Arkansas Real Estate License FREE Arkansas Real Estate License Property Valuation and Appraisal Questions and Answers 2

Question 1

In Arkansas, which appraisal approach estimates value by calculating the cost to rebuild a property minus depreciation plus land value?

Accepted Answer

Cost approach

Answer

The cost approach estimates value by determining replacement or reproduction cost, subtracting depreciation, and adding land value.

Question 2

What is the primary purpose of a Comparative Market Analysis (CMA) prepared by an Arkansas real estate licensee?

Accepted Answer

To help sellers set a competitive listing price

Answer

A CMA is used by licensees to help sellers understand current market conditions and set an appropriate listing price.

Question 3

Under Arkansas law, which factor is NOT typically considered a form of depreciation in property appraisal?

Accepted Answer

Proximity to a new shopping center

Answer

Proximity to a new shopping center is generally considered a positive externality that increases value rather than a form of depreciation.

Question 4

When using the income approach to value a rental property in Arkansas, what does the capitalization rate represent?

Accepted Answer

The rate of return an investor expects on the investment

Answer

The capitalization rate reflects the expected rate of return on a real estate investment based on the income the property generates.

Question 5

Which type of value represents the most probable price a property would bring in a competitive and open market under fair sale conditions in Arkansas?

Accepted Answer

Market value

Answer

Market value is defined as the most probable price under conditions where both buyer and seller are acting prudently and knowledgeably.

Arkansas Real Estate License Practice Test

Arkansas Real Estate License Practice Test

Arkansas Real Estate License FREE Arkansas Real Estate License Property Valuation and Appraisal Questions and Answers 2