Chapter 11 Quiz - Real Estate Appraisal PDF

Chapter 11: Reconciliation and Final Value Estimate Chapter 11 Quiz 1. What is one reason that multiple value indica- 5. Which of the following is NOT part of review- tors are helpful in an appraisal? ing the appraisal process? A. They increase the possibility...

Chapter 11: Reconciliation and Final Value Estimate Chapter 11 Quiz 1. What is one reason that multiple value indica- 5. Which of the following is NOT part of review- tors are helpful in an appraisal? ing the appraisal process? A. They increase the possibility of mathemati- A. Checking for mathematical errors cal errors B. Choosing comparable properties B. There will be less disparity between the C. Making sure that all properties are evalu- value indicators ated using the same highest and best use C. This provides more points of comparison D. Verifying that characteristics of the subject to make the value estimate more reliable property are consistently de¿ned D. The value indicators will cover a wider range of possible values 6. Which of the following is NOT a factor that affects the reliability of a value indicator? 2. Reconciling the values indicated by multiple A. The level of accuracy of the indicator comparables is almost always performed in B. The amount of data that support the appraisals using which method? indicator A. Cost method C. The effective date of the appraisal report B. Sales comparison method D. The relevance of the indicator to the C. Income method appraisal problem D. Yield capitalization method . What is one bene¿t of having a large sample 3. In which of the following situations would of data? reconciliation be used? A. The data can all come from one source A. The appraiser has several value indicators B. There is less chance that the data will con- based on different units of comparison tain errors B. Adjusting the value of a property using C. It narrows the size of the marketplace that several different elements of comparison is covered by the appraisal C. Identifying properties on the market that D. A larger sample will result in a lower margin are the best comparables for the subject of error property D. The appraisal requires that the land and the 8. What should an appraiser focus on to make sure improvements be valued separately the original data are accurate? A. Verifying the data using the most reliable 4. To reconcile different value indicators into a source available ¿nal estimate of value the appraiser B. Making as many adjustments to the data as A. calculates the average of the different indi- possible cators C. Personally generating all of the information B. evaluates the different indicators to reach needed a ¿nal estimate based on the appraiser¶s D. Making sure that the value indicators use a judgment and experience variety of different de¿nitions of value C. chooses only the indicator that is most relevant to the appraisal problem D. gives the most weight to the value indicated by the cost approach 7  Real Estate Appraisal Instructor Materials 9. The relevance of an appraisal technique to a 14. Which of the following estimates of value has particular appraisal problem would most likely the most signi¿cant digits? depend on the: A. $435,000 (rounded to the nearest $5,000) A. identity of the client B. $433,000 (rounded to the nearest $1,000) B. age of the improvements on the property C. $432,700 (rounded to the nearest $100) C. type of property being appraised D. $430,000 (rounded to the nearest $10,000) D. effective date of the appraisal 15. An appraiser who has a lower degree of con¿- 10. When appraising single-family residences, an dence in a value estimate may want to use: appraiser will likely rely most on the value A. fewer signi¿cant digits, in order to give a indicated by the: more realistic picture of his con¿dence in A. sales comparison approach the estimate B. income approach B. more signi¿cant digits, in order to be more C. cost approach precise D. None of the above C. four signi¿cant digits, because this is the standard in the industry D. more signi¿cant digits, in order to obscure 11. Which of the following would indicate that the lower level of con¿dence an appraisal is not credible by professional standards? A. The property later sells for more than the appraiser’s opinion of value B. The ¿nal value estimate is not as high as the client wanted C. The range value does not guarantee that the true value will fall within that range D. Critical data have been omitted 12. The appraiser expresses the estimate of a prop- erty’s value as $375,000. This is known as a: A. range value B. point estimate C. certain value D. broad estimate 13. A range value that is too broad: A. conveys too much information to the client B. implies a level of certainty that isn’t war- ranted C. is so vague that the estimate is useless D. can safely guarantee that the true value is within the range 8  Chapter 11: Reconciliation and Final Value Estimate Answer Key 1. C. Using a greater number of value 8. A. To ensure that the original data sup- indicators provides more points of porting the appraisal are accurate, an comparison and helps create a more appraiser should verify the data using reliable value estimate. the most reliable source available. 2. B. Virtually all appraisals using the sales 9. C. The choice of techniques used for an comparison method will involve rec- appraisal problem often depends on onciling value indicators generated by the type of property being appraised. multiple comparable properties. 10. A. Most home buyers value a property in 3. A. Reconciliation may be used when the terms of what it would cost them to appraiser has multiple value indicators buy a similar home, so it makes sense from different comparable properties, to focus on the sales comparison ap- different units of comparison, or dif- proach when appraising single-family ferent appraisal techniques. residences. 4. B. Reconciliation is a subjective process 11. D. An appraisal where critical data have and depends on the appraiser’s judg- been omitted would not be a credible ment rather than any mathematical appraisal under professional standards formula. in the appraisal industry. 5. B. In reviewing the appraisal process, 12. B. An estimate of value expressed as a an appraiser should check for errors, single dollar amount is called a point make sure that all properties are evalu- estimate. ated using the same interest in property and the same highest and best use, and 13. C. A range value that is too broad, such as verify that subject property character- from $320,000 to $380,000, is effec- istics are de¿ned consistently. tively useless because it is too vague. 6. C. The reliability of a value indicator 14. C. The estimate of $432,700 has four sig- depends on the amount of data sup- ni¿cant digits. porting it, the level of accuracy, and its relevance to the appraisal problem. 15. A. An appraiser should choose the number of signi¿cant digits that will 7. D. An indicator supported by more data realistically reÀect the degree of con¿- reÀects a larger portion of the market- dence in the value estimate. place. In statistical terms, it lowers the margin of error and makes the data more reliable. 9