CGA Property Maintenance & Operations 3

Question 1

Which of the following best describes a management fee as used in an appraisal income analysis?

Accepted Answer

A market-derived percentage of effective gross income reflecting professional property management

Answer

Management fees should reflect market norms—typically a percentage of EGI—regardless of whether the owner self-manages or uses actual costs that differ from market rates.

Question 2

What is the primary purpose of a reserve for replacement account in property operations?

Accepted Answer

To accumulate funds for future replacement of short-lived capital items

Answer

Reserves for replacement set aside funds annually to cover the eventual replacement of short-lived components such as roofing, appliances, and HVAC systems.

Question 3

A property's actual insurance premium is $12,000/year, but market surveys indicate comparable properties pay $8,500/year. How should the appraiser handle this discrepancy?

Accepted Answer

Use the market-derived $8,500 as the stabilized expense estimate

Answer

Appraisers use market-derived expense figures to reflect what a typical buyer would expect to pay, even if the current owner's costs differ.

Question 4

Which of the following property types would most likely have the HIGHEST maintenance expense ratio relative to effective gross income?

Accepted Answer

A 40-year-old garden apartment complex with deferred maintenance

Answer

Older multifamily properties with deferred maintenance typically carry high maintenance expense ratios due to aging systems, required repairs, and intensive tenant turnover costs.

Question 5

The Economic Age-Life method of estimating depreciation is most directly related to property maintenance because:

Accepted Answer

It reflects how well a property has been maintained through its effective age relative to total economic life

Answer

Effective age—the apparent age based on condition and maintenance—compared to total economic life directly reflects how maintenance quality impacts the depreciation calculation.

(CGA) Certified General Appraiser Practice Test

(CGA) Certified General Appraiser Practice Test

CGA Property Maintenance & Operations 3