Appraisal Procedures Flashcards
1
Q
A systematic set of procedures an appraiser follows to provide answers to a client’s questions about real property value.
A
Valuation Process (appraisal process)
2
Q
“The party or parties (i.e., individual, group, or entity) who engage an appraiser by employment or contract in a specific assignment, whether
directly or through an agent.”
A
Client
3
Q
“The client and any other party as identified, by name or type,
as users of the appraisal or appraisal review report by the appraiser, based on communication with the client at the time of the assignment.”
A
Intended user
4
Q
“The use(s) of an appraiser’s reported appraisal or
appraisal review assignment results, as identified by the appraiser based
on communication with the client at the time of the assignment.”
A
Intended use
5
Q
The objective of an assignment—e.g., in an
appraisal assignment, to develop an opinion of the defined value of a specified
interest in real estate.
A
Purpose of an assignment
6
Q
An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.
A
Extraordinary assumption
7
Q
An assumption, directly applicable to a specific service, which, if found to be false, could alter the opinions or conclusions in an appraisal or review
A
Special assumption
8
Q
This is a condition that is contrary to what exists but is supposed for the purpose of analysis
A
Hypothetical condition
9
Q
L____ and r_______ are also considered as assignment conditions.
A
Laws and regulations
10
Q
“type and extent of research and analyses in an appraisal or appraisal review assignment”
A
Scope of work
11
Q
M_____ a____ d___ is g_____ d___ about the four forces that influence value - economic, environmental, social, and governmental.
A
Market area data, general data
12
Q
Details about the property being appraised, comparable sale
and rental properties, and relevant local market characteristics.
A
specific data
13
Q
A series of related changes brought about by a chain of causes and
effects.
A
trend
14
Q
A shortened term for similar property sales, rentals, or operating expenses used for comparison in the valuation process. In best usage, the thing being compared should be specified, e.g., comparable sales, comparable properties, comparable rentals.
A
Comparables
15
Q
C______ p______ d___ can be general or specific data
A
Comparable property data
16
Q
the study of the supply and demand in a specific area for a specific type of property
A
Market analysis
17
Q
The reasonably probable use of property that results
in the highest value.
A
Highest and best use
18
Q
The four criteria that the h_____ and b___ u___ must meet are l____ p________, p_____ p_______, f_______ f________, and m_______
p________.
A
The four criteria that the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum
productivity.
19
Q
A tax appeal assignment will commonly involve a r________ effective date.
A
retrospective
20
Q
Intended use affects both appraisal d________ and reporting.
A
development
21
Q
A systematic procedure appraisers can employ to provide the answer to a client’s
question about the value of a property is called the v______ p_____
A
valuation process
22
Q
In h_____ a__ b___ u___ analysis, the appraiser analyzes the ideal
improvement for the property.
A
highest and best use
23
Q
The relevant characteristics of a property are part of i______ the problem.
A
identifying
24
Q
T or F Scope of work is the type and extent of research and
analyses in an appraisal or appraisal review assignment.
A
True
25
T or F Identifying relevant characteristics of the subject property
is specific data rather than general data.
True
26
T or F The client and intended user are never the same.
False
27
T or F A prospective appraisal has an effective date
| contemporaneous with the date of the report.
False
28
T or F Developing an opinion of insurable value can be identified as the purpose of an appraisal assignment.
True
29
```
6 different procedures for analyzing land:
G____ r___ c_______
L___ r______
A______
D_______ (subdivision)
E_______
S_____ c______
```
```
Ground rent capitalization
Land residual
Allocation
Development (subdivision)
Extraction
Sales comparison
```
30
involves searching for similar vacant parcels, analyzing them in comparison to the subject parcel, and adjusting the sales for salient differences.
Sales comparison
31
E______ is based on improved sales, and the depreciated cost (contributory value) of the improvements is subtracted from the sales price.
Sale price of comparable sale ‒ Depreciated cost of improvements = Land value of comparable sale.
Extraction
32
A_____ also uses sales of improved properties. Rather than deducting the improvements as in extraction, allocation is based on a ratio of land value to improved property value. The ratio is derived from what is typical in the market.
Sale price × Typical ratio of land value to improvement value = Land value
Allocation
33
L____ r______ t______ is an income approach based on the economic principle of surplus productivity. As the other three agents of production have been paid, land as the residual receives income, which is capitalized into land value.
In this procedure, the appraiser separates the rent between the improved land and building improvements. As will be discussed in greater detail later in this course, there is a basic formula for income capitalization called IRV, Income ÷ Rate = Value.
Land Residual Technique
34
G_____ r___ c_______ is also an income approach to land value. This procedure can be used when the improved land rent is a known amount, as in an improved land lease.
In this procedure, the appraiser divides the net amount estimated for the right to use and occupy the improved land by a land capitalization rate (derived from the market) to form an opinion of improved land value.
Ground rent capitalization
35
S______ d________ is also an income approach to the valuation of tracts of unimproved land with subdivision potential.
Subdivision development
36
If the comparable sale is S_____ S_____.
| If the comparable sale is I_____, I_____.
Superior, Subtract
| Inferior, Increase
37
R________ is the process of resolving the differences among the various value indications and arriving at a final opinion of value. The value opinion can be a single dollar figure or a range into which the value will most likely fall.
Reconcilliation
38
T or F A hypothetical condition is contrary to what exists but is
supposed for the purpose of analysis.
True
39
T or F The valuation process provides a framework for deriving an
opinion of market value as well as other types of value.
True
40
T or F The first two assignment elements of problem identification
are identifying the real estate and the real property rights to
be appraised.
False
41
T or F Comparable sales having a different highest and best use
than the subject should be used if similar in other relevant
characteristics.
False
42
T or F Non-realty components of value are an element of comparison
considered within the sales comparison approach.
True
43
T or F Extraction is an improved land valuation procedure that
can be used when a property sells and includes building
improvements on the site.
True
44
T or F The final step in the valuation process is the reconciliation of
the value indications.
False
45
T or F An appraiser must use all three approaches in every assignment.
False
46
T or F The first step in the cost approach is to value the land as vacant
and ready for development to its highest and best use.
True
47
T or F Purpose defines the intended use of the appraisal.
False
48
C________: The conversion of income into value.
Capitalization
49
The ratio of income or yield to the original investment; the ratio of the current annual net income generated from the operation of an enterprise to the capital investment, the net yield over the duration of the investment.
Rate of return
50
```
C_______ r___ (R). A ratio of one year’s net operating income provided
by an asset to the value of the asset; used to convert income into value in
the application of the income capitalization approach.
```
Capitalization rate
51
O____ c________ r____ (RO). The relationship between a single year’s
net operating income expectancy and the total property price or value.
Overall capitalization rate
52
E____ c_________ r___ (RE). An income rate that reflects the relationship between one year’s equity cash flow and the equity investment;
also called the cash-on-cash rate, cash flow rate, or equity dividend rate.
Equity capitalization rate
53
M______ c______ r____ (RM). The capitalization rate for debt; the
ratio of the annual debt service to the principal amount of the mortgage
loan.
Mortgage capitalization rate
54
The rate of return, or yield, on debt capital.
Interest rate
55
A rate of return on capital used to convert future payments
| or receipts into present value.
Discount rate
56
No separate mathematical distinction is made
| between return on and return of capital—it’s all in the rate.
Direct capitalization
57
The distinction between the return of and return
on capital is always definite and precise for each year’s cash flow and
reversion.
Yield capitalization
58
A stated or contract rate; an interest rate, usually
annual, that does not necessarily correspond to the effective or compound
interest rate.
Nominal interest rate
59
A method used to convert an estimate of a single year’s
income expectancy into an indication of value in one direct step, either by
dividing the net income estimate by an appropriate capitalization rate or by
multiplying the income estimate by an appropriate factor.
Direct capitalization
60
A method used to convert future benefits into present
value by 1) discounting each future benefit at an appropriate yield rate, or
2) developing an overall rate that explicitly reflects the investment’s income
pattern, holding period, value change, and yield rate. AKA D_____ c___ f___ a_____
Yield capitalization; discounted cash flow analysis
61
The portion of net operating
income that remains after total mortgage debt service is paid but before income tax on operations is deducted; also called before-tax cash flow or
equity dividend.
Pre-tax cash flow (PTCF)
62
The total potential income
attributable to property at full occupancy before vacancy and operating
expenses are deducted. (The word potential was added to the definition.)
Potential gross income (PGI)
63
The anticipated income from all operations of the real estate after an allowance is made for vacancy and
collection losses and an addition is made for any other income.
Effective gross income (EGI)
64
The actual or anticipated net
income that remains after all operating expenses are deducted from
effective gross income, but before mortgage debt service and book
depreciation are deducted.
Net operating income (NOI)
65
The portion of pre-tax cash flow that remains after all income tax liabilities have been deducted
After-tax cash flow (ACTF)
66
A lump-sum benefit that an investor receives or expects to receive upon the termination or sale of an investment
Reversion
67
What does the purpose of an appraisal assignment define?
A. a summary of the scope of work decision
B. the definition of the client’s problem
C. the intended use of the assignment
D. the type and definition of value used in the assignment
D
68
A value opinion of a proposed office building based on a current effective date would generally require what kind of assignment condition?
A. a hypothetical condition
B. an extended limiting condition
C. an extraordinary assumption/special assumption
D. a standard assumption
A
69
```
The ratio of annual debt service to the principal amount of the mortgage loan is
called the
A. discount rate.
B. equity capitalization rate.
C. interest rate.
D. mortgage capitalization rate.
```
D
70
If the net operating income of a property is $187,500 and the market indicates
an overall capitalization rate of 7.5%, what is the indicated value using direct
capitalization?
A. $201,563
B. $328,125
C. $2,500,000
D. $2,678,571
C $187,500 / 0.075 = $2,500,000
71
What are the three traditional approaches to value?
A. cost, sales comparison, and income capitalization
B. income capitalization, sales comparison, and extraction
C. market analysis, highest and best use analysis, and cost analysis
D. sales comparison, extraction, and allocation
A
72
What is the indicated overall capitalization rate of a property that sold for
$825,000 and has a net operating income of $53,625?
A. 0.063%
B. 0.15%
C. 6.5%
D. 15.38%
C $53,625 / $825,000 = 0.065 (or 6.5%)
73
```
What is the gross rent multiplier of a property that sold for $174,000 and has a
gross monthly rent of $1,500?
A. 8.6%
B. 98
C. 113
D. 116
```
D $174,000 / $1,500 = 116 GRM
74
```
The amount left after debt service has been deducted from net operating income
is called
A. after-tax cash flow.
B. discounted cash flow.
C. pre-tax cash flow.
D. reversion.
```
C
75
```
What method is used to convert an estimate of a single year’s income expectancy
into an indication of value?
A. direct capitalization
B. discounted cash fl ow analysis
C. reversion
D. yield capitalization
```
A
76
Jackson is appraising a large tract of land that is being farmed for agricultural use.
The land use surrounding the farm is currently in transition from agricultural to
one-unit residential developments. For this assignment, what two procedures should Jackson consider in analyzing the land value of the property?
A. extraction and allocation
B. ground rent capitalization and allocation
C. residual land technique and extraction
D. sales comparison and subdivision development analysis
D
77
```
T___ = Part ÷ Rate
P___ = Rate × Total
R___ = Part ÷ Total
```
Total, Part, Rate
78
A r______ is an element of a mathematical set that when
multiplied by a given element yields the identity element (Merriam-Webster). It is also referred to as a multiplicative inverse.
Reciprocal
79
O_____ e_____ r____ (OER). The ratio of total operating expenses to effective gross income (TOE / EGI); the complement of the net income ratio, i.e., OER = 1 – NIR.
Operating expense ratio
80
This is the ratio between the sale price (or value) of
| a property and its effective gross income (EGI) or its potential gross income (PGI).
Gross income multiplier (GIM)
81
This is a similar ratio to GIM, but it applies to
rental income only. This multiplier is applied in less complex properties such as
rented one-unit residential homes and two-to-four unit small residential income
properties.
Gross rent multiplier (GRM)
82
A contract in which the rights to use and occupy land, space, or structures
are transferred by the owner to another for a specified period of time in return for
a specified rent.
Lease
83
G____ l____. The landlord (i.e., lessor) pays all of the operating expenses.
N___ l____. The tenant (i.e., lessee) pays all of the operating expenses.
Gross lease
| Net lease
84
F___ r_____: A lease with a specified level of rent that continues throughout the
lease term; also called level payment lease.
Flat rental
85
G______ r____: A lease that provides for specified changes in rent at one or
more points during the lease term.
a. S___-__ l____. The payments increase at specified intervals.
b. S___-____ l___. The payments decrease at specified intervals.
Graduated rental
step-up lease
step-down lease
86
R_______ l____ A lease that provides for periodic rent adjustments based
on the market rental rate of the space. This is sometimes accomplished
through appraisal or arbitration.
Revaluation lease
87
I_____ l____ A lease, usually for a long term, that provides for periodic rent
adjustments based on the change in an economic index, e.g., a cost-of-living
index.
Index lease
88
P_______ l____. A lease in which the rent or some portion of the rent
represents a specified percentage of the volume of business, productivity, or use
achieved by the tenant. This type of lease is frequently used for retail. Most
leases specify a guaranteed minimum rent with overages possible.
Percentage lease
89
An amount paid for the use of land, improvements, or a capital good.
Rent
90
Types of rent
a. C______ r___. The actual rental income specified in a lease.
b. S________ r___. Income due under existing leases.
Contract rent
| Scheduled rent
91
M____ r___: The most probable rent that a property should bring in a
competitive and open market reflecting the conditions and restrictions of a
specified lease agreement, including the rental adjustment and revaluation,
permitted uses, use restrictions, expense obligations, term concessions,
renewal and purchase options, and tenant improvements
Market rent
92
E______ r___. Total base rent, or minimum rent stipulated in a lease, over
the specified lease term minus rent concessions; the rent that is effectively
paid by a tenant net of financial concessions provided by a landlord.
Effective rent
93
D____ r___. The amount by which market rent exceeds contract rent at the
time of the appraisal; created by a lease favorable to the tenant, resulting
in a positive leasehold, and may reflect uninformed or unusually motivated
parties, special relationships, inferior management, a lease executed in a
weaker rental market, or concessions agreed to by the parties.
Deficit rent
94
E_____ r___. The amount by which contract rent exceeds market rent
at the time of the appraisal; created by a lease favorable to the landlord
(lessor) and may reflect unusual management, unknowledgeable or unusually motivated parties, a lease execution in an earlier, stronger rental
market, or an agreement of the parties.
Excess rent
95
P________ r___. Rental income received in accordance with the terms of a percentage lease; typically derived from retail store and restaurant tenants
and based on a certain percentage of their gross sales.
Percentage rent
96
O____ r___. The percentage rent paid over and above the guaranteed minimum rent or base rent; calculated as a percentage of sales in excess of a specified breakpoint sales volume. This is not excess rent, but is a contract rent.
Overage rent
97
P_____ g____ i____ (PGI). This is the total rent possible if the property is 100% occupied.
Potential gross income
98
E______ g____ i____ (EGI). Derive by subtracting an allowance for vacancy and
collection loss from (PGI).
Effective gross income
99
O______ e____. The periodic expenditures necessary to maintain the
real estate and continue production of the effective gross income, assuming
prudent and competent management.
Operating expenses
100
F_____ e_____. Operating expenses such as property taxes and insurance
that generally do not vary with occupancy and that prudent management will
pay for whether the property is occupied or vacant.
Fixed expenses
101
V_______ e_____. Operating expenses that generally vary with the level of
occupancy or the extent of services provided.
Variable expenses
102
R________ a________. An allowance that provides for the periodic
replacement of short-lived building components that wear out more rapidly
than the building itself and must be replaced periodically during the building’s
life.
Replacement allowance
103
T____ o______ e____ (TOE) The sum of all fixed and variable operating expenses
and the replacement allowance cited in the appraiser’s operating expense estimate.
Total operating expenses
104
N__ o______ i____ (NOI or IO). The actual or anticipated net income that
remains after all operating expenses are deducted from effective gross income,
but before mortgage debt service and book depreciation are deducted; may be
calculated before or after deducting the replacement allowance.
Net operating income
105
M_____ d___ s_____ (IM). The periodic payment for interest on and retirement of
the principal of a mortgage loan.
Mortgage debt service
106
P__-___ c___ f___ (PTCF). The portion of net operating income that remains after
total mortgage debt service is paid but before income tax on operations is deducted.
Pre-tax cash flow
107
O______ e_____ r___ (OER). The ratio of total operating expenses to
effective gross income (TOE/EGI); the complement of the net income ratio, i.e.,
OER = 1 − NIR.
Operating expense ratio
108
N__ i____ r____ (NIR). The ratio of net operating income to effective gross
income (NOI/EGI); the complement of the operating expense ratio, i.e.,
NIR = 1 − OER.
Net income ratio
109
D____ c_____ r___ (DCR). The ratio of net operating income to annual debt
service; ... measures the relative ability of a property to meet its debt service
out of net operating income; DCR = IO / IM
Debt coverage ratio
110
E____ g___ i___: PGI minus allowance for vacancy and collection losses
Effective gross income
111
N___ o_______ i___: EGI minus operating expenses
Net operating income
112
P___ c___ f___: IO minus debt service
Pretax cash flow
113
G______ r____ l___: A contract calling for changes in the amount of rent at one or more points during
the lease term
Graduated rental lease
114
P______ l____: A lease in which some or all of the rent is based on the volume of business
Percentage lease
115
C_____ r___: The actual rent specified in a lease
Contract rent
116
E_____ r___: The amount by which contract rent exceeds market rent
Excess rent
117
O_____ r___: Percentage rent paid over and above the base rent
Overage rent
118
D___ c______ r____: Ratio of net operating income to annual debt service
Debt coverage ratio
119
O_______ e____ r___: Ratio of operating expenses to effective gross income
Operating expense ratio
120
A physical observation performed to assist in
| identifying relevant property characteristics in a valuation service.
Personal inspection
121
F______ is a waterproof material used
to prevent water leakage in places where it is likely to occur, such as roof
valleys or where vent pipes pass through the roof deck and where the roof
meets a wall.
Flashing
122
There are two common types of slab foundations. One is the slab on a perimeter
stem wall, and the other is called a m_______ slab.
monolithic
123
The two wall framing types are p_____ and b_____.
platform, balloon
124
A lender often requires a water test if a property has a p_____ w___.
private well
125
If an appraiser observes missing flashing, what construction system is the
appraiser viewing? R___ s_____
Roof system
126
Foundation walls are generally built on f_____
footings
127
T or F Colonial style is an example of a two-story design for a residence.
True
128
T or F Foundations are sometimes constructed of specially prepared
wood and referred to as a permanent wood foundation.
True
129
T or F Tighter construction standards since the 1980s have proven
to have little or no unfavorable side effects.
False
130
T or F Drain tile is another term used in lieu of gutters on the roof.
False
131
T or F Engineered trusses are sometimes used in lieu of hand
| framing a roofing support system.
True
132
The actual or estimated amount required to create, reproduce, replace, or
obtain a property.
Cost
133
The estimated cost to construct, at current prices as of the effective date of the appraisal, an exact duplicate or replica of the building being appraised, using the same materials, construction standards, design, layout, and quality of workmanship and embodying all the deficiencies, superadequacies, and obsolescence of the subject building.
Reproduction cost
134
The estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised, using modern materials and current standards, design, and layout.
Replacement cost
135
These are hard cost expenditures for the labor and materials used in the construction of improvements.
Direct (Hard) costs
136
These are soft cost expenditures (or allowances) that are necessary components but are not typically part of the construction contract.
Indirect (Soft) costs
137
A market-derived figure that represents the amount
an entrepreneur expects to receive for providing coordination and expertise
with the development of a project including associated risk.
Entrepreneurial incentive
138
A market-derived historical figure that represents
the amount an entrepreneur receives for his or her contribution to a project
and risk.
Entrepreneurial profit
139
The most commonly used cost-estimating method. It is used to derive
a cost estimate in terms of dollars per unit of area or volume based on
known costs of similar structures that are adjusted for market conditions,
geographic location, time and physical differences; usually applied to total building area
Comparative-unit method
140
In this method, the total building cost is estimated by adding together the
unit costs for the various building components as installed (e.g., the roof,
walls, foundation, excavation, electrical system, etc.).
Unit-in-place method
141
In this method, the quantity and quality of all materials used and all
categories of labor required are estimated and unit cost figures are applied
to arrive at a total cost estimate for labor and materials.
Quantity survey method
142
The total area of finished,
above-grade residential
space
Gross living area (GLA)
143
For d______ r_______ s______(see diagram above), the gross living
area (GLA) is calculated using exterior dimensions.
detached residential structures
144
For a______ r______ s_____ such as townhouses and twin homes),
exterior dimensions are measured to the center point of the party wall.
attached residential structures
145
For c________ u____, the GLA is based on interior dimensions of the
unit’s overall perimeter shell. The GLA represents the floor area of the
condominium “air space” ignoring all interior walls. In some areas, the
condo unit is measured to the center of the perimeter walls.
condominium units
146
Total floor area of a building, excluding unenclosed
areas, measured from the exterior of the walls of the above-grade area. This
includes mezzanines and basements if and when typically included in the
market area of the type of property involved.
Gross building area (GBA)
147
Total floor area designed for the occupancy and
exclusive use of tenants, including basements and mezzanines; measured
from the center of joint partitioning to the outside wall surfaces.
Gross leasable area (GLA)
148
The amount of space on which the rent is based;
| calculated according to local practice.
Net rentable area (NRA).
149
Chandra is appraising a residential property. The house was built in 1981 and is
in average condition. The appraiser is using a cost-service provider to develop the
cost approach. What type of cost is she using in this appraisal?
A. direct costs only
B. hard costs plus entrepreneurial profit
C. reproduction cost
D. replacement cost
D. replacement cost
150
The cost estimating method that considers all materials used and all categories of
labor required to construct the improvement is called
A. comparative-unit method.
B. quantity survey method.
C. segregated cost method.
D. unit-in-place method.
B. quantity survey method.
151
```
Which of the following is NOT an identified type of accrued depreciation applicable
to property improvement?
A. entrepreneurial obsolescence
B. external obsolescence
C. functional obsolescence
D. physical deterioration
```
A. entrepreneurial obsolescence
152
```
Labor and materials are an example of what kind of cost?
A. direct cost
B. indirect cost
C. replacement cost
D. reproduction cost
```
A. direct cost
153
A buyer will not pay more for a property than the cost to construct one of equal
desirability and utility without undue delay. What principle does this illustrate?
A. balance
B. highest and best use
C. substitution
D. supply and demand
C. substitution
154
```
What type of property is the gross living area (GLA) generally based on interior
dimensions?
A. cluster home in a PUD
B. condominium
C. manufactured home
D. twin home
```
B. condominium
155
An appraiser is analyzing the soft costs in a building project. In this analysis, what
might the appraiser consider in this category?
A. architectural fees
B. building permits
C. material storage facilities
D. security during construction
A. architectural fees
156
What is left when the total cost of development is deducted from the sale price of a property?
A. administrative expenses of the developer
B. entrepreneurial coordination
C. entrepreneurial profit or loss
D. contractor’s overhead
C. entrepreneurial profit or loss
157
```
An appraiser measured a one-story residence as 26’ x 40’ on the main floor, and the house had a below-grade-level finished basement area of 20’ x 16’. The residence also had an attached screen porch on the main level of 12’ x 14’. What is the gross living area (GLA) for the residence?
A. 1,040 sq. ft.
B. 1,208 sq. ft.
C. 1,360 sq. ft.
D. 1,528 sq. ft.
```
A. 1,040 sq. ft. (26 ft. × 40 ft. = answer)
158
The cost of a structure was $300,000 when it was built 18 months ago. The cost
index at that time was 150.5. What is the estimated cost today if the cost index
is 168.56?
A. $267,857
B. $327,587
C. $336,000
D. $354,180
C. $336,000 (168.56 / 150.5 = 1.12 × $300,000 = answer)
159
A rating that indicates resistance to heat conduction for a particular insulating material. A higher _____ for the insulation means less heat escapes through the walls and ceiling.
R-value
160
Mr. Chatsworth’s residence is on the historic register, and he wants to know
the insurable value in order to replicate the building in the event of fi re or storm
damage. What type of cost should the appraiser use?
A. direct cost
B. replacement cost
C. reproduction cost
D. indirect cost
C. reproduction cost
161
What area is included in gross living area?
A. all floor areas in the house, garage, porches, decks, etc.
B. finished and habitable floor areas above grade
C. finished floor areas above and below grade
D. open non-floored area of a two-story foyer
B. finished and habitable floor areas above grade
162
```
Because of the unique attributes of the cost approach, it is ideally suited for
A. estimating insurable value.
B. estimating market value for lenders.
C. estimating value in a condemnation.
D. subdivision development analysis.
```
A. estimating insurable value.
163
Condon has estimated the cost of excavation, the floor, wall, and roof components,
and the packaged costs for the electrical, heating, and plumbing. What cost
method is Condon using?
A. comparative unit method
B. price-index method
C. quantity survey method
D. unit-in-place method
D. unit-in-place method
164
Fogarty knows that the original cost of the building three years ago was
$750,000. If the cost index was 235 when the structure was built, what is the
estimated cost now if the index is at 267.9?
A. $657,895
B. $855,000
C. $996,750
D. $1,117,735
B. $855,000 (267.9 / 235 = 1.14 × $750,000 = answer)
165
```
What is the predominant type of frame construction used after World War II?
A. balloon
B. concrete block and stucco
C. platform
D. post and beam
```
C. platform
166
```
An appraiser observes that the distance between a private sewage system’s drain field and the water well does not meet the minimum requirements. Under which
component of a building does this fall?
A. electrical
B. foundation
C. framing
D. plumbing
```
D. plumbing
167
What type of foundation is likely to be found in housing that is located in a warm
climate and subject to occasional standing water?
A. basement wall foundation
B. monolithic slab foundation C. pier foundation
D. slab with stem wall foundation
C. pier foundation
168
```
An earth-sheltered dwelling would likely be placed into which of the following
categories of housing design?
A. contemporary
B. specialized
C. split level
D. zero-story
```
B. specialized
169
An appraiser is analyzing the cost on a 1,500 sq.-ft., one-story residence and has
estimated the base cost at $75 per sq. ft. If the local multiplier is 1.10 and the
current cost multiplier is 1.05, what is the cost for the dwelling?
A. $107,386
B. $117,857
C. $129,937
D. $241,875
C. $129,937
170
```
Reilly is counting the plumbing fixtures in a second-floor bath and found that there are two sinks, a toilet, a bathtub, and a separate shower stall. How many plumbing fixtures should Reilly include in his count?
A. 3
B. 4
C. 5
D. 7
```
C. 5
171
In an appraisal of a typical detached residential structure, an appraiser
determines the gross living area by
A. measuring the exterior perimeter dimensions of the residence and
multiplying it by the current cost modifier.
B. using the exterior perimeter dimensions of the residence.
C. using the interior dimensions of the residence’s overall perimeter shell.
D. using the size provided by the real estate broker.
B. using the exterior perimeter dimensions of the residence.
172
C___ __ c_______ is characterized by structural (skeletal) steel columns and beams that have been fireproofed with masonry, concrete, plaster or other noncombustible material. Floors will be concrete or concrete on the steel deck and fireproofed. Roofs will be formed concrete, pre-cast slabs, concrete or gypsum on the steel deck, and fireproofed. Walls are non-load bearing (this means they have a structural steel skeleton) curtain walls, with masonry, concrete, metal and glass panels, stone, steel studs and masonry, tile or noncombustible material.
Class A construction
173
C____ __ c________ is characterized by masonry or concrete load-bearing walls with or without pilasters including tilt-up construction. The curtain walls are masonry, concrete with full or partial open steel, wood, or concrete frame.The floor is wood or concrete plank on wood or steel floor joists. It can also be concrete slab on grade. The roof is wood or steel joists with wood or steel deck or concrete plank. The walls are brick, concrete block, or tile masonry, tilt-up, form concrete, non-bearing curtain walls.
Class C construction
174
These buildings are generally constructed to minimum code
| requirements often with little regard for architectural appearance or amenities.
Low Cost in commercial class
175
These buildings constitute the largest group of buildings constructed, approximately 50% of all buildings. Buildings are generally designed for maximum economic potential. They comply with standard code construction and have simple ornamentation and finishes.
Average in commercial class
176
```
These buildings are designed for good appearance, comfort, and
convenience, as well as an element of prestige. Ornamentation treatment is
usually of higher quality, and interiors are designed for upper-class rentals.
```
Good in commercial class
177
These are sometimes referred to as prestige buildings. On an
economic basis, part of the cost must be written off to pride of ownership and
some of the income intangibly derived from advertising. Excellent dwellings
are generally built for the established professional or those with higher
incomes and have some degree of expensive finishes and fixtures.
Excellent in commercial class
178
P______ d________. This is the slow destruction (or wear and tear) of the
structural components that goes on every day, from the moment a building is
completed.
Physical deterioration
179
F_______ o_________. The impairment of functional capacity attributed to
a particular property according to market tastes and standards.
Functional obsolescence
180
E______ o__________. This type of depreciation comes from outside the
boundaries of the property.
External obsolescence.
181
In appraisal, a loss in property value from any cause; the
difference between the cost of an improvement on the effective date of the
appraisal and the market value of the improvement on the same date.
Depreciation
182
In accounting, the amount of capital recapture deducted
| on an owner’s books.
Book depreciation
183
E_____ l___ - This is the period over which improvements to real property contribute to property value. It is usually shorter than physical life (i.e., how long the building will stand and provide shelter). The period can be extended by means of renovations or remodeling of the improvements. You can have a building that is still standing (such as an old barn) but is no longer being put to use as it was intended. Its economic life is long gone, but it is still physically standing (until a strong wind comes along and topples it).
Economic life
184
R_______ E_______ L___ - This is the estimated period over which existing improvements are expected to contribute economically to a property. What is left of the property to contribute to its usefulness.
Remaining Economic Life
185
A____ A___ - The number of years that have elapsed since the construction of an improvement was completed; also called historical or chronological age.
Actual Age
186
E_______ A___ - The age of property that is based on the amount of observed deterioration and obsolescence it has sustained, which may be different from its chronological age. This may be greater or less than actual age depending on the maintenance, quality, or design of a structure. As we will see in a moment, renovation or rehabilitation may decrease the effective age of a structure.
Effective Age
187
This method relies on the availability of comparable sales from which you can
extract the depreciation. Basically taking the cost new and subtracting the current depreciated cost of the building.
Market extraction method
188
Depreciation from all sources is grouped together in a lump-sum amount that is derived through the use of a ratio applied to the current cost of the structure. This is the method most commonly used by appraisers. It is a formula that covers all components of depreciation (physical, functional, and external) and groups them together in a lump-sum amount that is derived through the use of a ratio applied to the current cost of the structure.
Age-life method
189
In this method, the total diminution in the value of a property is estimated by
analyzing and measuring each cause of depreciation (physical, functional, and
external) separately. This is a very complicated method that involves breaking down each individual component of the structure. The diminution in the value of a property is estimated by analyzing and measuring each cause of depreciation (physical, functional, and external) separately. Appraisers rarely use this method.
Breakdown method
190
This is the period of time over which a structure or a component of a property may reasonably be expected to perform the function for which it was designed.
Useful life
191
The estimated period during which improvements will continue to provide utility; an estimate of the number of years remaining in the useful life of the structure or structural components as of the effective date of the appraisal. Used in the breakdown method of estimating depreciation.
Remaining useful life
192
C_____ p_____ d________ involves relatively minor items that are normally taken care of in the course of regular maintenance. These items as often referred to as "d_____ m_________." Examples include broken windows, broken steps, and peeling paint on fascia boards or window trim.
Curable physical deterioration, deferred maintenance
193
I_______ p______ d__________ are items of deterioration that cannot be practically or economically corrected as of the effective date of appraisal. These are considered only after the curable items of physical deterioration have been addressed and deducted (i.e. broken window). Further, incurable physical deterioration relates to both short-lived components and long-lived components, and each must be considered separately.
Incurable physical deterioration
194
S____-l_____ c_______ are items that have an expected useful life that is shorter than that of the entire structure. Examples include roof cover, boiler, carpeting, and appliances.
Short-lived components
195
The a__-l___ r____ is the actual age of the component divided by the total useful life (not economic life) of the component.
age-life ratio
196
L___-l_____ C______ are building components expected to have the same useful life as the entire structure. Examples include the structural steel framing of a high-rise office building, or the wood rafters, framing studs, and concrete foundation walls of a single-family residence.
Long-lived components
197
F_______ o_________ is a loss in value from defects in design.
Functional obsolescence
198
E______ o__________ is the diminished utility of a structure due to negative influences outside the site and generally incurable.
External obsolescence
199
```
What type of wall enclosure for a porch is the most costly?
A. knee wall with glass
B. open with post supports
C. screen only
D. solid wall
```
A. knee wall with glass
200
In the marketplace, a commercial broker might refer to a property as a “Class A”
building. This rating refers to
A. a rating established by the taxing district.
B. competitive ranking for leasing purposes.
C. construction classification based on Marshall and Swift/Boeckh.
D. the building’s Blue Book classification.
B. competitive ranking for leasing purposes.
201
In the cost approach, an appraiser may categorize high interest rates as what type
of depreciation accruing to the property?
A. external obsolescence
B. fi nancial obsolescence
C. functional obsolescence
D. physical deterioration
A. external obsolescence
202
Jacobs is trying to estimate the depreciation of a building’s roof by the breakdown
method. He knows that the useful life of the roof is 25 years and the actual age
is 10 years. Jacobs’ trainee, however, believes the effective age of the roof is 15
years due to some storm damage. What is the percent of depreciation for the roof?
A. 28.5%
B. 37.5%
C. 40%
D. 60%
C. 40% (10 / 25 = 40% depreciation)
203
Hopkins sold a warehouse for $950,000, in which the land value was estimated
at $250,000. If the cost to replace the existing warehouse building is
$1.5 million, what is the dollar amount of depreciation accrued to the building?
A. $550,000
B. $700,000
C. $800,000
D. $1,250,000
C. $800,000 (Step 1: $950,000 − $250,000 = $700,000 bldg. value)
(Step 2: $1,500,000 − $700,000 = answer)
204
A manufactured home has an effective age of 30 years and a remaining economic
life of 20 years. What is the percent of depreciation for the building?
A. 40%
B. 50%
C. 60%
D. 67%
C. 60% (30 / 50 = 60% depreciation)
205
An apartment building has plumbing and electrical systems that are deteriorated
to the point of requiring complete replacement. This depreciation can be identified
as
A. external obsolescence.
B. functional curable obsolescence.
C. physical curable deterioration.
D. physical incurable deterioration.
D. physical incurable deterioration.
206
```
When using the economic age-life method of depreciation, what type of
depreciation is actually measured?
A. external obsolescence
B. functional obsolescence
C. physical deterioration
D. all types of depreciation
```
D. all types of depreciation
207
Challenge: A buyer was interested in building on a lot next to a highway and
wanted to know how much of a loss might be attributed to the traffic influence.
The buyer’s new house will cost $375,000 and the site was recently purchased
for $150,000. What is the value of the property if the market indicates a 15%
loss due to the highway influence?
A. $431,250
B. $446,250
C. $468,750
D. $502,500
C. $468,750 (Land sale already reflects the external obsolescence.)
Solution:
$375,000 × 0.85 = $318,750 depreciated cost
$318,750 + $150,000 land = answer
208
T________ d________ r____ (TDR). A development right that cannot be used by the landowner, or that the owner chooses not to use, but can be conveyed to landowners in another location or leased for a period of years to then revert back to the original owner; TDRs are said to be transferred from a landowner in a sending district to the use of a landowner in a receiving district. TDRs are generally used to preserve agricultural land; may also be used to preserve historic sites or buildings and open space or to protect scenic features.
Transferable development right
209
E_____ of c______ are the aspects of the comparable sale that we compare to the subject property and then make adjustments for the differences. The characteristics or attributes of properties and transactions that cause the prices of real property to vary.
Elements of comparison
210
C_____ i_____ is the effect on the value produced by a property’s location at or near the intersection of two streets; the increment of value or loss in value resulting from this location or proximity.
Corner influence
211
P______ value is the increment of value that often occurs when two or more sites are combined to produce greater utility.
The process that creates plottage is called a______.
Plottage, assemblage
212
U____ of c_______. The components into which a property may be divided for purposes of comparison, e.g., price per square foot, front foot, cubic foot, room, bed, seat, apartment, or another unit.
Units of comparison
213
P_____ d___ a_____ is a method of extracting adjustments by comparing two sales that are similar in most respects with the exception of the one for which you are seeking the adjustment.
Paired data analysis
214
The c___ t_ c___ is a method of deriving adjustments for the cost to effect a necessary repair or renovation. For example, an upward adjustment could be made to a comparable sale if it had no utilities, and the subject property did, at the cost to connect and install utilities.
Cost to cure
215
C________ of g____ r___ is a method of deriving adjustments. In this type of analysis, the appraiser compares the capitalized values of leased land parcels, incomes, or rates.
Capitalization of ground rent
216
P____ v____ c_______ can be used to derive adjustments, particularly if a finite time frame is involved (like two years until the road is completed, or six months until the lease is up) in which you have a known future value and solve for present value using an appropriate discount rate.
Present value calculations
217
L_____ r______ can be used to derive an adjustment through the statistical “graphing” of sales and a trend line forecast for the subject property. This technique is very useful when value changes occur as the result of a change in only one variable like time, size, or distance from a city core, and can be done using your calculator.
Linear regression
218
A p_______ a______ can be made to the sale price of the comparable sale. This method is used frequently in appraisals of all property types, including land appraisals.
percentage adjustment
219
A whole d____ a_____ a________ can be made to the sale price of the comparable sale. This is generally the preferred method.
Dollar amount adjustments
220
If the comparable sale is S_____, S_____.
| If the comparable sale is I_____, I_____.
If the comparable sale is Superior, Subtract.
| If the comparable sale is Inferior, Increase.
221
E______. A method of estimating land [or site] value in which the depreciated cost of the improvements on an improved property is estimated and deducted from the total sale price to arrive at an estimated sale price for the land; most effective when the improvements contribute little to the total sale price of the property.
Extraction
222
A______. 1. The general process of separating value between the component parts of a property. 2. A method of estimating land value in which sales of improved properties are analyzed to establish a typical ratio of land value to total property value and this ratio is applied to the property being appraised or the comparable sale being analyzed.
Allocation
223
```
Which land/site valuation procedure requires a cost estimate of the improvements
for each of the comparable sales?
A. extraction
B. ground rent capitalization
C. land residual technique
D. sales comparison
```
A. extraction
224
Assemblage is the process of combining two or more sites in order to produce
greater utility. The increment of value created from assemblage is called
A. ground capitalization.
B. plottage.
C. residual value.
D. subdivision incremental value.
B. plottage.
225
An appraiser made the following dollar adjustments to a comparable sale of
vacant land: +$5,000; −$2,000; and −$6,000. What is the gross adjustment for
the land comparable?
A. −$8,000
B. −$2,000
C. +$3,000
D. +$13,000
D. +$13,000
226
```
Components into which a property may be divided for purposes of comparison are
called
A. adjustment items.
B. attribute characteristics.
C. elements of comparison.
D. units of comparison.
```
D. units of comparison.
227
```
5. What is the preferred method of land or site valuation when adequate data is available?
A. allocation
B. extraction
C. land residual technique
D. sales comparison
```
D. sales comparison
228
E______ t___ is the time a property was available for sale in the market and
always presumes to occur prior to the effective date of the appraisal.
Exposure time
229
R______ e______ t___ is linked to the subject and its market
value. It will differ depending on the subject’s property type and relevant
characteristics, value range, and market conditions as of the effective date.
Reasonable exposure time
230
M______ t____ is an opinion of the amount of time it might take to sell a real
or personal property interest at the concluded market value level during the
period immediately after the effective date of an appraisal.
Marketing time
231
S____ c_______ a_____. The process of deriving a value indication
for the subject property by comparing sales of similar properties to the
property being appraised, identifying appropriate units of comparison, and
making adjustments to the sale prices (or unit prices, as appropriate) of
the comparable properties based on relevant, market-derived elements of
comparison.
Sales comparison approach
232
A____ l____ t______. A transaction between unrelated parties who are each acting in his or her own best interest.
Arm's length transaction
233
```
All of the following data can be considered on sales comparable to the subject
property EXCEPT
A. active listings.
B. closed sales.
C. expired listings.
D. fraudulent contracts.
```
D. fraudulent contracts.
234
```
What unit of comparison is appropriate in the appraisal of a hotel?
A. price per apartment
B. price per bed
C. price per cubic foot
D. price per guest room
```
D. price per guest room
235
```
Which type of market would provide the best market conditions for an appraiser to
employ the sales comparison approach?
A. active market
B. buyer’s market
C. seller’s market
D. slow market
```
A. active market
236
What does grandfathered use mean?
A. a legal use that is permitted only for a specified time
B. an illegal use
C. a use that is nonconforming to the current zoning, but is permitted
D. housing adapted for the elderly
C. a use that is nonconforming to the current zoning, but is permitted
237
```
What type of factory-built structure must have a HUD seal affixed to the exterior?
A. manufactured home
B. modular home
C. panelized housing
D. sectionalized housing
```
A. manufactured home
238
In the appraisal of manufactured homes, which of the following is NOT required by a lending client?
A. The manufactured home must assume the characteristics of a site-built
housing.
B. The manufactured home must be built on a permanent foundation.
C. The manufactured home must be legally classified as real estate.
D. The towing hitch and axles must remain in place and not be removed.
D. The towing hitch and axles must remain in place and not be removed.
239
A buyer paid more for a property because he was uninformed about the cost to
petition for a zoning change. What element of comparison would this fall under?
A. expenditure made immediately after purchase
B. financing
C. market conditions
D. use
A. expenditure made immediately after purchase
240
Lenders concerned about adverse conditions affecting a property may require
appraisers to apply the 3-S Rule, which stands for
A. safety, soundness, and security.
B. sanitary, safe, and stable.
C. sturdy, safe, and strong.
D. none of the above.
A. safety, soundness, and security.
241
What components in a residence should NOT be accounted for in the value of the property?
A. built-in cabinetry for a home theater
B. free-standing kitchen appliances
C. installed fiber-optic cables in the walls
D. termites living in the crawl space and wall cavities
B. free-standing kitchen appliances
242
Aronson is using a comparable sale in which the seller paid discount points to
lower the buyer’s monthly mortgage payment. The property sold for $300,000 and the buyer is paying 20% down. If the seller paid 5 discount points on the mortgage
amount, what is the cash-equivalent sale price?
A. $285,000
B. $288,000
C. $300,000
D. $315,000
B. $288,000 ($240,000 mortgage × 0.05 = $12,000 for points)
243
C_______ a______. This is a general term used to identify the process in which
quantitative and qualitative techniques are applied to comparable sales so you
can derive a value indication in the sales comparison approach.
Comparative analysis
244
Q______ a______ use a mathematical process. In these adjustment
techniques, appraisers must be careful to ensure that mathematical processes
and results reflect the reactions of market participants.
Quantitative adjustments
245
P_____ d___ a_____. This technique is based on the premise that when
two properties are equivalent in all respects but one, the value of a single
difference can be measured to indicate the difference in price between the
two properties.
Paired data analysis
246
S______ analysis. Quantitative techniques used, for example, to estimate
value and identify and measure adjustments to the sale prices of comparable
properties; techniques include statistical inference and linear and multiple
regression analyses.
Statistical analysis
247
G_____ analysis. Quantitative techniques used to identify and measure
adjustments to the sale prices of comparable properties; a variant of statistical
analysis in which an appraiser interprets graphically displayed data visually or
through curve fit analysis. Graphs can also be used to support and exhibit value
trends for comparison elements in qualitative analysis.
Graphic
248
C___-_____/C___-r____ adjustments. Cost indicators such as depreciated
building costs are used as a basis for adjustments. Also, an appraiser might consider cost to cure or cost to remodel as the basis for adjustments. Cost-related adjustments are better suited in markets with limited sales activity.
Cost-analysis/Cost-related adjustments
249
C______ of i______ d_______. Capitalization of differences in net
operating income can be used to derive an adjustment when the income loss
incurred by a comparable property reflects a specific deficiency in the property,
such as inadequate parking facilities for a retail store.
Capitalization of income differences
250
Q______ a_____ recognizes the inefficiencies of real estate markets and the
difficulty in expressing adjustments with mathematical precision.
Qualititative analysis
251
T____ analysis. A qualitative technique used to identify and measure trends in
the sale prices of comparable properties. This technique can be used when a
large amount of market data is available.
Trend analysis
252
R_____ c______ analysis. Studies the relationships indicated by market
data without recourse to quantification. Appraisers
Relative comparison analysis
253
R______ analysis. This is a variant of relative comparison analysis. First,
sales are ranked in ascending or descending order of desirability. Next, each
sale is analyzed to determine the relative position of the subject property in
the array. This is a great way to visualize value patterns.
Ranking analysis
254
P_______ i______. Interviews can reveal the opinions of knowledgeable
individuals participating in the subject property’s market and identify trends
in sale prices. The appraiser has to be cautious when using data gathered
through personal interviews. Such data should not be used as the sole
criteria for estimating adjustments or reconciling value ranges if an alternative
method that relies on direct evidence of market transactions can be applied.
Personal interviews
255
C______ a_____ is the general term used to identify the process in which quantitative and qualitative techniques are applied to comparable sales. These two techniques are the most commonly used methods to derive a value indication
Comparative analysis
256
P________ a_______. These are often used to reflect changes in market conditions and differences in location. It is important to be consistent in stating the relationship between the subject and the comparable so that it reflects the way it is perceived by the market. Commercial appraisals commonly use percentage adjustments, and residential appraisals involving land usually use these as well.
Percentage adjustments
257
D____ A_______. Adjustments for relevant physical characteristics are commonly made in terms of dollars. Percentage adjustments are frequently converted to a dollar amount and vice versa. Most residential appraisers will use dollar amount adjustments, and what you're going to be doing for the rest of the class involves dollar adjustments. Dollar amount adjustments are often made for specific factors such as the cost of repairs, the fee to change the zoning, and the cost to demolish the improvements. Dollar adjustments can be applied as a "package" price adjustment or a comparative unit adjustment. In other words, dollar amount adjustments can be made to the total sale price (such as $15,000 for 1,000 square feet size difference), or to a unit of comparison (such as a $15 per square foot for a difference of 1,000 square feet).
Dollar adjustments
258
S________ of a_______. The sequence in which adjustments are applied to the
comparable sales is determined by the market data and the appraiser’s analysis
of that data.
Sequence of adjustments
259
S___ to s___ a_____. If two vacant sites were similar except for the frontage
on the water, the difference in sale price could be attributed to that item.
Sale to sale analysis
260
R_________ is a process that occurs not only at the end of the appraisal process but actually throughout the appraisal process. Resolving the differences among various value indications is called r________.
Reconciliation, reconcilliation
261
```
The part of the valuation process that uses experienced judgment and results in a
value opinion is called the
A. adjustment analysis.
B. interpolation.
C. reconciliation.
D. weighted average.
```
C. reconciliation.
262
An appraiser used cost-related indicators to derive an adjustment, which is
considered what type of adjustment technique?
A. paired sales
B. qualitative
C. quantitative
D. relative comparison
C. quantitative
263
While appraising an apartment building, an appraiser found that the location of
a comparable sale was superior by $25,000, but the smaller size was inferior by
$50,000. What is the indicated value if the comparable sale sold for $600,000?
A. $525,000
B. $575,000
C. $625,000
D. $650,000
C. $625,000 ($600,000 + $50,000 − $25,000 = answer)
264
```
Using the following percentages in the appropriate sequence of adjustments, what
is the indicated value of a comparable property that sold for $200,000?
−5% Property rights conveyed
+15% Location
+5% Economic
−5% Conditions of sale
−10% Financing
A. $194,940
B. $196,158
C. $200,000
D. $215,460
```
A. $194,940 (Property rights 0.95 × financing 0.90 × sale conditions
0.95 × [location 1.15 + economic 1.05])
265
```
Comparable sales are adjusted to the subject property as the base, except
financing, which is adjusted to what?
A. cash equivalency based on the market
B. consumer price index
C. nominal interest rates
D. the other comparable sales
```
A. cash equivalency based on the market
266
The sale price of a comparable sale is $120,000. The lot size is 10,000 sq. ft.,
and the GLA is 1,600 sq. ft. What is the price per gross living area for this sale?
A. $10.34
B. $12.00
C. $14.28
D. $75.00
D. $75.00 ($120,000 / 1,600 sq. ft. = answer)
267
An appraiser has selected two sale properties that are alike except for one
feature. Comparing the two sales to derive a market adjustment for the feature is
called
A. paired data analysis.
B. ranking analysis.
C. statistical analysis.
D. trend analysis.
A. paired data analysis.
268
A comparable sale sold in which the seller paid points on the buyer’s $200,000
mortgage. If the appraiser made an adjustment of $12,000 for the points, how
many points did the seller pay to lower the buyer’s mortgage payment?
A. 2 points
B. 3 points
C. 4 points
D. 6 points
D. 6 points ($12,000 / $200,000 = 0.06, or 6 points)
269
```
An appraiser adjusted a comparable sale to the subject property because it sold 12 months ago. In this instance, the adjustment is for
A. conditions of sale.
B. financing terms.
C. market conditions.
D. property rights conveyed.
```
C. market conditions.
270
Appropriateness, accuracy, and quantity of evidence are terms associated with the
A. adjustment process.
B. appraisal review of another appraiser’s work.
C. reconciliation criteria.
D. scope of work decision.
C. reconciliation criteria.
271
```
If the subject property and the comparable sales all have fee simple title, no
adjustment is required for
A. conditions of sale.
B. market conditions.
C. property rights conveyed.
D. use.
```
C. property rights conveyed.
272
An appraiser has appeared in court and testified to a value opinion on a specific
property. The testimony of the appraiser is considered to be
A. a consulting report.
B. an appraisal review report.
C. an oral appraisal report.
D. testimony and nothing more.
C. an oral appraisal report.
273
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Every written appraisal must contain
A. a detailed legal description.
B. a signed certification.
C. the highest and best use of the property as improved.
D. the land value.
```
B. a signed certification.
274
```
Labor and materials fall into the category of
A. direct cost.
B. indirect cost.
C. replacement cost.
D. reproduction cost.
```
A. direct cost.
275
A 10-unit apartment building has a PGI of $78,000 and a 3% vacancy rate. The
operating expenses and replacement allowance are $25,000. If the capitalization
rate is 9%, what is the value by direct capitalization?
A. $562,889
B. $588,889
C. $614,888
D. $975,000
A. $562,889 ($78,000 × 0.97 = $75,660 EGI − $25,000 = $50,660 IO/ 0.09)
276
An appraisal is required for determining just compensation in an eminent domain
hearing. What type of final opinion of value should the appraiser provide in this
assignment?
A. point estimate
B. probability range
C. range of value
D. trend estimate
A. point estimate
277
Site value is $76,000, and the remaining economic life of the improvements is
60 years with an effective age of 20 years. If replacement cost is $550,000, what
is the indicated value of the property by the cost approach?
A. $259,332
B. $442,667
C. $488,500
D. $516,000
C. $488,500 (20/80 = 0.25 $550,000 × 0.75 = $412,500 + $76,000)
278
```
Price per cubic foot, price per front foot, and price per apartment are used as
A. elements of comparison.
B. measures of dispersion.
C. units of comparison.
D. ways to measure land.
```
C. units of comparison.
279
```
A 20-story hotel with 300 rooms, which is serviced by two elevators, is an
example of
A. capitalization exceeding demand.
B. functional obsolescence.
C. reversion.
D. the breakdown method.
```
B. functional obsolescence.
280
R________. A phase of a valuation assignment in which two or more value indications are processed into a value opinion, which may be a range of value, a single point estimate, or a reference to a benchmark value.
Reconciliation
281
F___ v____ o____. The opinion of value that is derived from the final reconciliation of value indications and stated in the appraisal report; may be expressed as a single point, as a range, or in relation to a benchmark.
Final value opinion
282
P____ e______. A final value indication reported as a single dollar amount that is typically regarded as the most probable number, not the only possible number, and often required for revenue and condemnation purposes.
Point estimate
283
R____ of v____. The range, or confidence interval, in which the final market value opinion of a property may fall; usually the range in value is stated as a variable amount between a high and low value limit. Clients will often ask for assignment results to be communicated as a range of values. This range of values is not a statistical range. As you recall, a statistical range is the difference between the high and low numbers in a sampling. Reconciliation is not a statistical process.
Range of value
284
P_______ r____. The confidence level associated with a specific value opinion or set of value opinions. This option has to do with assigning probabilities to each of the value indications, then arriving at a weighted average. This is generally not the preferred method, as it implies a certain mathematical precision to the reconciliation process, which should be thought of as a judgmental process.
Probability range
