Appraisal Final Exam Questions with
Verified Solutions
The principle of highest and best use suggests that land must always be valued in its
present use. - ANS-False
Among appraisers, market value essentially means the most probable sales price in an
open market. - ANS-True
Zoning rules/regulations can influence the highest and best use of a property. - ANS-
True
The principle of substitution is basic to (at the core of) all three approaches to value. -
ANS-True
A parking lot can be a feasible interim use of a high valued downtown property. - ANS-
True
Both existing and planned infrastructure can influence the highest and best use of a
property. - ANS-True
The cost approach is normally given more weight in the appraisal of old and
substantially obsolete buildings. - ANS-False
In the sales comparison approach, the appraiser adjusts comparable sales by adding or
subtracting amounts from their respective sale prices to "improve" their comparability. -
ANS-True
Which of the following is NOT an example of property being valued at it highest and
best use? - ANS-
Which principle of value suggests that a property's value is equal to the present value of
the property's future benefits? - ANS-Anticipation
The Principles of Regression/Progression/Conformity are important for appraisers to: -
ANS-determining highest and best use, increase or decrease the value of a home
depending on how it compares to other nearby homes, select comparable properties
The goal of an appraisal is - ANS-An estimate or opinion of value
,Which of these actions is not characteristic of market value? - ANS-Sale as soon as
possible
Ideally, in the valuation process, when does the reconciliation of value indications to a
final value estimate take place? - ANS-After completion of all approaches used
Which of the following appraisal principles holds that market value in indicated by the
value of another property with similar utility? - ANS-Substitution
Formal appraisals rely primarily on - ANS-Analysis of supporting data
An appraisal is likely to include the following: - ANS-A detailed description, an
evaluation of overall property condition, an opinion of market value
Of the following statements, which one is correct? - ANS-The three approaches to value
may result in different estimates of value
The income approach is probably the most reliable when estimating the value for which
of the following types of property? - ANS-Office building
Which of the following statements on Appraisal Guidelines of 1) USPAP and 2)
Fannie/Freddie/FHA Appraisal Guidelines are correct? - ANS-USPAP provides general
appraisal rules while Fannie/Freddie/FHA dictate highly specific guidelines and rules
An assessment of real property refers to a(n) - ANS-value for property taxes
The various traditional approaches to value involve the use of different techniques. In
which approach(es) is the site valued separately from the valuation of the
improvements? - ANS-Cost approach
________ refers to that possible and legal use of land that will preserve the land's utility
and generate a net income that forms, when capitalized, the greatest present value of
the land. - ANS-Highest and best use
Why is it important for appraisers to carefully define the type of value they are
appraising? - ANS-
The appraisal process involves 4 steps, the first of which is to: - ANS-Define the
appraisal
When does the effective age of a home often differ from the actual age? - ANS-In cases
of older homes having had major updates/improvements
Each category of depreciation can be classified as curable or incurable. This
classification is based on: - ANS-both of the suggested answers
, The cost approach is often emphasized in a SFR appraisal when: - ANS-The home is
relatively new
Useful life is the same as - ANS-economic life
Depreciation is most dependent on - ANS-periodic upgrades and replacements of home
items
Which of the depreciation approaches utilized in cost approach Homework does not
require any detailed review of the condition of a home - ANS-straight line depreciation
For the lot value component of your Cost Approach Homework which of the following
data sources did you NOT use? - ANS-Marshall and Swift
In your cost approach Homework, you: - ANS-Compared lot values based on
comparable sales to assessor based values
In the cost approach what is a likely explanation for the fact that the unit in place
depreciation results differed from the Marshall and Swift (life cycle approach)
depreciation estimates? - ANS-None of the suggested answers
Which of the 3 different depreciation approaches used in your Cost Approach
Homework is likely to be the most appropriate (accurate) when a home has received
upgrades and remodeling that is not typical homes for nearby homes and homes in that
same age class. - ANS-unit in place building inspector depreciation
In your cost approach homework you evaluated the acceptability of using a Omaha-
wide range of 15% to 20% of land value to market value ratios by: - ANS-comparing
ratios of land sale price to assessor total value estimates
Note that this math based question is worth alot of relevant points so take your time on
it to make sure you answers are right.
Use the following information to estimate the market value of a property using the cost
approach:
1) Typical lot value in the neighborhood: $80,0002) Replacement Cost New: $300,000
3) The building is 20 years old with an expected life span of 100 years but is highly
updated/renovated with an effective age estimate of 5 years.
What is Value of property based on the cost approach ? - ANS-$365,000
Note that this math based question is worth alot of relevant points so take your time on
it to make sure you answers are right.
Use the following information to estimate the market value of a property using the cost
approach:
Verified Solutions
The principle of highest and best use suggests that land must always be valued in its
present use. - ANS-False
Among appraisers, market value essentially means the most probable sales price in an
open market. - ANS-True
Zoning rules/regulations can influence the highest and best use of a property. - ANS-
True
The principle of substitution is basic to (at the core of) all three approaches to value. -
ANS-True
A parking lot can be a feasible interim use of a high valued downtown property. - ANS-
True
Both existing and planned infrastructure can influence the highest and best use of a
property. - ANS-True
The cost approach is normally given more weight in the appraisal of old and
substantially obsolete buildings. - ANS-False
In the sales comparison approach, the appraiser adjusts comparable sales by adding or
subtracting amounts from their respective sale prices to "improve" their comparability. -
ANS-True
Which of the following is NOT an example of property being valued at it highest and
best use? - ANS-
Which principle of value suggests that a property's value is equal to the present value of
the property's future benefits? - ANS-Anticipation
The Principles of Regression/Progression/Conformity are important for appraisers to: -
ANS-determining highest and best use, increase or decrease the value of a home
depending on how it compares to other nearby homes, select comparable properties
The goal of an appraisal is - ANS-An estimate or opinion of value
,Which of these actions is not characteristic of market value? - ANS-Sale as soon as
possible
Ideally, in the valuation process, when does the reconciliation of value indications to a
final value estimate take place? - ANS-After completion of all approaches used
Which of the following appraisal principles holds that market value in indicated by the
value of another property with similar utility? - ANS-Substitution
Formal appraisals rely primarily on - ANS-Analysis of supporting data
An appraisal is likely to include the following: - ANS-A detailed description, an
evaluation of overall property condition, an opinion of market value
Of the following statements, which one is correct? - ANS-The three approaches to value
may result in different estimates of value
The income approach is probably the most reliable when estimating the value for which
of the following types of property? - ANS-Office building
Which of the following statements on Appraisal Guidelines of 1) USPAP and 2)
Fannie/Freddie/FHA Appraisal Guidelines are correct? - ANS-USPAP provides general
appraisal rules while Fannie/Freddie/FHA dictate highly specific guidelines and rules
An assessment of real property refers to a(n) - ANS-value for property taxes
The various traditional approaches to value involve the use of different techniques. In
which approach(es) is the site valued separately from the valuation of the
improvements? - ANS-Cost approach
________ refers to that possible and legal use of land that will preserve the land's utility
and generate a net income that forms, when capitalized, the greatest present value of
the land. - ANS-Highest and best use
Why is it important for appraisers to carefully define the type of value they are
appraising? - ANS-
The appraisal process involves 4 steps, the first of which is to: - ANS-Define the
appraisal
When does the effective age of a home often differ from the actual age? - ANS-In cases
of older homes having had major updates/improvements
Each category of depreciation can be classified as curable or incurable. This
classification is based on: - ANS-both of the suggested answers
, The cost approach is often emphasized in a SFR appraisal when: - ANS-The home is
relatively new
Useful life is the same as - ANS-economic life
Depreciation is most dependent on - ANS-periodic upgrades and replacements of home
items
Which of the depreciation approaches utilized in cost approach Homework does not
require any detailed review of the condition of a home - ANS-straight line depreciation
For the lot value component of your Cost Approach Homework which of the following
data sources did you NOT use? - ANS-Marshall and Swift
In your cost approach Homework, you: - ANS-Compared lot values based on
comparable sales to assessor based values
In the cost approach what is a likely explanation for the fact that the unit in place
depreciation results differed from the Marshall and Swift (life cycle approach)
depreciation estimates? - ANS-None of the suggested answers
Which of the 3 different depreciation approaches used in your Cost Approach
Homework is likely to be the most appropriate (accurate) when a home has received
upgrades and remodeling that is not typical homes for nearby homes and homes in that
same age class. - ANS-unit in place building inspector depreciation
In your cost approach homework you evaluated the acceptability of using a Omaha-
wide range of 15% to 20% of land value to market value ratios by: - ANS-comparing
ratios of land sale price to assessor total value estimates
Note that this math based question is worth alot of relevant points so take your time on
it to make sure you answers are right.
Use the following information to estimate the market value of a property using the cost
approach:
1) Typical lot value in the neighborhood: $80,0002) Replacement Cost New: $300,000
3) The building is 20 years old with an expected life span of 100 years but is highly
updated/renovated with an effective age estimate of 5 years.
What is Value of property based on the cost approach ? - ANS-$365,000
Note that this math based question is worth alot of relevant points so take your time on
it to make sure you answers are right.
Use the following information to estimate the market value of a property using the cost
approach:
