Azure Tide Section 16 Test Question with Answers

Azure Tide Section 16 Test Question with Answers The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) is a provision under Title XI that mandates states to license and certify appraisers. - Answer- True In real estate, the definition of highest and best use is always based on how the property is currently being used. - Answer-False The definition of highest and best use involves four tests. It is 1. the most probable use of land or improved property that is legally possible, 2. physically possible, 3. financially feasible (and appropriately supportable) from the market, and 4. which results in maximum profitability. According to Florida Statutes 475, real estate licensees may perform appraisal for a commission as long as the appraisal follows USPAP standards, are not being performed for a federally related transaction, and the licensee is not referring to him or herself as an actual certified appraiser. - Answer-False According to Florida Statutes 475, real estate licensees may perform appraisal for compensation as long as the appraisal follows USPAP standards, are not being performed for a federally related transaction, and the licensee is not referring to him or herself as an actual certified appraiser. Must be a flat fee not a percentage of the value Cost is how much money is required to produce the item. Price is the amount actually paid for an item. And value is how much something is worth to the average buyer and seller at the time value is being determined. - Answer-True The Concept of Substitution means that a buyer will be willing to pay more for a property that has lower quality features substituted with higher quality features. - Answer-False The Concept of Substitution means that a prudent buyer or investor will pay no more for a property than the cost of acquiring, through purchase or construction, an equally desirable alternative property. Appraisers commonly use the Comparative Market Analysis to determine value. - Answer-False Appraisers commonly use the Cost Deprecation Approach, the Comparable Sales Approach, or the Income Approach within an appraisal to determine value. Whereas real estate licensees commonly use the Comparative Market Analysis (CMA) to determine value. Progression is the value of an inferior property being enhanced by association with superior properties whereas regression is the value of a superior property that is adversely affected by association with inferior properties - Answer-True Rather than ordering a full appraisal, lenders may utilize an Automated Valuation Model which is a computer program that provides a quick synopsis of value. - Answer-True Liquidation value is when property is sold piece by piece rather than as a whole unit. - Answer-False Salvage value is when property is sold piece by piece rather than as a whole unit. Liquidation value is when money is needed quickly, a property can be sold at a value less than it would be within a normal timeframe. When figuring operating expenses to calculate net operating income, you can include the cost of the mortgage as an expense. - Answer-False Operating expenses include fixed expenses, variable expenses, and reserves for replacements of building components. Not included in operating expenses are Depreciation, Costs of mortgage, and Income taxes. The Cost-depreciation approach is commonly used to find value for all of the following reasons except which one? 1) New construction 2) Verify values found through other approaches 3) To Calculate income 4) Special-purpose properties - Answer-To Calculate income Kevin knows that rental property in the area averages a Gross Income Multiplier (GIM) of 7.5. If the property is producing annual rental income of $55,000 plus additional income of $20,000, how much should he offer for the property? 1) $412,500 2) $150,000 3) $562,500 4) $262,500 - Answer-$562,500 ($55,000 + $20,000) $75,000 x 7.5 = $562,500 Value When you create a CMA you collect data from the MLS. You would get all of the following data from the MLS EXCEPT what? 1) Recently SOLD properties 2) Recently expired listings 3) Currently listed properties 4) Appraisal values - Answer-Appraisal values What is combining two or more adjoining properties called? 1) Assemblage 2) Plottage 3) Accretion 4) Alluvium - Answer-Assemblage