CHI Market Analysis & Valuation 2

Question 1

In a seller's market, which condition is most commonly observed?

Accepted Answer

Low inventory with many competing buyers

Answer

A seller's market is characterized by limited housing inventory and strong buyer demand, which drives prices upward.

Question 2

Which of the following best describes the 'income approach' to property valuation?

Accepted Answer

Calculating value based on the property's ability to generate rental income

Answer

The income approach values a property by capitalizing its net operating income, primarily used for investment and rental properties.

Question 3

What does 'days on market' (DOM) indicate in a real estate analysis?

Accepted Answer

How long a property has been listed for sale before going under contract

Answer

DOM measures how long a property was actively listed before receiving an accepted offer, reflecting local market demand.

Question 4

A home inspector reviewing a property for valuation purposes notices deferred maintenance. How does this typically affect market value?

Accepted Answer

It generally reduces market value due to anticipated repair costs

Answer

Deferred maintenance signals future repair costs to buyers and appraisers, typically resulting in a downward adjustment to market value.

Question 5

Which factor is considered an 'external obsolescence' in property valuation?

Accepted Answer

A new highway constructed adjacent to the property

Answer

External obsolescence arises from outside the property's boundaries, such as nearby nuisances or infrastructure changes that reduce desirability.

(CHI) Certified Home Inspector Practice Test