SAEE SAEE - Core Valuation Principles Questions and Answers 2

Question 1

Which valuation approach relies on comparing the subject property to similar properties that have recently sold in the same market area?

Accepted Answer

Sales comparison approach

Answer

Income approach

Answer

Cost approach

Answer

Residual approach

Question 2

In the cost approach to valuation, what does 'external obsolescence' refer to?

Accepted Answer

Loss in value due to factors outside the property boundaries

Answer

Physical deterioration of the building structure

Answer

Outdated floor plan or design features

Answer

Deferred maintenance costs accumulated over time

Question 3

What is the primary purpose of the principle of substitution in real estate appraisal?

Accepted Answer

To establish that a buyer will not pay more for a property than the cost of an equally desirable alternative

Answer

To ensure appraisers use at least three valuation methods

Answer

To require that all comparable sales be within one mile of the subject

Answer

To mandate adjustments for differences in financing terms

Question 4

When applying the income capitalization approach, which formula correctly represents the relationship between value, net operating income, and capitalization rate?

Accepted Answer

Value = NOI / Cap Rate

Answer

Value = NOI x Cap Rate

Answer

Value = Cap Rate / NOI

Answer

Value = NOI - Cap Rate

Question 5

Which principle of value states that the maximum value of a property is influenced by the degree of homogeneity present in the surrounding neighborhood?

Accepted Answer

Principle of conformity

Answer

Principle of anticipation

Answer

Principle of contribution

Answer

Principle of balance

Question 6

What does the concept of 'highest and best use' require an appraiser to determine?

Accepted Answer

The most profitable, legally permissible, physically possible, and financially feasible use of the property

Answer

The current zoning classification of the property only

Answer

The use that produces the highest gross income regardless of legality

Answer

The use preferred by the current property owner