Section 3: Unit 13: Factors Affecting Value; CMAs Exam
Questions with Correct Answers 2025/2026
Difference between Value, Price, and Cost - CORRECT ANSWER-Value is the amount brought in
an open market under the above assumptions.
Price is the amount the buyer will actually pay, sometimes with unusual circumstances.
Cost is how much cash it takes to build and improve property. Cost may also be historical - for
example, what one paid for something is not necessarily what the item is worth today.
Characteristics of Value (DUSTS) - CORRECT ANSWER-Demand, Utility, Scarcity, Transferability,
Stitus (location)
Name four reasons determining the value of a property is important. - CORRECT ANSWER-To the
seller for selling the property at the appropriate price
To the buyer for purchasing the property at the appropriate price
To submit notice of value for property taxes
To submit notice of value for property insurance
Name three assumptions of market value. (Additional answers can be found on Page #4) -
CORRECT ANSWER-Seller can provide marketable title
Market value refers to a specific date
The terms are cash or its equivalent
The definition of highest and best use is that use that is: - CORRECT ANSWER-- Legally
permissible
- Physically possible
- Financially feasible
, - Maximally productive
What effect on property value do supply and demand have? - CORRECT ANSWER-The value of a
property increases when the supply is limited and decreases when there is too much property
available. Similarly, the value increases when the supply is short, and decrease when there is
little demand.
Which system of value determination is an educated guess because it is difficult to find
matching properties? - CORRECT ANSWER-Gross Rent Multiplier
What is the formula used in Gross Rent Multiplier? - CORRECT ANSWER-Divide market value by
monthly rent to determine GRM, or divide market value by GRM to determine monthly rent.
What is the formula used in Gross Income Multiplier? - CORRECT ANSWER-Divide market value
by annual income to determine GIM, or divide market value by GIM to determine annual
income.
Based on the Principle of Substitution (comparison) the three main steps of a CMA are: -
CORRECT ANSWER-1. Locate Comparable Properties - 3 comparable is desirable,
2. Compare the Subject to the Comparables
3 Reconcile all comparable information and draw the value conclusion.
What is a competitive market analysis (CMA) used to determine?
The listing price of a property - CORRECT ANSWER-The listing price of a property
What is the primary goal of a property investor? - CORRECT ANSWER-Increasing net worth with
as little income tax penalty as possible
Questions with Correct Answers 2025/2026
Difference between Value, Price, and Cost - CORRECT ANSWER-Value is the amount brought in
an open market under the above assumptions.
Price is the amount the buyer will actually pay, sometimes with unusual circumstances.
Cost is how much cash it takes to build and improve property. Cost may also be historical - for
example, what one paid for something is not necessarily what the item is worth today.
Characteristics of Value (DUSTS) - CORRECT ANSWER-Demand, Utility, Scarcity, Transferability,
Stitus (location)
Name four reasons determining the value of a property is important. - CORRECT ANSWER-To the
seller for selling the property at the appropriate price
To the buyer for purchasing the property at the appropriate price
To submit notice of value for property taxes
To submit notice of value for property insurance
Name three assumptions of market value. (Additional answers can be found on Page #4) -
CORRECT ANSWER-Seller can provide marketable title
Market value refers to a specific date
The terms are cash or its equivalent
The definition of highest and best use is that use that is: - CORRECT ANSWER-- Legally
permissible
- Physically possible
- Financially feasible
, - Maximally productive
What effect on property value do supply and demand have? - CORRECT ANSWER-The value of a
property increases when the supply is limited and decreases when there is too much property
available. Similarly, the value increases when the supply is short, and decrease when there is
little demand.
Which system of value determination is an educated guess because it is difficult to find
matching properties? - CORRECT ANSWER-Gross Rent Multiplier
What is the formula used in Gross Rent Multiplier? - CORRECT ANSWER-Divide market value by
monthly rent to determine GRM, or divide market value by GRM to determine monthly rent.
What is the formula used in Gross Income Multiplier? - CORRECT ANSWER-Divide market value
by annual income to determine GIM, or divide market value by GIM to determine annual
income.
Based on the Principle of Substitution (comparison) the three main steps of a CMA are: -
CORRECT ANSWER-1. Locate Comparable Properties - 3 comparable is desirable,
2. Compare the Subject to the Comparables
3 Reconcile all comparable information and draw the value conclusion.
What is a competitive market analysis (CMA) used to determine?
The listing price of a property - CORRECT ANSWER-The listing price of a property
What is the primary goal of a property investor? - CORRECT ANSWER-Increasing net worth with
as little income tax penalty as possible
