IAAO 101 Exam Questions with Correct and Verified Answers

IAAO 101 Exam Questions with Correct and Verified Answers The property tax is an ____ __________ tax, meaning it is based on value. - Correct Answer ad valorem" "The ownership of all legal rights to property is known as ____ _______. - Correct Answer fee simple (fee simple absolute)" "Determining the identity of the property to be appraised is a part of the ______ step in the appraisal process. - Correct Answer first" "The assessor is responsible for the _______, ________, and __________ of all taxable property. - Correct Answer discovery listing valuation" "The taxable location of personal property is referred to as its __________. - Correct Answer situs" "An estimate of value, usually in writing, of an adequately described property, as of a given date, is termed ___ ___________. - Correct Answer an appraisal" "A jurisdiction's tax rate is determined by dividing the _________ to be derived from property tax by the total _________ ____________ of the taxing jurisdiction. - Correct Answer budget assessed valuation" "The type of value usually estimated by the assessor is __________ value. - Correct Answer market" "The _________ ________ _________ reflects the ratio between the current tax bill and the property value. - Correct Answer effective tax rate" "In order for a property to have value, it must have ______, _______, ________ and __________ __________ _________. - Correct Answer utility scarcity desirability effective purchasing power" "The use that generates the highest net return to a property over a reasonable time period is called ________ _______ _________ _________. - Correct Answer highest and best use" "The principle of __________ states that maximum value of a neighborhood is attained when the uses of land are perfectly complementary. - Correct Answer balance" "Which appraisal principle affirms that land cannot be valued on the basis of one use while improvements are valued on the basis of another? - Correct Answer Consistent use" "List the four tests that the appraiser must make in the analysis of the highest and best use. - Correct Answer Legally permissible Physically possible Financially feasible Most productive" "_______ ________ is a parcel of land and any structures or improvements that are permanently affixed thereto. - Correct Answer Real estate" "Property is considered ________ if it can be moved without causing any damage or change to either the item of property or the structure to which it is attached. - Correct Answer personal" "Assessment level times the tax rate equals the _________ ______ ________. - Correct Answer effective tax rate" "____________ is the point at which the forces of supply and forces of demand meet. - Correct Answer Equilibrium" "List the two types of highest and best use analysis. - Correct Answer A. As if vacant. B. As if improved." "The typical life cycle of a neighborhood includes ________, ________, _______ and ___________. - Correct Answer growth stability decline revitalization" "What elements of the marketplace are most likely to contribute to a change in demand? - Correct Answer Consumer tastes and preferences Consumer income Price of related commodities Consumer expectations Price of the commodity" "Market value is defined as the most probable price of a property in terms of money, assuming - Correct Answer A. Buyer and seller are typically motivated B. A reasonable time is allowed for exposure in the open market. C. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto. D. All of the above." "________ refers to the amount of goods that producers are willing to sell at a given price during a specified time period. - Correct Answer Supply" "Ownership of all legal rights to property is limited by government in four ways: - Correct Answer Taxation Police Power Eminent domain Escheat" "An assessed value not statutorily at 100 percent of market value is known as a _________ assessment. - Correct Answer fractional" "The underlying principle for the three approaches to appraisal is ___________. - Correct Answer substitution" "The seven steps of the appraisal process are as follows: - Correct Answer Definition of the problem Scope of work Preliminary survey and planning Data collection and analysis Highest and best use Application of the data and the three approaches Correlation/reconciliation to final value estimate" "The basis for the adjustments in the sales comparison approach to value is the principle of ______________. - Correct Answer contribution" "______ ____ ______ represents the value of a property for a specific use. - Correct Answer Value in use" "List any two types of private encumbrances that can be placed on ownership of real property. - Correct Answer Rights of co-owners Condo and subdivision restrictions Covenants, conditions and restrictions found in the chain of title to the property Mortgages Easements and rights of way Liens and judgments Leases" "The principle of ____________ states that value is created by the expected future benefits to be derived from the property. - Correct Answer anticipation" "The six basic rights associated with property are as follows: - Correct Answer Sell Lease Use Give away Enter or leave Refuse to do any of the above." "The three types of boundaries used to delineate neighborhoods are _____, ______, and ______. - Correct Answer political man-made natural" "Under the step in the appraisal process that is termed data collection and analysis, specific data include - Correct Answer Site data" "The four forces that influence value and must be considered in neighborhood analysis are as follows - Correct Answer Physical (environmental) Economic Governmental Social" "The typical life cycle of a neighborhood can be extended or shortened by changes in _______ factors. - Correct Answer economic" "An area of complementary land uses in which all properties are similarly influenced by the four forces affecting value is termed a ___________. - Correct Answer neighborhood" "Municipal services, planning and zoning are examples of _________ forces that affect neighborhoods. - Correct Answer governmental" "What are the four basic elements of supply? - Correct Answer Cost of production Price of other goods Entrepreneur expectations Number of sellers" "The four factors affecting land values are as follows: - Correct Answer Physical (environmental) Economic Governmental Social" "The cost approach is premised primarily on the principle of ___________, which states an informed buyer will not pay more to build a property than the cost of similar property with equal utility. - Correct Answer substitution" "Costs that occur on the construction are considered ______ costs. - Correct Answer direct" "The first step in the cost approach is ________________________________________. - Correct Answer to estimate the land (site) value as if vacant and available for development to its highest and best use." "Building A contains 10,000 square feet and is 100' x 100'. Building B contains 10,000 square feet and is 50' x 200'. Will it cost more to build Building A or Building B? - Correct Answer Building B because it has more linear feet compared to Building A." "Architectural fees, insurance and title expenses are considered ______ _____ and are sometimes called soft costs. - Correct Answer indirect ocsts" "__________ ______ is the cost of producing an exact replica of a building or improvement. - Correct Answer Reproduction cost" "__________ ______ is the cost of producing a building or improvement using modern methods and materials with the same utility. - Correct Answer Replacement cost" "Building A was constructed 20 years ago at a cost of $400,000. The index 20 years ago was 200. The current index is 350. Reproduction cost new for Building A would be ____________. - Correct Answer $700,000" "The Principle of __________ __________ states that returns to land are what remain after returns to labor, management and capital are satisfied. - Correct Answer Surplus Productivity" "List the six methods of land valuation: - Correct Answer Direct sales comparison Allocation Abstraction Anticipated use or development Capitalization of ground rent Land residual technique" "A complete set of ________ maps showing boundaries, parcel size, sales information, and other relevant features of all parcels in a jurisdiction is a necessary tool for assessors. - Correct Answer cadastral" "The practice of measuring the direction of property lines with compass bearings and the distance with measuring chains or tapes in order to obtain a property description is known as ______ ______ ______. - Correct Answer metes and bounds" "A township in the Public Land Survey System contains ____ sections, with each section containing _____ acres. - Correct Answer 36 640" "When land is valued by using the direct sales comparison approach , sales must first be ________ into homogeneous groups. - Correct Answer stratified" "Improvements such as streets, sidewalks, and the availability of utilities are considered _________ improvements. - Correct Answer off-site" "Which method of land valuation compares the property being appraised to comparable vacant parcels that have recently sold? - Correct Answer direct sales comparison" "Front foot, square foot and acre are examples of basic _____ of __________. - Correct Answer units comparison" "In the direct sales comparison approach to land valuation, adjustments are always made to the ________ property, never to the _______ property. - Correct Answer comparable subject" "If a comparable lot that sold is superior in some aspect to the subject lot, a _________ adjustment would be made to the comparable property. - Correct Answer negative" "A method of valuing land that subtracts the depreciated value of the improvement from the sale price is known as _________. - Correct Answer abstraction" "The preferred method of valuing land if adequate data is available is the - Correct Answer Direct sales comparison method" "A land-to-building ratio of 1:4 means land represents ____ percent of the value. - Correct Answer 20" "The appropriate map scale for suburban areas and small towns is - Correct Answer 1" = 200'" "The merging of adjacent parcels into one common ownership without creating an increase in the unit value is known as _________. - Correct Answer assemblage" "The property account number, linking ownership records, tax maps and assessment records, is known as the _________ ________. - Correct Answer parcel identifier" "Land that has been developed to the extent that it is ready to be built upon is considered _____. - Correct Answer site" "The concept of ________ ______ ______ _____ means that the market value of vacant land depends on potential use rather than current use alone. - Correct Answer highest and best use" "Factors affecting land values such as size, topography, and location are termed __________ factors. - Correct Answer physical (environmental)" "Cost components such as the floor, roof or roofing are considered _________ costs and are expressed as cost per square foot. - Correct Answer horizontal" "The easiest, fastest, and most widely used method of estimating cost is the _____________________ method. - Correct Answer comparative unit (square foot)" "Which of the following is a desirable feature of a cost manual? - Correct Answer A. Applicable to most structure types B. Based on actual costs C. Suitable for computerization D. All of the above" "The difference between the market value of an improvement and its cost at the time of appraisal is termed __________. - Correct Answer depreciation" "The five methods of measuring depreciation are: - Correct Answer Sales comparison method Capitalization of income method Economic age-life method Modified economic age-life method Observed condition (breakdown) method" "Property B sold for $180,000 with an estimated land value of $80,000. The RCN for the improvement is $200,000. Depreciation is _____ percent. - Correct Answer 50" "Curable physical deterioration is measured by ______________. - Correct Answer cost to cure" "___________ obsolescence is a loss in value due to a deficiency, modernization, or superadequacy within the structure. - Correct Answer Functional" "___________ obsolescence is a loss in value resulting from a decrease in utility and desirability caused by factors outside the property's boundaries. - Correct Answer External" "Incurable physical deterioration is measured by the ______________. - Correct Answer age-life method" "If a depreciation table started at 0 percent and went to 40 percent, a percent good table would start at __________ and go to ___________. - Correct Answer 100 percent 60 percent" "Which method of estimating depreciation is the most detailed? Its use is required in the writing of demonstration appraisal reports. - Correct Answer Observed condition (breakdown) method" "An item classified as a short-lived item has a cost new of $5,000. Its actual age is 5 years, and its total useful life is 20 years. The dollar amount of depreciation would be ________. - Correct Answer $1,250" "A two-story residence has only one bath, which is located on the second floor. If a second bath had been included on the first floor when the residence was originally constructed, RCN would be $11,500. The cost to install (cure) the second bath today would be $13,500. The amount of functional obsolescence would be _______. - Correct Answer $2,000" "A residence is located on a street that has become a very busy thoroughfare. It rents for $800 per month. Residences not located on the busy street rent for $825 per month. The GRM for this area is 150, and the land-to-building ratio is 1:4. The indicated amount of external obsolescence is ______. - Correct Answer $3,000" "When the four forces-physical (environmental), governmental, social and economic - are in balance, the market achieves a temporary state of _____________. - Correct Answer equilibrium" "_______ ________ analysis, which is used primarily in single-property appraisal, requires the sale properties to be identical in all attributes except the one being measured (or adjustments have already been made for any differences). - Correct Answer Paired sales" "The sales comparison approach usually ______ be used to value special-purpose or one-of-a-kind properties. - Correct Answer cannot" "In the sales comparison approach step two is data collection and verification. This requires the appraiser to collect and verify general, _______, and comparative data. - Correct Answer specific" "The unit of comparison that is generally used in valuing office properties is the _______________________________________. - Correct Answer price per square foot of net rentable area" "Price per animal unit might be the appropriate unit to use in the valuation of _________ ___________. - Correct Answer agricultural pastureland" "A residence has an RCN of $200,000. Items classified as curable physical deterioration have an RCN of $10,000 and a cost to cure of $12,000. Incurable physical deterioration (short-lived items) have an RCN of $40,000 and a depreciation amount of $18,000. The actual age for the residence is 6 years, and the total useful life is 60 years. The total amount of physical deterioration for the residence would be ________. - Correct Answer $45,000" "If the cost to cure a functional deficiency within a residence exceeds the increase in value added to the property, it is called _______ functional obsolescence. - Correct Answer incurable" "The Principle of ___________ holds that the value of a property tends to be set by the price that would be paid to acquire a property of similar utility and desirability within a reasonable amount of time. - Correct Answer Substitution" "The Prince of _____________ is the underlying principle in the adjustment process in the sales comparison approach. - Correct Answer Contribution" "A major principle in the sales comparison approach holds that the relationship between a property and its environment must be in ________ for a property to reflect its optimum market value. - Correct Answer balance" "A major advantage to the sales comparison approach is that it reflects the actions of ________ and _________ in the market. - Correct Answer buyers sellers" "A unit of comparison that would be applicable to single-family residential property is the ____________________________ or __________________. - Correct Answer price per square foot of gross living area total property price" "A unit of comparison that would be applicable to agricultural farmland or larger rural residential tracts would be the ______________. - Correct Answer price per acre" "In the selection of comparable properties in the sales comparison approach, list four comparability items that should be considered. - Correct Answer Financing Current market conditions (date of sale) Similar in location Similar in size, age, condition Similar in design type Similar in construction type Affected by the same four forces that influence value Similar physical attributes" "List the order of adjustments in the sales comparison approach. - Correct Answer Financing Market conditions (time of sale) Location and other physical characteristics" "Which method of determining adjustments in the sales comparison approach cannot be used to determine market conditions (changes in value over time)? - Correct Answer Depreciated cost" "The first step in the sales comparison approach is to define the appraisal problem. List the five items that need to be included in defining the appraisal problem. - Correct Answer Identify the property to be appraised Determine the property rights to be appraised Define the purpose and function of the appraisal Specify the date of appraisal Define the type of value" "A cardinal rule in the sales comparison approach holds that all adjustments are made to the ______ property, and never to the ______. - Correct Answer subject" "The Principle of _________ states that market value is never constant because physical (environmental), governmental, social and economic forces are at work, affecting the property. - Correct Answer Change"