CERTIFIED RESIDENTIAL APPRAISAL EXAM REVIEW UPDATED
QUESTIONS AND ANSWERS
Appraisal - CORRECT ANSWER✅✅✅Land utilization studies, supply and demand studies, economic
feasibility studies, and highest and best use analysis are all examples of which of the following actions?
highest present value of the property - CORRECT ANSWER✅✅✅The highest and best use of a parcel
of land is that use that will result in the:
Supply information - CORRECT ANSWER✅✅✅The level of vacancy of five-bedroom apartments in a
particular city provides which of the following types of information (data) to an appraiser?
Highest present value of the property - CORRECT ANSWER✅✅✅The highest and best use of a parcel
of land is that use that will result in the:
Curable superadequate features are measured by: - CORRECT ANSWER✅✅✅calculating the
reproduction cost of the item minus any physical deterioration already charged, plus the cost to install a
normally adequate or standard item.
What is the difference between valuation and evaluation? - CORRECT ANSWER✅✅✅Valuation is the
process of finding an estimated value of a property at a given time; evaluation refers to an analysis of
the market without necessarily giving an estimate of value.
Districts - CORRECT ANSWER✅✅✅Multifamily, commercial, and industrial areas are generally
referred to as:
Jones sells land for $20,000 that he bought four years earlier for
$10,000. There were no carrying charges or transaction costs. What was Jones's IRR (nearest percent)? -
CORRECT ANSWER✅✅✅19%
19% - CORRECT ANSWER✅✅✅Jones sells land for $20,000 that he bought four years earlier for
$10,000. There were no carrying charges or transaction costs. What was
Jones's IRR (nearest percent)?
,Standards rules are more specific in direction than the standards. - CORRECT ANSWER✅✅✅Which
of the following statements is CORRECT in regard to the standards rules?
Any other property owned by the individual owner may be sold to satisfy the claim against the property
in question. - CORRECT ANSWER✅✅✅In regard to an unpaid property tax that has become due and
payable, which of the following statements is INCORRECT?
Investment Value - CORRECT ANSWER✅✅✅If an appraiser is asked to render an opinion of value
based on the specific requirements and needs of a purchaser or investor, the appraiser is more than
likely estimating which of the following values?
Debt Coverage Ratio = - CORRECT ANSWER✅✅✅NOI divided by mortgage payment
A property has NOI of $10,000, interest payments of $8,000, and principal payments of $1,000. What is
the debt coverage ratio? - CORRECT ANSWER✅✅✅1.11
An interim use is not the current highest and best use. - CORRECT ANSWER✅✅✅Which of the
following statements is NOT CORRECT in the definition of interim use?
Leasehold Estate - CORRECT ANSWER✅✅✅A reversion can follow which of the following types of
legal estates?
Only by coincidence - CORRECT ANSWER✅✅✅When does investment value equal market value?
analysis, opinion, and conclusion. - CORRECT ANSWER✅✅✅The operative words in Standard 2 that
result in the actions of the appraiser being referred to as an appraisal are:
Appropriateness, quantity of evidence, accuracy - CORRECT ANSWER✅✅✅Reconciliation criteria
used to estimate the final value in an appraisal include which of the following factors?
, Return on the land and building and recapture of the building - CORRECT ANSWER✅✅✅Which of
the following returns would be included in the
capitalization rate established by the appraiser for a property with a declining building value and a
constant land value?
Market Value - CORRECT ANSWER✅✅✅What term BEST identifies the most probable price as of a
given date for which specified property rights should sell to a knowledgeable buyer in a competitive
market?
Capitalization Rate = (Cap Rate = NOI/Value) - CORRECT ANSWER✅✅✅Net income ratio divided by
Gross Income Multiplier
8.33 percent. (The overall rate is equal to the net income ratio divided by the gross income multiplier.
Thus .75/9 = .0833 or 8.33 percent) - CORRECT ANSWER✅✅✅A property has a gross income
multiplier of 9 and a net income ratio of .75. What does this indicate for the overall capitalization rate?
Contribution - CORRECT ANSWER✅✅✅The sales comparison approach involves a step undertaken
by the appraiser to adjust for such items as square footage, age, quality of construction, etc. What
economic principle is the foundation on which this
adjustment process is undertaken?
debt service and net operating income. - CORRECT ANSWER✅✅✅The debt coverage ratio shows the
relationship between
net operating income of the property - CORRECT ANSWER✅✅✅A debt coverage ratio shows the
relationship between the debt service of the mortgage loan on a property and the:
Above market value - CORRECT ANSWER✅✅✅As an appraiser you attempt to render an opinion of
value of a particular residential property using the listing price of similar properties included in a
multiple listing service. Without any adjustments on your part,
the derived value based solely on this information would more than likely be:
QUESTIONS AND ANSWERS
Appraisal - CORRECT ANSWER✅✅✅Land utilization studies, supply and demand studies, economic
feasibility studies, and highest and best use analysis are all examples of which of the following actions?
highest present value of the property - CORRECT ANSWER✅✅✅The highest and best use of a parcel
of land is that use that will result in the:
Supply information - CORRECT ANSWER✅✅✅The level of vacancy of five-bedroom apartments in a
particular city provides which of the following types of information (data) to an appraiser?
Highest present value of the property - CORRECT ANSWER✅✅✅The highest and best use of a parcel
of land is that use that will result in the:
Curable superadequate features are measured by: - CORRECT ANSWER✅✅✅calculating the
reproduction cost of the item minus any physical deterioration already charged, plus the cost to install a
normally adequate or standard item.
What is the difference between valuation and evaluation? - CORRECT ANSWER✅✅✅Valuation is the
process of finding an estimated value of a property at a given time; evaluation refers to an analysis of
the market without necessarily giving an estimate of value.
Districts - CORRECT ANSWER✅✅✅Multifamily, commercial, and industrial areas are generally
referred to as:
Jones sells land for $20,000 that he bought four years earlier for
$10,000. There were no carrying charges or transaction costs. What was Jones's IRR (nearest percent)? -
CORRECT ANSWER✅✅✅19%
19% - CORRECT ANSWER✅✅✅Jones sells land for $20,000 that he bought four years earlier for
$10,000. There were no carrying charges or transaction costs. What was
Jones's IRR (nearest percent)?
,Standards rules are more specific in direction than the standards. - CORRECT ANSWER✅✅✅Which
of the following statements is CORRECT in regard to the standards rules?
Any other property owned by the individual owner may be sold to satisfy the claim against the property
in question. - CORRECT ANSWER✅✅✅In regard to an unpaid property tax that has become due and
payable, which of the following statements is INCORRECT?
Investment Value - CORRECT ANSWER✅✅✅If an appraiser is asked to render an opinion of value
based on the specific requirements and needs of a purchaser or investor, the appraiser is more than
likely estimating which of the following values?
Debt Coverage Ratio = - CORRECT ANSWER✅✅✅NOI divided by mortgage payment
A property has NOI of $10,000, interest payments of $8,000, and principal payments of $1,000. What is
the debt coverage ratio? - CORRECT ANSWER✅✅✅1.11
An interim use is not the current highest and best use. - CORRECT ANSWER✅✅✅Which of the
following statements is NOT CORRECT in the definition of interim use?
Leasehold Estate - CORRECT ANSWER✅✅✅A reversion can follow which of the following types of
legal estates?
Only by coincidence - CORRECT ANSWER✅✅✅When does investment value equal market value?
analysis, opinion, and conclusion. - CORRECT ANSWER✅✅✅The operative words in Standard 2 that
result in the actions of the appraiser being referred to as an appraisal are:
Appropriateness, quantity of evidence, accuracy - CORRECT ANSWER✅✅✅Reconciliation criteria
used to estimate the final value in an appraisal include which of the following factors?
, Return on the land and building and recapture of the building - CORRECT ANSWER✅✅✅Which of
the following returns would be included in the
capitalization rate established by the appraiser for a property with a declining building value and a
constant land value?
Market Value - CORRECT ANSWER✅✅✅What term BEST identifies the most probable price as of a
given date for which specified property rights should sell to a knowledgeable buyer in a competitive
market?
Capitalization Rate = (Cap Rate = NOI/Value) - CORRECT ANSWER✅✅✅Net income ratio divided by
Gross Income Multiplier
8.33 percent. (The overall rate is equal to the net income ratio divided by the gross income multiplier.
Thus .75/9 = .0833 or 8.33 percent) - CORRECT ANSWER✅✅✅A property has a gross income
multiplier of 9 and a net income ratio of .75. What does this indicate for the overall capitalization rate?
Contribution - CORRECT ANSWER✅✅✅The sales comparison approach involves a step undertaken
by the appraiser to adjust for such items as square footage, age, quality of construction, etc. What
economic principle is the foundation on which this
adjustment process is undertaken?
debt service and net operating income. - CORRECT ANSWER✅✅✅The debt coverage ratio shows the
relationship between
net operating income of the property - CORRECT ANSWER✅✅✅A debt coverage ratio shows the
relationship between the debt service of the mortgage loan on a property and the:
Above market value - CORRECT ANSWER✅✅✅As an appraiser you attempt to render an opinion of
value of a particular residential property using the listing price of similar properties included in a
multiple listing service. Without any adjustments on your part,
the derived value based solely on this information would more than likely be:
