Market Analysis & Property Valuation Flashcards
7 cards from real IACP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis & Property Valuation flashcards as text
A property generates $120,000 in potential gross income, has a 5% vacancy rate, and $15,000 in operating expenses. What is the net operating income?
Answer: $99,000
$120,000 × 0.95 = $114,000 effective gross income minus $15,000 expenses = $99,000 NOI.
The market rent for a commercial space is $30/SF/year, but the tenant is paying $25/SF/year under a long-term lease. The $5 difference per SF is the:
Answer: Leasehold value
The leasehold value represents the benefit to the tenant from paying below-market (contract) rent, equal to the difference between market and contract rent.
Which type of market study focuses specifically on the competitive supply, demand, and pricing for a particular land use or property type?
Answer: Market analysis
A market analysis examines supply and demand conditions for a specific property type or land use in a defined geographic area.
When adjusting comparable sales for conditions of sale, an appraiser discovers a sale was a distressed foreclosure. The adjustment to the comparable would typically be:
Answer: Positive (upward)
A distressed foreclosure sale typically transacts below market value, so a positive (upward) adjustment is applied to bring it to arm's-length market value.
The reconciliation step in an appraisal requires the appraiser to:
Answer: Weight value indicators based on quality and relevance of data
Reconciliation requires the appraiser to analyze and weight the value indicators from each approach based on the quality, quantity, and relevance of the supporting data.
A neighborhood that is 40% developed with single-family homes, experiencing new commercial development at its edges, is most likely in which life cycle stage?
Answer: Growth
A neighborhood that is still actively developing with increasing land uses is in the growth stage of the neighborhood life cycle.
Which factor does NOT affect the selection of an appropriate capitalization rate in direct capitalization?
Answer: Physical condition of improvements
The physical condition of improvements affects value through income and expense projections but does not directly determine the capitalization rate selection.