CAR Foundational Concepts & Principles 3

Question 1

Which foundational element of value is absent when a property has utility and scarcity but no effective demand or transferability?

Accepted Answer

Effective demand

Answer

All four elements — utility, scarcity, effective demand, and transferability — must be present for value to exist; absent effective demand, no market transaction can occur.

Question 2

An appraiser's conclusion that a warehouse is worth more as condominiums reflects which type of value concept used in highest and best use analysis?

Accepted Answer

Value in exchange

Answer

Value in exchange (market value) reflects what the open market will pay, which is the basis for highest and best use conclusions about alternative uses.

Question 3

Which USPAP concept allows an appraiser to accept an assignment with geographic or property-type limitations, provided they disclose those limitations?

Accepted Answer

Competency Rule

Answer

The Competency Rule allows an appraiser to accept an assignment lacking competency if they disclose the deficiency and take steps to acquire the necessary knowledge before completing the assignment.

Question 4

The principle that the worth of an improvement is measured by how much it adds to the whole property's value, not its cost, is called the principle of:

Accepted Answer

Contribution

Answer

The principle of contribution states that the value of any component is measured by its contribution to the whole, regardless of the component's actual cost.

Question 5

Under USPAP, when a reviewer provides an opinion of value in their review report, they are performing what type of assignment?

Accepted Answer

Standard 3 appraisal review with opinion of value

Answer

Standard 3 permits a reviewer to provide their own opinion of value within a review report; this is still an appraisal review assignment, not a separate appraisal.

(CAR) Certified Appraisal Reviewer Practice Test

(CAR) Certified Appraisal Reviewer Practice Test

CAR Foundational Concepts & Principles 3