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TEST 5
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1. An appraiser will always base his estimate of value upon:
(A) the reproduction cost (B) an analysis of facts as of a specific date
(C) an evaluation of income over the past six months
(D) the direct sales comparison approach to value
2. The amount that an appraiser charges for his appraisal is established by:
(A) the American Institute of Real Estate Appraisers
(C) contract (D) custom
(B) the Real Estate Commission
3. A property currently worth $76,000 is located in an area consisting of many higher priced homes. An appraisal
would embody the principle of:
(A) change of balance
(B) substitution
(C) progression
(D) regression
4. Which of the following would NOT contribute to obsolescence?
(A) Normal wear and tear due to use (B) Misplaced improvements
(C) Change in directional growth (D) Massive cornices on an apartment building
5. Which of the following would be considered economic obsolescence?
(A) Lack of air conditioning (B) Over-supply
(C) Insufficient on-site parking (D) Private restrictions
6. Functional obsolescence will cause a decrease in value and could be due to:
(A) adverse zoning
(B) wear and tear
(C) being out-dated
(D) decline in the neighborhood
7. In applying the cost approach method in the appraisal of an apartment house, an appraiser would also use the
market data approach to:
(A) determine the capitalization rate (B) arrive at the value of the land
(C) estimate accrued depreciation (D) to determine operating expenses
8. The appraisal of residential structures using the cost approach is best suited to:
(A) new properties (B) middle-aged properties
(C) older properties (D) multi-family dwellings
9. The terms "quantity survey", "unit in place", "square foot" and "cubic foot" are all part of which of the
following approaches to value?
(A) The cost approach (B) The income approach
(C) The market data (direct sales comparison) approach
(D) The sinking fund approach
10. When valuing an older house, which of the following will be most useful?
(A) The recent sale of a similar house (B) The seller's purchase price for the house
(C) The last list price of the house (D) The seller's valuation of the house
11. Which of the following is the first step in the appraisal process?
(A) To prepare a preliminary market survey (B) To collect data
(C) To complete the market data approach (D) To define the problem
12. An appraiser using the replacement cost approach on an older residential property would use all of the
following except:
(A) depreciation
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(B) capitalization
(C) land value
(D) cost of improvements new today
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TEST 5
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13. The market data (direct sales comparison) approach to value is best described as the process of:
(A) comparing the subject with other properties that have recently been sold
(B) calculating the cost to build the structure brand new today, subtracting depreciation and adding land
value
(C) comparing the capitalized net income from the property with the capitalized income from similar
properties
(D) making adjustments to the sales prices of similar properties for such items as time of sale and financing
14. If a house has a single car garage in an area where most other houses have two car garages, the house will
suffer a loss of value due to which of the following?
(A) External obsolescence (B) Physical deterioration
(C) Functional obsolescence (D) Economic obsolescence
15. If a broker appraises a single family residence and takes away a certain amount of value because of functional
obsolescence, this would most likely result from:
(A) commercial zoning next door (B) dry rot in basement timbers
(C) a low ceiling in the master bedroom (D) an oversupply of houses on the market
16. Economic (external) obsolescence would be considered all of the following, EXCEPT:
(A) curable
(B) incurable
(C) inherent
(D) non-self imposed
17. Which of the following could result in external obsolescence?
(A) Negligence of a renter (B) Termite infestation
(C) Legislative regulations (D) Architectural design
18. Which of the following is the most expensive and difficult method of cost estimate?
(A) Unit in place
(B) Quantity survey
(C) Square foot
(D) Cubic foot
19. If an appraiser is valuing a church built in 1956, which of the following would he use:
(A)
(B)
(C)
(D)
cost of living index in 1956
original cost of construction of 1956
change in cost of living index between 1956 and the present
today's cost of replacement, less depreciation
20. Which of the following is the least important when appraising property using the cost approach?
(A) Square footage cost
(B) Estimated rents
(C) Depreciation allowance
(D) Land value
21. In the market data (direct sales comparison) approach to value, a house sold through which of the following
would be inappropriate to use as a comparable?
(A) An inheritance tax sale (B) Foreclosure
(C) A multi-list system (D) Divorce
22. The age of a single family residence could be best determined by the:
(A) type of architecture (B) condition of the house
(C) size of trees in rear yard (D) county assessor's records
23. Which of the following is (are) to be deducted from gross income to arrive at the effective gross income of a
property?
I.
II.
Payments of mortgage interest
Allowance for vacancy and bad debts
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II
24. The capitalization rate of a property is the ratio between:
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(A) net income and market value (B) equity and selling price
(C) replacement cost and net income (D) gross income and market value
25. In appraising a building that is presently occupied by a tenant who will vacate the building in a short period of
time, the appraiser, in establishing the gross rent for his appraisal, should use:
(A) contract rent
(B) past rent
(C) economic rent
(D) base rent
26. An appraiser would review the zoning of a property he is appraising to find out:
(A)
(B)
(C)
(D)
if there are any encroachments that would decrease the property's value
who the previous owners of the property were
what encumbrances are recorded against the property
if there are errors in prior deeds to the property
27. The capitalization rate has considerable effect on the appraised value of property. Which of the following
statements is true?
(A) The capitalization rate consists only of return on investment
(B) The capitalization rate for different buildings in the same use and in the same town will usually vary
greatly
(C) A decrease in the capitalization rate produces an increase in the appraisal value
(D) The capitalization rate will be higher for a property where a long term tenant has shown a good record of
payment, than for one with a relatively new tenant with a poor record of payment
28. Which of the following is an example of economic (external) obsolescence?
(A) Inadequate on-site parking (B) Atypical architecture
(C) Deterioration of the neighborhood (D) Smaller rooms than other houses in the neighborhood
29. An appraiser is appraising a six year old, four bedroom house using the market data (direct sales comparison)
approach to value. He finds a house that sold recently and is similar in every way, except that it has three
bedrooms and is only three years old. His adjustments would include which of the following?
(A)
(B)
(C)
(D)
An increase to the value of the subject house for bedrooms, and a decrease for age
A decrease to the value of the subject house for age, and an increase for bedrooms
An increase to the sales price of the comparable for bedrooms, and a decrease for age
A decrease to the sales price of the comparable for bedrooms, and an increase for age
30. In valuing real property using the market data (direct sales comparison) approach to value, you would be
relying on the real estate activities of:
(A) appraisers
(B) buyers
(C) brokers
(D) lenders
31. Which of the following statements is NOT true concerning zoning laws?
(A) They are enacted in the exercise of police power
(B) They can determine building height limitations, off-street parking requirements, and types and intensities
of land use
(C) They are to protect the health, safety and general welfare of the public
(D) They are uniform throughout the United States
32. Which of the following statements is (are) true concerning zoning laws and private restrictions?
I.
II.
When there is a conflict between the two, the more restrictive is usually enforced
The city or county administrations will enforce both zoning laws and private restrictions
(A) I only
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(B) II only
(C) Both I and II
(D) Neither I nor II
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33. Permission from zoning authorities to conduct a use prohibited by current zoning laws in order to prevent
undue hardship is called a (an):
(A) variance
(B) hardship waiver
(C) zoning waiver
(D) exclusionary zoning use
34. Pre-existing land uses which do not conform to new zoning ordinances are called;
(A) reversionary uses
(B) illegal uses
(C) nonconforming uses
(D) exclusionary zoning uses
35. Which of the following is true of building codes in the United States?
I.
II.
They are set up by local governments to regulate building and construction standards
They must be complied with before a "certificate of occupancy" will be issued
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II
36. Which of the following is (are) usually included in a City or County Master Plan?
I.
II.
III.
Projections of population movements and growth
Traffic patterns and volume increases
Special consideration for blighted areas
(A) I only
(B) II only
(C) I & II only
(D) I, II, & III
37. All of the following are benefits of a Planned Unit Development (PUD), EXCEPT:
(A)
(B)
(C)
(D)
more efficient land-use planning
more flexibility in mixing various uses
lower priced homes and minimum maintenance costs because of higher densities
greater spaces between living units
38. When a salesperson prepares a competitive market analysis for a property he is listing, he will make
adjustments to which of the following?
(A) The value of the subject property (B) The sales prices of comparable properties
(C) The list price of the subject property (D) The list price of unsold comparable properties
39. Which of the following is true of a survey?
I.
II.
Most banks require a survey before lending money on a project
It should help reveal encroachments and zoning violations
(A) I only
(B) II only
(C) Both I and II
(D) Neither I nor II
40. An increase in the value of a property, not anticipated by the owner and due primarily to the operation of
economic forces rather than personal efforts is called:
(A) appreciation
(B) unearned increment
(C) depreciation
(D) assemblage
41. In determining the value of a twenty unit apartment property, the appraiser has established the potential gross
income from rents. After deducting for vacancy and collection losses, he would have established which of the
following?
(A) Effective gross income (B) Adjusted gross income
(C) Net income (D) Net spendable income
42. Which of the following regarding building codes throughout the country is true?
(A)
(B)
(C)
(D)
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Enforcement of building codes comes under the power of eminent domain
A person violating a building code has created a non-conforming use
Building codes set minimum standards in construction materials and design
Building codes are uniform throughout the country
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TEST 5
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43. The market data (direct sales comparison) approach to value would be least reliable when appraising:
(A) in an inactive market (B) during a time of high construction costs
(C) a commercial property (D) in an area where property uses are changing rapidly
44. In determining economic (external) obsolescence, an appraiser would be interested in knowing which of the
following?
(A) The status of deferred maintenance (B) The typical number of bedrooms in homes in the area
(C) If people in the area doing well financially (D) If the property is well managed
45. In the direct sales comparison approach, adjustments should be made to reflect differences between the subject
and comparables for all of the following, EXCEPT:
(A) financing terms
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(B) location
(C) size
(D) last sales prices