COS Property Valuation & Appraisal 3

Question 1

When using the sales comparison approach, an appraiser makes 'adjustments' to comparable sales. What is the direction of adjustment if a comparable sold for more because it has a garage that the subject property lacks?

Accepted Answer

Adjust the comparable downward

Answer

When a comparable is superior to the subject in a feature, the comparable's price is adjusted downward to reflect what it would have sold for without that advantage.

Question 2

In HUD-assisted multifamily housing, an 'as-is' appraisal reflects the property's value under which condition?

Accepted Answer

At its current state without assumed repairs or improvements

Answer

An 'as-is' appraisal reflects current market value in the property's existing condition without assuming future repairs or improvements.

Question 3

What term describes the difference between a property's gross potential income and effective gross income?

Accepted Answer

Vacancy and collection loss

Answer

Vacancy and collection loss represents the income lost due to unoccupied units and uncollected rents, reducing gross potential income to effective gross income.

Question 4

Which valuation concept is most relevant when a COS specialist is determining whether rents are at, above, or below market rates?

Accepted Answer

Market rent vs. contract rent

Answer

Comparing market rent (what units would rent for in the open market) against contract rent (actual lease amounts) helps identify rent subsidies or above-market rents in HUD properties.

Question 5

The Gross Rent Multiplier (GRM) is calculated by dividing a property's sale price by which figure?

Accepted Answer

Monthly gross rent

Answer

GRM = Sale Price ÷ Monthly Gross Rent; it's a quick rule-of-thumb tool used in residential property valuation.

(COS) Certified Occupancy Specialist Practice Test

(COS) Certified Occupancy Specialist Practice Test

COS Property Valuation & Appraisal 3