CCS Property Valuation & Appraisal 3

Question 1

A condominium complex has 50 units, all identical. If the entire complex sold for $10 million, what valuation principle cautions against simply dividing to value one unit?

Accepted Answer

Principle of contribution

Answer

The principle of contribution holds that value of a component depends on its contribution to the whole, not simply a proportional division of bulk sale price.

Question 2

Which document is the most critical for an appraiser to review when determining a condominium unit's legal description?

Accepted Answer

The condominium declaration and plat

Answer

The condominium declaration and recorded plat define legal boundaries, unit numbers, and the share of common elements, which are essential for a proper legal description.

Question 3

When using the income approach for an investor-owned condo, which formula correctly calculates Net Operating Income (NOI)?

Accepted Answer

Effective gross income minus operating expenses

Answer

NOI equals effective gross income (after vacancy/collection losses) minus all operating expenses, excluding debt service.

Question 4

A condo unit is in a project where 60% of units are investor-owned rentals. How might this affect the appraisal?

Accepted Answer

It may limit financing eligibility and reduce appraised value

Answer

High investor concentration can disqualify the project from conventional financing guidelines, limiting the buyer pool and potentially suppressing value.

Question 5

What is 'effective age' in the context of condominium appraisal?

Accepted Answer

The age indicated by the condition and utility of the property

Answer

Effective age reflects the property's apparent age based on condition, maintenance, and modernization, which may differ from its actual chronological age.

(CCS) Certified Condominium Specialist Practice Test

(CCS) Certified Condominium Specialist Practice Test

CCS Property Valuation & Appraisal 3