Appraisal Practice Exam Questions
with Verified Solutions
Demographic considerations in real estate appraisals would include:
a) The sale prices of residential properties
b) The soil types on the subject property
c) The income level of the property owners
d) The age of the residences in a market - ANS-c) The income level of the property
owners
When demand for housing increases, the supply: - ANS-Increases slowly
The subject is located in a market where the population is stable but the average
number of persons per household has increased from 2.35 to 2.77. What does this
imply about the apartment market in the subject's area? - ANS-There should be less
demand for apartments
Office space supply is most affected by:
a) population changes in the subject's area
b) changes in retail buying habits
c) the conversion or new construction of office buildings
d) increases in the regulation of retail (shopping center) construction - ANS-c) the
conversion or new construction of office buildings
The economic base of a community is - ANS-The economic activity of a community that
enables it to attract income from outside its borders.
What type of analysis is concerned with the characteristics of a property type, such as
the office market? - ANS-Market analysis
Gentrification is - ANS-A process by which older homes in a neighborhood are
remodeled and different residents replace the lower-income residents.
Linkages are the - ANS-Time-distance relationships between a property use and
supporting facilities
Land use planners tend to place low-density residential land uses next to - ANS-Higher-
density residential uses
,Highest and best use analysis is required in - ANS-Market value appraisals
The subject real estate includes two platted lots in a residential subdivision. Both
parcels are buildable, but one owner purchased both lots and built a house in the middle
of the two lots that straddles the property lines. Every other property in the addition
includes only one lot. The site value in this market is $50,000 per lot. The market value
of both parcels (land only) is - ANS-$100,000
The subject real estate us a 0.5-acre site improved with a 24-year-old, 1,400 S.F.
residence. The market is overwhelmed with bank-owned properties for sale. The buyers
for the subject are only speculators. In this market, - ANS-Properties that only appeal to
speculators must have a discount equal to the required speculator's incentive
Transferable Development Rights (TDRs) - ANS-Are a method by which the density of
zoning is controlled by planning, but the density (one unit per acre vs. 10 units per acre)
is marketable between the owners in the community
The subject is 80% covered with a legal wetland. What type of constraint on
development is this an example of?
a) topographical
b) legal
c) physical
d) all of the above - ANS-d) all of the above
In a highest and best-use analysis in an oversupplied market, it is likely that the
___________ is/are more significant than in a balanced market.
a) physically possible uses
b) current use of the property
c) timing of the use
d) brokerage fees - ANS-c) timing of the use
When an appraiser completes a secondary market residential form (such as a Fannie
Mae form), the highest and best use as though vacant is - ANS-not included because
the form instructions state that the form is only to be used when the highest and best
use is to leave the residence on the site; if the highest and best use is to remove the
residence from the site, these types of forms should not be used.
The subject was financed with a mortgage loan that started out with a payment that was
less than enough to satisfy the interest charges on the loan. At the beginning of the third
year and for the next two years, the paymetn went up to a level at which it was only
enough to pay the interest on the loan. The payment was increased at the beginning of
Year 5 to a level that would amortize the loan within 26 years. Three different payments
were paid, but the interest rate was always 6%. This is called a - ANS-Graduated
payment mortgage
, The subject is a 1.25-acre site located at the corner of Main and South in Smallburg.
The site is perfect for a new drugstore, gas station, or bank branch, but has no curb cuts
on either busy street. The city refused to give curb cuts within 150 feet of the
intersection to accommodate better traffic flow. Access is from the rear via the parking
lot of another site. This lack of direct access from the busy street will - ANS-Decrease
demand for the site because some users will only buy a property with direct access
The subject is a 10-acre industrial site in the suburbs of Bigville. The most significant
positive government influence on the property value would be: - ANS-A decrease in
employment expenses (cost of employees)
The subject is a 0.25-acre site with 100 feet of frontage on the Atlantic Ocean. This site
is located on a small island in a bay. There is only enough frontage for 35 such lots on
this island. The zoning requires 100 feet of ocean frontage to build. Sites with ocean
frontage sell for 500% more than similar land without frontage on the ocean. This
frontage limitation will cause: - ANS-Prices to be very high for the lots that are buildable
if there is demand for oceanfront lots in this area.
High interest rates cause - ANS-People to buy less on credit
The subject real estate is improved with a two-bedroom home that is located in a market
where demand for that design is high. There is also a good market for one-bedroom
homes. The market for four-bedroom homes is weak and over-supplied. In this market,
85% of buyers pay cash for real estate. The other 15% commonly finance less than half
of the price. An important factor for these buyers would be: - ANS-The level of taxation
on real estate
The subject real estate is located next to a busy thoroughfare with one lane in each
direction. The local government is planning to expand the road to four lanes and will
need a 21-ft by 100-ft. area off the front of the property. To initially establish "just
compensation," the local government usually - ANS-Appraises the property before the
taking and again after the taking (with the same effective date) and makes an offer
based on the difference between the two values.
Zoning - ANS-Controls land use
The most common definition of market value in the United States includes the following
specification: - ANS-The assumption of a sale of the subject on the effective date of
appraisal.
An appraiser was recently asked to appraise a hotel. The comparable sales used in this
analysis were all sales of the entire operation. The income used in the calculation was
based on the rental rate of each sleeping room plus the sales at the restaurant and bar.
In this cases, the appraiser provided the value of - ANS-The going concern
with Verified Solutions
Demographic considerations in real estate appraisals would include:
a) The sale prices of residential properties
b) The soil types on the subject property
c) The income level of the property owners
d) The age of the residences in a market - ANS-c) The income level of the property
owners
When demand for housing increases, the supply: - ANS-Increases slowly
The subject is located in a market where the population is stable but the average
number of persons per household has increased from 2.35 to 2.77. What does this
imply about the apartment market in the subject's area? - ANS-There should be less
demand for apartments
Office space supply is most affected by:
a) population changes in the subject's area
b) changes in retail buying habits
c) the conversion or new construction of office buildings
d) increases in the regulation of retail (shopping center) construction - ANS-c) the
conversion or new construction of office buildings
The economic base of a community is - ANS-The economic activity of a community that
enables it to attract income from outside its borders.
What type of analysis is concerned with the characteristics of a property type, such as
the office market? - ANS-Market analysis
Gentrification is - ANS-A process by which older homes in a neighborhood are
remodeled and different residents replace the lower-income residents.
Linkages are the - ANS-Time-distance relationships between a property use and
supporting facilities
Land use planners tend to place low-density residential land uses next to - ANS-Higher-
density residential uses
,Highest and best use analysis is required in - ANS-Market value appraisals
The subject real estate includes two platted lots in a residential subdivision. Both
parcels are buildable, but one owner purchased both lots and built a house in the middle
of the two lots that straddles the property lines. Every other property in the addition
includes only one lot. The site value in this market is $50,000 per lot. The market value
of both parcels (land only) is - ANS-$100,000
The subject real estate us a 0.5-acre site improved with a 24-year-old, 1,400 S.F.
residence. The market is overwhelmed with bank-owned properties for sale. The buyers
for the subject are only speculators. In this market, - ANS-Properties that only appeal to
speculators must have a discount equal to the required speculator's incentive
Transferable Development Rights (TDRs) - ANS-Are a method by which the density of
zoning is controlled by planning, but the density (one unit per acre vs. 10 units per acre)
is marketable between the owners in the community
The subject is 80% covered with a legal wetland. What type of constraint on
development is this an example of?
a) topographical
b) legal
c) physical
d) all of the above - ANS-d) all of the above
In a highest and best-use analysis in an oversupplied market, it is likely that the
___________ is/are more significant than in a balanced market.
a) physically possible uses
b) current use of the property
c) timing of the use
d) brokerage fees - ANS-c) timing of the use
When an appraiser completes a secondary market residential form (such as a Fannie
Mae form), the highest and best use as though vacant is - ANS-not included because
the form instructions state that the form is only to be used when the highest and best
use is to leave the residence on the site; if the highest and best use is to remove the
residence from the site, these types of forms should not be used.
The subject was financed with a mortgage loan that started out with a payment that was
less than enough to satisfy the interest charges on the loan. At the beginning of the third
year and for the next two years, the paymetn went up to a level at which it was only
enough to pay the interest on the loan. The payment was increased at the beginning of
Year 5 to a level that would amortize the loan within 26 years. Three different payments
were paid, but the interest rate was always 6%. This is called a - ANS-Graduated
payment mortgage
, The subject is a 1.25-acre site located at the corner of Main and South in Smallburg.
The site is perfect for a new drugstore, gas station, or bank branch, but has no curb cuts
on either busy street. The city refused to give curb cuts within 150 feet of the
intersection to accommodate better traffic flow. Access is from the rear via the parking
lot of another site. This lack of direct access from the busy street will - ANS-Decrease
demand for the site because some users will only buy a property with direct access
The subject is a 10-acre industrial site in the suburbs of Bigville. The most significant
positive government influence on the property value would be: - ANS-A decrease in
employment expenses (cost of employees)
The subject is a 0.25-acre site with 100 feet of frontage on the Atlantic Ocean. This site
is located on a small island in a bay. There is only enough frontage for 35 such lots on
this island. The zoning requires 100 feet of ocean frontage to build. Sites with ocean
frontage sell for 500% more than similar land without frontage on the ocean. This
frontage limitation will cause: - ANS-Prices to be very high for the lots that are buildable
if there is demand for oceanfront lots in this area.
High interest rates cause - ANS-People to buy less on credit
The subject real estate is improved with a two-bedroom home that is located in a market
where demand for that design is high. There is also a good market for one-bedroom
homes. The market for four-bedroom homes is weak and over-supplied. In this market,
85% of buyers pay cash for real estate. The other 15% commonly finance less than half
of the price. An important factor for these buyers would be: - ANS-The level of taxation
on real estate
The subject real estate is located next to a busy thoroughfare with one lane in each
direction. The local government is planning to expand the road to four lanes and will
need a 21-ft by 100-ft. area off the front of the property. To initially establish "just
compensation," the local government usually - ANS-Appraises the property before the
taking and again after the taking (with the same effective date) and makes an offer
based on the difference between the two values.
Zoning - ANS-Controls land use
The most common definition of market value in the United States includes the following
specification: - ANS-The assumption of a sale of the subject on the effective date of
appraisal.
An appraiser was recently asked to appraise a hotel. The comparable sales used in this
analysis were all sales of the entire operation. The income used in the calculation was
based on the rental rate of each sleeping room plus the sales at the restaurant and bar.
In this cases, the appraiser provided the value of - ANS-The going concern
