Market Analysis & Highest and Best Use Flashcards
7 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis & Highest and Best Use flashcards as text
In highest and best use analysis, 'as improved' refers to:
Answer: The property valued with its existing improvements in place
HBU 'as improved' analyzes whether the existing improvements should be retained, renovated, or demolished, considering the contribution of those improvements to total property value.
A neighborhood life cycle in its 'revitalization' stage is characterized by:
Answer: Increasing property values, rehabilitation of structures, and rising demand
Revitalization is marked by renewed investment, rehabilitation of older structures, rising values, and increasing demand, often following a period of decline.
Which of the following best describes 'effective demand' in real estate market analysis?
Answer: Desire for real estate backed by the financial ability and willingness to pay
Effective demand requires both the desire for a property and the financial ability to act on that desire, distinguishing it from mere want or need.
A transitional use is best described as a use that:
Answer: Is the interim use of a property until its highest and best use changes
An interim or transitional use generates income while the market matures to support the property's ultimate highest and best use, which may not yet be financially feasible.
The principle of substitution as it applies to market analysis holds that:
Answer: A buyer will pay no more for a property than the cost to acquire an equally desirable substitute
The substitution principle underpins the sales comparison and cost approaches: a rational buyer will not pay more for a property than it costs to obtain an equally desirable alternative.
When an appraiser concludes that the highest and best use of a site 'as vacant' differs from the current improved use, this typically indicates:
Answer: The property suffers from some form of obsolescence, and redevelopment may eventually be justified
A divergence between HBU as vacant and as improved indicates the existing improvements may suffer from functional or external obsolescence, and the land could eventually be worth more cleared.
In a competitive market analysis, a 'capture rate' represents:
Answer: The percentage of market demand that a specific subject property or project is expected to attract
Capture rate estimates the share of total market demand that a particular property or project will capture, based on its competitive position relative to other available options.