Advanced Residential Applications and Case Studies
QUESTIONS WITH COMPLETE SOLUTION
Which of these is likely to be considered a complex property?
A home with unfinished construction
A home located in a transitional neighborhood
A home located on a mountaintop with a view of three states
Any of these Correct Answer: Any of these
An appraisal on a complex single-family property having a transaction value of $2
million would require the services of Correct Answer: A Certified Residential or
Certified General Appraiser
A property can be complex because of
Market conditions
The appraiser's level of licensure
The proposed loan amount
All of these Correct Answer: Market conditions
An ordinary-looking home can have a hidden issue that can make the property
complex. T or F Correct Answer: True
A non-complex property with four residential units and having a transaction value
of $750,000 could be appraised by Correct Answer: A Certified General, a
Certified Residential, or a Licensed Residential Appraiser
Where should an appraiser look to find a definition of a "complex property"?
Correct Answer: Code of Federal Regulations
Which of these properties would likely be considered complex?
A house constructed to resemble a shoe
A 5,000 square foot home in a neighborhood of 2,000 square foot homes
A typical single-family home with a leaking oil storage tank on the property
All of these Correct Answer: All of these
An appraisal on a complex property with three residential units and having a
transaction value of $450,000 would require the services of Correct Answer: A
Certified Residential or Certified General Appraiser
,How does location factor into the decision on whether or not a property is
complex? Correct Answer: It sometimes makes a property complex
Fee simple Estate Correct Answer: "Absolute ownership unencumbered by any
other interest or estate, subject only to the limitations imposed by the governmental
powers of taxation, eminent domain, police power, and escheat."2
Life interest Correct Answer: Rights of use, occupancy, and control, limited to the
lifetime of a designated party, sometimes referred to as the life tenant.
leased fee interest is defined as Correct Answer: "The ownership interest held by
the lessor, which includes the right to receive the contract rent specified in the lease
plus the reversionary right when the lease expires.
leasehold interest is defined as Correct Answer: The right held by the lessee to use
and occupy real estate for a stated term and under the conditions specified in the
lease."5
Ramon owns a home. He grants his Aunt Marie, the right to live in and occupy the
home as long Ramon's father is still alive. This right is best described as a Correct
Answer: Life estate pur autre vie
Which of these is NOT a factor that can make a property complex?
Form of ownership
Assessed value
Market conditions
Property characteristics Correct Answer: Assessed value
Sally, the owner, leases a house to Peter, on a long-term lease. What type of interest
does Peter now hold in the property? Correct Answer: Leasehold interest
John leases a house to Sarah. Sarah's interest is best described as a Correct Answer:
Leasehold interest
Market conditions which might make a property complex include
Values increasing at an exceptional rate
Values decreasing at an exceptional rate
No sales due to a depressed local economy
Any of these Correct Answer: Any of these
,Life estate Correct Answer: total rights of use, occupancy, and control, limited to
the lifetime of a designated party"
Eric owns a home. He grants his mother, Martha, the right to live in and occupy the
home as long as she is alive. This right is best described as a Correct Answer: Life
estate or life interest
Typically, the ownership interest appraised in a market value appraisal of a
residential property is Correct Answer: Fee simple estate
A large detached garage costs $80,000 to construct, but it only adds $25,000 to the
value of the property. This is an example of the principle of Correct Answer:
Contribution
What is an appraiser's best source for information about conventional residential
mortgage underwriting guidelines? Correct Answer: Fannie Mae
Making an estimate that is beyond the range of known data is Correct Answer:
Extrapolation
What does the course author mean by the statement "you must be a glass half full
appraiser when dealing with complex properties"? Correct Answer: You must
concentrate on the data you have, rather than the data you do not have
What happens if you are appraising a property and you find there aren't any
suitable comparable sales? Correct Answer: You may be able to develop the cost
and/or income approaches
Extrapolation Correct Answer: involves making an estimate beyond the range of
known data. This concept is useful when the subject has characteristics outside the
range of typical properties in the area. A home with a living area much larger than
any comparable sales is an example where extrapolation would be used. Ch 1,
Nontraditional Techniques
Which group established levels of appraiser licensure and certification? Correct
Answer: The Appraisal Qualifications Board
Which type of classification applies to the appraisal of one to four residential units
without regard to transaction value or complexity? Correct Answer: The Certified
Residential Real Property Appraiser Classification
, An appraiser's role has been likened to that of a real estate "market doctor". What
does this analogy mean? Correct Answer: The appraiser diagnoses the health of
the market
How many comparable sales should be used in the sales comparison approach for a
complex property? Correct Answer: It depends
The tenant's possessory interest created by a lease is the definition of what type of
interest? Correct Answer: Leasehold interest
All of the following are techniques related to the Sales Comparison Approach
EXCEPT:
Extrapolation
Principle of Contribution
Qualitative analysis
Relative ranking Correct Answer: Principle of Contribution
Contribution Correct Answer: is a Cost Approach technique. This principle holds
that the value of a component is based on its contribution to the whole property.
This is known as the contributory value.
USPAP includes five basic rules that apply in all appraisal and appraisal review
assignments: Correct Answer: the ETHICS RULE
the COMPETENCY RULE
the RECORD KEEPING RULE
the SCOPE OF WORK RULE
the JURISDICTIONAL EXCEPTION RULE
COMPETENCY RULE Correct Answer: An appraiser must: (1) be competent to
perform the assignment; (2) acquire the necessary competency to perform the
assignment; or (3) decline or withdraw from the assignment. In all cases, the
appraiser must perform competently when completing the assignment.
Competency requires: Correct Answer: the ability to properly identify the problem
to be addressed; and
the knowledge and experience to complete the assignment competently; and
recognition of, and compliance with, laws and regulations that apply to the
appraiser or to the assignment
QUESTIONS WITH COMPLETE SOLUTION
Which of these is likely to be considered a complex property?
A home with unfinished construction
A home located in a transitional neighborhood
A home located on a mountaintop with a view of three states
Any of these Correct Answer: Any of these
An appraisal on a complex single-family property having a transaction value of $2
million would require the services of Correct Answer: A Certified Residential or
Certified General Appraiser
A property can be complex because of
Market conditions
The appraiser's level of licensure
The proposed loan amount
All of these Correct Answer: Market conditions
An ordinary-looking home can have a hidden issue that can make the property
complex. T or F Correct Answer: True
A non-complex property with four residential units and having a transaction value
of $750,000 could be appraised by Correct Answer: A Certified General, a
Certified Residential, or a Licensed Residential Appraiser
Where should an appraiser look to find a definition of a "complex property"?
Correct Answer: Code of Federal Regulations
Which of these properties would likely be considered complex?
A house constructed to resemble a shoe
A 5,000 square foot home in a neighborhood of 2,000 square foot homes
A typical single-family home with a leaking oil storage tank on the property
All of these Correct Answer: All of these
An appraisal on a complex property with three residential units and having a
transaction value of $450,000 would require the services of Correct Answer: A
Certified Residential or Certified General Appraiser
,How does location factor into the decision on whether or not a property is
complex? Correct Answer: It sometimes makes a property complex
Fee simple Estate Correct Answer: "Absolute ownership unencumbered by any
other interest or estate, subject only to the limitations imposed by the governmental
powers of taxation, eminent domain, police power, and escheat."2
Life interest Correct Answer: Rights of use, occupancy, and control, limited to the
lifetime of a designated party, sometimes referred to as the life tenant.
leased fee interest is defined as Correct Answer: "The ownership interest held by
the lessor, which includes the right to receive the contract rent specified in the lease
plus the reversionary right when the lease expires.
leasehold interest is defined as Correct Answer: The right held by the lessee to use
and occupy real estate for a stated term and under the conditions specified in the
lease."5
Ramon owns a home. He grants his Aunt Marie, the right to live in and occupy the
home as long Ramon's father is still alive. This right is best described as a Correct
Answer: Life estate pur autre vie
Which of these is NOT a factor that can make a property complex?
Form of ownership
Assessed value
Market conditions
Property characteristics Correct Answer: Assessed value
Sally, the owner, leases a house to Peter, on a long-term lease. What type of interest
does Peter now hold in the property? Correct Answer: Leasehold interest
John leases a house to Sarah. Sarah's interest is best described as a Correct Answer:
Leasehold interest
Market conditions which might make a property complex include
Values increasing at an exceptional rate
Values decreasing at an exceptional rate
No sales due to a depressed local economy
Any of these Correct Answer: Any of these
,Life estate Correct Answer: total rights of use, occupancy, and control, limited to
the lifetime of a designated party"
Eric owns a home. He grants his mother, Martha, the right to live in and occupy the
home as long as she is alive. This right is best described as a Correct Answer: Life
estate or life interest
Typically, the ownership interest appraised in a market value appraisal of a
residential property is Correct Answer: Fee simple estate
A large detached garage costs $80,000 to construct, but it only adds $25,000 to the
value of the property. This is an example of the principle of Correct Answer:
Contribution
What is an appraiser's best source for information about conventional residential
mortgage underwriting guidelines? Correct Answer: Fannie Mae
Making an estimate that is beyond the range of known data is Correct Answer:
Extrapolation
What does the course author mean by the statement "you must be a glass half full
appraiser when dealing with complex properties"? Correct Answer: You must
concentrate on the data you have, rather than the data you do not have
What happens if you are appraising a property and you find there aren't any
suitable comparable sales? Correct Answer: You may be able to develop the cost
and/or income approaches
Extrapolation Correct Answer: involves making an estimate beyond the range of
known data. This concept is useful when the subject has characteristics outside the
range of typical properties in the area. A home with a living area much larger than
any comparable sales is an example where extrapolation would be used. Ch 1,
Nontraditional Techniques
Which group established levels of appraiser licensure and certification? Correct
Answer: The Appraisal Qualifications Board
Which type of classification applies to the appraisal of one to four residential units
without regard to transaction value or complexity? Correct Answer: The Certified
Residential Real Property Appraiser Classification
, An appraiser's role has been likened to that of a real estate "market doctor". What
does this analogy mean? Correct Answer: The appraiser diagnoses the health of
the market
How many comparable sales should be used in the sales comparison approach for a
complex property? Correct Answer: It depends
The tenant's possessory interest created by a lease is the definition of what type of
interest? Correct Answer: Leasehold interest
All of the following are techniques related to the Sales Comparison Approach
EXCEPT:
Extrapolation
Principle of Contribution
Qualitative analysis
Relative ranking Correct Answer: Principle of Contribution
Contribution Correct Answer: is a Cost Approach technique. This principle holds
that the value of a component is based on its contribution to the whole property.
This is known as the contributory value.
USPAP includes five basic rules that apply in all appraisal and appraisal review
assignments: Correct Answer: the ETHICS RULE
the COMPETENCY RULE
the RECORD KEEPING RULE
the SCOPE OF WORK RULE
the JURISDICTIONAL EXCEPTION RULE
COMPETENCY RULE Correct Answer: An appraiser must: (1) be competent to
perform the assignment; (2) acquire the necessary competency to perform the
assignment; or (3) decline or withdraw from the assignment. In all cases, the
appraiser must perform competently when completing the assignment.
Competency requires: Correct Answer: the ability to properly identify the problem
to be addressed; and
the knowledge and experience to complete the assignment competently; and
recognition of, and compliance with, laws and regulations that apply to the
appraiser or to the assignment
