PRINCIPLES AND PRACTICES CHP 17 Flashcards
An appraiser has been contracted to determine the value of a large apartment building for a potential investor. Which appraisal method is probably the most useful for this situation?
A. competitive market analysis
B. cost approach
C. income approach
D. sales comparison approach
C. income approach
Which of the following appraisal approaches would be most appropriate for valuing a recently built single-family home?
A. income approach and cap rate
B. income approach and cost approach
C. replacement cost and cap rate
D. sales comparison and replacement cost
D. sales comparison and replacement cost
Which homes should an appraiser consider when finding comps?
A. homes currently listed for sale in the market
B. homes for which the listing agreements have expired
C. homes that have sold recently in the subject’s area
D. All homes should be considered.
C. homes that have sold recently in the subject’s area
Comp #3 has five bedrooms; the subject property has four bedrooms. The appraiser determines that a bedroom in that neighborhood is worth $7,500. What is the appropriate way to apply this information when performing the sales comparison approach to valuation?
A. add $7,500 to Comp #3 value
B. subtract $7,500 from Comp #3 value
C. add $7,500 to the subject base
D. subtract $7,500 from the subject base
B. subtract $7,500 from Comp #3 value
Comp #1 has three bathrooms; the subject property has four bathrooms. A bathroom in that neighborhood is valued at $4,000. Comp #1 does not have a fireplace; the subject does. A fireplace is valued at $6,000. Comp #1 has a finished basement; the subject does not. A finished basement is valued at $12,000. Comp #1 sold for $200,000. What is the comp’s adjusted value?
A. $198,000
B. $200,000
C. $202,000
D. $210,000
A. $198,000
Homeowner Helga takes good care of her house but recently discovered a small crack in a basement wall. This type of depreciation is MOST LIKELY
A. curable external obsolescence.
B. curable functional obsolescence.
C. curable physical deterioration.
D. incurable physical deterioration.
C. curable physical deterioration.
Which home suffers from external obsolescence?
A. Home A allows access to the basement only from outside of the home.
B. Home B has only a detached one-car garage.
C. Home C has a failing septic system.
D. Home D is less than 500 yards from the county dump.
D. Home D is less than 500 yards from the county dump.
An appraiser used various cost manuals as well as their experience to determine that it would cost $69 per square foot to replace the subject property. Since the property is 2,880 square feet, it would cost $198,720 to rebuild the house. To find the value of the subject property, they must also factor in
A. depreciation and site value.
B. depreciation and inflation.
C. inflation and labor costs.
D. labor costs and site value.
A. depreciation and site value.
Which of the following would NOT suffer from depreciation?
A. an abandoned building
B. a residential property used as a rental
C. unimproved land
D. a 2,700 sq. ft. commercial building
C. unimproved land
Reproduction cost, as opposed to replacement cost, would be more appropriate for which type of structure?
A. historical building
B. personal home
C. restaurant
D. school
A. historical building
The second bedroom of a house must be accessed through the first bedroom. This is an example of
A. economic deterioration.
B. external obsolescence.
C. functional obsolescence.
D. physical depreciation.
C. functional obsolescence.
Which example of depreciation is generally incurable?
A. economic obsolescence
B. functional obsolescence
C. physical depreciation
D. wear and tear
A. economic obsolescence
What would an appraiser be MOST LIKELY to discover by analyzing the neighborhood of the subject property?
A. contributory obsolescence
B. deferred obsolescence
C. external obsolescence
D. functional obsolescence
B. deferred obsolescence
An appraiser is analyzing a unique dome house for a mortgage. Using the square foot method, they determine that the replacement cost of the home would be $120 per square foot. The home has 2,150 square feet. They estimate depreciation at 30%. If the site is valued at $57,000, what is the final opinion of value using the cost approach?
A. $201,000
B. $228,983
C. $229,008
D. $315,000
C. $229,008
For which of these properties would the gross rent multiplier method be MOST appropriate?
A. a single-family home that is owner-occupied
B. a duplex
C. a retail complex with three units
D. an apartment building with five units
B. a duplex
