Chapter 3: Appraisal And Market Analysis

Front 1

Outdated, square tile countertops would
likely be considered:

a. incurable physical depreciation.
b. curable environmental depreciation.
c. incurable functional obsolescence.
d. curable functional obsolescence.

Back 1

D) curable functional obsolescence

Front 2

Which of the following would be a
consideration in appraising property using
the Market Data Approach?

a. terms of the sale
b. original purchase price
c. annual income of the property
d. depreciation

Back 2

A) terms of sale

Front 3

The first step in the income approach to
valuation is:

a. calculate the potential gross income
of the property
b. factor in the vacancies and bad
debts
c. evaluate comparable sales
d. obtain the property’s operating
expenses

Back 3

A) calculate the potential gross income of the property

Front 4

An appraiser is assessing the value of a
commercial office building that earns
$35,000 per quarter after vacancies and
expenses. The appraiser uses a
capitalization rate of 6.75% for this type of
property. What is the likely valuation of
the building?

a. $518,518
b. $2,074, 074
c. $6,222,222
d. There is not enough information.

Back 4

B) $2,074, 074

Front 5

If the appraiser in question #4 were using a
gross income multiplier of 15, what would
the value be?

a. $525,000
b. $2,100,000
c. $6,300,000
d. There is not enough information.

Back 5

D) there is not enough information

Front 6

Depreciation is applied to:

a. the land.
b. the building.
c. the land and the building.
d. neither the land or the building.

Back 6

B) the building

Front 7

Which of the following is considered
economic depreciation?

a. The interior and exterior needs
painting and the carpet and padding
need replacement.
b. The home backs up to a main
thoroughfare.
c. The floor plan is strange and not
desirable to buyers who see the
property.
d. all of these

Back 7

B) the home backs up to a main thoroughfare

Front 8

The Harrigans write an offer of $175,000 on
a home listed for $210,000 because there
are two others available in the same
subdivision for $179,900 and $175,900.
The Harrigans are probably basing their
offer on the theory of:

a. highest and best use.
b. conformity.
c. substitution.
d. contribution.

Back 8

C) substitution

Front 9

Your land is valued at $240,000 an acre. It is
determined by the appraiser that your
building’s replacement cost is $210,000. If
your building sits on ¼ of an acre and the
depreciation was calculated at 24%, what is
the value of your property?

a. $50,400
b. $159,600
c. $219,600
d. $399,600

Back 9

C) $219,600

Front 10

Which approach is best suited for a special
purpose structure such as the local YMCA
building?

a. cost approach
b. income approach
c. market data approach
d. any of these

Back 10

A) cost approach

Front 11

Which of the following is NOT one of the
generally accepted characteristics of value?

a. demand
b. use
c. scarcity
d. time

Back 11

D) time

Front 12

An out‐of‐state investor sees a 4‐plex with
you, as his agent. After you have provided
him the net operating income of $677,000,
he tells you he will not accept a return on
his investment less than 9% annually. What
is the investor’s offer likely to be?
(Rounded)

a. $60,000
b. $615,000
c. $675,000
d. $7.5 Million

Back 12

D) 7.5 million

Front 13

With which type of income producing
property would a GRM likely NOT be
appropriate?

a. shopping center
b. free‐standing office suite
c. single family home
d. a duplex

Back 13

A) shopping center

Front 14

The subject property being appraised has a
family room, but the comparable does not.
Virtually all other aspects of the
comparable are similar. What adjustment
will the appraiser make?

a. adjust the subject upward for the
contribution of the room
b. adjust the subject downward for the
contribution of the room
c. adjust the comparable upward for
the contribution of the room
d. adjust the comparable downward
for the contribution of the room

Back 14

C) adjust the comparable upward for the contribution of the room

Front 15

What term would best indicate that the
buyer and seller had no special
relationship, such as being related, friends,
or business partners, and therefore the sale
reflected true market value?

a. arm’s length
b. fiduciary
c. unrelated
d. competitive

Back 15

A) arms length

Front 16

A comparable property just sold for
$395,000 and had 400 square feet more
than the subject, but the subject had an
additional half bath that the comparable
did not. If the contribution is $100 per
square foot and $5,500 for a half bath, how
will the appraiser reflect the differences?

a. Adjust the subject property upward
$40,000 and then downward
$5,500.
b. Adjust the comparable property
upward $40,000 and then
downward $5,500.
c. Adjust the comparable property
downward $40,000 and then
upward $5,500.
d. Adjust the subject property
downward $40,000 and then
upward $5,500.

Back 16

C) Adjust the comparable property
downward $40,000 and then
upward $5,500.

Front 17

What is the name of the standard form of
appraisal required by most lenders and
governmental agencies?

a. Uniform Residential Appraisal
Report
b. Uniform Reconciliation Appraisal
Report
c. Standard Real Estate Appraisal
d. Market Valuation and Appraisal

Back 17

A) uniform residential appraisal report

Front 18

Which method of valuation would factor in
reproduction costs if applicable?

a. cost approach
b. income capitalization approach
c. sales comparison approach
d. none of these

Back 18

A) cost approach

Front 19

The developer of her property intends to
build a movie theatre but has assessed
there is not enough property for ample
parking. There are two lots immediately
north of the property she can acquire for
approximately $80,000 each. The process
of her purchasing the properties and
combining them legally with the land she
currently owns is known as:

a. plottage.
b. progression.
c. contribution.
d. assemblage.

Back 19

D) assemblage

Front 20

What might be the cause of an appraisal to
be ordered?

a. to verify value of real estate
collateral for lenders
b. to establish value for insurance
companies
c. to determine if the value of
property owned by a tax payer is
consistent with the income
reported by the tax payer
d. all of these

Back 20

D) all of these