Valuation and Appraisal

Question 1

The four parts of an appraisal are:

Answer 1

Date
Description of the property
Estimate of value,
Signature of the appraiser

Question 2

The nature of value incorporates the acronym DUST. The letters stand for:

Answer 2

Demand
Utility
Scarcity
Transferability

Question 3

T/F. The appraiser uses the information accumulated to find an “average” value.

Answer 3

False

Question 4

Which appraisal report has the most comprehensive records and backup information included (such as maps, photographs, etc.)?

Answer 4

Narrative

Question 5

Which appraisal report is less formal, with a simple statement of value, usually less than a page long?

Answer 5

Letter

Question 6

Which appraisal report is in the form of a “checklist” and most often used for institutional lenders?

Answer 6

Short

Question 7

Of value in use and value in exchange, which is subjective?

Answer 7

Use

Question 8

A neighborhood where all homes are similar in design and value illustrates the principle of:

Answer 8

Conformity

Question 9

If most homes are approximately $60,000 in value and one is $100,000, the $100,000 home is an example of the principle of:

Answer 9

Regression

Question 10

In an area of $100,000 homes, the $90,000 home is an example of:

Answer 10

Progression

Question 11

Amenities are:

Answer 11

Pleasure items

Question 12

A view would be considered a:

Answer 12

Intangible Amenity

Question 13

A hot tub would be a:

Answer 13

Tangible Amenity

Question 14

Define Assemblage

Answer 14

Joining two or more contiguous parcels of land together.

Question 15

If putting two or more contiguous parcels of land together increases the value, that is:

Answer 15

Plottage

Question 16

Which of these qualify as a “service” property?

a. Church
b. Home
c. Vacant lot

Answer 16

A. Church

Question 17

The shared or common wall between two twin homes is called a _____ ____.

Answer 17

Party Wall

Question 18

Name the 3 appraisal approaches:

Answer 18

Market Data (Comparison)
Cost Replacement
Income

Question 19

Which is most expensive?

a. Cost Reproduction
b. Cost Replacement

Answer 19

a.Cost Reproduction

Question 20

T/F The total square feet in a home is measured by inside dimensions.

Answer 20

False

Question 21

The Gross Rent Multiplier (GRM) is found by dividing the purchase price by the gross rents.

Answer 21

True

Question 22

The boundary of the lot that runs parallel to the street is called?

Answer 22

Front feet

Question 23

How close to the street are you allowed to construct a building is referred to as the ___ ____ ____.

Answer 23

Set back line

Question 24

Which is considered by the appraiser to be longer:

a. Economic life
b. Physical life
c. Appraised life
d. Amortized life

Answer 24

b. Physical Life

Question 25

The last step (before the report) in the appraisal process is to _________ ___ _____.

Answer 25

Reconcile the data

Question 26

What you paid for the property is the: a. Price b. Cost

Answer 26

Cost

Question 27

29. What you sell it for is the: a. Price b. Cost

Answer 27

Price

Question 28

The first principle of appraising is:

Answer 28

Highest and Best Use

Question 29

To determine highest and best use, the appraiser asks:

Answer 29

Is it legal? Is it economically feasible? What will bring the highest return now and in the future?

Question 30

The appraisal principle that states: "No prudent buyer will pay more than he has to in order to get what he wants," is:

Answer 30

Substitution

Question 31

"An improvement must add its cost to the value of the property," is the principal of:

Answer 31

Contribution

Question 32

The opposite of plottage is:

Answer 32

Subdivision

Question 33

A five-bedroom home with one bathroom is an example of _______________ obsolescence.

Answer 33

Functional

Question 34

A home in an area where property taxes have been markedly increased is an example of external, obsolescence or

Answer 34

Economic

Question 35

T/F. To qualify as a "service" property, it must be used by the public and also be non-profit.

Answer 35

True

Question 36

T/F. To appraise a church, the most effective approach would be the cost approach

Answer 36

True.

Question 37

The only approach that gives a separate value on the land is the _______________ approach.

Answer 37

Cost

Question 38

What appraisal method would be used for a warehouse?

Answer 38

The cubic foot

Question 39

The formula which takes several comparable properties and makes adjustments to make them look as much as possible like the subject property is the __________ ______ Approach, also known as Comparison Approach.

Answer 39

Market Data

Question 40

To determine value using the capitalization approach, the NOI (net operating income) is divided by the ____ ____

Answer 40

Sale Price

Question 41

T/F The higher the cap rate the lower the risk.

Answer 41

False

Question 42

The higher the cap rate the lower the purchased cost.

Answer 42

True

Question 43

The property being appraised is called the _________________ property.

Answer 43

Subject

Question 44

A "quick and dirty" estimate, or "rule of thumb" for arriving at a value for investment property is the:

Answer 44

Gross Rent Multiplier

Question 45

Gross Rent Multiplier Formula:

Answer 45

Sale Price/Annual Gross Rent