Property Valuation Methods Flashcards
7 cards from real CRECI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation Methods flashcards as text
What does a positive adjustment to a comparable sale price indicate in the sales comparison approach?
Answer: The comparable is inferior to the subject in that feature
A positive adjustment is added to the comparable's price because it is inferior to the subject in that attribute, raising the comparable toward the subject's level.
In commercial real estate, 'stabilized value' refers to the value of a property assuming:
Answer: The property operates at a typical, sustainable occupancy level
Stabilized value reflects the property at a normalized, market-typical occupancy and income level, excluding lease-up or transitional periods.
The band of investment technique is used to derive a capitalization rate by weighting:
Answer: The equity dividend rate and the mortgage constant
Band of investment blends the mortgage constant (weighted by LTV) and the equity dividend rate (weighted by equity) to derive an overall cap rate.
Which of the following best describes 'market value' as defined in standard appraisal practice?
Answer: The most probable price in a competitive and open market with knowledgeable parties and no duress
Market value is the most probable price under competitive, open-market conditions between informed, willing parties with no undue pressure.
When using the income capitalization approach for a triple-net (NNN) leased property, which income figure is typically capitalized?
Answer: Contract rent net of tenant expenses
In a NNN lease, the tenant pays most operating expenses, so the appraiser capitalizes the contract rent net of landlord obligations.
What is the purpose of a retrospective appraisal?
Answer: To estimate a property's value as of a past effective date
A retrospective appraisal establishes value as of a historical date, commonly required for estate, litigation, or tax purposes.
In the cost approach, reproduction cost differs from replacement cost in that reproduction cost estimates:
Answer: The cost to build an exact replica of the subject using current prices
Reproduction cost estimates the cost to construct an exact duplicate with the same materials and design, while replacement cost uses modern equivalents.