Arkansas Real Estate License FREE Arkansas Real Estate License Property Valuation and Appraisal Questions and Answers 2

Question 1

In Arkansas, which appraisal approach estimates value by calculating the cost to rebuild a property minus depreciation plus land value?

Accepted Answer

Cost approach

Answer

Sales comparison approach

Answer

Income capitalization approach

Answer

Gross rent multiplier approach

Question 2

What is the primary purpose of a Comparative Market Analysis (CMA) prepared by an Arkansas real estate licensee?

Accepted Answer

To help sellers set a competitive listing price

Answer

To replace a certified appraisal for lending purposes

Answer

To determine property tax assessments

Answer

To calculate insurance replacement cost

Question 3

Under Arkansas law, which factor is NOT typically considered a form of depreciation in property appraisal?

Accepted Answer

Proximity to a new shopping center

Answer

Outdated electrical wiring

Answer

Wear and tear on the roof

Answer

A nearby environmental hazard

Question 4

When using the income approach to value a rental property in Arkansas, what does the capitalization rate represent?

Accepted Answer

The rate of return an investor expects on the investment

Answer

The annual percentage of depreciation

Answer

The mortgage interest rate on the property

Answer

The property tax rate set by the county assessor

Question 5

Which type of value represents the most probable price a property would bring in a competitive and open market under fair sale conditions in Arkansas?

Accepted Answer

Market value

Answer

Assessed value

Answer

Insurance value

Answer

Liquidation value

Question 6

In Arkansas property appraisal, what is functional obsolescence?

Accepted Answer

Loss in value due to outdated design or layout features within the property

Answer

Loss in value due to physical wear and deterioration

Answer

Loss in value caused by factors external to the property

Answer

Loss in value from natural disaster damage