IACP Appraisal Methodology & Techniques 2

Question 1

Which adjustment in the sales comparison approach accounts for the difference in time between the sale date and the appraisal date?

Accepted Answer

Market conditions adjustment

Answer

Market conditions adjustments (time adjustments) reflect changes in property values between the date of a comparable sale and the effective date of the appraisal.

Question 2

In the income approach, the overall capitalization rate (OAR) is calculated as:

Accepted Answer

NOI divided by value

Answer

The overall capitalization rate equals Net Operating Income divided by value (or sale price), expressing the relationship between income and value.

Question 3

What is the primary purpose of a reconciliation in the appraisal process?

Accepted Answer

To weigh the reliability of each approach and arrive at a final value conclusion

Answer

Reconciliation involves weighing the relevance and reliability of each approach applied and exercising professional judgment to arrive at a final value opinion.

Question 4

The 'gross rent multiplier' (GRM) is most appropriately used for:

Accepted Answer

Single-family and small residential income properties

Answer

The GRM is most commonly applied to single-family residential rentals and small income properties where gross rent data is readily available.

Question 5

When applying the cost approach, which type of depreciation arises from factors outside the property boundaries?

Accepted Answer

External obsolescence

Answer

External obsolescence (also called economic obsolescence) results from negative influences outside the property, such as proximity to nuisances or adverse market conditions.

(IACP) Independent Appraisers Certification Program Practice Test

(IACP) Independent Appraisers Certification Program Practice Test

IACP Appraisal Methodology & Techniques 2