Market Analysis & Valuation 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 & Valuation flashcards as text
The absorption rate in a real estate market is calculated as:
Answer: Number of units sold per period divided by total available units
Absorption rate measures how quickly available inventory is being sold, calculated as units sold per time period divided by units available.
Under the income capitalization approach, a capitalization rate is best described as:
Answer: The ratio of net operating income to property value
The capitalization rate (cap rate) is derived by dividing net operating income (NOI) by property value, reflecting the expected rate of return on a real estate investment.
Which type of depreciation is considered incurable when the cost to cure exceeds the resulting increase in property value?
Answer: Incurable physical deterioration
Incurable physical deterioration refers to physical wear that is economically unreasonable to fix because the repair cost would exceed the value added.
In the cost approach, the term 'reproduction cost' differs from 'replacement cost' in that reproduction cost refers to:
Answer: Building an exact replica using original materials and methods
Reproduction cost is the cost to build an exact duplicate of the subject using the same materials and construction methods, while replacement cost uses modern equivalents.
A market with fewer than 6 months of supply is generally characterized as:
Answer: A seller's market with upward price pressure
Less than 6 months of supply indicates demand exceeds supply, creating a seller's market where prices typically trend upward.
Which valuation method is MOST appropriate for appraising a special-purpose property such as a church or school that rarely sells?
Answer: Cost approach relying on depreciated replacement cost
For special-purpose properties with few comparable sales and no income stream, the cost approach provides the most credible indication of value.
The concept of 'highest and best use as improved' asks the appraiser to determine:
Answer: Whether the existing improvements should be retained, modified, or demolished
Highest and best use as improved evaluates whether the existing improvements contribute positively to value or whether an alternative use would be more productive.