Real Estate 1 1 Chapter 14

The cubic foot, square foot, quantity survey and unit in place method are terms most directly related to real estate:

Appraisal These are three appraisal methods used in the cost approach.

Which of the following would be considered incurable functional obsolescence when appraising an old store building?

Closely spaced internal columns Since it would be quite costly to reconstruct the building to eliminate the internal columns, we would have to consider this incurable functional obsolescence.

An appraiser would most likely use a depth table when he is confronted with a value program involving:

Commercial property Depth tables are used to establish added value to lots of varying depths. Major fluctuations in value mainly occur on commercial property and not residential.

The best appraisal method to use in appraising a city library would be the:

Cost Since there are no similar properties that have sold recently and there is no income to capitalize, the cost method is the only approach available.

The period for which an improvement is worth maintaining is defined as its:

Economic life The statement of the question is a good definition of economic life.

A flight pattern to a nearby airport was changed so that planes would pass over a single-family residential neighborhood. Any loss in value to these properties caused by excessive noise would be attributed to:

Economic obsolescence This is an outside influence and would be classified as economic obsolescence.

In real estate the word amenities refers to:

Factors of convenience, location, beauty or utility Amenities are pleasing features in or about the property.

The reason an appraiser must take a site analysis is to determine the:

Highest and Best Use The value of land is based upon its highest and best use. This would indicate the use that would produce the greatest income

When interest rates on real estate loans increase, capitalization rates on income properties tend to:

Increase ck A capitalization rate is the rate of return demanded by an investor on his real estate investment. If other investors are getting greater returns, he would expect his rate to increase also.

When appraising an income property, which of the following would not be used as a deduction in arriving at the net income?

Interest on a mortgage Interest payments on mortgage loans are not considered when establishing the value of income property using the capitalization approach.

The amount of rent that can be charged for space in a commercial building is best determined by:

Market comparison Rent schedules are based upon economic rent or rent being charged for comparable space within the immediate area.

The appraisal method that is most often used to appraise amenity type properties is the:

Market data method Amenity type properties are single family residences and the market data method is most often uses for these.

Which of the following is the best example of functional obsolescence?

Massive cornices in an apartment building Old fashion architecture such as massive cornices, would be classified as functional obsolescence.

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

New property Since the depreciation is no factor, the cost approach is most accurate on new property.

A condition that results in a loss in value that would be classified as functional obsolescence would be:

Outdated design An out of date designed building would suffer a loss in value known as functional obsolescence.

Market value would most nearly be reflected by the:

Price at which the buyer and seller eventually agreed upon One of the definitions of market value is that it is based upon the "willing seller - willing buyer" concept.

Which of the following appraisal approaches tends to set the upper limit of value?

Replacement Based on the thinking that no buyer would pay more for a property than it would cost to replace the exact same property, the cost approach sets the upper limit of value.

In appraising a home, one of the key factors which would affect the appraised value is the:

Size of the structure The size of the structure certainly would have an effect on its value.

Two appraisers in appraising the same apartment property used the same net income but one appraiser used a capitalization rate of 9% while the other used a capitalization rate of 7%. The reason the one appraiser used a higher capitalization rate was probably due to:

The higher risk The higher the risk, the higher the capitalization rate.

The gross multiplier method of appraisal would least likely be used when estimating the value of:

Vacant land Since there would be no income on vacant land, you could not apply a gross multiplier.