Exam Crammer

42. A parcel in a lakefront community with no lake view sells for $100,000, while a parcel in the same community with a lake view sells for 25% more. If you appraised a square lot in this community that measures 10,000 square feet and has a view of the lake, what would be the price of the lot on a front foot basis? A. $125 B. $1,250 C. $1,200 D. $1,500

B. $1,250 A square lot with 10,000 sf is 100' x 100', (square foot to find one side of this square). Therefore, the subject has 100 front feet. The non-lake-view lot sold for $100,000, but a lot with a lake view sold for $100,000 x 1.25 = $125,000. $125,000 / 100 Front Feet (FF) = $1,250/ff.

84. A three-story apartment building with 12 apartments has no elevator. Due to the age and design of the property, installing an elevator would be physically prohibitive; thus the condition is incurable. Estimates reveal that if an elevator was added along with the construction of the building, the cost if installed new would be $27,000. Market data supports that the four second-floor units rent for $50 per month less than comparable second-floor units that are accessed by an elevator. As well, the four third-floor units rent for $75 per month less than comparable third-floor units that are accessed by an elevator. The appraiser determined that a GRM for the property is 110. What is the indicated incurable depreciation for functional obsolescence? A. $33,000 B. $28,000 C. $40,565 D. $16,588

B. $28,000 Each of the four second-floor units rent for $50 less per month (4 x $50 = $200), and each of the four third-floor units rent for $75 less per month (4 x $75 = $300). Therefore, the total loss per month due to the deficiency is $500 ($200 + $300): $500 x 110 (GRM) = $55,000 - $27,000 cost if installed when new = $28,000 depreciation.

85. The subject property is a five-year-old house that contains 5,200 sq. ft. of livable area, located on 1.8 acres, with a two-car garage with 650 sq. ft., and a granite swimming pool that measures 85 perimeter feet. The costs are estimated to be as follows: House, $85 per sq. ft.; garage, $25 per sq. ft.; indicated land value is $0.35 per sq. ft.; and the swimming pool is estimated to cost $275 per perimeter foot. The cost multiplier for the area is 0.9678.The chronological age is 5 years, and the effective age is 2 years. The remaining economic life is 63 years. If the total cost of improvements is $466,117, what is the indicated value via the cost approach? A. $452,133 B. $479,576 C. $13,984 D. $27,443

B. $479,576 The effective age is 2 years and the remaining economic life is 63 years for a total life of 65 years. Thus, total cost new of the improvements equals: $466,117 - $13,984 (2 / 65 = 3%) = $452,133. You can also do 466,117 * 0.97 = 452,133.49 $452,133 + $27,443 (land value) = $479,576.

96. 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

B. $875,900 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 = 875,87

50. A comparable property sold a week ago for $165,000. The property had previously sold for $175,000 six months ago. What is the annual change in market conditions indicated by this sale and re-sale? A. - 5.71% B. - 11.43% C. 5.71% D. 11.43%

B. - 11.43% $175,000 - $165,000 = $10,000 downward. -$10,000/$175,000 (the earlier total price) =-.0571% for 6 months, x 2 for -11.43% for a year.

20. 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? A. 1286 B. 1280 C. 1247 D. 1320

B. 1280 To calculate the indicated square footage of the building, we need to convert the measurements given in feet and inches to decimal form, then multiply the lengths of the walls. 43'9" 9 inches = 9 / 12 feet = 0.75 feet Total length = 43 + 0.75 = 43.75 feet 29'3": 3 inches = 3 / 12 feet = 0.25 feet Total length = 29 + 0.25 = 29.25 feet Square Footage = 43.75 * 29.25 43.75 X 29.25 = 1279.6875

72. The replacement cost of a dwelling is $415,500. The GLA is 3,200 sf. What is the cost per square foot? A. 125.88 B. 129.84 C. 132.00 D. 135.67

B. 129.84 $415,500 / 3,200 sf = $129.84

88. An investor requires a 10% rate of return to invest in a building. The building is expected to have a remaining economic life of 25 years. What is the appropriate building capitalization rate, using the straight-line method? A. 11% B. 14% C. 11.4% D. 13%

B. 14% Capitalization Rate = Required Rate of Return + Depreciation Rate Depreciation rate = 1 / 25 = 0.04. Rate of return is given, 10% 0.10 + 0.04 = 0.14 10% + 4% = 14% For every year that passes, the building wears out 1/25 years, or 0.04. The investor must earn the minimum 10% rate plus recapture the .04, therefore .10 + .04 = .14 or 14%.

23. A one-story, four-unit apartment building has exterior dimensions of 82' x 46'. The building has a common hallway down the center that is 12' x 46', a common mechanical area that is 200 square feet, and a 10' x 10' room for a coin-operated laundry facility. What is the gross building area? A. 3470 B. 3772 C. 2920 D. 3672

B. 3772 The gross building area is determined by the exterior dimensions: 82' x 46' = 3,772 square feet.

45. A parcel is 500' x 1,000' and is functioning as a farm. A developer obtains an option on the farm for 3 years. The developer hires an appraiser to perform a highest and best use analysis of the farm. Two years after obtaining the option, the developer exercises the option and purchases the farm. The developer applies for and obtains a 5-year straight mortgage (interest-only) for $20,000,000. The monthly payments are $133,000 interest only. A balloon is due in 60 months. The projected lots will be 5,000 square feet each. The street will consume 32,000 SF. There will be common elements (park, softball field ,greenbelt) that will take up 100,000 SF. What is the maximum number of lots this project could yield for the developer? A. 70 B. 73 C. 74 D. 82

B. 73 500' x 1000' = 500,000 sf. Subtract unusable space, so 500,000 sf - 32,000 sf - 100,000sf = 368,000 sf. If each lot is 5,000 sf, 368,000 sf/5,000 sf (per lot) = 73.6 lots. However the 0.6 lot is not a developable parcel. Round down to 73 lots.

82. An appraiser must determine the cost of carpet in a residential dwelling. The areas needing carpet measure 12' x 14', 15.5' x 17.25', and 12.3' x 17.5'. How many square yards of carpet are needed if the carpet must be purchased in full square yards? A. 651 B. 73 C. 30 D. 86

B. 73 First, determine the square footage of the three areas needing carpet: 12 x 14 = 168 sq.ft., 15.5 x 17.25 = 267.375 sq. ft., and 12.3 x 17.5 = 215.25 sq. ft. Next, add the three areas together: 168 + 267.375 + 215.25 = 650.625 sq. ft. To convert square yards to square feet, divide by 9: 650.625 / 9 = 72.291666, or 73 full square yards.

8. The process of enforcing the right of government to take private property for public use it A. Eminent Domain B. Condemnation C. Police Power D. Escheat

B. Condemnation 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.

26. A house was tenant occupied. As a result of a landlord-tenant dispute, the tenant removed all the plumbing fixtures from the bathroom of the house when they moved out. Due to the absence of plumbing fixtures, the property suffers from A. Economic depreciation B. Functional obsolescence C. Physical obsolescence D. Environmental obsolescence

B. Functional obsolescence The lack of fixtures (and thus the lack of functionality) leads to a functional obsolescence.

1. Which of the following value types is based on the replacement cost of physical items that are subject to loss? A. Assessed value B. Insurable value C. Liquidation value D. Value-in-use

B. Insurable value

29. Which technique for determining land value requires an appraiser to deduct the net income applicable to the building from the total net income, and then capitalize the remainder and attribute the result to the land? A. Allocation B. Land residual C. Abstraction D. Subdivision development

B. Land residual

34. When using the sales comparison approach, what is the proper sequence for making percentage adjustments? A. Physical characteristics, location, property rights, financing, conditions of sale, market conditions. B. Property rights, financing terms, conditions of sale, market conditions, location, and physical characteristics. C. Property rights, conditions of sale, market conditions, financing, location, and physical characteristics. D. Financing, conditions of sale, market conditions, property rights, location, and physical characteristics.

B. Property rights, financing terms, conditions of sale, market conditions, location, and physical characteristics. In order of importance, transactional, financial, and physical adjustments.

28. Riparian rights are those rights of a landowner whose property borders: A. Commercial Zoning B. Rivers, streams and waterways C. Governmental lands D. A zero lot line structure

B. Rivers, streams and waterways

2. Which of the following is the definition of a 'leased fee estate'? A. The reversionary interest retained by the tenant B. The rights enjoyed by the owner of a leased property C. The interest held by the owner of a vacant property D. The rights of the tenant under a percentage lease

B. The rights enjoyed by the owner of a leased property

74. Which of the following is an example of an indirect cost? A. materials and labor B. appraisal fee C. building permits D. contractor's profit

B. appraisal fee The appraisal fee is a soft (indirect) cost.

See PDF for chart. 55. Appraiser Harvey is appraising the fee simple interest of a house in a suburban neighborhood. He is unsure about the adjustment to use for a fireplace in the subject neighborhood but doesn't have the data necessary to perform a paired set analysis. He has acquired the following data: What is the indicated value of a fireplace in the subject neighborhood? A. $0 B. $3,000 C. $5,000 D. $7,000

A. $0 If a garage is worth $5,000, add $5,000 to Comp B. A patio has no contributory value. Therefore, $295,000 + $5,000 = $300,000; the same as Comp A. Therefore, based on these paired sales, a fireplace has no contributory value in this neighborhood.

91. A property's net operating income is $80,000 and its capitalization rate is 8%. Total expenses are $58,500 and the monthly debt service is $4,100. What is the property value? A. $1,000,000 B. $100,000 C. $640,000 D. $800,000

A. $1,000,000 80,000/.08 = $1,000,000. Debt service is irrelevant in this problem.

103. What are the operating expenses for this income-producing property? Annual income: $43,575; Variable expenses: 7%; Capitalization rate: 10.5%; Vacancy rate: 4.5%; Fixed expense: 11% of PGI; Replacement reserves: $250 per month. A. $10,706.24 B. $4,379.25 C. $41,614.12 D. $1,070.62

A. $10,706.24 First, determine the vacancy rate: $43,575 x 4.5% = $1,960.88; $43,575 - $1,960.88 =$41,614.12 (EGI). Next, determine the fixed and variable expenses and replacement reserves: 11% x $43,575 = $4,793.25 fixed expenses; 7% x $41,614.12 = $2,912.99 variable expenses; $250 x 12 = $3,000 replacement reserves. Now, add the three amounts together to determine the operating expenses: $4,793.25 + $2,912.99 + $3,000 = $10,706.24

49. You are appraising a property in order to establish its listing price and have found an identical comparable to use in your appraisal. The comparable sold six months ago for $134,000. You must make an adjustment for the difference in time between the two properties. You find a paired sale of two other houses, one of which sold one year ago for $100,000 and the other sold yesterday for $110,000. What is the adjusted value for the comparable? A. $140,700 B. $127,300 C. $147,400 D. $140,000

A. $140,700 $110,000 - $100,000 = $10,000. $10,000/$100,000 = 0.10 (10%) annual increase Now find monthly increase 10 / 12 = 0.8333 Apply this monthly increase to the comparable. 0.8333 * 6 = 5%. 134,000 * 1.05 = 147,700 (rounded).

See PDF for chart. 61. Sally Appraiser is appraising the fee simple estate of a brick ranch in an urban neighborhood. The intended use is asset valuation for mortgage lending. Through her research she extracts the following adjustment factors: Fireplace: $2,000 Central Air Conditioning: $3,000 Basement: $10,000 Fourth bedroom: $15,000 What is the indicated value range of the subject property? A. $145,000 - 160,000 B. $150,000 - 160,000 C. $135,000 - 155,000 D. $145,000 - 150,000

A. $145,000 - 160,000 Always adjust the sale, never the subject. If the comp is inferior to the subject, add. If superior, subtract. The underlying principles are: contribution (when ascertaining adjustments); and substitution (when making the adjustments). Sale A requires a negative adjustment for FP and a positive adjustment for CAC. B requires a positive adjustment for crawl. And C requires a positive adjustment for crawl and a negative adjustment for a fourth bedroom. The net adjustments: A (+1,000); B (+10,000); C (-5,000). The indicated(adjusted) values: A: $151,000; B: $160,000; C: $145,000.

See PDF for chart. 65. Using the chart above, derive the range of indicated values for Sales A, B, and C. Assume that seller-paid points have full contributory value in the subject market. Round indicated values to the nearest thousand. A. $195,000 - $206,000 B. $198,000 - $203,000 C. $203,000 - $207,000 D. $203,000 - $210,000

A. $195,000 - $206,000 For each sale, the sales price must be multiplied by the respective LTV. Therefore, A: $160,000; B: $199,500; and C: $177,500. Then each mortgage amount must be multiplied by the points. Thus: A: $160,000 x .02 = $3,200. B: $199,500 x .02 = $3,990. And C: $177,500 x 0 = 0. Assuming the points have full contributory value in the subject market, Seller concessions are always negative. Therefore, Sales A and B require negative adjustments. Sale C does not require an adjustment. The range is $195,000 - $206,010 (rounded to $206,000).

105. Tom is analyzing the equity portion of an investment property. He has already estimated the NOI at $335,000. The mortgage encumbering the property is described as follows: $450,000 initial balance, 6% fixed annual interest for 30 years. The loan factor is 0.00599551. What is the monthly payment? What is the annual debt service? What is the loan constant? A. $2,697.98; $32,375.76; 7.19% B. $2,501.25; $30,015; 6.67% C. $3,015.55; $36,186.60; 7.34% D. $3,544.43; $42,533.16; 8.01%

A. $2,697.98; $32,375.76; 7.19% HP12C keystrokes: 450000 chs PV; 30gn; 6gi; CPT PMT= $2,697.98. Debt service = 2697.98 x 12 = $32,375.76 Loan (mortgage) constant: $32,375.76 enter, 450000 divide = .07194606 or 7.19% rounded. PGI is: 2* 1000/mo + 2 * 850/mo = 3700/mo x 12 = 44,400/year. 4% (44,400) = 42,624 EGI. Expenses: taxes, insurance, utilities, management (@5% PGI) = 15,070. NOI = 42,624 -15,070 = 27,554/.085 = 324,000 (r). After repairs the NOI increases $1,000 and the caprate lowers to 8%, or 28,554/.08 = 357,000 (r). . The difference between values is less that $20,000 and is therefore feasible.

51. Suppose a comparable property is 12% inferior to the subject property and sold 2 weeks ago for $260,000. What is the adjusted price of this comparable? A. $291,200 B. $228,800 C. $260,000 D. $325,000

A. $291,200 $260,000 x 1.12 = $291,200.

See PDF for full question. 94. You are appraising a duplex and have found three good comparables in the subject's immediate area. A duplex on Brook Lane sold for $295,000, a duplex on Zoll Street sold for $225,000, and a 4-plex on Hobbin Ave sold for $345,000. A. $306,300 B. $314,600 C. $256,800 D. $264,300

A. $306,300 Brook Ln rents = 2,000/mo x 12 = $24,000/year. $295,000/$24,000 = GIM of 12.29. Zell St rents = $1,875/mo x 12 = $18,900/year. $225,000/$18,900 = GIM of 11.90 Hobbin Ave rents = $2,400/mo x 12 = $28,800/year. $345,000/$28,800 = GIM of 11.98 The mean of the three GIMs is 12.29 + 11.90 + 11.98 or 36.17/3 = 12.05, round to 12 The value of the subject's fee simple estate is the market rent of $25,525 x 12 = $306,300

See PDF for full question 90. Fred is appraising a 4-unit apartment building with a full basement and flat, rubber membrane roof. Two of the apartments are rented for $1,000/month each; two are rented for $850/month each. The leases are month-to-month. The vacancy rate is 2% per annum. The collection loss is 2% per annum. The annual expenses are: ad valorem taxes:$2,500; hazard insurance premium: $800; utilities: $8,500; maintenance: $1,050; debt service: $10,750; management: 5% of PGI. The cap rate is 8.5%. A. $324,000; $357,000; yes B. $236,000; $271,000; yes C. $324,000; $357,000; no D. $236,000; $271,000; no

A. $324,000; $357,000; yes PGI is: 2 @ 1000/mo. + 2 @ 850/mo. = 3700/mo. x 12 = 44,400/year - 4% (44,400) = 42,624 EGI. Expenses: taxes, insurance, utilities, management (@5% PGI) = 15,070. NOI = 42,624 -15,070 = 27,554/.085 = 324,000 (r). After repairs the NOI increases $1,000 and the caprate lowers to 8%, or 28,554/.08 = 357,000 (r). The difference between values is less that$20,000 and is therefore feasible.

100. 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

A. $89,000 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

5. The owners of a vacant lot owe property taxes of $2.10/$100 of assessed value. What is the tax rate in mills? A. 0.021 mills B. 20.1 mills C. 0.21 mills D. 210 mills

A. 0.021 mills 2.10/100 = .021, or 21 thousandths, which is 21/1000 or 21 mills.

68. Appraiser Arnold is researching trends in his market. He notes that property values have been declining over the last 6 months because a major employer filed bankruptcy. The mean sales price 6 months ago was $150,000 for a 1,200-square-foot ranch. Currently the mean sales price is $140,000. What is the monthly percentage decline in value in Arnold's market? A. 1.1% B. 1.2% C. 1.3% D. 1.4%

A. 1.1% The impact of a declining market is measured by where you were, versus where you arenow. The average dollar loss is $10,000. Therefore $10,000/$150,000 = 6.67%/6 months= 1.1% loss per month.

47. A $400,000 sale had the following adjustments: fireplace (-$5,000); 4th bedroom(+$25,000); 2nd bathroom (-$10,000). The gross adjustment percentage is A. 10% B. 8% C. 6.67% D. 2.5%

A. 10 This is because if you add up all the adjustments regardless of sign it would equal 40,000 which is 10% of the 400,000 sales price. They asked for GROSS adjustment.

83. For the purpose of estimating depreciation via the extraction method, you have utilized Comparable Sale #1, which is a 2,400 sq. ft. home with a two-car, 440 sq. ft. attached garage, having a replacement cost of $85/sq. ft. for gross living area and $18/sq. ft. for the garage area. This property sold for $240,000 and has a chronological age of 10 years. Through your research, the indicated land value is $50,000 and the site improvement shave a replacement cost of $25,000. What is the percentage total amount of accrued depreciation indicated by this sale? A. 22.14% B. 26.13% C. 18.33% D. 14.28%

A. 22.14% Cost new = (2,400 sq. ft. x $85) + (440 sq. ft. x $18) = $211,920. Depreciation Cost = $240,000- $50,000 - $25,000 = $165,000. Total Depreciation = $46,920 ($211,920 - $165,000). Depreciation / Cost new = Percentage of Depreciation (46,920 / 211,920 = 0.2214 or 22.14%).

106. You are reconstructing an apartment complex's income statement. You estimate that gross income is $500,000, vacancy and bad debt allowance are 6%, and operating expenses are $205,000. What is the operating expense ratio? (Round to the nearest whole number) A. 44% B. 43% C. 47% D. 54%

A. 44% OER = OE/EGI, or $500,000 x .94 (1.00 - .06) = $470,000 EGI. 205,000/470,000 = .44, or44%. The OER is OE/EGI. 500,000 x .94 = 470,000 EGI/ 205,000/470,000 = .44 (rounded)..

32. Calculate the allocation ratio for improvements using the following information: Improvement value: $230,000; Total market value of property: $315,000. A. 73% B. 137% C. 27% D. 64%

A. 73% $230,000 (Improvement Value) / $315,000 (Total Market Value) = 73%.

108. Why does the appraiser have to reconcile the approaches to value results in an appraisal? A. Because several approaches to value usually produce somewhat different results B. Because reconciliation ensures the accuracy of the ending estimate C. Because the value numbers derived may not meet client expectations D. Because there may be errors in any of the methods used

A. Because several approaches to value usually produce somewhat different results

4. Which phase of the economic cycle does a buyer's market occur? A. Decline B. Incline C. Flat D. Optimal

A. Decline When there are few buyers and surplus inventory, a buyer's market occurs. Such a market occurs during a period of decline.

19. Which of the following roof types slopes on four sides? A. Hip B. Gambrel C. Gable D. Shed

A. Hip Although Grambrel roofs has four slopes in total, they are not arranged on all four sides of the building. Instead, a gambrel roof typically has two sides with two slopes each. In contrast, a hip roof slopes downwards to the eaves on all four sides of the building, making it distinctively different from a gambrel roof.

21. Buildings that cost more to build than the site's highest and best use are: A. Over improvements B. Single-family homes. C. Nonconforming uses D. Under improvements

A. Overimprovements

27. When a building is constructed one story at a time, allowing for each successive level of the structure to rest upon the previously constructed level, what framing style is exemplified? A. Platform B. Balloon C. Post and Beam D. Cantilever

A. Platform Platform framing is when a building is constructed one story at a time, allowing for eachsuccessive level of the structure to rest upon the previously constructed level.

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 permissible to accept this assignment? A. Yes, as long as the residential certification is valid as of the date of the report. B. Yes, as long as the residential certification is valid as of the date the assignment is accepted. C. No, the appraiser would need to possess a valid appraisal credential on the effective appraisal date. D. No, the appraiser would have to possess a certification as a residential appraiser as of the appraisal's effective date.

A. Yes, as long as the residential certification is valid as of the date of the report.

54. Appraiser Patricia is performing a sales comparison approach. She has chosen sales that are inferior to her subject, as well as sales that are superior. She assumes the sales, once adjustments are made, will surround the value of the subject property. This process is known as A. bracketing B. encircling C. surrounding D. extrapolating

A. bracketing The process of using some sales that are inferior to the subject property (and therefore require a positive overall adjustment), and some that are superior (and therefore require a negative overall adjustment), is known as bracketing.

63. In the following list of possible adjustments, which one would be made first? Conditions of sale Location Physical features (condition, room count, etc.) Market conditions A. conditions of sale B. location C. physical features D. market conditions

A. conditions of sale

60. A residential subdivision is currently being developed. The developer and appraiser are concerned about rising interest rates and how they might affect factors that influence the sales and income approaches for individual units. The appraiser starts to analyze the absorption rate and absorption period with the scenario of rising interest rates. The appraiser indicates that if interest rates rise the absorption rate will ______________and the absorption period will ________________. A. decrease; lengthen B. increase; shorten C. decrease; shorten D. increase; lengthen

A. decrease; lengthen If interest rates rise and buyers react by withdrawing from the market, a buyer's market is created. A buyer's market is one which favors buyers. Such a market is evidenced by falling absorption rates and rising absorption periods in new developments. Additionally, housing inventories across the residential market (new and existing housing stock) might rise, and values might trend downward.

17. Appraiser John has received an assignment in a residential subdivision where one entity owns all the land. Homeowners rent the land their houses sit on, that is, the homeowners are tenants of the landowner. John is appraising one of the houses in this subdivision. John is appraising the A. leasehold estate B. freehold estate C. leased fee estate D. lessee estate

A. leasehold estate The homeowner is a lessee, and the landowner is a lessor in this non-freehold estate known as a leasehold. The tenant's interest is the leasehold, and the landowner's interest is the leased fee. In this scenario, where homeowners own the houses but rent the land from the landowner, Appraiser John is appraising the interest of the homeowner in the property. This type of interest is called a leasehold estate, which represents the tenant's interest in the property they lease.

14. Appraiser trainee Emilie is performing market research for her supervisory appraiser. The subject property is a mixed use property located in an urban area. Her instructions are to find sales that are both comparable and competitive with the subject property. A competitive property. A. competes head-to-head with the subject property B. may possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested the sale C. has the exact same features as the subject D. must have sold within the last six months

A: competes head-to-head with the subject property A competitive property competes head-to-head with the subject property. It probably has similar features, but need not be exactly the same as the subject property. The correct understanding of a competitive property in the context of market research for an appraisal is one that directly competes with the subject property in the market. This means it appeals to the same pool of potential buyers and offers similar utility and desirability.

57. Mary watches various fixer-upper shows on television. Convinced that "I can that, too! "she buys a single-family home for $92,000. The house requires substantial repairs to the foundation, roof, and frame. Mary spends $75,000 on the repairs, but is confident she will get back "...more than I spend." Mary has the house appraised for mortgage lending purposes and is shocked when the value is rendered: $125,000. Mary then protests the appraisal to the lender, and threatens to report the appraiser to the state licensing agency. The appraiser explains that the market value of the subject property is based on market sales which average around $145,000 in the subject market. Although Mary repaired quite a bit, there was still much left to be done. Which appraisal principle best illustrates what happened to Mary? A. increasing return on investment B. declining return on investment C. anticipation D. balance

B. declining return on investment Mary spent more in repairs, than the value increase she received. This illustrates adeclining return on investment. She should have been better prepared by performing amarket analysis before purchase.

52. Appraiser Tom notes that one of his comparable sales had a seller pay 2 discount points for the buyer. If the sale price was $130,000 one year ago, and the market has appreciated 5% per year, what is the adjusted sale price of the comparable property? The LTV reported for the sale was 80%. Assume that seller-paid points have full contributory value in the subject market. Round to the nearest hundred. A. $130,000 B. $136,500 C. $134,300 D. $134,400

C. $134,300 Transaction adjustments first: $130,000 x .80 (LTV) = $104,000 mortgage x 0.02 = $2,080. $130,000 - $2,080 = $127,920 x 1.05 (appreciation) = $134,300 (rounded). In the context of appraising comparable sales, the reason for subtracting the $2,080 (the value of the discount points paid by the seller) from the sale price is to adjust the sale price to reflect what the buyer effectively paid for the property. This adjustment is necessary because the seller-paid points are considered a financial concession that benefits the buyer, effectively reducing the net sale price.

43. The subject is 60,000 square feet. Comparable 1 sold one year ago for $2.92/square foot. Comparable 2 sold one year ago for $3/square foot. Comparable 3 is a current sale for $3.01/comparable 3 is a current sale for $3.01 per square foot. What would the most likely current value of the subject be? A. $175,200 B. $178,600 C. $180,600 D. $181,000

C. $180,600 The current sale is at $3.01/SF, this is likely the most reliable sale. 60,000 x $3.01 = $180,600.

See PDF for chart. 62. Appraiser Zeke is appraising a single-unit residence for estate planning purposes. The subject property is located in a federally designated flood zone that actively floods. In the flood zone there is buyer resistance to properties with a basement. Such properties typically sell for less than similar properties with crawl spaces. Zeke's research indicates that a third bedroom is worth $10,000. The market has been stable for the past 6 months. Basements are deleterious and have a negative impact of 10% of value/sales price. What is the indicated value of the subject property? A. $200,000 B. $210,000 C. $198,000 D. $180,000

C. $198,000 Since Sale A has a crawl space, it is superior to the subject property and requires a negative adjustment of .10 x $220,000 = $22,000, resulting in an indicated value of $198,000. Sale B has 2 bedrooms and requires a positive adjustment of $10,000, resulting in an indicated value of $198,000.

56. Appraiser Henrietta, who has been a residential appraiser for 30 years, is appraising a four-bedroom condominium unit. She is nearly finished with her appraisal, but has yet to ascertain what a fourth bedroom is worth in her subject market. Two sales, identical in many ways, are used in a paired set analysis: Sale A has 3 bedrooms and rents for $1,500/month. Sale B has 4 bedrooms and rents for $1,700/month. Analysis of other sales in the subject market indicate that investors expect a monthly multiplier of 120 when purchasing rental condos in the subject market. What is the indicated value of a fourth bedroom in the subject market? A. $200 B. $10,000term-121 C. $24,000 D. $28,800

C. $24,000 Sale A rents for $1,500/month with only 3 bedrooms, whereas Sale B rents for $1,700/month with 4 bedrooms. The extra bedroom generates an extra $200/month. $200/month x 120 = $24,000. The extra income translates into an extra $24,000 of value, whichcan be used as an adjustment factor in a sales comparison approach.

64. The subject property is a single-family residence with 3 bedrooms. The effective date is current (now). Comparable A is similar in all ways to the subject property except it has four bedrooms and sold one year ago. Comparable A sold for $320,000 in an arm's-length transaction. A fourth bedroom in the subject market is valued at $5,000. The market is appreciating 10% per annum. Given the data above, what is the indicated value of the subject property? A. $315,000 B. $346,500 C. $347,000 D. $352,000

C. $347,000 The date of sale/market conditions adjustment is a percentage. According to the sequence of adjustments, market conditions adjustments are made before adjustments for physical characteristics. $320,000 x 1.10 = $352,000 (the time adjusted normal sales price, or TANSP). A negative adjustment of $5,000 is then made for the 4th bedroom. Therefore, $352,000 - $5,000 = $347,000. If the sequence is reversed, the (erroneous) answer of$346,500 is achieved.

See PDF for chart. 66. Using the chart above, derive the range of indicated values for Sales A and B. Assume that seller-paid points have partial (50%) contributory value in the subject market. Round indicated values to the nearest thousand. A. $425,000 - $450,000 B. $422,000 - $439,000 C. $423,000 - $445,000 D. $430,000 - $435,000

C. $423,000 - $445,000 For each sale, the sales price must be multiplied by the respective LTV. Therefore, A:$450,000 x .80 = $360,000; B: $425,000 x .75 = $318,750. Then we multiply the mortgage amounts by the respective points: A: $360,000 x .03 = $10,800. B: $318,750 x .01 =$3,187.50. The dollar amount of the points is halved: $10,800 x .5 = $5,400; B: $3187.50x .50 = 1,593.25. Then these totals are subtracted from the sales prices to derive the indicated adjusted sales prices: A: $450,000 - $5,400 = $444,600 rounded to $445,000.And B: $425,000 - $1593.75 = $423,406.25 rounded to $424,000.

33. In evaluating a variety of proposed uses for a site valuation analysis, how should an appraiser determine whether a certain proposed use is maximally productive? A. Determine whether costs will exceed the value of the end product B. Determine whether the use is physically possible and legally permissible C. Determine which use promises the greatest residual return to the land D. Determine whether the yield capitalization exceeds the market capitalization

C. Determine which use promises the greatest residual return to the land The greatest residual return of the land will determine the most productive use of land, which constitutes one of the four tests of highest and best use.

24. What type of drawing, commonly found in a blueprint, illustrates how the finished exterior views of the front, side, and rear of a proposed structure will appear when finished? A. External B. Line Drawing C. Elevation D. Blueline

C. Elevation An elevation drawing illustrates the front, side, and rear views of a finished property.

See PDF for chart. 101. Potential uses are being considered for development. Based on the following information, which investment alternative is the highest and best use of the site? A. APARTMENT. B. RETAIL. C. OFFICE. D. ALL OF THE ABOVE.

C. OFFICE Apartment: 400,000 X 0.12 = 48,000 100,000 - 48,000 = 52,000 Retail: 290,000 X 0.12 = 34,800 80,000 - 34,800 = 45,200 Office: 350,000 X 0.12 = 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 over improvement and the retail is an under improvement based on construction costs.

10. When buyers consider other properties, they are observing what economic principle? A. Competition B. Anticipation C. Substitution D. Supply and Demand

C. Substitution

16. Appraiser Sam has been asked to appraise a parcel of land that is under contract for purchase. The grantor has reserved the mineral, oil, and gas rights. Sam will not appraise these subsurface rights. Sam is appraising a(n) A. defeasible estate B. mineral rights C. partial interest D. undivided remainder estate

C. partial interest

93. Which of the following is most likely a fixed expense? A. saving to replace a water heater B. utility bills C. real estate tax bill D. maintenance cost

C. real estate tax bill A fixed expense is one that does not fluctuate with occupancy levels, such as the real estate (ad valorem) taxes. A fixed expense is a cost that does not fluctuate with changes in production level or sales volume and is typically a regular, recurring charge

15. Appraiser Sarah is performing a sales comparison approach for a residential appraisal. She has chosen four comparable sales based on style, age, size, location, and a variety of other features. Adjustments are made based on market extraction and data pulled from work files of properties that are similar to her subject property. The appraisal principle that is most likely being emphasized by Sarah is A. anticipation B. conformity C. substitution D. progression and regression

C. substitution The sales comparison approach is largely based on the principle of substitution, where comparable properties are contrasted against the property being appraised, and adjustments are made in the substitution process to make the sales more similar to the subject property. Other principles are also involved. For example, when deriving and making the individual adjustments, the contribution of each feature is taken into account. But the over-riding principle in this case is substitution.

80. You are appraising a five-year-old residence and note the following: The roof has a total physical life of 20 years and a cost to replace of $10,000; appliances have a total physical life of 15 years and a cost to replace of $3,500; the floor covering has a total physical life of 10 years and a cost to replace of $5,000. You estimate the cost new to be $96,000 and once the items are cured, the remaining economic life of the residence will be 45 years. Rounded to the nearest dollar, what is the total accrued depreciation (rounded) using the modified age-life method for the property? A. $13,267 B. $11,500 C. $15,140 D. $16,100

CORRECT ANSWER: $15,140 When a question like this is presented on the exam with no effective age indicated that is different than the actual age, use the actual age as the effective age. Roof: 5 years effective age / 20 years life = 25% depreciation ($10,000 x 25% = $2,500). Appliances: 5 years effective age / 15 years life = 33% depreciation ($3,500 x 33% = $1,155). Floorcovering: 5 years effective age / 10 years life = 50% depreciation ($5,000 x 50% = $2,500). Total of all curable depreciation: $2,500 + $1,155 + $2,500 = $6,155. The question states that once the curable items are cured, the remaining life of the structure is 45 years. Curable depreciation must be deducted from the estimated cost new: $96,000 - $6,155 = $89,845. The structure has a remaining economic life of 45 years: 5 years effective age + 45 years remaining economic life = 50 years total economic (physical) life. 5 years effective age / 50 years economic life = 10% depreciation (for incurable items): $89,845 x 10% = $8,984.50. $6,155.00 + $8,984.50 = $15,139.50, or rounded $15,140.

78. 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: 2.3% 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 (cost new) - 1,050,000 (depreciated improvements) = 575,000 575,000/1,625,000 = 0.353846 (amount of total depreciation). 0.353846/15 = .02358 (annual depreciation).

79. The value of a building is equal to its construction cost when the building is: A. Newly constructed B. Overimproved C. The highest and best use of the site D. 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.

77. A single-unit residence is being appraised for ad valorem assessment purposes. A comparative unit method is being used to estimate a current cost for the subject improvements. However, the client wants another, alternative method to estimate the cost. The appraiser chooses the index method. Research indicates: the original cost of the subject improvements 20 years ago was $150,000. The index that year was 100. The current index is 215. What is the current construction cost (rounded to the nearest hundred dollars)? A.$322,500 B.$325,000 C.$330,000 D.$316,000

Correct answer: A ($150,000 x 215) /100 = $322,500

107. The sale price of an apartment building is $5,000,000. Its potential gross income is $1,000,000, its vacancy loss is $50,000, and its operating expenses total $350,000. What is the effective gross income multiplier? A. 5.26 B. 3.19 C. 4.21 D. 9.63

Correct answer: A: 5.26 1,000,000 x 0.95 = 950,000 EGI. $5,000,000 sales price / $95,000 = 5.26 Expenses are irrelevant in this question.

76. A warehouse measures 50' x 100' x 16'. The replacement cost is $7.80/cubic foot. The total economic life is 50 years; the effective age is 20 years. The land to building value ratio is 1:4. What is the overall value of this property? A. $425,000 B. $468,000 C. $525,000 D. $624,000

Correct answer: B. $468,000 50' x 100' x 16' = 80,000 cu ft x $7.80/ cu ft = $624,000 cost. Depreciation is 20/50 = 40%.Value of the building is $624,000 x 40% = $249,600. $624,600 - $249,600 = $374,400/.80= $468,000.

44. 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? A. $1,550/acre B. $1,137/acre C. $1,102/acre D. $1,002/acre

D. $1,002/acre Comparable Improved - 200 x 1.00 = 200 Natural - 400 x .80 = 320 Wooded - 400 x .30 = 120 640 x 1,050 = 672,000 Subject Improved - 300 x 1.00 = 300 Natural - 200 x .80 = 160 Wooded - 500 x .30 = 150 300 + 160 + 150 = 610 672,000 = 610 x ($x/acre) 672,000/610 = 1101.639

59. A residential subdivision has 400 units for sale. The developer and appraiser estimate an absorption rate of 6 units per month. Interest rates, employment, and other economic indicators are predicted to be stable for the next year. The appraiser is concerned about the impact of absorption on factors that might affect the sales and income approaches for individual units. She analyzes the absorption rate and absorption period. What is the anticipated absorption period? A. 4.5 years B. 18.0 years C. 18.0 quarters D. 22.2 quarters

D. 22.2 quarters The absorption rate is 6 units/month x 3 = 18 units per quarter. 400 units/18 units per quarter = 22.2 quarters.

22. How many linear feet are along one side of one-fourth of a township section? A. 330 B. 660 C. 1320 D. 2640

D. 2640 A township section is typically 1 mile by 1 mile, which equals 5280 feet by 5280 feet. One-fourth of a township section would be a quarter of this area. Area of one-fourth section: 640 acres / 4 = 160 acres or 5,280 * 5,280 / 4 = 6,969,600 SF Square root to get the square footage of one side: 2,640 feet.

25. A privacy fence is six feet high and constructed of boards that are six inches wide. How many linear feet of board will be needed to build each eight-foot-wide section of fence? A. 32 B. 84 C. 144 D. 96

D. 96 Calculate the number of boards needed per eight-foot-wide section: Each board is six inches wide. The section is eight feet wide. First, convert the width of the section to inches: 8 ft * 12 inches = 96 inches Determine the number of boards required: 96 inches / 6 inches per board = 16 boards. Since each board is 6 feet in height calculate the total linear feet of boards 16 boards * 6 feet per board = 96 linear feet. or you can do it like: Each six-inch board is six linear feet high. So, for each foot the fence is wide, 12 linear feet of board will be needed: 8 x 12 = 96 linear feet.

3. Which of the following is not a component of supply? A. Existing inventory B. Planned properties C. Properties under construction D. Absorption

D. Absorption - Considered under demand

46. A comparable property sold for $465,000 nine months ago. Values in the area are increasing on a 5% per year basis. What would be the market conditions adjustment to this sale if it were used in an appraisal with a current effective date? A. A downward adjustment of $17,438 B. An upward adjustment of $23,240 C. A downward adjustment of $23,240 D. An upward adjustment of $17,438

D. An upward adjustment of $17,438 5% per annum/12 = .4167% per month. Over nine months the rate is .4167 x 9 = 3.75%.$465,000 x 3.75% = $17,438 (rounded). The adjustment is upward as values are trendingupward.

11. For a busy commercial intersection, what would the appraiser be suggesting if their recommendation for one corner was a drug store when there are currently drug stores on 2 other corners at the intersection? A. Legally permissible use B. Complementary use C. Value in use D. Competitive use

D. Competitive use A competitive use offers the same product or services as other properties in the immediate area, and will thus compete for customers. If the appraiser recommends a competitive use, it should be supported that there is sufficient demand for the products or services offered by the proposed property use.

9. An appraisal for the price that a property would sell for based on a quick sale would be for what type of value? A. Value-in-use B. Value-in-exchange C. Going Concern Value D. Liquidation Value

D. Liquidation Value Less than reasonable marketing time results in a liquidation type sale.

89. Which of the following is not included in operating expenses? A. Property taxes B. Utilities C. Replacement reserves D. Loan payments

D. Loan payments

35. The subject property has an in-ground pool in the rear yard. Similar pools in comparable sales have the following effects: 1) prolonged marketing times; 2) sales prices that do not reflect the cost of installing such pools. The pool is likely a(an): A. example of increasing return on investment B. example of anticipation C. over improvement D. inadequacy

over improvement

6. Which of the following cannot impact value as an environmental influence? A. View B. Location C. Climate C. Crime

C. Crime Criminal activity is a social value influence

13. Appraiser Dixie is performing research in the subject market. She is examining sales in the MLS and sorting out which ones might be comparable or which might be competitive with her subject property. A comparable property A. competes head-to-head with the subject property B. may possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested in buying the comparable property C. has the exact same features as the subject property D. must have sold within the last six months

B. may possess many of the same features as the subject property, but the buyer of the subject property might not necessarily be interested in buying the comparable property A comparable property should possess many of the features as the subject property. However, the buyer of one might not be interested in the other. This could be due to different markets (say, the subject and comparable sale being several miles apart). A comparable property in the context of an appraisal is one that is similar to the subject property in terms of key characteristics and can provide relevant data for the appraisal analysis, even if it is not a direct competitor.

73. Which of the following is an example of a direct cost? A. architect's fees B. supervision of labor C. entrepreneurial profit D. construction loan interest

B. supervision of labor Labor is a direct (hard) cost. Supervision of a hard cost is also a hard cost. Given the options: A. Architect's fees - These are typically considered indirect costs (or soft costs) because they are associated with the design and planning phase rather than the actual construction. B. Supervision of labor - This is a direct cost because it is directly related to the construction process, involving overseeing the laborers who are building the project. C. Entrepreneurial profit - This is considered an indirect cost or a part of the overall return expected by the developer, not directly tied to the physical construction process. D. Construction loan interest - This is also considered an indirect cost (or soft cost) because it is related to the financing of the project, not the direct physical construction.

75. Jenny is performing an appraisal of a single-family residence for mortgage lending. The subject residence is 50' x 30' and consists of 2 stories over a full, unfinished basement. The replacement cost new of the residence (including basement) is $175 per square foot. There is an attached 20' x 22' garage and a concrete patio. The actual age of the structure is 20 years. The effective age is 15 years. The remaining economic life is 60 years. The patio has a depreciated cost of $500. The garage has a depreciated cost of $7,040. The land to building value ratio is 1:3. What is the total value of the subject property (rounded to the nearest thousand). A. $535,000 B. $428,000 C. $570,000 D. $713

C. $570,000 50 x 30' = 1500 sf x 2 x $175/sf (incl basement) = $525,000. Depreciation is 15/75 = 0.20. (effective age of 15 + 60 years remaining economic life. $525,000 x .20 = $105,000 (total amount of depreciation) $525,000 - $105,000 = $420,000 (value remaining after depreciation) Add $500 patio and $7,040 garage for $427,540. You do this because: Depreciated costs of items such as the garage and patio should already reflect their current value, so they should be added to the depreciated value of the main structure LB Ratio is 1:3 (That means there are 4 pieces total and 1 of the 4 is land, so you will divide the building cost by 0.75) 427,540 / 0.75 = $570,053 or $570,000 (rounded).

18. The dining room measures 9' x 12'. The living room measures 9' x 15'. Carpet costs $25/sq. yd. installed. What is the cost of installing carpet assuming no waste and that both rooms are carpeted? A. $6,561 B. $843 C. $675 D. $6,075

C. $675 9' x 12' = 108 sf. 9' x 15' = 135 sf. Total = 243 sf. There are 9 sf in every sq. yd. Therefore, 243 sf/9 = 27 sq. yds x $25/sq. yd. = $675.

81. A 1,500 square foot structure has an actual age of 27 years with no functional or external obsolescence and a cost new of $78 per square foot. All forms of physical curable depreciation are estimated to be $1,600. Once cured, the structure will have an effective age of 15 years and a remaining economic life of 55 years. Applying depreciation using the modified age-life method, what is the current value of the structure? A. $26,330.22 B. $117,000.00 C. $90,669.78 D. $24,730.22

C. $90,669.78 The modified age-life method considers the known cost to cure of curable items and an effective age as if the items were cured to calculate incurable depreciation: 1,500 x $78 = $117,000. If there is no functional or external obsolescence, the cost of curing curable items is $1,600, and once cured, the effective age would be 15 years with a remaining economic life of 55 years. The curable depreciation must be subtracted from the cost new before calculating incurable depreciation by the age-life method. Thus, 15 / 70 (55 + 15) =21.43%; $117,000 - $1,600 = $115,400. $115,400 x 21.43% = $24,730.22 is the incurable physical depreciation. Total depreciation: $1,600.00 + $24,730.22 =$26,330.22. Current value of the structure $117,000 - $26,330.22 = $90,669.78

99. 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? A. 0.6578 B. 0.8771 C. 0.1168 D. 0.2921

C. 0.1168 Mortgage-equity band of investment 20gn 6.25gi 1PV PMT = 0.007309282 0.007309282 x 12 = .087711384 0.087711384 x .75 = .0657835 0.095 (cap rate) - .0657835 = .02921646 .02921646/.25 = 0.11686584

30. A parcel is 10 acres (2 acres wide x 5 acres deep). If zoning requires a minimum of 200 feet of frontage per lot, how many lots may be sold? A. 4 lots B. 6 lots C. 2 lots D. 5 lots

C. 2 lots We know the width is directly measured in feet. Therefore, we square foot an acre to get 208.71 feet. 208.71 * 2 = 417.42 Given the requirement of 200 feet of frontage per lot, we can determine the number of lots by dividing the total width by the frontage requirement 417.42 / 200 = 2 lots, rounded.

98. A property was purchased for $1,200,000. It had first year net operating income of $110,500 increasing annually by 3% for the term of the lease which ends in 10 years. The property was financed with a 70% loan, a 7% interest rate, and a twenty-year term with monthly payments. The property was sold at the end of year 5 with a reversion based on a capitalization rate of 9.3% applied to year 6 income. Cost of sale for the reversion is projected to be 5% of the gross sale proceeds. What is the yield to the lender? A. 9.8% B. 9.5% C. 7% D. 6.8%

C. 7% The lender's yield is the interest rate. The lender is not participating in the income or salebenefits of this investment.

48. Adam is appraising a house on the waterfront where some houses have private boat docks. The subject is 2,713 square feet, 3 bed 2 bath, 2-car garage, and boasts a water front location without a boat dock. The market-based adjustment for living area is $60 per square foot, a 3-car garage space is valued at $6,000, and the private dock is valued at $100,000. The waterfront amenity is worth about $150,000. One of the comps Adam selected is: Comparable 1, which recently sold for $1,320,000, is 2,978 square feet, 3 bed 2 bath, 3-car garage. The house is across the street from the waterfront, but has nice views from the second story. There is a fenced side yard suitable for the storage of a boat. A golf cart worth $1,150 was included in the sale. What is the indicated net adjustment amount for Comparable 1? A. $4,920 B. $173,050 C. $1,446,950 D. $126,950

D. $126,950 The subject is 2,713 sf and comp 1 is 2,978 sf, a difference of 265 sf @ $60/sf or a negative adjustment of $15,900. Comp 1 is not waterfront and requires a positive $150,000 adjustment. The comp has a 3-car garage, and therefore requires a negative $6,000 adjustment. The net adjustment: -$15,900 + $150,000 -$6,000 - $1,150 (golf cart) = $126,950.

58. Appraiser Joy has many sales from which to choose for the house appraisal she has accepted. Unfortunately, Joy has no good candidates for a paired sales analysis. Joy wonders, "How will I ever derive individual adjustments for my sales comparison grid?" Joy organizes the sales into clusters: Group A (houses with central air conditioning): n = 21; x = $124,392; Group B (houses without central air conditioning): n = 18; x =$121,462. There are various other differences between Groups A and B, but Joy thinks those differences will offset, and cancel each other out. The subject property lacks central air conditioning. The property Joy is using as Sale One sold for $130,000 and has central air conditioning. What is the adjusted value of Sale One? (Round to the nearest thousand) A.$121,000 B.$130,000 C.$133,000 D.$127,000

D. $127,000 Instead of using two sales in a paired set, the appraiser can use two data sets (or clusters) of sales. This is called grouped data analysis. All the sales in Group A had one thing in common: central air conditioning (CAC). There were other differences, (e.g., one such difference could have been one sale had a crawl space, and all others had basements),but in the end, all such differences wash out. Similarly, Group B had one trait in common: No CAC. Again, all differences washed out. The difference between Groups A and B was:$124,392 - $121,462 = $2,930, rounded to $3,000. Since Sale One had CAC, and subject did not, a negative adjustment of $3,000 was called for. Therefore, $130,000 - $3,000 =$127,000.

53. The subject property is a 2,400 square foot, 5-year-old, single-family tract home with a typical view, stucco exterior, 10 rooms, 4 bedrooms, 3 baths, and 3-car garage. The property is in good condition and house prices have been increasing at a compounded rate of 1% a month. What is the market conditions adjustment that should be made to a comparable property that sold 4 months ago for $380,000? A. $15,200 B. $395,200 C. $14,444 D. $15,430

D. $15,430 380,000 x 1.01 = $383,800 (month 1) 383,800 * 1.01 = 387,638 (month 2) 387,638 * 1.01 = 391,514.38 (month 3) 391,514.38 * 1.01 = 395,429.52 (month 4). Calculate the difference: 395,423 - 380,000 = 15,430.

95. What was the original purchase price of a home if the buyer took out an 80% loan-to-value loan with monthly payments of $1,000, an interest rate of 9%, and the loan amortized over 30 years? A. $103,568 B. $124,282 C. $180,000 D. $155,352

D. $155,352 1,000 pmt; 30 gn; 9 gi; PV = -124,281.87 /0.8 = -155,353 (rounded).

31. An acre measures 208.71 feet by 208.71 feet. If the lot is two acres wide, it would be 417.42 feet wide and therefore, only 2 lots would be permitted. Using the ground rent capitalization method, what is the value of the subject? Comparable sale price: $225,000; Comparable net income (annual): $18,000; Subject net income (annual): $16,500. A. 8% B. $280,432 C. $210,220 D. $206,250

D. $206,250 RATIONALE First, determine the capitalization rate: $18,000 / $225,000 = 8%. Next, apply the rate to the subject's net (annual) income: $16,500 / 8% = $206,250 value of the subject.

97. 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

D. $374,075 Simple Linear Regression y = a + bx 374,075 = 250,000 + (35 x 3,545)

See PDF for chart. 67. Appraiser Bob is appraising a single-unit residence for mortgage lending purposes. After conducting his market research, he compiles the following data: Given the data above, what is the contributory value of personal property? A. $25,000 B. $30,000 C. $35,000 D. $40,000

D. $40,000 If $10,000 is subtracted from Sale B for the 4th bedroom an adjusted price of $260,000 is reached. If $40,000 is added for a barn for Sale C, an adjusted price of $300,000 is reached. The adjusted prices of Sales A and C are $300,000. The difference of $40,000 between Sales A and C on the one hand, and Sale B on the other, is attributed to the lack of personal property in B.

36. You select a comparable sale that recently sold for $50 per square foot. You study the market and determine you need to make the following adjustments to the price of the comparable: A. Market conditions adjustment +8% B. Physical adjustment -5% C. Age adjustment -6% What is the value of the comparable sale per square foot? A. $48.06 B. $52.50 C. $48.60 D. $48.22

D. $48.22 50 * 1.08 = 54 54 * 0.95 = 51.3 51.3 * 0.94 = 48.22

39. An appraiser is trying to extract a GLA adjustment from market data. He has two sales: Monte Carlo Street has 2,146 square feet and sold for $330,000 while Porto Fino Lane sold for $365,000 and has 2,632 square feet. What is the market-extracted GLA adjustment per square foot? A. $35,000 B. $54 C. $146 D. $72

D. $72 Find the difference in SP (365,000 - 330,000) = 35,000 Then divide that by the difference in SF (2632 - 2146) = 486 This results in $35,000/485 SF = $72/SF

40. Cynthia is appraising a single-unit residence for the purpose of appealing the ad valorem assessment. The client is the property owner. Intended users are the owner and the assessor. The subject property is a brick Georgian with 4 bedrooms, 2 bathrooms, no central air, and a basement. She chooses a comparable sale that sold for $300,000 with a brick exterior, 4 bedrooms, 1.5 bathrooms, central air, and a basement. Brick is valued at $20,000; a 4th bedroom $10,000; a ½ bathroom $5,500; central air $3,000; and a basement at $20,000. After making the appropriate adjustments, what is the gross adjustment to this comparable sale? A. $2,500 B. ‐$2,500 C. ‐$8,500 D. $8,500

D. $8,500 Remember, this is asking the GROSS ADJUSTMENT. Therefore, add all adjustments as if they are positive (absolute terms, without regard to sign).

12. In which type of value would a real property appraiser also need to be competent in the appraisal of intangible assets if they were the only appraiser in the assignment? A. Insurable value B. Going concern value C. Market value D. Quick sale value

In an assignment where the type of value is as a going concern, a single sole appraiser would need to be competent in both tangible (real/personal property) and intangible (business assets) property.