CAA Valuation Methodologies 2

Question 1

Which valuation approach estimates a vehicle's value by analyzing recent sales of similar vehicles and adjusting for differences?

Accepted Answer

Sales comparison approach

Answer

The sales comparison approach derives value from comparable sales adjusted for differences in features, condition, and mileage.

Question 2

An appraiser finds a comparable that sold for $42,000 but has 15,000 fewer miles than the subject, valued at $0.10 per mile. What is the adjusted comparable price?

Accepted Answer

$40,500

Answer

The comparable is superior in mileage, so its price is adjusted downward by $1,500 to $40,500.

Question 3

Under IRS guidance, fair market value is best described as the price at which property changes hands between whom?

Accepted Answer

A willing buyer and willing seller, neither compelled, both with reasonable knowledge

Answer

Treasury Regulation 20.2031-1(b) defines FMV as the price between a willing buyer and willing seller with reasonable knowledge and no compulsion.

Question 4

When valuing a one-off custom-built hot rod with no true comparables, which approach is often given the most weight?

Accepted Answer

Cost approach

Answer

With no comparable sales, the cost to build or replace the vehicle, less depreciation, is often the most supportable indicator.

Question 5

In the final step of an appraisal where multiple approaches yield different indications, what process does the appraiser use to arrive at a single value?

Accepted Answer

Reconciliation

Answer

Reconciliation weighs the reliability and relevance of each approach rather than simply averaging them.

CAA - Certified Automotive Appraiser Practice Test

CAA - Certified Automotive Appraiser Practice Test

CAA Valuation Methodologies 2