BC Real Estate Trading Services Course Property Valuation & Appraisal 4

Question 1

Which of the following BEST describes 'highest and best use' in BC property valuation?

Accepted Answer

The legal, physically possible, financially feasible, and maximally productive use of the land

Answer

Highest and best use is the reasonably probable use of land that is legally permissible, physically possible, financially feasible, and results in the highest value. It may or may not be the current use.

Question 2

In BC, when a licensee prepares a CMA using 'active listings' as comparables, they should note that:

Accepted Answer

Active listings represent asking prices and typically overstate market value compared to actual sales

Answer

Active listings are asking prices, not completed sale prices. They represent the ceiling of value — properties may sell for less. Sold comparables are the most reliable indicators of market value.

Question 3

In BC property valuation, 'accrued depreciation' is the:

Accepted Answer

Total loss in value of improvements from all causes as of the date of appraisal

Answer

Accrued depreciation is the total actual loss in value of improvements from the date of construction to the appraisal date, from all causes: physical deterioration, functional obsolescence, and external obsolescence.

Question 4

In BC, a licensee tells a seller their property is worth more than it actually is to win the listing. This is called:

Accepted Answer

Listing inflation or 'buying the listing'

Answer

'Buying the listing' is the unethical practice of inflating the estimated value to convince a seller to list with that brokerage, with the intent to reduce the price later. This violates professional conduct rules.

Question 5

In BC, effective gross income for a rental property is calculated as:

Accepted Answer

Potential gross income minus vacancy and credit losses

Answer

Effective Gross Income = Potential Gross Income (100% occupancy) minus vacancy and credit losses. This represents the realistic income expected to be collected.

BC Real Estate Practice Test

BC Real Estate Practice Test

BC Real Estate Trading Services Course Property Valuation & Appraisal 4