Quiz Sales Comparison and Income Approach Ch 9-10

Question 1

__________ is often referred to as the “bundle of rights”.

Answer 1

Real property

Question 2

“A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use” is the definition of

Answer 2

Amenity

Question 3

“The cost of options forgone or opportunities not chosen” is the definition of the principle of

Answer 3

Opportunity cost

Question 4

“The illegal purchase and resale of property at an artificially inflated price; usually requires collusion among the borrower, loan officer, and appraiser, with the victim being the lender or investor” is the definition of

Answer 4

Flipping

Question 5

“The value created by a proven property operation; considered as a separate entity to be valued with a specific business establishment” is the definition of __________ value.

Answer 5

Going concern

Question 6

“A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use” is the definition of

Answer 6

Amenity

Question 7

“The sum of the positive and negative adjustments made to a comparable sale price ” is the definition of

Answer 7

Net adjustment

Question 8

Ad Valorem means

Answer 8

According to value

Question 9

An appraisal for which of the following property types should NOT be reported on the URAR?

Hint: there is another form for this type

Answer 9

Manufactured home

Instead: 1004C Manufactured Home Appraisal Report

Question 10

Fannie Mae expects an explanation when the net adjustments exceed ____% and the gross adjustments exceed _____%.

Answer 10

There is no set number

Question 11

Fannie Mae requires a sales history of the subject property for ____ years and the comparable properties for ____ years.

Answer 11

3, 1

Question 12

Fannie Mae requires an interior floor drawing

Answer 12

Only if the floor plan is a atypical or functionally obsolete

Question 13

As of August xx, the 1004MC is xx xx xx by Fannie Mae.

Answer 13

2018
no longer required

Question 14

Fannie Mae’s Market Conditions Addendum is also known as Form

Answer 14

1004MC

Question 15

Historically, which investment has typically produced the highest overall rate of return?

Answer 15

Real estate

Question 16

Historically, which investment typically produces the lowest overall rate of return?

Answer 16

Savings account

Question 17

If you are appraising the value of a specialized industrial property to an owner/occupant, you might estimate ________ value.

Answer 17

Use

Question 18

If you buy a bond, the return on your investment will be

Answer 18

Interest only

Question 19

In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$2,000. How much is the gross adjustment?

Answer 19

17000

Question 20

In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the gross adjustment?

Answer 20

18000

Question 21

In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the net adjustment?

Answer 21

Minus 3000

Question 22

In addition to estimating the market value of the fee simple interest in an income producing property, an appraiser can also estimate its

Answer 22

Investment value, Leasehold value, Leased fee value

Question 23

In an appraisal of the leased fee interest, a lease that is below market rent could have a ________ effect on value. A lease that is above market rent could have a _________ effect on value.

Answer 23

Negative, positive

Question 24

Owners buy _______ – investors buy __________.

Answer 24

Homes, houses

Question 25

Residential investment properties are typically considered to be ___________ properties.

Answer 25

One- to four-unit

Question 26

The Appraisal Standards Board has expressed the opinion that the level of information in a URAR report is consistent with:

Answer 26

an Appraisal Report

Question 27

The decision to purchase by an investor is motivated more by the property’s __________ and ____________.

Answer 27

Income, risk

Question 28

The income approach typically considers the value of a property to a

Answer 28

Typical investor

Question 29

The most common methodology used to value residential investment properties is the

Answer 29

Gross rent multiplier

Question 30

The primary principle upon which the cost and sales comparison approaches are based is the principle of

Answer 30

Substitution

Question 31

The principle of __________ is defined as “the appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution.”

Answer 31

Substitution

Question 32

The principle of ________________ is defined as “the perception that value is created by the expectation of benefits to be derived in the future.”

Answer 32

Anticipation

(expectations!)

Most important for income producing properties

Question 33

The principle of anticipation is the basis for which valuation methodology?

Answer 33

Income capitalization approach

Question 34

USPAP requires an appraisal report to be identified as one of the following types:

Answer 34

Restricted Appraisal Report. Restricted Appraisal Report is the only valid report type listed. USPAP states: “Each written real property appraisal report must be prepared under one of the following options and prominently state which option is used: Appraisal Report or Restricted Appraisal Report.”

Question 35

Which investment has historically entailed the most risk?

Answer 35

Stocks

Question 36

Which investment typically incurs the highest burden of management?

Answer 36

Real estate

Question 37

Which investment usually has the best liquidity?

Answer 37

Savings account

Question 38

Which of the following are required exhibits for Fannie Mae appraisal reports?

Answer 38

Street map, Original photos of front, rear and street of the subject property, Photos of the front of each comparable sale

Question 39

Which of the following is NOT a required exhibit for Fannie Mae appraisal reports?

Answer 39

Interior floor plan showing doors and closets

Question 40

Which of the following is NOT a required exhibit for Fannie Mae appraisal reports?

Answer 40

Sketch showing the location of well and septic

Question 41

Which of the following property types should be reported on the URAR?

Answer 41

Single unit, Single unit with accessory apartment, Unit in a PUD

Question 42

Which of the following property types should NOT be reported on the URAR?

Answer 42

Unit in a condominium and Manufactured home.

Question 43

Which of these is one of the written report options identified by USPAP?

Answer 43

Appraisal Report

Question 44

You are appraising a property for an investor, and are valuing the property based on the investor’s specific criteria for financing and rate of return. What type of value is this?

Answer 44

Investment value

Question 45

What is the absorption rate?

Answer 45

The rate at which properties for sale have been or can be sold (marketed) within a given area.

Question 46

How to calculate absorption rate?

Answer 46

divide the total number of settled sales by the time frame being analyzed