Chapter 12

Question 1

Which of the following is NOT one of the three methods to determine the value of real property?

Answer 1

Correlation approach

Question 2

The market data method (comparative approach) is best used for:

vacant land
condominiums.
houses.
all of the above

Answer 2

all of the above

Question 3

The approach that takes the current selling prices of similar properties and adjusts these prices for any differences is called the:

Answer 3

comparative approach

Question 4

Which of the following is NOT a type of depreciation?

Answer 4

political

Question 5

Loss of value due to outmoded style or non-usable space is called:

Answer 5

functional obsolescence.

Question 6

Another term for the income approach is:

Answer 6

capitalization approach

Question 7

The unit of comparison in the market data approach for a house would be:

Answer 7

the entire property.

Question 8

The replacement cost approach to appraisal is best used for:

Answer 8

new construction.

Question 9

A quick way to convert gross income into the approximate value is to use a:

Answer 9

gross rent multiplier

Question 10

Which of the following is an example of economic obsolescence?

Answer 10

Rundown neighborhood

Question 11

Which of the following would be considered operating expenses to be subtracted from the gross income of a property when determining its value through the income capitalization approach?

Answer 11

Property taxes

Question 12

Depreciation can be:

Answer 12

incurable
loss in value due to any cause.
curable.

Question 13

What is NOT an example of functional obsolescence?

Answer 13

Hole in the roof

Question 14

Which type of depreciation is always incurable, meaning nothing can be done?

Answer 14

Economic obsolescence

Question 15

Which of the following is TRUE concerning fee appraisers?

Answer 15

They are self-employed

Question 16

The capitalization rate is a:

Answer 16

return “on” and “of” investment.

Question 17

Which appraisal method measures the present worth of future benefits?

Answer 17

Income approach

Question 18

Which appraisal method uses the principle of substitution?

Answer 18

Market data approach

Question 19

In the income approach, the Net Income divided by the Capitalization Rate equals:

Answer 19

market value

Question 20

Because they are “asking prices” in most cases, listings:

Answer 20

set a ceiling on market value.