IACP Market Analysis & Property Valuation 4

Question 1

A property generates $120,000 in potential gross income, has a 5% vacancy rate, and $15,000 in operating expenses. What is the net operating income?

Accepted Answer

$99,000

Answer

$120,000 × 0.95 = $114,000 effective gross income minus $15,000 expenses = $99,000 NOI.

Question 2

The market rent for a commercial space is $30/SF/year, but the tenant is paying $25/SF/year under a long-term lease. The $5 difference per SF is the:

Accepted Answer

Leasehold value

Answer

The leasehold value represents the benefit to the tenant from paying below-market (contract) rent, equal to the difference between market and contract rent.

Question 3

Which type of market study focuses specifically on the competitive supply, demand, and pricing for a particular land use or property type?

Accepted Answer

Market analysis

Answer

A market analysis examines supply and demand conditions for a specific property type or land use in a defined geographic area.

Question 4

When adjusting comparable sales for conditions of sale, an appraiser discovers a sale was a distressed foreclosure. The adjustment to the comparable would typically be:

Accepted Answer

Positive (upward)

Answer

A distressed foreclosure sale typically transacts below market value, so a positive (upward) adjustment is applied to bring it to arm's-length market value.

Question 5

The reconciliation step in an appraisal requires the appraiser to:

Accepted Answer

Weight value indicators based on quality and relevance of data

Answer

Reconciliation requires the appraiser to analyze and weight the value indicators from each approach based on the quality, quantity, and relevance of the supporting data.

(IACP) Independent Appraisers Certification Program Practice Test

(IACP) Independent Appraisers Certification Program Practice Test

IACP Market Analysis & Property Valuation 4