Chapter 16 - Real Estate Appraisal - 8%

Question 1

Assessed value is the value assigned

Answer 1

by the property appraiser for the ad valorem tax purposes

Question 2

Properties with higher assessment should

Answer 2

sell for more than the properties with lower assessments

Question 3

The principle of substitution recognizes that no one would pay more for a property than the amount

Answer 3

necessary to acquire an acceptable substitute. This principle is the basis for all mathematical methods that are used by appraisers to estimate value

Question 4

Economic theory is that a prudent buyer will pay no more than

Answer 4

the cost of acquiring an equally desirable alternative property - Principle of Substitution

Question 5

The cost depreciation approach may be the only approach available to estimate the value of

Answer 5

special purpose properties such as
schools
churches
government buildings
museums

Question 6

An over-improved property may suffer functional obsolescence since

Answer 6

it will not sell in the market for the amount invested

Question 7

External obsolescence or economic obsolescence is a loss in value caused by

Answer 7

factors beyond the boundaries of the subject value

Question 8

Effective Age / Total economic life

Answer 8

= total depreciation rate for the entire time period

Question 9

The income approach is used to estimate the value that a property’s

Answer 9

net earning power will support.

Question 10

Income approach is used to estimate the value of

Answer 10

income producing property and for the valuation of a business

Question 11

rate and value have what type of relationship

Answer 11

an inverse relationship

Value = Net Operation Income (I) / Capitalization Rate (R)