Which of these methods would be used to appraise a single-residential site in a built-up
neighborhood where no vacant land sales are found?
a. The abstraction method
b. The land residual method
c. The land development method
d. None of the above
An appraiser should have no undisclosed financial interest in the results of the
appraisal. This standard is intended to ensure
a. Confidentiality
b. Impartiality
c. Competency
d. Cost effectiveness
The main physical unit(s) of comparison in the analysis of vacant land are
a. Price per square foot, front foot, or acre
b. Terms of sale, time, location, and physical characteristics
c. Price, topography, view
d. Price per room
When appraising a condominium unit, the appraiser most commonly emphasizes the
a. Sales comparison approach
b. Income approach
c. Capitalization method
d. Gross income multiplier method
A rectangle is
a. Any closed figure with two right angles
b. Any four sided figure
c. A three sided figure
d. A closed four sided figure with four right angles, and opposite sides equal and
parallel
Controls that arise from the government’s police power include all except which one of
the following
a. Deed restrictions
b. Zoning regulations
c. Subdivision requirements
d. Building & safety regulations
Certain lending agencies performing federally related appraisals may be required to go
beyond the scope of USPAP by
a. Conforming to even stricter standards
b. Showing appropriate deductions for proposed construction, partially leased buildings,
and tracts with unsold units.
c. Be based on the definition of market value set forth in the regulation of the agency
d. All of the above
An appraisal can be simply described as
a. A statement of value
b. A fixing of value
c. An opinion of value
d. None of the above
A reliable cost manual suggests cost figures and adjustment factors for a house like that
diagramed below. Using the sketch, and the following data, estimate the total
replacement cost of these improvements:
Answer (choose nearest to correct answer):
a. $130,000
b. $116,000
c. $138,000
d. $220,000
Which type of value loss is attributed to causes lying within the property?
a. Functional obsolescence
b. External obsolescence
c. Economic obsolescence
d. None of the above
To adjust the sale price of a comparable sale with a 15% better location than the subject
property, you should
a. Add 15%
b. Subtract 15%
c. Multiply the sale price by 1.15.
d. None of the above
An opinion of highest and best use in a market value appraisal of a vacant parcel
a. Suggests the comparables
b. Is required by USPAP
c. Both of the above
d. None of the above
An environmental study shows that nearby toxic wastes have affected the neighborhood
market. What kind of loss in value might be experienced by the improved properties?
a. Physical deterioration
b. Economic or external obsolescence
c. Functional obsolescence
d. Detrimental obsolescence
Value is said to be the present worth of future benefits. This defines the principle of
a. Substitution
b. Change
c. Diminishing returns
d. Anticipation
Which of the following do not represent private restrictions?
a. Association Agreements
b. Deed restrictions
c. Zoning laws
d. Leases
By the cost approach, estimate the value of a 40 year old, 2,000 square foot house,
based on the following:
As indicated by the cost approach, the value of the described property is
a. $260,000
b. $287,000
c. $200,000
d. $240,000
People turn to professionals for appraisals in order to
a. Get a more reliable estimate of value than their own
b. Get an unbiased and disinterested estimate of value
c. Obtain a document capable of being reviewed
d. All of the above
Good architecture is concerned with all the following except
a. Harmony with the setting
b. Purity of style
c. Appropriate materials
d. Proper scale
If land value is estimated from an analysis of the number of units that can be built under
the present zoning, which type of unit of comparison is used?
a. Physical
b. Economic
c. Total property
d. None of the above
A 10-unit property has a gross income of $8,000 per month. What is its probable value
if the appropriate annual GIM is 8.0, based on analysis of comparable sales?
a. $ 768,000
b. $1,050,000
c. $ 640,000
d. $ 64,000
To select the unit of comparison for an appraisal
a. Choose a feature that is the most common among the sales
b. Select an important property variable
c. Always use a physical unit
d. None of the above
Which of the following usually is the most useful technique to derive dollar amounts in
the adjustment of sales?
a. Price per square foot
b. Price per unit
c. Gross rent multiplier
d. Paired sales
While actual sales are preferred in the sales comparison approach, listings and offers in
some market conditions may help bracket the value because
a. Listings may indicate an upper limit of value
b. Offers may indicate a lower limit of value
c. Both of the above
d. None of the above
For a new residential structure being developed, the direct construction costs have been
estimated at $140,000. If certain indirect costs of 15%, and a 25% builder’s overhead
and profit are added, what is the total construction cost for this building? Assume that
the profit applies to both direct and indirect costs given.
a. $201,250
b. $161,000
c. $140,000
d. $175,000
What is the property value where the net operating income is estimated to be $80,000,
the anticipated loan will be for 80% of value at a 7.65% loan constant, and the market
indicates an equity cash-on-cash rate of 7%?
a. $900,000
b. $1,260,000
c. $1,050,000
d. $1,140,000
Increasing the floor area of a structure usually has the effect of
a. Increasing the square foot cost
b. Decreasing the square foot cost
c. Reducing the utility
d. None of the above
The purpose of verifying a sale with a party to the transaction is to
a. Confirm your opinion of value
b. Improve the reliability of your data
c. Comply with a rigid requirement
d. Establish the motives of the seller
If there are no comparables available, which method can be used to appraise vacant
commercial land?
a. The market method
b. The allocation method
c. The land residual method
d. None of the above
When a jurisdiction concluded that environmental impact reports are required on any
new development in an area, the likely immediate result is that
a. Developed properties suffer
b. Vacant land values increase
c. Vacant land values decrease
d. None of the above
Which of the following best describes a condominium?
a. A detached lot in a city subdivision
b. Common interest in a group of lots
c. A townhouse
d. A land or air space unit, plus an undivided interest in the common areas
The effective gross income is defined as the
a. Gross income less allowance for expenses
b. Gross income less vacancy and collection losses
c. Gross income less allowable expenses
d. None of the above
The first step in the appraisal process is to
a. Define the appraisal problem
b. Choose an appropriate value approach
c. View the property
d. Formulate an appraisal plan
The cost approach is useful in appraisals to
a. Estimate the value of new property
b. Appraise properties not usually rented or sold
c. Check against other value approaches
d. All of the above
You are deriving a gross income multiplier in the appraisal of a 14-unit apartment
building. Market data is as follows:
16 units sold for $1,200,000 with a gross income of $150,000.
12 units sold for $ 960,000 with a gross income of $120,000.
4 units sold for $ 480,000 with a gross income of $ 48,000.
What GIM is suggested for the property under appraisal?
a. 10
b. 9
c. 12
d. 8
If an income property has a scheduled annual income of $220,000; a vacancy and
collection loss estimate of $20,000; and a net operating income of $150,000, the net
income ratio is
a. 13.3%
b. 68%
c. 75%
d. 9%
The cost approach is often emphasized when estimating the value of new or nearly new
property.
If you subtract vacancy and credit loss from gross scheduled income, you arrive at the
effective gross income.
Generally, state and federal laws require all appraisers to be licensed or certified.
As in a condominium, the site in a planned unit development is a defined block of
airspace, plus an undivided interest in the land.
A perfect market occurs only when an active and large role is played by government.
Environmental protection and subdivision reform laws affect the availability and cost of
vacant land.
Real property rights cannot be divided.
Reversionary returns from an investment do not include equity build-up from
loan pay-off.
The quantity survey method is the most practical and widely used method of estimating
construction costs.
The sales price chart shown below suggests an average monthly increase of about one
percent for the area under study.
The living area of condominium units for appraisal purposes includes the thickness of
all exterior walls and finish.
Good architectural design is independent of functional utility.
Indirect cost elements should not be included in cost estimates.
The ethics provision of USPAP requires keeping an exact replica of all written
appraisals.
A discount factor is used to adjust for the time value of money.
The principle of highest and best use suggests that land must always be valued in
its present use.
The licensed appraiser is eligible to appraise all residential and residential-income
properties for all intended uses.
The highest and best use must always be one that is legal under the present zoning laws,
even if a zoning change is anticipated.
Real estate markets do not meet any of the criteria of a perfect market.