Fundamental of Real Property Appaisal - Quiz #2

Question 1

The cost of producing a building or structure having the same utility but using modern material, design and workmanship is called

Answer 1

Replacement cost

Question 2

When a cost manual is being used, which one of the following components is not included in the inventory of physical characteristics for the building?

Answer 2

Location

Question 3

The underlying principle in the adjustment process in the sales comparison approach is he Principle of ___________

Answer 3

Contribution

Question 4

You are analyzing re-sales to determine a time adjustment. You have found a sale that sold 18 months ago for $200,000 and sold again 8 months ago for $220,000. Based on this sale, the monthly adjustment for time would be

Answer 4

Months Price
Older sale 18 $200,000
New Sale 8 $220,000
Difference 10 $20,000

Difference per month $20,000/10 = $2,000
Percentage per month $2,000/$200,000 = 0.01
Answer is 1%

Question 5

Which approach to value is premised on the Principle of Substitution?

Answer 5

Cost approach
Sales comparison approach
Income approach

Question 6

The Principle of ___________ states that market value is never constant because environmental, governmental, social, and economic forces are at work influencing the property and its environment.

Answer 6

Change

Question 7

Which of the following is not an appropriate unit of comparison when multiple -unit residential properties are being appraised?

Answer 7

Price per cubic foot

Question 8

The cost of building an exact replica of a building is called

Answer 8

Reproduction cost

Question 9

The direct cost for a single family residence containing 1,500 square feet are $80.00 per square foot. Indirect cost are an additional 20% of direct cost. The land value is well supported at $50,000. The improvements are 10 years old and have depreciated at the rate of .5% per year.

1. What is the cost new of the improvements?
2. What is the indicated value of the property based on the cost approach?

Answer 9

1. $80.001.20 = $96.001,500=$144,000
   Answer is $144,000
2. Improvement cost new $144,000
   Less depreciation: (0.0510) = 0.05144,000 -7,200
   Replacement cost new less depreciation $136,800
   Land value $50,000
   Indicated value by the cost approach $186,800

Question 10

When a direct method of measuring depreciation is used, the loss of value attributable to external obsolescence is measured by

Answer 10

Capitalizing an actual or estimated rent loss using a GRM, multiplied by the building portion of the land-to-building ratio.

Question 11

When a property experiences functional obsolescence, it

Answer 11

Is usually the result of diminished utility within the building.

Question 12

the cost estimation method that is considered the most accurate but is also the most time consuming is the

Answer 12

Quantity survey method

Question 13

The first adjustment in the sales comparison approach is

Answer 13

Financing