General Questions: N - V

Question 1

Which of the following best describes who an appraiser may owe Obligations to?

1) the appraisal profession
2) clients and institutions such as lending institutions and government agencies
3) society in general
4) an appraiser may owe obligations to all of the above groups.

Answer 1

Which of the following best describes who an appraiser may owe Obligations to?
1) the appraisal profession
2) clients and institutions such as lending institutions and government agencies
3) society in general
YES - 4) an appraiser may owe obligations to all of the above groups.

Question 2

The Net Income remaining after the costs of labor, capital, and coordination have been paid for is?
Surplus Productivity and sets the value of the Land
Surplus Productivity - Land

Answer 2

Surplus Productivity and sets the value of the Land

Surplus Productivity - Land

Question 3

The mayor of a small town recently hired you to estimate the value of a new, one-storey, three-bay fire station. The fire station was built last year at a cost of $2.5 million (land and building). Similar-sized, one-year-old commercial buildings in comparable location are selling for $2 million. If you appraise this building for
approximately $2.5 million, you probably have conveyed AN OPINION OF:

Answer 3

Use Value

Question 4

Which criterion is not considered when distinguishing between personal property and fixtures ?

Answer 4

The length of time that the item has been on the property

Question 5

A contractor has constructed a large expensive home in a run-down neighborhood and is unable to sell it for its
cost. What Principle does this represent?

Answer 5

Principle of Conformity

Question 6

John has renovated his home and has spent $50,000 updating his kitchen and flooring. However, he has been advised by an appraiser that this improvement has only added $40,000 to the market value of his property.
Which Principle Impacting Value does this demonstrate?

Answer 6

Contribution

Question 7

Which of the following Private Restrictions could increase the value of a piece of property?

Answer 7

The subject has an easement attached to it that allows it to access the lake

Question 8

Which of the following is the BEST example of the PRINCIPAL of BALANCE ?

Answer 8

A developer involved in a hotel development is considering the owner’s suggestion to include five pools in the design. Similar hotels have four or less pools. The developer believes it is uneconomical to include a fifth pool because the cost to build the pool will exceed the value added to the customers.

Question 9

You and an appraiser colleague are discussing the value of a duplex located in an area that is experiencing
rising demand for mid-rise condominiums. Your friend argues that the sale prices for condominiums is
irrelevant, because you need to focus on what is, not what could be.
Which Principle is your friend ignoring in this case?

Answer 9

Highest and Best Use Principle

Question 10

You are appraising a property that houses a single family residence, but is commercially zoned. The house is 40 years old and still provides adequate living accommodation with a good floor plan. As a single family residence, it has a value of $300,000 for the lot and $45,000 for the home for a total value of $354,000. The commercial land value is $350,000 less $15,000 to demolish the house for a total of $335,000. Your client has stated that your appraisal is incorrect because you should add the commercial land value to the value of the house for a total value of $395,000.
You reply that your client’s method is incorrect as it does not comply with the Principle of :

Answer 10

Consistent Use

Question 11

The Principle of ___________, holds that the value of a property tends to equal the cost of acquiring an
equally desirable substitute property.

Answer 11

Substitution

Question 12

The Period of time over which a structure or a component of a property may reasonably be expected to perform the function for which it was designed is called:

Answer 12

The Useful Life

Question 13

__________, is a Qualitative Technique used to study comparable sales.

Answer 13

Relative Comparison analysis

Question 14

Fred is an apprentice appraiser, and has been asked to undertake a Quantitative Analysis in support of
adjustments as part of a new assignment to estimate the market value of an apt building.
Which of the following would Fred consider NOT applying?

Answer 14

Trend analysis

Question 15

The tenant of a small, freestanding retail building is a baker who has installed ovens for baking bread. The
ovens are large and heavy, and the back wall of the building had to be removed for the ovens to be installed. The appraiser is performing a Refinancing Appraisal of the real estate only. How should the appraiser treat the ovens?

Answer 15

The Appraiser should not include the ovens because they are trade fixtures

Question 16

Based on the definitions of “ real estate” and “real property” in this lesson, which of the following is an example of real estate?

Answer 16

Alex has bought a house for his extended family

Question 17

Which of the following is a characteristic of Real Property ?

Answer 17

Durability of Improved Land

Question 18

Adjustments for Real Property Rights conveyed reflect:

Answer 18

Differences in the rights in realty transferred between the subject and the comparables

Question 19

The choice of whether to use Reproduction or Replacement Cost in an Appraisal depends Mainly on the:

Answer 19

Purpose of the Appraisal

Question 20

During an inspection of an office building with a Remaining Economic Life of 10 years, you notice that the boiler is deteriorating and you estimate a Remaining useful life of 15 years. On the date of inspection, the nboiler is operative and there is NO NEED to replace it. What is the Remaining Life of the boiler and how would you categorize this item in your Analysis ?

Answer 20

10 Years. It would be treated as part of the Long-Lived incurable calculation. The Life of the Boiler exceeds the
Life of the building, therefore it should match the buildings REL of 10 years.

Question 21

_______ Rent is the actual rent income specified in a lease and ______ Rent is the rental income that a
property would most probably command in the open market.

Answer 21

Contract, Market

Question 22

A Reconstructed Operating Statement should include:

Answer 22

Management Charges

Question 23

Over the years, you have reviewed a lot of reports from junior appraisers at your firm, and heard a lot of
explanations for the limited work completed.
Which is the MOST likely to be a valid statement of a SCOPE of WORK Limitation .

Answer 23

I did not inspect the barns, as the client stated she was only interested in the value of the house

Question 24

Short Term Capture is referred to as _________, whereas Long Term Capture is referred to as _______.

Answer 24

Absorption - Share of the market

Question 25

Edna has been researching a property transaction where a neighborhood shopping center sold from ABC
Company to a subsidiary of itself to transfer tax obligations. Based only upon this information, how would Edna
categorize this Transaction ?

Answer 25

A non-arm’s length transaction

Question 26

The city planning department has indicated that a Vacant residential lot located in a flood zone cannot be
given a building permit. This site:

Answer 26

Has lost nearly all utility

Question 27

Which of the following types of Value reflects a Subjective Relationship between a particular Investor and a Given investment?

Answer 27

Special

Question 28

Which of the following represents the correct order when looking for comparables sales for
Valuation of a vacant site ?

Answer 28

Gather Data on Actual Sales – Identify the Similarities and Differences - Identify their HBU – Identify the units
of Comparison – Adjust the sale prices to account for any differences – and then Form a Conclusion

Question 29

Henry is appealing the Assessment of his property, as he believes the Land Value is too high. There are NO
recent sales in his area so the Appraiser used the Allocation Technique.
Which of the following statements would Best Describe this Valuation to Henry ?

Answer 29

In the Allocation Technique, a Ratio of Land Value to Property Value is extracted from comparable sales and
applied to the Sale Price of the Subject Property to arrive at the Land Value.

Question 30

Wendy owns a large parcel of land in South Garlin. The HBU of the property would be to develop it into a
subdivision. There have been NO Sales of similar properties in this area in the recent past.
What Valuation Technique is best to use for the valuation of her property ?

Answer 30

Yeild Capitalization – Is applicable when vacant land with the potential for a subdivision development
represents it’s HBU.

Question 31

An allowance for Vacancy and collection loss is estimated as a percentage of:

Answer 31

Potential Gross Income

Question 32

__________ is the increment of Value that results when two or more sites are assembled or created to
produce one of greater utility, whereas, _____________is the combining of two or more parcels, usually but
not necessarily contiguous, into one ownership or use.

Answer 32

Plottage, Assemblage