Res Market Anal and Highest and Best Use Ch 2 Quiz

Question 1

A neighborhood in the decline phase of its life cycle may reach a point where the most likely buyer for properties will be:

Answer 1

investors

Question 2

A neighborhood in the decline phase of its life cycle will usually be characterized by a decline in:

Answer 2

property values, and condition of properties. Chapter 2, “Real Estate Market Life Cycle”: A neighborhood in decline will begin to change character and usually will indicate a general decline in both condition and value of the properties.

Question 3

An announcement of the closing of an industrial plant that is the region’s major employer would likely result in:

Answer 3

a buyer’s market

Question 4

Conclusions derived in the market analysis phase of the appraisal assignment can be used in which approach to value?

Answer 4

Income Approach, Cost Approach, Sales Comparison Approach

Question 5

Data that has already been compiled and is deemed to be reliable is:

Answer 5

secondary data source. Chapter 2, “General Data - Secondary Source”: Data which has already been compiled and is deemed to be reliable from its source is identified as a secondary data source.

Question 6

Data that is gathered personally by the appraiser is:

Answer 6

primary data

Question 7

Discussions of supply and demand in the housing market always return to the principle of:

Answer 7

balance

Question 8

During which period in a neighborhood’s life cycle will there be a strong demand for additional community infrastructure?

Answer 8

growth

Question 9

Examples of general data include the following :

Answer 9

transportation, schools, employment

Question 10

How might a local community entice a buyer to purchase a blighted property and revitalize it?

Answer 10

reduced tax assessment

Question 11

How might an appraiser determine if a neighborhood is in the decline phase of its life cycle?

Answer 11

analyze the ratio of owner occupied-properties to tenant-occupied properties. Chapter 2, “Real Estate Market Life Cycle”: The appraiser may want to analyze the number of owner occupied properties relative to the number of tenant occupied properties in the subject’s market area. Property tax trends may not indicate a declining neighborhood. The racial composition of the neighborhood may not be used as a criterion to determine if a neighborhood is declining; this would constitute illegal discrimination.

Question 12

How would an appraiser estimate the estimated length of time it will take to sell the existing available inventory in a market?

Answer 12

absorption rate

Question 13

If the market achieves balance, or equilibrium, it is considered to be:

Answer 13

stable

Question 14

In a “buyer’s market”, what would an appraiser expect to see?

Answer 14

prices of homes will fall

Question 15

In a “seller’s market”, an appraiser is likely to find:

Answer 15

increasing property values

Question 16

In a “seller’s market”, an appraiser is most likely to find:

Answer 16

a small number of properties available

Question 17

In a market area, there were 168 single-family sales last year, and there are currently 98 properties on the market. How long will it take to sell this existing inventory?

Answer 17

7 months. Chapter 2, “Absorption Rates and Periods”: 168 / 12 = 14 per month. 98 / 14 = 7 months.

Question 18

In a market area, there were 168 single-family sales last year, and there are currently 98 properties on the market. What is the monthly absorption rate?

Answer 18

14 per month. Chapter 2, “Absorption Rates and Periods”: 168 / 12 = 14 per month.

Question 19

In a market area, there were 327 single-family sales last year, and there were 29 expired listings that did not sell. What is the expiration ratio for this area?

Answer 19

8%. Chapter 2, “Expiration Ratios”: 327 + 29 = 356. 29 / 356 = 8.14% (rounded to 8%).

Question 20

In a market that has maintained a state of equilibrium, what would an appraiser expect to see?

Answer 20

home prices remain stable

Question 21

In a neighborhood, there were 122 single-family sales last year, and there were 52 expired listings that did not sell. What is the expiration ratio for this area?

Answer 21

30%. Chapter 2, “Expiration Ratios”: 122 + 52 = 174. 52 / 174 = 29.89% (rounded to 30%).

Question 22

In determining market supply and demand, questions to be considered by the appraiser would include all of the following:

Answer 22

What is the status of the community’s infrastructure?Is there a long-term plan for developing the community’s future housing needs? Is demand keeping pace with supply?

Question 23

In most markets:

Answer 23

demand changes faster than supply

Question 24

In order to produce credible assignment results, an appraiser should:

Answer 24

verify all data

Question 25

In the purchase of a residential property, how does the principle of anticipation apply to the buyer's actions? 

Answer 25

buyer typically anticipates the value of the property will increase 

Question 26

Market analysis in appraisals can be divided into ___ distinct categories. 

Answer 26

two. Chapter 2, "Data Analysis": Market analysis can be divided into two distinct categories for the appraisal process. One is a broad based analysis, involving the study of the supply and/or demand for a particular type of property within a particular area. The second type introduces market segmentation, and involves the supply and/or demand for a specific type of property or unit in a market area.

Question 27

Most specific data are gathered from a: 

Answer 27

primary data source 

Question 28

Once the appraiser has gathered all the data, the next step in the process is: 

Answer 28

isolating the information that is relevant to the assignment 

Question 29

Questions about balance must be answered by the appraiser in order to: 

Answer 29

measure the trends of the market area 

Question 30

The comparable sales used in an appraisal assignment are considered ______ data. 

Answer 30

specific data. Chapter 2, "Specific Data Type": Specific data relates directly to the particular property being appraised. Most of the specific data will be collected by the appraiser; therefore most specific data are said to be gathered from a primary data source. Specific data extends to the selection of those comparable sales from similar recently sold properties in the subject’s market area.

Question 31

The dimensions of the subject property's site would be considered what type of data? 

Answer 31

specific data 

Question 32

The real estate life cycle applies to: 

Answer 32

entire communities, individual properties, subdivisions

Question 33

The revitalization period of a neighborhood's life cycle is also called

Answer 33

renewal period 

Question 34

The subject property's assessment record would be considered ________ data. 

Answer 34

specific data 

Question 35

There were 24 sales in a subdivision in the last year, and there are currently 10 properties on the market. How long will it take the market to absorb this existing inventory? 

Answer 35

5 months. Chapter 2, "Absorption Rates and Periods": 24 / 12 = 2 sales per month. 10 / 2 = 5 months.

Question 36

There were 24 sales in a subdivision in the last year, and there are currently 10 properties on the market. What is the monthly absorption rate? 

Answer 36

2 per month 

Question 37

What does USPAP state about cost? 

Answer 37

it is a fact, or an estimate of fact 

Question 38

What is another name for "average"? 

Answer 38

mean 

Question 39

What is the likely result of an announcement of the closing of an industrial plant that is a region's major employer? 

Answer 39

decreasing property values 

Question 40

What is the preferred method of estimating site value for residential properties? 

Answer 40

Sales Comparison method 

Question 41

What type of data would pertain to a specific property being appraised? 

Answer 41

specific data 

Question 42

What type of data would pertain to trends in the local market area? 

Answer 42

general data 

Question 43

When appraising in a "seller's market", an appraiser is most likely to make adjustments for: 

Answer 43

market conditions ("time") 

Question 44

When supply catches up to demand, what happens in the market? 

Answer 44

the market achieves balance 

Question 45

When the market becomes saturated with a certain type of housing, what happens in the market? 

Answer 45

marketing times lengthen 

Question 46

When we refer to "purchasing power", which question are we asking? 

Answer 46

Are prospective purchasers able to purchase this property? 

Question 47

When writing an appraisal report, charts and graphs may be used to replace parts of the narrative explanation. 

Answer 47

TRUE

Question 48

Where should an appraiser document his or her data verification sources? 

Answer 48

in the workfile 

Question 49

Which of these are accepted methods of estimating site value? 

Answer 49

allocation technique A, Capitalization of ground rent, Sales Comparison Approach

Question 50

Which of these would be examples of general data? 

Answer 50

streets and roads, municipal services, shopping

Question 51

Which period in a neighborhood's life cycle will mean a demand for more social services to be supplied by the community? 

Answer 51

growth