Real Estate Sales Exam FREE Real Estate Sales Property Valuation and Appraisal Questions and Answers 2

Question 1

Which appraisal approach estimates value by calculating the cost to rebuild the structure, minus depreciation, plus land value?

Accepted Answer

Cost approach

Answer

The cost approach determines value by estimating reproduction or replacement cost, subtracting accrued depreciation, and adding land value.

Question 2

A property generates $60,000 in annual net operating income and the capitalization rate is 8%. What is the estimated property value using the income approach?

Accepted Answer

$750,000

Answer

Property value equals net operating income divided by the capitalization rate: $60,000 ÷ 0.08 = $750,000.

Question 3

What type of depreciation is caused by factors external to the property, such as a nearby landfill?

Accepted Answer

External (economic) obsolescence

Answer

External or economic obsolescence results from negative influences outside the property boundaries that reduce its value.

Question 4

In the sales comparison approach, if a comparable property has a feature that the subject property lacks, how should the appraiser adjust?

Accepted Answer

Subtract the value of the feature from the comparable

Answer

Adjustments are always made to the comparable property, and a superior feature in the comp requires a downward adjustment to make it equivalent to the subject.

Question 5

Which principle of value states that the maximum value of a property is set by how much it would cost to acquire an equally desirable substitute?

Accepted Answer

Principle of substitution

Answer

The principle of substitution holds that a buyer will pay no more for a property than the cost of obtaining an equally desirable alternative.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam FREE Real Estate Sales Property Valuation and Appraisal Questions and Answers 2