Chapter 16 - Appraising and Estimating Market Value Flashcards
1
Q
In appraisal, loss of value in a property from any cause is referred to as
A
depreciation.
2
Q
As a component of real estate value, the principle of substitution suggests that
A
if two similar properties are for sale, a buyer will purchase the cheaper of the two
3
Q
The cost of constructing a functional equivalent of a subject property is known as
A
replacement cost.
4
Q
If net income on a property is $20,000 and the cap rate is 5%, the value of the property using the income capitalization method is
A
$400,000
5
Q
Net operating income is equal to
A
potential gross income minus vacancy and credit loss minus expenses.
6
Q
The steps in the income capitalization approach are:
A
estimate net income, and apply a capitalization rate to it.
