Sales Comparison Approach McKissock
Class Questions and Answers Verified by
Experts
A property is improved with a building and is valued at $425,000. It would cost $50,000 to raze
and remove the building, and the value of the vacant site would be $500,000. Under this
scenario, razing and removing the building would be considered ____________.
Financially Feasible - Razing and removing the building would be considered financially
feasible, because it produces a positive return. This is not necessarily the highest and best use,
though, because there may be other alternative uses which would produce a greater return.
(Chapter 1 - As Improved)
What is the appraisal or valuation process? A sequence of steps used by the appraiser to
develop a value conclusion
A _________ includes supply and demand analysis along with the collection of market data,
analyses, and recommendations. market analysis
Which value characteristic implies the presence of a need or demand, which considers the
monetary power to fill that need? Desire - In order to have value, an item must fulfill a
need or satisfy a desire. Someone has to want to purchase the item. Wishful thinking is indicative
,of desire. However, purchasing power is required to translate that desire into value. (Chapter 1 -
Desire)
When considering legal permissibility and current land use regulations, an appraiser must also
consider __________. Reasonably probable modifications of land use regulations
In a competitive market, ________ will function to equalize the quantity demanded by
consumers and the quantity supplied by producers. Price
A building owner installs a new "green" roof on the structure at a cost of $300,000. The value of
the building only increases by $200,000 as a result of the new roof. This demonstrates which
economic principle? Contribution
The sales comparison approach is based primarily on the principle of ___________, which states
that a prudent purchaser will pay no more for a property than he or she would pay for a similar or
comparable property. Substitution
An appraiser takes secondary data on a sale from the local MLS, and personally verifies elements
of the transaction and the physical characteristics of the property with the purchaser. This sale
would now be considered what type of data? Primary Data
,Jerald is researching data for an appraisal of an apartment building. On the internet, he finds
useful information on employment statistics, housing trends, and transportation studies. What
type of data is this? General Data
The Concentric Zone Model explains the proper layout and functional utility of heavy industrial
properties, and specifies work zones, office zones, and transition zones. (T/F) False
Annette is appraising a five-acre vacant parcel of land, in an area where there is no zoning. As a
residential home site, the property is worth $225,000. For commercial purposes, it is worth $1.25
per square foot. For industrial purposes, it is worth $50,000 per acre. Assuming that all three uses
pass the physically possible and legally permissible tests, what is the highest and best use of the
property? Commercial
The sales comparison approach would be most useful in valuing which property?
Undeveloped land - The sales comparison approach is often the most appropriate
approach in valuing properties that do not generate income, or have the potential to generate
income. Examples of properties that are not income-producing include owner-occupied
properties, land, and properties for which there is not an active leasing market. (Chapter 2 - Sales
Comparison Approach - Overview)
, The value conclusion indicated by the sales comparison approach is always market value. (T/F)
False
Boris loans $1,000 to his friend for a one-year period, after which his friend promises to pay him
back $1,100. What principle does this demonstrate? Time value of money
Cyndi contacts the buyer and verifies that a comparable sale she is using was purchased on the
open market, between a typically-motivated seller and buyer, who were not related to each other.
What type of sale is this? Arm's length transfer
In analyzing the local market, Charles uses data that was gathered and published by his local
Chamber of Commerce. This would be considered _________. Secondary Data
Peggy blackmails Frank into selling his property to her. The sale appears in the local MLS and is
reported in the local assessment office as a valid sale. Is this an arm's length transfer? No
The sales comparison approach is primarily based on what principle? Substitution
Calculate the mean of this set of Gross Rent Multipliers: 77, 88, 72, 69, 77, 91. 79
Class Questions and Answers Verified by
Experts
A property is improved with a building and is valued at $425,000. It would cost $50,000 to raze
and remove the building, and the value of the vacant site would be $500,000. Under this
scenario, razing and removing the building would be considered ____________.
Financially Feasible - Razing and removing the building would be considered financially
feasible, because it produces a positive return. This is not necessarily the highest and best use,
though, because there may be other alternative uses which would produce a greater return.
(Chapter 1 - As Improved)
What is the appraisal or valuation process? A sequence of steps used by the appraiser to
develop a value conclusion
A _________ includes supply and demand analysis along with the collection of market data,
analyses, and recommendations. market analysis
Which value characteristic implies the presence of a need or demand, which considers the
monetary power to fill that need? Desire - In order to have value, an item must fulfill a
need or satisfy a desire. Someone has to want to purchase the item. Wishful thinking is indicative
,of desire. However, purchasing power is required to translate that desire into value. (Chapter 1 -
Desire)
When considering legal permissibility and current land use regulations, an appraiser must also
consider __________. Reasonably probable modifications of land use regulations
In a competitive market, ________ will function to equalize the quantity demanded by
consumers and the quantity supplied by producers. Price
A building owner installs a new "green" roof on the structure at a cost of $300,000. The value of
the building only increases by $200,000 as a result of the new roof. This demonstrates which
economic principle? Contribution
The sales comparison approach is based primarily on the principle of ___________, which states
that a prudent purchaser will pay no more for a property than he or she would pay for a similar or
comparable property. Substitution
An appraiser takes secondary data on a sale from the local MLS, and personally verifies elements
of the transaction and the physical characteristics of the property with the purchaser. This sale
would now be considered what type of data? Primary Data
,Jerald is researching data for an appraisal of an apartment building. On the internet, he finds
useful information on employment statistics, housing trends, and transportation studies. What
type of data is this? General Data
The Concentric Zone Model explains the proper layout and functional utility of heavy industrial
properties, and specifies work zones, office zones, and transition zones. (T/F) False
Annette is appraising a five-acre vacant parcel of land, in an area where there is no zoning. As a
residential home site, the property is worth $225,000. For commercial purposes, it is worth $1.25
per square foot. For industrial purposes, it is worth $50,000 per acre. Assuming that all three uses
pass the physically possible and legally permissible tests, what is the highest and best use of the
property? Commercial
The sales comparison approach would be most useful in valuing which property?
Undeveloped land - The sales comparison approach is often the most appropriate
approach in valuing properties that do not generate income, or have the potential to generate
income. Examples of properties that are not income-producing include owner-occupied
properties, land, and properties for which there is not an active leasing market. (Chapter 2 - Sales
Comparison Approach - Overview)
, The value conclusion indicated by the sales comparison approach is always market value. (T/F)
False
Boris loans $1,000 to his friend for a one-year period, after which his friend promises to pay him
back $1,100. What principle does this demonstrate? Time value of money
Cyndi contacts the buyer and verifies that a comparable sale she is using was purchased on the
open market, between a typically-motivated seller and buyer, who were not related to each other.
What type of sale is this? Arm's length transfer
In analyzing the local market, Charles uses data that was gathered and published by his local
Chamber of Commerce. This would be considered _________. Secondary Data
Peggy blackmails Frank into selling his property to her. The sale appears in the local MLS and is
reported in the local assessment office as a valid sale. Is this an arm's length transfer? No
The sales comparison approach is primarily based on what principle? Substitution
Calculate the mean of this set of Gross Rent Multipliers: 77, 88, 72, 69, 77, 91. 79
