Real Estate Valuation & Appraisal

Question 1

The three standard approaches to value used by appraisers are:

Accepted Answer

Sales comparison, cost, and income

Answer

Sales, income, and replacement

Answer

Market, assessed, and insured

Answer

Replacement, GRM, and tax

Question 2

The sales comparison approach estimates value primarily by:

Accepted Answer

Comparing the subject property to recently sold similar properties

Answer

Calculating replacement cost minus depreciation

Answer

Capitalizing net operating income

Answer

Using the assessed tax value

Question 3

Market value is defined as the most probable price a property would sell for:

Accepted Answer

In an arm's-length transaction between informed and willing parties

Answer

Under distressed conditions

Answer

To a related party

Answer

After major renovation

Question 4

In the sales comparison approach, if a comparable sold for more than the subject because it has a pool, the appraiser would make a:

Accepted Answer

Negative adjustment to the comparable

Answer

Positive adjustment to the comparable

Answer

Positive adjustment to the subject

Answer

No adjustment

Question 5

The principle of substitution states that a buyer will pay no more for a property than the cost of:

Accepted Answer

An equally desirable substitute property

Answer

Remodeling the existing property

Answer

The assessed tax value

Answer

The property's replacement cost only

Question 6

Which type of depreciation in real estate refers to a loss in value from external factors outside the property?

Accepted Answer

Economic (external) obsolescence

Answer

Physical deterioration

Answer

Functional obsolescence

Answer

Structural depreciation