Basic Appraisal Procedures –
McKissock Comprehensive Exam
Already Passed!!
SECTION 1: APPROACHES TO VALUE (18 Questions)
Q1: An appraiser is analyzing two nearly identical homes to derive an adjustment for a swimming
pool. Sale A has a pool and sold for $310,000. Sale B has no pool and sold for $295,000. Both
sales occurred within the same month and have the same GLA, lot size, and condition. The
indicated adjustment for a swimming pool is:
A. ($15,000) (negative adjustment)
B. $15,000 (positive adjustment) [CORRECT]
C. $305,000
D. Cannot determine without more data
Correct Answer: B
Rationale: Correct because paired sales analysis shows the difference of $15,000 ($310,000 -
$295,000) is attributable to the pool; subject superior to comp without pool requires positive
adjustment to comp.
Q2: Which of the following approaches to value is typically considered the most reliable for
single-family residential properties in an active market?
A. Cost Approach
B. Income Capitalization Approach
C. Sales Comparison Approach [CORRECT]
D. Extraction Method
Correct Answer: C
Rationale: Correct because the Sales Comparison Approach is generally the most reliable
indicator of value for single-family residential properties when sufficient comparable sales data
exists in an active market.
Q3: The Income Capitalization Approach is most applicable when appraising which type of
property?
A. Owner-occupied single-family residence
B. Income-producing commercial or multi-family property [CORRECT]
C. Special-purpose property with no comparable sales
D. New construction residential subdivision
Correct Answer: B
Rationale: Correct because the Income Capitalization Approach is most applicable for income-
producing properties where value is based on the property's ability to generate income.
,Q4: The Cost Approach is typically given the greatest weight when appraising:
A. A 5-year-old suburban ranch home
B. A newly constructed special-purpose building with limited comparable sales [CORRECT]
C. A fully leased shopping center
D. A historic Victorian home in a historic district
Correct Answer: B
Rationale: Correct because the Cost Approach is most reliable for new or special-purpose
properties where comparable sales are limited and depreciation is minimal.
Q5: Which statement about scope of work is correct under USPAP?
A. Scope of work is determined solely by the client
B. Scope of work must be the same for every appraisal assignment
C. Scope of work is established by the appraiser based on the problem to be solved [CORRECT]
D. Scope of work is defined exclusively by the intended use
Correct Answer: C
Rationale: Correct because USPAP standards require the appraiser to determine the appropriate
scope of work based on the specific assignment conditions and problem to be solved.
Q6: When is the Cost Approach least reliable?
A. When appraising a property with minimal depreciation
B. When appraising an older property in a changing neighborhood [CORRECT]
C. When appraising a property with recent comparable sales
D. When appraising a property with accurate cost data
Correct Answer: B
Rationale: Correct because the Cost Approach becomes less reliable for older properties where
accrued depreciation is difficult to estimate accurately, especially in neighborhoods experiencing
economic change.
Q7: The extraction method is used to:
A. Estimate land value from a comparable sale [CORRECT]
B. Calculate the gross rent multiplier
C. Determine the capitalization rate
D. Estimate replacement cost new
Correct Answer: A
Rationale: Correct because the extraction method estimates land value by subtracting the
depreciated value of improvements from the total sale price of a comparable property.
Q8: Which of the following is NOT one of the three approaches to value recognized in appraisal
practice?
A. Sales Comparison Approach
B. Income Capitalization Approach
, C. Cost Approach
D. Residual Approach [CORRECT]
Correct Answer: D
Rationale: Correct because the three recognized approaches to value are Sales Comparison, Cost,
and Income Capitalization; the Residual Approach is a technique within these approaches, not a
standalone approach.
Q9: In a declining market, which approach to value might indicate a higher value than what the
market is currently willing to pay?
A. Sales Comparison Approach
B. Cost Approach [CORRECT]
C. Income Capitalization Approach
D. All approaches equally
Correct Answer: B
Rationale: Correct because the Cost Approach reflects replacement cost rather than market
demand; in a declining market, cost may exceed what buyers are willing to pay.
Q10: When appraising a property with no comparable sales available, which approach becomes
most important?
A. Sales Comparison Approach
B. Income Capitalization Approach
C. Cost Approach [CORRECT]
D. All approaches are equally important
Correct Answer: C
Rationale: Correct because when comparable sales are unavailable, the Cost Approach becomes
the primary indicator of value as it does not rely on market comparables.
Q11: The principle of substitution states that:
A. A buyer will pay no more for a property than the cost of acquiring an equally desirable
substitute [CORRECT]
B. Value is created by the expectation of future benefits
C. The value of a property is determined by its highest and best use
D. Value increases as supply decreases and demand increases
Correct Answer: A
Rationale: Correct because the principle of substitution is the foundation of the Sales Comparison
and Cost Approaches, stating that a rational buyer will not pay more than the cost of an
equivalent substitute.
Q12: Which approach to value is based on the principle of anticipation?
A. Sales Comparison Approach
B. Income Capitalization Approach [CORRECT]
C. Cost Approach
McKissock Comprehensive Exam
Already Passed!!
SECTION 1: APPROACHES TO VALUE (18 Questions)
Q1: An appraiser is analyzing two nearly identical homes to derive an adjustment for a swimming
pool. Sale A has a pool and sold for $310,000. Sale B has no pool and sold for $295,000. Both
sales occurred within the same month and have the same GLA, lot size, and condition. The
indicated adjustment for a swimming pool is:
A. ($15,000) (negative adjustment)
B. $15,000 (positive adjustment) [CORRECT]
C. $305,000
D. Cannot determine without more data
Correct Answer: B
Rationale: Correct because paired sales analysis shows the difference of $15,000 ($310,000 -
$295,000) is attributable to the pool; subject superior to comp without pool requires positive
adjustment to comp.
Q2: Which of the following approaches to value is typically considered the most reliable for
single-family residential properties in an active market?
A. Cost Approach
B. Income Capitalization Approach
C. Sales Comparison Approach [CORRECT]
D. Extraction Method
Correct Answer: C
Rationale: Correct because the Sales Comparison Approach is generally the most reliable
indicator of value for single-family residential properties when sufficient comparable sales data
exists in an active market.
Q3: The Income Capitalization Approach is most applicable when appraising which type of
property?
A. Owner-occupied single-family residence
B. Income-producing commercial or multi-family property [CORRECT]
C. Special-purpose property with no comparable sales
D. New construction residential subdivision
Correct Answer: B
Rationale: Correct because the Income Capitalization Approach is most applicable for income-
producing properties where value is based on the property's ability to generate income.
,Q4: The Cost Approach is typically given the greatest weight when appraising:
A. A 5-year-old suburban ranch home
B. A newly constructed special-purpose building with limited comparable sales [CORRECT]
C. A fully leased shopping center
D. A historic Victorian home in a historic district
Correct Answer: B
Rationale: Correct because the Cost Approach is most reliable for new or special-purpose
properties where comparable sales are limited and depreciation is minimal.
Q5: Which statement about scope of work is correct under USPAP?
A. Scope of work is determined solely by the client
B. Scope of work must be the same for every appraisal assignment
C. Scope of work is established by the appraiser based on the problem to be solved [CORRECT]
D. Scope of work is defined exclusively by the intended use
Correct Answer: C
Rationale: Correct because USPAP standards require the appraiser to determine the appropriate
scope of work based on the specific assignment conditions and problem to be solved.
Q6: When is the Cost Approach least reliable?
A. When appraising a property with minimal depreciation
B. When appraising an older property in a changing neighborhood [CORRECT]
C. When appraising a property with recent comparable sales
D. When appraising a property with accurate cost data
Correct Answer: B
Rationale: Correct because the Cost Approach becomes less reliable for older properties where
accrued depreciation is difficult to estimate accurately, especially in neighborhoods experiencing
economic change.
Q7: The extraction method is used to:
A. Estimate land value from a comparable sale [CORRECT]
B. Calculate the gross rent multiplier
C. Determine the capitalization rate
D. Estimate replacement cost new
Correct Answer: A
Rationale: Correct because the extraction method estimates land value by subtracting the
depreciated value of improvements from the total sale price of a comparable property.
Q8: Which of the following is NOT one of the three approaches to value recognized in appraisal
practice?
A. Sales Comparison Approach
B. Income Capitalization Approach
, C. Cost Approach
D. Residual Approach [CORRECT]
Correct Answer: D
Rationale: Correct because the three recognized approaches to value are Sales Comparison, Cost,
and Income Capitalization; the Residual Approach is a technique within these approaches, not a
standalone approach.
Q9: In a declining market, which approach to value might indicate a higher value than what the
market is currently willing to pay?
A. Sales Comparison Approach
B. Cost Approach [CORRECT]
C. Income Capitalization Approach
D. All approaches equally
Correct Answer: B
Rationale: Correct because the Cost Approach reflects replacement cost rather than market
demand; in a declining market, cost may exceed what buyers are willing to pay.
Q10: When appraising a property with no comparable sales available, which approach becomes
most important?
A. Sales Comparison Approach
B. Income Capitalization Approach
C. Cost Approach [CORRECT]
D. All approaches are equally important
Correct Answer: C
Rationale: Correct because when comparable sales are unavailable, the Cost Approach becomes
the primary indicator of value as it does not rely on market comparables.
Q11: The principle of substitution states that:
A. A buyer will pay no more for a property than the cost of acquiring an equally desirable
substitute [CORRECT]
B. Value is created by the expectation of future benefits
C. The value of a property is determined by its highest and best use
D. Value increases as supply decreases and demand increases
Correct Answer: A
Rationale: Correct because the principle of substitution is the foundation of the Sales Comparison
and Cost Approaches, stating that a rational buyer will not pay more than the cost of an
equivalent substitute.
Q12: Which approach to value is based on the principle of anticipation?
A. Sales Comparison Approach
B. Income Capitalization Approach [CORRECT]
C. Cost Approach
