procedures Basic Appraisal F i n a l Examination #2 2 nd edition

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Preston Moris Rose
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1 F i n a l Examination #2 A n s w e r Key Page When determining effective gross income from potential gross income, an appraiser considers a. debt service. b. depreciation. c. fixed expenses. d. vacancy losses. Page The area that a structure s foundation rests on is called a a. footer. b. joist. c. pier. d. slab. Page Based on dimensions, which commercial building site typically would be the most valuable? a. 80 x 185 b. 150 x 200 c. 185 x 80 d. 200 x 150 Page Which is general data on a subject property? a. school district b. site topography c. utility source d. view Page Identify the method of determining observable depreciation for a structure. a. calculate unit-in-place b. determine economic life c. establish effective age d. inspection by the appraiser Page Calculate the percent of depreciation for a house using the age-life method. Current building cost $200,000; Effective age 25 years; Actual age 40 years; Remaining economic life 50 years a % b % c % d % Page When performing a final inspection of a newly constructed dwelling, the appraiser is responsible for a. certifying compliance with building codes. b. issuing an occupancy permit. c. notifying building authorities of completion. d. recertifying completion per plans/specs. Page Using a GRM, the income approach requires the appraiser to a. convert net income into a value estimate. b. divide the net income into the rate. c. multiply the gross rent by a multiplier. d. use gross rent divided by the property value. Page The rental amount according to lease terms is defined as a. contract rent. b. effective rent. c. market rent. d. term rent.

2 Page What is one key difference between a restricteduse appraisal report and other reporting options? a. can t be used for financing b. client is the only intended user c. only good for one day d. not as credible Page The structures, as they are proposed to be situated on a lot, are depicted on a a. lot and block survey. b. plat map. c. plot plan. d. topography map. Page With the information given, calculate the value of an apartment building using direct capitalization. Annual income $150,000; Monthly expenses $2,000; Capitalization rate 9% a. $1,134,000 b. $1,400,000 c. $1,644,444 d. $1,666,667 Page What condition exists when business volume on a street decreases by 50% after construction of a freeway? a. deterioration b. gentrification c. obsolescence d. progression Page What should an appraiser do if she finds an addition has been made to a house being appraised without a building permit? a. Disclose and include an extraordinary assumption in the report. b. Notify the building authorities of the owner s violation. c. Require in the appraisal that the property owner apply for a building permit. d. Withdraw, as an appraiser cannot appraise something illegal. Page A rectangular parcel of land containing five acres has 600 feet of road frontage. How many feet deep is the parcel? a. 363 b. 378 c. 495 d. 660 Page For the sales comparison approach, in which case would using a percentage adjustment be appropriate? a. gross living area b. market conditions c. overall condition d. significant features Page Which is a true statement regarding replacement cost and reproduction cost? a. Both consider external obsolescence. b. Deterioration is cured in replacement. c. Reproduction reproduces functional obsolescence. d. There is never a difference between the terms. Page While closed sales are required for the sales comparison approach, why would analyzing listed properties be useful? a. A listing can be used as a third comparable property. b. Location adjustments can be extracted from listings. c. They are necessary for determining time adjustments. d. They provide evidence of substitution and the upper limit of value. Page If the gross rent multiplier is 180 and monthly rent is $600, what is the value indication? a. $108,000 b. $110,000 c. $160,000 d. $180,000

3 Page Sale #1 sold for $60,000 and the appraiser has determined that it is 15% superior to the subject property. What is the indicated value of the subject? a. $51,000 b. $58,500 c. $61,500 d. $69,000 Page Exposure time occurs a. before the property has been recognized by the typical buyer. b. if the highest and best use cannot be achieved immediately. c. prior to the effective date of the appraisal. d. when the property has been on the market too long. Page An unfurnished house rents for $6,000 per year. An appraiser estimates the value of the subject at $80,000. What s the monthly gross rent multiplier? a b c. 133 d. 160 Page According to USPAP, with who can the appraiser discuss confidential information regarding an assignment without the client s specific consent? a. another appraiser who will rely on the report b. investigator from the appraiser board c. owner s attorney inquiring for estate planning d. property owner in a refinance transaction Page Geologic characteristics of a parcel of land include a. air quality. b. climate. c. soil type. d. transportation. Page What level of detail is indicated by USPAP for reporting highest and best use in a self-contained appraisal report? a. describe b. narrate c. state d. summarize Page Guidelines established by jurisdictions for minimum standards of construction methods and materials are known as a. ADA requirements. b. building codes. c. permit standards. d. zoning codes Page Which might require a use variance rather than an area variance to be permissible in a strictly residential neighborhood? a. Adding two more stories than permitted on the house to provide more livability. b. Constructing an eight-car garage to store the owner s car collection. c. Converting a garage to a sales area for pottery made by the owner. d. Expanding the house beyond a side yard setback to build a gourmet kitchen. Page Which is a true statement about the appraiser s workfile? a. A workfile is not necessary for oral reports used as testimony in court. b. A workfile preserves evidence of the appraiser s observance of USPAP. c. The file requires a systematic and orderly flow of information. d. The original signed appraisal report must be in the file.

4 Page The most detailed method of estimating a reproduction cost for a structure is a. comparative unit. b. index. c. quantity survey. d. square foot. Page The duration of time during which a structure may be financially efficient is its a. chronological age. b. economic life. c. effective age. d. observable life. Page Which statement is FALSE regarding reconciliation in an assignment of an older owner-occupied single-family dwelling located in a neighborhood that is now predominantly tenant-occupied? a. Cost approach is of little value due to the property s age. b. Income approach is given little weight as the property is owner-occupied. c. Income approach should be considered due to a typical buyer s potential use. d. Sales comparables would include properties purchased by owner-occupants. Page A comparable sale that closed two days ago for $152,000 also sold six months ago for $149,000. What was the percent of appreciation during that time? a % b % c % d % Page What is the primary purpose of a drain trap? a. catch items that may have dropped into the drain b. keep debris from entering the sewer line c. prevent water from rushing out d. stop the backflow of gases and fumes Page A primary characteristic of a casement window is a(n) a. arched top. b. fixed sash. c. side hinge. d. top hinge. Page The land valuation method that uses a ratio of land to improved value is called a. allocation. b. capitalization. c. extraction. d. land residual. Page Which exterior siding material has a type known as T-111? a. brick b. stucco c. vinyl d. wood Page For the appraisal of an older single-family residential dwelling, where should the appraiser put his reliance? a. cost conclusions b. market rents c. recent listings d. recent sales Page A comparable sale that sold for $102,000 requires the adjustments below. What percent is the total of gross adjustments? Location +$5,000; Condition -$7,500; Physical characteristics +$2,500 a. 0% b. 4.9% c. 9.8% d. 14.7%

5 Page The property described below is selling for $2,700 per acre. What is the total purchase price? S ½ of SW ¼ of SW ¼ of Section 6 N ½ of NW ¼ of Section 7 a. $216,000 b. $243,000 c. $270,000 d. $324,000 Page If the appraiser elects NOT to use one or more of the valuation approaches in the appraisal assignment, what is the appraiser s responsibility according to USPAP? a. explain in the report b. gain consent from the client c. note in the workfile d. notify the client Page The appraiser has the responsibility in the scope of work to ensure that the a. client agrees with the value opinion. b. property s highest and best use is met. c. value opinion is credible. d. value opinion will withstand time. Page The method for estimating replacement cost using costs of recently constructed comparable structures is the a. comparative unit. b. index. c. quantity survey. d. unit-in-place. Page When would the determined highest and best use NOT necessarily be the most profitable use? a. highest and best use is a non-commercial use b. if the highest and best use is a public use c. subject is a vacant parcel of land d. zoning does not allow the ideal use Page Determine the effective gross income of an occupied property from the information provided. 2 $650 per month; 2 $800 per month; Fixed expenses $530 per month; Vacancy rate 3.5%; Variable expenses $220 per month a. $24,582 b. $25,800 c. $33,582 d. $34,800 Page If the subject is 5% superior to the comparable due to size and 10% inferior due to location, what adjustment is made to the comparable? a. -5% b. -15% c. +5% d. +15% Page The effective age of a house has been established at 30 years. The remaining economic life is 50 years. What is the percent of depreciation? a. 16.7% b. 26.7% c. 37.5% d. 60.0% Page Research revealed the following rates for rental units in a market. For what will the landlord rent his units if he uses the median of the range? $580 - $490 - $575 - $580 - $570 a. $559 b. $570 c. $575 d. $580

6 Page Which is taken into consideration when determining gross income and disregarded when determining gross rent? a. debt service and depreciation b. fixed and variable expenses c. miscellaneous income d. vacancy and collection loss Page Which is part of a structure s mechanical system? a. appliances b. roof c. foundation d. water heater Page When residential uses are allowed in a commercial zone, but commercial uses are not allowed in a residential zone, the zoning is referred to as a. a variance. b. grandfathered. c. non-conforming. d. pass-through.

How to Read a Real Estate Appraisal Report

How to Read a Real Estate Appraisal Report Much of the private, corporate and public wealth of the world consists of real estate. The magnitude of this fundamental resource creates a need for informed