CRU CRU Property Appraisal & Valuation

Question 1

Which appraisal approach estimates a property's value by analyzing the cost to replace or reproduce the improvements minus depreciation, plus land value?

Accepted Answer

Cost approach

Answer

The cost approach values a property by estimating the land value plus the depreciated cost of reproducing or replacing the improvements.

Question 2

An appraiser identifies three comparable sales that bracket the subject property's value. What is the primary purpose of 'bracketing' in the sales comparison approach?

Accepted Answer

To ensure comparables bound the subject above and below in key characteristics

Answer

Bracketing means selecting comparables with features both superior and inferior to the subject to support value adjustments from both directions.

Question 3

Which of the following best describes 'effective age' in a residential appraisal?

Accepted Answer

The age implied by the property's condition and utility relative to new construction

Answer

Effective age reflects how old the property appears functionally and physically, which may differ from its actual chronological age.

Question 4

A residential property has a swimming pool while none of the comparable sales do. How should the underwriter treat this during appraisal review?

Accepted Answer

Require the appraiser to add a positive adjustment to the comparables

Answer

Because the subject has a feature the comparables lack, the appraiser must add value to the comparables to make them equivalent to the subject.

Question 5

Under FNMA guidelines, what is the maximum age of an appraisal report that can be used for a conventional loan at the time of note date?

Accepted Answer

6 months for existing and 12 months for new construction

Answer

Fannie Mae allows appraisals up to 12 months old for new construction and up to 12 months for existing properties when an appraisal update is provided, but the standard effective date limit is 12 months with updates permitted.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU CRU Property Appraisal & Valuation