BC Real Estate Trading Services Course Property Valuation & Appraisal 3

Question 1

When a BC appraiser makes a 'positive adjustment' to a comparable sale, it means:

Accepted Answer

The comparable is inferior to the subject, so its price is adjusted upward

Answer

A positive adjustment means adding value to the comparable's price because the comparable lacks a feature the subject has. The comparable is inferior in that element, so its price is adjusted upward to reflect what it would have sold for with that feature.

Question 2

In BC, 'functional obsolescence' in property valuation is best described as:

Accepted Answer

Reduced value due to outdated or inefficient design features of the building

Answer

Functional obsolescence is loss of value due to features of the building itself that are outmoded, inefficient, or undesirable — such as an outdated floor plan, poor ceiling heights, or inadequate electrical service.

Question 3

In BC residential appraisals, which factors are considered when selecting comparables?

Accepted Answer

Recently sold properties that are similar in type, size, location, and condition to the subject

Answer

Good comparables are recent sales of similar properties — comparable in type (residential), size, location, age, condition, and features. The more similar they are, the fewer adjustments needed.

Question 4

Net Operating Income (NOI) for a BC income property is calculated as:

Accepted Answer

Effective gross income minus operating expenses (excluding debt service)

Answer

NOI = Effective Gross Income (potential income minus vacancy and credit losses) minus all operating expenses, excluding debt service (mortgage payments). NOI is used in the income approach to estimate value.

Question 5

In BC, a property's BC Assessment value compared to its market value typically:

Accepted Answer

May differ — BC Assessment uses a mass appraisal as of July 1, while market value reflects current conditions

Answer

BC Assessment uses mass appraisal as of July 1 of the previous year. By the time assessments are published and taxes levied, market conditions may have changed, causing assessed value to differ from current market value.

BC Real Estate Practice Test

BC Real Estate Practice Test

BC Real Estate Trading Services Course Property Valuation & Appraisal 3