Appraisal Cost and Income Approach Flashcards

1
Q

Which represents the cost approach to appraisal?
*cost approach formula

A

Replacement Cost
minus
depreciation
plus
land value
= Appraised Value

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2
Q

What is the math formula used to estimate value using the cost approach:

A

Building Cost
- Depreciation
+ Land Value
= Appraised Value

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3
Q

An agent evaluating a residential property for a listing presentation would most likely use:
a. direct sales comparison approach
b. relacement cost approach
c. cost approach
d. income approach

A

A.

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4
Q

Which approach is best used when valuing vacant land?
Cost or Comparison

A

Comparison Approach
*Comparison Approach is relied heavily in appraising
a. Existing Residences
b. Vacant Land

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5
Q

The three appraisal approaches are:

A

1.Comparison Approach (existing residences and vacant land)
2.Cost Approach (one of a kind properties like churches and municipal buildings and new construction
3.Income/Capatalization Approach (properties that produce income)

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6
Q

Capitalization is a process used to:
a. convert income into value
b. determine cost
c. establish depreciation
d. determine potential future value

A

A.

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7
Q

The income approach would be relied on most heavily in estimating the value of:
a. an office building
b. cooperative apartment
c. a municaple building
d. vacant land

A

A.

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8
Q

The approach most heavily relied on in estimating the value of a 20 unit apartment building?

a. cost approach
b. market data breach
c. FNMA guidelines
d. income approach

A

D. Income approach aka Capatalization

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9
Q

The rate of return that an investor expects to receive or that the property is producing is known as:

a. interest rate
b. capatalization rate
c. annual percentage rate
d. gross income multiplier

A

B.

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10
Q

Capatalization is a process used to:
a. convert income to value
b. determine cost
c. establish depreciation
d. determine potential future value

A

A.

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11
Q

In using the income approach, an appraiser must establish a(n):
a. discount rate
b. capatalization rate
c. interest rate
d. expense rate

A

B.

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12
Q

When developing a cap rate, one would not consider:
a. replacement cost
b. comparable sales income
c. investment alternatives
d. risk

A

A.

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13
Q

The gross rent multiplier is calculated by:
a. dividing gross rents by the sales price
b. dividing the net income by the sales price
c, dividing the sales price by the net income
d. dividing the sales price by the gross rents

A

D.

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14
Q

In appraising a commercial property, which of the following would an appraiser not need?
a. the schedule of gross income
b. original cost
c. expenses of operation
d. cap rate

A

B.

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