Appraisal Income Approaches & Environmental 10

Question 1

The “Income Remaining” after Operating Expenses Deducted** **From the Gross Income (Annual Rent Collected)

Answer 1

Net Operating Income -

The “Income Remaining” after Operating Expenses deducted from the Gross Income (Annual Rent Collected)

Chap 10

Question 2

Income Approach Methods are:

1. Cap_______ - (Income = Value x Rate)
2. G_____ Rent M______ - Value/GI = CRM
3. Recon________ Data - 3 Appraisal Methods Together

Answer 2

Income Approach Methods are:

1. Capitalization - (Income = Value x Rate)
2. Gross Rent Multiplier - Value/GI = GRM
3. Reconciliation Data - 3 Appraisal Methods Together

Chap 10

Question 3

Ec_______ L___

Period of Time of which a Property will Produce Income.

Answer 3

Economic Life -

Period of Time of which a Property will Produce Income.

Chap 10

Question 4

Gross Annual Income - Operating Expenses Equals What?

Answer 4

Net Income aka Net Operating Income =

Gross Annual Income - Operating Expenses

Chap 10

Question 5

Rate of Return an Investor Wants to Receive for a Property is called?

Answer 5

Capitalization Rate (Cap Rate) -

Rate of Return an Investor Wants to Receive for a Property.

Chap 10

Question 6

Using the Capitalization Method, How Do You Determine Value?

Answer 6

Capitalization Method - To Determine Value

Net Income (yr) / Cap Rate(Rate of Return) = Value

• Formula: (I=RV)
• Net Income (Yr)
• Value x Cap Rate

Chap 10

Question 7

What is Sometimes Used to Determine “Value” on Smaller Income Properties?

V=GGI

Answer 7

(GRM) Gross Rent Multiplier for Smaller Income Properties - Formula V=GGI

Answer: GRM x Gross Income (Mo) = Value

• Value
• GRM x Gross Inc Mo (Subj)

Chap 10

Question 8

What is Formula to Determine Value for Small Income Properties using GRM?

V=GGI

Answer 8

Formula to Determine Value for Small Income Properties, using GRM

Answer: GRM X Gross Inc (Mo) = Value-Price

******Value / GI = GRM

• Sales Price
• Gross Inc Mo x GRM

Chap 10

Question 9

(EPA) Env_______ Prot______ Ag____

Regulates Federal Environmental Rules and Laws.

Answer 9

(EPA) Environmental Protection Agency - Federal

Regulates Federal Environmental Rules and Laws.

Chap 10

Question 10

(ADEQ) AZ Dept of Env_________ Q______

Sets State Environmental Standards

Answer 10

(ADEQ) Arizona Dept of Environmental Quality -

Sets State Environmental Standards

Chap 10

Question 11

(ADWR) AZ Dept of W____ R______

Regulates use of Ground Water

Answer 11

(ADWR) Arizona Dept of Water Resources

Regulates use of Ground Water

Chap 10

Question 12

(ADRE) Arizona D___ of Real E_____ -

Must Obey Commissioner’s Rules Requirements to Disclosure

Answer 12

(ADRE) Arizona Dept of Real Estate -

Must Obey Commissioner’s Rules Requirements to Disclosure

Chap 10

Question 13

HUD Title __ (Requirements) -

Lead Base Requirements are Found under HUD Title __ for Pre-1978 Building’s with Lead Paint.

Answer 13

HUD Title X (Requirements) -

Lead Base Requirements are Found under HUD Title X for Pre-1978 Building’s with Lead Paint.

Chap 10

Question 14

Lead Base Paint (HUD Title X)

1. Built Pre ____- Disclose Presence of Known Lead in Residential Homes
2. Records - Provide Buyer/Leasee with
3. “Lead Base P_____ P______” - Provide Buyer
4. Risk Assessment Inspection - Purchaser has ___ Dys or Agreed Time to Conduct
5. Dis_____/Ack________ Language -Sales/Lease Contracts Must Include.

Answer 14

Lead Base Paint (HUD Title X) -

1. Built Pre 1978 - Disclose Presence of Known Lead in Residential Homes
2. Records - Provide Buyer/Leasee with
3. “Lead Base Paint Pamphlet” - Provide Buyer
4. Risk Assessment Inspection - Purchaser has 10 days or Agreed Time to Conduct
5. Disclose/Acknowlegment Language -Sales/Lease Contracts Must Include.

Chap 10

Question 15

R_____

1. Natural Odorless, Tasteless Radioactive Gas -
2. Causes Lung Cancer

Answer 15

Radon -

1. Natural Odorless, Tasteless Radioactive Gas -
2. Causes Lung Cancer

Chap 10

Question 16

Asb_______

1. Tiny Airborne Fiber
2. Creates Respiratory Diseases

Answer 16

Asbestos -

1. Tiny Airborne Fiber
2. Creates Respiratory Diseases

Chap 10

Question 17

M____

1. Caused by Excess Moisture
2. Airtight Windows

Answer 17

Mold -

1. Caused by Excess Moisture
2. Airtight Windows

Chap 10

Question 18

Surface and Ground Water Contamination -

Types of Contamination:

1. Conta______ Well Sites
2. Underground Pl_____
3. W____ Disp__ Systems
4. Leaking Underground Stor___ Ta___ (LUST)

Answer 18

Surface and Ground Water Contamination -

Types of Contamination:

1. Contaminated Well Sites
2. Underground Plumes
3. Waste Disposal Systems
4. Leaking Underground Storage Tank (LUST)

Chap 10

Question 19

Soil Contamination (4)

1. Pestic_____
2. Herbic____
3. Fert_____ and
4. Sol______

Answer 19

Soil Contaminations as follows -

1. Pesticides
2. Herbicides
3. Fertilizers and
4. Solvents

Chap 10

Question 20

E________ Soil -

Soils that May Absorb Water and Expand

Answer 20

Expansive Soil -

Soils that May Absorb Water and Expand

Chap 10

Question 21

What causes Lung Cancer?

Answer 21

Radon -

1. Natural Odorless, Tasteless Radioactive Gas -
2. Causes Lung Cancer

Chap 10

Question 22

Fiss___

Cracks that occur on Valley Floors from Extensive Groundwater Withdrawal

Answer 22

Fissures -

Cracks that occur on Valley Floors from Extensive Groundwater Withdrawal

Chap 10

Question 23

B_______

Defunct, Aban______ Commercial or Industrial Site Contaminated with Toxic Waste.

Answer 23

Brownfield -

Defunct, Abandoned Commercial or Industrial Site Contaminated with Toxic Waste.

Chap 10

Question 24

Disco______ aka D__ Dil_______ -

Process of Investigating the Property to Determine if Hazardous Substances or Pollution Exist.

Agent Exercises Reasonable Skill and Care and Must Disclose

Answer 24

Discovery aka Due Diligence -

Process of Investigating the Property to Determine if Hazardous Substances or Pollution Exist.

Agent Exercises Reasonable Skill and Care and Must Disclose.

Chap 10

Question 25

**Ph\_\_\_ __ Assessment** - ## Footnote **Process of _Inspecting_ Property, the _Review_ of Public Records and _Interview_ Owners/Tenants to Determine if Contamination Exist.**

Answer 25

**Phase 1 Assessment** - ## Footnote **Process of _Inspecting_ _Property_, the _Review_ of _Public Records_ and _Interviewing_ Owners/Tenants to Determine if Contamination Exist.** **Chap 10**

Question 26

**Phase 2 Assessment** - ## Footnote **_Process of Taking_ S\_\_\_\_\_ to Analyze if Pollution Exists.** **Remember: _Phase 1_ - _Inspecting_ Property; _Review_ Public Records, _Interview_ Owners/Tenants to Determine if Contamination Exists.**

Answer 26

**Phase 2 Assessment** - ## Footnote **Process of _Taking Samples_ taken to Analyze if Pollution Exists.** **Remember: _Phase 1_ - _Inspecting_ Property; _Review_ Public Records, _Interview_ Owners/Tenants to Determine if Contamination Exists.** **Chap 10**

Question 27

**Phase 3 Assessment** - **Core Samples** taken and **Actual C\_\_\_\_-Up** of **Contamination**

Answer 27

**Phase 3 Assessment** - ***Core Samples*** taken and **_Actual_ _Clean-up_ of Contamination** **Chap 10**

Question 28

**Superfund/Mini-Superfund - Property Location -** **Realtor must Dis\_\_\_\_\_ Knowledge of Property Located in Boundaries of Super or Mini-Superfund as per Real Estate Comissioner**

Answer 28

**Superfund/Mini-Superfund - Property Location -** **Realtor Must Disclose Knowledge of Property Located in Boundaries of Super or Mini-Superfund as per Real Estate Comissioner** **Chap 10**

Question 29

**S\_\_\_\_\_\_\_\_\_** - **Fund Set Up by _Federal_ (CERCLA**) **_Comprehensive Environmental Response Compensation and Liability Act_ to Bear Cost of Clean Up**

Answer 29

**Superfund** - **Fund Set Up by _Federal_ (CERCLA**) **_Comprehensive Environmental Response Compensation and Liability Act_ to Bear Cost of Clean Up** **Chap 10**

Question 30

**Mini-S\_\_\_\_\_\_\_\_\_ -** **Fund is Set Up by _State_ (WQARF)** **Water Quality Assurance Revolving Fund** 1. **Bears cost of Clean-Up that CERCLA Does Not Cover.**

Answer 30

**Mini-Superfund -** **Fund Set Up by _State_ (WQARF) _Water Quality Assurance Revolving Fund_** 1. **Bears cost of Clean-Up that CERCLA Does Not Cover.** **Chap 10**

Question 31

**(CERCLA) Compre\_\_\_\_\_\_\_ Env\_\_\_\_\_\_\_ Resp\_\_\_\_ Comp\_\_\_\_\_\_\_\_\_ and Liab\_\_\_\_\_\_ Act** - 1. **Superfund Set Up by the _Federal_ CERCLA to Bear Cost of Clean Up of Polluted Property.**

Answer 31

**(CERCLA) Comprehensive Environmental Response _Compensation and Liability Act_** _-_ 1. **Superfund Set Up by the _Federal_ CERCLA to Bear Cost of Clean Up of Polluted Property..** **Chap 10**

Question 32

**(WQARF) W\_\_\_ Q\_\_\_\_\_ Ass\_\_\_\_\_ Rev\_\_\_\_\_ F\_\_\_** - 1. **Mini Superfund Set Up by State (AZ) known as WQARF to Bear Cost of Clean-Up Not Covered by CERCLA.**

Answer 32

**(WQARF) Water Quality Assurance Revolving Fund** - 1. **Mini Superfund Set Up by by State (AZ) known as WQARF to Bear Cost of Clean-Up Not Covered by CERCLA.** **Chap 10**

Question 33

**AZ On-Site Wastewater Facilities** - 1. **Seller - Has __ Months Prior to Transfer of Property, to have System _Inspected_ and _Pumped_ and/or _Cleaned_.** 2. **Seller - Give the Buyer "_Inspection Report_"** 3. **Buyer - _Notice of Transfer_ Completed Within __ Days of Purchase** 4. **_Percolation_ - Ability for Gr\_\_\_\_\_ to Ab\_\_\_ and Dr\_\_\_\_ Water before Installation of Sep\_\_\_ Tank** 5. **_Perc Test_ - _Suitablity_ for _Installation_ of S\_\_\_\_ Tank** 6. **_Compaction_ - Compressed Soil added to Site to F\_\_\_ in Low Area to Make Level**

Answer 33

**AZ On-Site Wastewater Facilities** - (Septic Tanks and Alternative Systems) 1. **Seller - Has _6 Months_ prior to Transfer of Property, to have System _Inspected_ and _Pumped_ and/or _Cleaned_.** 2. **Seller - Give the Buyer "_Inspection Report_"** 3. **Buyer - _Notice of Transfer_ Completed Within _15 Days_ of Purchase** 4. **_Percolation_ - Ability for Ground to _Absorb_ and _Drain_ Water before Installation of Septic Tank** 5. **_Perc Test_ - _Suitablity_ for _Installation_ of Septic Tank** 6. **_Compaction_ - Compressed Soil added to Site to Fill in Low Areas to Make Level** **Chap 10**

Question 34

**On-Site** **Wastewater Facilities - Notice of Transfer** ## Footnote **Buyer has __ days from Purchase to _Complete_ "_Notice of Transfer_"**

Answer 34

**On-Site** **Wastewater Facilities - Notice of Transfer** **Buyer has _15 days_ from Purchase to _Complete_ "_Notice of Transfer_"** **Chap 10**

Question 35

**W\_\_\_\_\_\_\_\_ -** **Land Areas where Groundwater is "_At or Near_" The _Surface_, so as to Produce a _Wetland Plant Community_. _These Areas Subject to Environmental Controls for Preservation and Conservation._**

Answer 35

**Wetlands -** **Land Areas where Groundwater is "_At or Near_" the _Surface_ so as to Produce a Wetland Plant Community. These Areas Subject to many _Federal_, _State_ and _Local_ _Environmental Controls_ for "_Preservation_" and "_Conservation_.".** **Chap 10**

Question 36

**P\_\_\_ Test** - **Test Done to Determine _Suitability of Site for Installation of Septic Tank._**

Answer 36

**Perc Test** - ## Footnote **Test Done to Determine _Suitability_ of _Site for Installation of Septic Tank_** **Chap 10**

Question 37

**Seller's Responsibility** - **On-Site** **Wastewater Facilities** 1. **Within __ Mos** **Prior to Transfer,** **Seller to Have** **System _Inspected_, _Pumped_ or _Cleaned_; then Certified** 2. **Buyer do Transfer Form in 15 Days** 3. **Provide** **Buyer with** **Inspection Report**

Answer 37

**Seller's Responsibility** **- On-Site** **Wastewater Facilities** 1. **Within _6 Mos_ Prior to Transfer, Seller to Have System _Inspected_, _Pumped_ or _Cleaned_; then Certified** 2. **Buyer do Transfer Form in 15 Days** 3. **Provide Buyer with Inspection Report** **Chap 10**

Question 38

**Perc\_\_\_\_\_\_\_ -** **Ability of Ground** to **_Absorb_ and _Drain_ Water.**

Answer 38

**Percolation -** **Ability of Ground** to **_Absorb_ and _Drain_ Water.** **Chap 10**

Question 39

**National Fl\_\_\_\_ Ins\_\_\_\_\_ -** **Operated by FEMA,** **_Provides_** **_Insurance_** to **_Owners_, _Tenants_, and _Businesses_**

Answer 39

**National Flood Insurance -** **Operated by FEMA**, **_Provides_** **_Insurance_** to **_Owners_**, **_Tenants**_, and _**Businesses_**. **Chap 10**

Question 40

**Compa\_\_\_\_\_\_ -** **_Compressed Soil Added to Site_ to Fill Low Areas to Make Level**

Answer 40

**Compaction -** **_Compressed Soil Added to Site_ to Fill Low Areas to Make Level** **Chap 10**

Question 41

**S\_\_\_\_ L\_\_\_\_\_\_** **All Owners Current and Previous** are **Responsible for Polluted Properties**

Answer 41

**Strict Liability -** **All Owners Current and Previous** are **responsible for Polluted Properties** **Chap 10**

Question 42

**(EPA) Env\_\_\_\_\_\_\_ Pro\_\_\_\_\_\_\_ Ag\_\_\_\_\_** 1. **Regulates _Federal_ Environment Rules and Laws**

Answer 42

**(EPA) Environmental Protection Agency** 1. **Regulates _Federal_ Environment Rules and Laws** **Chap 10**

Question 43

**(ADEQ) AZ D\_\_\_ of Env\_\_\_\_\_ Q\_\_\_\_\_** 1. **Sets** **_State_** **Environmental Standards**

Answer 43

**ADEQ (stands for) -** AZ Dept of Environmental Quality 1. **Sets** **State** E**nvironmental Standards** **Chap 10**

Question 44

**G\_\_\_\_ R\_\_\_ M\_\_\_\_\_\_\_ -** **What is Used to Determine "Values" on _Small_ _Income_ _Properties_.**

Answer 44

**Gross Rent Multiplier -** **What is Used to Determine "Values" on _Small_ _Income_ _Properties_.** **Chap 10**

Question 45

**Recon\_\_\_\_\_\_\_ of D\_\_\_ -** **Process of Bringing Data Together From the _Three Apraisal Methods_ to Arrive at a Final Estimated Value.**

Answer 45

**Reconciliation of Data -** **Process of Bringing Data Together From the _Three Apraisal Methods_ to Arrive at a Final Estimated Value.** **Chap 10**

Question 46

**Lic\_\_\_\_\_\_ Ap\_\_\_\_\_\_ -** **May Appraise Non-Complex 1-4 Residential Family Units Valued at _Less than $1,000,000_.**

Answer 46

**Licensed Appraiser -** **May Appraise Non-Complex 1-4 Family Residential Units Valued at _Less than $1,000,000_.** **Chap 10**

Question 47

**Na\_\_\_\_\_ Fl\_\_\_\_ In\_\_\_\_\_\_ -** **Operated by FEMA, _Provides_ Insurance to _Owners_, _Tenants_, and _Businesses_**

Answer 47

**National Flood Insurance -** **Operated by FEMA**, **_Provides_** **Insurance** to **_Owners_**, **_Tenants**_, and _**Businesses_**. **Chap 10**

Question 48

**Cert\_\_\_\_ Res\_\_\_\_\_\_ Ap\_\_\_\_\_\_ - 1-4 Fam** **May Appraise "All Types of 1-4 Family Units" (1 Million Plus)**

Answer 48

**Certified Residential Appraiser - 1-4 Fam** **May Appraise "All Types of 1-4 Family Units" (1 Million Plus)** **Chap 10**

Question 49

**Cert\_\_\_\_\_ Gen\_\_\_\_ Appraiser - ALL** **May Appraise _All Types_ of Properties**

Answer 49

**Certified General Appraiser - ALL** **May Appraise _All Types_ of Properties** **Chap 10**

Question 50

**Ap\_\_\_\_\_ M\_\_\_\_\_\_\_ C\_\_\_\_\_ -** **Company that acts as "Firewall" between Lender and Appraiser to _Prevents Lender_ from _Choosing_ Appraiser Directly.**

Answer 50

**Appraisal Mgmt Company -** Company that acts as **"Firewall" between Lender and Appraiser** to _Prevents Lender_ from _Choosing_ Appraiser Directly. **Chap 10**

Question 51

**Com\_\_\_\_\_\_ M\_\_\_\_\_\_ A\_\_\_\_\_\_** **Analysis of Current Market Conditions used to _Help_ _Consumer_ Determine List Price, Sales Price/Purchase Price.**

Answer 51

**Competitive Market Analysis** - ## Footnote **Analysis of Current Market Conditions used to _Help_ _Consumer_ Determine List Price, Sales Price/Purchase Price.** **Chap 10**

Question 52

**B\_\_\_\_\_ P\_\_\_\_ O\_\_\_\_\_\_ -** **Property Evaluation Prepared by a Broker/Sales Person for Lender for a _Short Sale_, _Foreclosure_, or _Home Equity Line_ of Credit.**

Answer 52

**Broker Price Opinion -** **Property Evaluation Prepared by a Broker/Sales Person for Lender for a _Short Sale_, _Foreclosure_, or _Home Equity Line_ of Credit.** **Chap 10**

Question 53

**Fl\_\_\_p\_\_\_ -** **_Flat Portion of Land_ _Located Along Rivers or Streams_ which are Subject to Flooding.**

Answer 53

**Floodplain -** **_Flat Portion of Land_ _Located Along Rivers or Streams_ which are Subject to Flooding.** **Chap 10**

Question 54

**FEMA - F\_\_\_\_ Emer\_\_\_\_\_\_ Mgmt Agency -** **_Develop Floodplain Maps_. If Home in Floodplain Area, Lender will Require Flood Insurance _Purchased_ _by Buyer_.**

Answer 54

**FEMA - Federal Emergency Mgmt Agency -** **_Develop Floodplain Maps_. if Home in Floodplain Area, Lender will Require Flood Insurance to be _Purchased by Buyer._** **Chap 10**

Question 55

**Na\_\_\_\_\_ F\_\_\_\_\_\_ I\_\_\_\_\_\_\_\_ -** **Operated by FEMA**, **_Provides_** **Insurance** to **_Owners_**, **_Tenants**_, and _**Businesses_**.

Answer 55

**National Flood Insurance -** **Operated by FEMA**, **_Provides_** **Insurance** to **_Owners_**, **_Tenants**_, and _**Businesses_**. **Chap 10**

Question 56

**Fl\_\_\_\_ Elev\_\_\_\_\_ Certificates -** **Used by _FEMA_ and _Private Insurance Companies:_** 1. **"_TO RATE_" Fl\_\_\_\_ Ins\_\_\_\_\_\_ Policies.**

Answer 56

**Flood Elevation Certificates - Rate Insurance** **Used by _FEMA_ and _Private Insurance Companies:_** **"_TO RATE_" Flood Insurance Policies.** **Chap 10**

Question 57

**W\_\_\_\_\_\_ -** **Land Areas Where _Groundwater is "At or Near" the Surface_ so As To Produce a Wetland Plant Community. These Areas Subject to Many _Federal_, _State_ and _Local_ _Environmental Controls_ for "_Preservation_" and "_Conservation_.".**

Answer 57

**Wetlands -** **Land areas where _Groundwater is "At or Near" the Surface_ so As To Produce a Wetland Plant Community. These Areas Subject to Many _Federal_, _State_ and _Local_ _Environmental Controls_ for "_Preservation_" and "_Conservation_.".** **Chap 10**

Question 58

**Fl\_\_\_\_ Elev\_\_\_\_\_ Certificates -** **Used by _FEMA**_ and _**Private Insurance Companies_** 1. **"_TO RATE_" Fl\_\_\_\_ Ins\_\_\_\_\_\_ Policies.**

Answer 58

**Flood Elevation Certificates - Rate Insurance** **Used by _FEMA**_ and _**Private Insurance Companies:_** **"_TO RATE_" Flood Insurance Policies.** **Chap 10**

Question 59

**Capitalization -** **Process of Converting N\_\_ I\_\_\_\_ into V\_\_\_\_\_\_** **Net Income = Value x Rate** **\*\*\*\*\*Net Income / Rate = Value**

Answer 59

**Capitalization -** **Process of Converting Net Income into Value.** **Gross Income - Operating Income = NOI** **Cap Method: Net Income = Value x Rate** **\*\*\*\*\*Net Income / Rate = Value** **Chap 10**

Question 60

**S\_\_\_\_\_\_\_\_ Property** **Has a Negative Psychological Impact on Prospective Buyers. This Affects Home Value, Making the House Harder to Sell at Full Price Regardless of its Location or Physical Condition.** **_Examples_ Site of an _Infamous Murder_ or Suicide or a House with a Reputation for _Paranormal Activity_.**

Answer 60

**Stigmatized Property -** **Has a Negative Psychological Impact on Prospective Buyers. This Affects Home Value, Making the House Harder to Sell at Full Price Regardless of its Location or Physical Condition.** **_Examples_ Site of an _Infamous Murder_ or Suicide or a House with a Reputation for _Paranormal Activity_.** **Chap 10**

Question 61

**Income = Value x Rate** **A Property Produces a Net Income of $24,000 Annually. The Market Indicates that Investors can Expect a 12% Rate of Return. What is the Value of Property.**

Answer 61

**Income = Value x Rate** **A Property Produces a Net Income of $24,000 Annually. The Market Indicates that Investors can Expect a 12% Rate of Return. What is the Value of Property.** **IRV FORMULA Net Annual Income = Value x Rate** **24,000 (Income) \ .12 (Rate) = 200,000 (Value)** **Chap 10**

Question 62

A **Property Valued at $1,500,000** has a **Gross Income of $250,000** and **Operating Expenses of 40% of Gross Income.****If the Cap Rate Increases by 1%**; What will the New Value be? * _Income NOI_ * Value x Rate

Answer 62

A **Property Valued at $1,500,000** has a **Gross Income of $250,000** and **Operating Expenses of 40% of Gross Income.****If the Cap Rate Increases by 1%**; What will the New Value be? I=RV **_Find Income_**: $250,000 x 60% = $150,000 **NOI** **_Find Cap Rate_:** $150,000 (I) / $1,500,000 (V) = 10% (R) **Find New Value**: $150,000 (Inc) X 11% = $1,363,636.36

Question 63

**A Property Produces a Net Income $24,000 Annually. The Market Indicates the Investor can Expect a 12% Rate of Return. What is the Value of Property?**

Answer 63

**A Property Produces a Net Income $24,000 Annually. The Market Indicates the Investor can Expect a 12% Rate of Return. What is the Value of Property?** * **_Income (Annual)_** * **Value x Rate** **$24,000 (Inc) / 12% = $200,000 Value**

Question 64

**A Property Valued at $1,500,000 has a Gross Income of $250,000 and Operating Expenses of 40% of Gross Income. If Cap Rate increase by 1% what will New Value be?**

Answer 64

**A Property Valued at $1,500,000 has a Gross Income of $250,000 and Operating Expenses of 40% of Gross Income. If Cap Rate increase by 1% what will New Value be?** **_Formula_**: **(IRV)** Net Income = Value x Rate **Find Net Inc $250,000 (Inc) x 60% = $150,000 NOI** **Find Cap $150,000 (NOI) / $1,500,000 = 10% Rate** **Rate Change $1,500,000 x 11% = 1,363,636.36**

Question 65

**A Comparable Duplex Sold for $96,000 and Rented for $800 per Month. If the Subject Property Rents for $775, what is its Value using GRM**

Answer 65

**A Comparable Duplex Sold for $96,000 and Rented for $800 per Month. If the Subject Property Rents for $775, what is its Value using GRM** **_Formula_: Value = Gross Inc x GRM** **_Find GRM for Comp_: $96,000 (V) / $800(mo) = 120** **_Apply to Subj_: 120 (GRM) x $775 = 93,000 Value**

Question 66

**_Three Type of Appraisers:_** 1. **_License Appraiser_ - _Non-Complex_ 1-4 Res Units - under 1 M\_\_\_\_** 2. **_Cert Res Appraiser_ -All Types 1-4 Res M\_\_\_\_ Plus** 3. **_Cert Gen Appraiser_ - All Types of Property**

Answer 66

**_Three Type of Appraisers:_** 1. **_License Appraiser_ - _Non-Complex_ _1-4 Res Units_ - Under 1 Million** 2. **_Cert Res Appraiser_ -All Types _1-4 Res Units_ Million Plus** 3. **_Cert Gen Appraiser_ - All Types of Property** **Chap 10**

Question 67

**N\_\_\_\_\_ F\_\_\_\_\_ Insurance -** **Operated by FEMA, Provides Flood Insurance to _Owners_, _Tenants_, and _Businesses_.**

Answer 67

**National Flood Insurance -** **Operated by FEMA, Provides Flood Insurance to _Owners_, _Tenants_, and _Businesses_.**. **Chap 10**

Question 68

**Compared to the Physical Life of a Building, the Economic Life is:** 1. Longer 2. Shorter 3. The Same 4. Based on the Type of Improvements

Answer 68

**Compared to the Physical Life of a Building, the Economic Life is:** 1. Longer 2. **Shorter** 3. The Same 4. Based on the Type of Improvements **Chap 10**

Question 69

**The Income Approach Would Most Rely Heavily on Estimating the Value of:** 1. An Office Building 2. A Cooperative Apartment 3. A Municipal Building 4. Vacant Land

Answer 69

**The Income Approach Would Most Rely Heavily on Estimating the Value of:** 1. **An Office Building (Income Approach)** 2. A Cooperative Apartment 3. A Municipal Building (Cost Approach - One of a Kind) 4. Vacant Land (Compare Approach) **Chap 10**

Question 70

**Which of the Following Situations Would be Considered to be a Stigma on a House?** 1. Pink Walls 2. A Murder that Occured in the Basement 3. A Deteriorating Neighborhood 4. One Bathroom

Answer 70

**Which of the Following Situations Would be Considered to be a Stigma on a House?** 1. Pink Walls 2. **A Murder that Occured in the Basement** 3. A Deteriorating Neighborhood 4. One Bathroom **Chap 10**

Question 71

**A Brownfield in an Area Causes Loss in Value to Neighboring Properties. This is An Example:** 1. Economic Obslescense 2. Economic Quality 3. Economic Life 4. Functional Obsolescence

Answer 71

**A Brownfield in an Area Causes Loss in Value to Neighboring Properties. This is An Example:** 1. **Economic Obslescense** 2. Economic Quality 3. Economic Life 4. Functional Obsolescence **Chap 10**