Quiz

Valuation & Appraisal — 20 Questions

1. Question 1. Highest and best use means the use that is

   A. Most sentimental to the owner B. Legally permissible, physically possible, financially feasible, and maximally productive C. Most expensive to construct D. Always residential
2. Question 2. The principle of substitution states that a buyer will generally

   A. Pay more for a similar property than necessary B. Choose the least expensive comparable substitute C. Ignore market alternatives D. Base value only on original cost
3. Question 3. The term 'effective age' refers to

   A. The property’s legal age only B. Apparent age based on condition and utility C. Years since last sale D. Only the age of the roof
4. Question 4. The income approach is most applicable to a

   A. Single-family home occupied by owner B. Shopping center producing rent C. Vacant lot in a subdivision D. Public park
5. Question 5. An appraiser adjusts comparable sales to account for

   A. Borrower credit score B. Differences between the comparable and subject C. Only tax assessments D. Only mortgage terms
6. Question 6. Economic obsolescence is generally caused by

   A. Normal wear and tear B. Outdated floor plan C. External factors outside the property D. Poor maintenance only
7. Question 7. Which appraisal approach is most commonly emphasized for single-family homes?

   A. Income approach B. Cost approach only C. Sales comparison approach D. Gross rent multiplier only
8. Question 8. The assessed value used for tax purposes is determined by the

   A. Appraiser in a lending report B. County property appraiser C. Title insurer D. Closing agent
9. Question 9. The cost approach estimates value by

   A. Capitalizing net income B. Adding land value to depreciated replacement or reproduction cost C. Averaging assessed values D. Using only listing prices
10. Question 10. Gross rent multiplier is calculated by dividing

    A. Annual rent by value B. Sale price by monthly rent C. Value by NOI D. Gross income by vacancy
11. Question 11. Reconciliation in appraisal is the process of

    A. Averaging all values mechanically B. Choosing the lowest approach C. Weighing the approaches to reach a final opinion of value D. Negotiating the contract price
12. Question 12. Functional obsolescence refers to

    A. Loss from age and weather B. A problem in design or utility within the property C. A decline in the overall market D. A title defect
13. Question 13. The appraisal process begins with

    A. Closing the transaction B. Defining the appraisal problem C. Calculating tax prorations D. Recording the deed
14. Question 14. A cap rate is used in the income approach to convert

    A. Gross income into land value B. Net operating income into value C. Taxes into assessments D. Square footage into rent
15. Question 15. If comparable sale A is superior to the subject in condition, the appraiser should

    A. Add value to sale A B. Subtract value from sale A C. Ignore sale A D. Raise the subject’s size
16. Question 16. Physical depreciation includes

    A. Traffic noise from a new highway B. Wear and tear on a roof C. An obsolete floor plan D. A restrictive zoning change
17. Question 17. A comparable sale that closed yesterday is generally

    A. More relevant than one from five years ago, all else equal B. Less relevant than an older sale C. Never usable D. Automatically identical to the subject
18. Question 18. Market value is best defined as the most probable price under conditions of

    A. Compulsion and secrecy B. A competitive, open market with informed parties C. Immediate distress only D. Seller financing only
19. Question 19. Which principle says value is affected by conformity with surrounding properties?

    A. Anticipation B. Progression and regression C. Contribution D. Balance
20. Question 20. A property with stable income and reliable expenses is especially suited to

    A. Direct capitalization B. Lot-and-block description C. Assemblage D. Subdivision mapping

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