IACP Market Analysis & Property Valuation 5

Question 1

The sales comparison approach relies MOST heavily on which appraisal principle?

Accepted Answer

Substitution

Answer

The sales comparison approach is grounded in the principle of substitution, which states that a prudent buyer will not pay more for a property than the cost of an equally desirable substitute.

Question 2

An appraiser is estimating the value of a retail strip center. The most relevant unit of comparison to use for the sales comparison approach would be:

Accepted Answer

Price per square foot of GLA

Answer

Retail properties are most commonly compared on a price per square foot of gross leasable area (GLA) basis.

Question 3

Which condition must exist for the income capitalization approach to produce a reliable value indication?

Accepted Answer

Reliable income and expense data must be available

Answer

The income approach requires reliable income, vacancy, and expense data; without credible market data, the resulting value indication is unreliable.

Question 4

A time adjustment is needed when comparables sold significantly earlier than the effective appraisal date. What data source BEST supports deriving this adjustment?

Accepted Answer

Paired resales of the same properties over time

Answer

Paired resales (repeat sales) of the same properties at different points in time provide the best market-supported basis for time adjustments.

Question 5

When the effective gross income multiplier (EGIM) method is used, the value indication is calculated by:

Accepted Answer

Multiplying effective gross income by the EGIM

Answer

Value = Effective Gross Income × EGIM; the multiplier is applied directly to effective gross income (after vacancy) to estimate value.

(IACP) Independent Appraisers Certification Program Practice Test

(IACP) Independent Appraisers Certification Program Practice Test

IACP Market Analysis & Property Valuation 5