IAAO COURSE 300 EXAM WITH
CORRECT QUESTIONS AND ANSWERS
2025
A. Scope of Work Rule - CORRECT-ANSWERS1. Identify the problem to be solved
B. 2. Determine and perform the scope of work necessary to develop credible assignment
results
C. 3. Disclose the scope of work in the report
D. Scope of work acceptability - CORRECT-ANSWERSWhen it meets or exceeds:
1. Expectations of parties who are regularly intended users for similar assignments
and 2. What an Appraiser's peers actions would be in performing the same or
similar assignments
E. Economic Basis of Model Building - CORRECT-ANSWERSSupply factors relate to
availability and thus reflect such things as Cost, interest rates, and economic conditions.
Demand factors include characteristics to buyers, such as construction quality, condition,
and location.
F. Basic Cost Model Structure - CORRECT-ANSWERSMV = LV + BV
G. Basic Sales Comparison Basic Model Structure - CORRECT-ANSWERSMVs = Sc +
ADJc
H. Basic Income Models - CORRECT-ANSWERS1. NOI Model
I. MV = NOI / OAR
J. 2. GI Model
,K. MV = GI x GIM
L. Model Development - CORRECT-ANSWERS1. Specification
M. 2. Calibration
N. 3. Quality Assurance
O. Specification - CORRECT-ANSWERSWhat data to include in the model and in what
format
1. Additive
2. Multiplicative
3. Hybrid (generic)
P. Additive Model Structure - CORRECT-ANSWERSEach of the variables are independent
from the other variables. A change in one variable does not directly impact any other
variables
Q. MV = ($/sqft x sqft) + ($/plumbing fixture x #fixtures) + ($/car stall x #/cars) + ...
R. Multiplicative Model Structure - CORRECT-ANSWERSEach of the variables are
interdependent. Any change to one variable will have an impact on all of the other
variables.
S. Hybrid (generic) Model Structure - CORRECT-ANSWERSCombines both additive and
multiplicative model structures
T. Finding Net Operating Income (NOI) - CORRECT-ANSWERS1. Potential Gross Income
(PGI) 100% occupancy at market rent (market rent is the prevailing rent in the open
market, not the rent called for in a lease)
, U. 2. Minus Vacancy and Collection Loss (V&C) - any money lost from units not being
rented or from people not paying rent
V. 3. Plus Miscellaneous Income (Misc Inc) - income from secondary sources, such as
clubhouse rentals, health club memberships, storage rentals, and vending or laundry
machines
W. 4. Equals Effective Gross Income (EGI) - this 100% of the actual money made by the real
property operation.
X. 5. Minus Allowable Expenses and Reserves (Exp & Res) - expenses that have to do with
the operation of the real estate and not the business. Reserves are items that will wear out
before the bone structure, such as carpet, roof, air conditioners, etc. Reserves are
expensed on a prorated basis (ie. Carpet lasts 5 years so if it costs $2, = $400
allowable deduction per year)
Y. 6. Equals Net Operating Income (NOI) - the income remaining after expenses and
reserves. This is the "I" in the IRV formula
Z. Capitalization Rate - CORRECT-ANSWERSThe term capitalization means to convert
income into an estimate of value. A capitalization rate is used in converting net income
(NOI) into an estimate of value.
AA. Direct Capitalization Rate - CORRECT-ANSWERSNet operating income (NOI)
divided by the market value (sale price) of the property.
CORRECT QUESTIONS AND ANSWERS
2025
A. Scope of Work Rule - CORRECT-ANSWERS1. Identify the problem to be solved
B. 2. Determine and perform the scope of work necessary to develop credible assignment
results
C. 3. Disclose the scope of work in the report
D. Scope of work acceptability - CORRECT-ANSWERSWhen it meets or exceeds:
1. Expectations of parties who are regularly intended users for similar assignments
and 2. What an Appraiser's peers actions would be in performing the same or
similar assignments
E. Economic Basis of Model Building - CORRECT-ANSWERSSupply factors relate to
availability and thus reflect such things as Cost, interest rates, and economic conditions.
Demand factors include characteristics to buyers, such as construction quality, condition,
and location.
F. Basic Cost Model Structure - CORRECT-ANSWERSMV = LV + BV
G. Basic Sales Comparison Basic Model Structure - CORRECT-ANSWERSMVs = Sc +
ADJc
H. Basic Income Models - CORRECT-ANSWERS1. NOI Model
I. MV = NOI / OAR
J. 2. GI Model
,K. MV = GI x GIM
L. Model Development - CORRECT-ANSWERS1. Specification
M. 2. Calibration
N. 3. Quality Assurance
O. Specification - CORRECT-ANSWERSWhat data to include in the model and in what
format
1. Additive
2. Multiplicative
3. Hybrid (generic)
P. Additive Model Structure - CORRECT-ANSWERSEach of the variables are independent
from the other variables. A change in one variable does not directly impact any other
variables
Q. MV = ($/sqft x sqft) + ($/plumbing fixture x #fixtures) + ($/car stall x #/cars) + ...
R. Multiplicative Model Structure - CORRECT-ANSWERSEach of the variables are
interdependent. Any change to one variable will have an impact on all of the other
variables.
S. Hybrid (generic) Model Structure - CORRECT-ANSWERSCombines both additive and
multiplicative model structures
T. Finding Net Operating Income (NOI) - CORRECT-ANSWERS1. Potential Gross Income
(PGI) 100% occupancy at market rent (market rent is the prevailing rent in the open
market, not the rent called for in a lease)
, U. 2. Minus Vacancy and Collection Loss (V&C) - any money lost from units not being
rented or from people not paying rent
V. 3. Plus Miscellaneous Income (Misc Inc) - income from secondary sources, such as
clubhouse rentals, health club memberships, storage rentals, and vending or laundry
machines
W. 4. Equals Effective Gross Income (EGI) - this 100% of the actual money made by the real
property operation.
X. 5. Minus Allowable Expenses and Reserves (Exp & Res) - expenses that have to do with
the operation of the real estate and not the business. Reserves are items that will wear out
before the bone structure, such as carpet, roof, air conditioners, etc. Reserves are
expensed on a prorated basis (ie. Carpet lasts 5 years so if it costs $2, = $400
allowable deduction per year)
Y. 6. Equals Net Operating Income (NOI) - the income remaining after expenses and
reserves. This is the "I" in the IRV formula
Z. Capitalization Rate - CORRECT-ANSWERSThe term capitalization means to convert
income into an estimate of value. A capitalization rate is used in converting net income
(NOI) into an estimate of value.
AA. Direct Capitalization Rate - CORRECT-ANSWERSNet operating income (NOI)
divided by the market value (sale price) of the property.
