Practice Examination Questions for Real
Estate Appraisers Exam Questions With
Correct Answers
Fundamental |Market |Analysis |- |CORRECT |ANSWER✔✔-considers |the |basic |reasons |for |changes
|in |demand:
such |as |birth |rate, |migration, |and |changes |in |employment |and |household |size
Value |in |Use |- |CORRECT |ANSWER✔✔-is |often |the |conclusion |that |results |when |the |cost |
approach |is |used |on |a |special-purpose |property. |If |there |is |no |market |for |the |property, |the |
market |value |must |assume |a |conversion |or |a |sale |in |a |market |where |buyers |are |available.
The |extraction |method |of |estimating |site |value |includes |- |CORRECT |ANSWER✔✔-Adjusting |the
|improved |comparable |sales |for |the |"transactional" |items
Cash |Equivalent |Sale |Price |- |CORRECT |ANSWER✔✔-=Sale |Price |- |Seller |Paid |Concessions
What |provides |the |context |for |the |depth |of |the |analysis |required |in |development, |and |the |
level |of |detail |required |in |reporting? |- |CORRECT |ANSWER✔✔-intended |use
What |is |the |overall |capitalization |rate |(RO) |for |a |property |that |has |a |PGI |of |$45,000, |an |EGI |of |
$41,500, |and |an |OER |of |33%? |The |net |income |multiplier |is |16.55. |- |CORRECT |ANSWER✔✔-The
|reciprocal |of |the |net |income |multiplier |is |the |capitalization |rate:
1 |/ |16.55 |= |0.0604
If |the |expected |yield |in |a |market |is |9% |and |the |income |and |value |are |increasing |at |2% |per |
year, |what |is |the |value |of |a |property |with |$100,000 |net |income? |- |CORRECT |ANSWER✔✔-The |
math |is |based |on |R |= |Y |− |Δa, |which |in |this |scenario |is
,R |= |Y |− |CR
The |correct |calculation |is:
R |= |0.09 |− |0.02 |= |0 |.07100,000 |/ |0.07 |= |1,428,571
What |is |the |indicated |equity |dividend |rate |(RE) |of |a |property |with |a |sale |price |of |$400,000, |an
|NOI |of |$35,000, |and |mortgage |terms |of |9.75% |interest |for |25 |years, |fully |amortized |with |
monthly |payments, |and |a |loan-to-value |ratio |of |65%? |- |CORRECT |ANSWER✔✔-First, |calculate |
the |capitalization |rate |(RO). |
The |correct |calculation |is:
35,000 |/ |400,000 |= |0.08750 |(RO)
Next, |calculate |the |RM |using |the |HP-12C. |
The |correct |keystrokes |for |the |HP-12C |are:
9.75 |g |i
25 |g |n
1 |CHS |PV
0 |FV
Solve |for |P |= |0.008911ENTER |12x |= |0.10694 |(RM)
Then |multiply |the |RM |(0.10694) |by |the |loan |percent |(65%) |to |get |the |weighted |rate |for |the |
mortgage:0.65 |× |0.10694 |= |0.06951
Subtract |the |weighted |rate |for |the |mortgage |from |the |overall |rate |of |0.0875 |to |produce |the |
weighted |amount |for |equity:
0.08750 |− |0.06951 |= |0.01799
Divide |the |weighted |rate |for |the |equity |by |the |equity |ratio |(35%) |to |produce |the |equity |
dividend |rate |
(RE):0.01799 |/ |0.35 |= |0.05140
A |property |has |an |NOI |of |$150,000 |per |year. |The |value |of |the |land |(VL) |is |$550,000. |The |land |
capitalization |rate |(RL) |is |9.75%, |and |the |building |capitalization |rate |(RB) |is |12.25%. |What |is |
, the |property |value |to |the |nearest |$100,000? |- |CORRECT |ANSWER✔✔-550,000 |× |0.0975 |= |
53,625
150,000 |− |53,625 |= |96,375
96,375 |/ |0.1225 |= |786,735
550,000 |+ |786,735 |= |1,336,735
The |subject |property |has |a |projected |level |income |of |$30,000 |for |the |next |five |years. |The |
property |value |is |expected |to |increase |by |10% |over |the |projection |period |of |five |years. |The |
yield |rate |is |8%. |What |is |the |market |value |of |the |property? |Round |your |answer |to |the |nearest |
$50,000. |- |CORRECT |ANSWER✔✔-5 |n
8 |i
1 |CHS |PV
1.10 |FV
Solve |for |PMT |= |0.062954 |
(RO)30,000 |/ |0.062954 |= |476,535.74
Calculate |the |leased |fee |value |of |the |real |estate |investment |based |on |the |following |data: |The |
property |is |leased |for |10 |years |at |$55,000 |per |year |(net), |and |the |property |value |is |expected |
to |decline |by |10% |over |the |10 |years. |The |required |yield |rate |is |11% |- |CORRECT |ANSWER✔✔-
10 |n
11i
1 |CHS |PV
0.9 |FV
Solve |for |PMT |= |0.11598 |(capitalization |rate)
55,000 |/ |0.115980 |= |474,219
The |subject |property |is |the |leasehold |interest |in |a |parcel |of |land |that |was |leased |eight |years |
ago |for |75 |years |at |$1,000 |per |month |on |a |net |basis. |It |was |vacant |land |at |the |time |of |the |
lease. |Susan, |the |tenant, |built |an |office |building |on |that |vacant |land. |After |construction, |she |
Estate Appraisers Exam Questions With
Correct Answers
Fundamental |Market |Analysis |- |CORRECT |ANSWER✔✔-considers |the |basic |reasons |for |changes
|in |demand:
such |as |birth |rate, |migration, |and |changes |in |employment |and |household |size
Value |in |Use |- |CORRECT |ANSWER✔✔-is |often |the |conclusion |that |results |when |the |cost |
approach |is |used |on |a |special-purpose |property. |If |there |is |no |market |for |the |property, |the |
market |value |must |assume |a |conversion |or |a |sale |in |a |market |where |buyers |are |available.
The |extraction |method |of |estimating |site |value |includes |- |CORRECT |ANSWER✔✔-Adjusting |the
|improved |comparable |sales |for |the |"transactional" |items
Cash |Equivalent |Sale |Price |- |CORRECT |ANSWER✔✔-=Sale |Price |- |Seller |Paid |Concessions
What |provides |the |context |for |the |depth |of |the |analysis |required |in |development, |and |the |
level |of |detail |required |in |reporting? |- |CORRECT |ANSWER✔✔-intended |use
What |is |the |overall |capitalization |rate |(RO) |for |a |property |that |has |a |PGI |of |$45,000, |an |EGI |of |
$41,500, |and |an |OER |of |33%? |The |net |income |multiplier |is |16.55. |- |CORRECT |ANSWER✔✔-The
|reciprocal |of |the |net |income |multiplier |is |the |capitalization |rate:
1 |/ |16.55 |= |0.0604
If |the |expected |yield |in |a |market |is |9% |and |the |income |and |value |are |increasing |at |2% |per |
year, |what |is |the |value |of |a |property |with |$100,000 |net |income? |- |CORRECT |ANSWER✔✔-The |
math |is |based |on |R |= |Y |− |Δa, |which |in |this |scenario |is
,R |= |Y |− |CR
The |correct |calculation |is:
R |= |0.09 |− |0.02 |= |0 |.07100,000 |/ |0.07 |= |1,428,571
What |is |the |indicated |equity |dividend |rate |(RE) |of |a |property |with |a |sale |price |of |$400,000, |an
|NOI |of |$35,000, |and |mortgage |terms |of |9.75% |interest |for |25 |years, |fully |amortized |with |
monthly |payments, |and |a |loan-to-value |ratio |of |65%? |- |CORRECT |ANSWER✔✔-First, |calculate |
the |capitalization |rate |(RO). |
The |correct |calculation |is:
35,000 |/ |400,000 |= |0.08750 |(RO)
Next, |calculate |the |RM |using |the |HP-12C. |
The |correct |keystrokes |for |the |HP-12C |are:
9.75 |g |i
25 |g |n
1 |CHS |PV
0 |FV
Solve |for |P |= |0.008911ENTER |12x |= |0.10694 |(RM)
Then |multiply |the |RM |(0.10694) |by |the |loan |percent |(65%) |to |get |the |weighted |rate |for |the |
mortgage:0.65 |× |0.10694 |= |0.06951
Subtract |the |weighted |rate |for |the |mortgage |from |the |overall |rate |of |0.0875 |to |produce |the |
weighted |amount |for |equity:
0.08750 |− |0.06951 |= |0.01799
Divide |the |weighted |rate |for |the |equity |by |the |equity |ratio |(35%) |to |produce |the |equity |
dividend |rate |
(RE):0.01799 |/ |0.35 |= |0.05140
A |property |has |an |NOI |of |$150,000 |per |year. |The |value |of |the |land |(VL) |is |$550,000. |The |land |
capitalization |rate |(RL) |is |9.75%, |and |the |building |capitalization |rate |(RB) |is |12.25%. |What |is |
, the |property |value |to |the |nearest |$100,000? |- |CORRECT |ANSWER✔✔-550,000 |× |0.0975 |= |
53,625
150,000 |− |53,625 |= |96,375
96,375 |/ |0.1225 |= |786,735
550,000 |+ |786,735 |= |1,336,735
The |subject |property |has |a |projected |level |income |of |$30,000 |for |the |next |five |years. |The |
property |value |is |expected |to |increase |by |10% |over |the |projection |period |of |five |years. |The |
yield |rate |is |8%. |What |is |the |market |value |of |the |property? |Round |your |answer |to |the |nearest |
$50,000. |- |CORRECT |ANSWER✔✔-5 |n
8 |i
1 |CHS |PV
1.10 |FV
Solve |for |PMT |= |0.062954 |
(RO)30,000 |/ |0.062954 |= |476,535.74
Calculate |the |leased |fee |value |of |the |real |estate |investment |based |on |the |following |data: |The |
property |is |leased |for |10 |years |at |$55,000 |per |year |(net), |and |the |property |value |is |expected |
to |decline |by |10% |over |the |10 |years. |The |required |yield |rate |is |11% |- |CORRECT |ANSWER✔✔-
10 |n
11i
1 |CHS |PV
0.9 |FV
Solve |for |PMT |= |0.11598 |(capitalization |rate)
55,000 |/ |0.115980 |= |474,219
The |subject |property |is |the |leasehold |interest |in |a |parcel |of |land |that |was |leased |eight |years |
ago |for |75 |years |at |$1,000 |per |month |on |a |net |basis. |It |was |vacant |land |at |the |time |of |the |
lease. |Susan, |the |tenant, |built |an |office |building |on |that |vacant |land. |After |construction, |she |
