Exam Prep - National Section III -
Trebs 2021 Questions with Complete
Solutions11
N3. Capitalization rate, gross rent multiplier, and gross income multiplier are used to describe
the:
A. Market approach
B. Cost approach
C. Income approach
D. Sales comparison approach - ANSWERS-C. Income approach. The income approach uses
several formulas to assist in determining the value of the property. Capitalization rate, gross rent
multiplier and gross income multiplier are all formulas used by both investors and appraisers.
N3. What is defined as the application of a rate to an income stream?
A. Capitalization rate
B. Economic rate
C. Income rate
D. Revenue rate - ANSWERS-A. Capitalization rate. The formula for finding the capitalization rate
is: Gross income - expenses = NOI (net operating income). Divide the net operating income into
the sales price (asking price) to find the capitalization rate of the property.
N3. This rate does NOT create depreciation, nor does it consider lot size.
A. Economic rate
B. Income rate
C. Revenue rate
, D. Capitalization rate - ANSWERS-D. Capitalization rate. The capitalization rate does not take int
account depreciation or the size of the lot. It strictly deals with income and expenses and the
pricing of the property.
N3. A real estate salesperson would use a competitive market analysis, or CMA, to help a seller
price his residential property. An appraisal approach similar to the CMA is the:
A. Supply and demand approach
B. Market-data approach
C. Cost approach
D. Income approach - ANSWERS-B. Market data approach. The market data approach is used to
compare similar properties. The income approach is used on income-producing property and
the cost approach is used to value buildings that are difficult to find comparables for (i.e. a fire
station, a school, church, etc.).
N3. When preparing a market analysis for a homeowner, what must the licensee do?
A. Hire an appraiser to verify the market analysis.
B. Include a statement on the analysis that the market analysis is NOT an appraisal.
C. Have copies of the market analysis available for all prospective buyers.
D. Make sure to include all sales within the past two years. - ANSWERS-B. Include a statement
on the analysis that the market analysis is NOT an appraisal. The licensee may complete a
comparative market analysis or a broker price opinion of the seller of a property; however, they
must make it very clear to the seller that their analysis in not an appraisal.
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - ANSWERS-C. An estimate of the most probable price it
should bring. Market price is the sold price. Value without improvements would be the value of
only the land.
Trebs 2021 Questions with Complete
Solutions11
N3. Capitalization rate, gross rent multiplier, and gross income multiplier are used to describe
the:
A. Market approach
B. Cost approach
C. Income approach
D. Sales comparison approach - ANSWERS-C. Income approach. The income approach uses
several formulas to assist in determining the value of the property. Capitalization rate, gross rent
multiplier and gross income multiplier are all formulas used by both investors and appraisers.
N3. What is defined as the application of a rate to an income stream?
A. Capitalization rate
B. Economic rate
C. Income rate
D. Revenue rate - ANSWERS-A. Capitalization rate. The formula for finding the capitalization rate
is: Gross income - expenses = NOI (net operating income). Divide the net operating income into
the sales price (asking price) to find the capitalization rate of the property.
N3. This rate does NOT create depreciation, nor does it consider lot size.
A. Economic rate
B. Income rate
C. Revenue rate
, D. Capitalization rate - ANSWERS-D. Capitalization rate. The capitalization rate does not take int
account depreciation or the size of the lot. It strictly deals with income and expenses and the
pricing of the property.
N3. A real estate salesperson would use a competitive market analysis, or CMA, to help a seller
price his residential property. An appraisal approach similar to the CMA is the:
A. Supply and demand approach
B. Market-data approach
C. Cost approach
D. Income approach - ANSWERS-B. Market data approach. The market data approach is used to
compare similar properties. The income approach is used on income-producing property and
the cost approach is used to value buildings that are difficult to find comparables for (i.e. a fire
station, a school, church, etc.).
N3. When preparing a market analysis for a homeowner, what must the licensee do?
A. Hire an appraiser to verify the market analysis.
B. Include a statement on the analysis that the market analysis is NOT an appraisal.
C. Have copies of the market analysis available for all prospective buyers.
D. Make sure to include all sales within the past two years. - ANSWERS-B. Include a statement
on the analysis that the market analysis is NOT an appraisal. The licensee may complete a
comparative market analysis or a broker price opinion of the seller of a property; however, they
must make it very clear to the seller that their analysis in not an appraisal.
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - ANSWERS-C. An estimate of the most probable price it
should bring. Market price is the sold price. Value without improvements would be the value of
only the land.
