Wisconsin Real Estate License Valuing and Financing Property 2

Question 1

Which appraisal approach relies most heavily on recent sales of comparable properties to estimate value?

Accepted Answer

Sales comparison approach

Answer

The sales comparison approach estimates value by comparing the subject to similar recently sold properties and adjusting for differences.

Question 2

In the sales comparison approach, adjustments are always made to which property?

Accepted Answer

The comparable properties

Answer

Adjustments are made to the comparable sales, never to the subject property, to make them equivalent to the subject.

Question 3

A homeowner adds a feature the subject lacks. How is the comparable adjusted?

Accepted Answer

Subtract value from the comparable

Answer

If a comparable is superior, its price is adjusted downward to reflect the subject lacking that feature.

Question 4

The principle of substitution in appraisal states that a buyer will pay no more than:

Accepted Answer

The cost of acquiring an equally desirable substitute

Answer

Under substitution, value is limited by the cost to acquire an equally desirable alternative property.

Question 5

Which factor would MOST likely decrease a property's market value?

Accepted Answer

Proximity to a newly built landfill

Answer

A nearby landfill is external obsolescence that typically reduces market value.

Wisconsin Real Estate License Practice Test