SAEE SAEE - Core Valuation Principles Questions and Answers 4

Question 1

The principle of highest and best use requires that the use be all of the following EXCEPT:

Accepted Answer

Historically precedented

Answer

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive — historical precedent is not a required criterion.

Question 2

An appraiser is valuing land as if vacant under the highest and best use analysis. This is done primarily to:

Accepted Answer

Estimate the land value separately from improvements for the cost approach

Answer

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.

Question 3

Which of the following best describes 'effective demand' in real estate valuation?

Accepted Answer

Desire for a property backed by purchasing power

Answer

Effective demand combines both the desire to purchase a property and the financial ability to do so.

Question 4

The principle of externalities recognizes that value can be affected by:

Accepted Answer

Forces originating outside the property boundaries

Answer

Externalities are positive or negative influences from outside the property — such as proximity to schools, highways, or nuisances — that affect value.

Question 5

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:

Accepted Answer

Conversion potential or interim use differential

Answer

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.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Core Valuation Principles Questions and Answers 4