Basic Appraisal Procedures study Exam #1| 204 questions| with complete solutions

An entrepreneur is taking on a development project, and by his calculations, he expects to receive a 25% return on his investment in the project. This 25% figure represents CORRECT ANSWERS: entrepreneurial incentive- expected profit. A _______________ home is built in accordance with the HUD Code. CORRECT ANSWERS: manufactured The basic principle underlying the cost approach is the principle of ____________. CORRECT ANSWERS: substitution A property has a cost new of $350,000. It has an effective age of 20 years and a total expected economic life of 65 years. There are curable items totaling $45,000. If they are cured, it will reduce the effective age to 15 years. What is the value of the improvements on a modified age-life basis, before including the site value? CORRECT ANSWERS: Modified Age-Life Method. $350,000 - $45,000 = $305,000. 15 ÷ 65 = .231 or 23.1%. $305,000 X .231 = $70,455. $305,000 - $70,455 = $234,545 An old gas station on a good corner location in a desirable older neighborhood recently sold for $375,000. The reproduction cost of the improvements today would be $350,000 and the total depreciation is estimated to be 80%. What is the land value? CORRECT ANSWERS: Extraction Method. $350,000 X .2 = $70,000 (current building value). $375,000 - $70,000 = $305,000 (land value). The method that estimates land value based on a percentage of the total property value is the _______________ method. CORRECT ANSWERS: Allocation Method. That describes the allocation method - using percentages. What is the most common type of framing currently being used in new homes? CORRECT ANSWERS: Platform Framing. That is the standard today. Ranking analysis is a form of __________ analysis. CORRECT ANSWERS: Qualitative Methods. Yes, it is a qualitative method. __________ occurs within a property; while _________occurs off the site. CORRECT ANSWERS: Physical deterioration and functional obsolescence, external obsolescence In the sales comparison approach, sales data on __________ sales should be collected. CORRECT ANSWERS: at least three A house is rented for $1,050 per month, but lacks air conditioning. Comparable houses with air conditioning rent for $1,100 per month. The appropriate gross rent multiplier is 85. By the capitalized value method, how much is the depreciation attributable