FREE Real Estate Sales Property Valuation and Appraisal Questions and Answers Flashcards
6 cards from real Real Estate Sales Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 FREE Real Estate Sales Property Valuation and Appraisal Questions and Answers flashcards as text
Which appraisal approach estimates value by calculating the cost to rebuild the structure, minus depreciation, plus land value?
Answer: Cost approach
The cost approach determines value by estimating reproduction or replacement cost, subtracting accrued depreciation, and adding land value.
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?
Answer: $750,000
Property value equals net operating income divided by the capitalization rate: $60,000 ÷ 0.08 = $750,000.
What type of depreciation is caused by factors external to the property, such as a nearby landfill?
Answer: External (economic) obsolescence
External or economic obsolescence results from negative influences outside the property boundaries that reduce its value.
In the sales comparison approach, if a comparable property has a feature that the subject property lacks, how should the appraiser adjust?
Answer: Subtract the value of the feature from the comparable
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.
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?
Answer: Principle of substitution
The principle of substitution holds that a buyer will pay no more for a property than the cost of obtaining an equally desirable alternative.
What does the gross rent multiplier (GRM) measure?
Answer: The ratio of sale price to gross monthly or annual rent
The GRM is calculated by dividing the sale price of a property by its gross rental income, providing a quick valuation estimate.
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