Session 14 Quiz

8. Annual rent collected for a 10-unit apartment complex is $60,000. The owner pays property tax of $7,000 per year, insurance or $4,500, and $1,500 per year in water bills. The property is appraised at an 11% capitalization rate. What was the appraiser's estimate of value? A. $545,000 B. $517,000 C. $660,000 D. $427,272

$427,272

19. An apartment complex rents as follows: Three 1BR at $350 per month; 15 2BR at $440 per month; three 2BR at $495 per month. You determine a 10% vacancy rate and 3% credit losses per year. The annual property tax is $7,300; the insurance is $2,100. The owner takes $6,500 per year in depreciation. An investment broker suggests a 10 1/4% capitalization rate. What is your estimate of value? A. $838,726 B. $814,561 C. $775,311 D. $881,186

$838,726

9. The county assessor says the full cash value of a 12,000 square foot strip center you have listed is $825,000. Annual income is $12 per square foot per year, minus a 14% vacancy rate and a 3% credit loss. Owner's expenses are: $23,000 property tax and $12,000 / year insurance. What is the capitalization rate? A. 17.45% B. 9.76% C. 5.73% D. 10.24%

10.24%

17. Appraiser qualifications are required by A. Federal Reserve. B. HUD. C. Sherman Antitrust Act. D. FIRREA.

FIRREA.

10. What is the purpose of a date in an appraisal report? A. It is required by law. B. It defines the market conditions under which the appraisal was made. C. It helps identify the D. It serves no important purpose.

It defines the market conditions under which the appraisal was made.

1. Market price is closest to the A. price asked by the seller in the open market. В. price offered by a buyer in the open market. C. market value. D. amount of money given in exchange for the property (value in exchange).

amount of money given in exchange for the property (value in exchange).

11. By definition, what does an appraiser give in the course of his work? A. a valuation B. an estimate C. a reaction D. a guarantee

an estimate

12. The principle of _______ affirms that value is created by expected benefits to be derived in the future. A anticipation B. conformity C. progression D. substitution

anticipation

4. An appraiser is preparing an appraisal for the lender. The subject property is older and has a pool. The comparable property is newer and has no pool. How would the appraiser make the necessary adjustments? A. sale price of seller's property up for age and pool B. sale price of seller's property down for age and pool C. comparable property up for age and down for pool D. comparable property down for age and up for pool

comparable property down for age and up for pool

15. The period of time that an improvement contributes value to the land is considered to be its A. economic life. B. highest and best use. C. effective age. D. salvage value.

economic life.

6. Mr. Williams owned his home for 15 years. It originally had an estimated life of 40 years. He has maintained his home in excellent condition. He decided to sell his house. It was appraised to be only 6 years old. The appraiser's determination exemplifies the concept of A. physical age. B. effective age. C. chronological age. D. depreciation table.

effective age.

14. Poor layout of rooms would be included as an element of depreciation called A. economic obsolescence. B. functional obsolescence. C. political obsolescence. D. social obsolescence.

functional obsolescence.

18. In appraisal terminology, "A factory too close to a home" is an example of A. incurable obsolescence. B. curable economic obsolescence. C. curable physical deterioration. D. functional obsolescence.

incurable obsolescence.

13. In the cost approach, when figuring depreciation, which does NOT qualify as a depreciation item? A. roof B. air conditioner C. land D. fixtures

land

16. In checking for conformity of a home in a particular neighborhood, an appraiser would NOT consider A. size. B. style of architecture. C. list price. D. amenities.

list price.

7. On which of the following properties would you most likely use the income approach to appraising? A. residential В. condominium C. office building D. vacant land

office building

2. The increase in value created by joining ownership of several smaller parcels of land into one large single ownership is called A. par value increase. B. over improvement. C. plottage increment. D. physical inflation.

plottage increment.

5. Under the principle of substitution, of acquiring an equally desirable replacement A. property cannot be worth more than the cost of acquiring an equally desirable replacement property. B. there should be a reasonable degree of uniformity in property values, C. excess profits tend to encourage ruinous competition. D. a good structure substituted for a bad structure will not cure the ills of the surrounding neighborhood.

property cannot be worth more than the cost of acquiring an equally desirable replacement property.

3. After the appraiser has used all three appraisal approaches to estimate value, what process is used to arrive at a final estimate of value? A. data evaluation B. summation C. reconciliation D. averaging

reconciliation

Estate 20. When the cost approach is used to determine value, which of the following applies? A. replacement cost minus depreciation B. gross income minus expenses C. net income plus land value D. comparable property value plus site value

replacement cost minus depreciation