section 4 chapter 3 Flashcards

section 4 chapter 3 Flashcards The comparison approach to appraisal is based on the principle of:Select one:a. Contributionb. Progression and regressionc. Substitutiond. Anticipation Substitution Utilization of a property in the manner most profitable to the

owner at the time the value is estimated is called:Select

one:a. Economic lifeb. Highest and best usec. Principle of

conformityd. Reconciliation process Highest and best use Mary is considering purchasing a rental house. Another rental home recently sold for $187,500 and rents for $1,500 per month. If the house she is considering rents for $1,700 per month, what should Mary expect to pay for the house?a. $195,500.b. $208,500.c. $212,500.d. $218,500.$212,500-$212,500 ($187,500 [sale price] / $1,500 [rent] = $125 [gross rent multiplier] x $1,700 [rent] = $212,500 [estimated value]) A homeowner spends $40,000 installing a luxurious kitchen in his home. When the property is sold, the homeowner finds that the kitchen only added $25,000 to the value of the home. This illustrates the principle of:Select one:a.Changeb. Unearned incrementc. Regressiond. Contribution contribution

Which of the following statements is/are true?Select one:a.

Replacement cost means that the property is replaced by one with similar utilityb. Reproduction cost means that the property is replaced by one that is identical to the subject propertyc. Using the cost approach tends to set the upper limits of valued. All of the above all of the above Which of the following types of depreciation would be least

likely to be curable?Select one:a. Physical deteriorationb.

Functional obsolescencec. Economic obsolescenced. None of these - since they can all be cured if the owner is willing to pay the cost Economic obsolescence-Depreciation is only curable if the cost of fixing it adds at least that much to the value of the property. Economic obsolescence is caused by factors outside of the property lines and would therefore be least likely to be curable.Which of the following values is used to establish real

property taxes?Select one:a. Insured.b. Appraised.c. Sales

price.d. Assessed.assessed The use of a capitalization rate is most suitable for estimating the value of which type of property?Select

one:a. A single family home which has been

owner-occupied for ten years.b. A building which is being converted to a public art gallery.c. A building leased to a theater chain.d. A cooperative development.A building leased to a theater chain.A home that has severely peeling paint would be an

example of which of the following?Select one:a.

Correlationb. Obsolescencec. Depreciationd. Capitalization depreciation

When analyzing various comps in the comparison approach, the appraiser would consider each of the following issues, EXCEPT:Select one:a. Number of adjustments in each comp.b. The average indicated value of the comps.c. The size of the adjustments in each comp.d. The distance of each comp from the subject.The average indicated value of the comps.To properly calculate effective gross income on a 16-unit

apartment building, the appraiser should allow for:Select

one:a. The amount of property taxesb. The amount of

income taxes paidc. Principal and interest paid on the mortgaged. Vacancy rate and bad debts Vacancy rate and bad debts

True or False: An appraiser usually charges a fee based

upon the percentage of the appraised value.False Two real estate developers are working on similar but competing commercial developments. Both projects are finished at approximately the same time. Which of the following would most likely characterize the reasons that

one succeeds while the other fails?Select one:a. Supply

and demand.b. Situs.c. Plottage value.d. Nonhomogeneity.situs- location of the properties The cost to build a building with the same utility as a particular structure, but not necessarily identical to the existing structure, would be the:Select one:a. Replacement costb. Reproduction costc. Quantity survey costd.Unit-in-place cost replacement cost An appraiser is preparing an appraisal. Included in the appraisal report are several statistical charts detailing the traffic count. For which type of property is this type of

information most important?Select one:a. Offices.b.

Apartments.c. Retail stores.d. Industrial warehouses.retail stores A home located in an area where there are factories with much smoke and dust experiences:Select one:a. Physical deteriorationb. Economic obsolescencec. Locational obsolescenced. Functional obsolescence

• Economic obsolescence

An appraiser would use which of the following information if she or he was appraising a house built in 1935?Select

one:a. Consumer Price Index for 1935 with annual

adjustmentsb. Current construction costs adjusted by the CPI indexc. Replacement or reproduction costd. Actual cost of construction in 1935 Replacement or reproduction cost The property being appraised has 4 bedrooms. The comparables in the area have only 3 bedrooms. Using the Market Data approach, how does the appraiser arrive at an

estimate of value for the subject property?Select one:a.

Deduct the value of a bedroom from the selling price of the subject property.b. Add the value of a bedroom to the

selling price of the comparables.c. Adjust the selling price of the subject property by the difference of the salary of the owners of the properties.d. Deduct the value of a bedroom from the price paid for the property by the current owner.Add the value of a bedroom to the selling price of the comparables.When computing the net operating income, an appraiser

would deduct which of the following?Select one:a.

Depreciation.b. Interest payments on any mortgages.c.Both depreciation and interest payments on any

mortgages.d. None of these choices.none The appraised value of a quality single-family residence would probably NOT take into consideration which of the following:Select one:a. Projected rental incomeb. The