SRS Property Valuation 3

Question 1

A buyer offers $500,000, but the appraisal comes in at $480,000 on a loan with 20% down. What is the appraisal gap?

Accepted Answer

$20,000

Answer

The appraisal gap is the contract price minus the appraised value: $500,000 − $480,000 = $20,000.

Question 2

Which is an example of functional obsolescence?

Accepted Answer

A four-bedroom home with only one bathroom

Answer

Functional obsolescence is a design or layout flaw that reduces a property's usefulness or appeal.

Question 3

If homes in a neighborhood sell at an average list-to-sale price ratio of 103%, this most likely indicates:

Accepted Answer

A seller's market with competitive offers

Answer

Homes selling above list price signal strong demand and a seller's market.

Question 4

What is the main limitation of an automated valuation model (AVM) like an online home-value estimate?

Accepted Answer

It cannot account for interior condition and upgrades

Answer

AVMs rely on public data and algorithms, so they miss condition, renovations, and unique features seen only in person.

Question 5

Under the principle of conformity, what tends to happen to the most expensive home in a modest neighborhood?

Accepted Answer

It loses value relative to its cost (regression)

Answer

Regression means a superior home is pulled down in value by lower-priced surrounding properties.

SRS - Seller Representative Specialist Practice Test