Land or site value estimates are important only in the appraisal of vacant properties.
Allowable deduction from book value is one of the four basic appraisal methods for
measuring accrued depreciation.
Using “matched pairs” of comparable sales is considered an indirect method of
estimating sales adjustments.
The form and general content of appraisal reports should be agreed on in advance
between the appraiser and the client.
If the data reviewed for one value approach is marginally reliable, the resulting value is
still given equal weight.
Depreciation is usually classified as incurable if it is not economically feasible to
correct the condition(s) causing the loss in value.
The most important reason for inspecting and analyzing the site is to gather information
for estimating its highest and best use.
Small income properties are bought and sold only for their tangible amenities.
The capitalized income method can be used to estimate either the amount of accrued
depreciation from all causes, or that from a single cause.
Units of comparison are dollar or percentage amounts that are added to, or subtracted
from, the comparable sales prices.
Which of the following suggests a market transaction, rather than a legal transaction,
that may require an appraisal?
a. An income tax casualty loss estimate
b. A property damage lawsuit
c. A property tax appeal
d. Exercise of a purchase option
Advanced preparation for the site inspection should include
a. A plat map of the site
b. Zoning information
c. Collecting needed equipment
d. All of the above
In a recent appraisal of a three bedroom home in a good location, the appraiser has
analyzed three comparable sales. A summary follows:
Dollar Adjustments Indicated by Market Study
Location difference = $30,000; Lot size difference = $25,000;
Amenities and condition difference = $10,000;
Problem:
Relying upon the comparables and the adjustments indicated, what is the best value
conclusion for the subject property?
a. $220,000
b. $240,000
c. $255,000
d. $270,000
USPAP requires each written or oral appraisal report to:
a. State who inspected the property
b. Disclose any extraordinary assumptions or hypothetical conditions
c. Both of the above
d. None of the above
The applicability of any approach depends upon all the following except
a. The intended use of the appraisal
b. How many approaches have been applied
c. The strengths and weaknesses of the approach
d. The actions of buyers and sellers
Which of the value approaches is considered to be the most direct?
a. Cost
b. Income
c. Sales comparison
d. A combination of the above
When making the building inspection, the appraiser
a. Always looks for the same things
b. Considers the purpose and intended use of the appraisal
c. Keeps in mind the value approaches to be emphasized
d. Both b and c are correct
Which approach to value is emphasized where there are good comparable sales
available?
a. Sales comparison approach
b. Cost approach
c. Income approach
d. A combination of all the above
The economic base of a town depends upon
a. Its local services c. Its export production
b. The type of function it serves
c. Its export production
d. Its land-use pattern
Which of the following is not a typical reason for using the cost approach?
a. To appraise unusual or special-use properties
b. To appraise older tract homes
c. To check against the values estimated from the other approaches
d. To suggest the value of new property
If streets and common areas require 5 acres, approximately how many 5,000
square-foot lots can be developed on a raw 10 acre site?
a. 40-45
b. 10
c. 80-90
d. 100
Which capitalization technique analyzes the cash flow after debt service, rather than the
total net income?
a. Direct capitalization
b. Building residual
c. Land residual
d. Equity residual
The part(s) of the structure to be excluded when calculating the total living area of
condominiums is/are
a. Garage
b. Porch
c. Exterior walls
d. All of the above
An apartment building has a potential gross income of $100,000 per year, vacancy and
collection losses of 5%, and operating expenses of $35,000. What is the indicated value,
if the net operating income is capitalized at 8%?
a. $1,000,000
b. $ 750,000
c. $ 812,500
d. $1,187,500
Which of the following is not a characteristic of a perfect market?
a. Large numbers of buyers and sellers
b. Products are similar and interchangeable
c. Government plays a large role
d. Items are small and inexpensive
The boundary of a neighborhood is influenced by
a. Economic factors
b. Physical features
c. Legal boundaries
d. All of the above
Plottage value can be defined as
a. The value of land adjacent to the subject property
b. The added value that may result from combining parcels
c. The price of land per plot
d. The value of land per unit
The elements of a sale that need to be identified and compared include which of the
following?
a. Terms, conditions, and time of sale
b. Location elements
c. Physical elements
d. All of the above
Neighborhood trends help the appraiser decide upon
a. The highest and best use
c. Both a and b
b. How to interpret the
d. None of the above market data
As used in appraisal, all cost estimates relate to
a. “Book” costs
b. Wholesale costs
c. Cost of materials only
d. Typical costs on the date of value
Which of the following best describes or defines a leasehold estate?
a. The rights of use held by a tenant
b. The owner’s interest in the property
c. The reversionary rights
d. None of the above
Which of the following mandates the use of a Self-Contained Appraisal Report?
a. Complete appraisal
b. An appraisal review
c. A retrospective appraisal
d. None of the above
Which of the following is not true?
a. Real estate consists of the land and everything fastened to it
b. Land includes the surface, the subsurface and the space above
c. Fixtures are always personal property even when attached to real estate
d. Property consists of valuable rights held to the exclusion of others
Accrued depreciation is considered curable if the cost to cure is no greater than the
a. Expected increase in value
b. Replacement cost
c. Reproduction cost
d. Actual installation cost
In the appraisal of income property, common operating expense categories are
represented by all but which one of the following?
a. Variable
b. Fixed
c. Allowable depreciation
d. Replacement reserves
In an appraisal, the reconciliation process involves all the following except
a. A review of the appraisal process
b. An averaging of the value indications
c. An evaluation of each value approach applied
d. Reaching a final value estimate
One statistical technique looks for a “central tendency” among the sales. Which of the
following would describe the most commonly found sales price in a neighborhood
study?
a. Mean sales price
b. Median sales price
c. Mode or modal sales price
d. The standard deviation
Which type of appraisal report is the most formal?
a. The form report
b. The narrative report
c. The letter report
d. None of these
Endorsed by all leading appraisal groups, the Uniform Standards of Professional
Appraisal Practice requires that the appraiser
a. Employ recognized methods and techniques
b. Communicate the appraisal in a manner that is not misleading
c. Consider and analyze any agreement of sale of the subject property around the date
of value
d. All of the above
In the cost approach, indirect costs include all of the following except
a. Insurance
b. Taxes and interest
c. Yard improvements
d. Administration and management
Of the following, which does not represent a method for estimating accrued
depreciation for appraisal purposes?
a. Age-life or straight-line
b. Sum of the digits
c. Cost to cure
d. Capitalized rental loss
The first step in the sales comparison approach is to
a. Investigate sales of comparable property
b. Analyze and compare sales
c. Adjust the sales
d. Arrive at an indicated value
Each adjusted sale may suggest a different value for the subject property. What should
precede the value conclusion within the sales comparison approach?
a. Review the entire approach
b. Review the sales and their adjustments
c. Estimate a range of value
d. All of the above
The value of the lessee’s interest in real property can be defined or calculated as
a. The remainder estate
b. The value of the capitalized income
c. The difference between the contract and market rent, capitalized over the life of the
lease
d. The leased fee
Informal appraisals are performed by most people in real estate.
A single-family appraisal report should include a sales history of the subject property,
with details of any known sales transaction that occurred within the three years prior to
the date of value.
A neighborhood sales study finds selling prices of $150,000, $157,500, $159,000,
$162,000, and $164,000 for homes similar to the subject property. The median price of
this sample is $158,500.
Market rent can be defined as the potential gross rent in an open market.
State and federal laws generally require a license or certificate to perform certain
federally related appraisals.
The marketability and appeal of a house should be rated by the demands and tastes of
potential buyers.
Land value estimates by the abstraction method routinely are just as accurate as those
arrived at by the market method.
A key lot is one that is the most important one on the block.
A gross lease requires the tenant to pay all operating expenses.
The building inspection should be geared to the client’s intended use of the report and
the appraisal purpose.
Prior sales of the subject property should be noted, but are always irrelevant to the
value of land.
Direct cost elements include labor, materials, and design costs.
Letter reports are well adapted to the Restricted Use Appraisal Report.
A step-up lease is a lease on a walk-up apartment.
An adjacent site purchased by the local grocer for business expansion would be a good
market comparable in your appraisal of a parcel one block away with the same size,
shape, and zoning.
A subordination clause in a land sales agreement often involves seller financing.
The first step in the sales comparison approach is to research comparable sales.