Practice Exam - Valuation and Market Analysis

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What's the first step to an appraisal? *

1 point

List the data needed and its sources

State the purpose

Schedule an interior inspection of the property

Gather, record and verify the data

If a price for something is rising, that usually means *

1 point

demand is increasing in relation to supply

demand is decreasing in relation to the supply

both supply and demand are increasing

supply is increasing

Which of the following is a trait of real estate? *

1 point

variety

homogeneity

guaranteed appreciation

uniqueness

What are the four elements of value in real estate? *

1 point

scarcity, transferability, utility and demand

scarcity, transferability, utility and supply

scarcity, utility, non-homogeneity, marketability

uniqueness, transferability, supply, demand

Demand for real estate in the downtown Jeffersonville region is increasing while supply remains the same. What will be the likely effect on property prices? *

1 point

Prices will increase

Prices will remain the same

Prices will fall

Demand has no effect on price

Corporation Inc., a global retail company, moves into Anywhere Town, USA. As a result, they hire 200 new employees. What is the reasonable result? *

1 point

demand for residential real estate will increase

demand for all types of real estate will increase

demand for industrial real estate will increase

no change in demand

Vacancies in the local commercial real estate market are declining. How will this affect the market? *

1 point

prices will fall

prices will rise

no affect to the markets

absorption rate declines

Anywhere Town, USA; is growing but all buildable lots in the most desirable locations are sold. How will this affect the price of existing homes? *

1 point

there is no way to predict how this will affect existing home prices

prices of existing homes will rise

values of existing homes will remain stable

prices of existing homes will decline

Jerry bought a house for $100,000 to operate as an Airbnb and plans to earn $1,000/month in revenue. Which economic principle is Jerry using if he pays a price based on the property's ability to generate income? *

1 point

substitution

supply/demand ratios

utility

anticipation

Which of the following best describes the principle of contribution? *

1 point

Thelma's house appreciates 17% this year because houses in her neighborhood are selling for more

John pays 1.5 points to buy down his interest rate

Charlie adds a garage to his house and increases appraised value

Interest rates are declining which means a buyer can afford a higher prices house

Selena bought the vacant lot next door and has combined the lot with her own to create a single property. Which principle of value applies? *

1 point

subdivision

accretion

assemblage

progression

Appraiser Joe is appraising 123 Anywhere Street using the sales comparison approach. The subject house has 3 bedrooms, 2 bathrooms, and a 6 ft wooden privacy fence. The comp selected by Joe sold for $200,000 and has 3 bedrooms, 3 bathrooms, and no fence. A bathroom is valued at $7,000 and a fence is valued at $2,000. What is the adjusted value of the comparable? *

1 point

$195,000

$193,000

$202,000

$207,000

Appraiser Julie is working on an appraisal using the sales comparison approach. In making her dollar adjustments, Julie *

1 point

adds value to the subject if it's inferior to the comparable

subtracts value from an inferior comparable

adds value to an inferior comparable

subtracts value from the subject if the subject is inferior

Which of the following best describes the central methodology to the cost approach of appraisal? *

1 point

Apply a depreciating factor to the reported actual cost of acquiring and improving the subject property

Estimate the cost of adding improvements on a subject property

Add estimated land value and cost of improvements and subtract accrued depreciation of the improvements

Estimate land value and add the actual costs of the improvements, adjusted for competitive differences with similar properties

1234 Anywhere Street is being appraised using the cost approach. The land is worth $30,000 and the replacement cost of the building is $95,000. The total depreciation is $10,000. What is the value of the property? *

1 point

$125,000

$135,000

$115,000

$130,000

Which of the following BEST describes how to apply the income capitalization approach to appraisal? *

1 point

Estimate the rate of return a property owner receives from income generated by the property

Estimate the amount of income a property must generate to return the capital invested

Apply a rate of return to the price paid for the income property

Divide the income a property generates by a rate of return

Appraiser Mary is appraising a duplex using the income capitalization method. The duplex has annual gross income of $60,000, vacancy losses of $3,000, and operating expenses of $20,000. Assuming a cap rate of ten percent, what is the duplex's value? *

1 point

$570,000

$370,000

$400,000

$600,000

A quadplex has monthly rent revenue of $3,000 and is sold for $450,000. What is the monthly gross rent multiplier? *

1 point

.08

12.5

150

.01

A rental property has monthly rent revenue of $1,200 and an annual gross income multiplier of 14.1, What is the estimated property value if it were to sell? *

1 point

$102,060

$169,020

$203,040

$169,000

One weakness to the cost approach of appraisal is *

1 point

it's not possible to calculate depreciation on new properties

market value is not always the same as what the cost to build is

comps used might now have similar quality of construction

builders may not pay market value for materials or labor

A historic office building lacks CAT-5 high speed cabling to accommodate the latest in internet communications. This is an example of *

1 point

physical deterioration

economic obsolesence

incurable depreciation

functional obsolescence

Tyler owns a house in a neighborhood where other homeowners on the block have failed to maintain their properties. This is an example of: *

1 point

functional obsolescence

physical deterioration

incurable economic obsolescence

curable external obsolescence

Which entity establishes the standards for appraisal methods? *

1 point

Federal Appraisal Standards Board

Uniform Standards of Professional Appraisal Practice

Appraisal Code of Ethics

State Appraisal Standards Board

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