Basic Appraisal Principles Flashcards
True or False: An applicant for Certified General appraiser must possess at least an associate’s degree from an accredited college or university.
False: Bachelor’s Degree Minimum
The current requirements for real property appraiser licensing and certification went into effect on
May 1, 2018
A certified residential appraiser needs ____ hours of continuing education per year to renew his or her certification.
14
Which entity is responsible for establishing the requirements to become an appraiser?
the AQB
True or False: Some state agencies employ full-time staff appraisers.
True
According to the 2018 AQB Criteria, an applicant for Certified General Appraiser must obtain _______ experience hours in no fewer than _____ months.
3,000, 18
True or False: Attorneys often engage appraisers to complete assignments for estates and divorces.
True
The appraisal of what type of property is more likely to be affected by local neighborhood conditions?
a single-family residence
The four components of the Appraiser Qualification Criteria include Continuing Education, Examination, ____________, and ______________.
Experience and Qualifying Education
Which of the following situations would NOT normally require an appraisal?
- mortgage finance
- title insurance
- estate settlement
- condemnation
title insurance
An appraiser is “One who is expected to perform valuation services competently and in a manner that is independent, ___________, and ____________.
impartial, objective
The number of required classroom hours for Certified General Appraisers under the current AQB criteria is ____ hours.
300
The nationally recognized ethical and performance standards for appraisers are known as
Uniform Standards of Professional Appraisal Practice
Under the 2018 AQB Criteria, an applicant for a Certified Residential credential must hold a(n) _____________.
bachelor’s degree, or alternative
If you have specific questions about appraisal certification or licensure requirements in your state, you should
contact the appraiser licensing and certification agency in your state
The Licensed Residential Real Property Appraiser classification applies to the appraisal of non-complex one to four residential units having a transaction value __________ and complex one to four residential units having a transaction value ____________.
Less than $1,000,000, less than $250,000
Under the 2018 AQB criteria, an Appraiser Trainee is permitted to have ________ supervising appraiser, but a supervising appraiser may not supervise ________ trainees.
More than one, more than three
The number of required classroom education hours for Licensed Residential Appraisers under the 2018 AQB Criteria is ____ hours.
150
In 1987, eight U.S. appraisal organizations formed
The Appraisal Foundation
True or False? The Board of Trustees acts as the executive board for The Appraisal Foundation.
True
True or False? The Appraisal Foundation has significant legal authority to enforce USPAP.
False
In the 1970s, who developed uniform rules for mortgage underwriting?
Fannie Mae and Freddie Mac
True or False? The requirements of USPAP apply equally to appraisers and their clients.
False
Which TAF advisory council consists of for-profit entities?
IAC
True or False? Valuation Advisories, issued by The Appraisal Foundation, provide guidance that is binding on real property appraisers.
False
Which entity is responsible for appointing members to the ASB and AQB?
the Board of Trustees
The state regulatory agency for California appraisers is called the
Bureau of Real Estate Appraisers
The state regulatory agency for Missouri appraisers is called the
Real Estate Appraisers Commission
True or False? The Appraisal Subcommittee’s mission is to ensure that real estate appraisers who perform appraisals in federally-related transactions are sufficiently trained and tested to assure competency and independent judgment.
True
Which of these entities is NOT a member of the Appraisal Subcommittee?
The Appraisal Foundation
Which of these is NOT a protected class, according to the Fair Housing Act?
political party affiliation
True or False? The ASC is responsible for maintaining a National Registry of appraisers.
True
The ______ maintains a National Registry of licensed and certified appraisers.
ASC
The largest professional appraisal society in the U.S. is the
Appraisal Institute
The Fair Housing Act prohibits discrimination in housing because of all of the following statuses EXCEPT
- Race or color
- Credit rating
- Sex
- Religion
Credit rating
The Savings and Loan Crisis happened in the
Late 1980s
Only the _______ has the authority to amend or interpret USPAP.
ASB
ECOA applies to all the following types of loans EXCEPT
- Condominiums
- Manufactured homes
- Junior liens
- Vacant land
Vacant land
The Uniform Standards of Professional Appraisal Practice (USPAP) was copyrighted by:
The Appraisal Foundation
The _________ monitors and reviews the practices, procedures, activities and organizational structure of The Appraisal Foundation.
ASC
The Uniform Standards of Professional Appraisal Practice (USPAP) was developed by the Ad Hoc Committee and was copyrighted by The _________________.
Appraisal Foundation
________ has regulatory authority in enforcing the housing requirements in most civil rights legislation.
HUD
True or False? An appraiser who selects only the data that supports the contract sale price in an appraisal has violated USPAP.
True
True or False? The mere fact that an appraiser has previously appraised a property is typically NOT considered confidential information under USPAP.
True
USPAP requires an appraiser to be
objective
True or False? If not required to comply with USPAP by law, regulation, or agreement with the client, an appraiser may voluntarily choose to comply with USPAP.
True
A client has requested that an appraiser value a property that is improved with an old dilapidated single family home, and asks the appraiser not to mention the existence of the home in the appraisal report. Which statement is TRUE regarding this situation?
It would be misleading if the appraiser did not disclose the presence of this structure in the appraisal report.
An appraiser pays a fee for the procurement of an assignment. Where in the appraisal report does this payment have to be disclosed?
In the certification and any transmittal letter where conclusions are stated
An appraiser states to a client that the appraisal fee will be $100 higher than the standard fee because the appraiser’s value opinion is for the property is over $500,000. Is it a violation of USPAP for the appraiser to quote the fee in this manner?
Yes
When an appraiser discloses that she paid a fee for the procurement of an assignment, does USPAP require her to disclose the AMOUNT of the fee?
No
When should an appraiser’s compensation be dependent on reporting of a predetermined value conclusion?
Never
Appraiser Amy agrees to pay a fee to be included on Lender B’s “approved appraiser” list. Which statement is TRUE regarding this situation?
- This is permissible under USPAP as long as it is disclosed.
- This is a violation of USPAP, and Amy is subject to disciplinary action.
- This is permissible under USPAP and does not require disclosure.
- USPAP does not address this issue.
This is permissible under USPAP as long as it is disclosed.
“A preference or inclination that precludes an appraiser’s impartiality, independence, or objectivity in an assignment” is the definition of which USPAP term?
Bias
An appraiser accepts an appraisal on a property that is under contract for purchase. Based on a request from the client, the appraiser agrees to select and use only the data that supports the pending contract sale price of the subject property. Which statement is TRUE regarding this situation?
- The appraiser has violated the ETHICS RULE by doing this.
- The client has violated USPAP by asking the appraiser to provide a predetermined value.
- The appraiser has fulfilled his obligation under USPAP to analyze the pending sale price of the property.
- The appraiser has earned his fee by doing exactly what the client asked for.
The appraiser has violated the ETHICS RULE by doing this.
May an appraiser disregard her USPAP obligations if she does not charge a fee for the assignment?
No
True or False? Webster’s Dictionary defines ethics as relating to the principles established by the world’s most common religions.
False: They define ethics as relating to what is good or bad; having to do with moral duty and obligation.
When clients began asking for faxed copies of appraisal reports
appraisers typically still had to mail hard copies of reports anyway
How are most dates in a UAD-compliant appraisal report required to be formatted?
MM/DD/YYYY
What is the most recent innovation in photography for appraisers?
digital cameras
As it pertains to appraisers, what does the abbreviation UAD stand for?
Uniform Appraisal Dataset
What is the biggest issue when creating GIS maps?
the maps must all be of the same scale
When calculating the square footage of a condominium unit, an appraiser must use
interior measurements
True or False? Prices of laser measuring devices have been declining over the last few years.
True
True or False? There is only one company in the U.S. that produces software programs for appraisers.
False
____________ cameras have become an essential tool for most appraisers.
Digital
The largest appraisal software company is
ala mode
Today, most appraisals are transmitted in a(n) _______ format.
When comparing printers, make sure to compare the cost per ___________
Printed page
When calculating square footage of a condominium unit, an appraiser must use
interior measurements
The latest technology in measurements is
laser measuring device
The two major sketch programs are
Apex and Winsketch
EDI stands for
Electronic Data Interchange
Land is a long lasting asset, and has a long economic life as compared to other assets. What characteristic of land does this refer to?
durability
“An identified parcel or tract of land, including improvements, if any” is the definition of
real estate
A client asks an appraiser to omit the client’s identity from the appraisal report. What can the appraiser do?
omit the client’s identity from the report, but identify the client in the workfile
Property Owner A has the right to develop his property into 10 lots. He sells this right to nearby Property Owner B who wishes to develop his property into additional lots. This is an example of
transferable development rights
Which of these would be considered a public restriction on real property ownership?
- mortgage
- deed restrictions
- encumbrances
- escheat
escheat
True or False? When people buy and sell land and buildings in the marketplace, they are actually buying and selling real property rights.
True
A property owner hires a contractor to construct an addition on his home, but does not pay the contractor when the work is completed. The contractor may place a __________ on the property to recover the debt.
mechanic’s lien
True or False? By exercising one of his/her bundle of rights, a property owner may be giving up another one of those rights from the bundle.
True
Trade fixtures are only found in ___________ property.
rented
“A document or a clause in a document in which the borrower accepts responsibility for the repayment of a debt” is the definition of
mortgage note
The process of eminent domain is administered through
condemnation
“The right of government, through which property is regulated, to protect public safety, health, morals, and general welfare” is the definition of
police power
Which would NOT be a characteristic of a good appraisal?
- concise
- unsupported
- accurate
- unbiased
unsupported
Which of the following would MOST LIKELY be considered personal property?
- window air conditioner
- built-in cooktop
- light fixtures
- microwave mounted under a cabinet
window air conditioner
Police power would include all of the following EXCEPT
- building codes
- zoning
- taxation
- fire codes
taxation
Private restrictions on property rights include all of the following EXCEPT
- mortgages
- escheat
- mechanic’s liens
- deed restrictions
escheat
Physical land and appurtenances attached to the land is the definition of
real estate
“A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions” is the definition of
mortgage
A rectangular lot measures 222.5 feet by 1372.25 feet. How many acres is this?
7.01 acres (multiply the width of the lot by the length, in feet, to get the square footage. Then divide the square footage by 43,560 to get the number of acres)
True or False? A lot and block legal description always gives the lot size and dimensions.
False
Which is NOT one of the primary systems of legal descriptions?
- rod and chain
- lot and block
- rectangular survey
- metes and bounds
rod and chain
The rectangular survey system is also known as the
government survey system
How many acres are in a quarter-section per rectangular survey system?
160
Which system of legal descriptions is based on standardized measurements and consistent rectangles and squares?
rectangular survey
A lot contains 5.62 acres. It sells for $225,000. How much did it sell for per acre?
$40,036
In the rectangular survey system, a township contains ______ square miles.
36
In the rectangular survey system, a section contains _____ square mile(s)
1
How many degrees are in a full circle?
360
Which system of legal descriptions uses townships?
Rectangular Survey
How many links are there in Gunter’s chain?
100
A chain contains ____ feet.
66
A property has a market value of $300,000. The owner has a first mortgage of $200,000 and a second mortgage of $40,000. What is the market value of the fee simple estate?
$300,000
An easement that has, by definition, both dominant and servient tenements is
an easement appurtenant
True or False? When a property is leased, two separate estates are created.
True (Partial Interest. When a property is leased, it creates two separate estates or interests. One belongs to the owner of the property and the other belongs to the tenant.)
True or False? Fee simple estate is not limited by the governmental powers of taxation, eminent domain, police power, and escheat.
False
Tenancy by the entirety is a form of ownership reserved for
spouses
Joint tenancy has the right of survivorship. What does this mean?
when a joint tenant dies, his/her share goes to the surviving joint tenants.
What type of property ownership is characterized by the purchase of shares of stock in a corporation, which provides a proprietary lease to occupy an apartment unit?
cooperative
A property is owned as tenancy in severalty. How many owners are there?
1
The fullest and most complete type of estate is
fee simple
“Trespassing on the domain of another” is the definition of
encroachment
“Type of building development designed as a grouping of complementary land uses, such as housing, schools, recreation, retail, office, and industrial parks, contained within a single master development; usually includes common area and common area maintenance obligations in the form of owners association dues” is the definition of
PUD
A leasehold interest may have value when
the contract rent is less than market rent
A drainage easement is an example of a(n)
negative easement
A facade easement is a type of________________ easement.
historic preservation
Which of the following is NOT a partial estate?
- fee simple
- life estate
- leased fee estate
- leasehold estate
fee simple
The landlord’s ownership interest in a leased property would be
leased fee
“Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat” is the definition of
fee simple
From the buyer’s standpoint, what is the weakest type of deed?
quitclaim deed
In a trust deed state, title to a property is vested in the __________ until the mortgage lien is satisfied.
trustee
The statute of limitations for suing for breach of an oral contract is __________ for written contracts.
shorter than
What is the purpose of a state’s statute of frauds?
requires certain documents to be in writing
Which of these is NOT necessary in creating a valid contract that would be binding and enforceable on all parties?
- competent parties
- reasonable price
- lawful objective
- consideration
reasonable price
The general rule of contracting with minors is that a contract with a minor is
voidable at the minor’s option
A(n) ________ contract is one that has not been fully performed or completed.
executory
Contracts for the sale of real estate must be __________ in order to be enforceable.
in writing
Breach of contract is also known as
default
In most appraisals for residential mortgage lending transactions, personal property items are
not included in the real property appraisal
A lease that includes a specific level of rent that continues throughout the lease term is a(n)
flat rental lease
What type of lease requires the landlord to pay all of the property’s operating and fixed expenses?
gross lease
A(n) __________ contract is one that results from the failure of the parties to meet some legal requirement.
voidable
Which is true of an express contract?
- an example would be a listing agreement
- the terms must be stated in words
- Both A and B
Both A and B
Which would NOT be a required element of a valid deed?
- must be recorded
- legal description
- must be in writing
- a granting clause
must be recorded
“A written, legal instrument that conveys an estate or interest in real property when it is executed and delivered” is the definition of a
deed
All of the following are required ingredients of a valid contract EXCEPT
- competent parties
- mutual agreement
- legal description
- consideration
legal description
“A manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance” is the definition of a(n)
offer
The weakest form of deed is the ___________ deed.
quitclaim
A deed of trust is similar to a
mortgage
A real estate contract is a(n)
bilateral agreement
The ___________ rule states that written contracts take precedence over oral agreements.
parol evidence
The seller of a property is called the
grantor
If a seller defaults in a real estate contract, the buyer may take all of these actions EXCEPT
- rescind the contract and recover the earnest money - - deposit
- file a suit calling for specific performance, to force the seller to sell the property
- sue the seller for compensatory damages
- sue the seller for punitive damages
sue the seller for punitive damages
A firm agreement to perform an act, refrain from acting or make a payment or delivery” is the definition of a(n)
promise
“The act of transferring an interest in property or some right (such as contract benefits) to another” is the definition of
assignment
An agreement of parties to a contract to substitute a new contract for the old one is called
novation
According to the principle of supply and demand, the price of a commodity varies ___________ with supply.
inversely
The principle of supply and demand states that the price of a commodity varies ________ with demand.
directly
Which type of market is MOST likely to be characterized by higher prices and a shortage of homes for sale?
seller’s market
In real property, a market is defined in terms of
competition
Because real estate is immobile, it is
sensitive to nearby influences
True or False? Real property is typically purchased with cash.
False
Which of these would be considered the most INEFFICIENT market?
- the real property market
- a local farmer’s market
- the New York Stock Exchange
- eBay
the real property market
“The area associated with a subject property that contains its direct competition” is the definition of a
market area
“A market characterized by numerous transactions.” is the definition of a(n) _________ market.
active
“An active market in which the sellers of available properties can obtain higher prices than those obtainable in the immediately preceding period; a market in which a few available properties are demanded at prevailing prices by many users and potential users” is the definition of a(n) __________ market.
seller’s
When supply and demand are out of balance, they tend to move towards
equilibrium
“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises” is the definition of
neighborhood
The principle of supply and demand states, in part, that the price of real property varies directly with ________ and inversely with __________.
demand, supply
“A market in which buyers have the advantage; exists when market prices are relatively low due to an oversupply of property or reduced buyer demand” is the definition of a(n) ___________ market.
buyer’s
A problem with the real property market is that the amount of _______ is slow to change.
supply
True or False? Stocks are considered a good investment because the return OF your investment is guaranteed.
False
You are an investor who owns a parcel of real property. You want to cash out your investment, and it takes you a year to market your property and close the sale. What investment factor does this demonstrate?
liquidity
True or False? The burden of managing the investment is one of the reasons why real property investors typically demand higher yields.
True
When was the Fed founded?
1913
The Federal Reserve consists of ____ regional banks
12
Who owns the Fed?
No one, it is independent
To whom is the Fed accountable?
Congress
As part of its monetary policy, the Fed can influence both the _______ of money and the _______ of money.
supply, cost
Which of these entities needs to invest money as a fundamental part of their operations?
- government
- insurance companies
- pension funds
- all of these
All of these
How are members of the Board of Governors of the Federal Reserve System selected?
they are appointed by the President and confirmed by the Senate
The interest rate that is charged by the Fed when lending money to banks is called the _______ rate.
discount
The rate that banks employ when lending money to their highest rated customers is called the __________ rate.
prime
Which of the following is NOT a commodity?
- gold
- real estate
- money
- market area
market area
The FDIC insures deposits up to $______________.
$250,000
Which of the following typically generates the highest return on investment?
- savings account
- money market
- certificate of deposit
- real estate
Real Estate
The “price” of money is
an interest rate
Money market is defined as the interaction of buyers and sellers who trade
short-term money instruments
Which investment alternative has the least liquidity?
real estate
What type of loans are assumable without the permission of the lender?
Very few loans of any type are assumable without lender permission
Up until the 1970s, mortgage lending was typically done at the ______ level.
local
True or False? Fannie Mae and Freddie Mac are now defunct.
True
Reverse annuity mortgages are primarily intended for what type of borrower?
senior homeowners
“A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions” is the definition of
mortgage
A mortgage loan that is not government-insured or guaranteed is considered
a conventional mortgage
“The process of retiring a debt or recovering a capital investment, typically through scheduled, systematic repayment of the principal; a program of periodic contributions to a sinking fund or debt retirement fund” is the definition of
amortization
Which of the following is a guaranteed loan?
VA
What kind of mortgage is not fully amortized at maturity, and thus requires a lump sum payment of the outstanding balance?
balloon
A point is ____ percent of the amount of the ___________.
1, mortgage loan
A mortgage that has priority over all other mortgage liens on a property is a
first mortgage
The government entity that oversees the conservatorship of Fannie Mae and Freddie Mac is
Federal Housing Finance Agency (FHFA)
The primary participants in the secondary mortgage market are
Fannie Mae, Freddie Mac, and Ginnie Mae
Savings banks are __________ owned.
mutual or stockholder
A purchaser bought a property for $215,000, put 15% down and borrowed the rest at 6.75% interest for 25 years. The lender charged 2.5 points at the closing. How much was paid for the points?
$4,568.75
$215,000 x 15% = $32,250 Down Payment
$215,000 - 32,250 = $182,750 Amount financed
$182,750 x 2.5% = $4,568.75 Amount paid for points
In 1968, FNMA was split into two organizations, which were
Fannie Mae and Ginnie Mae
Mortgage assumptions are
attractive when rates are rising
True or False? Building codes have no impact on property values.
False
Value is influenced by
external market forces
True or False? All major cities in the U.S. have zoning ordinances.
False
Taxes would be a(n) _____________ force affecting property values.
governmental
The cost of construction is based on three factors. What are they?
land, materials, and labor
After the crash of the mortgage lending industry in the late 2000s, lenders that remained in business
tightened their underwriting standards
Generally speaking, low interest rates encourage ___________, while high interest rates encourage ___________.
borrowing, saving
True or False? Over the last several years in the U.S., there has been a substantial decrease in the number of people working from home.
False
__________ industries consist of major employers in an area, that are net importers that produce goods that are shipped outside the region.
Basic
True or False? Topography may preclude development entirely in some areas.
True
Environmental influences on property values would include all of these EXCEPT
- construction costs
- soil conditions
- man-made hazards
- topography
construction costs
True or False? The presence of man-made hazards may affect property values over a wide geographic area.
True
“The ability of an individual or group to participate in a market, i.e., to acquire goods and services with cash or its equivalent” is the definition of
effective purchasing power
Which is NOT a reason for smaller household sizes?
- More adults never marrying
- Declining birth rate
- More single mothers
- More families with more than four children
More families with more than four children
An example of something that likely has no value in most situations is
- air
- a cup of pencils
- a lot with hilly topography
- a building that is in poor condition
air
Economic forces would include all of the following EXCEPT
- zoning and building codes
- interest rates
- unemployment rates
- cost of construction
zoning and building codes
Which federal agency is responsible for monitoring coastal habitats?
NOAA
Which is NOT an economic force?
climate
The majority of American households today consist of ________ person(s).
one or two
Governmental forces would include all of the following EXCEPT
- zoning
- unemployment rates
- taxes
- fire protection
unemployment rates
“A purchaser’s wish for an item to satisfy human needs (e.g. shelter, clothing, food, companionship) or individual wants beyond essential life-support needs” is the definition of
desire
“The present or anticipated undersupply of an item relative to the demand for it….” is the definition of
scarcity
The four main categories of external market forces are: governmental, ____________, social, and ________________.
environmental, economic
The most prominent federal agency in the environmental arena is
EPA
The first citywide zoning regulations occurred in
New York City
The prime source for population demographics is
U.S. Bureau of the Census
“The amount asked, offered, or paid for a property” is the definition of
price
A property owner purchases a lot for $100,000 and pays $400,000 to have a home constructed on it. When it is completed, the owner sells the home for $560,000. The appraiser for the buyer’s mortgage company appraises the home at $525,000. The appraiser’s opinion of $525,000 represents the _________ of the property.
value
“The monetary relationship between properties and those who buy, sell, or use those properties” is the definition of
value
A bank acquires a property at foreclosure, and they need to sell it very quickly. They ask an appraiser to provide them a value opinion based on a restricted marketing time, and considering they are under extreme compulsion to sell. What type of value is this client asking for?
liquidation value
When is an appraiser required to develop an opinion of reasonable exposure time in an appraisal?
when reasonable exposure time is a component of the definition of value being used
What type of value requires an appraiser to consider the expectations of a particular investor or class of investors?
investment value
What type of value is based on a specific use, which may or may not be the property’s highest and best use?
value in use
When is an appraiser required under USPAP to develop an opinion of reasonable exposure time in an appraisal?
if reasonable exposure time is a component of the value definition being developed
“The market value of an established and operating business including the real property, personal property, financial assets, and the intangible assets of the business” is the definition of:
market value of the going concern
The market value definition says that __________ is allowed for exposure in the open market.
a reasonable time
Which of these property types would NOT typically be appraised based for the market value of the going concern?
- hotel
- restaurant
- retail sales property
- single-family home
single-family home
A value that cannot be imputed to any part of the physical property is called ___________ value.
intangible
“The amount a particular purchaser agrees to pay and a particular seller agrees to accept under the circumstances surrounding their transaction” is the definition of
price
Exposure time is a _____________ developed by the appraiser.
retrospective opinion
A bank acquires a property at foreclosure, and they need to sell it very quickly. They ask an appraiser to provide them a value opinion based on a restricted marketing time, and considering they are under extreme compulsion to sell. What type of value is this client asking for?
liquidation value
A transaction between unrelated parties who are each acting in his or her own best interest is the definition of
arm’s-length transaction
A comparable property was offered on the market for 8 months at $429,000, with no offers. It was reduced to $419,000 and was on the market for another 6 months. It was reduced again to $359,000 and it sold for $355,000 in 3 months. What is the reasonable exposure time indicated by this property?
3 months (Exposure time starts when buyers begin to have interest in the home)
The principle of supply and demand states that price varies _______ with demand.
directly
The basic economic principles, such as anticipation and substitution, apply in
any economic endeavor
True or False? Basic economic principles apply in the valuation of real property only.
False
True or False? Each of the four agents of production requires a return to make it work.
True
True or False? When developing an opinion of site value of an improved property, an appraiser needs to consider the highest and best use of the property as though vacant.
True
True or False? The highest and best use of a property is always to construct some type of building or improvement on it.
False
Supply and price move in a(n) ____________ relationship.
inverse
In the agents of production theory, the return on land would be __________ and the return on labor would be ________.
rent, wages
“In appraisal, the concept that the value of an inferior property is enhanced by its association with better properties of the same type” is the definition of the principle of
progression
When estimating the value of a swimming pool to a residential property, the most important principle is the principle of
contribution
If there is anything at all left after satisfying the four agents of production, the excess profit would be returned to the land. This is the principle of
surplus productivity
Which statement is FALSE concerning the highest and best use of land as though vacant?
- It could be to leave it vacant
- It could be for projected development
- This analysis can only be applied if there are no existing improvements
- It could be the existing use
This analysis can only be applied if there are no existing improvements
Normally the first step in highest and best use determination is to investigate the uses that are
legally permissible
How many criteria are used in highest and best use analysis?
4
What process would an appraiser use to identify submarkets within a larger market?
market segmentation
A subject property’s market area would be defined as
the area from where demand comes and that contains its competition
“A process for examining the demand and supply of a property type and the geographic market area for that property type” is the definition of ____________ analysis.
market
True or False? Availability of financing is part of supply analysis because builders and developers need to be able to obtain financing in order to build homes or buildings.
True
A large local employer announces plans for immediate expansion, which will add 400 new jobs. There are only 180 houses available for sale in the market at this time. What is MOST likely to happen in the near future?
the number of building permits issued will increase
True or False? While material costs vary greatly throughout the United States, labor costs do not vary with location.
False
“The differentiation of a subject property from other properties on the basis of subclassifications with differing product characteristics” is the definition of
disaggregation
“Study of the economy as an aggregate system, focusing on national/domestic production, national/domestic income, the supply of money, the rate of inflation, the national budget, the balance of trade, and the interrelationships among constituent sectors” is the definition of
macroeconomics
A local employer announces plans for immediate expansion, which will add 600 new jobs. There are only 120 houses available for sale in the market at this time. What is MOST likely to happen in the near future?
the number of building permits issued will increase
“Buyers and sellers of particular real estate and the transactions that occur among them” is the definition of a(n)
real estate market
When appraising a 250-store regional shopping mall, an appraiser is most likely to conclude that the market area is
national or international
“The process by which submarkets within a larger market are identified and analyzed” is the definition of
market segmentation
Researching and analyzing the number of building conversions in process would be considered part of __________ analysis.
supply
“An analysis of the market conditions of supply, demand, and pricing or the demographics of demand for a specific property type in a specific area” is the definition of
market study
.0091 is the same as
.91%
You bought a property 2 years ago for $400,000. You sold it today for $376,000. What was your average percent of loss per year?
Percent Change. $400,000 - $376,000 = $24,000. $24,000 ÷ 400,000 = .06. .06 ÷ 2 = .03 x 100 = 3%
What is 16.9% of 112,456.25?
19,005.11
35% of the houses in a neighborhood are split levels and 24% are ranches. There are a total of 325 houses. How many are ranches?
78 (325 X .24 = 78)
In the following set of numbers (18, 26, 29, 18, 44) what is the median?
26 (organize and find middle)
In the following set of numbers (18, 26, 29, 18, 44) what is the mode?
18 (occurs twice)
In the following set of numbers (18, 26, 29, 18, 44) what is the mean?
27 (add all and divide by total set of numbers, in this case, 5)
Your living room measures 14 x 24 feet. You want to re-carpet it. The carpet company says it will cost $15.50 per square yard plus $2.75 per square yard for the pad. How much will it cost you? (HINT: There are 9 square feet in a square yard.)
C - $681.27
14 x 24 = 336 sf / 9 = 37.33 sy
$15.50 / $2.75 = $18.25 x 37.33 = $681.27
You are analyzing sale prices of lots in a subdivision. There have been 7 lot sales in the subdivision over the last year. They sold for $75,000, $76,000, $76,500, $80,000, $80,500, $80,500, and $82,500. What is the median sale price of these lots?
$80,000
You are analyzing sale prices of lots in a subdivision. There have been 7 lot sales in the subdivision over the last year. They sold for $75,000, $76,000, $76,500, $80,000, $80,500, $80,500, and $82,500. What is the mean sale price of these lots?
$78,714
What is the mean of these numbers: 124.5, 146.8, 152, 187.9, 153, 217.98, 12, 542.66, 45.7, 71.44, 158.04?
164.73
USPAP defines _________ as the amount asked, offered, or paid for a property.
price
“Trespassing on the domain of another” is the definition of
encroachment
Which of the following would NOT be considered a negative easement?
- access right of way
- conservation easement
- drainage easement
- historic preservation easement
access right of way
Who retains final authority over revisions to USPAP?
the Appraisal Standards Board
Eric pays $35,000 to have an inground swimming pool constructed in his back yard. When he sells the property, he only receives $10,000 more for his property than what similar property sold for without a pool. This is an example of the principle of
contribution
The Uniform Commercial Code covers the sale of goods over $________.
500
You apply for a mortgage. The lender will allow you to spend up to 28% of your annual income for housing costs, including your mortgage, property taxes, and insurance. Your income is $1,472 every two weeks. If you apply for the loan, how much can your maximum monthly payment be?
1472 x (52 / 2) / 12 * .28 = $893.01
Which valuation approach relies most heavily on the principle of substitution?
sales comparison
Which of the following statements about offers is FALSE?
- An offer may never be revoked once delivered to the offeree.
- An offer may be revoked at any time prior to communication of the acceptance of the offer.
- An offer may be revoked by the maker of the offer, by giving notice of revocation to the person to whom the offer was made.
- An offer may be revoked by the lapse of time set forth in the offer.
An offer may never be revoked once delivered to the offeree.
“A value that cannot be imputed to any part of the physical property, e.g., the excess value attributable to a favorable lease or mortgage, the value attributable to goodwill” is the definition of ____________ value.
intangible
A lot measures 178 feet by 464 feet. It sold for $80,000. What did it sell for per acre? HINT: Round the acreage amount to two decimal places.
(178 x 464) = 82,592 sqft
82,592 / 43,560 = 1.86 (rounded to 1.9)
$80,000 / 1.9 = $42,105
“The interaction of buyers and sellers who trade long-term or intermediate-term money instruments” is the definition of the _____________ market.
capital
Here are all the sales in your area in the last 4 months. They sold for: $178,500; $166,000; $172,750; $182,000; $168,000; $174,000; $176,000; $184,000; $170,000; $175,000; $172,000; $181,500. What is the median sale price?
$174,500
You apply for a mortgage and the lender will allow you to spend up to 30% of your annual income for housing costs. These housing costs will include your mortgage, property taxes, and insurance. Your income is $1,635 every two weeks. If you apply for the loan, how much can your maximum monthly payment be?
1635 x (52 / 2) / 12 * .30 = $1,062.75
“The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires” is the definition of
leased fee interest
The four elements of value are desire, _________, scarcity, and ________.
utility, effective purchasing power
In property measurement, a chain contains 100 links, which measures _______ feet.
66
“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of
district
The first appraiser organizations were formed in the
1930s
You want to buy a house for $216,500. You can get a loan for 90% of value. You will also have to pay 1.5 points on the loan. If you have to pay both the down payment and the loan points at closing, how much will you have to deliver to closing to cover these?
$24,572.75
$216,500 x 10% = $21,650 Down Payment
$216,500 - 21,650 = $194,850 Amount financed
$194,850 x 1.5% = $2922.75 Amount paid for points
$21,650 + $2,922.75 = $24,572.75
Which is NOT a characteristic of tenancy in common?
- no limit to the number of tenants in common
- the ownership does not have to be in equal amounts
- there is a right of survivorship
- interest can be sold or passed to heirs
there is a right of survivorship
Modern definitions of the word “appraisal” have replaced the word _______ with ________.
estimate, opinion
A facade easement is a type of_______________ easement.
historic preservation
The strongest form of deed is the __________ deed.
warranty
Under the current qualifying education criteria, there are college-level course requirements for __________ classifications.
both Certified Residential and Certified General
The median price of homes sold in your county 6 months ago was $224,650. Prices have been increasing at the rate of 7% per year. What is the median price of homes today?
$232,513
225,650 * 1.035
Which of these factors would result in a violation of USPAP if the appraiser based his or her appraisal fee on it?
- the appraiser’s value opinion
- the borrower’s estimate of value
- the square footage of the home
- none of these
the appraiser’s value opinion
All of the following would be considered to be economic influences on value EXCEPT
- interest rates
- zoning
- unemployment rates
- Consumer Price Index
zoning
The federal financial institutions regulatory agencies directly involved in fair lending include all of the following EXCEPT
- ASB
- FDIC
- OCC
- FRB
ASB
An appraiser pays a fee for the procurement of an assignment. Where in the appraisal report does this payment have to be disclosed?
in the certification and transmittal letter where conclusions are stated
Which would NOT be an example of demand in a real property market?
- increasing immigration into an area
- decreasing building permits
- decreasing vacancy rates
- increasing unemployment
decreasing building permits
What is the median of these numbers: 19, 11, 64, 36, 81, 22, 35, 95?
35.5
The current number of appraisal education hours required for Certified General Appraiser applicants is ______ hours.
300
The four components of the Appraiser Qualification Criteria are:
qualifying education, examination, experience, continuing education
Valuation Advisories, issued by The Appraisal Foundation, are considered:
voluntary guidance
Which of the following types of investments has historically generated the highest return on investment?
- real estate
- savings account
- money market fund
- certificate of deposit
real estate
“A development right that cannot be used by the landowner, or that the owner chooses not to use, but can be sold to landowners in another location” are called _____________ rights.
transferable development
When estimating the value of a fireplace in a single-family home, the most important principle is the principle of
contribution
“The right to construct and maintain tunnels, subways, subcellars, pipelines, sewers, etc.” is the definition of _________ rights.
subsurface
You purchased a house two years ago for $190,000. It has appreciated an average of 3% per year since the time of purchase. What is its current value?
$201,571
190,000 x 1.03 x 1.03
Sonic measuring devices employ _____________ to take measurements.
sound waves
The ________ is responsible for establishing criteria for individuals to become real property appraisers.
Appraiser Qualifications Board
What is the mode of the following set of gross rent multipliers? (95, 93, 120, 94, 93, 129)
93
“The party or parties who engage, by employment or contract, an appraiser in a specific assignment” is the definition of
client
The Management Section of the ETHICS RULE states, in part, “An appraiser must __________ that he or she paid a fee or commission, or gave a thing of value in connection with the procurement of an assignment.”
disclose
A client has requested that an appraiser value a property that is improved with an old dilapidated single family home, and asks the appraiser not to mention the existence of the home in the appraisal report. Which statement is TRUE regarding this situation?
- The client has violated USPAP.
- The appraiser must avoid mentioning this structure in the report.
- It would be misleading if the appraiser did not disclose the existence of this structure in the report.
- USPAP does not address this issue.
It would be misleading if the appraiser did not disclose the existence of this structure in the report.
You purchased a house for $120,000, three years ago. Property values increased 3% the first year, 5%, the second year, and 7% the third year. How much is your house worth now?
$138,865
Which of the below is a requirement of a valid real estate contract?
- consideration
- in writing and signed
- lawful objective
- all of the above
all of the above
You want to buy a house for $243,500. You can get a loan for 90% of value. You will also have to pay 2.75 points on the loan. How much will you have to deliver to closing to cover both the down payment and the loan points?
$30,376.63
The interest rate that banks charge when lending money to their highest rated customers is called the __________ rate.
prime
“The study of the economics of individual spheres of activity or patterns and behaviors, e.g., a firm, an industry, a retail market, a consumer segment, pricing, local employment” is the definition of
microeconomics
Property Owner A has the right to develop his property into 10 lots. He sells this right to nearby Property Owner B who wishes to develop his property into additional lots. This is an example of
transferable development rights
In a trust deed state, title to a property is vested in the __________ until the mortgage lien is satisfied.
Trustee
Deed of trust. Title is vested in a third party, the trustee, until the mortgage lien is satisfied.
Reporting requirements for real property appraisers are set forth in STANDARD ___ of the Uniform Standards of Professional Appraisal Practice.
2
The federal financial institutions regulatory agencies directly involved in fair lending include all of the following EXCEPT
- Fannie Mae
- FDIC
- OCC
- FRB
Fannie Mae
Real estate includes all of the following EXCEPT
- land
- buildings
- property rights
- trees
property rights
“A mortgage in which the interest rate may move up or down, following a specified schedule or in accordance with the movements of a standard or index to which it is tied” is the definition of a(n) ______________ mortgage.
adjustable rate
Which is NOT an economic force affecting property values?
- wage rates
- transportation
- expense levels
- Consumer Price Index
transportation
You have found comparable sales of rural land parcels that indicate the following sale prices per acre: ($930, $775, $1202, $995, $1612, $906). What is the mean of these indications?
$1,070
Which is NOT a requirement of a valid deed?
- must be in writing
- property adequately described
- consideration stated
- must be recorded
must be recorded
“The rate at which vacant space in a property or group of properties for sale or lease has been or is expected to be successfully sold or leased over a specified period of time” is the definition of
absorption rate
The real property market is generally classified as a(n) __________ market.
imperfect
The appraisal standards and qualification criteria promulgated by the boards of The Appraisal Foundation achieves legal authority by adoption, citation or implementation by
government agencies
In USPAP, the word “Ethics” is defined
nowhere
A circle contains _______ degrees.
360
Under the current qualification criteria, an applicant for Appraiser Trainee must have completed ___ creditable hours of experience.
0
The primary operators in the secondary mortgage market include all of the following EXCEPT
- Fannie Mae
- FHA
- Ginnie Mae
- Freddie Mac
FHA
Normally the first step in highest and best use analysis is to research the uses that are
legally permissible
Twenty years ago, most appraisal reports that were sent electronically were sent using _____ technology; today, most appraisals are sent electronically using a _______ format.
EDI, PDF
Which is the fullest and most complete type of estate?
- leased fee
- life estate
- leasehold
- fee simple
fee simple
A client asks an appraiser to omit the client’s identity from the appraisal report. What can the appraiser do?
omit the client’s identity from the report but identify the client in the workfile
The _______ maintains a national registry of state certified and licensed appraisers who are eligible to perform appraisals in federally related transactions.
Appraisal Subcommittee
Which of the following is a characteristic of an effective market?
- prices relatively low
- supply and demand operate freely
- buyers and sellers act rationally
- all of the above
all of the above
A homeowner fears the construction of a factory nearby will decrease the value of her property. This illustrates the principle of
externalities
