Basic Appraisal Procedure

Question 1

Who is responsible for identifying the intended use of an appraisal?

Answer 1

the appraiser

Question 2

“An assignment-specific assumption, as of the effective date, which, if found to be false, could alter the appraiser’s opinions or conclusions” is the definition of

Answer 2

extraordinary assumption

Question 3

True or False: The effective date of the valuation must be the date on which the appraiser inspected the subject property.

Answer 3

False

Question 4

What is the final step in the valuation process?

Answer 4

report the final opinion of value

Question 5

An appraisal report must contain sufficient information to allow ________ to understand the scope of work.

Answer 5

intended users

Question 6

“Documentation necessary to support an appraiser’s analyses, opinions, and conclusions” is the appraiser’s

Answer 6

workfile

Question 7

True or False: A workfile must be in existence prior to the issuance of a written or oral report.

Answer 7

True

Question 8

True or False: Real property appraisal reports may be written or oral.

Answer 8

True

Question 9

An appraiser encounters a small crack in a foundation slab on a house he is appraising. He discloses the crack in the appraisal report and states that he is not a structural engineer and assumes the crack is not structural in nature and does not require a repair. This is an example of the use of a(n) ______________.

Answer 9

Extraordinary assumption

Question 10

An appraiser produces an appraisal report that includes the effective date of the value. What other date does the appraiser need to include in the appraisal report?

Answer 10

Date of report

Question 11

Which would NOT be a sub­-step in defining the problem?

• definition of value
• effective date of value
• identification of the property rights
• highest and best use

Answer 11

highest and best use

Question 12

What is the first step in the valuation process?

Answer 12

Define the problem

Question 13

Which appraisal term is defined as: “A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis”?

Answer 13

Hypothetical condition

Question 14

An appraiser encounters an underground storage tank. If there is no evidence of any observable leaks, the appraiser could indicate a value opinion based on the ______________ that the tank is indeed not leaking.

Answer 14

extraordinary assumption

Question 15

Which influences typically exert the greatest pressure on property values?

Answer 15

local influences

Question 16

The largest source for demographic information is

Answer 16

U.S. Bureau of the Census

Question 17

True or False: General data tends to influence all properties in an area equally.

Answer 17

True

Question 18

Professional or trade associations offering general data include all of the following EXCEPT

• Federal National Mortgage Association
• National Association of Home Builders
• National Association of Realtors
• Appraisal Institute

Answer 18

Federal National Mortgage Association

Question 19

FEMA stands for

Answer 19

Federal Emergency Management Agency

Question 20

It is important for an appraiser to research and understand what when doing an appraisal?

Answer 20

both the zoning map and the ordinance

Question 21

You check the FEMA flood map, and the subject property is located in Zone C. Is this a Special Flood Hazard Area (SFHA)?

Answer 21

No

Question 22

In residential mortgage lending appraisals, it is more common for lenders and AMCs to ask for _________ maps to be included in appraisal reports.

Answer 22

aerial

Question 23

Local and regional multiple listing services typically concentrate on ____________ properties.

Answer 23

Single unit residential

Question 24

Which of the following pieces of information would MOST likely be found in the deed?

• Assessed value
• Current owner of record
• Zoning classification
• All of these

Answer 24

Current owner of record

Question 25

Multiple Listing Services can be utilized for gathering ____________ .

Answer 25

both general and specific data

Question 26

Which of these organizations is responsible for preparing flood maps for U.S. communities? - FEMA - HUD - Fannie Mae - NAHB

Answer 26

FEMA

Question 27

The largest repository of demographic information in the U.S. is the

Answer 27

Census Bureau

Question 28

Comparable sale and rental properties would be considered ________ data.

Answer 28

specific

Question 29

Which would NOT be a possible source of general data? - trade association - university - deed - department of transportation

Answer 29

deed

Question 30

BEA stands for

Answer 30

Bureau of Economic Analysis

Question 31

True or False: Condemnation appraisals often require an appraiser to develop a separate opinion of site value.

Answer 31

True

Question 32

Improvements that could be made to raw land in order to make a site would include: - permits - grading - fill - any of these

Answer 32

any of these

Question 33

A parcel of raw land has been improved so that it is ready to be used for a specific purpose. The land has now become

Answer 33

a site

Question 34

(True or False) In the sales comparison method, quantitative adjustments are based on dollars, while qualitative adjustments are based on percentages.

Answer 34

b. False Note: When utilizing sales comparison, adjustments to the comparable sales may be made either on a quantitative or qualitative basis. Quantitative adjustments are usually made on a percentage or dollar basis.

Question 35

A rectangular parcel of land has 114 feet of frontage and is 222 feet deep. It sold for $280,000. What did it sell for per front foot?

Answer 35

$2,456 Note: $280,000/114 front ft. = $2,456 per front foot

Question 36

True or False: GPS systems can be used to locate vacant land parcels.

Answer 36

True

Question 37

True or False: A postal mailing address is equivalent to a legal description.

Answer 37

False

Question 38

Another name for the extraction method of site valuation is

Answer 38

abstraction

Question 39

A property sold for $120,000. An old building on the property has a cost new of $300,000 and it is 75% depreciated. What is the indicated site value by extraction?

Answer 39

Extraction Method Solution: Depreciation: $300,000 x 0.75 = 225,000 Building Value: $300,000-$225,000 = $75,000 ``` Property = Land + Building 120,000 = Land + 75,000 ``` Land Value = $45,000

Question 40

Which method of site valuation is based on a typical ratio of land value to total property value?

Answer 40

allocation Note: The allocation method is defined as "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."

Question 41

An improved property has a net operating income of $75,000. The appraiser estimates that $61,000 of the income is attributable to the building. The land capitalization rate is 8%. What is the estimated land value?

Answer 41

$175,000 V (land) = I (land)/R (land) Net income: $75,000 Income from building: $61,000 $75,000-$61,000 = $14,000 income from land V (land) = I (land)/R (land) V(land) = $14,000 / 0.08 V(land) = $175,000

Question 42

Sidewalks, curbs, and landscaping are examples of

Answer 42

site improvements

Question 43

A property contains 2.1 acres and is worth: A. $115,000 as single home site B. $40,000 per unit as a site for a triplex and C. $60,000 per acre as a retail site. All uses are physically possible, economically feasible and legally permitted. Which is the highest and best use?

Answer 43

C ``` A. Single home: $115,000 B. Triplex: $40,000 x 3 units = $120,000 C. Retail: $60,000 x 2.1 acres = $126,000 ```

Question 44

Property that fronts on a lake is often valued using what unit of comparison?

Answer 44

Price per front foot

Question 45

A commercial site currently rents for $4,000 per month. The applicable land capitalization rate is 6%. What is the value of the site by the ground rent capitalization method?

Answer 45

$800,000 4,000 x 12 = 48,000 48,000/ .006 = 800,000

Question 46

Which of the following is a technique for site valuation? - Subdivision development - Sales comparison - Allocation - All of the above

Answer 46

All of the above

Question 47

The ___________method has good application in valuing land in rural areas and in older, urban areas.

Answer 47

extraction

Question 48

A site is currently rented for $600 per month and the ground rent capitalization rate is 7.5%. What is the indicated value of the site?

Answer 48

$96,000 Note: $600 month X 12 months = $7,200 per year. $7,200 ÷ .075 = $96,000

Question 49

Developers usually value land on a basis of price per

Answer 49

buildable unit

Question 50

A property with an old house sold for $220,000. The cost new of the house was $280,000 and it was 75% depreciated. What is the site value of the property by extraction?

Answer 50

$150,000 280,000 x .75 = 210,000 280,000 - 210,000 = 70,000 220,000 - 70,000 = 150,000

Question 51

“Improved land or a lot in a finished state so that it is ready to be used for a specific purpose” is the definition of

Answer 51

Site

Question 52

The Manufactured Home Construction and Safety Standards is also known as the

Answer 52

HUD Code

Question 53

The _______ area of the site is used for family activities and is often found in the _______ yard.

Answer 53

private, rear

Question 54

A bi­level home is also often referred to as a __________ home.

Answer 54

split entry

Question 55

Which type of home is built to meet the HUD Code?

Answer 55

manufactured home

Question 56

In framing, __________ are constructed above window and door openings.

Answer 56

headers

Question 57

The main support beams for a home are called

Answer 57

girders

Question 58

In modern construction, the most common subflooring material is

Answer 58

plywood or OSB board

Question 59

A monolithic slab­ on ­grade foundation is essentially one ____ footing

Answer 59

giant

Question 60

An inch of wood has an R-­factor of approximately

Answer 60

1

Question 61

Materials that transfer heat and energy more quickly are called

Answer 61

conductors

Question 62

The most common type of heat system in new construction today is

Answer 62

forced warm air

Question 63

In electricity, voltage measures __________ , while amperage measures __________ .

Answer 63

pressure, volume

Question 64

U-shaped traps are installed under every plumbing fixture in order to

Answer 64

prevent sewer gases from venting back into the house

Question 65

Slab-on-grade foundations are most popular in the ______________.

Answer 65

South and Southwest

Question 66

With regard to electricity, voltage is equal to __________.

Answer 66

pressure

Question 67

A roof has a pitch of 4 to 12. For every three feet the roof goes sideways, it goes up ________.

Answer 67

One foot

Question 68

Which is the most recent type of construction materials? - rafters - floor trusses - floor joists - balloon framing

Answer 68

floor trusses

Question 69

The earliest framing method was

Answer 69

post and beam

Question 70

When calculating the gross living area of a dwelling, you would NOT include: - The stairs from the first floor to the second floor - Closets - Interior hallways - Covered porches

Answer 70

Covered porches

Question 71

Gross living area should NOT include:

Answer 71

A basement family room

Question 72

A manufactured home is built to meet which code?

Answer 72

the HUD code

Question 73

With regard to electricity, amperage is equal to:

Answer 73

volume

Question 74

A reversible air conditioner is called a(n) _______________.

Answer 74

heat pump

Question 75

Marshall & Swift categorizes reinforced concrete frame commercial structures as Class

Answer 75

B

Question 76

When measuring a condominium unit, you should calculate _____ using ______measurements.

Answer 76

GLA, interior

Question 77

The estimated cost to construct an exact duplicate or replica of the property being appraised, using the same materials, and embodying all the obsolescence of the subject building, is _______________ cost.

Answer 77

reproduction

Question 78

The cost approach would likely be MOST applicable in a situation where: - the improvements are older, and are constructed of outdated materials - the subject is a special purpose property - the improvements do not represent the highest and best use of the property as though vacant - the land value is not well-supported

Answer 78

the subject is a special purpose property

Question 79

The difference between the cost of an improvement and its market value on the effective date of the appraisal is

Answer 79

depreciation

Question 80

The estimated cost to construct, at current prices as of a specific date, a substitute for a building or other improvements, using modern materials and current standards, design, and layout, is _______________ cost.

Answer 80

replacement

Question 81

The most popular cost estimating service for residential appraisers is:

Answer 81

Marshall & Swift

Question 82

When a published cost manual is used, the result is ____________ cost.

Answer 82

replacement

Question 83

Which type of cost new would replicate a slate roof and a steam heating system in a 100-year-old home? - reproduction cost - replacement cost

Answer 83

reproduction cost

Question 84

Direct costs are also called

Answer 84

hard costs

Question 85

You are using the Marshall & Swift Residential Cost Handbook to estimate the cost new of a home built in the early 1900s. What should you do? - not use Marshall & Swift because it has no data on homes built before 1966 - go to the Old Residence pages in the book - go to the Manufactured Housing section in the book - none of the above

Answer 85

go to the Old Residence pages in the book

Question 86

A rectangular-shaped two-story home measures 28 feet by 40 feet. How many lineal feet are there in the foundation?

Answer 86

136 (28 x 2) + (40 x 2) = 136

Question 87

A 2,800 square foot new home recently sold for $660,000. The site value was $180,000. What was the indicated cost per square foot of the home?

Answer 87

$171.43 $660,000 - $180,000 = $480,000 cost new. $480,000 divided by 2,800 = $171.43

Question 88

Which of these is NOT one of the traditional cost estimating methods? - comparative-unit - direct-indirect - unit-in-place - quantity survey

Answer 88

direct-indirect

Question 89

A building was constructed in September 2008 for $872,500. The cost index at that time was 174.6. The current cost index is 222.9. What is the indicated cost new of the building today? (Round the index to 2 decimal places)

Answer 89

$1,116,800

Question 90

When does USPAP require the cost approach to be developed?

Answer 90

When it is necessary for credible results

Question 91

An example of a special purpose property is - 5,000 acre ranch - geodesic dome house - school building - 8,000 square foot residence

Answer 91

school building (it has limited use)

Question 92

The oldest of the three traditional appraisal approaches is the _________ approach.

Answer 92

cost

Question 93

You examine a construction contract to build a 1,448 square foot house and the total cost is $197,450. What was the cost per square foot?

Answer 93

$136.36

Question 94

Fannie Mae says the cost approach _______________.

Answer 94

is optional

Question 95

A building was constructed in August 1999 for $2,340,000. The cost index at that time was 192.3. The current cost index is 302.1. What is the indicated cost new of the building today? (Round the index to 2 decimal places)

Answer 95

$3,673,800

Question 96

You are performing the cost approach on an old house. By engaging in painstaking research, you are able to estimate the cost to construct an exact duplicate of the house, using all the actual materials that were used in its construction. What type of cost have you estimated?

Answer 96

Reproduction cost

Question 97

The simplest, quickest, and least accurate method of estimating costs is the ______________ method.

Answer 97

comparative-unit

Question 98

"Expenditures for the labor and materials used in the construction of improvements" is the definition of

Answer 98

direct costs

Question 99

Unless adjustments are made for ownership interest, the cost approach will indicate the value of the ___________ interest.

Answer 99

fee simple

Question 100

You are performing the cost approach on an old house. You use a cost manual to estimate the current cost of constructing a similar structure, using modern materials. Which type of cost have you estimated?

Answer 100

Replacement cost

Question 101

Physical deterioration is best described as

Answer 101

wear and tear

Question 102

Depreciation is defined as a loss in property value from

Answer 102

any cause

Question 103

True or False: Functional obsolescence may be present in a brand-new structure.

Answer 103

True

Question 104

In most situations, which of these would be considered an example of a superadequacy? - gold-plated faucets - R-90 insulation in walls and ceilings - foundation walls that are 4 feet thick - all of these

Answer 104

all of these

Question 105

A building has an effective age of 12 and a total economic life of 60 years. It cost $320,000 new and its site value is $95,000. What is the indicated value by cost approach?

Answer 105

$351,000 12 / 60 = 20% depreciation. $320,000 x 20% = $64,000. $320,000 - $64,000 + $95,000 = $351,000

Question 106

The number of years that have elapsed since a building was constructed is its

Answer 106

actual age

Question 107

A new building is expected to remain standing for 80 years. This period is the building's ____________ life.

Answer 107

physical

Question 108

"The period over which improvements to real estate contribute to real property value" is the definition of

Answer 108

economic life

Question 109

A roof on a building costs $18,000 to replace. It has an expected life of 25 years, and it is 10 years old. How much short-lived depreciation is attributable to this item?

Answer 109

$7,200

Question 110

A hot water furnace in a building costs $22,000 to replace. It has an expected life of 30 years, and it is 24 years old. How much short­lived depreciation is attributable to this item?

Answer 110

$17,600

Question 111

A building has a cost new of $400,000. Deferred maintenance items have been identified at a cost of $9,000. Short-­lived depreciation has been identified at $15,000; these short­-lived items have a total cost of $45,000. The building has an effective age of 20 years and a total economic life of 50 years. What is the amount of depreciation attributable to the long-­lived items?

Answer 111

$138,400 $400,000 - 9,000 - 45,000 = $346,000 Depreciation = 20/50 = 40% $346,000 x 40% = 138,400 Long Lived Depreciation

Question 112

A home suffers functional obsolescence of $10,000 because it lacks a second bathroom, which could be installed at a cost of $9,500. This type of obsolescence is considered

Answer 112

curable

Question 113

Economic feasibility is indicated if the __________ is ______________ the ______________ of the property.

Answer 113

cost to cure, equal to or less than, anticipated increase in value

Question 114

The amount of depreciation attributed to deferred maintenance is measured by

Answer 114

the cost to cure the deferred maintenance item

Question 115

Which type of age is based on the amount of observed deterioration and obsolescence the improvement has sustained?

Answer 115

effective

Question 116

“The ability of a property or building to be useful and perform the function for which it was intended according to current market tastes and standards” is the definition of __________________.

Answer 116

functional utility

Question 117

Which of these factors is most likely to cause external obsolescence to a residential property? - A roof that shows obvious signs of deterioration but is not yet leaking - A gas station/convenience store located across the street - A kitchen design that does not meet current market tastes and expectations - All of these are examples of external obsolescence

Answer 117

A gas station/convenience store located across the street

Question 118

External obsolescence can be

Answer 118

marketwide

Question 119

The subject is a 15 year old duplex that would cost $240,000 to build new today. It is in good condition and you estimate the effective age to be 10 years. Your estimate of total economic life is 50 years. Its land value is $60,000. What is its value by the cost approach?

Answer 119

$252,000 10/50 = .2 240,000 x .2 = 48,000 240,000 - 48,000 + 60,000 = 252,000

Question 120

A short-­lived item is a building component with an ______________ life that is shorter than the _______________ life of the entire structure.

Answer 120

expected remaining economic, remaining economic

Question 121

Which of these is an example of deferred maintenance? - A hallway that is too narrow - Outdated kitchen cabinets - A bathroom with a tub but no shower - A broken window

Answer 121

A broken window

Question 122

The subject property has 1,200 square feet of GLA, and a comparable sale has 1,400 square feet. What type of adjustment are you likely to make in the sales comparison approach for GLA?

Answer 122

a downward adjustment to the comparable

Question 123

You are conversing with an appraiser who has been in the profession for 40 years, and he mentions the term "market approach". What approach to value is he probably referring to?

Answer 123

sales comparison

Question 124

For what type of property might the sales comparison approach NOT be an applicable approach to value? - a duplex - a commercial office building - an unusual or one-of-a-kind design home - a tract home in a subdivision

Answer 124

an unusual or one-of-a-kind design home

Question 125

What is the first step in the sales comparison approach process?

Answer 125

research the market

Question 126

"The geographic region from which a majority of demand comes and in which the majority of competition is located" is the definition of

Answer 126

market area

Question 127

Specific data is

Answer 127

different for each appraisal assignment

Question 128

Which of these is an element of comparison listed in The Appraisal of Real Estate, 14th Edition? - location - financing terms - property rights being appraised - all of the above

Answer 128

all of the above

Question 129

True or False: Qualitative analysis is used for elements that cannot be given a numerical value.

Answer 129

True

Question 130

Comp A has three bedrooms and sold for $118,000. Comp B has four bedrooms and sold for $125,000. What is the indicated adjustment for a fourth bedroom, using these two paired sales?

Answer 130

$7,000

Question 131

True or False: Qualitative analysis uses percentages adjustments, while quantitative analysis uses specific dollar adjustments.

Answer 131

False

Question 132

A property sold for $129,000. It was not improved or added onto, and it re­-sold 12 months later for $141,900. What is the annual change in market conditions indicated by this sale?

Answer 132

10% increase 141,900/129,000 = 1.1

Question 133

Adjustments should be made for __________ differences between the subject property and a comparable property.

Answer 133

significant

Question 134

Comparable 1 sells for $222,000 and contains 1,900 SF. Comparable 2 is similar in all aspects, except it contains 2,100 SF, and it sells for $234,000. How much should we adjust another comparable sale, per square foot?

Answer 134

$60 2100 - 1900 = 200SF 234000 - 222000 = 12000 12000 / 200 = 60

Question 135

The principle of _________________ is used when determining how much to adjust for differences between various components of a property.

Answer 135

contribution

Question 136

A transaction could be verified through any of the following EXCEPT - buyer - seller - home inspector - listing agent

Answer 136

home inspector

Question 137

“A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of ____________.

Answer 137

district

Question 138

Which of the following would be considered a source of comparable sale data? - MLS - appraiser’s own files - the internet - all of the above

Answer 138

all of the above

Question 139

Which approach is most widely used in the appraisal of residential properties?

Answer 139

sales comparison approach

Question 140

A VA mortgage is an example of

Answer 140

a guaranteed mortgage

Question 141

Bob grants his aunt, Mary, the right to occupy a property he owns for the rest of her life. In this situation, Mary is the

Answer 141

life tenant

Question 142

Tenancy in severalty means the property is owned by

Answer 142

one person

Question 143

According to Fannie Mae, all of the following are unacceptable appraisal practices EXCEPT - not supporting adjustments in the sales comparison approach - selection and use of inappropriate comparable sales - use of comparables that are over six months old - failure to make adjustments when they are clearly indicated

Answer 143

use of comparables that are over six months old

Question 144

When adjusting a comparable sale for financing terms in an FHA appraisal, FHA instructs the appraiser to adjust

Answer 144

downward

Question 145

An appraiser uses a comparable sale that sold as a result of the owner's bankruptcy, and the appraiser adjusts the sale because it is not an arms-length transaction. This is an example of ___________ adjustment.

Answer 145

a conditions of sale

Question 146

Market conditions adjustments are referred to by some appraisers as _________ adjustments.

Answer 146

Time

Question 147

A buyer purchases a home, knowing that it needs a new roof. The buyer offers $104,000 and anticipates the cost of the roof to be $4,000. The roof actually ends up costing $8,000 because of unforeseen circumstances. How much should this sale be adjusted for expenditures made immediately after purchase?

Answer 147

+$4,000 (based on the buyer prediction, regardless of actual cost)

Question 148

A property sold for $183,950, and the purchaser made no significant improvements. One year later it sold again for $195,000. What is the percentage of increase indicated by this sale?

Answer 148

6% $183,950 - $195,000 = $11,050 increase. $11,050 / $183,950 = 6%

Question 149

True or False: In a residential appraisal, the comparable sales must always be located in the same market area as the subject.

Answer 149

False

Question 150

When calculating room and bathroom count in a residential property, how is a "three­-quarter bath" typically counted?

Answer 150

as a full bath

Question 151

According to the requirements of the Uniform Appraisal Dataset, an appraiser is required to rate a location as

Answer 151

N, B, or A

Question 152

When completing an appraisal using the Uniform Appraisal Dataset, in the "Age" section of the sales comparison grid, the appraiser is required to enter

Answer 152

actual age only

Question 153

"The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards" is the definition of

Answer 153

functional utility

Question 154

A comparable sale required the following adjustments: +8,000, -4,500, +5,000, -2,000, -1,000. What is the gross adjustment total?

Answer 154

$20,500

Question 155

An appraisal of which of these types of properties would NOT be reported using the Fannie Mae URAR form? - a unit in a shopping mall - a unit in a planned unit development - a one-unit property with an accessory unit - a one-unit property

Answer 155

a unit in a shopping mall

Question 156

Which of these items is NOT required by Fannie Mae to be included as an exhibit in an appraisal report? - exterior photographs of the front, rear, and street of the subject property - an exterior building sketch of the improvements - a copy of the deed or legal description - photos of the front of each comparable sale

Answer 156

a copy of the deed or legal description

Question 157

With real property, the value of the whole __________ the sum of the separate estates or parts.

Answer 157

may be equal to, more than, or less than

Question 158

A property sold for $200,000, there was a $20,000 down payment and the rest was in the form of a 30 year mortgage at 6% interest. The seller paid 3 points at the closing. How much was that?

Answer 158

$5,400

Question 159

The third step in the life cycle of a market area is

Answer 159

decline

Question 160

A ___________ is a lump-sum payment to the lender that reduces the interest rate of the borrower's mortgage.

Answer 160

buydown

Question 161

“Divided or undivided rights in real estate that represent less than the whole, i.e., a fractional interest such as a tenancy in common, easement, or life interest” is the definition of

Answer 161

partial interest

Question 162

A “point” is equal to _____% of a _______________.

Answer 162

1, mortgage loan amount

Question 163

Market condition adjustments to comparable sales should always be calculated from the time of the _________ to the ____________.

Answer 163

contract, effective date of the appraisal

Question 164

The first step in the life cycle of a market area is

Answer 164

growth

Question 165

GLA includes ___________ but not____________.

Answer 165

above grade heated area, garages

Question 166

Fannie Mae says that positive adjustments for sales or financing concessions

Answer 166

are not acceptable

Question 167

The formula for applying the income capitalization approach is

Answer 167

value = income / rate

Question 168

True or False: If a property is rented, its market rent is always the same as its contract rent.

Answer 168

False

Question 169

"A ratio of one year’s net operating income provided by an asset to the value of the asset" is the definition of ____ rate

Answer 169

capitalization rate

Question 170

A property is currently rented for $1,200 per month, however market rent is only $1,000. The $200 difference between the contract rent and the market rent is

Answer 170

excess rent

Question 171

Which of these would be considered an operating expense?

Answer 171

management fee

Question 172

If we subtract vacancy and collection loss from potential gross income, we get

Answer 172

effective gross income

Question 173

A method of valuing property by discounting the anticipated income stream at an appropriate rate, plus discounting the value of the reversion is

Answer 173

yield capitalization

Question 174

Which type of expenses do not vary with the occupancy of the property?

Answer 174

fixed expenses

Question 175

The basic formula for income capitalization states that value equals _______________ divided by a __________.

Answer 175

income, rate

Question 176

_______________ income is “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.”

Answer 176

Effective gross income

Question 177

A comparable sale sold for $940,000. It had a verified NOI of $122,500. The capitalization rate (Ro) from the comparable sale is calculated as:

Answer 177

.13 | 122500/940000 = .13

Question 178

A 12 unit apartment building has 6 units rented at $900 per month and 6 units rented at $1,050 per month. What is its gross income?

Answer 178

$140,400

Question 179

Which method converts a single year's net operating income into an indication of property value?

Answer 179

Direct capitalization

Question 180

Typical replacement allowance items would NOT include - roof - plumbing repairs - appliances - boiler

Answer 180

plumbing repairs

Question 181

_____________ rent is defined as ”the actual rental income specified in a lease.”

Answer 181

Contract

Question 182

“The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted" is the definition of

Answer 182

potential gross income

Question 183

GRM assumes there is __________ relationship between rental income and value.

Answer 183

a direct linear

Question 184

True or False: An appraiser would typically not value a 50-unit apartment complex with a gross rent multiplier (GRM).

Answer 184

True

Question 185

Properties with more than _____ living units are considered to be non-residential properties.

Answer 185

4

Question 186

True or False: GRM analysis should not be used in areas with rent controls.

Answer 186

True

Question 187

Why does an appraiser need as much information as he or she can get about rental comparables?

Answer 187

to make sure that accurate and appropriate comparisons are made

Question 188

True or False: New single-unit homes are frequently purchased as rental investment properties.

Answer 188

False

Question 189

The gross monthly unfurnished rent of the subject property is $760. The appraiser reconciles the GRM at 115. What is the indicated value of the subject property by income approach?

Answer 189

$87,400 | 760 x 115

Question 190

The Fannie Mae 1007 form is intended to

Answer 190

estimate the market rent of the subject property

Question 191

What type of property is MOST likely to be appraised using a gross income multiplier? - 1-unit - 2-unit - 4-unit - 10-unit

Answer 191

10-unit

Question 192

When developing an appraisal, you calculate the following GRMs from comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the mode of the GRMs?

Answer 192

there is no mode

Question 193

"The sum of values for a variable in a sample or population divided by the number of items in the sample or population" is the definition of

Answer 193

mean

Question 194

GRM analysis is based on the assumption that there is a __________ relationship between income and ________.

Answer 194

direct, value

Question 195

The Fannie Mae Single Family Comparable Rent Schedule is also known as Form

Answer 195

1007

Question 196

"A measure of central tendency identified as the middle value in an ordered array of numerical values …" is the definition of

Answer 196

median

Question 197

A property sells for $95,750. At the time of sale it is rented for $975. What is the GRM?

Answer 197

98.2 | 95750 / 975

Question 198

Which term is defined as: "The relationship or ratio between the sale price or value of a property and its periodic gross rental income"?

Answer 198

Gross rent multiplier

Question 199

GRMs are derived by dividing the _______________ by the _______________ at the time of sale.

Answer 199

sale price, gross monthly unfurnished market rent

Question 200

A set of numbers that has two modes is referred to as a:

Answer 200

bi-modal distribution

Question 201

Residential properties are considered to be ________ unit(s).

Answer 201

one to four

Question 202

To appraise a non-complex 6-unit property for a federally-related transaction, you need to be a _______________

Answer 202

Certified General Appraiser

Question 203

The process of reconciliation occurs

Answer 203

in several places throughout the appraisal process

Question 204

True or False: The reconciliation process means simply proofreading the report for typos and math errors.

Answer 204

False

Question 205

When reconciling to a value conclusion, USPAP requires an appraiser to consider: - The quality of the data available - The applicability and relevance of the approaches used - The quantity of the data available - All of these

Answer 205

All of these

Question 206

An appraiser discovers that the indicated values of her comparable sales, after adjustment, have a range of over 20%. What should the appraiser do?

Answer 206

leave the indications as they are and explain it

Question 207

True or False: Good appraisal practice dictates brief boilerplate statements in the reconciliation section of an appraisal report.

Answer 207

False

Question 208

Which of these final value conclusions is MOST appropriately rounded? - $889,500 - $1,211,000 - $44,500 - $87,545

Answer 208

$44,500

Question 209

Which of these is a reason why appraisers typically use at least three comparable sales in the sales comparison approach? - USPAP requires a minimum of two sales - if one sale is a bad indicator, it will show up in contrast with the other sales - the first appraisal ever prepared had three sales, so that became the required number - over the years, appraisers found that four sales were too many

Answer 209

if one sale is a bad indicator, it will show up in contrast with the other sales

Question 210

True or False: The indicated values in the sales comparison approach should ideally be within 10% of each other.

Answer 210

False

Question 211

An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 80%. What is the land value?

Answer 211

$305,000 $350,000 X .20 = $70,000 (remaining building value). $375,000 - $70,000 = $305,000 (land value).

Question 212

Which would NOT be a form of concurrent ownership? - tenancy in severalty - tenancy in common - joint tenancy - tenancy by the entirety

Answer 212

tenancy in severalty

Question 213

An 8-unit apartment building has 5 units rented at $850 per month and 3 units rented at $925 per month. What is its gross income?

Answer 213

$84,300 (850 x 5) + (925 x 3) *12 = 84,300

Question 214

The _______________ method has good application in valuing land in rural areas and in older, urban areas.

Answer 214

extraction

Question 215

What are the three general types of depreciation?

Answer 215

physical, functional, and external

Question 216

A factory-built house constructed in compliance with the HUD code is _________ home.

Answer 216

manufactured

Question 217

A single parcel is valued at $450,000. Zoning allows it to be subdivided into 8 lots and it is estimated that each lot could sell for $50,000. Site development costs (sewer, grading, road, etc.) would cost $50,000. What is the highest and best use?

Answer 217

Leave it as one parcel

Question 218

A property has a cost new of $350,000. It has an effective age of 20 years and a total expected economic life of 65 years. There are curable items totaling $45,000. If they are cured, it will reduce the effective age to 15 years. What is the value of the improvements on a modified age-­life basis, before including the site value?

Answer 218

$234,545 $350,000 - $45,000 = $305,000. 15 ÷ 65 = .231 or 23.1%. $305,000 X .231 = $70,455. $305,000 - $70,455 = $234,545.

Question 219

“An element of comparison in the sales comparison approach; comparable properties can be adjusted for differences in the motivations of either the buyer or a seller in a transaction” is the definition of

Answer 219

conditions of sale

Question 220

The intended user of an appraisal is the __________ and any other user, as identified by _________.

Answer 220

client, name or type

Question 221

Multiple listing services can be utilized for gathering _______________.

Answer 221

both general and specific data

Question 222

In what type of heating system would you find an expansion tank?

Answer 222

hot water

Question 223

“The type of data and the extent of research and analyses” is the definition of

Answer 223

scope of work

Question 224

The most common type of framing in residential construction today is

Answer 224

platform frame

Question 225

A ___________ home has a permanent steel chassis, wheels and axles.

Answer 225

manufactured

Question 226

A house is rented for $1,050 per month, but lacks air conditioning. Comparable houses with air conditioning rent for $1,100 per month. The appropriate gross rent multiplier is 85. By the capitalized value method, how much is the depreciation attributable to the lack of air conditioning?

Answer 226

$4,250 Capitalization of Income Loss. $1,100 - $1,050 = $50 rent loss. $50 X 85 = $4,250.

Question 227

An estimate of remaining economic life is required by - Fannie Mac - Freddie Mac - VA - all of the above

Answer 227

VA (& FHA)

Question 228

The following statement is a definition for what? “Improved land or a lot in a finished state so that it is ready to be used for a specific purpose”.

Answer 228

Site

Question 229

Which would NOT be an appropriate legal description of a subject property? - postal address - metes and bounds description - rectangular survey description - lot and block description

Answer 229

postal address

Question 230

The summation approach is another name for the _______________ approach.

Answer 230

Cost

Question 231

It is common in appraisal reports to include a map that shows the location of the _______________.

Answer 231

subject property and comparable sales

Question 232

“The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease” is the definition of _______________.

Answer 232

leasehold interest

Question 233

Functional obsolescence could be caused by all of the following EXCEPT - superadequacies - layout problems - deferred maintenance - outmoded items

Answer 233

deferred maintenance Functional Obsolescence. Deferred maintenance is a physical form of depreciation.

Question 234

“The estimated cost to construct, at current prices as of the effective appraisal date, an exact duplicate or replica of the building being appraised, using the same materials..." is the definition of _______________ cost.

Answer 234

reproduction

Question 235

Which entity produces the most commonly-­used land appraisal report form?

Answer 235

It is a generic form

Question 236

Which site valuation methods should only be utilized when the subject property is income-producing by nature?

Answer 236

land residual and ground rent capitalization

Question 237

"The relationship or ratio between the sale price or value of a property and its periodic gross rental income" is the definition of

Answer 237

gross rent multiplier

Question 238

An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 75%. What is the land value?

Answer 238

$287,500

Question 239

Architectural and engineering fees are examples of _____________ costs.

Answer 239

indirect

Question 240

When developing an appraisal, you calculate the following GRMs for comparable properties: 94.3, 90.1, 95.6, 109.2, 84.5, 100.7, 99.9. What is the median of the GRMs?

Answer 240

95.6

Question 241

A dwelling has a reproduction cost of $625,000. It is 10 years old and has an effective age of 12. Its remaining economic life is estimated to be 48 years. What is the depreciated value of the improvements by the age-­life method, before including the site value?

Answer 241

$500,000 500,000 - 12 + 48 = 60 years, 12/60 = .2 625,000*.2 = 125,000 depreciation 625,000-125,0000 = 500,000

Question 242

An appraiser must not allow the intended use of an assignment or a client’s objectives to cause the assignment results to be __________.

Answer 242

biased

Question 243

The first step in the valuation process is

Answer 243

define the problem

Question 244

A cement mixture that is applied to the exterior of a foundation wall is called

Answer 244

parging

Question 245

The URAR form can be used to report the appraisal of which of the following property types? - one-unit property - one-unit with an accessory unit - unit in a PUD - all of the above

Answer 245

all of the above

Question 246

In your sales comparison grid, you made adjustments of +$5,000, +$3,500, -$2,500, + $8,000, and -­$4,000. What is your net adjustment?

Answer 246

+$10,000

Question 247

Flood maps are prepared by

Answer 247

FEMA

Question 248

“The age of property that is based on the amount of observed deterioration and obsolescence it has sustained” is the definition of ____________ age.

Answer 248

effective

Question 249

“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

Answer 249

fee simple estate

Question 250

"The amount an entrepreneur expects to receive for his or her contribution to a project" is the definition of

Answer 250

entrepreneurial incentive

Question 251

A mortgage in which a party other than the borrower assures payment in the event of default is a(n) _____________ mortgage.

Answer 251

guaranteed

Question 252

A comparable new house just sold for $340,000. You estimate the value of the site at $95,000 and the cost of the site improvements at $10,000. It has 2,030 square feet of GLA. What is its unit cost?

Answer 252

$115.76

Question 253

In a federally related transaction, a licensed residential appraiser is permitted to appraise non-complex 1-4 unit residential properties with a transaction value of less than ________ and complex 1-4 unit residential properties with a transaction value less than _________.

Answer 253

$1,000,000, $250,000

Question 254

You examine a construction contract to build a 2,448 square foot house and the total cost is $197,450. What was the cost per square foot?

Answer 254

$80.66

Question 255

Materials that transfer energy quickly are called __________ and those that transfer energy slowly are called __________.

Answer 255

conductors, insulators

Question 256

Which cost estimating method is the most detailed and time-consuming to develop?

Answer 256

quantity survey

Question 257

"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" is the definition of

Answer 257

net operating income

Question 258

“A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis” is the definition of

Answer 258

hypothetical condition

Question 259

The most complex method of site valuation is the _______________ method.

Answer 259

subdivision development

Question 260

A property sold for $250,000. The reproduction cost of the building was $380,000 and it was 60% depreciated. By extraction, what is the value of the land?

Answer 260

$98,000 Example 1. $380,000 X .40 = $152,000 (building value). $250,000 - $152,000 = $98,000 (land value).

Question 261

Fill, grading and permits are examples of improvements that create a

Answer 261

Site improvement

Question 262

J-bolts are used to anchor the _________ to the __________.

Answer 262

sill plate, foundation

Question 263

“A method of estimating land value in which the depreciated cost of the improvements on an improved property is calculated and deducted from the total sale price to arrive at an estimated sale price for the land” is the definition of the ___________ method of site valuation.

Answer 263

extraction

Question 264

Condemnation occurs when a municipality exercises

Answer 264

eminent domain

Question 265

In most residential appraisals, the appraiser values

Answer 265

site

Question 266

A deed could provide which of the following information about a property? - owner of record - easements - deed restrictions - all of the above

Answer 266

all of the above

Question 267

A one­-and-­a-­half-­story house is commonly known as a

Answer 267

cape cod

Question 268

You calculate the following gross rent multipliers for comparable properties: 121.2, 105.3, 111.2, 150.1, 108.3, 105.3, 109.8, 108.8. What is the range of the GRMs?

Answer 268

44.8 (organize & subtract highest from lowest)

Question 269

“Real property for which the expansion, redevelopment, or reuse of the real estate may be complicated by the presence of environmental contamination that needs to be remediated to appropriate regulatory standards ” is the definition of

Answer 269

brownfield

Question 270

The valuation process is a systematic procedure employed to provide the answer to a(n) _______ question about the value of _________.

Answer 270

client’s, real property