CFE CFE Market Analysis & Valuation Methods

Question 1

In the sales comparison approach to property valuation, what is a 'paired sales analysis' used to determine?

Accepted Answer

The dollar or percentage adjustment for a specific property characteristic

Answer

The gross rent multiplier for income properties

Answer

The capitalization rate for commercial properties

Answer

The depreciation rate for older structures

Question 2

Which valuation approach is most commonly emphasized when assessing residential properties for Florida ad valorem tax purposes?

Accepted Answer

Sales comparison approach

Answer

Income approach

Answer

Cost approach

Answer

Residual approach

Question 3

Under the income approach to valuation, what does the term 'capitalization rate' (cap rate) represent?

Accepted Answer

The ratio of net operating income to property value

Answer

The total gross income generated by the property annually

Answer

The percentage of expenses relative to gross income

Answer

The annual depreciation rate for income-producing improvements

Question 4

In the cost approach, 'effective age' differs from 'actual age' in that it reflects:

Accepted Answer

The age indicated by the property's condition and utility relative to new construction

Answer

The number of years since the building permit was issued

Answer

The age used for depreciation schedules by the IRS

Answer

The average age of comparable properties in the neighborhood

Question 5

What is 'economic obsolescence' in the context of property valuation?

Accepted Answer

Loss in value caused by external factors outside the property itself

Answer

Deterioration of a structure due to deferred maintenance

Answer

Reduced functionality due to outdated floor plan design

Answer

Normal wear and tear on building components over time

Question 6

Which of the following best describes the term 'just value' as used in Florida property assessment?

Accepted Answer

The fair market value of the property as of January 1 of the assessment year

Answer

The value determined by a certified appraisal firm

Answer

The value after applying all exemptions and classifications

Answer

The replacement cost of the structure minus depreciation