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Question
The principle of substitution is basic to all three approaches to value.Answer
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Related questions
Q:
In a recent appraisal of a three bedroom home in a good location, the appraiser has analyzed three comparable sales. A summary follows:DataComparable #1 Comparable #2 Comparable #3Price paid$250,000$225,000$295,000LocationInferior EqualSuperior Lot sizeLarger than subject Smaller than subjectSmaller than subjectAmenities & ConditionEqual to subjectSuperior to subjectSuperior to subjectDollar Adjustments Indicated by Market StudyLocation difference = $30,000; Lot size difference = $25,000;Amenities and condition difference = $10,000;Problem:Relying upon the comparables and the adjustments indicated, what is the best value conclusion for the subject property?a. $220,000 b. $240,000c. $255,000 d. $270,000
Q:
Which of these procedures would be recommended when adjusting the sales of six-room houses with large size differences?
a. Apply the average square foot price derived from sales
b. Use the median price per room
c. Adjust each sale by the cost of the size difference
d. Graph the sales to explore the effect of size upon selling price
Q:
In the sales comparison approach, the price of a comparable property should be adjusted for which of the following?
a. Favorable or unfavorable financing
b. Cash sale
c. Typical third-party financing
d. None of the above
Q:
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
Q:
To capitalize income, you could
a. Divide the net income by the capitalization rate
b. Multiply the income by a cap rate
c. Divide the net income into the rate
d. Change the method of accounting
Q:
A rectangular parcel of land containing five acres has 660 feet of frontage on a road. What is its depth?a. 495 feet b. 660 feetc. 330 feet d. None of the above
Q:
Which type of appraisals generally requires a state license or certification?
a. Those made to support federally-insured real estate loans
b. Private income tax appraisals
c. Appraisals made to settle divorce cases
d. All appraisals
Q:
The "ASA" designation offered by the American Society of Appraisers is associated witha. Expertise in all real estate fieldsb. Accredited Senior Appraiser c. Accredited membershipd. None of the above
Q:
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
Q:
Which of the value approaches is considered to be the most direct?a. Cost b. Incomec. Sales comparison d. A combination of the above
Q:
What is the net income ratio of a property where the potential gross income is $110,000; the vacancy and collection loss is estimated at $10,000; and the operating expenses are estimated at $30,000?a. 30% b. 142%c. 100% d. 70%
Q:
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.UseBuilding CostAnnual Net IncomeOffice Building$500,000$76,000Shopping Center$700,000$98,000Apartment$800,000$104,000a. Office building b. Shopping centerc. Apartment d. None of the above
Q:
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
Q:
The income remaining after vacancy and credit losses are deducted from gross potential income is known as the
a. Net to operations
b. Net income
c. Effective gross income
d. None of the above
Q:
A 20-year old property sells for $240,000. If the lot is worth $100,000 and the cost new for the building is $200,000, what is the annual rate of depreciation as indicated by the market?a. 1.5% b. 2%c. 5% d. 1/2%
Q:
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
Q:
As used in appraisal, all cost estimates relate toa. "Book" costs b. Wholesale costsc. Cost of materials only d. Typical costs on the date of value
Q:
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 methodc. The land development method d. None of the above
Q:
One statistical technique looks for a "central tendency" among the sales. Which of the following would describe the most commonly found sales price in a neighborhood study?
a. Mean sales price
b. Median sales price
c. Mode or modal sales price
d. The standard deviation
Q:
USPAP requires that prior sales of the subject property be considered when they have occurred
a. Within one year for one-to-four family residential
b. Within 3 years for all other property
c. Within 3 years
d. None of the above
Q:
The best test of functional utility in a structure is its
a. Usefulness/attractiveness to buyers (users)
b. Appeal to the owners (sellers)
c. Pure style
d. Floor plan
Q:
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
Q:
Which of the following can be considered political forces that affect value?a. Federal loan regulations b. Local zoning laws c. Public educationd. All of the above
Q:
Which of the following is not a characteristic of a perfect market?
a. Large numbers of buyers and sellers
b. Products are similar and interchangeable
c. Government plays a large role
d. Items are small and inexpensive
Q:
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
Q:
The four components of real property includea. Land, buildings, furnishings and fixturesb. Land, improvements, personal property and rightsc. Land, permanently affixed objects, appurtenant rights, and that which is immovable by lawd. None of the above
Q:
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. $1,260,000c. $1,050,000 d. $1,140,000
Q:
If the annual gross income multiplier is 8.0 and monthly rents are $5,000, what is the indicated value of the subject property?a. $400,000 b. $ 40,000c. $480,000 d. $750,000
Q:
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
Q:
Of the following, which does not suggest functional obsolescence?
a. A conforming house in poor condition
b. An illegal structure
c. A misplaced improvement
d. An over-improvement