FREE CFE Appraisal Principles Questions and Answers

Question 1

What is the definition of market value in appraisal?

Accepted Answer

The most probable sale price in a fair market.

Answer

The value set by the appraiser.

Answer

The assessed value for taxes.

Answer

The actual sale price.

Question 2

Which approach is commonly used to appraise single-family homes?

Accepted Answer

Sales Comparison Approach

Answer

Income Approach

Answer

Cost Approach

Answer

Land Value Method

Question 3

What does the principle of substitution state?

Accepted Answer

A property's value is limited by the cost of acquiring a substitute.

Answer

Lower-priced properties are ignored.

Answer

Value is based on original cost.

Answer

Properties must be identical to compare.

Question 4

Which of the following is a key factor in the cost approach?

Accepted Answer

Depreciation and replacement cost

Answer

Sales of similar properties

Answer

Rental income potential

Answer

Future value potential

Question 5

Which type of depreciation is caused by outdated design features?

Accepted Answer

Functional obsolescence

Answer

Physical depreciation

Answer

External obsolescence

Answer

Structural wear

Question 6

In which document is the final appraised value reported?

Accepted Answer

Appraisal report

Answer

Deed

Answer

HUD statement

Answer

Mortgage note

Question 7

What does USPAP stand for in appraisal practice?

Accepted Answer

Uniform Standards of Professional Appraisal Practice

Answer

Uniform Standards of Property Adjustment Policies

Answer

United Standards of Pricing Appraisal Procedures

Answer

Uniform System of Professional Account Principles

Question 8

Which appraisal approach is most suitable for income-producing properties?

Accepted Answer

Income Approach

Answer

Sales Comparison Approach

Answer

Cost Approach

Answer

Land Residual Method

Question 9

What is the primary goal of an appraisal?

Accepted Answer

Estimate fair market value

Answer

Increase property taxes

Answer

Establish sales commission

Answer

Advertise properties for sale