Loan Officer Exam Loan Officer Appraisal and Property Valuation 2

Question 1

Which of the three appraisal approaches estimates value by calculating land value plus the cost to replace improvements minus accrued depreciation?

Accepted Answer

Cost approach

Answer

Sales comparison approach

Answer

Income approach

Answer

Residual approach

Question 2

The sales comparison approach to value is primarily based on which of the following?

Accepted Answer

Recent sales prices of comparable properties adjusted for differences

Answer

Projected rental income capitalized at a market rate

Answer

The cost to replace the improvements minus physical depreciation

Answer

The property's assessed value as determined by the municipality

Question 3

In the income approach to value, the capitalization rate represents:

Accepted Answer

The rate of return an investor expects from an income-producing property

Answer

The mortgage interest rate applied to the subject property's loan

Answer

The percentage of gross income consumed by operating expenses

Answer

The annual rate of property appreciation in the local market

Question 4

What type of depreciation is 'external obsolescence' in real estate appraisal?

Accepted Answer

A loss in value caused by negative factors located outside the property

Answer

Physical wear and tear on the building's interior finishes

Answer

Outdated floor plans or design features that reduce marketability

Answer

Structural deterioration of the roof, foundation, or exterior walls

Question 5

When an appraiser makes a positive adjustment to a comparable sale, it means the comparable is:

Accepted Answer

Inferior to the subject property in that feature, so value is added to the comparable

Answer

Superior to the subject property in that feature, so value is added

Answer

Located in a more desirable neighborhood than the subject property

Answer

A more recent sale that commands a higher market price

Question 6

Which appraisal approach is most commonly used and given the most weight when valuing single-family residential properties?

Accepted Answer

Sales comparison approach

Answer

Income approach

Answer

Cost approach

Answer

Residual approach

Question 7

What is 'functional obsolescence' in real estate appraisal?

Accepted Answer

A loss in value due to outdated design, layout, or features that do not meet current buyer standards

Answer

Physical deterioration resulting from normal age and use over time

Answer

Economic decline caused by negative forces in the surrounding neighborhood

Answer

Environmental contamination discovered on or near the subject property