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33 Cards in this Set

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When buying an apartment building, it would be appraised using what approach:

a. Market
b. Income
c. Cost
d. Highest and best use
b. Income
When a house is built with cheap material and shows signs of deterioration, this is called:

a. Social depreciation
b. Economic depreciation
c. Functional depreciation
d. Physical depreciation
d. Physical depreciation
The Market Data approach in apparaising would refer to which of the following:

a. Net operating income
b. Building plus value of the land
c. Substitution
d. Depreciation
c. Subsitution
A use of a property that produces the greatest net return is called:

a. Substitution
b. Highest and best use
c. Progression
d. Market value
d. Market value
An old home in an area of new home developement would be appraised using what approach?

a. Cost
b. Market
c. Income
d. Highest and best use
a. Cost
Which of the three appraisal approaches takes into account depreciation?

a. Cost
b. Income
c. Market
d. Highest and best use
a. Cost
In appraisal terminology, what is meant by marginal land?

a. Land that is a good bargain
b. Land near a buffer zone
c. Land that does not always cover the cost of operation
d. Land that is in excess of the building
c. Land that does not always cover the cost of operation
An example of functional depreciation is:

a. Outdated interior
b. Exterior deterioration
c. A factory in the area of a residential home
d. Wear and tear
a. Outdated interior
What does the Gross Rent Multiplier find?

a. A multiple of net rents to determine value
b. A multiple of gross rents to determine price
c. The capitalized value of the property
d. The effective gross income after operating expenses
b. A multiple of gross rents to determine price
Which of the following is reflective of value given in exchange for a property:

a. Appraisal
b. Market value
c. Market price
d. Reproduction cost
c. Market price
For the best appraisal of residential property, the appraiser would use:

a. A different neighborhood
b. The neighborhood adjacent to the subject neighborhood
c. A similar neighborhood
d. Only the cost method
c. A similar neighborhood
After gathering all appraisal data, the appraiser would:

a. Establish a value
b. Reconcile and correlate
c. Average all three approaches
d. Establish Gross Rent Multiplier
b. Reconcile and correlate
The loss of nearby fire service in a rural area would be considered

a. Functional depreciation
b. Economic depreciation
c. Physical depreciation
d. Economic life depreciation
b. Economic depreciation
Which of the following would not apply to the income approach of appraising:

a. Property depreciation
b. Vacancy and loss of credit
c. Scheduled gross income
d. Risk
a. Property depreciation
Physical obsolescence is a problem with which of the following?

a. Poor architectural design
b. Property deterioration
c. Outside social conditions
d. Functional inadequacies
b. Property deterioration
In order to establish effective gross income, one would subract which of the following items from scheduled gross income?

a. Debt service
b. Income taxes
c. Operating expenses
d. Vacancy and loss of credit
d. Vacancy and loss of credit
When one is advised to add a swimming pool to an apartment complex, this is determined by the appraisal principle of:

a. Regression
b. Progression
c. Contribution
d. Economic life
c. Contribution
If a real estate agent leases a building with 20 year leases and no escalation clause, how would this affect the value of the building?

a. Value would increase
b. Value would decrease
c. Value is unaffected
d. Value is gauranteed
b. Value would decrease
The cost approach would be used:

a. An old home not at its highest and best use
b. A new home at its highest and best use
c. Shopping center
d. Office building
b. A new home at its highest and best use
A four bedroom, two and one-half bath, two car garage house is located next to a drive-in movie theater. This is called:

a. Functional depreciation
b. Physical depreciation
c. Economic depreciation
d. Market value depreciation
c. Economic depreciation
When using the market data approach, what would you least likely use as a comp when appraising a 3 bedroom, 2 bath house with 2 car garage?

a. 8 month old comp with a 2 car carport
b. 3 month old comp with pool and garage
c. Cash sale
d. Foreclosure sale
d. Foreclosure sale
A house is located in a poor neighborhood next to a factory. This is an example of:

a. Physical Obsolescence
b. Functional Obsolescence
c. Economic Obsolescence
d. Poor master plan
c. Economic Obsolescence
After the economic life of a property has expired, there exists:

a. Residual value
b. Assessed value
c. Fair cash value
d. Economic value
a. Residual value
Which of the following is not used in the market approach of appraising?

a. Terms of sale
b. Date of sale
c. Amenities
d. Functional depreciation
d. Functional depreciation
Smoke and dust in a given area would be considered what type of depreciation?

a. Physical
b. Economic
c. Functional
d. Social
b. Economic
When you appraise land and add to it the depreciated value of the improved property, what appraisal approach is being used?

a. Market
b. Cost
c. Income
d. Highest and best use
b. Cost
Value is best described as:

a. Price paid by owner
b. Present worth of future benefits
c. Assessed valuation
d. Price offered by a prospective buyer
b. Present worth of future benefits
In one building, the tenant intends to start a health food shop using her life savings; in an identical adjacent building is a catalog store leased to Sears. Both have long-term leases at identical rents. Which of the following statements is correct?

a. If the values of the buildings were the same before the leases, the values will be the same after they are leased.
b. An appraiser would likely use a higher capitalization rate for the Sears store.
c. The best appraisal would likely be the market comparison method
d. The building with the health food shop will be worth less then the other building
d. The building with the health food shop will be worth less than the other building.
The terms of sale can be expected to affect the:

a. Price of the property
b. Value of the property
c. Utility of the property
d. Cost basis of the property
a. Price of the property
An appraiser would NOT depreciate:

a. A structure that is vacant
b. Unimproved land leased for open storage
c. A single-family house used for rental purposes
d. A residence used for owner occupancy
b. Unimproved land leased for open storage
A one-hundred year old building has modern fixtures what would the appraiser likely consider:

a. Reproduction value
b. Replacement value
c. Market approach
d. Unit in place
b. Replacement value
When excess profits are made in a certain area of real estate this would lead to which of the following:

a. Conformity
b. Regression
c. Progression
d. Competition
d. Competition
Which of the following items would not be a consideration, when appraising rental property?

a. Supply and demand
b. Highest and best use
c. Utility cost
d. Tax rate
d. Tax rate