SAEE SAEE - Market Approach Application Questions and Answers 4

Question 1

An appraiser calculates a gross adjustment of 28% and a net adjustment of 5% on a comparable. What does this indicate?

Accepted Answer

Large positive and negative adjustments are offsetting each other, reducing reliability

Answer

High gross adjustments relative to net adjustments signal that large positive and negative items are canceling out, which reduces the reliability of the comparable.

Question 2

The Gross Rent Multiplier (GRM) is calculated as:

Accepted Answer

Sale Price ÷ Monthly Gross Rent

Answer

GRM = Sale Price ÷ Monthly Gross Rent; it is a quick market-derived ratio used as a check in the sales comparison approach for residential income properties.

Question 3

When selecting comparables for a single-family residence, which factor has the HIGHEST priority?

Accepted Answer

Similarity of location and neighborhood

Answer

Location is paramount in real estate value; a geographically similar comp in the same neighborhood is more reliable than a time-similar comp in a different area.

Question 4

A comparable sold for $350,000 and required $15,000 in deferred maintenance that a typical buyer would cure. The subject is in average condition. The appropriate adjustment to the comparable is:

Accepted Answer

+$15,000

Answer

The comparable is inferior due to deferred maintenance, so a positive $15,000 adjustment brings it up to the subject's average condition.

Question 5

An appraiser is valuing a lakefront property. Which type of adjustment is MOST appropriate for the lake frontage feature?

Accepted Answer

A dollar adjustment derived from paired sales near the subject lake

Answer

Paired sales from the same lake most accurately capture local market reaction to that specific water frontage attribute.

SAEE Test Practice Test

SAEE Test Practice Test

SAEE SAEE - Market Approach Application Questions and Answers 4