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
Which of the following statements about the sales comparison approach is most accurate?
Answer: It is most reliable when many recent, similar sales exist in the subject's market area
The sales comparison approach is most reliable when there are sufficient recent, arms-length sales of comparable properties in the same market area.
A property's 'highest and best use' must meet which four criteria?
Answer: Legal, physical, financial, and maximally productive
Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.
What is 'market rent' as used in income property appraisal?
Answer: The rental income a property would command on the open market given current conditions
Market rent is the most probable rent a property would command in the open market under competitive conditions, which may differ from actual contract rent.
When a comparable sale required a seller concession of $5,000, the appraiser should:
Answer: Subtract $5,000 from the comparable's sale price to reflect its cash-equivalent price
Seller concessions inflate the nominal sale price, so the appraiser subtracts the concession amount to arrive at the cash-equivalent, arms-length sale price.
The principle of 'progression' in real estate value means:
Answer: A lower-value property benefits from being located among higher-value properties
Progression holds that a modest property surrounded by superior properties tends to be pulled upward in value by the more valuable neighborhood.
In the cost approach, the term 'reproduction cost' differs from 'replacement cost' in that:
Answer: Replacement cost uses modern materials and design; reproduction cost is an exact replica using original materials and design
Reproduction cost is the cost to build an exact replica of the original structure; replacement cost is the cost to build a functionally equivalent structure using current materials and standards.
Under Arkansas appraisal licensing, which category allows appraisal of non-complex one-to-four unit residential properties with a transaction value below the established threshold?
Answer: Licensed Residential Appraiser
The Licensed Residential Appraiser credential in Arkansas authorizes appraisal of non-complex one-to-four unit residential properties below the applicable federal threshold.