Lesson 15

Question 1

An official valuation of property for ad valorem tax purposes is BEST described as

Answer 1

An assessment appraisal

Question 2

Real estate values are MOST affected by

Answer 2

Location

Question 3

Which statement is TRUE of real estate appraisers of property secured by federally related loans?

Answer 3

They must hold a state appraiser’s license or certification

Question 4

An appraisal is needed to judge all of the following EXCEPT

Answer 4

Book Value

Question 5

All of the following statements are true EXCEPT

Answer 5

External obsolescence is the result of one’s personal financial condition

Question 6

An appraisal of real estate

Answer 6

Estimates Value

Question 7

If the replacement cost shows a higher value than the appraised value, which of the following has MOST probably occurred?

Answer 7

Accrued Depreciation

Question 8

Physical deterioration MOST closely means

Answer 8

Wear & Tear

Question 9

Assume that the trend in architectural design is toward more contemporary-styled homes. Because of this trend, a conservatively designed home will tend to

Answer 9

decrease in value more rapidly

Question 10

The sales comparison approach to value is an indication of the

Answer 10

Range of probable value

Question 11

A new office building constructed in an old neighborhood is for sale. What is the BEST method of appraisal to use?

Answer 11

RCN minus depreciation plus land

Question 12

An appraiser was informed that a new freeway exit ramp was going to be built that would be servicing a previously undeveloped piece of property under appraisal. Knowing this information the appraiser decided to add some additional value to the appraisal. What appraising principle was the appraiser applying?

Answer 12

Anticipation

Question 13

In appraising a single-family home, the appraiser makes adjustments to the sales price of three comparable properties. The estimate of value would MOST likely be the

Answer 13

Adjusted value of the comparable property that is most similar to the subject property

Question 14

The useful life of a building, or period of time after which the income provided by it is NOT sufficient to warrant its maintenance, is called

Answer 14

economic life

Question 15

Market value could be determined BEST by considering

Answer 15

comparison, income, replacement

Question 16

Of the three methods of appraising properties, the replacement cost approach is particularly appropriate and would give the MOST accurate value in the appraisal of a(n)

Answer 16

New Home

Question 17

A post office of unique design and construction is BEST appraised by which of approach?

Answer 17

Cost

Question 18

In appraising income-producing property, the remaining useful life of a building is considered to be the time remaining

Answer 18

That the property can be profitably used.

Question 19

The value of land plus the reproduction cost less depreciation is the formula for which appraisal approach?

Answer 19

Cost

Question 20

An appraiser often makes a distinction between the physical life and the economic life of an improvement. Regarding these two ways to measure “life” which is generally TRUE?

Answer 20

Economic life ceases first

Question 21

Lots are valued at $30,000. Reproduction cost of the dwelling is $170,000. If properties are now selling for $140,000, the accrued depreciation is

Answer 21

$60,000

Question 22

A buyer purchased a commercial warehouse for $750,000. fixed expenses are $15,000 per year and operating expenses are $49,000 per year. If the buyer wants a 9 percent return, how much gross rental income does he need each month?

Answer 22

$10,958 (A 9 percent return on a $750,000 investment is $67,500. Add the expenses ($67,500 + $15,000 + $49,000) and then divide by 12 months.)

Question 23

Assume that three rental buildings had sales prices and rents as follows: $107,250 and $16,500: $105,625 and $16,250: $112,125 and $17,250. What value would most likely be indicated on a similar building if rents were $16,750?

Answer 23

$108,875 (A 9 percent return on a $750,000 investment is $67,500. Add the expenses ($67,500 + $15,000 + $49,000) and then divide by 12 months.)

Question 24

The gross rent multiplier (GRM) is calculated by dividing the sales price by the

Answer 24

Monthly gross income

Question 25

Determine the multiplier of a duplex that sells for $200,000 and has gross rents of $2,000. What would a similar duplex be valued if it had gross rents of $2,500?

Answer 25

$250,000 (200,000 / 2,000 = 100 (GRM) 2,500 X 100 = $250,000)

Question 26

The difference between reproduction cost and the present value of a building is:

Answer 26

Depreciation

Question 27

Two of the elements necessary to constitute fraud are that the misrepresentation concerns a material fact and that the party to whom the statement is made has the right to rely on it. A third element necessary is that:

Answer 27

The broker knew the truth

Question 28

All of the following are examples of external obsolescence EXCEPT:

Answer 28

Direct effect of inclement weather

Question 29

The direct sales comparison (market data) approach to appraising is BEST used when:

Answer 29

Many comparable sales exist

Question 30

Functional obsolescence can be created by:

Answer 30

An overimmprovement

Question 31

Economic life refers to the period:

Answer 31

Over which a property may be profitable utilized

Question 32

Given the annual income of a property, what is the BEST method to determine its value?

Answer 32

Capitalization method

Question 33

The term reproduction cost new, as used in the cost approach to estimating value, means the present cost of reproducing the subject improvement:

Answer 33

With the same or very similar materials

Question 34

For appraisal purposes, which of the following factors has the GREATEST influence on a property’s value?

Answer 34

The local economic conditions

Question 35

Highest and best use refers to:

Answer 35

Optimum use to produce best net return

Question 36

A home located in an area where there are factories with a great deal of smoke and dust experiences

Answer 36

Economic/External obsolescence

Question 37

All of the following are examples of physical deterioration as defined by the cost approach to value EXCEPT

Answer 37

Rundown neighborhood