RES Valuation & Appraisal

Question 1

Which three approaches are used by appraisers to estimate property value?

Accepted Answer

Sales Comparison, Income, and Cost Approaches

Answer

Market, Replacement, and Depreciation Approaches

Answer

Gross Rent, Net Income, and Replacement Approaches

Answer

Comparative Market, Replacement Cost, and Capitalization Approaches

Question 2

The Sales Comparison Approach to value is primarily based on:

Accepted Answer

Recent sales of similar properties in the area

Answer

The cost to replace the improvements on the property

Answer

The income the property is capable of generating

Answer

The assessed value assigned by the local tax assessor

Question 3

What does GRM stand for in real estate valuation?

Accepted Answer

Gross Rent Multiplier

Answer

Gross Revenue Multiplier

Answer

General Rate of Market

Answer

Gross Ratio Measure

Question 4

In appraisal, depreciation is defined as:

Accepted Answer

Any loss in value from any cause

Answer

The annual tax deduction allowed for property improvements

Answer

The increase in property value over time due to inflation

Answer

The difference between the list price and the final sale price

Question 5

The principle of substitution states that:

Accepted Answer

A prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute

Answer

A property's value is created by its highest and best use

Answer

Properties of similar type tend to conform to neighborhood standards

Answer

Value is created when supply and demand are in balance

Question 6

Functional obsolescence in a property refers to:

Accepted Answer

Loss in value due to outdated design, poor floor plan, or inadequate features

Answer

Physical deterioration caused by wear and tear on structural components

Answer

Loss in value due to factors located outside the property boundaries

Answer

A decrease in value caused by rising property tax assessments

Question 7

The Cost Approach to value estimates:

Accepted Answer

The cost to reproduce or replace improvements plus land value, minus accrued depreciation

Answer

The income stream a property will generate over its economic life

Answer

The price a willing buyer would pay based on comparable sales data

Answer

The present value of future rental income streams discounted at the cap rate