Property Valuation Methods & Techniques Flashcards
7 cards from real FHA 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 & Techniques flashcards as text
An FHA appraisal requires a minimum of how many comparable sales in the sales comparison approach grid?
Answer: Three
FHA requires a minimum of three closed comparable sales to support the sales comparison approach value indication.
A property has functional obsolescence caused by a bathroom located off the kitchen, which is a design common in older homes but undesirable today. This is best classified as:
Answer: Curable functional obsolescence — deficiency requiring modernization
A poorly located bathroom is a functional deficiency that, while potentially curable through remodeling, represents obsolescence due to an outdated design element.
In the cost approach, the distinction between reproduction cost and replacement cost is:
Answer: Reproduction cost duplicates the original exactly; replacement cost uses current equivalent utility
Reproduction cost replicates the original structure exactly (including its deficiencies), while replacement cost builds a functionally equivalent structure using current materials and standards.
When using the sales comparison approach, an adjustment for location would be necessary if:
Answer: The comparable is in a different neighborhood with demonstrably different market appeal
A location adjustment is warranted when a comparable is in a market area with measurably different price levels, demand, or neighborhood characteristics relative to the subject.
The principle of contribution states that the value of a component is measured by:
Answer: The amount it adds to the total property value
Contribution measures a component's value by how much it adds to the property's total market value, which may be more or less than its actual cost.
An FHA appraiser identifies that a subject property's HVAC system is functional but near the end of its economic life. This is an example of:
Answer: Incurable short-lived physical deterioration
Short-lived items such as HVAC systems that are still functioning but nearing the end of their expected life represent incurable short-lived physical deterioration, which is estimated by the age-life method.
Which of the following best describes the purpose of bracketing in the sales comparison approach?
Answer: Selecting comparables with features both inferior and superior to the subject to support the value conclusion
Bracketing involves selecting comparables that are superior, inferior, and similar to the subject so that the subject's value is logically supported within the range of adjusted sale prices.