CAA Vehicle Valuation Techniques 2 — Questions and Answers
Question 1: When adjusting a comparable sale that has a better feature than the subject vehicle, the appraiser should:
- Add the feature's value to the subject's final value
- Add the feature's value to the comparable's price
- Ignore the feature if the difference is under 10%
- Subtract the feature's value from the comparable's price (Correct answer)
Correct answer: Subtract the feature's value from the comparable's price
Adjustments are always made to the comparable, so a superior comparable is adjusted downward to match the subject.
Question 2: Which valuation approach is most appropriate for a one-of-a-kind custom-built hot rod with no market sales data?
- Book value approach
- Income approach
- Cost approach (Correct answer)
- Sales comparison approach
Correct answer: Cost approach
Without comparable sales, the cost to build or reproduce minus depreciation is the most reliable indicator.
Question 3: The process of weighing the value indications from different approaches to reach a final opinion of value is called:
- Bracketing
- Extraction
- Averaging
- Reconciliation (Correct answer)
Correct answer: Reconciliation
Reconciliation weighs each approach by reliability and relevance rather than simply averaging them.
Question 4: A limousine used in a livery business would most likely be valued with significant weight given to which approach?
- Cost approach only
- Salvage approach
- Income approach (Correct answer)
- Trade-in approach
Correct answer: Income approach
Income-producing vehicles can be valued by capitalizing or discounting the net income they generate.
Question 5: Selecting comparables both slightly superior and slightly inferior to the subject vehicle is a technique known as:
- Paired sales analysis
- Reconciliation
- Depreciation extraction
- Bracketing (Correct answer)
Correct answer: Bracketing
Bracketing places the subject's value between comparables above and below it, improving reliability.
Question 6: Paired sales analysis is used primarily to:
- Determine the salvage value of a total loss
- Estimate future resale value
- Calculate the replacement cost of parts
- Isolate the market value of a single feature or difference (Correct answer)
Correct answer: Isolate the market value of a single feature or difference
Comparing two sales that differ in only one feature shows how much the market pays for that feature.
Question 7: Which source primarily reflects wholesale dealer auction transaction prices?
- Window sticker
- Manufacturer's Suggested Retail Price
- Manheim Market Report (MMR) (Correct answer)
- Dealer retail asking prices
Correct answer: Manheim Market Report (MMR)
MMR is based on actual dealer-to-dealer wholesale auction transactions.
CAA Vehicle Valuation Techniques 2
When adjusting a comparable sale that has a better feature than the subject vehicle, the appraiser should: