SAEE - Core Valuation Principles Questions and Answers Flashcards
7 cards from real SAEE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 SAEE - Core Valuation Principles Questions and Answers flashcards as text
The principle of highest and best use requires that the use be all of the following EXCEPT:
Answer: Historically precedented
Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive — historical precedent is not a required criterion.
An appraiser is valuing land as if vacant under the highest and best use analysis. This is done primarily to:
Answer: Estimate the land value separately from improvements for the cost approach
Land must be valued as if vacant and available for its highest and best use in order to isolate land value in the cost approach.
Which of the following best describes 'effective demand' in real estate valuation?
Answer: Desire for a property backed by purchasing power
Effective demand combines both the desire to purchase a property and the financial ability to do so.
The principle of externalities recognizes that value can be affected by:
Answer: Forces originating outside the property boundaries
Externalities are positive or negative influences from outside the property — such as proximity to schools, highways, or nuisances — that affect value.
A property's value is $300,000 as a single-family home but could be worth $450,000 if converted to a duplex under current zoning. The difference represents:
Answer: Conversion potential or interim use differential
When a property's current use does not represent its highest and best use, the value differential reflects its potential upon conversion to a more productive use.
Under the substitution principle, a buyer would NOT pay more for a property than:
Answer: The cost to acquire an equally desirable substitute property
Substitution holds that a rational buyer will pay no more for a property than the cost of acquiring an equally desirable alternative in the market.
Which economic concept explains why raw land at the edge of an expanding urban area tends to increase in value over time without any improvements?
Answer: Anticipation of future urban development and demand
Anticipation drives land values upward as the market expects future demand and development to reach previously underutilized areas.