Certified Appraisal Exam Review questions with
correct answers
For the purpose of estimating depreciation via the extraction method, you have
utilized Comparable Sale #1, which is a 2,400 sq. ft. home with a two-car, 440 sq. ft.
attached garage, having a replacement cost of $85/sq. ft. for gross living area and
$18/sq. ft. for the garage area. This property sold for $240,000 and has a chronological
age of 10 years. Through your research, the indicated land value is $50,000 and the
site improvements have a replacement cost of $25,000. What is the percentage total
amount of accrued depreciation indicated by this sale? - CORRECT ANSWERS
✔✔Steps.
1. Determine Cost New
Main house 2400 SF x 85/SF =204,000
Garage 440 x 18/SF = 7920
======================================
204,000 + 92 = 211,920
2. Determine Depreciation Cost
Sale Price 240,000 -
Land Value 50,000 -
Improvements 25,000
========================
165,000
3. Determine Total Depreciation
,Cost New 211,920 - Depreciation Cost 165,000 = 46,920
4. Determine Depreciation Percentage
Cost New 211,920/Total Depreciation 46,920 = 22.14%
Allocation method vs. extraction method - CORRECT ANSWERS ✔✔Allocation: a
method of estimating land value in which sales of improved properties are analyzed
to establish a typical ratio of site value to total property value and this ratio is applied
to the property being appraised or the comparable being analyzed.
Extraction: a method of estimating land value in which the depreciated cost of the
improvement on the improved property is estimated and deducted from the total sale
price to arrive at an estimated sale price for the land; most effective when the
improvements contribute little to the total sale price of the property.
Which is a physical force in relationship to value? - CORRECT ANSWERS ✔✔size
What is the highest and best use of a rural property that has 300 lineal feet of
frontage and a depth of 300 lineal feet, when zoning requires a site to be at least two
acres for the development of a single-family home? - CORRECT ANSWERS
✔✔utilize the site as one home site, since the site cannot legally be split
Regardless of the desire for a property in a particular market, if there is not general
purchase ability linked to the desire within the market, the market is lacking -
CORRECT ANSWERS ✔✔effective demand.
RATIONALE The characteristic of purchase ability, or affordability, is known as
effective demand or effective purchasing power.
,Which of the following characteristics create value in real estate? - CORRECT
ANSWERS ✔✔scarcity and utility. DUST
Once a neighborhood has reached the phase of stability in its life cycle - CORRECT
ANSWERS ✔✔it could remain in that phase indefinitely.
RATIONALE
Stability is when buyer interest in the neighborhood remains strong and prices rarely
drop. Some neighborhoods remain in this stage and don't experience decline.
Legal interest of a subject property was conveyed to the current owner as fee simple
conditional. What can be best said about the estate held by the current owner? -
CORRECT ANSWERS ✔✔If the condition is not adhered to, the title to the property
could be forfeited
RATIONALE
Fee simple conditional provides that the owner may hold the estate only as long as
some specified act or condition does or does not occur. Thus, if the condition is not
observed, the owner could forfeit title.
When an individual has a freehold estate that only lasts as long as a specified person
lives and then the interest goes back to the grantor or the grantor's heirs, what type of
freehold estate does the individual have? - CORRECT ANSWERS ✔✔Life estate with
a reversionary interest
RATIONALE
A life estate is a freehold estate that lasts only as long as a specified person lives. A
life estate with a reversionary interest means that the property will go back (revert) to
the grantor or the grantor's heirs.
, As the depth of the lot increases, the value per front footage - CORRECT ANSWERS
✔✔increases at a decreasing rate.
RATIONALE
With a fixed frontage, as the depth of the lot increases, the overall value of the lot
increases. However, as the lot extends back, the value of the land farther back
becomes less and the increase in overall value becomes smaller. Therefore, the front
foot rate will increase, but as the lot extends farther back, the amount of increase in
rate will decrease.
The allocation method for determining site value - CORRECT ANSWERS ✔✔takes a
ratio of the land or site value to the total improved value.
RATIONALE
When the ratio of land to total value is calculated for the comparable sales and then
applied to the subject, the allocation method is being used.
Six homes sold within the past few months. What is the standard deviation among
the data provided? $150,000, $165,000, $148,000, $156,000, $163,000, $170,000 -
CORRECT ANSWERS ✔✔$8,756
RATIONALE
HP-12C Keystrokes: [f] [Sigma] [150000] [Sigma+] [165000] [Sigma+] [148000]
[Sigma+] [156000] [Sigma+] [163000] [Sigma+] [170000] [Sigma+] [g] [s] gives you
a result of $8,756.
Using this number set, find the standard deviation: 47 - 14 - 37 - 29 - 37, rounded to
two places. - CORRECT ANSWERS ✔✔12.30
RATIONALE
correct answers
For the purpose of estimating depreciation via the extraction method, you have
utilized Comparable Sale #1, which is a 2,400 sq. ft. home with a two-car, 440 sq. ft.
attached garage, having a replacement cost of $85/sq. ft. for gross living area and
$18/sq. ft. for the garage area. This property sold for $240,000 and has a chronological
age of 10 years. Through your research, the indicated land value is $50,000 and the
site improvements have a replacement cost of $25,000. What is the percentage total
amount of accrued depreciation indicated by this sale? - CORRECT ANSWERS
✔✔Steps.
1. Determine Cost New
Main house 2400 SF x 85/SF =204,000
Garage 440 x 18/SF = 7920
======================================
204,000 + 92 = 211,920
2. Determine Depreciation Cost
Sale Price 240,000 -
Land Value 50,000 -
Improvements 25,000
========================
165,000
3. Determine Total Depreciation
,Cost New 211,920 - Depreciation Cost 165,000 = 46,920
4. Determine Depreciation Percentage
Cost New 211,920/Total Depreciation 46,920 = 22.14%
Allocation method vs. extraction method - CORRECT ANSWERS ✔✔Allocation: a
method of estimating land value in which sales of improved properties are analyzed
to establish a typical ratio of site value to total property value and this ratio is applied
to the property being appraised or the comparable being analyzed.
Extraction: a method of estimating land value in which the depreciated cost of the
improvement on the improved property is estimated and deducted from the total sale
price to arrive at an estimated sale price for the land; most effective when the
improvements contribute little to the total sale price of the property.
Which is a physical force in relationship to value? - CORRECT ANSWERS ✔✔size
What is the highest and best use of a rural property that has 300 lineal feet of
frontage and a depth of 300 lineal feet, when zoning requires a site to be at least two
acres for the development of a single-family home? - CORRECT ANSWERS
✔✔utilize the site as one home site, since the site cannot legally be split
Regardless of the desire for a property in a particular market, if there is not general
purchase ability linked to the desire within the market, the market is lacking -
CORRECT ANSWERS ✔✔effective demand.
RATIONALE The characteristic of purchase ability, or affordability, is known as
effective demand or effective purchasing power.
,Which of the following characteristics create value in real estate? - CORRECT
ANSWERS ✔✔scarcity and utility. DUST
Once a neighborhood has reached the phase of stability in its life cycle - CORRECT
ANSWERS ✔✔it could remain in that phase indefinitely.
RATIONALE
Stability is when buyer interest in the neighborhood remains strong and prices rarely
drop. Some neighborhoods remain in this stage and don't experience decline.
Legal interest of a subject property was conveyed to the current owner as fee simple
conditional. What can be best said about the estate held by the current owner? -
CORRECT ANSWERS ✔✔If the condition is not adhered to, the title to the property
could be forfeited
RATIONALE
Fee simple conditional provides that the owner may hold the estate only as long as
some specified act or condition does or does not occur. Thus, if the condition is not
observed, the owner could forfeit title.
When an individual has a freehold estate that only lasts as long as a specified person
lives and then the interest goes back to the grantor or the grantor's heirs, what type of
freehold estate does the individual have? - CORRECT ANSWERS ✔✔Life estate with
a reversionary interest
RATIONALE
A life estate is a freehold estate that lasts only as long as a specified person lives. A
life estate with a reversionary interest means that the property will go back (revert) to
the grantor or the grantor's heirs.
, As the depth of the lot increases, the value per front footage - CORRECT ANSWERS
✔✔increases at a decreasing rate.
RATIONALE
With a fixed frontage, as the depth of the lot increases, the overall value of the lot
increases. However, as the lot extends back, the value of the land farther back
becomes less and the increase in overall value becomes smaller. Therefore, the front
foot rate will increase, but as the lot extends farther back, the amount of increase in
rate will decrease.
The allocation method for determining site value - CORRECT ANSWERS ✔✔takes a
ratio of the land or site value to the total improved value.
RATIONALE
When the ratio of land to total value is calculated for the comparable sales and then
applied to the subject, the allocation method is being used.
Six homes sold within the past few months. What is the standard deviation among
the data provided? $150,000, $165,000, $148,000, $156,000, $163,000, $170,000 -
CORRECT ANSWERS ✔✔$8,756
RATIONALE
HP-12C Keystrokes: [f] [Sigma] [150000] [Sigma+] [165000] [Sigma+] [148000]
[Sigma+] [156000] [Sigma+] [163000] [Sigma+] [170000] [Sigma+] [g] [s] gives you
a result of $8,756.
Using this number set, find the standard deviation: 47 - 14 - 37 - 29 - 37, rounded to
two places. - CORRECT ANSWERS ✔✔12.30
RATIONALE
