Appraising

Question 1

Which of the following might be classified as functional obsolesce:

A) Exterior needs painting
B) Property fronts on a busy expressway
C) Very small bedroom closets
D) Neighborhood is 35 to 50 years old

Answer 1

C) Very small bedroom closets

Question 2

When capitalization is sought, a person is particularly interested in:

A) The potential future value
B) Cost value
C) Total capital invested
D) Converting income into value

Answer 2

D) Converting income into value

Question 3

In estimating the value lost by a structure due to physical deterioration, the appraiser places greatest emphasis on:

A) The age of the building
B) The condition of the surrounding buildings
C) The observed condition of the subject buildings
D) The zoning of the neighborhood

Answer 3

C) The observed condition of the subject buildings

Question 4

Of the three methods of appraising properties, the reproduction cost approach is particularly appropriate and would give the most accurate value in the appraisal of a :

A) New home
B) Multiple dwelling
C) Old home
D) Medium-age home

Answer 4

A) New home

Question 5

The formula used in direct capitalization of income property valuation is:

A) Value equals cap rate divided by income
B) Value equals income divide by cap rate
C) Value equals income multiples by cap rate
D) Value equals income divided by net assets

Answer 5

B) Value equals income divide by cap rate

Question 6

The economic life of a building has come to an end when:

A) The building ceases to represent the highest and best use of the land
B) The value of the land and the building equals the value of the land only
C) The rent produced is valued at less than a similar amount of money invested elsewhere could produce
D) The reserve for depreciation equals the cost to replace the building

Answer 6

B) The value of the land and the building equals the value of the land only

Question 7

An appraiser’s fee is typically based on which of the following:

I. Value of property
II. Time and expenses

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 7

B) II only

II. Time and expenses

Question 8

Highest and best use is concerned with all the following except:

A) Net yield to owner
B) Utility of surrounding area
C) Relationship to regional development
D) Interest rate on investment loans

Answer 8

D) Interest rate on investment loans

Question 9

All but one of the following is used to estimate value:

A) Improvements
B) Deterioration
C) Livelihood
D) Economic life

Answer 9

C) Livelihood

Question 10

In regard to the capitalization rate:

A) As it increases, value of property increases
B) As it decreases, value of the property decreases
C) As it increases, value of the property decreases
D) Changing capitalization rate has no effect on value of the property

Answer 10

C) As it increases, value of the property decreases

Question 11

In using the market comparison approach to appraisal, the appraiser considers:

I. The sale price of comparable properties
II. The acquisition cost to the present owner

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 11

A) I only

I. The sale price of comparable properties

Question 12

The difference between the cost of replacement and current valuation is equal to:

I. Accrued depreciation
II. Assessed valuation

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 12

A) I only

I. Accrued depreciation

Question 13

An official valuation of property for tax purposes is:

I. Capitalization
II. Assessment appraisal

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 13

B) II only

II. Assessment appraisal

Question 14

Market value could be determined best by considering:

A) Acquisition cost, market comparison, replacement
B) Acquisition cost, market data, income
C) Acquisition cost, income, replacement
D) Comparison, income, replacement

Answer 14

D) Comparison, income, replacement

Question 15

The most widely used approach to appraisal of real property is the:

I. Income approach
II. Market comparison approach

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 15

B) II only

II. Market comparison approach

Question 16

A capitalization rate incorporates:

A) Return on land and building and recapture of building
B) Return on land and building and recapture of land
C) Return on land and recapture of land and building
D) Return on building and recapture of land and building

Answer 16

A) Return on land and building and recapture of building

Question 17

Physical deterioration most clearly means:

A) Obsolescence
B) Wear and tear
C) Repair
D) Recapture

Answer 17

B) Wear and tear

Question 18

The market comparison to value is an:

A) Indication of the lowest value
B) Indication fo the highest value
C) Indication of the future value
D) Range of probable value

Answer 18

D) Range of probable value

Question 19

A homogenous community has what effect on real estate values?

A) Stabilizes them
B) Causes the value to increase
C) Causes the value to decrease
D) Doesn’t have any effect

Answer 19

A) Stabilizes them

Question 20

A house with 4 bedrooms and 1 bath is an example of:

I. External obsolescence
II. Functional obsolescence

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 20

B) II only

II. Functional obsolescence

Question 21

Real estate value are most affected by:

A) Location
B) Availability of money
C) Appraisal
D) National Trends

Answer 21

A) Location

Question 22

The trend in architectural design in a neighborhood is toward more contemporary styled homes. Because of this trend a conservatively designed home will tend to depreciate in value:

A) More rapidly
B) Less rapidly
C) Stay the same
D) Appreciate

Answer 22

A) More rapidly

Question 23

A residence located in an area where there are factories and plants, is suffering from:

I. Physical depression
II. External obsolescence

A) I only
B) II only
C) Both I and II
D) Neither I nor II

Answer 23

B) II only

II. External obsolescence

Question 24

A comparable property that had a finished deck worth $15,000 sold for $295,000. What is the subject house worth?

A) $310,000
B) $280,000
C) $295,000
D) none of these

Answer 24

B) $280,000

Question 25

The subject property has a garage worth $18,000. A comparable that just sold for $282,000 had no garage. What is the subject property worth?

A) $264,000
B) $300,000
C) $282,000
D) None

Answer 25

B) 300,000