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Sales Comparison Approach McKissock
Class. Exam Questions and Answers 100%
Pass
What is created in the mind of an individual or market participant? - ANS Value
What is the motivation of an individual, group of persons, or business entity involving the
purchase of an item? - ANS Desire
As the term applies to appraisal, transferability refers to the number of goods and services that
can be purchased with a unit of currency. (T/F) - ANS True
What does not include physical mobility, but rather the control and possession of all the rights
of ownership? - ANS Purchasing Power
As it refers to real property appraisal, what word is best used to describe "value"? -
ANS Opinion
Value is a fact, or an estimate of fact. (T/F) - ANS False
USPAP cautions appraisers to use the definition of market value that is specified in the
DEFINITIONS section of USPAP. (T/F) - ANS False
Which statement is TRUE regarding appraisers and value? - ANS Market value is only one
type of value; appraisers estimate other types of value as well.
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It is important for appraisers to consider the specific definition of value that is appropriate for
the appraisal assignment being undertaken. (T/F) - ANS True
The rights and benefits inherent in the ownership of a parcel of land would be defined as: -
ANS Real Property - It is commonly understood that real estate is the land and everything
permanently attached thereto, while real property consists of the rights and benefits inherent
in ownership. (Chapter 1 - The Importance of Value)
USPAP cautions appraisers to use the definition of market value that is specified in the
DEFINITIONS section of USPAP. (T/F) - ANS False - In its DEFINITIONS section, USPAP does not
set forth a specific definition of market value; instead it provides a somewhat generic overview
of the concept. Instead of providing a specific market value definition, USPAP cautions
appraisers to identify the exact definition of value and its authority, in every market value
appraisal. (Chapter 1 - USPAP and Value Definition)
If an appraiser is valuing real property by sales comparison, whose actions is he or she LEAST
likely to consider? - ANS Government Agencies
Which phrase is an example of economic equilibrium? - ANS The quantity demanded is equal
to the quantity supplied.
What is the loss of income that results from not choosing an alternative? - ANS Opportunity
Cost
Which principle equally applies to residential and commercial properties? - ANS Substitution
The principle of substitution does not apply to non-owner-occupied commercial properties.
(T/F) - ANS False
What adds the most value to land and the improvements? - ANS When the property is used
for its highest and best use
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Which methods are most appropriate to the sales comparison approach? - ANS Economics
and Statistics
Why is the real estate market considered inefficient? - ANS The real estate market is
complex. -
Because of the lack of readily available information during many of the various levels of a
transaction. -
It takes a relatively long time to improve a parcel of real estate.
The growth rate is higher in Community A than Community B, because Community A has public
water and sewage available. As a result, property values are higher in Community A. This is an
example of what force affecting the market? - ANS Environmental - Environmental or
physical factors include transportation, open space, availability of public utilities, among other
factors. (Chapter 1 - The Four Great Forces)
Market segmentation separates the market for different types of properties such as: -
ANS Lodging
Residential or multi-family
Commercial or office
Which market is inefficient? - ANS Real estate market
A large, old, dilapidated commercial building sits in an economically depressed section of the
city. There are no market participants who have the financial capability to renovate and use
such a large building. This is an example of what force? - ANS Economic
Dave is completing a market value appraisal on a property that is currently improved with an
office building. Which statement will most likely be TRUE regarding his highest and best use
analysis? - ANS He will have to develop two highest and best use opinions.
Annette is appraising a five-acre vacant parcel of land, in an area where there is no zoning. As a
residential home site, the property is worth $225,000. For commercial purposes, it is worth
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$1.25 per square foot. For industrial purposes, it is worth $50,000 per acre. What is the highest
and best use of the property? - ANS Commercial
When considering legal permissibility and current land use regulations, an appraiser must also
consider __________. - ANS Reasonably probable modifications of land use regulations
Which statement is FALSE regarding highest and best use analysis? - ANS It does not help in
selecting comparable sales.
Carole is appraising a vacant land parcel which can be used for residential, commercial, or
industrial use. What is the highest and best use of the property? - ANS Cannot determine
from the information provided
The criteria for highest and best use include all of the following EXCEPT: - ANS No undue
stimulus
Harry is preparing a real property appraisal report for his client. Which USPAP Standard must he
follow when preparing this report? - ANS STANDARD 2
A property is improved with a building and is valued at $425,000. It would cost $50,000 to raze
and remove the building, and the value of the vacant site would be $500,000. Under this
scenario, razing and removing the building would be considered ____________. -
ANS Financially Feasible - Razing and removing the building would be considered financially
feasible, because it produces a positive return. This is not necessarily the highest and best use,
though, because there may be other alternative uses which would produce a greater return.
(Chapter 1 - As Improved)
What is the appraisal or valuation process? - ANS A sequence of steps used by the appraiser
to develop a value conclusion
A _________ includes supply and demand analysis along with the collection of market data,
analyses, and recommendations. - ANS market analysis
©FYNDLAY 4
Sales Comparison Approach McKissock
Class. Exam Questions and Answers 100%
Pass
What is created in the mind of an individual or market participant? - ANS Value
What is the motivation of an individual, group of persons, or business entity involving the
purchase of an item? - ANS Desire
As the term applies to appraisal, transferability refers to the number of goods and services that
can be purchased with a unit of currency. (T/F) - ANS True
What does not include physical mobility, but rather the control and possession of all the rights
of ownership? - ANS Purchasing Power
As it refers to real property appraisal, what word is best used to describe "value"? -
ANS Opinion
Value is a fact, or an estimate of fact. (T/F) - ANS False
USPAP cautions appraisers to use the definition of market value that is specified in the
DEFINITIONS section of USPAP. (T/F) - ANS False
Which statement is TRUE regarding appraisers and value? - ANS Market value is only one
type of value; appraisers estimate other types of value as well.
©FYNDLAY 1
, ©FYNDLAY 2025 ALL RIGHTS RESERVED
It is important for appraisers to consider the specific definition of value that is appropriate for
the appraisal assignment being undertaken. (T/F) - ANS True
The rights and benefits inherent in the ownership of a parcel of land would be defined as: -
ANS Real Property - It is commonly understood that real estate is the land and everything
permanently attached thereto, while real property consists of the rights and benefits inherent
in ownership. (Chapter 1 - The Importance of Value)
USPAP cautions appraisers to use the definition of market value that is specified in the
DEFINITIONS section of USPAP. (T/F) - ANS False - In its DEFINITIONS section, USPAP does not
set forth a specific definition of market value; instead it provides a somewhat generic overview
of the concept. Instead of providing a specific market value definition, USPAP cautions
appraisers to identify the exact definition of value and its authority, in every market value
appraisal. (Chapter 1 - USPAP and Value Definition)
If an appraiser is valuing real property by sales comparison, whose actions is he or she LEAST
likely to consider? - ANS Government Agencies
Which phrase is an example of economic equilibrium? - ANS The quantity demanded is equal
to the quantity supplied.
What is the loss of income that results from not choosing an alternative? - ANS Opportunity
Cost
Which principle equally applies to residential and commercial properties? - ANS Substitution
The principle of substitution does not apply to non-owner-occupied commercial properties.
(T/F) - ANS False
What adds the most value to land and the improvements? - ANS When the property is used
for its highest and best use
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, ©FYNDLAY 2025 ALL RIGHTS RESERVED
Which methods are most appropriate to the sales comparison approach? - ANS Economics
and Statistics
Why is the real estate market considered inefficient? - ANS The real estate market is
complex. -
Because of the lack of readily available information during many of the various levels of a
transaction. -
It takes a relatively long time to improve a parcel of real estate.
The growth rate is higher in Community A than Community B, because Community A has public
water and sewage available. As a result, property values are higher in Community A. This is an
example of what force affecting the market? - ANS Environmental - Environmental or
physical factors include transportation, open space, availability of public utilities, among other
factors. (Chapter 1 - The Four Great Forces)
Market segmentation separates the market for different types of properties such as: -
ANS Lodging
Residential or multi-family
Commercial or office
Which market is inefficient? - ANS Real estate market
A large, old, dilapidated commercial building sits in an economically depressed section of the
city. There are no market participants who have the financial capability to renovate and use
such a large building. This is an example of what force? - ANS Economic
Dave is completing a market value appraisal on a property that is currently improved with an
office building. Which statement will most likely be TRUE regarding his highest and best use
analysis? - ANS He will have to develop two highest and best use opinions.
Annette is appraising a five-acre vacant parcel of land, in an area where there is no zoning. As a
residential home site, the property is worth $225,000. For commercial purposes, it is worth
©FYNDLAY 3
, ©FYNDLAY 2025 ALL RIGHTS RESERVED
$1.25 per square foot. For industrial purposes, it is worth $50,000 per acre. What is the highest
and best use of the property? - ANS Commercial
When considering legal permissibility and current land use regulations, an appraiser must also
consider __________. - ANS Reasonably probable modifications of land use regulations
Which statement is FALSE regarding highest and best use analysis? - ANS It does not help in
selecting comparable sales.
Carole is appraising a vacant land parcel which can be used for residential, commercial, or
industrial use. What is the highest and best use of the property? - ANS Cannot determine
from the information provided
The criteria for highest and best use include all of the following EXCEPT: - ANS No undue
stimulus
Harry is preparing a real property appraisal report for his client. Which USPAP Standard must he
follow when preparing this report? - ANS STANDARD 2
A property is improved with a building and is valued at $425,000. It would cost $50,000 to raze
and remove the building, and the value of the vacant site would be $500,000. Under this
scenario, razing and removing the building would be considered ____________. -
ANS Financially Feasible - Razing and removing the building would be considered financially
feasible, because it produces a positive return. This is not necessarily the highest and best use,
though, because there may be other alternative uses which would produce a greater return.
(Chapter 1 - As Improved)
What is the appraisal or valuation process? - ANS A sequence of steps used by the appraiser
to develop a value conclusion
A _________ includes supply and demand analysis along with the collection of market data,
analyses, and recommendations. - ANS market analysis
©FYNDLAY 4
