Certified Appraisal Exam Review UPDATED
ACTUAL Questions and 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% - CORRECT ANSWER - 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?
,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. - CORRECT ANSWER - Allocation method vs. extraction
method
size - CORRECT ANSWER - Which is a physical force in relationship to value?
utilize the site as one home site, since the site cannot legally be split - CORRECT ANSWER -
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?
effective demand.
RATIONALE The characteristic of purchase ability, or affordability, is known as effective
demand or effective purchasing power. - CORRECT ANSWER - 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
scarcity and utility. DUST - CORRECT ANSWER - Which of the following characteristics
create value in real estate?
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. - CORRECT ANSWER -
Once a neighborhood has reached the phase of stability in its life cycle
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. - CORRECT ANSWER - 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?
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. - CORRECT ANSWER - 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?
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. - CORRECT
ANSWER - As the depth of the lot increases, the value per front footage
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. - CORRECT ANSWER - The allocation
method for determining site value
$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. -
, CORRECT ANSWER - 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
12.30
RATIONALE
HP 12C method: 47 [Sigma+], 14 [Sigma+], 37 [Sigma+], 29 [Sigma+], 37 [Sigma+], [g] [s] =
12.2963, or 12.30 rounded. Be sure to clear all registers before beginning entries. The[s]key is
the decimal key ('s' in blue on front of key). - CORRECT ANSWER - Using this number set,
find the standard deviation: 47 - 14 - 37 - 29 - 37, rounded to two places.
22.14%
RATIONAL:
1. Cost new = (2,400 sq. ft. x $85) + (440 sq. ft. x $18) = $211,920.
2. Depreciation Cost =
Sale Price $240,000 -
Land Value $50,000 -
Site Improve $25,000 = $165,000
.
3. Total Depreciation = $46,920 ($211,920 - $165,000).
4. Percentage of Depreciation Depreciation / Cost new (46,,920 = 0.2214 or 22.14%). -
CORRECT ANSWER - 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?
52%
ACTUAL Questions and 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% - CORRECT ANSWER - 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?
,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. - CORRECT ANSWER - Allocation method vs. extraction
method
size - CORRECT ANSWER - Which is a physical force in relationship to value?
utilize the site as one home site, since the site cannot legally be split - CORRECT ANSWER -
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?
effective demand.
RATIONALE The characteristic of purchase ability, or affordability, is known as effective
demand or effective purchasing power. - CORRECT ANSWER - 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
scarcity and utility. DUST - CORRECT ANSWER - Which of the following characteristics
create value in real estate?
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. - CORRECT ANSWER -
Once a neighborhood has reached the phase of stability in its life cycle
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. - CORRECT ANSWER - 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?
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. - CORRECT ANSWER - 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?
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. - CORRECT
ANSWER - As the depth of the lot increases, the value per front footage
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. - CORRECT ANSWER - The allocation
method for determining site value
$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. -
, CORRECT ANSWER - 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
12.30
RATIONALE
HP 12C method: 47 [Sigma+], 14 [Sigma+], 37 [Sigma+], 29 [Sigma+], 37 [Sigma+], [g] [s] =
12.2963, or 12.30 rounded. Be sure to clear all registers before beginning entries. The[s]key is
the decimal key ('s' in blue on front of key). - CORRECT ANSWER - Using this number set,
find the standard deviation: 47 - 14 - 37 - 29 - 37, rounded to two places.
22.14%
RATIONAL:
1. Cost new = (2,400 sq. ft. x $85) + (440 sq. ft. x $18) = $211,920.
2. Depreciation Cost =
Sale Price $240,000 -
Land Value $50,000 -
Site Improve $25,000 = $165,000
.
3. Total Depreciation = $46,920 ($211,920 - $165,000).
4. Percentage of Depreciation Depreciation / Cost new (46,,920 = 0.2214 or 22.14%). -
CORRECT ANSWER - 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?
52%
