RES Valuation & Appraisal 1

Question 1

Which three approaches are used by appraisers to estimate property value?

Accepted Answer

Sales Comparison, Income, and Cost Approaches

Answer

The three recognized approaches to value are the Sales Comparison Approach, the Income Approach, and the Cost Approach.

Question 2

The Sales Comparison Approach to value is primarily based on:

Accepted Answer

Recent sales of similar properties in the area

Answer

The Sales Comparison Approach determines value by comparing the subject property to recent sales of similar (comparable) properties in the market.

Question 3

What does GRM stand for in real estate valuation?

Accepted Answer

Gross Rent Multiplier

Answer

GRM stands for Gross Rent Multiplier, which estimates value of income-producing properties by multiplying gross rents by a derived multiplier.

Question 4

In appraisal, depreciation is defined as:

Accepted Answer

Any loss in value from any cause

Answer

In appraisal, depreciation refers to any loss in value from any cause, including physical deterioration, functional obsolescence, and external obsolescence.

Question 5

The principle of substitution states that:

Accepted Answer

A prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute

Answer

The principle of substitution holds that a prudent buyer will pay no more for a property than the cost to purchase a comparable substitute property.

RES - Real Estate Salesperson Exam Practice Test

RES - Real Estate Salesperson Exam Practice Test

RES Valuation & Appraisal 1