Chapter 11 Quiz PDF

Principles of California Real Estate Instructor Materials Chapter 11 Quiz   7KHFDOFXODWLRQRIDSURSHUW\¶VH൵HFWLYHJURVV 7. A potential purchaser of an income property LQFRPHUHÀHFWV is most likely to overlook what property ex-...

Principles of California Real Estate Instructor Materials Chapter 11 Quiz   7KHFDOFXODWLRQRIDSURSHUW\¶VH൵HFWLYHJURVV 7. A potential purchaser of an income property LQFRPHUHÀHFWV is most likely to overlook what property ex- A. depreciation pense? B. vacancies A. Insurance C. repairs and operating costs B. Depreciation D. taxes C. Management expenses D. Risk 2. Which of the following causes the greatest loss of property value? 8. Which of the following items would not be A. Wear and tear included in an appraisal using the cost ap- B. Obsolescence proach? C. Lack of proper maintenance A. Depreciation D. Physical deterioration B. Cost of improvements C. Land value D. Capitalization rate 3. The principle of substitution may be applied to which of the following appraisal methods? A. Cost approach 9. To an appraiser, a trend is: B. Sales comparison approach A. related changes with discernible causes and C. Income approach H൵HFWV D. All of the above B. slight changes not included in the appraisal analysis C. major zoning changes in government regu- 4. What appraisal method should be used to de- lations termine the value of a restaurant building? D. None of the above A. Sales comparison B. Market data C. Cost 10. An appraiser would be least concerned with a D. Income separate site valuation when using which ap- proach to value? A. Gross multiplier method 5. To measure accrued depreciation most accu- B. Capitalization rately, an appraiser should use: C. Sales comparison A. direct methods D. Income B. indirect methods C. the straight-line method D. the engineering method 11. Which of the following would not be a cause of economic obsolescence?  $ /RFDWLRQLQWKHÀLJKWSDWKRISODQHVIURP   ,W¶VLPSRUWDQWWRGL൵HUHQWLDWHEHWZHHQWKHSXU- a nearby airport pose of an appraisal and:  % /RZ ¿[HG LQFRPH RI QHLJKERUKRRG UHVL- A. the appraisal process overall dents B. appraisal principles C. Broken air conditioning system C. the use of the appraisal D. Departure of major retail stores and service D. the owner’s amenities providers 14  Chapter 11: Real Estate Appraisal 12. Where would the property value be stated in a narrative appraisal report? A. Neighborhood description B. Introduction C. Description of use D. Purpose of appraisal 13. Two properties, each worth $50,000, are com- bined into one larger parcel that has a value of $120,000. This increase in value is called: A. blockage B. appurtenance C. plottage D. appreciation  9DOXHLVD൵HFWHGE\DOOEXWZKLFKRIWKHIRO- lowing? A. Physical and environmental factors B. Government regulations C. Private restrictions D. Economic trends 15. The remodeling that the Sorensons had done cost $30,000, but it added only $17,000 to their home’s value. Which principle of value does this illustrate? A. Regression B. Progression C. Contribution D. Conformity 15  Principles of California Real Estate Instructor Materials Answer Key  % (൵HFWLYHJURVVLQFRPHLVFDOFXODWHGE\ 9. A. Appraisers should take trends into subtracting vacancies from the poten- account when appraising properties. tial gross rental income. A trend is typically a series of re- lated changes with a chain of causes 2. B. Functional and economic obsolescence and effects. cause much greater losses in property value than any type of physical dete- 10. A. The gross multiplier method does not rioration. involve appraising the land. The value estimate is determined using the sale 3. D. Substitution applies to all three ap- prices of comparable properties and praisal methods. the subject property’s rental income. 4. D. The income approach should be used, 11. C. A nonfunctioning air conditioning since the restaurant is a commercial system is an example of physical de- property. preciation. The other problems are all external to the property, and therefore 5. B. Indirect methods of estimating depre- are economic (external) obsolescence. ciation are considered more accurate because they involve taking informa- 12. D. A narrative appraisal report typically tion from the market. begins with a section containing the SXUSRVHRIWKHDSSUDLVDODQGWKH¿QDO 6. C. The purpose of an appraisal is usually estimate of value. to determine the market value of a property. The “function” or “use” of an 13. C. An increase in value that results when appraisal is the reason for having the two or more contiguous properties are property appraised (for example, to de- combined into a more valuable parcel termine whether it would be adequate under single ownership is called plot- security for a loan). So the purpose and tage. The increase in value is due to use of an appraisal are never the same. improved usability. This often occurs where larger parcels are needed for in- 7. C. Management expenses are the income dustrial or commercial uses. property expenses most easily over- looked. 14. C. Social ideals and standards, economic trends, government regulations, and 8. D. The capitalization rate is used in the physical and environmental factors are income approach, not the cost ap- WKHPDMRUIRUFHVD൵HFWLQJYDOXH proach. 15. C. The principle of contribution holds that some improvements contribute more to value than they cost, while others cost more than they contribute. 16