Section 16 Multiple Choice

Question 1

The cost-depreciation approach is commonly used to find value for all of the following reasons except which one?

Answer 1

New construction
Verify values found through other approaches
[A] To Calculate income
Special-purpose properties

Question Feedback
[Section 16C, Slide 42]

Question 2

An appraiser found three comparable properties, but she believed that one of the properties was significantly more relevant to the true value of the subject property. In this case, what would the appraiser most likely do?

Answer 2

[A] Assign weighted values to each of the three properties
Add and subtract for differences and take the average
Use the estimated reproduction cost because there aren’t enough comps
Ignore the difference as a biased opinion

Question Feedback
[Section 16C, Slide 61]

Question 3

What is combining two or more adjoining properties called?

Answer 3

[A] Assemblage
Plottage
Accretion
Alluvium

Question Feedback
[Section 16C, Slide 29]

Question 4

A 9-year-old condominium was estimated by an appraiser to have a reproduction cost of $240,000. It has an effective age of 3 years and an economic life of 60 years. What is the accrued depreciation?

Answer 4

[A] $12,000
$4,000
$36,000
$3,500

Question Feedback
[Section 16D, Slide 25] (3÷60) ×$240,000= $12,000

Question 5

Donny’s house didn’t appraise as high as he expected. The appraisal report cited a railroad track running along the back of the property as having a negative effect on the value. This is an example of what?

Answer 5

Property Progression
Physical deterioration
[A] External obsolescence
Functional obsolescence

Question Feedback
[Section 16D, Slide 23]

Question 6

Kevin knows that rental property in the area averages a Gross Income Multiplier (GIM) of 7.5. If the property is producing annual rental income of $55,000 plus additional income of $20,000, how much should he offer for the property?

Answer 6

$412,500
$150,000
[A] $562,500
$262,500

Question Feedback
[Section 16D, Slide 63] ($55,000 + $20,000) $75,000×7.5 = $562,500 Value

Question 7

A subject property has four bedrooms. A comparable property sold for $275,000 with only 3 bedrooms. The appraiser attributes a $5,000 to the 4th bedroom. How is the adjustment made?

Answer 7

Minus $5,000 to the comparable
[A] Plus $5,000 to the comparable
Minus $5,000 to the subject property
Plus $5,000 to the subject property

Question Feedback
[Section 16C, Slides 49 & 50]

Question 8

Carlyle managed an apartment building that has 10 units which rents at $1100 each per month. Last month he had combined vacancy and collection losses of $3,300. His insurance payment was $400, and the utility bills for the common area was $700. What was his effective gross income last month?

Answer 8

[A] $7,700
$6,600
$9,900
$7,300

Question Feedback
[Section 16D, Slide 40] $1,110×10=$11,000; $11,000-$3,300=$7,700

Question 9

You are appraising a 5-year old home. If the livable square footage is 3,500 with a cost of $95 to replace according to a cost-estimating service and the 400 square foot garage can be replaced at $60 a sq. foot, calculate the reproduction cost of the structure.

Answer 9

$365,500
[A] $356,500
$332,500
$71,300

Question Feedback
[Section 16D, Slides 5 & 6] $95×3,500 = $332,500; $60×400 = $24,000; $332,500 + 24,000 = $356,500

Question 10

When vacancy and collection losses are deducted from annual potential gross income and income from other sources is added, what is the result called?

Answer 10

PGI
[A] Effective Gross Income
Net Operating Income
Reserve

Question Feedback
[Section 16D, Slide 40]

Question 11

What does effective age mean?

Answer 11

How long the property is expected to last
[A] How old the building or house appears to be
The actual age of the property
The amount of time since it was last improved

Question Feedback
[Section 16D, Slide 24]

Question 12

Whose mission is it to develop, interpret, and amend the Uniform Standards of Professional Appraisal Practice, or USPAP?

Answer 12

The Appraisal Subcommittee (ASC)
[A] The Appraisal Board (ASB)
The Financial Institutions Reform, Recover, and Enforcement Act (FIRREA)
The Appraisal Qualification Board (AQB)

Question Feedback
[Section 16A, Slide 46

Question 13

What is the value of a property with a Net Operating Income of $175,000 and a capitalization rate of 7.5%?

Answer 13

$23,333,333
$233,333
$13,125
[A] $2,333,333

Question Feedback
[Section 16D, Slide 47] $175,000÷0.075=$2,333,333

Question 14

Functional obsolescence matches which description?

Answer 14

A railroad running on a neighboring property that causes the home to shake when a train passes by
A homeowner that failed to keep the property maintained
Normal depreciation
[A] A one-bathroom home

Question Feedback
[Section 16D, Slide 20]

Question 15

What is a liquidation sale?

Answer 15

[A] A liquidation sale is associated with a rapid sale.
A liquidation sale is used to sell property piece by piece.
A liquidation sale is associated with an estate.
A liquidation sale is used to establish going-concern value.

Question Feedback
[Section 16D, Slides 49 & 69]