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Key ANS. Book4.4 Valuation and Appraisal RDL 55q 10p 2014
Key ANS. Book4.4 Valuation and Appraisal RDL 55q 10p 2014
Key ANS. Book4.4 Valuation and Appraisal RDL 55q 10p 2014
2.In appraising a home for a lender who wishes to make a purchase loan, the
appraiser would be concerned with:
A.the amount of the loan requested
B.unpaid special assessments
C.the price the seller has agreed to pay
D.economic changes in the arena
5.An appraiser would need to determine accrued depreciation when using the:
A.gross rent multiplier method
B.cost approach
C.income approach
D.sales comparison approach
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Diagnostic Test-Appraisal/Valuation
8.An appraiser in using the expression a "willing, informed buyer and a willing
informed seller," is referencing
A.Progression
B.supply and demand
C.the principle of highest and best use
D.market value
9.Which appraisal method would tend to set the upper limit of value on a new
structure?
A.Gross multiplier
B.Income approach
C.Cost approach
D.Sales comparison approach
10.The advisability of including a tennis court with a planned apartment building may
be determined by the principle of
A.contribution
B.progression
C.substitution
D.change
11.A new, expensive home in a mixed area of commercial property and older, less
expensive homes could have a market value less than the cost of the new home
because of:
A.external obsolesence
B.the gross multiplier effect
C.progression
D.physical deterioration
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Diagnostic Test-Appraisal/Valuation
12.A property has a net income of $30,000. One appraiser decides to use a 12
percentcapitalization rate, while a second appraiser uses a 10 percent rate. Use of the
higher rate results in:
A.a 2 percent increase in appraised value
B.a $50,000 increase in appraised value
C.a $50,000 decrease in appraised value
D.no change in appraised value
16.The reason the gross rent multiplier is an inaccurate measurement of value is that
it fails to consider:
A.depreciation
B.unusual expenses
C.location
D.amenity values
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Diagnostic Test-Appraisal/Valuation
18.Several $150,000 homes were built in an area where the existing homes had been
valued at $400,000 to $500,000. The effect was that the value of the existing homes
declined. Which real estate principle applies to this situation?
A.regression
B.competition
C.substitution
D.integration and disintegration
19.With an annual net income of $40,000 and a capitalization rate of 8 percent, the
value of the property using the income approach would be
A.$400,000
B.$440 ,000
C.$500,000
D.$520,000
20.The time period during which a structure shows income that is attributable to the
structure itself is known as its
A.economic life
B.effective age
C.period for depreciation
D.period of profitability
21.the last lot in a subdivision sold for almost twice the price paid for the first lot
sold. This is an example of the principle of
A.regression
B.diminishing returns
C.supply and demand
D.Conformity
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Diagnostic Test-Appraisal/Valuation
22.A property being appraised has a two car garage, while a comparable has a three
car garage. In making adjustments, the apppraiser would
A.raise the value of the comparable
B.lower the value of the home being appraised
C.lower the value of the comparable
D.raise the value of the home being appraised
25.The highest and best use is the use that provides the greatest
A.benefit to the community
B.gross
C.value
D.capitalization rate
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Diagnostic Test-Appraisal/Valuation
27.An investor making extraordinary profits from the first mini warehouse in the area
would be concerned with the principal of
A.substitution
B.competition
C.surplus productivity
D.conformity
29.An appraiser wanted to know the capitalization rate applicble for a recent sale. The
net income was reported at $21,000 and the property sold for $300,000. What
capitalization rate applied to this sale?
A.6%
B.7%
C.8%
D.9%
30.The appraiser used 80 percent of the value arrived at by the market comparison
approach, 20 percent of the value arrived at with the cost approach, and did not
consider the value arrived at using the income approach. the process the appraiser
was engaged in is known as:
A.the sum of the values
B.reconciliation
C.the abstractive method
D.the index method
31.The appraiser could calculate the annual gross rent multiplier that applied to a
recent sale by:
A.capitalizing the annual gross income
B.dividing the annual gross income by the price paid
C.dividing the price paid by the annual gross
income
D.multiplying the monthly gross income by 12
32.A seller agreed to sell a home with no down payment and the below market rate
seller financing. The favourable financing could be expected to affect the
By: R.D.LEONEN-IPA, REB, REA, REC
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Diagnostic Test-Appraisal/Valuation
A.price but not the value of the property
B.value of the property but not the price
C.utility of the property
D.depreciation method
33.A property owner would have the greatest difficulty in correcting depreciation
caused by
A.chronological age
B.the built in nature of the structure
C.forces outside the property boundaries
D.wear and tear due to use
34.An appraiser sets a replacement cost of a structure at $120,000 and appraises the
land value separately at $80,000. the appraiser places an economic life on the
structure at 50 years and states that it has an effective age of 10 years. Using the cost
approach, the appraiser would appraise this property at
A.$140,000
B.$160,000
C.$176,000
D.$200,000
37. In using the sales comparison approach to value to appraise a single family
residence, an appraiser might have to make adjustments for
A.assessed valuation differences
B.a difference in possible rental income
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Diagnostic Test-Appraisal/Valuation
C.date of sale
D.difference in the capitalization rate
38. Each unit in a fourplex rents for $225 per month. With the sales price of $81,000,
the annual gross rent multiplier is
A.7.5
B.30
C.90
D.360
41. A buyer who looked at seven very similar homes in a three year old subdivision
made an offer on the home with the lowest list price. the buyer was utilizing the
principal of
A.supply and demand
B.substitution
C.conformity
D.change
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Diagnostic Test-Appraisal/Valuation
D.land x depreciation + cost
44. With fixed rents and a capitalization rate of 8 percent, an increase in taxes of
$4,000 would result in the value of a property:
A.decreasing by $5,000
B.decreasing by $50,000
C.remaining unchanged
D.Increasing
46. An appraiser counting the number of electrical outlets in a structure is using the
A.market comparison method
B.income approach
C.cost approach
D.gross rent multiplier method
47. A property being appraised had 2,400 square feet, but a comparable used by the
appraiser had only 2,250 square feet. The appraiser should
A.disregard the comparable because of dissimilar
size
B.use the comparable but ignore the slight size
difference
C.adjust the sale price of the comparable upward
because of size difference
D.adjust the sale price of the comparable downward
because of the size difference
48. which appraisal principle indicates the economic effect an improvement has on
property?
A.progression
B.substitution
C.surplus
D.Contribution
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Diagnostic Test-Appraisal/Valuation
49. the use of more than one appraisal method with different weights assigned to
each method describes:
A.Reconciliation
B.a certified appraisal
C.the development method
D.the quantity survey method
51. The first step in appraising an apartment building using the income approach
would be to determine the
A.scheduled gross income
B.effective gross income
C.net income
D.vacancy factor
52. "The whole is worth more than the sum of its parts" refers to
A.progression
B.assemblage
C.land residual
D.depreciation
53. Two adjacent residences in the center of a large development had similar values
when they were built 60 years ago. They both have been maintained in similar
condition and the site values are identical but one is now worth far more than the
other. The reason for the difference in value relates to:
A.physical deterioration
B.economic obsolesence
C.functional obsolesence
D.the principle of integration and disintegration
54.Which appraisal method would be used to determine the present value of future
income?
A.income approach
B.cost approach
C.quantity survey method
D.Sales comparison approach
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Diagnostic Test-Appraisal/Valuation
55. Which description refers to reproduction cost?
A.present cost to build a structure of similar utility
and desirability
B.depreciated present value of a structure
C.present cost to produce a duplicate of a structure
D.depreciated value of a structure plus the present
land value
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