LICENSED RESIDENTIAL APPRAISER EXAM PRACTICE
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. The primary role of a Licensed Residential Appraiser is to:
A. Sell real estate
B. Estimate residential property value
C. Approve loans
D. Inspect insurance claims
Answer: B
Rationale: Appraisers provide an opinion of value for residential properties.
2. A “licensed residential appraiser” is generally allowed to appraise:
A. Only commercial properties
B. 1–4 unit residential properties
C. Industrial plants only
D. Government buildings only
Answer: B
Rationale: Scope is limited to residential properties (1–4 units).
3. The foundation of all appraisal work is:
A. Marketing
B. Market value
C. Loan approval
D. Insurance pricing
Answer: B
Rationale: Appraisals are based on market value estimation.
4. Market value assumes:
,A. Forced sale
B. Arm’s length transaction
C. Foreclosure
D. Auction sale only
Answer: B
Rationale: No pressure between buyer and seller.
5. The three approaches to value are:
A. Income, Tax, Insurance
B. Cost, Sales Comparison, Income
C. Market, Loan, Credit
D. Land, Building, Tax
Answer: B
Rationale: Standard valuation methods.
6. The Sales Comparison Approach is most reliable when:
A. No sales exist
B. There are many similar recent sales
C. Only rentals exist
D. Property is new only
Answer: B
Rationale: Requires comparable market data.
7. The Cost Approach is most useful for:
A. Unique or new properties
B. Rental apartments only
C. Vacant land only
D. Foreclosures only
Answer: A
Rationale: Useful when sales data is limited.
8. The Income Approach is primarily used for:
, A. Owner-occupied homes
B. Investment properties
C. Vacant land
D. Farms only
Answer: B
Rationale: Based on rental income.
9. Depreciation refers to:
A. Increase in value
B. Loss in property value
C. Loan reduction
D. Tax increase
Answer: B
Rationale: Loss in value over time.
10. Physical depreciation is caused by:
A. Market trends
B. Wear and tear
C. Location
D. Taxes
Answer: B
Rationale: Physical deterioration.
11. Functional obsolescence is due to:
A. Design inefficiencies
B. Market demand
C. Inflation
D. Loan changes
Answer: A
Rationale: Poor layout or outdated design.
12. External obsolescence is caused by:
QUESTIONS AND CORRECT ANSWER WITH
EXPLANATION LATEST 2025-2026
1. The primary role of a Licensed Residential Appraiser is to:
A. Sell real estate
B. Estimate residential property value
C. Approve loans
D. Inspect insurance claims
Answer: B
Rationale: Appraisers provide an opinion of value for residential properties.
2. A “licensed residential appraiser” is generally allowed to appraise:
A. Only commercial properties
B. 1–4 unit residential properties
C. Industrial plants only
D. Government buildings only
Answer: B
Rationale: Scope is limited to residential properties (1–4 units).
3. The foundation of all appraisal work is:
A. Marketing
B. Market value
C. Loan approval
D. Insurance pricing
Answer: B
Rationale: Appraisals are based on market value estimation.
4. Market value assumes:
,A. Forced sale
B. Arm’s length transaction
C. Foreclosure
D. Auction sale only
Answer: B
Rationale: No pressure between buyer and seller.
5. The three approaches to value are:
A. Income, Tax, Insurance
B. Cost, Sales Comparison, Income
C. Market, Loan, Credit
D. Land, Building, Tax
Answer: B
Rationale: Standard valuation methods.
6. The Sales Comparison Approach is most reliable when:
A. No sales exist
B. There are many similar recent sales
C. Only rentals exist
D. Property is new only
Answer: B
Rationale: Requires comparable market data.
7. The Cost Approach is most useful for:
A. Unique or new properties
B. Rental apartments only
C. Vacant land only
D. Foreclosures only
Answer: A
Rationale: Useful when sales data is limited.
8. The Income Approach is primarily used for:
, A. Owner-occupied homes
B. Investment properties
C. Vacant land
D. Farms only
Answer: B
Rationale: Based on rental income.
9. Depreciation refers to:
A. Increase in value
B. Loss in property value
C. Loan reduction
D. Tax increase
Answer: B
Rationale: Loss in value over time.
10. Physical depreciation is caused by:
A. Market trends
B. Wear and tear
C. Location
D. Taxes
Answer: B
Rationale: Physical deterioration.
11. Functional obsolescence is due to:
A. Design inefficiencies
B. Market demand
C. Inflation
D. Loan changes
Answer: A
Rationale: Poor layout or outdated design.
12. External obsolescence is caused by:
