SRS Property Valuation 5

Question 1

A 2,000 sq ft home sold for $340,000. Using that price per square foot, what is the indicated value of a similar 2,300 sq ft home?

Accepted Answer

$391,000

Answer

$340,000 ÷ 2,000 = $170/sq ft; $170 × 2,300 = $391,000.

Question 2

The principle of highest and best use states a property's value is based on its:

Accepted Answer

Legally permissible, physically possible, financially feasible, and most productive use

Answer

Highest and best use must meet all four tests: legal, physical, financial, and maximally productive.

Question 3

A seller spent $60,000 on a luxury kitchen in a starter-home neighborhood. The CMA shows little value added. Which principle explains this?

Accepted Answer

Contribution

Answer

The principle of contribution says an improvement is worth only what it adds to market value, not its cost.

Question 4

Why might a seller's agent recommend pricing slightly below a round number, such as $499,000 instead of $505,000?

Accepted Answer

To capture buyers searching with a $500,000 price cap

Answer

Pricing just under a search threshold exposes the listing to more online buyers.

Question 5

A buyer is willing to pay no more than the cost of an equally desirable substitute property. This is the principle of:

Accepted Answer

Substitution

Answer

Substitution is the foundation of the sales comparison approach.

SRS - Seller Representative Specialist Practice Test