Property Valuation and Appraisal Flashcards
7 cards from real Arkansas Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation and Appraisal flashcards as text
When an appraiser 'brackets' comparables in the sales comparison approach, this means:
Answer: Selecting comparables with features both superior and inferior to the subject
Bracketing means selecting comparables that are both superior and inferior to the subject in key features, ensuring the subject's value falls within a supportable range.
Which of the following best defines 'effective age' of a property?
Answer: The age indicated by the property's condition and utility relative to similar properties
Effective age reflects a property's condition and utility rather than its actual chronological age; a well-maintained older home may have a younger effective age.
The reconciliation process in an appraisal involves:
Answer: Analyzing and weighing the results of each applicable approach to arrive at a final value opinion
Reconciliation requires the appraiser to analyze strengths and weaknesses of each approach and exercise professional judgment — not simply average — to arrive at a final value opinion.
A property has a potential gross income of $60,000, a vacancy and collection loss of 5%, and operating expenses of $20,000. What is the net operating income?
Answer: $37,000
Effective gross income = $60,000 × 0.95 = $57,000; NOI = $57,000 − $20,000 = $37,000.
Under Arkansas law, who is authorized to perform appraisals for federally related transactions involving property valued over $500,000?
Answer: A Certified General Appraiser
Federally related transactions on non-residential or complex properties over the applicable threshold require a Certified General Appraiser under FIRREA guidelines adopted by Arkansas.
Which of the following is NOT typically considered when selecting comparable sales in the sales comparison approach?
Answer: The original listing price of the comparable
The original listing price is irrelevant; appraisers use the actual closed sale price of a comparable, not what the seller originally asked.
The income approach to value is MOST reliable for which type of property?
Answer: Income-producing commercial properties with consistent rental data
The income approach is most applicable and reliable for income-producing properties where investors purchase based on expected income streams.