Appraisal Methodology & Techniques Flashcards
7 cards from real IACP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Appraisal Methodology & Techniques flashcards as text
Which method of estimating site value assumes that the land can be valued by deducting the depreciated cost of improvements from a known total property sale price?
Answer: Extraction method
The extraction method derives land value by subtracting the estimated depreciated cost of improvements from the total sale price of a comparable property.
In the sales comparison approach, a 'gross adjustment percentage' exceeding industry norms may indicate:
Answer: The comparable may not be truly comparable and should be reconsidered
Large gross adjustments suggest significant differences between the comparable and subject, weakening the reliability of that comparable and warranting further scrutiny.
The 'band of investment' technique is used to estimate:
Answer: An overall capitalization rate by weighting mortgage and equity components
The band of investment technique develops an overall capitalization rate by weighting the mortgage constant and equity dividend rate according to their respective shares of total capital.
Under the cost approach, 'replacement cost new' differs from 'reproduction cost new' in that replacement cost:
Answer: Estimates the cost of a functionally equivalent modern building using current materials and standards
Replacement cost new estimates the cost to construct a functionally equivalent structure using current materials and design standards, whereas reproduction cost replicates the exact original.
When appraising a property 'as stabilized,' the appraiser assumes:
Answer: The property is currently at market vacancy and achieves market rents
An 'as stabilized' appraisal assumes the property has reached a typical occupancy level with market rents, reflecting its value once lease-up or renovation is complete.
Which statistical measure is MOST useful when testing the reliability of regression-derived adjustments in mass appraisal?
Answer: Coefficient of determination (R²)
R² (coefficient of determination) measures how much of the variation in sale prices is explained by the regression model, indicating reliability of the derived adjustments.
The 'mortgage-equity' (Ellwood) technique in income capitalization is primarily used when:
Answer: Typical buyers use leverage and equity build-up over a holding period is significant
The Ellwood mortgage-equity technique accounts for leverage, equity build-up through amortization, and projected appreciation or depreciation over a typical holding period.