Appraisal Methodology & Techniques 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 Appraisal Methodology & Techniques flashcards as text
Which adjustment in the sales comparison approach accounts for the difference in time between the sale date and the appraisal date?
Answer: Market conditions adjustment
Market conditions adjustments (time adjustments) reflect changes in property values between the date of a comparable sale and the effective date of the appraisal.
In the income approach, the overall capitalization rate (OAR) is calculated as:
Answer: NOI divided by value
The overall capitalization rate equals Net Operating Income divided by value (or sale price), expressing the relationship between income and value.
What is the primary purpose of a reconciliation in the appraisal process?
Answer: To weigh the reliability of each approach and arrive at a final value conclusion
Reconciliation involves weighing the relevance and reliability of each approach applied and exercising professional judgment to arrive at a final value opinion.
The 'gross rent multiplier' (GRM) is most appropriately used for:
Answer: Single-family and small residential income properties
The GRM is most commonly applied to single-family residential rentals and small income properties where gross rent data is readily available.
When applying the cost approach, which type of depreciation arises from factors outside the property boundaries?
Answer: External obsolescence
External obsolescence (also called economic obsolescence) results from negative influences outside the property, such as proximity to nuisances or adverse market conditions.
In paired sales analysis, an appraiser isolates the value contribution of a single feature by:
Answer: Comparing two sales that are identical except for the feature being studied
Paired sales analysis matches two sales that are nearly identical except for the characteristic being valued, allowing the appraiser to isolate that feature's market contribution.
Which statement best describes the concept of 'effective age' in appraisal?
Answer: The age indicated by the condition and utility of the structure, regardless of chronological age
Effective age reflects the apparent age of a structure based on its condition and utility, which may differ significantly from its actual chronological age.