Q&A Hero

Q: A site zoned R-3 was approved for 10 new apartment units. After the owner-developer acquired an identical adjacent site, the combined parcel was approved for 21 similar units. The advantage gained is referred to as:a. Trading on zoning laws b. Plottage valuec. Economy of scale d. Developer's profit

Q: An opinion of highest and best use in a market value appraisal of a vacant parcela. Suggests the comparables b. Is required by USPAP c. Both of the aboved. None of the above

Q: For any land sale to be considered a valid comparable, it should be a. Qualified as an open market transaction b. Competitive with the subject property c. Both of the above d. None of the above

Q: If the site is typically found to represent 60% of the total value in a particular neighborhood, what would be the site value allocated to a single-family home that sold for $400,000?a. $160,000 b. $ 24,000c. $240,000 d. $200,000

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: An appraisal is being made of a good quality, 25-year old, three bedroom home. The appraiser locates three comparables that have similar square footage, numbers of rooms, and construction quality. After viewing and rating the comparables, a summary is made as follows:DataComparable #1Comparable #2Comparable #3Price paid$295,000$300,000$350,000LocationInferior EqualSuperior Lot sizeLarger than Smaller thanEqual tosubject subjectsubjectAmenities &Equal to Superior toSuperior toConditionsubject subjectsubjectDollar Adjustments Indicated by Market StudyLocation difference=$40,000Lot size difference=$20,000Amenities and condition difference=$15,000Problem:Relying upon the comparables and the adjustments indicated, which of the following would be the best value conclusion for the subject property?a. $300,000 b. $260,000c. $275,000 d. $400,000

Q: A comparable property sold six months ago for $250,000 in a market that is seeing a 6% per year increase in value from appreciation. If you are making a current appraisal on a property that is judged to be 10% inferior in quality to the comparable sale cited, what is the indicated value of the subject (rounded to the nearest $1,000)?a. $232,000b. $292,000c. $220,000d. $175,000

Q: Each adjusted sale may suggest a different value for the subject property. What should precede the value conclusion within the sales comparison approach? a. Review the entire approach b. Review the sales and their adjustments c. Estimate a range of value d. All of the above

Q: The price per square foot (or other unit of comparison) in the sales comparison approach usually a. Declines as the number of units increase b. Increases as the number of units increase c. Remains constant d. None of the above

Q: The most reliable method for estimating the amount to adjust a sale of a three-bath home being compared with the subject two-bath home usually is to usea. Matched pairs b. Depreciated costc. Multiple regressiond. The price per square foot

Q: In adjusting a comparable sale, the appraiser should always a. Adjust the sale to the subject b. Adjust the subject to the sale c. Add or subtract dollar amounts d. Consider all of the above rules

Q: The elements of a sale that need to be identified and compared include which of the following? a. Terms, conditions, and time of sale b. Location elements c. Physical elements d. All of the above

Q: 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

Q: Required data about a comparable sale should include a. Sale transaction data b. Physical characteristics c. Legal characteristics d. All of the above

Q: A developer sold his own home to an employee at the office. The price was somewhat below the typical price for the neighborhood. You discard the sale on the basis that it was not a. A competitive property b. An open market arms-length transaction c. Recent in time of sale d. A high enough price

Q: A competitive property means one that a. A prospective buyer would consider as an alternative purchase b. Has superior features c. Is more attractively priced 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: "Effective" age most nearly means a. Relative condition and marketability as to age as seen by market b. Original age c. The difference between original and average age d. Average age

Q: Construction quality is usually rated as either a. Excellent, good, or average b. Good, average, fair, or poor c. Superior or inferior d. None of the above

Q: The data required to be collected during the building inspection depends upon a. The value definition and scope of work of the appraisal b. The intended use of the report c. The value approach to be emphasized d. All of the above

Q: 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

Q: 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

Q: Which of the following is a likely disadvantage of a key lot? a. Faces only one street b. Has poor side yard privacy c. Suffers excess traffic noise d. Has reduced street frontage

Q: Which of the following do not represent private restrictions?a. Association Agreements b. Deed restrictionsc. Zoning lawsd. Leases

Q: Advanced preparation for the site inspection should include a. A plat map of the site b. Zoning information c. Collecting needed equipment d. All of the above

Q: Legal and physical problems should be noted in the site inspection. Which of the following is most likely to constitute a physical problem?a. A non-conforming use b. An encroachmentc. Soil instability d. A violation of a deed restriction

Q: The criteria for estimating the highest and best use of land include all the following except a. Most or maximally productive b. Physically possible and legally permissible c. Economically feasible d. The typical use

Q: The principle of increasing and decreasing returns says that maximum value results from adding to the agents of production a. As long as you can afford to do it b. To meet the competition c. Until they are in balance d. As long as the total dollar income increases

Q: Which of the four agents of production is said to be entitled to the "surplus" of productivity?a. Labor b. Capitalc. Landd. Coordination or management

Q: Value is said to be the present worth of future benefits. This defines the principle ofa. Substitution b. Changec. Diminishing returnsd. Anticipation

Q: The fiscal policy of government is concerned primarily with a. Interest rates b. The Gross Domestic Product c. Government spending and taxation d. Urban development

Q: Real estate supply factors include all of the following except a. Population b. The volume of new construction c. Availability of vacant land d. The housing supply

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: Of the four elements of value, which one needs purchasing power?a. Demand b. Utility c. Scarcityd. Transferability

Q: These monthly average single family home prices were recently published by the local real estate board in the subject neighborhood:April$170,000August$176,000May171,700September178,750June173,500October180,500July174,000 If your date of value is November, how much total time adjustment would be indicated for a June sale in this neighborhood? (Hint: Apply the April to October time trend to your date of value.)a. 4%b. 1%c. 2%d. 5%

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: The economic base of a town depends upon a. Its local services c. Its export production b. The type of function it serves c. Its export production d. Its land-use pattern

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: Income levels, growth rate, value trends, supply and demand, and employment opportunities describe some of the a. Economic factors affecting neighborhood quality b. Social factors of a community c. The patterns of neighborhood growth d. None of the above

Q: The boundary of a neighborhood is influenced bya. Economic factors b. Physical featuresc. Legal boundariesd. All of the above

Q: Investment properties are most often appraised by placing the emphasis ona. Income approach b. Sales Comparison approachc. Cost approachd. None of the above

Q: Market value most nearly meansa. The most probableb. The cost of replacementc. The assessed valued. The value to the user

Q: The reconciliation process considers all but one of the following a. The purpose of the appraisal b. The type of data available c. The range of indicated values and the reliability of each d. The loan commitment

Q: The typical appraisal assignment is to appraise a. The leased fee b. The value of the mining rights c. The value subject to an existing loan d. The "fee simple" ownership

Q: 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

Q: Which of the following requires using a Hypothetical Condition, as defined in USPAP?a. An as-is appraisal b. An appraisal of a new homec. A prospective appraisald. Letter appraisal report

Q: Which of the following statements about the government survey system is false? a. All sections are the same exact size b. A township is 36 sections c. A section is 640 acres d. A section measures one square mile

Q: A metes and bounds description identifies a parcel of land with a. Perimeter lines, each described by direction and distance b. Lot and block labels c. Engineering cross-sections d. Government survey lines

Q: Which of the following is true? a. The bundle of rights is indivisible b. Zoning is one example of a government restriction c. Deed restrictions are examples of government controls placed on real estate d. Property ownership rights are absolute

Q: Title to property generally reverts to the state when the owner leaves no will or heirs. This illustrates the government's right ofa. Police powerb. Escheatc. Taxationd. Eminent domain

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: Which of the following is not true? a. Real estate consists of the land and everything fastened to it b. Land includes the surface, the subsurface and the space above c. Fixtures are always personal property even when attached to real estate d. Property consists of valuable rights held to the exclusion of others

Q: Which of the following suggests a market transaction, rather than a legal transaction, that may require an appraisal? a. An income tax casualty loss estimate b. A property damage lawsuit c. A property tax appeal d. Exercise of a purchase option

Q: 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

Q: An appraisal can be simply described asa. A statement of valueb. A fixing of valuec. An opinion of valued. None of the above

Q: Endorsed by all leading appraisal groups, the Uniform Standards of Professional Appraisal Practice requires that the appraisera. Employ recognized methods and techniquesb. Communicate the appraisal in a manner that is not misleadingc. Consider and analyze any agreement of sale of the subject property around the date of valued. All of the above

Q: To improve the quality of appraising, many professional appraisal groups require members to follow a code of ethics. Such codes typically require the appraiser to a. Have no undisclosed financial interest in the property appraised b. Keep the value conclusion confidential from everyone except the client c. Be able to support the value conclusion d. All of the above

Q: Which of the following best describes or defines a leasehold estate? a. The rights of use held by a tenant b. The owner's interest in the property c. The reversionary rights d. None of the above

Q: The valuation of any lease interest in real estate usually calls for thea. Sales comparison approach b. Income approachc. Cost approach d. Comparison method

Q: In which type of housing would you be least likely to find a homeowners' association?a. Conventional detached homes b. Town housesc. Planned unit developments d. Condominiums

Q: USPAP requires each written or oral appraisal report to: a. State who inspected the property b. Disclose any extraordinary assumptions or hypothetical conditions c. Both of the above d. None of the above

Q: The Uniform Residential Appraisal Report is a. A narrative report used by most appraisers b. A form report often required by lenders c. A precise letter report d. None of the above

Q: Whether a Self-Contained, Summary, or Restricted Use appraisal report is used should depend upon: a. The intended use of the appraisal, and the knowledge of the client b. The real estate, its market, and the complexity of the appraisal c. The detail of disclosure needed d. All of the above

Q: The applicability of any approach is said to be dependent upon a. The intended use of the appraisal b. The type of property being appraised c. The inherent strengths and weaknesses of the approach d. All of the above

Q: In an appraisal, the reconciliation process involves all the following except a. A review of the appraisal process b. An averaging of the value indications c. An evaluation of each value approach applied d. Reaching a final value estimate

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: The net income attributed or residual to the land is estimated to be $44,000. Land value is estimated to be stable. What is the value of the land if the yield rate is 8%?a. $ 550,000 b. $1,760,000c. $ 200,000 d. $ 352,000

Q: If the appropriate risk or interest rate for a property is 10%, what yield is available to the equity investor, with a loan at 8% interest covering 70% of the property value?a. 10.0% b. 9.0%c. 14.7% d. 7.0%

Q: The commonly recognized methods of explicitly providing for capital recovery are a. Increasing, decreasing, level, and variable b. Straight-line, sinking fund, and annuity c. Building, land, property, and management d. Land, building, leasehold, and equity

Q: Which of the following refers to the ability to use property as collateral for a loan?a. Size or denomination b. Hypothecationc. Liquidity d. Safety

Q: Discounted cash flow is an example ofa. Yield capitalization b. Ratio capitalizationc. Neither of the above d. Both of the above

Q: In the income approach, the net income is defined as the a. Effective gross income less operating expenses b. Gross income minus vacancy factor c. Effective gross income less income to land d. None of these

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: Assuming no rent control, the gross income multiplier to be applied shoulda. Be consistent with the comparables b. Be based on current rentc. Be based on current rent less vacancy d. Be based on market rent

Q: Which of the following should be considered when selecting a gross income multiplier from comparable sales?a. The location b. The size and type of unitsc. The operating expense ratio d. All of the above

Q: 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 isa. 13.3% b. 68%c. 75% d. 9%

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