IACP Market Analysis & Property Valuation 3

Question 1

When a property's income is subject to a below-market lease, the discount applied to the leased fee value compared to fee simple value is called:

Accepted Answer

Negative leasehold

Answer

A negative leasehold occurs when the contract rent is below market rent, reducing the leased fee value relative to the fee simple market value.

Question 2

In highest and best use analysis, which test must be satisfied FIRST?

Accepted Answer

Legally permissible

Answer

Legal permissibility must be tested first because uses that violate zoning or other legal restrictions cannot be considered regardless of other factors.

Question 3

An appraiser notes that similar homes in a neighborhood sell for $10,000 more when they have an additional bathroom. This adjustment was derived using:

Accepted Answer

Paired sales analysis

Answer

Paired sales analysis isolates the contributory value of the bathroom by comparing otherwise similar properties that differ only in that feature.

Question 4

Which of the following BEST describes economic obsolescence?

Accepted Answer

Loss in value from external forces beyond the property

Answer

Economic (external) obsolescence is a loss in value caused by negative factors outside the property, such as nearby industrial development or economic downturns.

Question 5

A capitalization rate derived by dividing a property's NOI by its recent sale price is known as a:

Accepted Answer

Overall (OAR) capitalization rate

Answer

The overall capitalization rate (OAR) is calculated by dividing the net operating income by the sale price of a comparable property.

(IACP) Independent Appraisers Certification Program Practice Test

(IACP) Independent Appraisers Certification Program Practice Test

IACP Market Analysis & Property Valuation 3