CGA Property Evaluation & Analysis 2 — Questions and Answers
Question 1: Which depreciation category accounts for a roof that has exceeded its expected useful life?
- External obsolescence
- Functional obsolescence
- Physical deterioration (Correct answer)
- Economic obsolescence
Correct answer: Physical deterioration
Physical deterioration includes wear and tear or age-related decline such as a roof reaching the end of its useful life.
Question 2: A property's effective age is best described as:
- The number of years since the building permit was issued
- The age indicated by the property's condition and utility relative to new construction (Correct answer)
- The chronological age minus the remaining economic life
- The age assigned by the local tax assessor
Correct answer: The age indicated by the property's condition and utility relative to new construction
Effective age reflects the property's apparent condition and functional utility rather than its actual chronological age.
Question 3: In the sales comparison approach, a paired sales analysis is used to:
- Calculate the capitalization rate from recent sales
- Isolate the contribution of a single feature by comparing sales that differ only in that feature (Correct answer)
- Reconcile the indicated values from multiple approaches
- Determine the reproduction cost of improvements
Correct answer: Isolate the contribution of a single feature by comparing sales that differ only in that feature
Paired sales analysis identifies market-supported adjustments by comparing two otherwise identical sales that differ by one characteristic.
Question 4: The term 'plottage' refers to the:
- Additional value created when two or more parcels are combined into one larger parcel (Correct answer)
- Loss in value due to an irregular lot shape
- Value contributed by on-site utilities and site improvements
- Premium paid for a corner lot location
Correct answer: Additional value created when two or more parcels are combined into one larger parcel
Plottage is the increment of value that results from combining contiguous parcels into a single, larger, more useful parcel.
Question 5: When reconciling value indications in a CGA appraisal, the appraiser should:
- Average the three approach values mathematically
- Weight each approach based on data quality, relevance, and applicability to the property type (Correct answer)
- Always give greatest weight to the cost approach
- Select the median value from the three approaches
Correct answer: Weight each approach based on data quality, relevance, and applicability to the property type
Reconciliation requires the appraiser to exercise professional judgment by weighting approaches according to their reliability and applicability to the subject property.
Question 6: Which of the following best defines 'market rent'?
- The actual rent currently paid by tenants under existing leases
- The rent a property would command in an open, competitive market at the time of appraisal (Correct answer)
- The rent established by local housing authorities for rent-controlled units
- The average rent of all comparable properties in the market area
Correct answer: The rent a property would command in an open, competitive market at the time of appraisal
Market rent is the most probable rent that a property would command in an open, competitive market under arm's-length conditions.
Question 7: An appraiser applies a 10% upward adjustment to a comparable sale. This most likely means the comparable is:
- Superior to the subject in the adjusted characteristic
- Inferior to the subject in the adjusted characteristic (Correct answer)
- Equal to the subject in the adjusted characteristic
- Located in a superior market area
Correct answer: Inferior to the subject in the adjusted characteristic
If a comparable is inferior to the subject in some characteristic, the appraiser adjusts the comparable's price upward to reflect what it would have sold for if it were equal to the subject.
CGA Property Evaluation & Analysis 2
Which depreciation category accounts for a roof that has exceeded its expected useful life?