Real Property Appraisal Questions PDF

1. There are valuation scenario in which it may be permissible for an appraiser's conclusion to be different given the same property and with the same effective date. Which of the following intended use scenarios should NOT be expected to have a significant difference in the value c...

1. There are valuation scenario in which it may be permissible for an appraiser's conclusion to be different given the same property and with the same effective date. Which of the following intended use scenarios should NOT be expected to have a significant difference in the value conclusion? 2. When an appraiser identifies the purpose of a real property appraisal, what objective is bineg sough in the assignment? 3. An appraiser is analyzing a multi-family apartment complex for lending purposes. While collecting dta for the appraisal, what informaitno listed below would the appraiser identify as general data? 4. An appraiser is analyzing the market value of a commercial building that has a lease ending in nine months. For what time period is the appraiser's opinion of market value valid? 5. IN the appraiser's data collection process that involves a market value assignment, which of the following is an example of general data? 6. In a market value assignment, which criteria of highest and best use would an appraiser generally NOT analyze as one of the four primary tests? 7. An appraiser has been hired to provide a valuation of property that is known to have a contamination issue. To quantify that damage to the property, the appraiser will provide a value opinion as though the property is not contaminated for comparison purposes. What assignment condition should the appraiser use for the specific value opinion? 8. In which step of the valuation process does n appraiser analyze the ideal improvement for the appraised property? 9. When an appraiser identities an effective date of value, for what period of time is the value opinion valid? 10. As the clint may be an individual, group or entity, which of the following best represent how an appraiser identities the client in an appraisal assignment? The client is the party or parties? 11. An appraiser has been hired to provide a valuation of property that is known to have a contamination issue. To quantify that damage to the property, the appraiser will provide a value opinion as though the property is not contaminated for comparison purposes. What assignment condition should the appraiser use for the specific value opinion? 12. Which of the following best defines the valuation process that appraisers use to perform appraisal assignments? 13. There are valuation scenario in which it may be permissible for an appraiser's conclusion to be different given the same property and with the same effective date. Which of the following intended use scenarios should NOT be expected to have a significant difference in the value conclusion? 14. A potential client is on the phone with an appraiser discussing issues about the valuation of a property that client owns. In this initial contact with the client, what step of the valuation process is the appraiser's focal point? 15. In the highest and best use analysis, when an appraiser is evaluating the land as though vacant, what is one of the four criteria the appraiser will evaluate? 16. Which of the following statements is true regarding the terms "land and "site"? 17. What is the first step in the cost approach? 18. How is reversion in an investment property defined? 19. Which of the following best describes the term, "capitalization"? 20. Which of the following descriptions provides a simple explanation of the process used in direct capitalization? 21. Which of the following is true of an equity capitalization rate? 22. What is the amount left after debt service has been deducted from net operating income called? 23. The income capitalization approach is generally not applicable to which of the following property types? 24. Whhich of the following describles the term, "pre-tax cash flow"? 25. Which of the following best describes the term, "capitalization"? 26. What does GRM refer to in the appraiser's analysis of a residential income property? 27. Which term best describes an interest (yield) rate used to convert future payments into present value? 28. What is the amount left after debt service has been deducted from net operation income called? 29. What are the two primary methods of income capitalization that are differentiated by the duration of their income streams? 30. Which of the following descriptions provides a simple explanation of the process used in direct capitalization? 31. The principal of anticipation affirms that value is based on? 32. Which of the following is not an element of comparison? 33. Which approach to value requires a separate valuation of the site? 34. The land residual technique is primarily used on which of the following? 35. The three approaches to value are the cost approach, the sale comparison approach, and the income capitalization approach. Which of the following is a true statement regarding the application of these approaches to value? 36. When would the extraction method of land valuation be most applicable? 37. Which of the following statements about land valuation is true? 38. Which of the following descriptions provides a simple explanation of the process used in direct capitalization? 39. Which of the following is true of an equity capitalization rate? 40. What is the amount left after debt service has been deducted from net operation income called? 41. The income capitalization approach is generally not applicable to which of the following property types? 42. Which of the following describes the term, "pre-tax cash flow"? 43. Which of the following is another term for yield capitalization? 44. Which of the following best describes the term, "capitalization"? 45. What does GRM refer to in the appraiser's analysis of a residential income property? 46. Which of the following describes the term, "Pre-tax cash flow"? 47. Which of the following is true of an equity capitalization rate? 48. How is reversion in an investment property defined? 49. What is the amount left after debt service has been deducted from net operating income called? 50. Which of the following is the correct manner in which a GRM (gross rent multiplier) would be calculated? 51. What is a discount rate used for? 52. The principle of anticipation affirms that value is based on 53. What of the following best describes the term capitalization? 54. Which of the following do you need to now in order to solve for an operating expense ratio? 55. If the overall rate is 8%, what is its corresponding factor? 56. A gross income multiplier (GIM) is generally used to value what type of property? 57. What is the capitalization rate ® for a property that has a net operating income of \$45,000 and that just sold for \$500,000? 58. What is the value of a property that has an appropriate capitalization rate (R) of 12.5%, an operating expense ratio of 40%, and effective gross income of \$10,000? 59. Which of the following rates would be used when seeking the value of the property (both land and improvements) based on a single year of net operating income? 60. Which of the following would you need to solve for income (I)? 61. If the overall rate is 8%, what is its corresponding factor? 62. A comparable four-unit residence just sold for \$300,000. It was rented at the time of sale for (or has a market rent of) \$1,000 per unit per month. What is the GRM? 63. A comparable one-unit residence just sold for \$300,000. It was rented at the time of sale for (or had a market rent of) \$3,000 per month. What is the GRM? 64. A gross income multiplier (GIM) is generally used to value what type of property? 65. What is the capitalization rate (R) for a property that has a net operating income of \$45,000 and that just sold for \$500,000? 66. What is the value of a property that has an appropriate capitalization rate (R) of 12.5%, an operating expense ratio of 40%, and effect gross income of \$10,000? 67. What of the following rates would be used when seeking the value of the property (both land and improvements) based on a single year of net operating income? 68. What is the capitalization rate (R) for a property that has a net operating income of \$40,000 and a net income multiplier (NIM) of 12.5? 69. A multi-unit apartment building has a net operating income of \$505,000 and an operating expense ratio (OER) of 43.56%. The vacancy is estimated at 4% in the market. What is the net income ratio (NIR)? 70. A property has a net operating income of \$355,500. The fixed expense are \$110,200 and variable expenses are \$125,000. What is the effective gross income (EGI)? 71. A warehouse has a net operating income of \$135,000 and net income ratio (NIR) of 60%. The vacancy is estimated at 4% in the market. What is the operating expense ratio (OER)? 72. A property has a net operating income of \$150,000. The fixed expenses are \$50,000 and variable expenses are \$75,000. What is the effective gross income (EGI)? 73. Which of the following best describes a net lease? 74. What is the total income attributable to real property at full occupancy before vacancy and operating expense are deducted? 75. A property has an effect gross income of \$60,420. Vacancy and collection loss are estimated at 5% in the market, and operating expenses total \$19,156. What is the net operating income (NOI)? 76. What is the most probable rent that the property should bring? 77. Which type of lease may adjust due to changes in market rent, and may be facilitated through the use of an appraisal or arbitration? 78. Using the following date, what is the value? 79. Which of the following is NOT one of the six major components of a building? 80. Which of the following is considered a type of framing? 81. An appraiser is not a building inspector. The appraiser does which of the following? 82. A wood stud home in which each floor is framed and erected separately is referred to as what type of construction? 83. An appraiser observes a bathroom with a sink, a bathroom with shower, and toilet. What would this be called? 84. What is the predominant type of frame construction used after World War II? 85. If an appraiser observes missing flashing, what construction system is the appraiser viewing? 86. During an exterior inspection, an appraiser observes a foundation that is exposed to the environment, What type of foundation is this? 87. Which of the following is NOT considered an interior framing finish? 88. An appraiser observes a bathroom with a sink and toilet only. What would this be called? 89. The annual debt service on a property is \$25,000 and the pre-tax cash flow is \$50,000. If the mortgage capitalization rate is 8.5% and the overall rate is 10%, what is the indicated value of the property? 90. Which of the following expenses that maybe be found on a property owner's financial statements, should be excluded from the appraiser's reconstructed operating statement? 91. Using the following date, what is the value? 92. Which oof the following expense that may be found on a property owner's financial statements, should be exclude in the appraiser's reconstructed operating statement? 93. Using the following information, what is the effective gross income multiplier (EGIM)? 94. What is the monthly debt service on a commercial warehouse with a mortgage amount of \$450,000 and a mortgage capitalization rate of 6.75%? 95. Using the following information, what is the effective gross income multiplier? 96. Using the following data, what is the pretax cash flow (PTCF)? 97. An appraiser asking a local building contract for cost data. The contractor gives his best estimate to build an exact replica of the property being appraised. What could this data be called? 98. Which of the following best describes gross living area (GLA) in single-unit residences? 99. The cost approach might be the only approach available to an appraiser when appraising? 100. The second step of the cost approach is to estimate direct (hard) and (soft) costs as of 101. What method is being used when an appraiser estimates the cost of construction by considering the quantity and quality of all materials, as well as all categories of required labor, and unit costs are applied? 102. An estimate of reproduction cost includes which of the following? 103. Entrepreneurial profit is best described by which of the following statements? 104. When measuring a commercial office structure, an appraiser identifies the amount of space on which the rent is based. What measurement is the appraiser using? 105. If an appraiser estimates the current cost of individual units of construction and adds them up, what method is the appraiser using? 106. When performing a cost analysis, where can an appraiser obtain information about the entrepreneurial incentive? 107. Which of the following statements best describes entrepreneurial incentive? 108. The first step of the cost approach is to estimate? 109. Which of the following best describes direct costs? 110. In terms of cost, what type of cost are appraisal fees? 111. The total construction cost of a structure requires consideration of which of the following? 112. When an appraiser estimates cost using a cost manual, which method is being used? 113. To which kind of cost should an appraiser attribute labor and materials to? 114. A warehouse contains 45,000 square feet of building area. There is also an attached 65 feet x 100 feet canopy. The square foot reproduction cost is estimated at \$65.00 for the building area and \$25.00 for the canopy. What is the total reproduction cost new of the entire structure (rounded to the nearest \$10,000)? 115. The final step of the cost approach is to? 116. Why is it important to include a local multiplier when determining the cost basis for a subject property? 117. Marshall and Swift has three classifications for climate. The three classifications are? 118. When making wall height adjustment of 1.03, you're adjusting for the fact that? 119. A convenience store building contains 3,100 square feet of building area. There is a 42 feet x 24 feet attached canopy. The square foot reproduction cost is estimated at \$94.00 for the building area and \$27.00 for the canopy. What is the total reproduction cost new of the entire structure (rounded)? 120. If a residence were 75% carpet that cost \$2.24 per square foot, and 10% ceramic title that cost \$8.84 per square foot, and 15% vinyl sheet that \$3.04 per square foot, what is the average cost for floor coverings? 121. A one-story residence has a main section that is \$1,100 square feet, what a full basement, and a 20x22 detached garage. If the replacement cost is estimated at \$49.00 per square foot for the residence section and \$18.00 per square foot for the garage. What is the total replacement cost new of the improvements? (rounded) 122. Which of the following is considered a plumbing fixture? 123. Why is it important to include a local multiplier when determining the cost basis for a subject property? 124. What area is included in the gross living area? 125. When making a CCM adjustment using a cost manual, you are adjusting the cost for which of the following? 126. A one-story residence has a main section that is 45 x 55, a full basement that is 20 x 35, a back porch that is 10 x 12 and a 15 x 22 detached garage. What is the GLA of this residence? 127. If a residence were 75% carpet that cost \$2.24 per square foot, and 10% ceramic tile that cost \$8.84 per square foot, and 15% vinyl sheet that cost \$3.04 per square foot, what is the average cost for floor coverings? 128. Assume that an open porch has a base cost of \$12.14 per square foot. The subject has a 168 square feet open porch. What impact on cost would this have? 129. Marshall and Swift have three classifications for climate. The three classifications are? 130. When making wall height adjustment of 1.03, you're adjusting for the fact that? 131. The older a building becomes, the great is the likelihood of it having? 132. When is an item of depreciation curable? 133. Which of the following describes the number of years that have elapsed since the construction of the improvements was completed? 134. Which of the following describes the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 135. Suppose you are appraising a high-rise apartment building with fireproofed structural steel frames, concrete floors and roof, and metal and glass paneled walls. What class of construction is this building? 136. A building has been designed for maximum economic potential and to comply with standard construction codes, but extras in ornamentation and finishes are not evident. What quality rank should be chosen for this building? 137. Which of the following is the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 138. You have a 20,000 square feet retail store with a concrete slab floor, stucco on masonry block exterior walls, and metal trusses as a roof structure partially supported by open steel framing members. What class of construction is this building? 139. The major employer in a small city just went out of business. This resulted in a loss of jobs and a subsequent decline in real estate values. Which of the following terms best describes this loss? 140. Which of the following types of depreciation would a three-story office building without an elevator suffer? 141. What type of construction would a high-rise office tower be according to Marshall Valuation Service? 142. Deprecation is a loss in value. Which of the following categories can these losses be attributed to? 143. Within each construction class, Marshall Valuation Service assigns a quality rating. What are the four quality ratings? 144. According to Marshall Valuation Service, which construction class refers to reinforced concrete frame? 145. An appraisal of a single-family residence located adjacent to a busy highway might suffer from which of the following forms of depreciation? 146. Which of the following statements regarding functional obsolescence is the most correct? 147. When is an item of depreciation curable? 148. The older a building becomes, the great is the likelihood of it having? 149. The older a building becomes, the great is the likelihood of it having? 150. Which statement bet describes the term "depreciation"? 151. When is an item of depreciation curable? 152. Which of the following describes the period of times over which the improvements will contribute to property value? 153. Which of the following describes the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 154. The period of time over which the improvements will contribute to property value is described by which of the following terms? 155. The number of years that have elapsed since the construction of the improvements was completed is described by which of the following terms? 156. A building has been designed for maximum economic potential and to comply with standard construction codes, but extras in ornamentation and finishes are not evident. What quality rank should be chosen for this building? 157. Which of the following is the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 158. Suppose you are appraising a high-rise apartment building with fireproofed structural steel frames, concrete floors, and roof, and metal and glass paneled walls. What class of construction is this building? 159. You have a 20,000 square feet retail store with a concrete slab floor stucco on masonry block exterior walls, and metal trusses as a roof structure partially supported by open steel framing members. What class of construction is this building? 160. When is an item of depreciation curable? 161. The older a building becomes, the great the likelihood of it having? 162. Which of the following types of depreciation would a three-story office building without an elevator suffer? 163. Which statement best describes the term "depreciation"? 164. An appraisal of a single-family residence located adjacent to a busy highway might suffer from which of the following forms of depreciation? 165. Which of the following statements describes the loss in value due to changes in market tastes and standards? 166. Depreciation is a loss in value. Which of the following categories can these losses be attributed to? 167. According to Marshall Valuation Service, which construction class refers to reinforces concrete frame? 168. What type of construction would a high-rise office tower be according to Marshall Valuation Service? 169. Within each construction class, Marshall Valuation Service assigns a quality rating. What are the four quality ratings? 170. Which of the following statements regarding functional obsolescence is the most correct? 171. Which of the following describes the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 172. The period of time over which the improvements will contribute to property value is described by which of the following terms? 173. Suppose you are appraising a high-rise apartment building with fireproofed structural steel frames, concrete floors and roof, and metal and glass paneled walls. What class of construction is this building? 174. A building has been designed for maximum economic potential and to comply with standard construction codes, but extras in ornamentation and finishes are not evident. What quality rank should be chosen for this building? 175. Which of the following is the age of a property that is based on the amount of observed deterioration and obsolescence it has sustained? 176. You have a 20,000 square feet retail store with a concrete slab floor, stucco on masonry black exterior walls, and metal trusses as a roof structure partially supported by open steel framing members. What class of construction is this building? 177. An incurable functional problem is best defined as? 178. The major employer in a small city just went out of business. This resulted in a loss of jobs and a subsequent decline in real estate values. Which of the following terms best describes this loss? 179. The older a building becomes, the great the likelihood of it having? 180. When is an item of depreciation curable? 181. Which of the following statements describes the loss in value due to changes in market tastes and standards? 182. Within each construction class, Marshall Valuation Service assigns a quality rating. What are the four quality ratings? 183. Which of the following statements regarding Marshall Valuation service is most correct? 184. Which of the following statements regarding external obsolescence is the most correct? 185. What type of construction would a tilt-wall warehouse be according to Marshall Valuation Service? 186. Which of the following statements regarding physical deterioration is the most correct? 187. An appraiser observing infestation and action of the elements would classify them as? 188. Which of the following would be considered a long-lived component? 189. Which of the following could be a good example of inadequacy? 190. Which of the following can define the term "useful life"? 191. A warehouse recently sold for \$1,950,000. The land value was estimated to be \$750,000, and the replacement cost was estimated at \$1,500,000. What percent deprecation was present in the improvements? 192. Which of the following items could be a good example of deferred maintenance? 193. A building has an effective age of 20 years and an estimated remaining economic life of 50 years. What is the total economic life of the building? 194. Which of the following is a good example of "economically feasible"? 195. A property has an overhead garage door that is 13 years old. It costs \$1,900 to replace. Because the inclement weather comes out of the northwest, these doors typically last 15 years if they face the west and 25 years if they face east. This door faces east. What is the amount of value left in this item? 196. Which of the following can define the term "useful life"? 197. Which of the following can incur deprecation? 198. A building has an effective age of 20 years and an estimated remaining economic life of 50 years. What is the total economic life of the building? 199. A building has an effective age of 20 years and an estimated reimaging economic life of 50 years. What is the percentage of deprecation? 200. A property has a roof that is 8 years old. It cost \$12,000 to replace. Roofs in this market typically last 15 years? What is the amount of value left in this item? 201. How do you calculate the effective age of a property? 202. What does the economic age-life method assume? 203. Which kind of depreciation is a very expensive feature not recognized in the market at its physically depreciated cost because it is too nice? 204. Which of the following can define the term "useful life"? 205. Which of the following can incur depreciation? 206. Remaining economic life is 40 years, and total economic life is 60 years. Site value of \$550,000. If the replacement cost of the improvements was estimated at \$1,800,000, what is the indicated value of the property? 207. A building has an effective age of 20 years and an estimated remaining economic life of 50 years. What is the total economic life of the building? 208. Which of the following could be a good example of super-adequacy? 209. A ten-year-old property sold for \$500,000 (sale price) and has a site value of \$150,000. If the replacement cost of the improvements was estimated at \$600,000, what is the indicated annual depreciation rate (straight-line, annual percentage)? 210. Verification of data is required of appraisers to ensure the data they are using is? 211. Regarding data, professional appraisal standards require appraisers to do which of the following? 212. Which of the following does the standard land valuation techniques include? 213. If market value is sought, the sales comparison approach to land valuation is based primarily on an analysis of the market behavior of which group? 214. Which of the following best defines elements of comparison? 215. Which of the following terms applies to the process when two or more sites are combined to produce great utility? 216. A comparable site sold six months ago for \$4,000. If the comparable site is 10% superior to the subject site, what is the adjusted sale price? 217. Which of the following would be considered an example of a unit of comparison? 218. Which of the following is always considered when valuing land? 219. Which of the following method of site valuation requires an appraiser to use a ratio? 220. Which of the following does the standard land valuation techniques include? 221. A comparable site sold six months ago for \$4,000. If the comparable site is 10% superior to the subject site, what is the adjusted sale price? 222. An appraiser has an assignment for a residential lot located on a busy road. The appraiser has determined that in this market, these lots are approximately \$2,000 inferior. How should the appraiser apply the adjustment to a comparable sale NOT located on the busy road? 223. Which of the following units of comparison would be appropriate in the valuation of a waterfront property? 224. If the market value is sought, the sales comparison approach to land valuation is based primarily on an analysis of the market behavior of which group? 225. What are the examples of adverse site conditions? 226. Generally, what is the effective date of value for an appraisal of a single-family residence? 227. The URAR form asks for finished floor area. What is it referring to? 228. Where can we obtain information about the size of a site? 229. What is the effective age? 230. Where do appraisers generally obtain site information for residential properties? 231. The use of the cost approach and the income approach are? 232. How should an appraiser identity utilities? 233. Which of the following would be an acceptable way of describing the boundaries of an irregular shaped lot? 234. In the cost approach, site improvements are included based on their contribution to the overall property value. Which of the following site improvements might be included? 235. Which of the following economic principles affirms that buyers constitute market demand and that the properties offered for sale make up the supply? 236. What are units of comparison? 237. Which of the following statements best define "units of comparison?" 238. Which of the following property types is the sales comparison approach applicable to? 239. A potential axiom for the sales comparison approach may be stated as; the more market data available, the? 240. Whis is the main limitation of the sales comparison approach? 241. You are analyzing a sale in which the mathematical calculation of cash equivalency calls for a \$10,000 downward adjustment. However, by use of several paired data sets, you find that the market only recognizes a \$4,000 downward adjustment. What is the adjustment for financing? 242. Which of the following is used for conditions of sale adjustments? 243. What adjustment should an appraiser make if the subject property is an office building on a long-term land lease and the comparable sale is a fee simple interest in a similar building? 244. For which of the following reasons, a market conditions adjustment is applied in some situations? 245. The subject property is a warehouse containing 10,000 square feet, with a 14-food ceiling height, which was leased for \$4.50 per square foot annually. An appraiser learned that a similar size warehouse in the same industrial park had recently sold. The sold warehouse had an 18-foot ceiling height and was lease for \$5.00 per square foot annually. The appraiser discovered that the rent difference was due to the difference in ceiling height. If there were a prevailing potential gross income multiplier (PGIM) of 8.5 in this industrial market, what adjustment would the appraiser make to the sale for ceiling height? 246. Adjustments to comparable sales can be made using which of the following methods? 247. Which of the following is NOT an example of a quantitative technique? 248. Why would an appraiser NOT want to use the figure \$154,245 as the final value conclusion in a market value assignment? 249. A comparable sale included the seller taking back a purchase-money mortgage at 3% under the market rate for 10 years. The appraisal was based on the cash-equivalent market value. Which of the following describes this adjustment? 250. A restaurant with a favorable mortgage sold for \$2,250,000. A similar restaurant sold for \$2,000,000 all cash. If an appraiser were to make a downward \$250,000 adjustment to the first restaurant sale, what might the adjustment reflect? 251. Which of the following best describes a quantitative adjustment? 252. Which of the following would be the most useful tool to help identify differences in elements of comparison between a subject property and its comparable sales? 253. At what point during the assignment can reconciliation occur? 254. A bank underwrite may question an appraiser's use of a particular comparable sale if the gross adjustment percentage is great than? 255. Which statement is trust regarding extraordinary assumptions and hypothetical conditions? 256. In which of the following methods are appraisers permitted to communicate value conclusions? 257. Regarding work-files, which of the following statements is correct? 258. The subject property has a 12 x 10 wood deck valued at \$10 per square foot. A comparable sale has a 15 x 20 screened porch valued at \$25 per square foot. What is the proper adjustment for this difference? 259. Which of the following methods is most common for appraisers to communicate a value conclusion? 260. Alan used four comparable sales with value indications of \$199,000, \$201,000, \$202,000 and \$204,000. What should Alan's final opinion of value for the sales comparison approach be if the appraiser believes all the comps are reasonably similar to the subject property? 261. A work-file must be prepared for every appraisal or appraisal review assignment and must contain which of the following? 262. Which of the following best describes a certification?