RESIDENTIAL PROPERTY VALUATION FINAL EXAM
PRACTICE QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. Residential property valuation primarily determines:
A. Insurance cost
B. Market value of a home
C. Construction permit fee
D. Loan interest rate
Answer: B
Rationale: It estimates the market value of residential property.
2. The most commonly used approach for residential valuation is:
A. Income approach
B. Sales comparison approach
C. Cost approach only
D. Stock approach
Answer: B
Rationale: Most homes are valued using comparable sales.
3. Market value is defined as:
A. Forced sale price
B. Most probable price in a competitive market
C. Tax value
D. Insurance value
Answer: B
Rationale: Assumes willing buyer and seller.
4. The principle of substitution means:
,A. Buyers overpay
B. Buyers will not pay more than similar properties
C. Sellers set taxes
D. Loans determine price
Answer: B
Rationale: Value is limited by alternatives.
5. A comparable property is also called a:
A. Subject
B. Comp
C. Lease
D. Cost unit
Answer: B
Rationale: A similar property used for comparison.
6. The subject property is:
A. A similar sale
B. The property being appraised
C. A rental unit
D. A tax record
Answer: B
Rationale: Main focus of valuation.
7. Adjustments are made to comparables to:
A. Increase taxes
B. Make properties equivalent
C. Reduce income
D. Set insurance
Answer: B
Rationale: Standardization for comparison.
8. A positive adjustment is made when the comp is:
, A. Superior
B. Inferior
C. Identical
D. Newer only
Answer: B
Rationale: Increase comp value.
9. A negative adjustment is made when the comp is:
A. Inferior
B. Superior
C. Identical
D. Older only
Answer: B
Rationale: Reduce comp value.
10. Time adjustment reflects:
A. Property age
B. Market changes over time
C. Taxes
D. Loan changes
Answer: B
Rationale: Market appreciation or decline.
11. Location adjustment considers:
A. Interior design
B. Neighborhood differences
C. Taxes
D. Insurance
Answer: B
Rationale: Location affects value.
12. Physical characteristics include:
PRACTICE QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. Residential property valuation primarily determines:
A. Insurance cost
B. Market value of a home
C. Construction permit fee
D. Loan interest rate
Answer: B
Rationale: It estimates the market value of residential property.
2. The most commonly used approach for residential valuation is:
A. Income approach
B. Sales comparison approach
C. Cost approach only
D. Stock approach
Answer: B
Rationale: Most homes are valued using comparable sales.
3. Market value is defined as:
A. Forced sale price
B. Most probable price in a competitive market
C. Tax value
D. Insurance value
Answer: B
Rationale: Assumes willing buyer and seller.
4. The principle of substitution means:
,A. Buyers overpay
B. Buyers will not pay more than similar properties
C. Sellers set taxes
D. Loans determine price
Answer: B
Rationale: Value is limited by alternatives.
5. A comparable property is also called a:
A. Subject
B. Comp
C. Lease
D. Cost unit
Answer: B
Rationale: A similar property used for comparison.
6. The subject property is:
A. A similar sale
B. The property being appraised
C. A rental unit
D. A tax record
Answer: B
Rationale: Main focus of valuation.
7. Adjustments are made to comparables to:
A. Increase taxes
B. Make properties equivalent
C. Reduce income
D. Set insurance
Answer: B
Rationale: Standardization for comparison.
8. A positive adjustment is made when the comp is:
, A. Superior
B. Inferior
C. Identical
D. Newer only
Answer: B
Rationale: Increase comp value.
9. A negative adjustment is made when the comp is:
A. Inferior
B. Superior
C. Identical
D. Older only
Answer: B
Rationale: Reduce comp value.
10. Time adjustment reflects:
A. Property age
B. Market changes over time
C. Taxes
D. Loan changes
Answer: B
Rationale: Market appreciation or decline.
11. Location adjustment considers:
A. Interior design
B. Neighborhood differences
C. Taxes
D. Insurance
Answer: B
Rationale: Location affects value.
12. Physical characteristics include:
