CPP41419 Property Valuation and Appraisal 2

Question 1

What does the 'land to asset ratio' indicate in residential property valuation?

Accepted Answer

The proportion of the land value to the total property value

Answer

The proportion of mortgage debt to total property value

Answer

The ratio of rental income to land tax payable

Answer

The percentage of council rates applicable to the land component

Question 2

Which method of property appraisal is most appropriate for valuing an investment property where rental income is the primary consideration?

Accepted Answer

Income capitalisation method

Answer

Comparative sales method

Answer

Cost approach method

Answer

Residual land value method

Question 3

What is 'gross rental yield' used to measure in property appraisal?

Accepted Answer

The annual rental income as a percentage of the property's purchase price

Answer

The total maintenance costs as a proportion of rent received

Answer

The proportion of rent allocated to mortgage repayments

Answer

The net profit after all property expenses are deducted

Question 4

How does depreciation affect the value of a residential property's building component over time?

Accepted Answer

It reduces the value of the built structure as it ages and wears

Answer

It increases value due to renovation investment

Answer

It has no impact if the property is owner-occupied

Answer

It only applies to commercial properties, not residential

Question 5

What is meant by the 'highest and best use' principle in property valuation?

Accepted Answer

The most profitable legally permissible use of a property that is physically possible and financially feasible

Answer

The use that generates the highest rental income regardless of zoning

Answer

The use preferred by the current property owner

Answer

The use that results in the lowest council rates

Question 6

Which of the following is an EXTERNAL factor that can affect residential property values in Australia?

Accepted Answer

Interest rate changes set by the Reserve Bank of Australia

Answer

The vendor's motivation to sell quickly

Answer

The colour scheme chosen by the vendor

Answer

The agent's commission rate

Question 7

What does it mean when a property has 'passed in' at auction in the context of property valuation?

Accepted Answer

The highest bid did not meet the vendor's reserve price and the property was not sold under the hammer

Answer

The property sold to the highest bidder

Answer

The property was withdrawn from sale before auction day

Answer

The auctioneer extended the bidding time by passing the bid to another buyer