DAY 4 FUNDAMENTALS of REAL ESTATE APPRAISAL

1. An “as of” date is specified in appraisals to

A. Indicate the prevailing price level
B. Show when the appraiser inspected the property
C. Indicate the value as of the closing date
D. Indicate when the buyer agreed to purchase the property
E. Indicate when the market conditions on which the value is estimated

2. An appraisal of real estate

A. Determines its value
B. Estimates its value
C. Guarantees its value
D. Assures its value
E. Segments its value

3. Residential appraisers generally provide an estimate of

A. Market value
B. Mortgage loan value
C. Assessed value
D. Cash Value
E. Market price

4. Commercial real estate appraisers are most frequently asked to estimate

A. Insurable value
B. Liquidation value
C. Assessed value
D. Intrinsic Value
E. Market Value

5. Common transactions that frequently require appraisals are

A. Income-tax-deductible charitable contribution of property, estate tax, and property
settlement upon divorce
B. Damage lawsuits and security for bail bonds
C. Company merger, tax basis, and loan assumptions
D. All of the above
E. None of the above

6. Knowledge of land value is required for all of the following except

A. Condemnation actions
B. Property taxation

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 C. Fire insurance
D. A grazing lease
E. A ground lease

7. A market value estimate provided in an appraisal

A. Changes with the function of the appraisal
B. Changes with the use to which it is put
C. Remains the same regardless of whom the appraisal is prepared for
D. Depends upon the use or function of the appraisal
E. Always reflects market value

8. In preparing an appraisal, definition of the problem identifies all of the following except
A. The highest and best use for the property
B. The real estate being appraised
C. The date of the values estimates
D. The real property rights
E. The use to which the appraisal will be put
9. In appraising, the data requirements are set by the
A. Appraiser
B. Seller
C. Lender
D. Appraisal problem
E. Client
10. The requirement to verify data in appraisal report vary according to
A. The purpose and intended use of the appraisal report
B. The appraiser’s available time
C. Legal restrictions on the property
D. The type of value being sought
E. The use to which the property has been put
11. A property’s immediate environment is
A. A neighborhood
B. The adjacent uses
C. Its pivotal point
D. A natural boundary
E. A “comp” grid
12. The life cycle of a neighborhood illustrates the principle of
A. Change
B. Highest and best use
C. Substitution
D. Conformity
E. Anticipation

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
13. The data required for an appraisal assignment depend on the
A. Nature of the appraisal problem
B. Appraiser Buyer
C. Appraiser
D. Office of the Thrift Supervision
E. Lending association

14. Which of the following exhibits is least frequently used in an appraisal?

A. A photograph of the subject property
B. A plot plan
C. An aerial photograph of the surrounding area
D. A floor plan
E. A photograph of a comparable property

15. In which market is the sales comparison approach most applicable?

A. Active
B. Buyer’s
C. Reasonable
D. Seller’s
E. Calm

16. The criteria for determining highest and best use include all of the following except
A. Financial possibility
B. Physical feasibility
C. Legal permissibility
D. Effect on community welfare
E. Maximal productivity

17. The three approaches to estimating value are

A. Cost, sales comparison, and income capitalization
B. Reproduction, cost, and income
C. Cost, income, and replacement
D. Replacement, income, and reproduction
E. Market, building residual, and multiplier

18. In appraising a dwelling built 50 years ago, the appraisers usually rely on the
A. Original construction cost
B. Sales comparison approach
C. Current replacement cost
D. Current reproduction

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 E. Superior construction technique
19. Which approach would be best when appraising a 15- to 20- year-old house?
A. Income capitalization
B. Sales Comparison
C. Feasibility study
D. Cost
E. Replacement costs new less accrued depreciation.

20. The appraiser’s find value estimate should be based on

A. An average of the three value indications
B. A weighing of the reliability in each of the information analyze in each of the three
approaches to value
C. An average of the values in the three closest comparable sales
D. The correlation technique
E. Adjustments for the most recent indicators in the local market.

21. Before signing the appraisal report, the appraiser should

A. Review the overall appraisal process and check technical accuracy
B. Evaluate the reliability of each approach to value
C. Reinspect the subject property
D. Average the results from the approaches used
E. Seek the property owner’s opinion

22. Since each value approach has its own strength and weaknesses, an appraiser should
A. Choose the approach that is the most popular with lenders
B. Choose the approach that is the most popular with buyers
C. Weigh the strength and weaknesses of each approach and decide which is the most
reliable for the subject property
D. Weight each approach equally
E. Use the approach that the client feels is most appropriate

23. The cost approach is often given more weight in the appraisal of
A. New buildings or special-use buildings
B. Vacant land
C. Old or obsolete building
D. Commercial and industrial properties
E. Single-family houses more than 10 years old

24. In reconciliation and conclusion of value, the appraiser should

A. Describe the relevance of each value approach explored
B. Discuss the reliability of the data used

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 C. Provide arguments to justify his or her final conclusion of value
D. Explain his or her judgments and reasoning
E. Do all of the above

25. Value indications are reconciled into a final value estimate

A. Throughout the appraisal
B. After all three approaches have been completed
C. After each approach is completed
D. At the preliminary stage to let the client know what result to expect
E. After the report o defined value

26. During the reconciliation process, an appraiser should ask:

A. How adequate are the data?
B. How appropriate is each approach?
C. What range of values do the approaches suggest?
D. A and C only
E. All of the above

27. Which of the following is the shortest and least detailed type of appraisal report?
A. Restricted
B. Summary
C. Self-contained
D. Engagement letter
E. Detailed

28. All of the following are main sections in the typical narrative appraisal report except
A. Addenda
B. Introduction
C. Description, analyses, and conclusion
D. Engagement letter
E. Valuation

29. An appraisal reports

A. Is not worth the paper is written on
B. Is unethical
C. Must be supported by a work paper file
D. Is impossible
E. Is a legitimate substitute for a written report

30. Standardized residential form reports

A. Are adequate for all appraisals

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 B. Are difficult to computerized
C. Are seldom adequate for appraisals
D. Allow little space for neighborhood analysis
E. May not be as detailed or complete as written reports

31. The highest and best use of a site is its

A. Existing use
B. Most probable use that is legally and physically possible and provides the highest
financial returns
C. Immediate next use
D. Ordinary and necessary use
E. Least expensive use

32. The important reason(s) for inspecting and analyzing the subject site is (are) to
A. Note any unusual characteristics
B. Ascertain its highest and best use
C. Be certain the property exists
D. Find comparable sales
E. All of the above

33. The length of a tract of land along a street is called the land’s
A. Frontage
B. Depth
C. Width
D. Abutment
E. Lineage

34. The number of square feet in 1 acre is

A. 460
B. 64, 000
C. 43,560
D. 440
E. 34, 560

35. The livable square footage of a single-family residence is usually measured from the
A. Total interior (including interior walls)
B. Inside room dimensions
C. Interior plus basement
D. Exterior, with adjustment for wall width
E. Exterior

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
36. The most important item an appraiser needs for recording data during a building inspection
is a
A. Checklist
B. Tape measure
C. Clipboard
D. Plat map
E. Blank paper

37. A large home built in an area of small cottages is an example of

A. Large regression
B. Under improvement
C. Over improvement
D. Functional obsolescence
E. Environmental aesthetics

38. The period over which a building may be profitably used is its
A. Effective life
B. Physical life
C. Actual life
D. Normal life
E. Useful life

39. An improvement’s remaining economic life is

A. Its effective age
B. Its chronological age
C. The future time span over which the improvement is expected to generate benefits
D. Its effective age minus its chronological age
E. Its effective age plus its chronological age

40. To be considered as a possible alternative for highest and best use, a use must be
A. Physically and legally possible
B. Physically and legally possible and financially feasible
C. Already in existence and legal
D. Physically possible and appropriate
E. Legal and profitable

41. When applying the concept of highest and best use of land as if vacant, the assumption is
made that
A. Vacant land produces maximum income
B. Zoning cannot be changed
C. The basic characteristics of a site can be changed

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 D. Any existing building can be demolished
E. Land is not subject to erosion

42. The highest and best use of land as if vacant forms part of the basis for
A. Mortgage equity analysis
B. A property rights adjustment
C. The cost approach
D. An operating expense estimates
E. The square footage approach

43. The best assurance of appraisal accuracy results from the use of
A. A large number of truly comparable properties
B. The gross dollar amount of adjustments
C. The greatest number of adjustments
D. A net dollar amount of adjustments
E. Market segmentation

44. The direct sales comparison approach to appraising derives an estimate of value from
A. Checking prices in the Wall Street Journal stock market report
B. Comparison of the architecture of properties
C. Comparison of loans made on properties
D. Original costs of comparable properties
E. Sales of comparable properties

45. A gross rent multiplier is often used in the

A. Back-door approach to valuation
B. Income approach for income property
C. Cost approach
D. Income approach for single-family property
E. Direct sales comparison approach for single-family housing

46. Gross rent multiplier analysis is

A. Required in almost every residential appraisal
B. Applicable to residential property valuation only
C. Applicable to every residential appraisal
D. Part of the direct sales comparison approach to valuation of commercial properties
E. Seldom used for houses

47. In estimating site value, the direct sales comparison approach

A. Is the most reliable method available
B. Does not apply to order residences

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 C. Is considered inferior to other methods
D. Is used only when the subject property is unimproved
E. Is sed for real estate but not for personal property appraisals

48. In an open market transaction, the subject property sold would not be
A. Sold to a relative
B. Listed on a multiple listing service
C. Advertised in local newspaper
D. Listed for at least 30 days
E. Closed by a title company

49. The minimum number of comparable sales needed to apply direct sales comparison is
A. 10
B. 3
C. 4
D. 30
E. No set number

50. Physical units of comparison include

A. Rooms in a hotel
B. Seats in a theater
C. Square feet of a house
D. Cubic feet of a warehouse
E. All of the above

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---
 Day 4 Multiple Choice Answers
1. E 26. E
2. B 27. A
3. A 28. D
4. E 29. C
5. A 30. E
6. C 31. B
7. C 32. E
8. A 33. A
9. A 34. C
10. A 35. E
11. B 36. A
12. A 37. C
13. A 38. E
14. C 39. C
15. A 40. B
16. D 41. D
17. A 42. C
18. B 43. A
19. B 44. E
20. B 45. D
21. A 46. D
22. C 47. A
23. A 48. A
24. E 49. E
25. B 50. E

Real Estate Appraisal Reviewer 2022 by Mister Z (Updated Quarterly). CONGRATULATIONS and CLAIM YOUR APPRAISER LICENSE
—UNAUTHORIZED COPY MOSTLY LEADS TO UNFORTUNATE RESULTS. THUS, PURCHASE YOUR OWN COPY. BLESSINGS!---