PSI Real Estate Appraisal

Question 1

Which of the following best describes the three traditional approaches to real estate value used by appraisers?

Accepted Answer

Sales comparison, cost, and income approaches

Answer

Market, assessed, and replacement approaches

Answer

Comparable, depreciation, and capitalization approaches

Answer

Gross rent, net income, and cost-basis approaches

Question 2

Market value in real estate appraisal is best defined as:

Accepted Answer

The most probable price a property would bring in a competitive and open market under fair sale conditions

Answer

The price a seller demands for the property regardless of market conditions

Answer

The assessed value assigned by the county tax assessor

Answer

The replacement cost of the improvements minus accrued depreciation

Question 3

The principle of highest and best use requires that use to be:

Accepted Answer

Legally permissible, physically possible, financially feasible, and maximally productive

Answer

Currently used, zoned for residential, income-producing, and owner-occupied

Answer

Approved by the municipality, historically consistent, and commercially viable

Answer

Permitted under current zoning, profitable, and environmentally sustainable

Question 4

In the sales comparison approach, an upward adjustment is made to a comparable sale when:

Accepted Answer

The comparable is inferior to the subject property in that feature

Answer

The comparable is superior to the subject property in that feature

Answer

The comparable sold more recently than the subject's effective date

Answer

The comparable is located closer to amenities than the subject

Question 5

The gross rent multiplier (GRM) is calculated by dividing:

Accepted Answer

Sale price by gross monthly rental income

Answer

Net operating income by the capitalization rate

Answer

Effective gross income by operating expenses

Answer

Gross scheduled income by vacancy rate

Question 6

Which type of depreciation is caused by factors outside the property itself, such as a nearby industrial facility?

Accepted Answer

Economic (external) obsolescence

Answer

Physical deterioration

Answer

Functional obsolescence

Answer

Structural depreciation

Question 7

The principle of substitution states that:

Accepted Answer

A buyer will pay no more for a property than the cost to obtain an equally desirable substitute

Answer

A property's value is set by the government based on public benefit

Answer

Sellers must accept a fair market offer once their property is listed

Answer

Appraisers must use at least two comparable sales to establish value