Real Estate Final Exam Study Quiz

Final Exam (1-14) Study Notes

• Quiz Instructions: This is a preview of the final exam.
• Question 1: Profit is not an agent of production; land, labor, and capital are.
• Question 2: A lien is a type of financial encumbrance.
• Question 3: A self-employed appraiser who performs appraisals for clients is known as a fee appraiser.
• Question 4: Accepting an assignment with a predetermined outcome may violate the Conduct section of the Ethics Rule.
• Question 5: The formula for the income approach to value is Value = Income × Rate of Return.
• Question 6: When using sales comparison to value land, comparables must be similar in highest and best use, physical characteristics and degree of development but not necessarily similar improvements.
• Question 7: An older house single bathroom and four bedrooms suffers from functional obsolescence.
• Question 8: A kitchen is part of the living zone.
• Question 9: Above-grade room count, age of property, and sales or financing concessions are considered for comparables only, not the subject property.
• Question 10: For a property sale to reliably represent market value, the sale must have been on the open market a reasonable period, typical conditions, buyer/seller not under unusual pressure, and all cash rather than financed.
• Question 11: An appraiser includes disclaimers, comparable property data, limiting conditions, and market trend data in appraisal reports to mitigate unwarranted conclusions.
• Question 12: A state-licensed (not certified) appraiser can perform a federally related appraisal if the appraised property is residential.
• Question 13: Martin County township with 75 degrees east and along Johnson Creek is a legal description.
• Question 14: Community property is a method of property ownership. Other questions such as joint tenancy are not correct.
• Question 15: External obsolescence includes issues like nearby paper mill, crime-ridden neighborhoods while outdated kitchen appliances are not.
• Question 16: The principle of highest and best use determines value by the most profitable practical use of a property.
• Question 17: Area's jobs next year, inadequate highway infrastructure, large landfills, and new environmental regulations are considered regional/community data for appraisals.
• Question 18: The economic age-life method of estimating depreciation assumes a steady loss of value.
• Question 19: A property's current use should change when vacant land value is greater than improved property value minus demolition cost.
• Question 20: The purpose of the appraisal is not a consideration when determining what is to be appraised (The subject real property interest is).
• Question 21: Because of a long lease, the value of the leasehold has dropped while the value of the leased fee has risen.
• Question 22: The adjusted value indicators of four comparable sales are 418,000,418,000, 418,000,425,000, 454,000and454,000 and 454,000and455,000. The most probable transaction value indicated, after fewer adjustments to the first two comparables, is $439,500.
• Question 23: Principle of substitution is the underpinning theory of the sales comparison method for valuation.
• Question 24: A horizontal member supporting a floor or ceiling is a joist.
• Question 25: A house with significant termite damage and costly repair exceeding the value increase, suffers from incurable physical deterioration.
• Question 26: Transaction involving a loan made directly by a savings & loan institution does not qualify as a Federally related transaction.
• Question 27: A house with a quality condition above average for its age displays effective age.
• Question 28: Comparable sales older than 6 months usually are not considered because market conditions change.
• Question 29: Lot and block method predominately describes farm properties.
• Question 30: An investment with an 18% compound annual return of 1,000willbeworth1,000 will be worth 1,000willbeworth1,392.40 in two years.
• Question 31: The simplest cost estimation method for construction is the comparative unit method.
• Question 32: The length of property's boundary facing water or street is referred to as frontage.
• Question 33: Appraisal defines the scientific or professional determination or opinion of a property's value.
• Question 34: When performing sales comparison, subtract value of garage from the subject property cost and add the comparable's value to the comparable's price.
• Question 35: Property taxes, hazard insurance and building maintenance are expenses for a commercial tenant with a triple net lease.
• Question 36: An appraiser collecting employment and commuting patterns is gathering specific data.
• Question 37: A 800,000annualincomepropertywitha12800,000 annual income property with a 12% capitalization rate has a value of 800,000annualincomepropertywitha126,666,667.
• Question 38: A foundation supported by separate raised concrete blocks is referred to a pier and beam foundation.
• Question 39: If a site's value is 100,000forresidentialand100,000 for residential and 100,000forresidentialand160,000 for commercial, with 20,000democost;theimprovedvalueforcommercialuseis20,000 demo cost; the improved value for commercial use is 20,000democost;theimprovedvalueforcommercialuseis180,000.
• Question 40: The effective date of an appraisal is when the appraisal report is issued.
• Question 41: R-value in house construction is a concern when evaluating insulation.
• Question 42: The unit-in-place method estimates construction costs by measuring quantities and multiplying by unit costs.
• Question 43: Gross living area is calculated using inside dimensions, excluding the garage.
• Question 44: Using a gross income multiplier and comparable sales, the value is estimated as $224,000.
• Question 45: Description of improvements in the URAR form does not include view.
• Question 46: The mettes and bounds system uses a point of origin.
• Question 47: Horizontal subdivision enables division of multi-story condos.
• Question 48: Five comparables provide a more reliable market representation.
• Question 49: Interest is the return on invested capital.
• Question 50: The formula for the cost approach is: Property value = Cost of Improvements - Depreciation + Land Value.