Real Estate License Property Valuation and Appraisal 2

Question 1

Which appraisal approach is most appropriate for valuing a newly constructed school building with no comparable sales?

Accepted Answer

Cost approach

Answer

The cost approach is best for special-purpose or unique properties where comparable sales and income data are scarce.

Question 2

An appraiser deducts $15,000 from a comparable's sale price because it has a finished basement the subject lacks. What is this adjustment based on?

Accepted Answer

The contributory value of the feature

Answer

Adjustments in the sales comparison approach reflect the contributory value a feature adds to market value, not its cost.

Question 3

In the sales comparison approach, if the comparable is superior to the subject, the appraiser should:

Accepted Answer

Subtract value from the comparable

Answer

When a comparable is superior, you subtract from its price to make it equivalent to the inferior subject.

Question 4

A property's net operating income is $48,000 and the capitalization rate is 8%. What is its indicated value?

Accepted Answer

$600,000

Answer

Value equals NOI divided by cap rate: $48,000 / 0.08 = $600,000.

Question 5

Which of the following is an example of functional obsolescence?

Accepted Answer

An outdated single bathroom in a four-bedroom house

Answer

Functional obsolescence is a loss in value from outdated design or features within the property itself.

Real Estate License Practice Test