Briefing Exam 3 Flashcards
1
Q
- Demand being:
a. prices decrease as availability decreases.
b. prices increase as availability increases.
c. prices increase as availability decreases.
d. prices always increases.
A
c. prices increase as availability decreases.
This is an example of supply and demand.
2
Q
- While the economy is experiencing inflation, interest rates:
a. drop and housing prices rise.
b. rise and housing prices drop.
c. and housing prices rise.
d. none of these.
A
c. and housing prices rise.
During inflationary periods, interest rates and housing prices usually rise.
3
Q
- Of the following, value is best described as:
a. present worth of future benefits.
b. relationship between money and desire.
c. commodities in exchange.
d. speculative gain.
A
a. present worth of future benefits.
This definition of value is most applicable to income producing properties. “The present worth the future benefits” have to do with the projected income stream.
4
Q
- Value is best described as:
a. disability.
b. worth.
c. equity.
d. cost.
A
b. worth.
Value is generally described as the amount of money deemed to be the equivalent in the worth of the subject property. Cost does not equal value, nor does equity.
5
Q
- The relationship between a property and a prospective purchase is known as:
a. utility.
b. value.
c. highest and best use.
d. progression.
A
b. value.
Value can also be described as the relationship between a property and a prospective purchaser. The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale (market value).
6
Q
- Market value is determined by:
a. value offered.
b. value paid.
c. appraised value.
d. all of the above.
A
b. value paid.
Market value: the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale. It is assumed that the buyer and seller acted prudently and knowledgeably and that the price is not affected by undo stimulus.
7
Q
- Of the following, which would most likely be the highest value?
A. Loan value
B. Tax value
C. Market value
D. Book value
A
C. Market value
The other choices would most likely be lower than market value.
8
Q
- Which of the following would most likely lower the value of a single-family residence?
A. Deferred maintenance
B. Strict zoning
C. Questionable neighborhood
D. Obsolescence
A
A. Deferred maintenance
Deferred maintenance is physical deterioration or loss in value of a building resulting from postponed maintenance to the building.
9
Q
- When appraising a commercial property, an appraiser would be least interested in:
A. Changes in use.
B. Physical condition.
C. Past sales of similar property.
D. Original cost.
A
D. Original cost.
The value of commercial property is more often derived from its income earning potential.
10
Q
- Which represents the four unities of market value?
A. Location, interest, demand, financing
B. Time, title, interest, possession
C. Possession, encumber, will, sell
D. Demand, utility, scarcity, transferability
A
D. Demand, utility, scarcity, transferability
Referred to as the four characteristics of market value: demand, utility, scarcity, transfer ability. On the state exam they are sometimes referred to as the “prime requisites a value.” Memory aid: DUST
11
Q
- In order for demand to be effective, it must be implemented by:
A. Amenities.
B. Location.
C. Highest and best use.
D. Purchasing power.
A
D. Purchasing power.
The element of value known as “demand” is rendered ineffective by lack of purchasing power.
12
Q
- Which of the following is not one of the three great forces affecting value?
A. Social ideals and standards
B. Economic adjustments
C. Political or governmental regulations
D. Private restrictions
A
D. Private restrictions
Real estate undergoes constant change from physical, economic, social, and political forces.
13
Q
- A $260,000 house having been built among $100,000 to $145,000 homes would eventually see the value of the surrounding homes. This influence on the value of the $260,000 house is known as:
A. Supply and demand.
B. Social obsolescence.
C. Deterioration.
D. Regression.
A
D. Regression.
Principle of regression: between dissimilar properties, the worth of the better property is adversely affected by the presence of the lesser quality property.
14
Q
- Which of the following is an appraiser’s primary concern and the appraisal of residential property?
A. Marketability
B. Square footage
C. Functional utility
D. Operating expenses
A
A. Marketability
If a residential property is not marketable it is worthless.
15
Q
- Offers to purchase by prospect of buyers will tend to set:
A. Future prices
B. The ceiling price
C. The floor for prices
D. None of these
A
C. The floor for prices
Sellers list high and buyers usually offer to pay less than they might agree to pay. In bargaining circumstances, asking prices establish the upper limit for prices in an area while offers to purchase will set the lower limit to which prices might fall.
16
Q
- In an appraisal, the term “utility value” would most nearly be described as:
A. Insurance value.
B. Liquidation value.
C. Market value.
D. Use value.
A
D. Use value.
Utility value is the value in use to an owner-user. A property that has no utility has no value.
17
Q
- The ultimate test of functional utility is:
A. Marketability
B. Layout
C. Location
D. Desire
A
A. Marketability
Functional utility is defined as “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, as well as the efficiency of a building’s use in terms of architectural style, design & layout, traffic patterns, and size and type of rooms.” The ultimate test of functional utility is marketability. If the property can be marketed for the same price as others in the area, there is no functional obsolescence.
18
Q
- The principle of “highest and best use” refers to the use:
A. That produces the greatest net income attributable to the land.
B. That produces the largest gross income.
C. Of improvements best adapted to the architectural style and design of the neighborhood.
D. Best suited to the environment.
A
A. That produces the greatest net income attributable to the land.
Highest and best use refers to use of land. It is that use of the land that will product the greatest net income designated and credited to the land.
19
Q
- Which would be considered economic obsolescence?
A. Poor architectural design
B. Blighted neighborhood
C. Termite damage
D. Deferred maintenance
A
B. Blighted neighborhood
Economic onsolescence concerns influences outside the property limits and would include a blighted neighborhood.
20
Q
- Any loss in value due to placing a building in an incompatible neighborhood would be an example of:
A. Functional obsolescence
B. Economic obsolescence
C. Physical wear and tear
D. Improper design techniques
A
B. Economic obsolescence
The fact that neighboring properties are hurting the value of a building would indicate that it is suffering from economic obsolescence.
21
Q
- A flight pattern to a nearby airport was changed so that planes pass over a single-family residential neighborhood. Any loss in value to these properties would be attributed to:
A. Economic obsolescence
B. Functional obsolescence
C. Physical obsolescence
D. All of these
A
A. Economic obsolescence
This outside influence is considered economic obsolescence.
22
Q
- Which of the following is an example of functional obsolescence?
A. New zoning laws
B. Encroachment of in harmonious land use
C. Deteriorated driveway
D. Ornate cornices
A
D. Ornate cornices
An ornate cornice is an outdated architectural design classified as functional obsolescence. A deteriorated driveway would be physical deterioration. New zoning laws and inharmonious land use would be examples of economic obsolescence.
23
Q
- A loss in value due to a city sewer system in poor condition would be classified as:
A. Physical deterioration
B. Functional obsolescence
C. Wear and tear
D. Economic obsolescence
A
D. Economic obsolescence
A poor sewer system is an outside influence and is considered economic obsolescence.
24
Q
- Economic obsolescence would be considered:
A. Curable
B. Incurable
C. Inherent
D. Wear and tear
A
B. Incurable
Whether an item of depreciation is curable or incurable depends solely on the cost to cure. Since economic obsolescence is caused by external forces, there is usually nothing that can be done to change it.
25
25. Wear and tear to the load bearing members of a building would be classified as:
A. Functional obsolescence-curable
B. Physical deterioration-curable
C. Functional obsolescence-incurable
D. Physical deterioration-incurable
D. Physical deterioration-incurable
Physical damage to the load bearing members of a building would usually be considered too expensive to repair. If it is too expensive to repair, it is classified as incurable.
26
26. Two different properties are located side-by-side in the same neighborhood. They were both built by the same contractor, at the same time, for the same cost, are maintained the same, and contain the same square footage. If one property is worth less than the other, it would be due to:
A. Functional obsolescence
B. Economic obsolescence
C. Deferred obsolescence
D. Physical deterioration
A. Functional obsolescence
The only possible difference is that the properties do not look the same. All forces and factors that could influence value operate on both properties. Possibly the floor plans are different. The difference must be architectural and is considered functional obsolescence.
27
27. A four-bedroom house with a one-car garage would be an example of:
A. Physical deterioration
B. Functional obsolescence
C. Economic obsolescence
D. Environmental obsolescence
B. Functional obsolescence
Functional obsolescence is a loss in the value of a property resulting from deficiency in the floor plan of a house. A one-car garage would be inadequate for the four bedroom house.
28
28. Evans owns a new personal residence. The transportation agency is widening the street in front of his residence. This will cause Evans to lose 10 feet along the front of this property which borders the street. This is an example of:
A. Functional obsolescence
B. Economic obsolescence
C. Physical deterioration
D. Accrued depreciation
B. Economic obsolescence
Any loss in value would be considered economic obsolescence because it is caused by a force which is outside the property lines.
29
29. The period over which a property may be profitably utilized is called it's:
A. Economic life
B. Amortized life
C. Income life
D. Net life
A. Economic life
Economic life is the estimated period over which it is anticipated that a property may be profitably utilized.
30
30. The economic life of improved property is which of the following in relation to the physical life?
A. Longer
B. Shorter
C. The same
D. Depends on the type of building
B. Shorter
Economic life is the estimated period over which an improved property may be profitably utilized so it will yield a return. The physical life is the estimated period during which a physical thing is habitable if normally maintained. Typically, physical life is expected to be longer than economic life.
31
31. If a building is in exceptionally good condition, it's effective age is:
A. Less than its actual age
B. More then it's actual age
C. The same as its actual age
D. Depends on the type of building
A. Less than its actual age
Effective age is the apparent age of a building based on observed condition rather than chronological age. The effective age of improvements to real property at the time of inspection differs from actual age by such variable factors as depreciation, quality of maintenance, and the like.
32
32. The basic valuation principle underlying the market approach is:
A. Change
B. Increase and decrease
C. Anticipation
D. Substitution
D. Substitution
The Principle of Substitution is the basis of all appraisal techniques in determining property value. Simply stated, value will tend to be set by the cost of acquiring an equally desirable substitute.
33
33. The hardest and yet most important part of the market data method of appraising is:
A. Adjusting for differences between the comparable and the subject property
B. Analyzing the volume of sales data
C. Collecting a sufficient volume of sales data
D. Establishing the unit of comparison
A. Adjusting for differences between the comparable and the subject property
The most difficult part of the market data method of appraising for differences in the properties.
34
34. In appraisal, the adjustment process whereby comparables are adjusted to the subject property is known as:
A. Averaging
B. Reconciliation
C. Weighing
D. Comparing
B. Reconciliation
In appraisal, reconciliation is the process of interpreting the data gathered by bringing the various value estimates into mutual relationship with one another to determine a final estimate of value. With this process, the comparable are always adjusted to the subject property.
35
35. You are preparing a competitive market analysis on a vacant lot that you hope to list for sale. Which of the following approaches to value will be used in the development of the estimated value?
A. Cost approach
B. Gross rent multiplier
C. Income approach
D. Sales comparison approach
D. Sales comparison approach
The sales comparison approach is most applicable to the appraisal of vacant land. The cost approach is most applicable to the appraisal of special purpose properties such as a church. The gross rent multiplayer is used as a substitute for the income approach in the valuation of a single family home. The income approach is used in the appraisal of an income-producing property.
36
36. When using the market data approach to appraise a single-family home, recent sales are compared to the subject property as to:
A. Capitalization rates
B. Exterior features only
C. The entire property
D. Rental income
C. The entire property
The entire property is examined for comparison purposes.
37
37. The subjective value of a property is the:
A. Exchange value
B. Market value
C. Use value to the owner
D. Lenders value
C. Use value to the owner
Since value sometimes depends on the use by a specific owner, it tends to be considered subjective.
38
38. The objective value of a property is closest to:
A. Market value
B. Club appeal
C. Listing price
D. Future value
A. Market value
Objective value is what a reasonable person ends up paying for a property.
39
39. Which of the following approaches to real estate appraisal is concerned with "the present worth of future benefit of a property?
A. Market data
B. Income
C. Cost
D. Summation
B. Income
The income approach is based on the theory that the present worth or value of an income property is the present worth of future net income.
40
40. The income approach would not be used when appraising:
A. Commercial retail property
B. Residences in a subdivision
C. Industrial buildings
D. Neighborhood shopping centers
B. Residences in a subdivision
When there are no suitable comparatives or, in this case, no income to capitalize, the income approach is not a viable method.
41
41. The most difficult step in applying the income approach in the appraisal of income property is:
a. verifying the income and expense records
b. selecting a proper capitalization rate
c. locating similar properties to make a market comparison
d. establishing the net income
b. selecting a proper capitalization rate
Capitalization rates are usually established by examining established rates on similar properties. Since few comparables are usually available it can be difficult to establish an accurate rate.
42
42. When analyzing the income produced by a property, an appraiser is concerned with:
A. Amount of income
B. Prospect of continued income
C. Quality of tenants
D. All of these
D. All of these
All of these are important factors to consider when calculating net income for capitalization purposes.
43
43. The principle of anticipation applies when using the:
A. Market-data approach
B. Income approach
C. Cost approach
D. Summation approach
B. Income approach
The income approach estimates value based upon the amount of net income a property is anticipated to produce over its remaining economic life.
44
44. An appraiser would determine the value of an apartment building by:
A. Capitalizing anticipated future income
B. Calculating the reproduction cost
C. Using comparables exclusively
D. Analyzing past income streams
A. Capitalizing anticipated future income
The income capitalization method analyzes a property's anticipated future income.
45
45. Capitalization is most closely related to:
A. Investment to equity ratio
B. Income to to equity ratio
C. Income to value ratio
D. Cost to equity ratio
C. Income to value ratio
The formula for capitalization:
VALUE = NET INCOME/CAPITALIZATION RATE
46
46. Capitalization is a process whereby an appraiser:
A. Finds gross income of equity capital.
B. Converts income into capital value.
C. Establishes cost of capital investment.
D. All of these.
B. Converts income into capital value.
Capitalization is a mathematical process used in estimating the value of income producing promptly by applying a certain capitalization rate to the net operating income.
47
47. The capitalization rate in the income approach provides for "return of" and "return on" the investment. "Return of" refers to:
A. Return of the land
B. Depreciation
C. Monthly savings
D. Principal payments
B. Depreciation
An investor is allowed a "return on" his/her investment, which is the same as interest, and a "return of", which is depreciation. The "return of" allows for depreciation of the wasting asset.
48
48. If interest rates on loans increase, capitalization rates would tend to:
A. Increase
B. Decrease
C. Remain the same
D. Disappear
A. Increase
The "return on" part of the capitalization rate is the same as interest. If interest rates increase, the capitalization rate increases.
49
49. After capitalizing the net income of a property and then deducting the replacement cost of the improvements, an appraiser has established the:
A. Value of the land.
B. Market value of the property.
C. Use value to the owner.
D. Potential value to an investor.
A. Value of the land.
The total value of a property is made up of the value of the land plus improvements.
50
50. Which of the following should be included when estimating the value of an income property using the capitalization approach?
A. Vacancy loss
B. Principal payments on a loan
C. Interest payments on a loan
D. Management expenses
D. Management expenses
Management expenses should be considered when using the capitalization approach. Loan payments are not considered in capitalizing net income.
51
51. To arrive at a capitalization rate in the appraisal of an income producing property, no provisions should be made for:
A. Manager's salary
B. "Return of" the investment
C. Federal income taxes
D. All of these
C. Federal income taxes
To arrive at a capitalization rate, the appraiser makes an allowance for depreciation or a "return of" the investment. No provisions are made for federal income taxes that might become due on the property income.
52
52. An individual owns an income property which is worth $100,000, based upon a capitalization rate of 6%. If an appraiser uses a capitalization rate of 8% on the same property, the estimate of value would be:
a. $70,000
b. $75,000
c. $80,000
d. $90,000
b. $75,000
Using a 6% capitalization rate, the net income is determined by multiplying the value by the capitalization rate: $100,00 x 0.6 = $6,000. Then capitalize the $6,000 at 8%: $6,000/.08 = $75,000.
53
53. Assuming the total value of the property to be $190,000 and the total net income to be $13,680, the capitalization rate would be:
a. 6.5%
b. 7%
c. 7.2%
d. 7.5%
c. 7.2%
The basic capitalization formula is: VALUE = NET INCOME/CAPITALIZATION RATE
From this we get: CAPITALIZATION RATE = NET INCOME/VALUE
$13,680/$190,000 = 0.72 or 7.2%
54
54. Two buildings are located in the same area, of comparable size, both under long-term leases. One is leased to the government for a post office and the other for a hardware store. Using the income capitalization approach to appraise the properties, which of the following is correct?
a. the same capitalization rate for both.
b. a lower capitalization rate for the hardware store.
c. a higher capitalization rate for the the hardware store.
d. proportional capitalization rates based upon the different uses.
c. a higher capitalization rate for the the hardware store.
Part of the capitalization rate measures the risk involved in an investment. Thus, the higher the risk, the higher the CAP rate: the lower the risk, the lower the CAP rate. Leasing a building for a hardware store involves higher risk of vacancy than leasing for a post office and results in a higher CAP rate.
55
55. Property that is very seldom sold would be appraised by which of the following appraisal techniques?
a. market data approach
b. cost approach
c. capitalization approach
d. Hoskold or Inwood method
b. cost approach
An example of property that is seldom sold would be government buildings or churches. There is usually no comparative information available on these types of property. The cost approach relates to construction information which is readily available.
56
56. In the appraisal of residential property, the cost approach is most appropriate in the case of:
a. new property
b. middle-age property
c. older property
d. multi-family property
a. new property
Cost estimates per square foot can more easily be ascertained with new property. This is not to imply that the cost approach is always the best method for the appraisal of new property.
57
57. When using the cost approach, the appraiser may estimate the cost of reconstruction based on its "reproduction" cost or its "replacement" cost. "Reproduction" cost is:
a. The cost to replace the current improvements with another structure.
b. An estimate of the actual cost of the building when originally constructed.
c. The cost to build an exact replica using the actual materials and design of the present building.
d. The cost to remodel the existing structure so it meets current building codes.
c. The cost to build an exact replica using the actual materials and design of the present building.
"Reproduction" cost is the cost of reconstructing a replica of the existing structure using the same design and materials.
58
58. An appraiser using the cost method can use the unit cost per square foot or per cubic foot in his/her computations. On a unit cost basis:
a. a small house would cost more than a large house per square foot or cubic foot
b. a small house would cost less than a large house per square foot or cubic foot
c. a large house would cost more than a small house per square foot or cubic foot
d. the cost would be the same for a small house as a large house
a. a small house would cost more than a large house per square foot or cubic foot
The cost of the essential core items such as the kitchen and bathrooms (which are usually the most expensive to produce) would be prorated over a smaller number of square feet so the unit cost would be higher in a small house.
59
59. The quantity survey method, unit-in-place method, and square foot/cubic foot methods of real estate appraisal most directly relate to the:
a. cost approach
b. income approach
c. sales comparison approach
d. all of these
a. cost approach
In the cost approach, an appraiser may use all of these methods to determine the cost to build.
60
60. Which of the following is the biggest problem in using the cost approach to appraise and older building?
a. economic conditions have changed
b. construction materials and methods have changed
c. estimating accrued depreciation
d. lack of comparable properties recently sold
c. estimating accrued depreciation
For appraisal purposes, accrued depreciation is the difference between the cost to reproduce the property (as of the appraisal date) and the property's current value as judged by its condition. Accused depreciation is difficult to estimate on very old properties.
61
61. Which of the following appraisal techniques requires a separate estimate for the value of the land?
a. market data approach
b. income capitalization approach
c. cost approach
d. all of these
c. cost approach
The primary steps of the cost approach are to (1) estimate the land value, (2) estimate the replacement cost of the building new, (3) deduct all accrued depreciation from the replacement cost and (4) add the estimated land value to the depreciated replacement cost.
62
62. Which of the following is true about the replacement cost method?
a. it works best with new properties
b. it tends to set the upper value of a property
c. it works best for libraries
d. all of these
d. all of these
Since the cost approach looks at the cost of constructing an identical building with current materials and techniques, it tends to se the upper value of the property. The cost approach is ideal for new properties and special purpose properties that have no comparable in the area or which produce no income. Examples are museums, schools, churches, and libraries.
63
63. An appraisal under the cost approach method places the value of landscaping, fences, and walkways:
a. always as a separate item
b. as part of the building
c. usually in the land value
d. none of these
c. usually in the land value
Landscaping, fences, and walkways are considered as improvements or simply as part of the land itself.
64
64. A gross rent multiplier is obtained by:
A. dividing gross monthly rent by the property's value
B. Dividing gross monthly rent by the selling price
C. Dividing sales price by gross monthly rent
D. Dividing net income by the gross monthly rent
C. Dividing sales price by gross monthly rent
The gross rent multiplier is obtained by dividing the sales price or value by the gross monthly rent.
65
65. Which of the following appraisal methods prices all labor and material in construction?
A. Quantity survey
B. Unit-in-place
C. Capitalization
D. Comparison
A. Quantity survey
The quantity survey method involves a detailed estimate of the quantities of raw materials (lumber, plaster, brick, cement) used, as well as the current price of the material and installation costs. It also includes indirect costs, such as building permit, land survey, and overhead.
66
66. Which appraisal method values electrical work by number of light fixtures per square yard?
A. Quantity survey method
B. Unit-in-place method
C. Comparison method
D. Construction cost method
B. Unit-in-place method
The unit-in-place method is a method for computing replacement cost which uses prices for various building components, as installed, based on specific units of use such as square footage or cubic footage. For example, insulation may cost $.07 per square foot, drywall $1.50 per square yard, painting $.08 per square foot and so on.
67
67. Amenities are:
A. Features that add to the value or desirability of a property
B. Items of personal property that may be depreciated
C. Capital improvements that add to the cost basis
D. None of the above
A. Features that add to the value or desirability of a property
Amenities are features, both tangible and intangible, that enhance and add to the value of desirability of real estate. In a condominium, for example, common amenities include a swimming pool, clubhouse, and a good view.
68
68. A property with great amenity value would best be appraised by using the:
A. Reproduction cost method
B. Comparison method
C. Capitalization method
D. Replacement cost method
B. Comparison Method
The comparison method would be used intros case by adjusting comparable to compensate for the amenities of the subject property.
69
69. A corner lot would most likely add value to:
A. Residential property
B. Retail property
C. Industrial property
D. Agricultural property
B. Retail property
Retail property would benefit from the added traffic and visual exposure of a corner lot.
70
70. A cul-de-sac is which of the following?
A. Street
B. Drainage ditch
C. French door
D. Wood molding
A. Street
A cul-de-sac is a dead-end street or a street open at only one end.
71
71. An increase in value as a result of taking several small parcels and joining them together to form a larger parcel is called:
A. Plottage value
B. Combined increment
C. Combination factor
D. Combined worth
A. Plottage value
Assemblage is the combining of two or more adjoining lots into one large tract. This is usually done to increase the value of the individual lots because a larger building capable of producing a larger net return may be erected on a larger parcel. The resulting added value is called plottage value.
72
72. Which of the following is not a method of depreciation?
A. Straight line
B. Sum of the years digits
C. Sinking fund
D. Obsolescence
D. Obsolescence
Straight line, sum-of-the-years-digits, and sinking fund are all methods of calculating depreciation. Obsolescence is also in value due to a decrease in the usefulness of property cause by decay, changes in technology, people's behavior, patterns and tastes, or environmental changes.
73
73. Putting aside money each year for five consecutive years to replace the roof is an example of:
A. A trust fund
B. A depreciation allowance
C. A sinking fund
D. An emergency plan
C. A sinking fund
A sinking fun is established to gradually amass enough money to satisfy a debt or to meet a specific requirement. The sinking fund method of depreciation contemplates produce investments of equal amounts of money in a compound-interesting-bearing account wherein the investment, plus the compound interest, will be used to replace the improvement at the end of its economic life.
74
74. Which of the following best identifies the three phases normally involved in a single-family dwelling?
A. Construction proposal, map approval, and buyer qualification
B. Land acquisition, development, and construction
C. Financing, building, and resale
D. Syndication, subdivision, and recordation
B. Land acquisition, development, and construction
These are the 3 stages of building a single family dwelling.
75
75. An appraiser would most likely use a depth table when confronted with a valuation problem involving:
a. capitalization of net income
b. a sinking fund
c. commercial property
d. residential property
c. commercial property
Depth tables are tables of percentage used to provide a uniform system of measuring additional value of lots which may be more valuable because of added depth. Depth tables are used on vacant land usually for commercial property.
76
76. Which of the following appraisal reports is the most complete and detailed?
a. certificate
b. letter
c. short form
d. narrative
d. narrative
A narrative report is a complete document including all pertinent information about the area and the subject property as well as the reasons and computations for the value consideration. It includes maps, photographs, charts, and plot plans.
77
77. The increase of value with the passage of time describes:
a. appreciation
b. "return on" investment
c. "return of" investment
d. depreciation
a. appreciation
Appreciation is a temporary or permanent increase in the worth or value of property due to economic causes; the opposite of depreciation.
78
78. Restoring an old home to its original condition without making any changes in the floor plan or style is referred to as:
a. rehabilitation
b. reclamation
c. remodeling
d. modernization
a. rehabilitation
Rehabilitation is the restoration of a property to a satisfactory condition without changing the plan, form, or style of the structure.
79
79. An appraiser was hired by Williams to appraise Henderson's property. With whom should the appraiser discuss his findings?
a. Mr. Williams
b. Mr. Henderson
c. any interested party
d. any party willing to pay
a. Mr. Williams
The results of an appraisal are confidential.
80
80. An appraiser is appraising a property which is next door to an abandoned gas station. The appraiser should recommend a:
a. soil engineering study
b. toxic waste study
c. seismic study
d. all of these
b. toxic waste study
There is possibility that the old underground fuel storage tanks used by the gas station were left in the ground and may be leaking. A toxic waste study would require a soil analysis to determine if the tanks have leaked. A soil engineering study is used to test the soils ability to support a structure.
81
81. What is a "fee appraiser"?
a. an appraiser who works for a lending institution
b. a certified appraiser who works on salary
c. an appraiser who works for a federally insured lender
d. an independent appraiser who works on a fee basis
d. an independent appraiser who works on a fee basis
A fee appraiser is a non-salaried professional who furnishes appraisal services for a fee.
82
82. What part of portion of the narrative report contains the estimate of value?
a. Letter of Transmittal
b. Body
c. Conclusion
d. Preface
a. Letter of Transmittal
The letter of transmittal identifies the property, purpose of the appraisal, methods used, and value estimate.
83
83. As far as sales are concerned, the most important date on an appraisal is the:
a. date of the offer
b. date escrow is opened
c. date of acceptance of the offer
d. date of recording
d. date of recording
Since the value could change for a variety of reasons during escrow, the most important date on an appraisal is the date escrow closes, or in this question, the date of recording.
84
84. What is the first step in the appraisal process?
a. define the appraisal problem
b. make an appraisal plan
c. classify the date
d. organize the date program
a. define the appraisal problem
The first step in the appraisal process is to write a concise statement of the appraisal problem.
85
85. A plot drown by an architect is destined to:
A. Show the side and exterior views
B. Outline the foundation system
C. Give detailed specifications of the building components
D. Define the lot and show the location of the improvements on the site
D. Define the lot and show the location of the improvements on the site
A plot plan shows the layout of improvement on a property site. The plot plan usually includes location, dimensions, parking areas, landscaping, and the like.
86
86. A group of buildings developed in a line along the frontage of a main highway would most likely be a(n):
a. neighborhood shopping center
b. industrial park
c. strip shopping center
d. commercial strip development
c. strip shopping center
Strip centers (sometimes referred to as convenience centers), are characterized by adjoining buildings that are narrow in depth relative to their length. The typical design for these districts is a straight line of stores set back far enough from the street to allow for perpendicular parking.
87
87. When referring to his development, a contractor mentions his elevation sheet. He is referring to:
a. reinforcing steel rods in the side walls of the building.
b. the inside dimensions of each room.
c. the exterior and architectural appearance.
d. the building and sit relative to other sites.
c. the exterior and architectural appearance.
Elevations show the exterior sides of a building as it appears after all structural work has been completed. Views are often identified as front, rear, left, and right elevation. Symbols on elevation drawings indicate the kind of exterior materials, their placement, and the height of their construction.
88
88. What is a kiosk?
a. an outside utility sink
b. a term for a sunken living room
c. a gazebo or pavilion
d. a type of foundation footing
c. a gazebo or pavilion
A kiosk is a freestanding structure (open sides, usually multi-sided) located in a shopping center or mall from which merchandise is sold. Another answer encountered on the state exam may be "a multi-sided structure found in a shopping mall."
89
89. In order to find the architectural details of the footing, pier blocks, and sub-floor, a contractor or real estate broker would look at a(n):
a. plot plan
b. floor plan
c. elevation plan
d. foundation plan
d. foundation plan
A foundation plan provides details concerning size of footings, size, and dimensions of piers, and construction measurements with details of sub-floor areas.
90
90. The term "walk-up" refers to a(n):
a. drive-in restaurant
b. agricultural subdivision
c. apartment house
d. subdivider's elevation sheet
c. apartment house
The term "walk-up" usually refers to three or more story apartment buildings with no elevators.
91
91. Which of the following is NOT considered dry-wall construction?
a. plywood
b. sheetrock
c. wallboard
d. plaster
d. plaster
Dry wall construction is any type of masonry work laid up without the use of mortar. It is the type of interior wall construction where finished material is used (other than plaster), such as wood paneling, plywood, plasterboard, or other types of wall board.
92
92. Depression, expansion, prosperity, and recession are all terms related to the:
a. real estate cycle
b. mortgage market cycle
c. capital market cycle
d. business cycle
d. business cycle
Depression, expansion, prosperity, and recession are all terms that refer to the business cycle.
93
93. The framing members over windows and doors are called:
a. headers
b. braces
c. plates
d. guides
a. headers
A header is a framing member over an opening in a wall. The most common are those over windows and doorways which serve to transfer the load.
94
94. The parallel framing members under the flooring boards and in the ceiling are called:
a. beams
b. ledges
c. joists
d. piers
c. joists
A joist is a heavy piece of horizontal timber to which the boards of a floor or the lath of a ceiling are nailed. Joists are laid edgewise to form the floor support.
95
95. What is the unutilized space between the floor and ground of a structure called?
a. air space
b. belly space
c. crawl space
d. lee space
c. crawl space
The minimum required crawl space is 18". This is measured from the ground level to the bottom of the floor joists.
96
96. The insects that are considered to be the most destructive to wood are:
a. dry-wood termites
b. wood beetles
c. silverfish
d. spiders
a. dry-wood termites
One of the most damaging types of termites is the dry-wood termite. Also look for subterranean termite as a possible answer on the state exam.
97
97. The metal used by builders to prevent the seepage of water at certain joints in buildings is known as:
a. guttering
b. draining
c. stoving
d. flashing
d. flashing
Flashing serves as protection against water exerting the building framework at valleys in the roof and at the other critical joints between the roof and wall sections. Flashing is usually made of galvanized steel.
98
98. The word "percolation" deals with:
a. coffee pots
b. water mains
c. smog
d. septic tanks
d. septic tanks
Percolation refers to the returning of water to the land. It is important that a septic tank system has good percolation. Percolation also refers to the recharging of the underground water system (water table).
99
99. Insulation materials are rated by their effectiveness according to their "R-value." The rating system is used to rate the material's:
a. heat replacement rate
b. energy efficiency
c. resistance to flow of heat
d. restance to moisture
c. resistance to flow of heat
The "R-value" rating system is used to measure a material's resistance to the flow of heat.
100
100. If the interior side of an exterior wall is the same temperature to the touch on a winter day as the interior adjacent wall, this would indicate:
a. it's not that cold outside
b. there is plenty of heating duct work in that room
c. the home has a good heating system
d. there is adequate wall insulation
d. there is adequate wall insulation
When an exterior wall is adequately insulated, the interior surface will be about the same temperature as the surface of interior walls because warm air will not be seeping through the walls.
101
101. The vertical structural support members are attached to the:
a. mud sill
b. header
c. sole plate
d. none of these
c. sole plate
The vertical structural support members (studs) are nailed to the horizontal plate (sole plate) which is attached to the subfloor.
102
102. Because of roofing regulations regarding load factor:
a. manufactures are making stronger plywood
b. builders are spacing roofing rafters closer together
c. manufactures are making stronger joists
d. none of the above
b. builders are spacing roofing rafters closer together
Placing rafters closer together strengthens a roof.
103
103. What are the units used to measure the length of a nail?
a. common
b. mil
c. centimeter
d. penny
d. penny
The original system was to measure the nail in relation to a silver penny. Thus, a ten-penny nail weighed as much as ten silver pennies.
104
104. The spread part at the bottom of the exterior of the foundation in a single family dwelling is a:
a. foundation
b. pier
c. base
d. footing
d. footing
The spread part of the foundation below the ground is referred to as the foundation footing.
105
105. Which of the following are known as artificial monuments?
a. canals and streets
b. streets and trees
c. trees and fences
d. fences and rocks
a. canals and streets
A monument is an object that marks property lines or the like. Streets may or may not be artificial. Canals are not natural, therefore artificial.
106
106. Which of the following generally installs conduit?
a. electrician
b. plumber
c. carpenter
d. inspector
a. electrician
Conduit is usually a metal pipe in which electrical wiring is installed.
107
107. A builder was going to build a home on a 75' x 125' lot and wanted it to fit in relation to its surroundings. this placement would be known as:
a. orientation
b. elevations
c. pottage
d. topography
a. orientation
Orientation is the placing or positioning of a structure on a lot with regard to exposure to the sun, prevailing winds, privacy, and protection from noise.
108
108. Which of the following is NOT a type of soil or a soil condition?
a. alkaline
b. expansive
c. adobe
d. deciduous
d. deciduous
Deciduous pertains to plants that lose their leaves, not found. Expansive soil is tightly packed, such as clay or adobe. Alkaline refers to the condition of the soil as to alkali content (salt).
109
109. The person most likely to use a "bench mark" in his or her profession would be a:
a. lawyer
b. carpenter
c. general contractor
d. surveyor
d. surveyor
A bench mark is an identification symbol on stone, metal, or other durable matter permanently fixed to the ground, from which differences of elevation are measured, such as tidal observations or topographical surveys.
110
110. Soil pipe is usually used for:
a. sewers
b. water systems
c. gas lines
d. sprinkler systems
a. sewers
Soil pipe is the pipe that carries waste from the house to the sewer in the street.
111
111. The higher the EER rating:
a. the lower the BTU's
b. the higher the BTU's
c. the bigger the unit is
d. the more watts needed to run the unit
a. the lower the BTU's
The efficiency rating of an air conditioning unit is called its ERR or Energy Efficiency Rating. The higher the ERR, the more efficient the unit and the more money saved on cooling bills. With this question, it is correct to say the higher the ERR rating, the lower the BTU's
(British Thermal Unit).
112
112. A developer ordered two truckloads of backfill during the construction of a home. He ordered this for the purpose of:
a. filling the area around the foundation
b. landscaping
c. septic tanks
d. drainage
a. filling the area around the foundation
Backfill is earth, or selected material such as aggregate, usually used to fill in around foundation walls after they are completed.
113
113. B.T.U's would indicate:
a. water output
b. butane gas pressure
c. heating output
d. electrical resistance
c. heating output
B.T.U stands for British Thermal Unit. One BTU is the amount of heat required to raise one pound of water one degree Fahrenheit in temperature.
114
114. A bearing wall:
a. generally has stronger supportive members
b. can be built at any angle to the door
c. is usually left alone during remodeling
d. all of the above
d. all of the above
A bearing wall is a main or supporting wall referred to as a load-bearing wall, usually supporting a roof above. It usually is of stronger construction than other members and is usually left alone when remodeling. It is possible for a bearing wall to be built in a variety of angles to a door.
115
115. The measurement or the length of road that abuts a thoroughfare is referred to as:
a. front foot
b. frontage
c. width
d. the side of the parcel
b. frontage
Frontage is a term used to describe or identify that part of a parcel of land or an improvement on the land which faces the street.
116
116. What is meant by the expression "turnkey project?"
a. low income, federally funded housing project
b. a development where everything is ready for the buyer to move in
c. a development where there is a lock-box on each door
d. urban redevelopment
b. a development where everything is ready for the buyer to move in
A turnkey project is a development term meaning the complete construction package from ground breaking to building completion.
117
117. Which of the following includes site plans, elevations, drawings, and street locations?
a. Schematics
b. Plottage
c. Subdivision Map
d. Public Report
c. Subdivision Map
A Subdivision Map would include all of these.
118
118. When subdividers evaluate the topography of land,
a. hillside topography is highly considered
b. hillside topography is least considered
c. hillside topography property is less desirable than flat mainstream property
d. topography is not a concern
c. hillside topography property is less desirable than flat mainstream property
Topography is a graphic representation of the surface features or contour of a place or region on a map, indicating their relative positions and elevations. Flat land is cheaper and easier to build on. The subdivider can build more homes on flat land compared to hillside land.
