Property Valuation and Appraisal Flashcards
7 cards from real Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Property Valuation and Appraisal flashcards as text
Highest and best use analysis requires that the use be legally permissible, physically possible, financially feasible, and:
Answer: Maximally productive
The four tests of highest and best use conclude with the use that is maximally productive.
An appraiser observes that homes lose value because a busy highway was built behind them. This is best classified as:
Answer: External (economic) obsolescence
External obsolescence is a loss in value caused by factors outside the property boundaries.
In the cost approach, what must be subtracted from the reproduction cost of improvements?
Answer: Accrued depreciation
Accrued depreciation is deducted from improvement cost, then land value is added back to reach the estimate.
A four-unit building rents each unit for $1,200 per month. Using a GRM of 90, what is the indicated value?
Answer: $432,000
Annual gross rent is 4 × $1,200 × 12 = $57,600; multiplied by 90 the GRM here uses monthly rent: $4,800 × 90 = $432,000.
Which principle states that maximum value is achieved when a property conforms with surrounding properties?
Answer: Conformity
The principle of conformity holds that uniformity among nearby properties supports maximum value.
An expensive home located among smaller, lower-value homes will likely be affected by the principle of:
Answer: Regression
Regression holds that a high-value property's worth is dragged down by surrounding lower-value properties.
What is the primary purpose of a reconciliation in the appraisal process?
Answer: To weigh the approaches and arrive at a final value opinion
Reconciliation is the appraiser's analysis of the indicated values to form a single, supported opinion of value.