CGA Market Analysis & Valuation 3

Question 1

The absorption rate in a real estate market is calculated as:

Accepted Answer

Number of units sold per period divided by total available units

Answer

Absorption rate measures how quickly available inventory is being sold, calculated as units sold per time period divided by units available.

Question 2

Under the income capitalization approach, a capitalization rate is best described as:

Accepted Answer

The ratio of net operating income to property value

Answer

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.

Question 3

Which type of depreciation is considered incurable when the cost to cure exceeds the resulting increase in property value?

Accepted Answer

Incurable physical deterioration

Answer

Incurable physical deterioration refers to physical wear that is economically unreasonable to fix because the repair cost would exceed the value added.

Question 4

In the cost approach, the term 'reproduction cost' differs from 'replacement cost' in that reproduction cost refers to:

Accepted Answer

Building an exact replica using original materials and methods

Answer

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.

Question 5

A market with fewer than 6 months of supply is generally characterized as:

Accepted Answer

A seller's market with upward price pressure

Answer

Less than 6 months of supply indicates demand exceeds supply, creating a seller's market where prices typically trend upward.

(CGA) Certified General Appraiser Practice Test

(CGA) Certified General Appraiser Practice Test

CGA Market Analysis & Valuation 3