value quiz

In attempting to estimate the market value of a house he is listing, a licensee discovers that the owner paid $310,000 for the house six years ago. What effect will this number have on this estimate?

It will have no effect at all.

24. The most difficult depreciation to correct would be:

economic.

6. In appraising, the term location is most closely associated with:

situs.

After a neighborhood experiences a period of growth, expansion, and rising property values, the next phase of change it will experience is:

stability.

When estimating the capitalized value of a property:

the lower the capitalization rate, the higher the estimated value.

19. If a property has a value of $475,000 and a cap rate of 12%, what is the value with a cap rate of 8%?

Answer: A. $712,500

17. An income producing property is valued at $2,000,000o with annual income of $400,000. What is the indicated GIM?

Answer: B. 5

2. What is the first step in the appraisal process?

Answer: B. Define the appraisal problem

5. Appreciation in unit value created by joining smaller parcels into one large single parcel is called:

Answer: B. plottage increment.

16. A property's actual age is 18 and the appraiser has determined the effective age to be 12. If the remaining economic life is 38, what is the percent depreciation?

Answer: C. 24%

Which of the following would NOT be important in a market data approach to value?

Answer: C. Different original costs

13. Which would NOT cause functional obsolescence?

Answer: D. Proximity to noxious odors or nuisances

An investor wants to purchase a twenty unit apartment complex. Ten units rent for $300 per month, five for $325, and five for $350. Vacancy and collection losses are estimated to be five percent of the potential gross income and operating expenses are expected to be $31,950. Using a capitalization rate of ten percent, what should the investor pay for the property?

$407,250

Using a twelve percent capitalization rate, an apartment complex is valued at $480,000. What will be the value of the same property if a ten percent capitalization rate is used?

$576,000

The actual selling price can be described as which of the following?

(A.) Market price

9. Which of the following is used when estimating value by using the gross rent multiplier method?

A, Market rent of subject property

12. Which of the following components would not represent market value in an arm's length transaction?

A. A seller who provides financing

22. Which of the following may be used to figure accrued depreciation?

A. Age-life or straight line method

In the appraisal of residential property, the cost approach is most reliable in the case of:

A. a new home.

In the sales comparison approach, the value of a feature present in the subject property but NOT in the comparable would be:

A. added to the selling price of comparable property.

3. The elements of value do not include:

A. cost and age.

14. When employing the sales comparison approach, the appraiser will:

A. make a positive adjustment to the comparable for a feature that the subject has but the comparable does not.

20. The ground floor of a home measures 38' by 48; the second floor has the same measurements; and, the basement is half that size. If the ground floor improvements are valued at $62 a square foot; the second floor improvements are valued at $48 a square foot; and, the basement area is valued at $21 a square foot, what is the value of the improvements?

B. $219,792

21. Which of the following approaches to value estimation is based upon the calculation of construction costs at current prices of a property that serves the same purpose or function as an original property?

B. Replacement cost

9. The separate valuation of land and buildings is necessary in which method of estimating value?

B. Reproduction cost approach

7. An example of an item of depreciation that would NOT generally be incurable is:

B. old fashioned fixtures.

When selecting comparables for a comparison approach to market value, it is a good practice to:

B. place emphasis on the ones that require the fewest percentage of adjustments.

8. On an operating statement, the allowance for items that have a useful life of more than one year is called:

B. reserve for replacements.

The cost approach would be the least reliable method to use in estimating the value of seventy year old building because of:

B. the problem associated with estimating depreciation.

13. A method of estimating proposed construction costs by adding the cost of all the building's component parts is the:

B. unit in place method.

18. A small apartment building produces monthly net income of $3,500. If the value is $350,000, what is the capitalization rate?

C. 12%

In the capitalization approach, which of the following steps comes first.

C. Determining potential gross income

The gross rent multiplier produces the best results when used to estimate the value of:

C. Jan apartment building.

4. Which of the following is the most complete type of appraisal report?

C. Narrative report

Which of the following is not considered obsolescence?

C. Wear and tear

1. All of the following might contribute to the economic obsolescence of a property EXCEPT:

C. poor architectural design.

10. The market price as related to the market value of a property is:

C. possibly the same.

15. In distinguishing between curable and incurable depreciation, it would be correct to say that:

C., incurable depreciation costs more to correct than it adds to property value.

Which of the following would not be considered an operating expense of an apartment building?

Collection losses

8. An agent is listing a home that has been over improved for the neighborhood. The principal of value that the agent may cite to persuade the seller his home is NOT worth substantially more than his neighbors is:

Correct Answer: A. regression.

10. Karlie Sinclair has paid $300,000 for a new house in a neighborhood of properties that are worth a similar price. Now she is considering some major improvements to both the house and lot, that would cost $200,000. Which principle of valuation might suggest that this is not a wise move?

D. Progression and regression

14. When using the sales comparison approach, the appraiser would utilize data derived from:

D. data from a multiple listing service.

12. A key lot is:

D. essential for plottage.

In the capitalization approach to establishing value, the selection of the cap rate to use reflects all of the following EXCEPT:

D. how soon the property can be resold for profit.

When a property's value increases due to the impact of physical, governmental, economic, and social forces, that increase in value is called:

D. unearned increment.