COS Property Valuation & Appraisal 2

Question 1

Which appraisal approach estimates value by calculating the cost to replace a property's improvements minus depreciation, plus land value?

Accepted Answer

Cost approach

Answer

The cost approach estimates value as land value plus the depreciated cost of reproducing or replacing improvements.

Question 2

An appraisal for a HUD-assisted housing property must be completed by which type of professional?

Accepted Answer

A certified general or certified residential appraiser licensed in the state

Answer

HUD requires appraisals to be performed by state-certified appraisers (general or residential) to ensure compliance with USPAP and federal standards.

Question 3

What does 'effective age' mean in the context of property appraisal?

Accepted Answer

The age the property appears to be based on its condition and utility

Answer

Effective age reflects the property's condition and functional utility rather than its chronological age — a well-maintained building may have a lower effective age.

Question 4

In the income capitalization approach, if a property generates a Net Operating Income (NOI) of $120,000 and the capitalization rate is 8%, what is the estimated value?

Accepted Answer

$1,500,000

Answer

Value = NOI ÷ Cap Rate = $120,000 ÷ 0.08 = $1,500,000.

Question 5

Which type of depreciation results from factors outside the property itself, such as a nearby industrial facility?

Accepted Answer

External (economic) obsolescence

Answer

External or economic obsolescence is caused by factors beyond the property boundaries, like neighborhood decline or nearby nuisances, and is typically incurable.

(COS) Certified Occupancy Specialist Practice Test

(COS) Certified Occupancy Specialist Practice Test

COS Property Valuation & Appraisal 2