Chapter 15: Appraisal (MC)

Question 1

What type of value does an appraiser most commonly estimate?

a. book
b. market
c. insurable
d. condemnation

Answer 1

b. market

Question 2

Investment value is best defined as

a. value to an individual.
b. the highest price a property would sell for in an open market.
c. value based on the use of the property.
d. the minimum value of a business opportunity.

Answer 2

a. value to an individual.

Question 3

For the sales price of a property to equal its market value

a. the parties cannot be dealing with a self-interest
b. the property would have to be exposed to the market for an unreasonably short time.
c. there can be no existing liens against the title.
d. the transaction must involve a willing and informed buyer and seller.

Answer 3

d. the transaction must involve a willing and informed buyer and seller.

Question 4

Market value is the amount

a. a buyer is willing to pay.
b. a seller is willing to accept.
c. that should be paid.
d. that was previously paid.

Answer 4

c. that should be paid.

Question 5

When calculating a gross rent multiplier, it is necessary to

a. multiply comparably property sales price by comparable property rent
b. divide comparable property sales price by comparable property rent.
c. multiply comparable property sales price by subject property rent.
d. divide comparable property sales price by subject property rent.

Answer 5

b. divide comparable property sales price by comparable property rent.

Question 6

Functional obsolescence includes

a. an overimprovement.
b. broken windows.
c. a waste water treatment plant next to the subject property.
d. a property located in the glide path to an airport

Answer 6

a. an overimprovement.

Question 7

Which appraisal approach would be given greater weight when appraising an apartment complex?

a. cost-depreciation
b. income capitalization
c. comparable sales
d. land residual

Answer 7

b. income capitalization

Question 8

The appraisal approach most suitable for estimating the value of a single-family property is

a. cost-depreciation.
b. comparable sales.
c. income capitalization.
d. land residual.

Answer 8

b. comparable sales.

Question 9

Which method of reporting the results of an appraisal does NOT come under requirements established by the Uniform Standards of Professional Appraisal Practice?

a. summary
b. restricted use
c. letter
d. self-contained

Answer 9

c. letter

Question 10

Which method may NOT be used to estimate reproduction cost?

a. quantity survey
b. economic age-life
c. unit-in-place
d. comparative unit

Answer 10

b. economic age-life

Question 11

Income divided by a capitalization rate results in an estimate of

a. market value.
b. the effective gross income.
c. reproduction cost.
d. the amount of accrued depreciation.

Answer 11

a. market value.

Question 12

If income remains constant and the capitalization rate is reduced, what is the effect on value?

a. insufficient information
b. decreases
c. increases
d. no effect

Answer 12

c. increases

Question 13

A new airport built in proximity to a residential neighborhood may cause properties to lose value due to

a. physical deterioration.
b. external obsolescence.
c. functional obsolescence.
d. proximity obsolescence.

Answer 13

b. external obsolescence.

Question 14

In the income capitalization approach, a capitalization rate can be derived from

a. tables published nationally by appraisal organizations.
b. rate schedules maintained by lending institutions.
c. the interest rate paid on Treasury Bills.
d. the relationship between sale prices and income of similar properties.

Answer 14

d. the relationship between sale prices and income of similar properties.

Question 15

When making adjustments based on the following information, $2,000 should be

Comparable Sales Price: $40,000
Comparable Property: Two-car Garage
Subject Property: No Garage
Garage Value: $2,000

Answer 15

subtracted from the comparable property – NEVER ADJUST THE SUBJECT