Ch. 12 HW (Value)

Question 1

All of the following might contribute to the economic obsolescence of a property EXCEPT:
A. zoning restrictions.
B. highway change.
C. poor architectural design.
D. over supply.

Answer 1

C. poor architectural design.

Question 2

What is the first step in the appraisal process?

Answer 2

B. Define the appraisal problem

Question 3

The elements of value do not include:

Answer 3

A. cost and age.

Question 4

Which of the following is the most complete type of appraisal report?

Answer 4

C. Narrative report

Question 5

Appreciation in unit value created by joining smaller parcels into one large single parcel is called:

Answer 5

plottage increment.

Question 6

Which of the following would NOT be important in a market data approach to value?
A. Difference in sales dates
B. Difference in age
C. Different original costs
D. Difference in locations

Answer 6

C. Different original costs

Question 7

An example of an item of depreciation that would NOT generally be incurable is:

Answer 7

B. old fashioned fixtures.

Question 8

An agent is listing a home that has been over improved for the neighborhood. The principal of value that the agent may cite to persuade the seller his home is NOT worth substantially more than his neighbors is:

Answer 8

regression.

Question 9

The separate valuation of land and buildings is necessary in which method of estimating value?

Answer 9

Reproduction cost approach

Question 10

The market price as related to the market value of a property is:

Answer 10

possibly the same.

Question 11

Which of the following is not considered obsolescence?

Answer 11

Wear and tear

Question 12

Which of the following components would not represent market value in an arm’s length transaction?

A. A seller who provides financing
B. A local buyer born and raised in the community
D. an elderly couple wanting to downsize

Answer 12

A. A seller who provides financing

Question 13

Which would NOT cause functional obsolescence?
A. Inadequate heating and air-conditioning
B. Eccentric and unorthodox design
C. Super adequate improvements
D. Proximity to noxious odors or nuisances

Answer 13

D. Proximity to noxious odors or nuisances

Question 14

When employing the sales comparison approach, the appraiser will:

Answer 14

make a positive adjustment to the comparable for a feature that the subject has but the comparable does not.

Question 15

In distinguishing between curable and incurable depreciation, it would be correct to say that:

Answer 15

incurable depreciation costs more to correct than it adds to property value.

Question 16

A property’s actual age is 18 and the appraiser has determined the effective age to be 12. If the remaining economic life is 38, what is the percent depreciation?

Answer 16

24%

Question 17

An income producing property is valued at $2,000,000 with annual income of $400,000. What is the indicated GIM?

Answer 17

5

Question 18

A small apartment building produces monthly net income of $3,500. If the value is $350,000, what is the capitalization rate?

Answer 18

12%

Question 19

If a property has a value of $475,000 and a cap rate of 12%, what is the value with a cap rate of 8%?

Answer 19

$712,500

Question 20

The ground floor of a home measures 38’ by 48; the second floor has the same measurements; and, the basement is half that size. If the ground floor improvements are valued at $62 a square foot; the second floor improvements are valued at $48 a square foot; and, the basement area is valued at $21 a square foot, what is the value of the improvements?

Answer 20

$219,792