appraisal section – Flashcards
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All of the following would be considered specific data EXCEPT a. the gross rent multipliers for the area b. the sales data for comparable properties c. the dimensions of the subject property d. the employment opportunities in the area
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the employment opportunities in the area
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the foremost factor contribuiting to commercial and residential demand in a market is a. base employment b. household income c. existing supply of properties d. marketing
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base employment
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the income approach as used by an appraiser makes use of which of the following? a. depreciation b. appreciation c. capitalization d. equalization
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capitalization
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in the cost approach an appraiser uses which of the following? a. Sales prices of similar properties b. the property's depreciated value as used for income tax purposes c. an estimate of the building's replacement cost d. the owner's original cost of construction
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an estimate of the building's replacement cost
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four principal determinants of value underlying the price for a product are a. desire, costs, convenience, and time b. desire, utility, scarcity and purchasing power c. popularity, utility, quality, and discount d. durability, quality, scarcity, and materials
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desire, utility, scaricity and purchasing power
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the sales comparision approach to value would be most important when estimating the value of a/n a. existing residence b. retail location c. apartment building d. new residence
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existing residence
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a local government could stimulate the real estate market by a. expanding the sewer system b. increasing labor costs and curbing the money supply c. increasing taxes and interest rates d. declaring a moratorium on construction
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expanding the sewer system
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an appraiser measuring the area of a house would use the a. net rentable area b. room sizes c. interior dimensions, excluding partitions d. exterior dimensions
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room sizes
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an appraiser has been hired to prepare an appraisal on a property that includes an elegant old mansion that is now used as an insurance company office. Which approach to value would the appraiser rely on most? a. replacement cost approach b. sales compariosn approach c. gross rent multiplier approach d. income approach
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income approach
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an appraiser is responsible for a. a estimating value b. computing value c. finding value d. determining value
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estimating value
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the market price of a parcel of real estate is a. based on it assessed value b. the price it is sold for c. the price that was being asked for it d. the price it should have sold for
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the price it sold for
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price is best described as a. the amount of money a buyer and seller agree to exchange to complete a transaction b. what supliers charge for goods and services c. the amount of money consumers are willing to pay for a product or service d. a control placed on prices by the federal government.
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the amount of money a buyer and seller agree to exchange to complete a transaction
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in the income approach, the appraiser makes use of a. depreciating schedules b. capitalization rate c. replacement cost d. reproduction cost
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capitalization rate
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which of the following would be classified as external depreciation a. convenient access to schools and recreational facilities b. a poorly-designed floor plan that could be modified? c. a leaking roof that needs to be completely replaced d. poorly-maintained properties in the neighborhood
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poorly maintained properties in the neighborhood
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when appraising a commercial property, the appraiser is most concerned with the a. income generated by the property b. accrued depreciation on the property c. sales prices of comparable properties d. total debt service on the property
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income generated by the property
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all of the following are steps in the appraisal process EXCEPT a. considering the seller's estimate of the property's value b. applying the three approaches to the collected data c. gathering specific data on the subject property d. gathering general data for the area of the subject property
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considering the seller's estimate of the property's value
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the income approach to value would be most important in the appriasal of a/n a. single family residence b. downtown office building c. residential condominium d. vacant residential lot
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downtown office building
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a building is valued at $215,000 and contains 4 apartments that rent for $470 each per month. The owner estimates that the net operating income is 65 percent of the gross rental receipts. What is the capitalization rate? a. 3.7% b. 14.2% c. 6.8% d. 10.5%
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6.8%
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the gross multiplier is used as a guideline for estimating value based on teh a. relationship of sales prices to the rental income b. ratio of the gross rents to the net rents after expenses c. proportion of rents due to the actual rents collected d. capitalization of the annual gross rental income
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relationship of sales prices to the rental income
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in the valuation of a large apartment complex, the most weight would be given to which of the following approaches to value? a. the income approach b. the cost approach c. all approaches equally weighted d. the sales comparison approach
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the income approach
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in the sales comparison approach, an adjustment is warranted if: a. the seller offers below-market seller financing b. a comparable is located in another, albeit similar neighborhood c. one property has a hip roof and the other has a gabled roof d. the buyer obtains conventional financing for the property
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the seller offers below-market seller financing
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to find the value of a property using the income approach to value, if the net operating income and the capitalization rate were known, the appraiser would a. divide the net operating income by the capitalization rate b. multiply the net operating income by the capitalization rate c. multiply the effective gross income by the capitalization rate d. divide the capitalization rate by the net operating income
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divide the net operating income by the capitalization rate
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which of the following is the most important in the appraisal process? a. original cost of the property b. highest and best use of the property c. asking price of the property d. selling prices of similar properties
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highest and best use of the property
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reconciliation is an appraisal term used to describe a. the appraiser's analysis and comparison of the results of all three appraisal approaches b. the method used to determine the most appropriate capitalization rate for a property c. an average of real estate values for properties similar to the subject property d. the appraiser's determination of a property's highest value
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the appraiser's analysis and comparison of the results of all three appraisal approaches.
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in the appriasal of an office building, which of the following would be classified as external depreciation a. a poor architectural design resulting in a cluttered floor plan b. an inadequate number of elevators and antiquatead restroom facilities c. a law requiring the building to be retrofitted with fire sprinklers d. termite damage to the structural components of the building
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a law requiring the building to be retrofitted with fire sprinklers
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if commercial real estate rental prices are falling in a market, it is likely that a. employment is increasing b. the market is over-supplied c. the market is in equilibrium d. demand has outstripped supply of space
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the market is over-supplied
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if the potential gross rental income from a property is 20,000 the vacancy rate is 5 percent, and the additional income from the laundry facilities and extra storage is $700, what is the effective gross income? a. $20,000 b. $19,700 c. $19,000 d. $20,700
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$19,000
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it is necessary to calculate a dollar value for depreciation when using which of the following? a. gross rent multipliers b. the income approach to value c. the cost approach to value d. the sales comparison approach to value
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the cost approach to value
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to complete the sales comparison approach, the appraiser a. discards all comparables having a lower value b. identifies the subject's value as that of the nearest comparable c. averages the adjustments d. weights the comparables
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weighs the comparables
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a house with outmoded plumbing is suffering from a. functional obsolescence b. incurable physical deterioration c. curable physical deterioration d. external depreciation
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fuctional obsolescence
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reconciliation is best described as a. selecting the highest value given by the three approaches to value b. determining the final value by selecting one value from those given c. comparing comparable properties and identifying thier amenities d. analyzing the results obtained from the three approaches to value
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analyzing the results obtained from the three approaches to value.
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if there is a significant undersupply of homes in the market, construction will tend to increase. This is an example of a. overpricing products b. the price mechanism c. supply outstripping demand d. the market tending toward equilibrium
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the market tending toward equilibrium
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in an old retail building, which of the following would most likely be a source of incurable fuctional obsolescence? a. an unattractive store front b. a decrease in the area's population c. closely-spaced internal support columns d.. deficient and inadequate lighting
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closely-spaced internal support columns
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in the income approach, which of the following is NOT considered when calculating net operating income? a. utilities b. real estate taxes c. debt service d. management fees
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debt service
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a home with its ktichen next to the master bedroom would be considered a. functionally obsolete b. diminished c. economically obsolete d. physically obsolete
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functionally obsolete
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in the cost approach to value, the appraiser makes use of a. the sales prices of similar buildings in the area b. the owner's original cost of the building c. the assessed value of the builidng d. the estimated replacement cost of the building
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the estimated replacement cost of the building
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which of the follwing is an important economic characteristic of real estate? a. the demand must literally come to the supply b. the product is quick to adapt to market changes c. the market is centralized d. real estate is a highly liquid product
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the demand must literally come to the supply
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an appraiser who is using the sales comparison approach to value would NOT use which of the following similar homes as a comparable properties? One that was a. sold by the ownerws who were undergoing a foreclosure b. sold recently but is located on a much larger lot c. sold recently but is located in another similar neighborhood d. sold over six months ago
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sold by the owners who were undergoing a foreclosure
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All of the following are characeristics of value EXCEPT a. obsolescence b. utility c. transferability d. scarcity
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obsolescence
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capitalization is a process used to a. determine the avlue of most residential property b. covert income into value c. save money on an investment d. determine the total remaining capital
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convert income into value
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a construction boom in a market is an indication that prices a. have been declining b. have been increasing c. have been in equilibrium d. have exceeded supply
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have been increasing
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using which of the following would require the value of the land to be calculated separately from the value of the improvements? a. the income approach b. the gross rent multiplier c. the sales comparison approach d. the cost approach
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the cost approach
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defined as a loss in value from any cause, depreciation is generally divided into three categories. The loss of value due to the normal wear and tear on a property is called a. fuctional obsolescence b. physical deterioration c. economic deterioration d. external depreciation
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physical deterioration
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a town has a rapidly growing population, but there are no longer any vacant lots around the lake to build more houses. In this case, it is likely that the price of existing homes on the lake a. will increase b. will not show any predictable movement c. will stabilize, since the population must stabilize d. will decline, since no further building can take place
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will increase
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an appraiser has been employed to estimate the market value of a parcel of vacant land. The resulting appraisal report would NOT include reference to a. the highest and best use of the parcel b. the listed price of the parcel c. the physical dimensions of the parcel d. the most probable price the parcel will bring
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the listed price of the parcel
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the purpose of an appraisal is to a. set the amount of consideration the seller should accept from a purchaser b. estmate the value of a property c. determine the projected income of a property d. set the market of a property
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estimate the value of a property
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the term depreciation refers to the a. loss of value in real estate from any cause b. value of real estate after the expiration of its useful life c. costs incurred to renovate or modernize a building d. capitalized value of lost rental income
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loss of value in real estate from any cause
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the period of time over which an imporvement to the property will remain useful for its original purpose is known as its a. chronological life b. amortized life c. actual life d. economic life
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economic life
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two important concerns of retail property users are a. trade area population & spending patterns b. costs of cocupancy and building efficiency c. environmental regulations and access by suppliers d. quality of life and dwelling amenties
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trade area population & spending patterns
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when estimating the value of property using the cost approach, which of the folllowing would NOT be considered by an appraiser a. quality of materials and workmanship in the original structure b. loss of value due to uncollected delinquent rent c. estimated loss attributable to an outdated heating system d. excessive amount of traffic noise outside the property
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loss of value due to uncollected delinquent rent
