Valuation Principles & Procedures

Which of the following best describes the bundle of rights theory in real estate?

Market value is best defined as:

The principle of substitution states that:

A comparable sale occurred 8 months ago for $450,000. Market conditions analysis shows property values have increased 0.5% per month. What is the adjusted sale price?

What is the difference between reproduction cost and replacement cost?

A property generates $85,000 in Net Operating Income and sells for $1,062,500. What is the overall capitalization rate?

In the band of investment technique for developing a capitalization rate, if the mortgage component is 75% at 5.5% and equity component is 25% at 12%, what is the overall rate?

Which type of depreciation is considered incurable?

The principle of anticipation is most directly applied in which approach to value?

A property has effective gross income of $120,000 and operating expenses of $45,000. If the capitalization rate is 8.5%, what is the indicated value?

Which of the following is an example of external obsolescence?

In paired sales analysis, two similar properties sold for $385,000 and $365,000. The only significant difference is that one has a fireplace and the other does not. What is the indicated adjustment for a fireplace?

Which type of depreciation is always incurable?

The principle of conformity suggests that:

Investment value differs from market value in that investment value:

A building has a reproduction cost new of $850,000. Physical depreciation is estimated at 15%, functional obsolescence at 8%, and external obsolescence at 5%. What is the depreciated value of the improvements?

The principle of progression indicates that:

In reconciling value indications from the three approaches, an appraiser should:

The Gross Rent Multiplier (GRM) for a property is calculated as:

Which of the following best describes the highest and best use concept?

The principle of surplus productivity states that:

Using the band of investment technique, if the loan-to-value ratio is 75% with a mortgage constant of 7.5%, and the equity capitalization rate is 12%, what is the overall capitalization rate?

A comparable property sold for $450,000. It has a two-car garage worth $8,000, while the subject has a three-car garage worth $12,000. What adjustment should be made to the comparable?

A property has a reproduction cost new of $280,000. Physical depreciation is $35,000, functional obsolescence is $15,000, and external obsolescence is $20,000. What is the depreciated cost of the improvements?

A rental property generates $48,000 in gross annual income. Operating expenses are $18,000 annually. If the overall capitalization rate is 8%, what is the indicated value using direct capitalization?

Which of the following is NOT typically included in operating expenses for income capitalization?

A property sold for $320,000 one year ago. If market conditions have improved by 6% since that sale, what is the time-adjusted sale price for comparison purposes?

Which of the following is NOT included in the bundle of rights associated with real property ownership?

When selecting comparable sales for the sales comparison approach, which factor is MOST important?

A comparable sale occurred 8 months ago for $350,000. Market data indicates property values have increased 0.5% per month. What is the time-adjusted value of this comparable?

A property has a replacement cost new of $400,000, physical depreciation of $50,000, functional obsolescence of $25,000, and external obsolescence of $30,000. What is the depreciated cost of the improvements?

What is the primary difference between replacement cost and reproduction cost?

Using the band of investment technique, calculate the overall capitalization rate given: mortgage at 70% LTV with 6% rate, and equity at 30% with 12% required return.

Which characteristic of real property refers to the concept that no two parcels are exactly alike?

The reconciliation process in an appraisal involves:

A building's gross rent multiplier (GRM) is 120. If the monthly rent is $2,500, what is the indicated value?

A rental property generates $60,000 in gross annual income. Operating expenses are $18,000 annually. Using a capitalization rate of 8%, what is the indicated value?

A property generates $48,000 in annual net operating income. Using a capitalization rate of 8%, what is the indicated value using direct capitalization?

An appraiser is valuing a 2,000 sq ft home and finds a comparable sale of a 2,200 sq ft home that sold for $440,000. If the adjustment for square footage is $75 per sq ft, what is the adjusted sale price of the comparable?

The highest and best use analysis must consider all of the following EXCEPT:

Which of the following is a physical characteristic of real property?

A property in an area of larger, more expensive homes may experience:

External obsolescence is characterized by:

In a paired sales analysis, two similar properties sold for $425,000 and $445,000. The only significant difference is that the higher-priced property has a fireplace. What adjustment should be made for a fireplace?

In the cost approach, what is the difference between reproduction cost and replacement cost?

A rental property generates $120,000 in gross annual income. Operating expenses are $45,000. If the overall capitalization rate is 8%, what is the indicated value using direct capitalization?

A property's assessed value is $180,000 and the assessment ratio is 85% of market value. What is the estimated market value?

The principle of balance in real estate valuation refers to:

In paired sales analysis, two properties sold for $285,000 and $305,000 respectively. The only difference is that the higher-priced property has a fireplace. What is the indicated adjustment for a fireplace?

A comparable property sold for $285,000 and has a two-car garage while the subject has a one-car garage. If a garage bay is worth $8,000, what adjustment should be made to the comparable?