Appraising Exam UPDATED ACTUAL
Questions and CORRECT Answers
Absorption Study - CORRECT ANSWER - An analysis of supply and demand concentrating
on the aspects of changes in product inventory when properties are offered and sold. The focus is
to identify the proper inventory which creates balance.
Accession - CORRECT ANSWER - Additional property rights that an owner acquires when
improvements (e.g. new carpet, paint, etc.) and/or additions are attached to the property by the
tenant at the tenant's own cost. This legal right means that the owner will acquire any
improvements to the property upon termination of the lease.
Accretion - CORRECT ANSWER - Land located next to a body of water increasing due to
water depositing additional soil (or waterborne solid material) gradually.
Accrued Depreciation - CORRECT ANSWER - The total amount of depreciation attributable
to the property.
Acre - CORRECT ANSWER - 43,560 square feet
Avulsion - CORRECT ANSWER - To tear off. The sudden loss of land or soil due to a sudden
natural act (e.g. earthquake, sudden change of river flow, etc.).
Alluvion - CORRECT ANSWER - The washing against a shoreline; depositing sand or soil so
as to gradually form firm ground
Amenities Benefit - CORRECT ANSWER - A gain resulting from a quality of life issue. Can
be tangible, or intangible, on the property or off.
Amortization - CORRECT ANSWER - The equal payment amount necessary to satisfy the
interest and principal of a loan.
,Amortization of $1 - CORRECT ANSWER - The period payment schedule necessary,
including interest and principle, to reduce a $1 (or any amount) debt with equal payments. See
"Mortgage Constant". One of the six functions of a dollar found on standard financial tables.
Annual Debt Service (ADS) - CORRECT ANSWER - The annual payments of a loan. It is
figured by multiplying the mortgage payment by the number of payments in one year.
Remember, it includes both the annual interest and principle payments.
Formula:
Monthly mortgage payments (with principle and interest) x 12 months.
Anticipation - CORRECT ANSWER - A purchase/sale decision based on the perceived future
value.
Appraisal - CORRECT ANSWER - The act or process of developing an opinion of value, or
an opinion of value based on generally accepted appraisal methods.
Appraisal Methodology - CORRECT ANSWER - Generally accepted processes to identify
value.
Appraisal Process - CORRECT ANSWER - Define Problem - Scope of Work - Data
Collection & Analysis - Approach to Value - Reconciliation & Final Opinion - Report
Appraisal Standards Board (ASB) - CORRECT ANSWER - A committee under the Appraisal
Foundation created to develop professional standards of practice for appraisals.
Appraisal Subcommittee - CORRECT ANSWER - The government oversight entity charged
with ensuring appraiser compliance with the federal laws. Their mandate includes, monitoring
the FFIRA, states, and the Appraisal Foundation for compliance wit Title XI, and maintaining a
registry of appraisers eligible to appraise FRT's.
,Appraiser - CORRECT ANSWER - One who performs professional appraisal services for
client's, using generally accepted appraisal methods and adhering to all state and federal
guidelines.
Appraiser Qualifications Board (AQB) - CORRECT ANSWER - A committee under the
Appraisal Foundation created to establish appraiser qualifications.
AQB - CORRECT ANSWER - Appraiser Qualifications Board
Arm's Length Transaction - CORRECT ANSWER - An agreement in which neither side has
an unusual advantage, or overriding influence.
ASB - CORRECT ANSWER - Appraisal Standards Board
Assessment - CORRECT ANSWER - A value amount placed on a property by the local
community for taxation purposes
Attached Type - CORRECT ANSWER - More than one unit connected together, having at
least one common wall.
Avulsion - CORRECT ANSWER - To tear off. The sudden loss of land or soil due to a sudden
natural act (e.g. earthquake, sudden change of river flow, etc.).
Balance - CORRECT ANSWER - Occurs when supply and demand factors at the point of
equilibrium.
Band of Investment Method - CORRECT ANSWER - Is used to determine the overall rate of
return on a property which is encumbered by a mortgage
Banks - CORRECT ANSWER - Financial entities engaged in the exchange of currency,
lending, and storage of legal tender.
, Bilateral Contract - CORRECT ANSWER - A contract where both parties have made
promises in exchange to the other party, therefore a "meeting of the minds" has occurred and
both parties are willing participants in the contract.
Example: A demonstration of this is when one party agrees to buy a home and the other party
agrees to sell.
Bundle of Rights - CORRECT ANSWER - The combined dominion over utilization of a
property, including possession, control, enjoyment, and exclusion .
CAM Fees - CORRECT ANSWER - Common Area Maintenance.
The operational and maintenance costs of the common areas.
Capital - CORRECT ANSWER - A sum of money available for investment
Capital Gain - CORRECT ANSWER - A sum of money or profit made from a sale of an asset.
Capital Improvements - CORRECT ANSWER - These are renovations or modifications which
change the characteristics of
Capitalization - CORRECT ANSWER - The conversion of income into value.
Capitalization Rate "R" - CORRECT ANSWER - An income to value percentage used as an
indicator of value. A Capitalization Rate is the rate your investment is paid back and is typically
based on the Net Operating Income (NOI). See "IRV" also
Example:
If you invest $1,000,000 on a property that has an NOI of $100,000, the Cap rate is 10%,
meaning it will take 10 years to pay back the initial investment. This is the rate of return. If the
Questions and CORRECT Answers
Absorption Study - CORRECT ANSWER - An analysis of supply and demand concentrating
on the aspects of changes in product inventory when properties are offered and sold. The focus is
to identify the proper inventory which creates balance.
Accession - CORRECT ANSWER - Additional property rights that an owner acquires when
improvements (e.g. new carpet, paint, etc.) and/or additions are attached to the property by the
tenant at the tenant's own cost. This legal right means that the owner will acquire any
improvements to the property upon termination of the lease.
Accretion - CORRECT ANSWER - Land located next to a body of water increasing due to
water depositing additional soil (or waterborne solid material) gradually.
Accrued Depreciation - CORRECT ANSWER - The total amount of depreciation attributable
to the property.
Acre - CORRECT ANSWER - 43,560 square feet
Avulsion - CORRECT ANSWER - To tear off. The sudden loss of land or soil due to a sudden
natural act (e.g. earthquake, sudden change of river flow, etc.).
Alluvion - CORRECT ANSWER - The washing against a shoreline; depositing sand or soil so
as to gradually form firm ground
Amenities Benefit - CORRECT ANSWER - A gain resulting from a quality of life issue. Can
be tangible, or intangible, on the property or off.
Amortization - CORRECT ANSWER - The equal payment amount necessary to satisfy the
interest and principal of a loan.
,Amortization of $1 - CORRECT ANSWER - The period payment schedule necessary,
including interest and principle, to reduce a $1 (or any amount) debt with equal payments. See
"Mortgage Constant". One of the six functions of a dollar found on standard financial tables.
Annual Debt Service (ADS) - CORRECT ANSWER - The annual payments of a loan. It is
figured by multiplying the mortgage payment by the number of payments in one year.
Remember, it includes both the annual interest and principle payments.
Formula:
Monthly mortgage payments (with principle and interest) x 12 months.
Anticipation - CORRECT ANSWER - A purchase/sale decision based on the perceived future
value.
Appraisal - CORRECT ANSWER - The act or process of developing an opinion of value, or
an opinion of value based on generally accepted appraisal methods.
Appraisal Methodology - CORRECT ANSWER - Generally accepted processes to identify
value.
Appraisal Process - CORRECT ANSWER - Define Problem - Scope of Work - Data
Collection & Analysis - Approach to Value - Reconciliation & Final Opinion - Report
Appraisal Standards Board (ASB) - CORRECT ANSWER - A committee under the Appraisal
Foundation created to develop professional standards of practice for appraisals.
Appraisal Subcommittee - CORRECT ANSWER - The government oversight entity charged
with ensuring appraiser compliance with the federal laws. Their mandate includes, monitoring
the FFIRA, states, and the Appraisal Foundation for compliance wit Title XI, and maintaining a
registry of appraisers eligible to appraise FRT's.
,Appraiser - CORRECT ANSWER - One who performs professional appraisal services for
client's, using generally accepted appraisal methods and adhering to all state and federal
guidelines.
Appraiser Qualifications Board (AQB) - CORRECT ANSWER - A committee under the
Appraisal Foundation created to establish appraiser qualifications.
AQB - CORRECT ANSWER - Appraiser Qualifications Board
Arm's Length Transaction - CORRECT ANSWER - An agreement in which neither side has
an unusual advantage, or overriding influence.
ASB - CORRECT ANSWER - Appraisal Standards Board
Assessment - CORRECT ANSWER - A value amount placed on a property by the local
community for taxation purposes
Attached Type - CORRECT ANSWER - More than one unit connected together, having at
least one common wall.
Avulsion - CORRECT ANSWER - To tear off. The sudden loss of land or soil due to a sudden
natural act (e.g. earthquake, sudden change of river flow, etc.).
Balance - CORRECT ANSWER - Occurs when supply and demand factors at the point of
equilibrium.
Band of Investment Method - CORRECT ANSWER - Is used to determine the overall rate of
return on a property which is encumbered by a mortgage
Banks - CORRECT ANSWER - Financial entities engaged in the exchange of currency,
lending, and storage of legal tender.
, Bilateral Contract - CORRECT ANSWER - A contract where both parties have made
promises in exchange to the other party, therefore a "meeting of the minds" has occurred and
both parties are willing participants in the contract.
Example: A demonstration of this is when one party agrees to buy a home and the other party
agrees to sell.
Bundle of Rights - CORRECT ANSWER - The combined dominion over utilization of a
property, including possession, control, enjoyment, and exclusion .
CAM Fees - CORRECT ANSWER - Common Area Maintenance.
The operational and maintenance costs of the common areas.
Capital - CORRECT ANSWER - A sum of money available for investment
Capital Gain - CORRECT ANSWER - A sum of money or profit made from a sale of an asset.
Capital Improvements - CORRECT ANSWER - These are renovations or modifications which
change the characteristics of
Capitalization - CORRECT ANSWER - The conversion of income into value.
Capitalization Rate "R" - CORRECT ANSWER - An income to value percentage used as an
indicator of value. A Capitalization Rate is the rate your investment is paid back and is typically
based on the Net Operating Income (NOI). See "IRV" also
Example:
If you invest $1,000,000 on a property that has an NOI of $100,000, the Cap rate is 10%,
meaning it will take 10 years to pay back the initial investment. This is the rate of return. If the
