CAR Advanced Techniques & Methods 2

Question 1

When reviewing a complex mixed-use property appraisal, which technique is most appropriate for allocating value between residential and commercial components?

Accepted Answer

Paired sales analysis isolating each use type

Answer

Paired sales analysis isolating each use type provides the most defensible market-based allocation by directly comparing properties with similar component ratios.

Question 2

A reviewer finds that an appraiser used a 4% terminal capitalization rate on a property where market evidence supports 5.5%. This discrepancy most likely results in:

Accepted Answer

An overstated reversion value in the DCF model

Answer

A terminal cap rate that is too low overstates the projected sale price (reversion value) at the end of the holding period, inflating the DCF conclusion.

Question 3

Which statistical measure should a reviewer prioritize when assessing whether comparable sales used in a sales comparison approach are truly comparable?

Accepted Answer

Coefficient of variation of the adjusted sale prices

Answer

The coefficient of variation of adjusted sale prices measures relative dispersion after all adjustments, indicating how tightly the comps cluster around a central value indicator.

Question 4

In reviewing a retrospective appraisal for estate tax purposes, the reviewer notes the appraiser used current market data. The most critical deficiency is:

Accepted Answer

Using data that post-dates the effective date of value

Answer

A retrospective appraisal must reflect market conditions and data available as of the historical effective date, not conditions at the time of report preparation.

Question 5

A reviewer evaluates a cost approach where functional obsolescence was calculated using the rent loss capitalization method. Which condition best justifies this specific technique?

Accepted Answer

Market rents for the subject and competing properties differ measurably due to a functional defect

Answer

The rent loss capitalization method is appropriate when a functional deficiency causes a measurable rent differential between the subject and competing properties without the deficiency.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR Advanced Techniques & Methods 2