General Questions: A - E

Question 1

What are the 3 STAGES of Land Development ?

Answer 1

Permitting, Construction and Absorption

Question 2

No matter where you reside, your property’s Assessed Value will always be based on:

Answer 2

Current legislation governing assessments

Question 3

Philip has been asked to Appraise the site of a potential apartment building, containing 25,000 sq feet. The land is zoned R-4, which permits a density of 40 units to the acre. A 25,000 sqft site zoned R-6, two blocks away, sold recently, between two unrelated parties, at market value. R-6 is also a residential zoning, and it permits 60 units to the acre. How would Philip treat the R-6 sale in considering whether or not to use it as a comparable for the Subject’s Appraisal ?

Answer 3

Philip would use this sale to develop a sale price per developable unit as an indicator in the subject’s value

Question 4

A developer who has been redeveloping parking lots sites in the downtown core is ready to bring his recently completed multi-use retail/office development on the market and asks you for an appraisal. He intends to sell the retail and lease the upper office units. Which Approaches are you MOST likely to use?

Answer 4

Direct comparison, Cost, and Income Approach

Question 5

The Assessment RATIO is:

Answer 5

The Ratio of Assessed Value to Market Value

Question 6

Which of the following is LEAST likely to be an important consideration in the Analysis of an apartment district ?

Answer 6

Pedestrian or vehicular traffic counts

Question 7

The Absorption Period is a measure of time to:

Answer 7

Sell all lots in a subdivision

Question 8

Martha is researching a small retail business that was developed 25 years ago. She has researched area-wide market data and has focused on historical data rather than attempting to make future projections. What type of Analysis has she taken?

Answer 8

Trend analysis

Question 9

Josh is an appraiser who is Analyzing the ideal improvement of his clients investment.

He should make sure:

1) The ideal improvement takes maximum advantage of the site’s potential given market demand.
2) The ideal improvement should meet current market standards and fit the character of the market area
3) The ideal improvement should use materials that are appropriately priced
4) All of the above constraints are taken into account

Answer 9

He should make sure:

1) The ideal improvement takes maximum advantage of the site’s potential given market demand.
2) The ideal improvement should meet current market standards and fit the character of the market area
3) The ideal improvement should use materials that are appropriately priced
4) All of the above constraints are taken into account

Question 10

Adjustments are made:

Answer 10

To the comparable to make them like the subject

Question 11

Which of the following is an Appropriate Basis for making Site Adjustments ?

Answer 11

1) Adding and Subtracting Dollar amounts
2) Adding and Subtracting Percentages
3) By Multiplying Factors

Question 12

Which of the following is the most APPROPRIATE Approach to Value land, given the following:

• The building value can be accurately estimated
• There are NO vacant land comparables in the subject area
• Both building and land Capitalization Rates are available from the market
• Net Operating Income from the land is KNOWN ?

Answer 12

Land Residual Technique – Tests the feasibility of alternate uses of a particular site in HBU analysis or when land sales are NOT available.

Question 13

Which of the following statements best describes a Building Scheme ?

Answer 13

A group of restrictive covenants attaching to two or more lots within a particular development.

Question 14

Which of the following is a Public Limitation on the Bundle of Rights ?

Answer 14

Zoning

Question 15

The furnace in the apartment building is 15 years old and according to the boiler contractor, the life
expectancy is 20 years old. The economic life of the building is estimated at 50 years.
Under “The Breakdown Method of Depreciation” , what is the most appropriate category for calculating the
depreciation for the furnace ?

Answer 15

Physical Short-Lived Deterioration

Question 16

Which procedure for calculating Incurable Physical Deterioration is recommended in The Breakdown Method ?

Answer 16

Application of an Age-Life Ratio – or Straight Line Method

% Depreciation = Effective Age / Economic Life

Question 17

When is The Breakdown Method typically used ?

Answer 17

1) When multiple elements of depreciation that exist in the subject property are not accurately reflected
in available sales data
2) When the Age-Life method is too simplistic to account for the varied forms of depreciation present
3) When an appraisal requirement specifies that each form of depreciation must be accounted for

Question 18

When is The Breakdown Method typically NOT used ?

Answer 18

4) When an estimate of depreciation is required quickly and with minimal expense

Question 19

If the subject property is significantly larger than the benchmark building described in the Cost Manual , the
subject building’s cost is probably:

Answer 19

Lower – Benchmark costs are applied to a Larger space.

Question 20

In today’s society, there are sometimes conflicts over the use of some lands. Environmentalists often feel that
some lands should be kept for the use by society as a whole, while the owner thinks they have the right to
develop it as they like, subject to zoning regulations. Which Concept of Value does this fall under?

Answer 20

Social

Question 21

Valuation professionals may undertake assignments that extent beyond point-in-time valuation,
as reflected in CUSPAP’s Consulting Standard Section 11. Which of the following assignments are most likely to be considering CONSULTING ?

Answer 21

Evaluating the probability of success for a real estate development project

Question 22

The property that that Allen is hoping to buy is relatively flat, has natural drainage, and has great soil
conditions. These ________ Characteristics are very important to Allen, because he had many problems
building on the last site he owned.

Answer 22

Topography

Question 23

A Conditions of Sale Adjustment is MOST likely in which of the following situations?

Answer 23

A purchase made for its plottage value

Question 24

_____, is an example of Indirect Costs, whereas , ______ are examples of Direct Costs .

Answer 24

Property taxes during construction, Labor and Materials used in construction

Indirect costs include – Property taxes incurred during construction, architectural and engineering fees for
plans, building permits, admin expenses of the developer, marketing costs, sales commission, appraisal, accounting and legal fees.

Direct costs include – expenses for labor and materials used in the construction of the improvements,
contractor’s profit.

Question 25

In the Cost Approach , the site is valued as if it were:

Answer 25

Vacant and Available for development to it’s HBU

Question 26

In the Frobisher Report, excerpt presented in Case Study 8.1, a factor of 1.15 was applied to the Swift
Estimator Cost estimate conclusion to reflect the:

Answer 26

Entrepreneurial Profit

Question 27

Direct and Indirect Costs must be calculated and included in:

Answer 27

ALL cost-estimating Methods

Question 28

The Cost to restore an item of Deferred Maintenance to New or reasonably New condition is known as:

Answer 28

Cost to Cure

Question 29

Which type of Curable Functional Obsolescence is measured as the cost of installing a new modern component minus the remaining value of the existing component ?

Answer 29

Deficiency requiring Substitution or Modernization

Question 30

When can overall Cap Rates be accurately derived from comparable sales ?

Answer 30

1) When the Income and expenses of the subject property and comparable properties are estimated on
the same basis
2) When market expectations about the resale prices, tax benefits, and holding periods are similar
3) When the subject and comparable properties are affected by the same financing terms and market
conditions
4) All of the above are correct

Question 31

Which of the following is an example of an Environmental Force impacting Real Property?

Answer 31

Primary transportation systems

Question 32

Christine and four of her friends from university, all of whom are middle-and upper income earners, are
moving into the same neighborhood. They have all purchased houses in a residential neighborhood one block meast of Pidgeon Park and are going to renovate their new homes to their own specs. The former residents are these houses were lower income families. This is an Example of;

Answer 32

Gentrification

Question 33

Mark owns the West Court Apt building, which has occupied a 10,000 sq ft site for the last 25 years. Recently the city has adopted a new zoning ordinance in which the minimum site for an apt building of this size is 12,500 sq ft. This is an example of:

Answer 33

A legally Non-Conforming Use

Question 34

An old, 2 storey house that you have just inspected only has 1 electrical outlet in the Living Room. The cost of installing more outlets is greater than the added value and other existing items will still maintain their value if this work is not done. This is an example of an :

Answer 34

Incurable Deficiency

Question 35

Entrepreneurial profit is the difference between the ______, and the ________.

Answer 35

Total cost of the development – Market Value

Total cost of the development - Market Value = Entrepreneurial profit