National Valuation

Question 1

If a manufacturing plant that employs 20% of the local labor force closes, the likely effect on the area’s real estate values will reflect the principle of

Answer 1

Supply and demand

Question 2

The final step in the sales comparison approach is to

Answer 2

Reconcile the adjusted values of the comparables

The main steps in the Sales Comparison Approach are to; identify comparable sales, compare comparables to the subject and adjustment comparables, reconcile values indicated by adjusted comparables for the final value estimate of the subject.

Question 3

A property owner must spend $10,000 to pave his driveway. Upon completion of construction, his property value will increase by $7,500. In this case the deficiency would be considered to be

Answer 3

Incurable deterioration

Question 4

Economic life is best defined as

Answer 4

The length of time during which an improvement will contribute to the value of a property

Question 5

Mike wanted a capitalization rate of 14% if he bought Joe’s property. If three units rented for $450 per month, two units @ $550, and one unit @ $600 per month, what is the maximum amount Mike could pay in order to net the cap rate he wants?

Answer 5

$261,429

$450 x 3 = $1,350, $550 x 2 = $1,100, $1,350 + 1,100 + 600 = $3,050, $3,050 x 12 = $36,600, $36,600 ÷ 0.14 = $261,429

Question 6

What is an ad valorem tax levy?

Answer 6

The part of a taxing body’s budgeted expenses that must come from real property taxes

Question 7

A unique characteristic of a special assessment tax is that

Answer 7

It only applies to properties which will benefit from the public improvement

Question 8

Each unit in a fourplex rents for $850 per month. If the appraised value is $460,000, what is the GRM for the fourplex?

Answer 8

135.3

$850 x 4 = $3,400, $460,000 ÷ $3,400 = 135.3

Question 9

Comparable sales of duplexes in a market indicate a GRM of 146. If the annual income of the subject is $24,000, what is the property’s estimated value?

Answer 9

$292,000

$24,000 ÷ 12 = $2,000, $2,000 x 146 = $292,000

Question 10

An income producing property rents for $1,000 per month and the GRM is 84. What is the estimated market value of the property?

Answer 10

$84,000

84 x $1,000 = $84,000

Question 11

Restrictive covenants are enforced by which of the following?

Answer 11

Injunction

In disputes between neighbors over enforced restrictions, the court will issue an injunction to prevent a neighboring lot owner from violating the recorded restrictions.

Question 12

One important characteristic of environmental protection legislation is that it

Answer 12

Can require affirmative action on the part of owners and developers

The Residential Lead-Based Paint Hazard Reduction Act requires affirmative action on the part of the sellers, landlords, real estate agents, and renovators disturbing more than two square feet of paint in houses built before 1978. Disclosure of knowledge of Lead Paint on any sale or lease of a residential property is mandatory.

Question 13

The purpose of a building permit is

Answer 13

To regulate minimum construction standards