Real Estate Valuation & Appraisal 3

Question 1

The principle of conformity holds that maximum value is achieved when:

Accepted Answer

Properties in an area are similar in size, style, and use

Answer

Conformity states that properties attain maximum value when they are similar to surrounding properties, supporting consistent market expectations.

Question 2

Highest and best use is defined as the use that is:

Accepted Answer

Physically possible, legally permissible, financially feasible, and maximally productive

Answer

Highest and best use is the reasonably probable and legal use of property that produces the highest value, considering physical, legal, and financial factors.

Question 3

Assessed value is used primarily for:

Accepted Answer

Calculating property taxes

Answer

Assessed value is set by the local tax assessor as a basis for calculating property tax obligations and may differ significantly from market value.

Question 4

A Comparative Market Analysis (CMA) is typically prepared by a:

Accepted Answer

Real estate agent to help price a home for listing

Answer

A CMA is an informal analysis performed by a real estate agent comparing recent sales, active listings, and expired listings to recommend a listing price.

Question 5

The principle of regression states that a higher-value property placed among lower-value properties will:

Accepted Answer

Experience a decline in value

Answer

Regression holds that a superior property's value is pulled down when surrounded by inferior properties, the opposite of the principle of progression.

Real Estate Practice Test

Real Estate Practice Test

Real Estate Valuation & Appraisal 3