The age-life method of estimating accrued depreciation suggests that
a. The age of the building depends on its life
b. Annual value loss is proportional to the total life expectancy
c. All buildings depreciate at the same rate
d. Loss in value depends on market studies
The net income attributed or residual to the land is estimated to be $44,000. Land value
is estimated to be stable. What is the value of the land if the yield rate is 8%?
a. $ 550,000
b. $1,760,000
c. $ 200,000
d. $ 352,000
Land and buildings should be valued on the basis of the same use. Select the principle
which defines this standard:
a. Conformity
b. Substitution
c. Consistent use
d. Contribution
Of the four methods of estimating cost, which is the one most often used by appraisers?
a. Index method
b. Unit-in-place method
c. Comparative square foot method
d. Quantity survey method
Studies of population, the national labor force, and disposable income are often used
to predict the
a. Lending policy of government
b. Demand for real estate
c. Supply of real estate
d. None of the above
There are several types of rates used in income capitalization. Which of the following is
composed of interest and recapture in separately determined amounts?
a. Interest rate
b. Overall rate
c. Composite rate
d. None of these
Assuming no rent control, the gross income multiplier to be applied should
a. Be consistent with the comparables
b. Be based on current rent
c. Be based on current rent less vacancy
d. Be based on market rent
Real estate markets are considered to be imperfect because
a. Buyers and sellers are not always well-informed
b. Each property is relatively unique
c. There is imperfect competition for any one property
d. All of the above
Cost estimates used in appraisal relate to
a. Typical costs
b. Wholesale costs
c. Actual costs to owner
d. Cost of materials plus labor
The economic principles relating to the productivity of real estate help us mainly in the
a. Income approach to value
b. Prediction of market trends
c. Understanding of government
d. Analysis of expenses
Neighborhood information assists the appraiser in
a. The selection of market data
b. The adjustment of sales and rental data
c. Defining the highest and best use of subject property
d. All of the above
In the income approach, the net income is defined as the
a. Effective gross income less operating expenses
b. Gross income minus vacancy factor
c. Effective gross income less income to land
d. None of these
Whether a Self-Contained, Summary, or Restricted Use appraisal report is used should
depend upon all of the following except:
a. The intended use and intended user(s) of the appraisal
b. Which value approaches were used
c. A mutual understanding of the differences between the reporting options
d. The detail of disclosure needed
The boundary of a neighborhood might logically be set by
a. Jurisdictional boundaries
b. Well-defined physical barriers
c. A sharp change in economic benefits
d. Any of the above
These monthly average single family home prices were recently published by the local
real estate board in the subject neighborhood:
If your date of value is November, how much total time adjustment would be indicated
for a June sale in this neighborhood? (Hint: Apply the April to October time trend to
your date of value.)
a. 4%
a. 4%
b. 1%
c. 2%
d. 5%
Which of the following is excluded from the privately owned “bundle” of rights?
a. Right to escheat
b. Right to ingress and egress
c. Right to encumber
d. Right to sell or convey
A change in zoning may cause a loss in value from
a. Economic obsolescence
b. Physical deterioration
c. Change in reproduction cost
d. Neighborhood obsolescence
If the appropriate risk or interest rate for a property is 10%, what yield is available to
the equity investor, with a loan at 8% interest covering 70% of the property value?
a. 10.0%
b. 9.0%
c. 14.7%
d. 7.0%
Market value most nearly means
a. The most probable
b. The cost of replacement
c. The assessed value
d. The value to the user
The most widely used method of estimating cost is the
a. Unit-in-place method
b. Comparative square foot method
c. Quantity survey method
d. Index method
Income levels, growth rate, value trends, supply and demand, and employment
opportunities describe some of the
a. Economic factors affecting neighborhood quality
b. Social factors of a community
c. The patterns of neighborhood growth
d. None of the above
“Effective” age most nearly means
a. Relative condition and marketability as to age as seen by market
b. Original age
c. The difference between original and average age
d. Average age
If 60% financing is available on a certain income property at a loan constant of 11%,
what equity cash-on-cash return is available where the overall rate is 10.6%?
a. 5.0%
b. 10.0%
c. 6.5%
d. 1.5%
Also referred to as diminished utility, accrued depreciation is defined for appraisal
purposes as
a. Deductions from value
b. Total loss in value from cost as if new
c. Original cost less book cost
d. None of the above
The typical appraisal assignment is to appraise
a. The leased fee
b. The value of the mining rights
c. The value subject to an existing loan
d. The “fee simple” ownership
Strong competition often leads to oversupply, and the reduction of price. Which of the
following best describes this cause and effect?
a. Excess profits breed ruinous competition
b. Business thrives on competition
c. Demand has caught up with supply
d. If you can”t stand the heat, you should stay out of the kitchen
Construction classification refers to the
a. Type of use or occupancy
b. Type of basic frame, wall, floor and roof construction
c. The quality of construction
d. Number of stories in a building
Which of the following requires using a Hypothetical Condition, as defined in USPAP?
a. An as-is appraisal
b. An appraisal of a new home
c. A prospective appraisal
d. Letter appraisal report
Of the following alternative projects, one represents the highest and best use of a
particular site being analyzed. Select the use that returns the greatest annual net income
to the land after deducting a 10% return to the building cost.
a. Office building
b. Shopping center
c. Apartment
d. None of the above
Rating a house for its marketability and appeal involves a judgment of
a. The demands of the market
b. The quality of construction
c. The condition and livability
d. All of the above
The applicability of any approach is said to be dependent upon
a. The intended use of the appraisal
b. The type of property being appraised
c. The inherent strengths and weaknesses of the approach
d. All of the above
The commonly recognized methods of explicitly providing for capital recovery are
a. Increasing, decreasing, level, and variable
b. Straight-line, sinking fund, and annuity
c. Building, land, property, and management
d. Land, building, leasehold, and equity
Which of the following is considered an indirect cost?
a. Labor costs
b. Material and equipment costs
c. Interest on construction financing
d. Subcontractors’ fees
A site zoned R-3 was approved for 10 new apartment units. After the owner-developer
acquired an identical adjacent site, the combined parcel was approved for 21 similar
units. The advantage gained is referred to as:
a. Trading on zoning laws
b. Plottage value
c. Economy of scale
d. Developer’s profit
To be qualified to work in the field, an appraiser should be knowledgeable about real
estate operations and markets.
A condominium unit may be described as the ownership of an airspace combined with a
joint ownership of the land and the common areas.
The sales comparison approach has no statistical connections.
The value of the lessee’s interest in real property can be measured by capitalizing the
difference between the contract and market rents.
The benefits that belong to the leased fee interest include the lease income and the
rights to the reversion.
The future worth of one factor is used to calculate how much income is necessary to
justify a given value.
Positive leverage results from an equity investment in a property that is earning a
greater return than the cost of the loan money.
Well-prepared Restricted Use Appraisal Reports are considered to be less reliable than
Self-Contained Appraisal Reports.
Construction classification refers to the type of occupancy of a structure.
The overall capitalization rate theoretically allows for a return on the investment,
without any recapture.
Quality of construction is rated on an absolute scale.
According to HUD, mobile homes constructed after 1976 are properly classified as
manufactured homes.
Some cost manual services provide on-line computer access.
Written appraisals usually consist of a letter, a printed form, or a narrative report.
A section of land always contains exactly 640 acres.