NSAR Salesperson Licensing Course
Exam Study Guide
Subjective Value - Answer the perception of value in the minds of the buyer and seller
Objective Value - Answer related to the direct cost of creating (e.g. acquiring a lot and
building a home)
Types of value found in the Canadian Economy - Answer -insurable; book
-appraised
-salvage
-assessed
-liquidation
-loan
-sentimental
Three approaches that appraisers use to establish an estimate of value - Answer -cost
approach (actual cost)
-income approach (subjective value)
-direct comparison approach (subjective value)
market price - Answer the price for an individual property
market value (aka value in exchange) - Answer an estimate of value arising from many
sales (market prices)
Definition of Market Value - Answer The most probable price, as of a specified date, in
cash, or in terms equivalent to cash or in other precisely revealed terms, for which the
specified property rights should sell after reasonable exposure in a competitive market
under all conditions requisite to a fair-sale, with the buyer and seller each acting
prudently, knowledgeably, and for self-interest, and assuming that neither is under
undue duress.
What brokerage should you join after you pass this exam? Let's chat! - Answer
Instagram: @laurahalifaxrealtor
Facebook: Laura Sumarah
Text: 902 210 9876
The 4 assumptions of market value - Answer 1) reasonable time
,2) no undue pressure
3) prudent behaviour
4) informed buyer and seller
15 Principles of Value - Answer - Principle of Anticipation
- Principle of Balance
- Principle of Change
- Principle of Competition
- Principle of Conformity
- Principle of Consistent Use
- Principle of Contribution
- Principle of External Factors
- Principle of Highest & Best Use
- Principle of Increasing/Decreasing Returns
- Principle of Progression
- Principle of Regression
- Principle of Substitution
- Principle of Supply & Demand
- Principle of Surplus
- Productivity
Principle of Anticipation - Answer Buyers buy the present worth of future benefits (e.g.
thinking about resale value)
Principle of Balance - Answer Maximum value is maintained through balance (e.g. huge
house with only one car garage is not balanced)
Principle of Change - Answer A value today is valid only for today (e.g. large portion of
the community will be losing their jobs = lower value of house as lower demand)
Principle of Competition - Answer Excess profit breeds ruinous competition (two people
see same opportunity and both jump in; neither will achieve their anticipated profits)
Principle of Conformity - Answer Reasonable conformance with existing standards
protects value (houses that conform with one another hold their value)
, Principle of Consistent Use - Answer No double dipping when analyzing value (can't give
value to the house on a commercial property worth building on; must be viewed
together as you'd have to renovate the house to use it commercially)
Principle of Contribution - Answer Value relates to contribution; not cost (owner wants
to put in a pool that cost $10,000 but appraiser says it will only improve value of house
by $7,000)
Principle of External Factors - Answer Things nearby can influence value (two
comparable houses purchased on a quiet vs. noisy street = noisy street will have
decreased value)
Principle of Highest and Best Use - Answer Focus on the use that will produce the
greatest return (look at the property's current and potential use = large house on lot that
a four-plex could be built; value can increase based on this possibility)
Principle of Increasing/Decreasing Returns - Answer More is not necessarily better
(building one garage may increase value, but building two more wont increase 3x; it
reaches a point)
Principle of Progression - Answer The smallest house on the street might be the best
buy (when houses aren't similar; the poorest property increases in value)
Principle of Regression - Answer The largest house on the street might not be the best
buy (when houses aren't similar; the highest value home loses value due to it's
neighbours)
Principle of Substitution - Answer Buyers look for the best bang for their buck (they
value a home by comparing it to a substitute and choose the best priced one)
Principle of Supply and Demand - Answer Market forces are always at work (supply
decreases value; demand increases value)
Principle of Surplus Productivity - Answer Net income flows to the land (after all costs
are satisfied, the net income flows to land and establishes the value of that land)
Definition of Appraisal - Answer The act or process of estimating value and providing an
opinion concerning that value.
8 Steps of the Appraisal Process - Answer 1) Define the problem
2) Preliminary inspection & planning the work
3) Data collection & analysis
4) Apply the cost approach
5) Apply the direct comparison approach
6) Apply the income approach
Exam Study Guide
Subjective Value - Answer the perception of value in the minds of the buyer and seller
Objective Value - Answer related to the direct cost of creating (e.g. acquiring a lot and
building a home)
Types of value found in the Canadian Economy - Answer -insurable; book
-appraised
-salvage
-assessed
-liquidation
-loan
-sentimental
Three approaches that appraisers use to establish an estimate of value - Answer -cost
approach (actual cost)
-income approach (subjective value)
-direct comparison approach (subjective value)
market price - Answer the price for an individual property
market value (aka value in exchange) - Answer an estimate of value arising from many
sales (market prices)
Definition of Market Value - Answer The most probable price, as of a specified date, in
cash, or in terms equivalent to cash or in other precisely revealed terms, for which the
specified property rights should sell after reasonable exposure in a competitive market
under all conditions requisite to a fair-sale, with the buyer and seller each acting
prudently, knowledgeably, and for self-interest, and assuming that neither is under
undue duress.
What brokerage should you join after you pass this exam? Let's chat! - Answer
Instagram: @laurahalifaxrealtor
Facebook: Laura Sumarah
Text: 902 210 9876
The 4 assumptions of market value - Answer 1) reasonable time
,2) no undue pressure
3) prudent behaviour
4) informed buyer and seller
15 Principles of Value - Answer - Principle of Anticipation
- Principle of Balance
- Principle of Change
- Principle of Competition
- Principle of Conformity
- Principle of Consistent Use
- Principle of Contribution
- Principle of External Factors
- Principle of Highest & Best Use
- Principle of Increasing/Decreasing Returns
- Principle of Progression
- Principle of Regression
- Principle of Substitution
- Principle of Supply & Demand
- Principle of Surplus
- Productivity
Principle of Anticipation - Answer Buyers buy the present worth of future benefits (e.g.
thinking about resale value)
Principle of Balance - Answer Maximum value is maintained through balance (e.g. huge
house with only one car garage is not balanced)
Principle of Change - Answer A value today is valid only for today (e.g. large portion of
the community will be losing their jobs = lower value of house as lower demand)
Principle of Competition - Answer Excess profit breeds ruinous competition (two people
see same opportunity and both jump in; neither will achieve their anticipated profits)
Principle of Conformity - Answer Reasonable conformance with existing standards
protects value (houses that conform with one another hold their value)
, Principle of Consistent Use - Answer No double dipping when analyzing value (can't give
value to the house on a commercial property worth building on; must be viewed
together as you'd have to renovate the house to use it commercially)
Principle of Contribution - Answer Value relates to contribution; not cost (owner wants
to put in a pool that cost $10,000 but appraiser says it will only improve value of house
by $7,000)
Principle of External Factors - Answer Things nearby can influence value (two
comparable houses purchased on a quiet vs. noisy street = noisy street will have
decreased value)
Principle of Highest and Best Use - Answer Focus on the use that will produce the
greatest return (look at the property's current and potential use = large house on lot that
a four-plex could be built; value can increase based on this possibility)
Principle of Increasing/Decreasing Returns - Answer More is not necessarily better
(building one garage may increase value, but building two more wont increase 3x; it
reaches a point)
Principle of Progression - Answer The smallest house on the street might be the best
buy (when houses aren't similar; the poorest property increases in value)
Principle of Regression - Answer The largest house on the street might not be the best
buy (when houses aren't similar; the highest value home loses value due to it's
neighbours)
Principle of Substitution - Answer Buyers look for the best bang for their buck (they
value a home by comparing it to a substitute and choose the best priced one)
Principle of Supply and Demand - Answer Market forces are always at work (supply
decreases value; demand increases value)
Principle of Surplus Productivity - Answer Net income flows to the land (after all costs
are satisfied, the net income flows to land and establishes the value of that land)
Definition of Appraisal - Answer The act or process of estimating value and providing an
opinion concerning that value.
8 Steps of the Appraisal Process - Answer 1) Define the problem
2) Preliminary inspection & planning the work
3) Data collection & analysis
4) Apply the cost approach
5) Apply the direct comparison approach
6) Apply the income approach
