Module 8 Quiz

Question 1

The four factors that create value are:

Answer 1

1) Utility (tangible or intangible benefit of real estate that enhances sits attractiveness or increases satisfaction in the user.)
2) Scarcity (present or anticipated undersupply of an item relative to demand)
3) Desire (a purchaser’s wish for an item)
4) Effective purchasing power (ability to participate in market)

Question 2

_____ is an opinion of the worth of a property as of a
specified time.

A) Price
B) Value
C) Cost
D) Estimate

Answer 2

B) Value

Note: “worth” means we are discussing value and not price or cost

Question 3

When real property is sold by one person to another, the amount of money used to compensate the seller is called:

A) the price of the real property.
B) the income of the real property.
C) the cost of the real property.
D) the value of the real property.

Answer 3

A) the price of the real property.

Question 4

A residential developer notices that a farm on the outskirts of a suburb is listed for sale. The developer would like to purchase and develop the farm acreage, but the necessary holding time before the land can be
developed is estimated to be 3 to 5 years. How is the holding cost best identified?

A) construction cost
B) builder’s overhead
C) entrepreneurial incentive
D) development cost

Answer 4

D) development cost

Note: This cost includes the overall project including acquisition cost and all other related expenditures required to bring the property into an operating state.

Question 5

A goods capacity to satisfy human desires or needs is known as:

A) utility.
B) functional obsolescence.
C) effective demand.
D) creative demand

Answer 5

A) utility.

Question 6

Which of the following terms is an independent factor that creates value?

A) utility
B) price
C) investment
D) cost

Answer 6

A) utility

Question 7

A tangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to use is called:

A) an amenity.
B) a right.
C) an intangible asset.
D) marketability.

Answer 7

A) an amenity.

Question 8

The value based on ad valorem tax rolls is called __________ value.

A) assessed
B) market
C) fair
D) investment

Answer 8

A) assessed

Question 9

The market value of a business property including the real property and intangible assets is called:

A) total value.
B) going-concern value.
C) assessment value.
D) fair value.

Answer 9

B) going-concern value.

Question 10

The value of a property to a particular user is known as

A) leasehold value.
B) value in exchange.
C) market value.
D) use value

Answer 10

D) use value

Question 11

A hospital is classified as a ______________ property for valuation purposes.

A) medical use
B) tangible asset
C) special use
D) public use

Answer 11

C) special use