IACP Appraisal Methodology & Techniques 5

Question 1

In a market characterized by rapidly rising prices, time adjustments applied to comparable sales should generally be:

Accepted Answer

Positive, increasing the sale prices of older comparables to current market levels

Answer

In a rising market, older comparable sales are adjusted upward (positive time adjustment) to reflect the appreciation that has occurred between the sale date and the appraisal date.

Question 2

Which of the following BEST describes 'economic life' of an improvement?

Accepted Answer

The total period over which the improvement contributes positively to the property's value

Answer

Economic life is the total estimated period during which an improvement contributes value to the total property, ending when the land value alone exceeds the improved property value.

Question 3

The 'income residual' technique values land or building by capitalizing the income attributable to one component after satisfying the return requirements of the other. Which statement is correct?

Accepted Answer

All of the above are correct

Answer

All three statements accurately describe residual techniques: each residualizes income to one component after satisfying the other's return, and both use component-specific capitalization rates.

Question 4

When a comparable sale includes personal property (e.g., furniture in a motel), the appraiser must:

Accepted Answer

Deduct the contributory value of personal property from the sale price before making adjustments

Answer

Personal property must be deducted from the sale price because real property appraisals value real property only, and including personal property would inflate the comparable's indicated value.

Question 5

In appraisal, 'market rent' is defined as:

Accepted Answer

The rental income a property would most probably command in the open market as of the appraisal date

Answer

Market rent is the most probable rent a property would command in a competitive and open market under conditions requisite to a fair transaction, as of the appraisal date.

(IACP) Independent Appraisers Certification Program Practice Test

(IACP) Independent Appraisers Certification Program Practice Test

IACP Appraisal Methodology & Techniques 5