As a general term, value means the worth, usefulness, or utility of an object.
Accrued depreciation can be defined in appraisal terms as the total loss in value from all
causes.
Tangible property can include both real property and personal property.
Sales adjustments should be market-related.
Appraising the appraisal means to evaluate each value approach, the data used, and the
range of indicated value.
Two or more percentage adjustments should theoretically be multiplied together
(instead of added) when they are dependent upon each other.
Variable units of comparison can often be effectively analyzed by graphing the sales.
If the 1.800 square-foot houses in the subject neighborhood sell typically at $200 per
square foot, you would expect that a 1.400 square-foot house would sell for under $200
per square foot.
Income capitalization converts income to its value equivalent.
The sales data or market method is the most direct way to estimate loss in value.
Before reconciliation begins, the appraiser should review the overall appraisal process.
An example of an economic unit of comparison in the appraisal of land is the price per
buildable apartment or dwelling unit.
Most appraisers have a specialized degree in real estate.
If large adjustments were required in any approach, the value indicated by that approach
should be totally ignored.
To adjust the sales price of a comparable sale with a 10% better location, you should
add 10% to the price.
The final value conclusion should be an average of the three approaches to value.
The value conclusion should fall within the range of value indications from the
approaches applied.
The owners of row houses and townhouses usually own the individual lot where the
unit is located.
Demand and scarcity are both essential elements of value.
The sales comparison approach is based on the principle of substitution.
The sales comparison approach is considered the most direct of the three approaches.
Reconciliation is defined as estimating value.
The four elements of comparison used in the sales comparison approach include the
terms and time of sale, as well as location and physical elements about the property.
Economic obsolescence is caused by factors outside the property.
A gross income multiplier is used to estimate loss in value by the cost-to-cure method.
A misplaced improvement suffers from functional obsolescence.
The quantity of data collected is not a factor in reviewing the results of a
particular value approach.
When you base your depreciation estimate on the “effective age” of the building rather
than the actual age, you are relying on an estimate of the market’s view of the property.
If you are a state licensed or certified appraiser, in most states your appraisals must
always conform to USPAP.
Cost estimates are useful only in the cost approach to value.
The boundaries of a neighborhood may be determined by either physical, economic, or
legal factors.
A new income property is being appraised and you have very few improved sales, and
no vacant land sales to estimate land value. Assume the following, and solve for the
land value, using the land residual capitalization method.
a. $400,000
b. $300,000
c. $100,000
d. $500,000
Of the four elements of value, which one needs purchasing power?
a. Demand
b. Utility
c. Scarcity
d. Transferability
The income approach is generally relied upon when
a. Income is the primary benefit of ownership
b. Property is acquired for different reasons
c. Intangible benefits are sought by buyers
d. None of these
Which of the four agents of production is said to be entitled to the ‘surplus” of
productivity?
a. Labor
b. Capital
c. Land
d. Coordination or management
An architectural style that features a steep roof as well as half timbering on the exterior
is called
a. English
b. Mediterranean
c. Contemporary Colonial
d. New England Colonial
Which of the following is not among the standard ways of describing land for legal
purposes?
a. Lot, block, and tract
b. Assessor’s parcel number
c. U.S. government survey
d. Metes and bounds
The fiscal policy of government is concerned primarily with
a. Interest rates
b. The Gross Domestic Product
c. Government spending and taxation
d. Urban development
Which of the following are private rather than public limitations to real property rights?
a. Zoning
b. Health and safety laws
c. Taxes
d. Deed restrictions
To adjust the sales price of a comparable sale with a 10% inferior location, you should
a. Add 10% to the price
b. Subtract 10% from the price
c. Multiply the price by 10%
d. None of the above
A lease in which the rent is based on the amount of gross sales of the business operated
by the tenant is called a
a. Net lease
b. Percentage lease
c. Gross rental agreement
d. None of these
Of the following, which does not suggest functional obsolescence?
a. A conforming house in poor condition
b. An illegal structure
c. A misplaced improvement
d. An over-improvement
What is the net income ratio of a property where the potential gross income is
$110,000; the vacancy and collection loss is estimated at $10,000; and the operating
expenses are estimated at $30,000?
a. 30%
b. 142%
c. 100%
d. 70%
Which type of appraisals generally requires a state license or certification?
a. Those made to support federally-insured real estate loans
b. Private income tax appraisals
c. Appraisals made to settle divorce cases
d. All appraisals
For any land sale to be considered a valid comparable, it should be
a. Qualified as an open market transaction
b. Competitive with the subject property
c. Both of the above
d. None of the above
The appraiser’s opinion of highest and best use on the date of value should include
a. The highest and best use as if vacant
b. The highest and best use as improved
c. Both a and b above
d. None of the above
If the site is typically found to represent 60% of the total value in a particular
neighborhood, what would be the site value allocated to a single-family home that sold
for $400,000?
a. $160,000
b. $ 24,000
c. $240,000
d. $200,000
A 40 year old building with an effective age of 20 years has a total economic life of 50
years. How much is the value loss?
a. 50%
b. 40%
c. 80%
d. 4/7
The choice of materials in construction should not depend upon
a. The lowest possible cost
b. Climate
c. Availability
d. Durability and style
A lower density zoning code in a high rent apartment neighborhood has changed the
usual comparison units and rules of thumb for land value. If vacant apartment-zoned
lots could formerly be developed to 12 units each, but now can be developed to only 6
units, what value change is likely?
a. A decrease in the value per square foot
b. An increase in the value per buildable unit
c. Both a and b are likely
d. Neither a or b is likely
To capitalize income, you could
a. Divide the net income by the capitalization rate
b. Multiply the income by a cap rate
c. Divide the net income into the rate
d. Change the method of accounting
A developer sold his own home to an employee at the office. The price was somewhat
below the typical price for the neighborhood. You discard the sale on the basis that it
was not
a. A competitive property
b. An open market arms-length transaction
c. Recent in time of sale
d. A high enough price
In contrast to reproduction cost, replacement cost refers to
a. The cost of constructing a building that will serve the same purpose as the one
being appraised
b. The cost of constructing an exact replica building
c. The cost of reproducing the subject building
d. None of these
Use restrictions include those imposed by
a. Government controls
b. Private agreements
c. Market standards
d. All of the above
The Uniform Residential Appraisal Report is
a. A narrative report used by most appraisers
b. A form report often required by lenders
c. A precise letter report
d. None of the above
In the sales comparison approach, the price of a comparable property should be
adjusted for which of the following?
a. Favorable or unfavorable financing
b. Cash sale
c. Typical third-party financing
d. None of the above
The Uniform Standards of Professional Appraisal Practice (USPAP)
a. Has been adopted by all leading appraisal groups
b. Must be complied with in most federally-related appraisals
c. Must be adhered to by all state licensed/certified appraisers
d. All of the above
The most reliable method for estimating the amount to adjust a sale of a three-bath
home being compared with the subject two-bath home usually is to use
a. Matched pairs
b. Depreciated cost
c. Multiple regression
d. The price per square foot
Which of the following refers to the ability to use property as collateral for a loan?
a. Size or denomination
b. Hypothecation
c. Liquidity
d. Safety
Which of the following statements about the government survey system is false?
a. All sections are the same exact size
b. A township is 36 sections
c. A section is 640 acres
d. A section measures one square mile
A rectangular parcel of land containing five acres has 660 feet of frontage on a road.
What is its depth?
a. 495 feet
b. 660 feet
c. 330 feet
d. None of the above
The valuation of any lease interest in real estate usually calls for the
a. Sales comparison approach
b. Income approach
c. Cost approach
d. Comparison method
The “ASA” designation offered by the American Society of Appraisers is associated
with
a. Expertise in all real estate fields
b. Accredited Senior Appraiser
c. Accredited membership
d. None of the above
The appraiser’s opinion of the highest and best use in a written appraisal is required
a. In all market value appraisals
b. At the request of the intended users
c. As an added assignment
d. None of the above
The so-called central town is selected mainly to provide services along a transportation
route.
The Society of Real Estate Appraisers and the American Institute of Real Estate
Appraisers merged to become the Appraisal Institute.
The economic base of a town depends upon its production for local use.
When properly prepared, the Uniform Residential Appraisal Report is acceptable for
federally-related appraisals.
The unit-in-place method of estimating costs is most often used as a supplement to
refine the square-foot method.
Building codes are enforced under the police power of government.
Expenses that are not classified as either variable or fixed should be omitted.
Metes and bounds; recorded lot, block, and tract; and government survey represent the
three types of legal descriptions.
An appraisal is simply a statement of value.
Sales data published and/or available on line for the use of subscribing appraisers is
often generated by cooperating lenders and appraisers.
The URAR form can be a good checklist for the building inspection.
When personal property is attached to real estate it is often called a fixture. Fixtures
always remain personal property.
In the analysis of sales transaction data, the actual date that the sale price was agreed
upon is the theoretical date of sale.
The land residual method is based on the principle of surplus productivity.
The typical appraisal assignment is to appraise the “fee simple” ownership.
Appraisal standards require the appraiser to consider and analyze the sales history of the
subject property.
The price per dwelling unit may be more important in multiple-residential land
appraisals than the price per square foot.