The best way to establish a reasonable capitalization rate is to
select a rate based on an investor's required "return on" and "return of" investment.
The most common unit of measure used in the cost approach to value residential properties is
square foot of living area.
Periodic decreases in value of income property can be covered by an allowance on an income tax return called
depreciation, currently called cost recovery.
In terms of basic physical characteristics, land may properly be described as
having all of these characteristics, immobile, indestructible, and nonhomogeneous.
The basis of the market data approach to appraising is found in the principle of
substitution.
The gradual decay or decline in value of property from all causes is called
depreciation".
The market data approach to value is most likely to be used on
residential properties.
In a real estate appraiser's approach to value, he would be most concerned with "the present worth of future potential benefits" in relation to the _____ approach.
income
Which of the following is NOT a characteristic of value?
Cost
The time period in which a building produces sufficient income to justify its continued use is customarily called
economic life.
To estimate the value of income property, which of the following calculations would be performed?
Divide the net income by the capitalization rate.
An investor would use which of the following as a hedge against inflation?
Investment equity assets
The term "depreciation" is best defined as loss in value due to
any cause.
Reconciliation is an appraisal term used to describe
the appraiser's analysis and comparison of the results of each approach.
Replacement cost is best described as the
cost of building a property of equivalent utility with the same or similar materials.
Using the income approach to valuation, which of the following is NOT a proper deduction from effective gross income to determine net income?
Interest payments on loans
A real estate licensee would most likely encounter the term "boot" when considering a problem involving
exchanging.
Amenities are
factors of convenience, location, beauty or utility.
Of the following, the factor which would NOT contribute to obsolescence is
wear and tear from use.
Sandy Jones is considering buying a lot to build a single-family residence. She hires an appraiser to appraise the lot. If the appraiser has a choice of the three approaches to appraisal, he would probably use which of the following?
Market data approach
While completing research for the property he was appraising, Jack Forster found that the building on the subject property was incompatible with the surrounding neighborhood. This would be an example of
economic obsolescence
Of the three methods of appraising properties, the replacement cost approach is particularly appropriate and would give the most accurate value in the appraisal of a(n)
relatively new home.
Ms. Barlow has an interest in her property over and above her mortgage debt. Her interest is called
equity.
If a building has an estimated remaining economic life of 35 years, the appropriate recapture rate will be
2.86%.
Steps of the market data approach include all of the steps listed below EXCEPT
compare current listed properties.
A post office of unique design and construction is best appraised by which of the following approaches?
Cost
Depreciation may occur from
All of the above
Smith owns an older home on a corner lot. A professional appraiser advised him that considerably more income could be obtained if the house were torn down and a different improvement placed upon the lot. This illustrates the principle of
highest and best use.
The actual age of a building was 15 years. However, because of better than average maintenance, depreciation was computed as if the building was 10 years old. This is an example of using the concept known as
effective age.
When a property has suffered a reduction in value due to dry rot and termite damage, appraisers will refer to such reduction as
physical deterioration.
Conditions of the sale, location of each property, and physical characteristics of the property are used in
the market approach.
The gross rent multiplier used to assist in appraisal of income property is the
relationship between rental income and sale price of the property.
A house newly built having four bedrooms and one bath would immediately undergo depreciation due to the concept of
functional obsolescence.
The approach to value that is considered the most reliable in appraising a single-family residence is the _____ approach.
market data
The cost approach in appraisal is based on
cost of reproduction.
There are three major approaches to value used in real estate appraisal. They are the
market data approach, cost approach and income approach.
The approach that appraisers most commonly use for estimating costs is the _____ method.
comparative cost
Two comparables are identical tract-type homes in the same subdivision, built in the same year and both sold on resale within 30 days of one another. The lots are of identical value. Comparable #1 was equipped with standard builder's model range and refri
No adjustment would be made to Comparable #1 and a $500 adjustment would be made to Comparable #2
When using the cost method of appraising, the upper limit of value is quite well determined by which of the following?
Determine the reproduction cost new, with no deduction for depreciation, plus land value.
Which of the following conditions is an indication of what appraisers call "functional obsolescence"?
Ceilings lower than customary
Which one of the following best describes the concept of highest and best use?
Greatest net return over a given period
The gross rent multiplier is an appraisal rule of thumb best suited for
a single-family residence.
Physical deterioration" most closely means
wear and tear.
In regard to the capitalization rate
as the capitalization rate increases, value of property decreases.
If a building has an estimated remaining economic life of 50 years, the appropriate recapture rate will most likely be _____%.
2
A real estate broker who is performing a market analysis for a single-family residence would be less likely to use the selling price of which of the following properties to compare with the subject property?
A similar home that was sold by owners who were forced to sell because of financial difficulties.
How would you best appraise a church?
Cost approach
Which of the following might be classified as functional obsolescence?
Property has a single-car garage.
When a building is cared for better than the average building, the appraiser knows that the effective age is
less than the actual age.
The decline of value of a house because it is located in an area that has recently been zoned industrial would be due to what is called "_____ obsolescence".
economic
Functional obsolescence is a loss of value due to
being outdated.
The cost approach in appraising
uses the principle of substitution.
The market data appraisal approach would be best used for
vacant land valuation.
In estimating the value lost by a structure due to physical deterioration, the appraiser places greatest emphasis on the
observed condition of the subject building.
An appraiser's estimate of market value in an appraisal report is valid
as of the date of the appraisal only.
When considering the cost approach to appraising, all of the following statements are true, EXCEPT
the cost approach tends to set the lower limits of value.
In making a market analysis of vacant lots
only lots of similar zoning should be employed.
A well done appraisal, including consideration of all available data, and completed by an appraiser of much experience and good judgment, is best defined as
an "opinion.
In the market comparison approach, adjustments are never made for differences in
acquisition cost to former owner.
The gross rent multiplier is derived by dividing the
selling price by the monthly rent.