ASA Real Property Appraisal Concepts 1 — Questions and Answers
Question 1: Which principle holds that the value of a property is affected by, and affects, the value of surrounding properties?
- Principle of conformity (Correct answer)
- Principle of substitution
- Principle of contribution
- Principle of anticipation
Correct answer: Principle of conformity
The principle of conformity states that maximum value is achieved when a property is compatible with the land uses in its neighborhood.
Question 2: The principle of substitution states that a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. This principle underpins which approach?
- All three approaches to value (Correct answer)
- Cost approach only
- Sales comparison approach only
- Income approach only
Correct answer: All three approaches to value
Substitution is the foundation of all three approaches — buyers compare cost, sales of comparables, and income-producing alternatives.
Question 3: Highest and best use analysis requires that the use be legally permissible, physically possible, financially feasible, and:
- Maximally productive (Correct answer)
- Environmentally compliant
- Approved by local zoning authorities
- Currently in use
Correct answer: Maximally productive
The fourth test of highest and best use is that the use must generate the maximum value — it must be maximally productive among all feasible uses.
Question 4: In real property appraisal, 'effective age' refers to:
- The age of a property as indicated by its condition and utility (Correct answer)
- The actual chronological age since construction
- The remaining economic life of the building
- The age stated in the building permit
Correct answer: The age of a property as indicated by its condition and utility
Effective age reflects the actual condition and functional utility of the improvements and may differ from chronological age due to maintenance or renovation.
Question 5: Which type of depreciation results from factors outside the property, such as proximity to a nuisance?
- External (economic) obsolescence (Correct answer)
- Functional obsolescence
- Physical deterioration
- Curable depreciation
Correct answer: External (economic) obsolescence
External obsolescence is caused by factors beyond the property's boundaries — such as neighborhood decline, adverse zoning, or nearby negative land uses.
Question 6: The sales comparison approach adjusts comparable sales to the subject property by applying adjustments that are:
- Added when the comparable is inferior and subtracted when the comparable is superior (Correct answer)
- Added when the comparable is superior and subtracted when the comparable is inferior
- Always applied as percentage adjustments
- Determined solely by paired data analysis
Correct answer: Added when the comparable is inferior and subtracted when the comparable is superior
When a comparable is inferior to the subject in some feature, an upward adjustment is made to the comparable's price to reflect what it would have sold for with that feature.
ASA Real Property Appraisal Concepts 1
Which principle holds that the value of a property is affected by, and affects, the value of surrounding properties?