AG HBU Practice Test Section 5 Flashcards
The most important characteristic in choosing a comparable property is similarity in
A. design/physical characteristics.
B. highest and best use.
C. location.
D. transaction date.
B. highest and best use.
The highest and best use of a site as though vacant is based on the premise that
A. any existing improvements can be demolished.
B. any existing improvements can be rehabilitated.
C. basic site characteristics can be changed.
D. one site can be substituted for any other site.
A. any existing improvements can be demolished.
The theory of consistent use states that
A. one site can be substituted for any other site.
B. the improvements must be valued for the same use as the land.
C. the land must be valued for the same use as the improvements.
D. the most likely users must match the most likely buyers.
B. the improvements must be valued for the same use as the land.
In making a CRA analysis, the most important consideration is that
A. demolition must be excluded from possibility.
B. the conversion must be relative to the alteration.
C. the most likely users must match the most likely buyers.
D. value added must be greater than cost plus profit.
D. value added must be greater than cost plus profit.
An interim use is
A. land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately.
B. land not needed to serve or support the existing improvement that can be separated and have a highest and best use of its own.
C. land valued for a different use than the improvement.
D. the temporary use to which a site or an improved property is put until a different use becomes maximally productive.
D. the temporary use to which a site or an improved property is put until a different use becomes maximally productive.
Excess land is
A. land not necessary to support the highest and best use of the existing improvement but, because of physical limitations, building placement, or neighborhood norms, cannot be sold off separately.
B. land not needed to serve or support the existing use that may or may not have the same the highest and best use as the improved parcel, has the potential to be sold separately, and is valued separately.
C. land valued for a different use than the improvement.
D. the temporary use to which a site or an improved property is put until it is ready to be put to its highest and best use.
B. land not needed to serve or support the existing use that may or may not have the same the highest and best use as the improved parcel, has the potential to be sold separately, and is valued separately.
Surplus land is
A. land not currently needed to support the existing use that cannot be separated from the property and sold off for another use, does not have an independent highest and best use, and may or may not contribute value to the improved parcel.
B. land not needed to serve or support the existing improvement that can be separated and have a highest and best use of its own.
C. land valued for a different use than the improvement.
D. the temporary use to which a site or an improved property is put until it is ready to be put to its highest and best use.
A. land not currently needed to support the existing use that cannot be separated from the property and sold off for another use, does not have an independent highest and best use, and may or may not contribute value to the improved parcel.
An ideal improvement is the improvement that
A. is most often found in the market area.
B. is used to estimate depreciation in the cost manuals or online services.
C. most likely establishes the value, the physical deterioration, and the functional obsolescence, if any, for the subject property.
D. takes maximum advantage of a site’s potential given market demand, conforms to current market standards and the character of the market area, and contains the most suitably priced components.
D. takes maximum advantage of a site’s potential given market demand, conforms to current market standards and the character of the market area, and contains the most suitably priced components.
The test of financial feasibility that compares costs with benefits is the
A. appropriately supported method.
B. demolition alternative.
C. profitability index.
D. reasonably probable index.
C. profitability index.
Financial feasibility is indicated by
A. negative residual demand.
B. negative residual land value, active sales of land to speculative investors, and feasibility rent greater than market rent.
C. positive residual land value, active sales of land to end users, and market rent equal to or greater than feasibility rent.
D. profitability index below 1.0.
C. positive residual land value, active sales of land to end users, and market rent equal to or greater than feasibility rent.
The two overarching concerns of highest and best use analysis are A. principle of balance and appropriate support.
B. reasonable probability and appropriate support.
C. reasonable probability and most likely user.
D. timing and interim use.
B. reasonable probability and appropriate support.
A highest and best use conclusion should state the
A. legal use, the appropriately supported use, and the timing of the use.
B. legal use, the physical use, and the reasonably probable use.
C. physical use, the appropriately supported use, and the timing of the use.
D. physical use, the timing of the use, and the most likely purchaser and user.
D. physical use, the timing of the use, and the most likely purchaser and user.
A CRA analysis is applicable to the
A. principle of balance and appropriate support.
B. reasonably probable and appropriately supported criteria.
C. reasonably probable and most likely user. D. timing and interim use.
B. reasonably probable and appropriately supported criteria.
For a 2-acre commercial site on a major thoroughfare, the four legal uses are branch bank, pharmacy, service station, and fast food restaurant. Market research indicates the following:
Investors are discounting property with a holding period at a 20% rate, which is intended to include all interim holding costs. There are no interim uses.
What is the site’s highest and best use?
A. branch bank
B. fast food restaurant
C. pharmacy
D. service station
C. pharmacy
An appraiser investigated the market and discovered that the current market rent per square foot for office space is $20. The vacancy rate is 2% and the capitalization rate is 9%. The appraiser needs to determine if a new office building is feasible in this market. The following data is obtained:
What is the feasibility rent for the new office construction?
A. $19.38
B. $19.55
C. $19.68
D. $22.30
C. $19.68
An appraiser investigated the market and discovered that the current market rent per square foot for office space is $20. The vacancy rate is 2% and the capitalization rate is 9%. The appraiser needs to determine if a new office building is feasible in this market. The following data is obtained:
The comparison of market rent and feasibility rent suggests that this project is
A. currently financially feasible.
B. maximally productive.
C. not currently financially feasible.
D. not physically possible.
A. currently financially feasible.
