. The property is projected to increase in value 15% in three years. Based on a discount rate of 11.5%, what is the present value of the reversion at the end of three years? a. $381,600 b. $392,900 c. $398,400 d. $399,900

Correct Answer: a 460,000x.15 = 69,000 460,000 + 69,000 = 529,000 3n 11.5i $529,000FV PV=$381,619

Question 535 A 26 unit apartment complex is being appraised. Typical properties are financed for a 30 year term with a 75% loan to value ratio,a 12% interest rate, and monthly payments. The overall capitalization rate is 14% and the mortgage constant is .1234. What is the debt coverage ratio based on the following data developed from comparable properties? Comparables Units Age EGI Sale Price 1 20 15 $60,000 $360,000 2 30 10 $64,000 $390,000 3 25 12 $58,000 $300,000 a. 1.2 b. 1.3 c. 1.4 d. 1.5

Correct Answer: d 360,000x.75=270,000 Loan Amount 390,000x.75=292,500 300,000x.75=225,000 270,000x.1234=33,318 Debt service 292,500x.1234=36,094 225,000x.1234=27,765 360,000x.14=50,400 Net operating income 390,000x.14=54,600 300,000x.14=42,000 50,400/33,318=1.5 Debt coverage ratio 54,600/36,094=1.5 42,000/27,765=1.5

Question 7 A certified residential appraiser was initially licensed as an appraiser trainee on January 30, 2008 and earned the residential certification April 15, 2010. An assignment was offered on May 3, 2010 to appraise a single family home under FNMA guidelines with an effective date of March 15, 2006. The report will be dated May 8, 2010. Assuming the appraiser is competent, is it legally permissable to accept this assignment? 1. Yes, as long as the residential certification is valid as of the date of the report. 2. Yes, as long as the residential certification is valid as of the date the assignment is accepted. 3. No, the appraiser would need to possess a valid appraisal credential on the effective appraisal date. 4. No, the appraiser would have to possess a certification as a residential appraiser as of the appraisal's effective date.

Correct Answer: A

Question 14 The assignment is to value an unimproved property in an area being developed into a subdivision. A summary of the potential net cash flows for a subdivision development on the subject property is presented below. Year 1: -$50,000 Year 2: -$15,000 Year 3: $130,000 Year 4: $125,000 Year 5: $75,000 Assuming a discount rate of 26%, what is the value of the undeveloped land (rounded to the nearest $1,000)? a. $89,000 b. $99,000 c. $129,000 d. $187,000

Correct Answer: A 26 i 50,000 chs g cfj 15,000 chs g cfj 130,000 g cfj 125,000 g cfj 75,000 g cfj f npv = 89,066

Question 2 A 15-year old office property recently sold for $1,400,000. The cost to replace the building is $1,625,000. Land in that office complex sells for $30,000 per acre and this sale had 10 acres. While the paving and landscaping cost $80,000, they contributed $50,000 to the sale. What is the annual depreciation rate of the building? a. 2.3% b. 1.3% c. 1.0% d. 6.3%

Correct Answer: A 30,000 x 10 = 300,000 1,400,000 - 300,000 = 1,100,000 1,100,000 - 50,000 = 1,050,000 1,625,000 - 1,050,000 = 575,000 575,000/1,625,000 = .353846 .353846/15 = .02358

Question 18 A PROPERTY OWNER ADDS A NEW BATHROOM TO HIS HOME AT A COST OF $9,000.00. THE VALUE OF THE HOME WAS $60,000.00 PRIOR TO THE ADDITION AND $65,000.00 AFTER THE ADDITION WAS COMPLETED. WHAT IS THE INDICATED VALUE OF THIS ADDITION? 1. $5,000.00 2. $9,000.00 3. $14,000.00 4. $19,000.00

Correct Answer: A 65,000-60,000=5,000 Based on the principle of contribution.

Question 35 A PROPERTY THAT BEARS AN EASEMENT IS A(AN): 1. SERVIENT ESTATE. 2. DOMINANT ESTATE. 3. EASEMENT APPURTENANT. 4. EASEMENT IN GROSS.

Correct Answer: A A property that benefits from an easement is the dominant estate. An easement that will survive a sale and therefore is relevant in a market value appraisal is an appurtenant easement (runs with the land).

Question 44 WHICH OF THE FOLLOWING WOULD NOT BE RECOGNIZED IN A FEDERALLY RELATED TRANSACTION? 1. ORAL APPRAISAL REPORT. 2. RESTRICTED USE APPRAISAL REPORT. 3. APPRAISAL REPORT. 4. NONE OF THE ABOVE.

Correct Answer: A As stated in USPAP.

Question 100 COMPARABLE PROPERTY A IS A WOODED AND SLOPED LOT THAT RECENTLY SOLD FOR $10,000. COMPARABLE PROPERTY B IS A WOODED AND LEVEL LOT THAT RECENTLY SOLD FOR $13,000. THE SUBJECT PROPERTY IS WOODED AND LEVEL. THE COMPARABLES ARE IDENTICAL TO THE SUBJECT IN ALL OTHER RESPECTS. WHAT TYPE OF ADJUSTMENT SHOULD BE MADE? 1. POSITIVE ADJUSTMENT TO A. 2. NEGATIVE ADJUSTMENT TO B. 3. NEGATIVE ADJUSTMENT TO A. 4. POSITIVE ADJUSTMENT TO B.

Correct Answer: A Comparable A is adjusted to match the characteristics of the subject.

Question 69 THE FRAMEWORK WHICH HOLDS THE GLASS IN A WINDOW OR DOOR IS A: 1. SASH. 2. MUNTIN. 3. MULLION. 4. STILE.

Correct Answer: A Description of sash.

Question 38 WHAT TYPE OF WINDOW IS HINGED AT THE TOP OF THE SASH, PERMITTING THE WINDOW TO OPEN HORIZONTALLY? 1. AWNING. 2. DOUBLE-HUNG. 3. SINGLE-HUNG. 4. CASEMENT.

Correct Answer: A Double hung windows may open from either top or bottom. Single hung windows open in only one direction. Casement windows do not open.

Question 96 THE GEOMETRICAL PROJECTION OF THE UPRIGHT EXTERNAL PARTS OF A BUILDING IN FRONT, REAR, OR SIDE VIEW IS THE BUILDING'S: 1. ELEVATION. 2. FACADE. 3. FACE. 4. FASCIA.

Correct Answer: A Fascia is a covering of some sort. Face is the front of the building. Facade is a false front or false covering. The is the definition of elevation.

Question 61 THE LOWER PART OF AN INTERIOR WALL WHEN THE SURFACE IS A DIFFERENT MATERIAL OR SEPARATED BY A MOLDING AND DIFFERENTLY DECORATED FROM THE UPPER PORTION IS: 1. WAINSCOT. 2. FENESTRATION. 3. NOGGING. 4. SHEATHING.

Correct Answer: A Fenestration is the design and location of openings in a building's walls. Nogging is the mortar between block or brick construction. Sheathing is plywood construction found in walls.

Question 63 WHICH OF THE FOLLOWING COULD BE FINANCED BY A CHATTEL MORTGAGE? 1. FURNITURE. 2. VACANT LAND. 3. LEASEHOLD ESTATE. 4. FIXTURE.

Correct Answer: A Furniture is personal property that may be financed. All other choices represent real property.

Question 28 SEVERAL HOUSES ARE AVAILABLE WITH THE SAME UTILITY. WHAT APPRAISAL PRINCIPLE STATES THAT THE ONE WITH THE LOWEST PRICE WILL ATTRACT THE GREATEST DEMAND? 1. SUBSTITUTION. 2. CONSISTENT USE. 3. BALANCE. 4. CONTRIBUTION.

Correct Answer: A Good definition of the principle of substitution.

Question 25 HIGHEST AND BEST USE IS AN ISSUE IN WHICH OF THE FOLLOWING APPRAISAL ASSIGNMENTS? 1. MARKET VALUE. 2. VALUE IN USE. 3. INSURABLE VALUE. 4. ALL OF THE ABOVE.

Correct Answer: A Highest and best use is the cornerstone of the market as it determines how property will sell. It is not relevant in the measurement of any other type of value.

Question 51 THE STABILITY STAGE OF THE NEIGHBORHOOD LIFE CYCLE WOULD TEND TO BE PROLONGED BY: 1. HOMOGENEITY OF LAND USES. 2. INCREASE OF WEALTH IN THE COMMUNITY. 3. EXTENSIVE REMODELING AND RENOVATION. 4. NEW CONSTRUCTION.

Correct Answer: A Land uses remain constant during the stability stage. Increasing wealth and new construction suggests growth. Remodeling indicates revitalizing neighborhoods.

Question 99 A LOT MEASURES 90 FEET BY 125 FEET. A 10 FOOT SETBACK REQUIREMENT EXISTS ALONG EACH BOUNDARY WITH AN ADDITIONAL 15 FOOT UTILITY EASEMENT ALONG THE FRONT. WHAT TYPE OF HOME CAN NOT BE BUILT ON THIS LOT? 1. RANCH. 2. BI-LEVEL. 3. TRI-LEVEL. 4. TWO STORY.

Correct Answer: A Ranch constuction is single story placing the greatest amount of emphasis on lot size. All other answer choices allow for living area to be placed on multiple stories.

Question 16 BUILDINGS THAT COST MORE TO BUILD THAN THE SITE'S HIGHEST AND BEST USE ARE: 1. OVERIMPROVEMENTS. 2. SINGLE-FAMILY HOMES. 3. NONCONFORMING USES. 4. UNDERIMPROVEMENTS.

Correct Answer: A See Question 15 for a demonstration.

Question 73 WHICH OF THE FOLLOWING HAS THE GREATEST IMPACT ON THE VALUE OF A LOT? 1. OCEAN-FRONT VIEW. 2. CORNER INFLUENCE. 3. SLOPE. 4. CLIMATE.

Correct Answer: A Self evident Question requires an assumption by the exam candidate.

Question 98 AN APPRAISAL ASSIGNMENT REQUIRES THE VALUATION OF NONCONFORMING PROPERTY THAT IS PRODUCING MORE INCOME THAN CONFORMING USES. HOW SHOULD THIS BONUS BE HANDLED? 1. ATTRIBUTED TO THE IMPROVEMENT. 2. ATTRIBUTED TO THE LAND. 3. DEDUCTED FROM PROPERTY VALUE. 4. ADDED TO PROPERTY VALUE.

Correct Answer: A Since land is appraised as though vacant and inappropriate improvements do not change the value of land, any bonus income must be attributed to the improvements only. If the improvements are lost, the opportunity to collect the bonus disappears.

Question 84 COMBINING TWO CONTIGUOUS PARCELS OF PROPERTY UNDER ONE OWNERSHIP TO INCREASE VALUE IS: 1. ASSEMBLAGE. 2. PLOTTAGE. 3. PLOTTAGE VALUE. 4. CONSOLIDATION.

Correct Answer: A The combination of properties is assemblage. The increase in value that may result is plottage (value).

Question 72 THE INSIDE LID OF THE TOILET IN AN OLDER PROPERTY OFTEN WILL GIVE THE: 1. APPROXIMATE DATE OF CONSTRUCTION. 2. NAME OF THE PLUMBER. 3. NAME OF THE BUILDER. 4. DETAILS OF INSTALLATION.

Correct Answer: A The date the toilet lid was cast will be found under the lid inside the tank.

Question 50 WHAT TYPE OF EMPLOYMENT EXISTS IN AN INDUSTRY WHOSE PRODUCTS ARE CONSUMED PRIMARILY IN THE LOCAL MARKET? 1. SERVICE. 2. BASIC. 3. IMPORT. 4. EXPORT.

Correct Answer: A The definition of a service industry.

Question 55 WHICH OF THE FOLLOWING TYPES OF WIRING WOULD THE MARKET TYPICALLY PREFER? 1. COPPER. 2. ALUMINUM. 3. NICKEL. 4. STEEL.

Correct Answer: A The only other possible wiring material would be aluminum which has been rejected by many markets because of its poor resistance to fire.

Question 46 WHEN ZONING CHANGES REDUCE THE PERMITTED INTENSITY OF PROPERTY USE, THE RESULT IS: 1. NON-CONFORMING OVERIMPROVEMENTS. 2. CONFORMING UNDERIMPROVEMENTS. 3. NON-CONFORMING UNDERIMPROVEMENTS. 4. CONFORMING OVERIMPROVEMENTS.

Correct Answer: A When zoning changes increase permitted intesity, underimprovements are the result.

Question 58 WHICH OF THE FOLLOWING IS AN ECONOMIC FACTOR IN SITE ANALYSIS? 1. COST OF UTILITIES. 2. INCOME CHARACTERISTICS OF SURROUNDING RESIDENTS. 3. ZONING ORDINANCES. 4. OCCUPATIONAL CHARACTERISTICS.

Correct Answer: A Zoning ordinances are governmental. Income of residents and occupational characteristics are social factors.

Question 48 YOU ARE ESTIMATING THE MARKET VALUE OF A PROPERTY WITH A ONE STORY INDUSTRIAL BUILDING THAT IS 17 YEARS OLD AND HAS AN EFFECTIVE AGE OF 10 YEARS. THE BUILDING HAS A REMAINING ECONOMIC LIFE OF 50 YEARS AND MEASURES 125' X 160'. THE COST TO REPLACE THE BUILDING IS $55 PER SQUARE FOOT AND YOU HAVE ESTIMATED THE SITE VALUE TO BE $180,000. WHAT IS THE PROPERTY'S MARKET VALUE? a. $1,296,000 b. $1,115,000 c. $1,096,000 d. $1,005,000

Correct Answer: B 125 x 160 = 20,000 20,000 x 55 = 1,100,000 17 + 50 = 67 10/67 = .15 .15 x 1,100,000 = 165,000 1,100,000 - 165,000 = 935,000 935,000 + 180,000 = 1,115,000

Question 23 WHAT IS THE ANNUAL ABSORPTION RATE IF 25 OF THE AVAILABLE 200 UNITS ARE SOLD EVERY SIX MONTHS? 1. 15% 2. 25% 3. 50% 4. 100%

Correct Answer: B 25 X 2 = 50 50 / 200 = .25

Question 6 THE SUBJECT IS 60,000 SQUARE FEET. COMPARABLE 1 SOLD ONE YEAR AGO FOR $2.92 PER SQUARE FOOT. COMPARABLE 2 SOLD ONE YEAR AGO FOR $3 PER SQUARE FOOT. COMPARABLE 3 IS A CURRENT SALE FOR $3.01 PER SQUARE FOOT. WHAT IS THE VALUE OF THE SUBJECT? 1. $175,200 2. $178,600 3. $180,600 4. $181,000

Correct Answer: B 3.01 E+ 3 E+ 2.92 E+ g x = 2.9777 x 60,000 = 178,600

Question 4 THE BLUEPRINTS OF A BUILDING INDICATE THE MEASUREMENT OF ONE WALL TO BE 43'9" AND THE INTERSECTING WALL TO BE 29'3". WHAT IS THE INDICATED SQUARE FOOTAGE OF THE BUILDING? 1. 1286 2. 1280 3. 1247 4. 1320

Correct Answer: B 43.75 X 29.25 = 1279.6875 Inches must be converted to tenths of a foot for this calculation.

Question 81 HOW MANY ACRES ARE FOUND IN THE PROPERTY DESCRIBED BY THE NE1/4 OF THE SW1/4 OF THE SE1/4 OF SECTION 10, R13E, T22S? 1. 5 2. 10 3. 15 4. 20

Correct Answer: B 640 acres in a section so: 640/4=160 160/4=40 40/4=10

Question 5 The assignment is to value an approved subdivision. The project is expected to be sold out in three years, selling eight lots in the first year, four lots in the second year, and three lots in the third year. The lots will sell for $88,500 each the first year, $91,200 the second year, and $93,900 in the third year. From the sale proceeds, a 6% commission will be paid. The project will pay $10,000 in taxes in the first year, $4,000 in the second year, $2,000 in the third year. All other infrastructure costs are complete. Developers require a 25% return on investment. What is the value of the subdivision today, rounded to the nearest $100? a. $664,300 b. $875,900 c. $1,258,400 d. $1,355,100

Correct Answer: B 88,500 x 8 = 708,000 708,000 x .06 = 42,480 708,000 - 42,480 - 10,000 = 655,520 91,200 x 4 = 364,800 364,800 x .06 = 21,888 364,800 - 21,888 - 4,000 = 338,912 93,900 x 3 = 281,700 281,700 x .06 = 16.902 281,700 - 16,902 - 2,000 = 262,798 25i 655,520 g cfj 338,912 g cfj 262,798 g cfj f npv = 875,872

Question 87 GENTLY SLOPING OR UNDULATING LAND IS REPRESENTED BY WHICH OF THE FOLLOWING? 1. 1% 2. 8% 3. 25% 4. 33%

Correct Answer: B A change of 8 feet in elevation for every 100 feet is a gentle slope. A change of 1 foot for every 100 feet is essentially flat.

Question 47 In an effort to restore wetlands, the US Army Corps of Engineers is diverting the flow of water in a river nearby your home. This will cause a canal adjacent to your property to flood a portion of your property saturating your land and making your property unusable. This is an exercise of: a. Riparian rights b. Flowage rights c. Easement d. Condemnation

Correct Answer: B A flowage easement is the right of the government to use the land of another to overflow, flood and submerge the affected lands. An owner of land is entitled to compensation whenever the waters of a stream or lake are impounded or altered so as to inundate, saturate, or flood his land.

Question 89 SOIL DEVELOPED FROM MATERIAL TRANSPORTED AND DEPOSITED BY THE WIND IS: 1. ALLUVIAL. 2. AEOLIAN. 3. COLLUVIAL. 4. LACUSTRINE.

Correct Answer: B Alluvial soil is deposited by flowing water. Lacustrine soil is in a semi floating state near the shoreline of lakes, ponds, and retention areas. Colluvial soil is formed by the interaction of flowing water and wind.

Question 31 WHO HOLDS TITLE TO FINANCED PROPERTY IN A DEED OF TRUST? 1. TRUSTOR. 2. TRUSTEE. 3. BENEFICIARY. 4. MORTGAGEE.

Correct Answer: B Deed of trust is a three party finacing arrangement where the borrower is the trustor and the lender is the beneficiary. Title is held by a third party, the trustee.

Question 3 THE PROCESS OF ENFORCING THE RIGHT OF GOVERNMENT TO TAKE PRIVATE PROPERTY FOR PUBLIC USE IS: 1. EMINENT DOMAIN. 2. CONDEMNATION. 3. POLICE POWER. 4. ESCHEAT.

Correct Answer: B Eminent domain is the right to take property for the good of the public. Condemnation describes the process of the taking. Escheat transfers title to a government entity when there is no owner identified upon death of the original property owner.

Question 36 THE DESIGN AND DISPOSITION OR ARRANGEMENT OF WINDOWS OR OTHER OPENINGS IN A BUILDING WALL IS DESCRIBED AS: 1. HYPOTHECATION. 2. FENESTRATION. 3. GENTRIFICATION. 4. NOVATION.

Correct Answer: B Fenestration is an architectural term. Hypothecation is a transfer of rights without transferring title or possession of the property. Gentrification is the displacement of of older residents in a community, replacing them with younger residents. Novation means new person.

Question 67 A SLENDER HORIZONTAL BAR OF WOOD OR METAL DIVIDING GLASS PANELS IN A WINDOW OR PANELS IN A DOOR IS A: 1. SASH. 2. MUNTIN. 3. MULLION. 4. STILE.

Correct Answer: B Horizontal construction members are muntins. Vertical framing are mullions. The sash represents the entire window construction. Stile is the outer perimeter framework of window construction.

Question 74 STRICT ENFORCEMENT OF ZONING REQUIREMENTS IS AN EXERCISE OF THE PRINCIPLE OF: 1. CONTRIBUTION. 2. CONFORMITY. 3. BALANCE. 4. EXTERNALITIES.

Correct Answer: B If all properties conform to zoning, there will be some conformity to their appearance.

Question 92 THE WORK TRIANGLE IN A KITCHEN CONSISTS OF: 1. RANGE, REFRIGERATOR, PANTRY. 2. RANGE, REFRIGERATOR, SINK. 3. RANGE, SINK, PANTRY. 4. SINK, REFRIGERATOR, PANTRY.

Correct Answer: B Major components of a kitchen establish the work triangle. Traffic should not be routed between these components and they should not be spread too far apart.

Question 91 BY REMOVING THE PROTECTIVE LIGHT SWITCH PLATE, AN APPRAISER MAY DETERMINE: 1. ELECTRICAL AMPERAGE. 2. PRESENCE OF INSULATION. 3. SPACING BETWEEN STUDS. 4. ELECTRICAL VOLTAGE.

Correct Answer: B Older homes without electric boxes for switches will reveal interior wall construction when the switch plate is removed. It will not be sufficient to reveal stud spacing, electrical amperage or voltage.

Question 52 FACTORS THAT INFLUENCE THE SUBJECT PROPERTY FROM NEARBY PROPERTIES ARE: 1. MACRONEIGHBORHOOD FACTORS. 2. MICRONEIGHBORHOOD FACTORS. 3. GENERALITIES. 4. INFRASTRUCTURE.

Correct Answer: B Outlying properties influences may be considered macroneighborhood factors.

Question 82 A SINKHOLE HAS APPEARED IN YOUR BACKYARD. WHAT TERM BEST DESCRIBES ITS IMPACT ON VALUE? 1. ECONOMIC OBSOLESCENCE. 2. FUNCTIONAL OBSOLESCENCE. 3. INCURABLE PHYSICAL DEPRECIATION. 4. CURABLE PHYSICAL DEPRECIATION.

Correct Answer: B Since the sinkhole is in your backyard, it is a functional issue. For it to exhibit economic (external) obsolescence, the sinkhole would be located in a neighboring property.

Question 79 WHICH OF THE FOLLOWING IS A SOCIAL CONSIDERATION IN THE ANALYSIS OF A NEIGHBORHOOD? 1. PROPERTY RENT LEVELS. 2. POPULATION DENSITY. 3. EFFECTIVE AGES OF PROPERTY. 4. DEED RESTRICTIONS.

Correct Answer: B Social value influences relate to the characteristics of the people who make up the population. Rent level and effective age are property characteristics and are economic value influences. Deed restrictions are governmental value influences.

Question 86 THE MOST FAVORED EXPOSURE FOR IMPROVEMENTS IS: 1. NORTH. 2. SOUTH. 3. EAST. 4. WEST.

Correct Answer: B Southern exposure insures that sunlight is lower in the southern sky during the colder winter months where it will be helpful in naturally supplying the heat needed in winter. The side of the home with exposure is the side with the greatest amount of glass area.

Question 76 WHAT IS THE BEST SOURCE FOR VERIFICATION OF A SALE PRICE? 1. PUBLIC RECORDS. 2. PARTIES TO THE SALE. 3. REALTORS. 4. MULTIPLE LISTING SERVICES.

Correct Answer: B Speaking to those who participated in the transaction is more reliable than using second hand sources.

Question 97 THE PRINCIPAL, EXTERIOR FACE OF A STRUCTURE THAT MAY DIFFER FROM THE REST OF THE BUILDING IN DESIGN, MATERIALS, AND ARCHITECTURE IS THE BUILDING'S: 1. ELEVATION. 2. FACADE. 3. FASCIA. 4. FACILE.

Correct Answer: B The definition of facade. It means "false front".

Question 70 WHICH OF THE FOLLOWING ARE DESIGNATED FLOOD ZONES WHICH REQUIRE FLOOD INSURANCE? 1. A U 2. A V 3. A W 4. A Z

Correct Answer: B The only flood zone on the list is AV.

Question 49 LOCAL EMPLOYMENT IN THE TOURISM INDUSTRY IS 15 PERCENT OF THE TOTAL WORK FORCE. NATIONAL EMPLOYMENT IN THE TOURISM INDUSTRY IS 4.5 PERCENT. THE LOCAL COMMUNITY CONSIDERS TOURISM TO BE A: 1. GROWTH INDUSTRY. 2. BASIC INDUSTRY. 3. SERVICE INDUSTRY. 4. DEPRESSED INDUSTRY.

Correct Answer: B This industry is attracting wealth to the local economy. Where national employment exceeds local employment percentages, wealth is not attracted and the industry is a service industry. The other two answer choices are not relevant.

Question 56 TIME-DISTANCE RELATIONSHIPS BETWEEN A SITE AND PROBABLE DESTINATIONS ARE: 1. SITUS. 2. LINKAGES. 3. THOROUGHFARES. 4. LOCATION FACTORS.

Correct Answer: B This is the definition of a linkage. Situs represents the fact that a property's location is a primary determinant of its value.

Question 42 An owner receives four offers to purchase. Offer 1 is $195,000 all cash. Offer 2 is for $215,000 seller financing with 10% down, 6% interest, 10 year amortization. Offer 3 is for $220,000 seller financing with with 5% down, 6.5% interest, 15 year amortization. Offer 4 is for $210,000 seller financing with 10% down, 6% interest, 10 year amortization with a 5 year balloon. Assuming monthly payments for all financing and a market interest rate of 8%, what offer represents the highest value to the seller? a. Offer 1 b. Offer 2 c. Offer 3 d. Offer 4

Correct Answer: C 1 - 195,000 2 - 215,000 x .10 = 21,500 215,000 - 21,500 = 193,500 10gn 6gi 193,500PV PMT = 2,148 10gn 8gi 2,148PMT PV = 177,041 + 21,000 = 198,041 3 - 220,000 x .05 = 11,000 220,000 - 11,000 = 209,000 15gn 6.5gi 209,000PV PMT = 1,820 15gn 8gi 1820PMT PV = 190,445 + 11,000 = 201,445 4 - 210,000 x .10 = 21,000 210,000 - 21,000 = 189,000 10gn 6gi 189,000PV PMT = 2,098 5gn 8gi 2098PMT PV = 103,470 5gn 6gi 2098PMT PV = 108,520 5n 8i 108,520FV PV = 73,856 103,470 + 73,856 + 21,000 = 198,326

Question 24 WHAT IS THE LENDER'S EFFECTIVE YIELD IF THE ORIGINAL LOAN AMOUNT IS $250,000, THE ANNUAL INTEREST RATE IS 7% WITH 2 DISCOUNT POINTS, PAYMENTS ARE PAID MONTHLY WITH A LOAN TERM OF 25 YEARS, AND THE LOAN IS PAID IN FULL IN 5 YEARS? 1. 6.249% 2. 7.225% 3. 7.499% 4. 7.999%

Correct Answer: C 250,000 x .02 = 5,000 250,000 - 5,000 = 245,000 25 gn 7 gi 250,000 PV PMT = 1,766.947993 60 f amort RCL PV = 227,905 5 gn 245,000 PV 1,766.947993 CHS PMT 227,905 CHS FV i =.62499706 12 x = 7.49996

Question 17 THE LENDER REQUIRES 2 DISCOUNT POINTS. THE ORIGINAL LOAN AMOUNT IS $250,000 AT AN ANNUAL INTEREST RATE OF 7%. THE LOAN TERM IS 25 YEARS WITH MONTHLY PAYMENTS. WHAT IS THE LENDER'S EFFECTIVE YIELD IF THE LOAN IS PAID IN FULL OVER THE 25 YEAR TERM? 1. 9.252% 2. 8.275% 3. 7.225% 4. 6.255%

Correct Answer: C 250,000 x .02 = 5,000 250,000 - 5,000 = 245,000 25 gn 7 gi 250,000 PV PMT = 1,766.9479 245,000 PV i = .602091451 12 x = 7.225

Question 45 A mortgage loan was originated with an interest rate of 8.5%, 30 year term, monthly amortization, and an original loan amount of $198,000. The property produces NOI of $28,500. The anticipated reversion is $280,000 after an investment period of 10 years. Based on an equity dividend rate of 14.5%, what is the value of the equity? 1. $94,720 2. $89,970 3. $79,340 4. $52,340

Correct Answer: C 30 gn 8.5 gi 198,000 PV PMT = 1,522.45 x 12 = 18,269 28,500 - 18,269 = 10,231 10 n 14.5 i 10,231 PMT PV = 52,340 20 gn 8,5 gi 1,522.45 PMT PV = 175,433 280,000 - 175,433 = 104,567 10 n 14.5 i 104,567 FV PV = 26,998 52,340 + 26,998 = 79,340

Question 15 POTENTIAL USES ARE BEING CONSIDERED FOR DEVELOPMENT. BASED ON THE FOLLOWING INFORMATION, WHICH INVESTMENT ALTERNATIVE IS THE HIGHEST AND BEST USE OF THE SITE? APARTMENT RETAIL OFFICE COST TO CONSTRUCT $400,000.00 $290,000.00 $350,000.00 NET OPERATING INCOME $100,000.00 $80,000.00 $95,000.00 RETURN ON BUILDING 12% 12% 12% a. APARTMENT. b. RETAIL. c. OFFICE. d. ALL OF THE ABOVE.

Correct Answer: C 400,000 X .12 = 48,000 100,000 - 48,000 = 52,000 290,000 X .12 = 34,800 80,000 - 34,800 = 45,200 350,000 X .12 = 42,000 95,000 - 42,000 = 53,000 This is an application of the land residual income capitalization technique. The use that generates the greatest residual income to land is considered the highest and best use. In this example, note the apartment is an overimprovement and the retail is an underimprovement based on construction costs.

Question 54 WHICH OF THE FOLLOWING IS NOT CONSIDERED A SITE IMPROVEMENT? 1. LANDSCAPING. 2. FENCING. 3. CARPORT. 4. DRIVEWAY.

Correct Answer: C A carport is part of the building improvements. Site improvements create a site from vacant land.

Question 34 WHICH OF THE FOLLOWING IS CHARACTERISTIC OF THE COOPERATIVE FORM OF OWNERSHIP? 1. FEE SIMPLE OWNERSHIP OF INDIVIDUAL UNITS. 2. TENANCY IN COMMON WITH A RIGHT OF PARTITION. 3. OCCUPANCY BY MEANS OF A PROPRIETARY LEASE. 4. INTERVAL OWNERSHIP.

Correct Answer: C A cooperative is a type of corporation ownership of real property. Stockholders of the corporation are provided with the right to occupy specific portions of the building through this tightly controlled private lease. Fee simple ownership of units is found in condominium ownership. Interval ownership is a type of timesharing.

Question 68 A THIN VERTICAL BAR OF WOOD, LEAD, OR STONE WHICH DIVIDES MULTIPLE WINDOWS OR PANES OF GLASS IS A: 1. SASH. 2. MUNTIN. 3. MULLION. 4. STILE.

Correct Answer: C A good description of a mullion.

Question 19 THE VALUE OF A BUILDING IS EQUAL TO ITS CONSTRUCTION COST WHEN THE BUILDING IS: 1. NEWLY CONSTRUCTED. 2. OVERIMPROVED. 3. THE HIGHEST AND BEST USE OF THE SITE. 4. NONE OF THE ABOVE.

Correct Answer: C A newly constructed building may experience functional or external obsolescence. New construction only guarantees no physical depreciation. The highest and best use of land guarantees the perfect improvement, no depreciation, cost equals value.

Question 71 AN APPRAISER HAS ACCEPTED AN ASSIGNMENT TO APPRAISE REAL PROPERTY. WHICH OF THE FOLLOWING WOULD NOT BE INCLUDED IN HIS ESTIMATE OF VALUE? 1. DOG KENNEL. 2. TELEVISION ANTENNA. 3. WALL-SIZE BOOKCASE. 4. ATTACHED GARAGE.

Correct Answer: C All of the choices represent real property except for the bookcase. The size is not relevant. The bookcase becomes real property if it is built-in or custom to that property.

Question 27 THE OPTIMUM LAND-BUILDING RATIO FOR THE PARCEL UNDER APPRAISAL ILLUSTRATES THE PRINCIPLE OF: 1. SUBSTITUTION. 2. OPPORTUNITY COST. 3. BALANCE. 4. CONTRIBUTION.

Correct Answer: C Balance suggests that niether an overimprovemt nor an underimprovement exists, that the improvement is ideal ie...highest and best use.

Question 32 OF THE FOLLOWING, WHICH ROOF STYLE WOULD BE EXPECTED TO BEST WITHSTAND THE IMPACT OF HURRICANE-FORCE WINDS? 1. GAMBREL. 2. GABLE. 3. HIP. 4. SALT BOX.

Correct Answer: C Because a hip roof has slopes on each of the four sides, the wind will tend to press the roof down on the structure.

Question 11 The subject has 300 acres of improved pasture, 200 acres of natural pasture, and 500 acres of wooded land. The only comparable in the market is very similar and sold for $1,050 per acre. The comparable has 200 acres of improved pasture, 400 acres of natural pasture, and 400 acres of wooded land. If natural pasture sells for 80 percent of improved pasture, and wooded land sells for 30 percent of improved pasture, what is the value of the subject? 1. $1,550/acre 2. $1,137/acre 3. $1,102/acre 4. $1,002/acre

Correct Answer: C Comparable Improved - 200 x 1.00 = 200 Natural - 400 x .80 = 320 Wooded - 400 x .30 = 120 640 x 1,050 = 672,000 Subject Improved - 300 x 1.00 = 300 Natural - 200 x .80 = 160 Wooded - 500 x .30 = 150 300 + 160 + 150 = 610 672,000 = 610 x ($x/acre) 672,000/610 = 1101.639

Question 26 A DESIGNATION OF THE U.S. CENSUS BUREAU FOR METROPOLITAN AREAS WITH A CENTRAL CITY HAVING AT LEAST 50,000 PEOPLE AND INCLUDING ALL COUNTIES THAT ARE ECONOMICALLY LINKED TO THE CENTRAL CITY IS A: 1. TOWNSHIP. 2. REGIONAL DISTRICT. 3. METROPOLITAN STATISTICAL AREA. 4. STANDARD METROPOLITAN AREA.

Correct Answer: C Description of an MSA.

Question 59 FOOTINGS AND SLABS ARE PARTS OF A BUILDING'S: 1. INFRASTRUCTURE. 2. INTERSTRUCTURE. 3. SUBSTRUCTURE. 4. SUPERSTRUCTURE.

Correct Answer: C Foundation components are substructure elements of construction. The portion of the structure above grade is the superstructure.

Question 90 WHICH OF THE FOLLOWING IS INCLUDED IN GROSS LIVING AREA? 1. FINISHED BASEMENT. 2. PATIO. 3. WALK IN CLOSET. 4. ATTIC.

Correct Answer: C Gross living area consists of that which is above-grade finished and habitable as residential space.

Question 88 WHAT TYPE OF SOIL HAS A MIXTURE OF SAND, SILT, AND CLAY IN SUCH PROPORTIONS THAT THE CHARACTERISTICS OF NO ONE PREDOMINATE? 1. GUMBO. 2. MUCK. 3. LOAM. 4. PEAT.

Correct Answer: C Gumbo is primarily clay. Muck is organic and wet. Peat is organic and dry.

Question 77 WHAT TYPE OF OWNERSHIP IS CHARACTERIZED BY BOTH VERTICAL AND HORIZONTAL TRAITS? 1. COOPERATIVE. 2. PUD. 3. CONDOMINIUM. 4. SEVERALTY.

Correct Answer: C Individual ownership of units in a multi-story building would have both horizontal and vertical traits ie.... 3rd floor unit. Cooperative ownership involves ownership of the entire structure by a corporate entity and therefore, no concern regarding vertical characteristics. Severalty is ownership by one entity and is not applicable as an answer to this Question.

Question 43 A NEW BUILDING REPRESENTING THE HIGHEST AND BEST USE OF THE SITE CAN BE CONSTRUCTED AT A TOTAL COST, INCLUDING ENTREPRENEURIAL INCENTIVE, OF $12,000,000. THE BUILDING CAPITALIZATION RATE IS 11% AND THE LAND CAPITALIZATION RATE IS 7%. THE PROPERTY WILL GENERATE A NET OPERATING INCOME OF $1,500,000. WHAT IS THE INDICATED VALUE OF THE SITE, ROUNDED TO THE NEAREST $1,000?: 1. $6,667,000 2. $4,750,000 3. $2,571,000 4. $1,636,000

Correct Answer: C Land Residual 12,000,000 x .11 = 1,320,000 1,500,000 - 1,320,000 = 180,000 180,000/.07 = 2,571,428

Question 13 THE LOAN TO VALUE RATIO IS 75%. THE MORTGAGE INTEREST RATE IS 6.25 WITH PAYMENTS MADE MONTHLY OVER A 20 YEAR TERM. THE LOAN IS FULLY AMORTIZING. IF THE OVERALL CAPITALIZATION RATE IS 9.5, WHAT IS THE EQUITY DIVIDEND RATE? 1. .6578 2. .8771 3. .1168 4. .2921

Correct Answer: C Mortgage-equity band of investment 20gn 6.25gi 1PV PMT = .007309282 .007309282 x 12 = .087711384 .087711384 x .75 = .0657835 .095 - .0657835 = .02921646 .02921646/.25 = .11686584

Question 65 WHICH OF THE FOLLOWING IS NOT A COMMON COMPONENT OF ROOF FRAMING? 1. PURLIN. 2. RAFTERS. 3. MUNTIN. 4. COLLAR-TIE.

Correct Answer: C Muntins are the horizontal framing members of window construction.

Question 95 WHICH OF THE FOLLOWING IS NOT A COMMON TYPE OF WOODEN FRAME CONSTRUCTION? 1. PLATFORM. 2. BALLOON. 3. BARREL AND JOINT. 4. POST AND BEAM.

Correct Answer: C Platform construction using studs is the most common wood frame construction. Barrel and joint does not exist as a construction technique.

Question 93 TAKING CORRECTIVE MEASURES TO BRING A PROPERTY INTO CONFORMITY WITH CHANGES TO MEET CURRENT DEMAND IS: 1. REMODELING. 2. REHABILITATION. 3. MODERNIZATION. 4. RENOVATION.

Correct Answer: C Renovation is all encompassing and is therefore essentially an "all of the above" type answer choice. Remodeling is a change in design. Rehabilitation takes an old structure and makes it look new again. Modernization brings an old home into the current market.

Question 85 WHICH OF THE FOLLOWING LAND TO BUILDING RATIOS REPRESENTS A BUILDING COVERING THIRTY PERCENT OF THE LOT? 1. 3:10 2. 7:10 3. 7:3 4. 10:3

Correct Answer: C Seven parts land: three parts building. The total must be 10 or 100% of the property. This Question does not state the building to the total property.

Question 12 THE EXPECTATION OF BENEFITS TO BE DERIVED IN THE FUTURE IS THE CONCEPT OF: 1. CHANGE. 2. SUPPLY AND DEMAND. 3. ANTICIPATION. 4. COMPETITION.

Correct Answer: C The question is a concise definition of the appraisal principle of anticipation.

Question 37 AN INCREMENT OF VALUE OBTAINED WHEN TWO OR MORE SITES ARE COMBINED UNDER A SINGLE OWNERSHIP IS: 1. ASSEMBLAGE. 2. AGGLOMERATION. 3. PLOTTAGE. 4. GENTRIFICATION.

Correct Answer: C The value earned by the combination is plottage (value). The combination itself is assemblage.

Question 80 LAND THAT IS IMPROVED SO THAT IT IS READY TO BE USED FOR A SPECIFIC PURPOSE IS: 1. DEVELOPED LAND. 2. RAW LAND. 3. A SITE. 4. IMPROVED LAND.

Correct Answer: C This is the definition of a site. Land has not been modified by people.

Question 39 • Your client desires a minimum 12% annual return on his equity investment. You have identified an investment that will yield the following characteristics. The property would be purchased with 80% financing, annual debt service is $82,000, and the loan balance at the end of the investment period would be $768,000. What is your recommendation to this client? Purchase price $1,000,000 NOI year 1 $112,000 NOI year 2 $105,000 NOI year 3 $110,000 NOI year 4 $118,000 NOI year 5 (includes reversion) $1,050,000 a. This investment will not meet his investment criteria. b. Additional equity contribution (down payment) must be made to make this investment acceptable. c. A reduced equity contribution (down payment) must be made to make this investment acceptable. d. This investment is acceptable as structured.

Correct Answer: D 1,000,000 x .80 = 800,000 1,000,000 - 800,000 = 200,000 equity (down payment) 112,000 - 82,000 = 30,000 equity 105,000 - 82000 = 23,000 equity 110,000 - 82,000 = 28,000 equity 118,000 - 82,000 = 36,000 equity 1,050,000 - 768,000 - 82,000 = 200,000 equity 200,000 chs g CFo 30,000 g CFj 23,000 g CFj 28,000 g CFj 36,000 g CFj 200,000 g CFj f IRR = 12.203

Question 9 The CPI was 100 in 1994 and 121.6 in 2002. What is the semi annual change in market conditions? a. 7.25% b. 5.25% c. 2.7% d. 1.35%

Correct Answer: D 121.6-100=21.6 21.6/100=.216 .216/8=.027 .027/2=.0135

Question 30 A 54,000 square foot private school building sold for 6.48 million. Upon confirming the sale, it is discovered that the seller provided a 5.25% interest only purchase money mortgage in the amount of 4.96 million payable monthly with a balloon payment due in 5 years. The market loan terms at the time were 75% loan to value ratio with a 7% fixed rate, fully amortizing 30 year term, paid monthly, with a 5 year balloon. Based on this information, what is the adjustment for cash equivalency per square foot? A. -8.84 B. -8.62 C. -6.62 D. -6.06

Correct Answer: D 4,960,000 x .0525 = 260,400 260,400/12 = 21,700 5 gn 7 gi 21,700 PMT PV = 1,095,893 5 n 7 i 4,960,000 FV PV = 3,536,411 1,095,893 + 3,536,411 + 1,520,000 = 6,152,304 6,480,000 - 6,152,304 = 327,696 327,696/54,000 = 6.06

Question 41 A farm was owned by three brothers. A recent appraisal was done valuing the farm at $600,000. One brother wants the other two to buy him out so that he can gift the proceeds to his two children. A recent court case resolved the value of a partition at 94% two additional court cases were resolved at 97%, and a newly settled claim was resolved at 101%. How much should be gifted to each child? a. $94,000 b. $97,000 c. $97,333 d. $100,000

Correct Answer: D 600,000/3=200,000 200,000/2=100,000

Question 83 WHICH OF THE FOLLOWING IS/ARE CHARACTERISTIC OF A PUD? 1. LOTS ARE SMALLER THAN USUAL. 2. UNITS OWNED BY INDIVIDUALS. 3. JOINT OWNERSHIP OF COMMON AREAS. 4. ALL OF THE ABOVE.

Correct Answer: D All are characteristic of planned unit developments.

Question 10 Compensation in a condemnation proceeding is determined by the: a. Condemning authority b. Property owner c. Certified appraiser d. Applicable court

Correct Answer: D Condemnation is a judicial proceeding that will use information from the three other answer choices in selecting an award.

Question 8 Which of the following can not impact value as an environmental influence? a. View b. Location c. Climate d. Crime

Correct Answer: D Criminal activity is a social value influence.

Question 40 A HOUSE IN A COMMERCIAL ZONE HAS A TOTAL PROPERTY VALUE OF $300,000 AND A COMMERCIAL SITE VALUE OF $350,000. WHICH OF THE FOLLOWING HOUSE DEMOLITION COST ESTIMATES OBTAINED BY THE HOMEOWNER WILL RESULT IN A HIGHEST AND BEST USE CONCLUSION AS A VACANT COMMERCIAL SITE? 1. $65,000 2. $60,000 3. $55,000 4. $45,000

Correct Answer: D DEDUCTION OF $45,000 AS A DEMOLITION COST LEAVES THE GREATEST RESIDUAL VALUE TO THE SITE.

Question 33 THE RIGHT TO USE PROPERTY OWNED BY ANOTHER IS PROVIDED BY: 1. ENCROACHMENT. 2. LIEN. 3. DEED RESTRICTION. 4. EASEMENT.

Correct Answer: D Encroachment is an unauthorized physical intrusion into the boundaries of property owned by another. A lien is a claim on property for the security of a debt.

Question 22 AN APPRAISAL FOR THE PRICE THAT A PROPERTY WOULD SELL FOR BASED ON A QUICK SALE WOULD BE FOR WHAT TYPE OF VALUE? 1. VALUE-IN-USE. 2. VALUE-IN-EXCHANGE. 3. GOING CONCERN VALUE. 4. LIQUIDATION VALUE.

Correct Answer: D Less than reasonable marketing time results in a liquidation type sale.

Question 64 THE OUTSIDE OR PERIMETER MEMBERS OF A WINDOW IS THE: 1. SASH. 2. MUNTIN. 3. MULLION. 4. STILE.

Correct Answer: D Outer framework of window construction.

Question 21 WHEN SUPPLY EXCEEDS DEMAND AT THE CURRENT PRICE, THE MOST LIKELY RESULT IS: 1. PRICE INCREASE. 2. EQUILIBRIUM. 3. INFLATION. 4. PRICE DECLINE.

Correct Answer: D Sellers will need to reduce their asking prices to insure their unit will be one that sells.

Question 1 THE SALE PRICE CONSTANT IS $250,000. THE VARIABLE IS $35 PER SQUARE FOOT. THE SUBJECT IMPROVEMENT IS 3,545 SQUARE FEET. NOI IS $25,000, WHAT IS THE VALUE OF THE SUBJECT? a. $124,075 b. $250,000 c. $274,075 d. $374,075

Correct Answer: D Simple Linear Regression y = a + bx 374,075 = 250,000 + (35 x 3,545)

Question 94 THE SOURCE OF UTILITIES FOR A HOME IS FOUND IN THE: 1. SUBSTRUCTURE. 2. SUPERSTRUCTURE. 3. INTRASTRUCTURE. 4. INFRASTRUCTURE.

Correct Answer: D Substructure is below-grade (foundation components) construction. Superstructure is above-grade. Infrastructure is described by this Question. Intrastructure is a fabricated word.

Question 29 WHICH OF THE FOLLOWING WOULD BE AN EXAMPLE OF THE APPRAISAL'S PURPOSE? 1. ESTABLISHING A LISTING PRICE. 2. DETERMINING A RANGE OF BID PRICES. 3. ASSESSING THE PROPERTY FOR TAXES. 4. ESTIMATING INVESTMENT VALUE.

Correct Answer: D The appraisal's purpose is to measure a type of value. The alternative choices are all uses for the appraisal.

Question 66 MORTGAGE MARKET ACTIVITY IS IMPORTANT TO THE APPRAISER BECAUSE: 1. RATES DETERMINE WHETHER PURCHASERS WILL BUY. 2. MOST APPRAISERS ARE ALSO BROKERS. 3. RATES DETERMINE MARKET VALUE. 4. THE MORTGAGE MARKET IMPACTS MARKET VALUES.

Correct Answer: D The mortgage market has an influence on how much will be paid and ultimately, market values.

Question 20 WHAT IS THE MAXIMUM NUMBER OF YEARS THAT A STATE LICENSED OR CERTIFIED APPRAISER MAY HAVE TO MAINTAIN COPIES OF APPRAISAL REPORTS AND SUPPORTING DOCUMENTS? 1. 7 2. 5 3. 2 4. NO MAXIMUM HAS BEEN ESTABLISHED.

Correct Answer: D Two years will be added to the retention of records requirement upon the close of litigation regardless of when that occurs.

Question 60 A farm was leased three years ago for a 10 year term of $150 per acre with payments at the end of each year. Current market rates for similar farms is $175 per acre. At the end of the lease term, the property is expected to have a market value of 2,300 per acre. The capitalization rate in the market is 8% and the discount rate is 12%. What is the value of the fee simple estate? a. 1,838 b. 1,875 c. 2,028 d. 2,388

Correct Answer: a 7 n 12 i 175 PMT PV = 798.6573 7 n 12 i 2,300 FV PV = 1,040 1,040 + 798 = 1,838

Question 57 A 10,000 square foot building has a current reproduction cost of $110 per square foot and a current replacement cost of $105 per square foot. The building was orignally built three years ago at a cost of $1,000,000 including incurable superadequate components of $50,000. Incurable physical deterioration is estimated at 2% annually (straight-line). What is the total incurable physical deterioration and functional obsolescence deduction to replacement cost new? a. $60,000 b. $63,000 c. $113,000 d. $117,000

Correct Answer: b 10,000 x 105 = 1,050,000 1,050,000 x .02 = 21,000 21,000 x 3 = 63,000 (Functional superadequacies are not included as part of replacement cost.)