1
Certified General Appraiser Exam — 100 Practice Questions & Answers (2026–2027)
Section 1: Highest and Best Use & Appraisal Principles (Questions 1–15)
1. In a highest and best use analysis for a vacant urban parcel, which sequence correctly
reflects the four criteria?
A) Marketability, productivity, legality, feasibility
B) Legally permissible, physically possible, financially feasible, maximally productive
C) Physically possible, legally permissible, maximally productive, financially feasible
D) Financially feasible, legally permissible, physically possible, maximally productive
Answer: B. The correct sequence begins with legal permissibility, followed by physical
possibility, then financial feasibility, and finally maximally productive use.
2. Which appraisal principle explains why a property's value may decline when surrounded
by poorly maintained or incompatible land uses?
A) Contribution
B) Regression
C) Anticipation
D) Substitution
Answer: B. Regression occurs when higher-value properties are adversely affected by
surrounding lower-value properties.
3. The principle of substitution suggests that:
A) Value depends on future benefits
B) A buyer will pay no more than the cost of an equally desirable alternative
C) Land value always increases
D) Cost equals value
Answer: B. Rational buyers seek alternatives and generally will not pay more for a property
than the cost of obtaining a comparable substitute.
4. Which appraisal principle states that value is created and sustained when the four
agents of production are in balance?
A) Contribution
B) Anticipation
C) Substitution
D) Balance
Answer: D. The principle of balance holds that value is maximized when land, labor, capital,
and entrepreneurship are in proper equilibrium.
5. The four agents of production are:
A) Land, labor, capital, and entrepreneurship
B) Land, buildings, equipment, and inventory
, 2
C) Capital, management, marketing, and sales
D) Labor, materials, overhead, and profit
Answer: A. These are the four agents of production referenced in the principle of balance.
6. The primary purpose of a highest and best use analysis is to:
A) Determine tax liability
B) Estimate replacement cost
C) Identify the most profitable legal use of a property
D) Calculate depreciation
Answer: C. Highest and best use analysis determines the reasonably probable and legal use
that is physically possible, financially feasible, and maximally productive.
7. The four tests of highest and best use must be applied:
A) Simultaneously
B) In sequential order
C) Only to improved properties
D) Only to vacant land
Answer: B. The tests must be applied sequentially: legally permissible, physically possible,
financially feasible, and maximally productive.
8. Which of the following is NOT one of the four tests of highest and best use?
A) Legally permissible
B) Physically possible
C) Environmentally sustainable
D) Financially feasible
Answer: C. Environmental sustainability is not one of the four tests.
9. A property's highest and best use must be:
A) The current use
B) The owner's preferred use
C) Legally permissible, physically possible, financially feasible, and maximally productive
D) The most expensive use
Answer: C. All four criteria must be met for a use to qualify as highest and best use.
10. The principle of anticipation in appraisal theory states that:
A) Value is based on historical cost
B) Value depends on the expectation of future benefits
C) Value is determined by tax assessments
D) Value equals replacement cost
Answer: B. The principle of anticipation holds that value is created by the expectation of
benefits to be derived in the future.
, 3
11. Which principle is fundamental to the cost approach?
A) Contribution
B) Substitution
C) Conformity
D) Progression
Answer: B. The cost approach is based on the principle of substitution — a prudent buyer
would not pay more than the cost to construct a similar property.
12. The principle of contribution states that:
A) Value is determined by the cost of the entire property
B) The value of a component is measured by its contribution to the value of the whole
C) All components contribute equally
D) Land value is always the largest component
Answer: B. Contribution measures the value of an individual component based on what it
adds to the total property value.
13. External obsolescence is typically:
A) Curable
B) Incurable
C) Always curable
D) Not a form of depreciation
Answer: B. External obsolescence arises from influences outside the property boundaries
(economic decline, adverse zoning) and is generally incurable by the owner.
14. The concept of "surplus productivity" refers to:
A) Excess inventory
B) The net income remaining after the costs of labor, capital, and entrepreneurship are paid
C) Overproduction
D) Unused land
Answer: B. Surplus productivity is the income attributable to land after the other agents of
production are compensated.
15. Which of the following best describes "market value"?
A) The most probable price a property should bring in a competitive and open market under
all conditions requisite to a fair sale
B) The assessed value determined by the local tax authority
C) The replacement cost of improvements minus depreciation
D) The original purchase price
Answer: A. Market value is defined as the most probable price in a competitive and open
market, with buyer and seller acting prudently and knowledgeably, under no undue
pressure.
Certified General Appraiser Exam — 100 Practice Questions & Answers (2026–2027)
Section 1: Highest and Best Use & Appraisal Principles (Questions 1–15)
1. In a highest and best use analysis for a vacant urban parcel, which sequence correctly
reflects the four criteria?
A) Marketability, productivity, legality, feasibility
B) Legally permissible, physically possible, financially feasible, maximally productive
C) Physically possible, legally permissible, maximally productive, financially feasible
D) Financially feasible, legally permissible, physically possible, maximally productive
Answer: B. The correct sequence begins with legal permissibility, followed by physical
possibility, then financial feasibility, and finally maximally productive use.
2. Which appraisal principle explains why a property's value may decline when surrounded
by poorly maintained or incompatible land uses?
A) Contribution
B) Regression
C) Anticipation
D) Substitution
Answer: B. Regression occurs when higher-value properties are adversely affected by
surrounding lower-value properties.
3. The principle of substitution suggests that:
A) Value depends on future benefits
B) A buyer will pay no more than the cost of an equally desirable alternative
C) Land value always increases
D) Cost equals value
Answer: B. Rational buyers seek alternatives and generally will not pay more for a property
than the cost of obtaining a comparable substitute.
4. Which appraisal principle states that value is created and sustained when the four
agents of production are in balance?
A) Contribution
B) Anticipation
C) Substitution
D) Balance
Answer: D. The principle of balance holds that value is maximized when land, labor, capital,
and entrepreneurship are in proper equilibrium.
5. The four agents of production are:
A) Land, labor, capital, and entrepreneurship
B) Land, buildings, equipment, and inventory
, 2
C) Capital, management, marketing, and sales
D) Labor, materials, overhead, and profit
Answer: A. These are the four agents of production referenced in the principle of balance.
6. The primary purpose of a highest and best use analysis is to:
A) Determine tax liability
B) Estimate replacement cost
C) Identify the most profitable legal use of a property
D) Calculate depreciation
Answer: C. Highest and best use analysis determines the reasonably probable and legal use
that is physically possible, financially feasible, and maximally productive.
7. The four tests of highest and best use must be applied:
A) Simultaneously
B) In sequential order
C) Only to improved properties
D) Only to vacant land
Answer: B. The tests must be applied sequentially: legally permissible, physically possible,
financially feasible, and maximally productive.
8. Which of the following is NOT one of the four tests of highest and best use?
A) Legally permissible
B) Physically possible
C) Environmentally sustainable
D) Financially feasible
Answer: C. Environmental sustainability is not one of the four tests.
9. A property's highest and best use must be:
A) The current use
B) The owner's preferred use
C) Legally permissible, physically possible, financially feasible, and maximally productive
D) The most expensive use
Answer: C. All four criteria must be met for a use to qualify as highest and best use.
10. The principle of anticipation in appraisal theory states that:
A) Value is based on historical cost
B) Value depends on the expectation of future benefits
C) Value is determined by tax assessments
D) Value equals replacement cost
Answer: B. The principle of anticipation holds that value is created by the expectation of
benefits to be derived in the future.
, 3
11. Which principle is fundamental to the cost approach?
A) Contribution
B) Substitution
C) Conformity
D) Progression
Answer: B. The cost approach is based on the principle of substitution — a prudent buyer
would not pay more than the cost to construct a similar property.
12. The principle of contribution states that:
A) Value is determined by the cost of the entire property
B) The value of a component is measured by its contribution to the value of the whole
C) All components contribute equally
D) Land value is always the largest component
Answer: B. Contribution measures the value of an individual component based on what it
adds to the total property value.
13. External obsolescence is typically:
A) Curable
B) Incurable
C) Always curable
D) Not a form of depreciation
Answer: B. External obsolescence arises from influences outside the property boundaries
(economic decline, adverse zoning) and is generally incurable by the owner.
14. The concept of "surplus productivity" refers to:
A) Excess inventory
B) The net income remaining after the costs of labor, capital, and entrepreneurship are paid
C) Overproduction
D) Unused land
Answer: B. Surplus productivity is the income attributable to land after the other agents of
production are compensated.
15. Which of the following best describes "market value"?
A) The most probable price a property should bring in a competitive and open market under
all conditions requisite to a fair sale
B) The assessed value determined by the local tax authority
C) The replacement cost of improvements minus depreciation
D) The original purchase price
Answer: A. Market value is defined as the most probable price in a competitive and open
market, with buyer and seller acting prudently and knowledgeably, under no undue
pressure.
