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REE 4103 EXAM 2 QUIZ QUESTIONS, REE Exam 2, REE 4103 Test 2
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REE 4103 EXAM 2 QUIZ QUESTIONS, REEExam 2, REE 4103 Test 2
Reproduction cost is - ANS-the cost new of an exact replica of the subject
By estimating replacement cost in lieu of reproduction cost, an appraiser -
ANS-Eliminates the need to measure many, but not usually all, forms of functional
obsolescence
Which of the following methods is not a usual method for estimating replacement cost of
the improvements of an apartment complex? - ANS-cubic foot method
Historical costs of construction for an improvement totaled $100,000 in January 1998.
To update the original cost amounts to a more recent date is an example of - ANS-Cost
index trending
Price per front foot is - ANS-a physical unit of comparison
Residential sites are often valued using - ANS-A price per square foot
The subdivision development analysis technique is - ANS-Is very applicable when the
main criteria of value is the number of lots that can be developed out of a parcel of land
Which approach would be best to use when appraising a 15-20 year old house? -
ANS-Sales comparison
An open market transaction would not be one: - ANS-Sold to a relative
Comparable sales that require no adjustment to the subject are usually sales: - ANS-In
new developments with nearly identical properties
The principle of _____________ states that a buyer will not pay more for a site than for
another equally desirable one: - ANS-Substitution
For a property to be considered as a comparable: - ANS-It must be a competitive
property
It must be an open market transaction
,Physical units of comparison are a substitute for adjusting for: - ANS-Size
Property sale prices - ANS-Are negotiated between buyers and sellers
Current listings that have been exposed to the market for a reasonable time - ANS-Tell
the appraiser what the subject's market value cannot exceed
Units of comparison - ANS-Are items that represent a breakdown of the price based on
a significant variable
Which approach is usually the most applicable for appraising residences? - ANS-Sales
Comparison.
Qualitative analysis is based on - ANS-"Inferior" or "superior" ratings
A market conditions adjustment is applied in some situations because - ANS-The
market has changed since the comparable property sold
Adjustments for financing terms compensate for - ANS-A comparable that sold with
financing terms that were different than the terms defined in the appraisal report
Adjustments for the property rights conveyed, financing, conditions of sale, and the date
of sale are often made to the _______________ of the comparable property. -
ANS-Actual sale price
The preferred sequence of adjustment is - ANS-Property rights, financing, conditions of
sale, expenditures after purchase, market conditions, and physical attributes
You are analyzing a sale in which the mathematical calculation of cash equivalency calls
for a $10,000 downward adjustment. However, by use of several paired data sets, you
find that the market only recognizes a $4,000 downward adjustment. What is the
adjustment for financing? - ANS-$4,000
The appropriate time adjustment is concluded to be an increase of 7% per year
compounded. The time adjustment for a comparable sale that sold for $40,000, 2 years
ago is: - ANS-+$5,796
When an appraiser researches the market directly with participants and the data has not
been previously collected, it is called - ANS-Primary data
,A conditions of sale adjustment reflects - ANS-The differences between the motivations
of the seller and buyer on the date of sale of a comparable and the typical motivation of
buyers and sellers as described in the definition of value
Comparative analysis is - ANS-A general term used to describe the process by which
qualitative or quantitative techniques are used to derive a value opinion in the sales
comparison approach
In a market value appraisal assignment, the appraiser found prices were increasing at
about 3% per year compounded annually. The appraiser found several comparable
sales but they were not very recent transactions. She decided to make an adjustment to
compensate for price increases in this market. These adjustments are called -
ANS-Market conditions adjustments
A comparable sale included the seller taking back a purchase-money mortgage at 3%
under the market rate for 10 years. The appraisal was based on the cash-equivalent
market value. The adjustment for this factor would be called a - ANS-Financing terms
adjustment
When reconciling the adjusted sales price of comparables, the greatest emphasis
should be given to: - ANS-None of the above
Consider a 10,000 sf strip shopping center that sold five years ago for $300,000 and
then sold again recently for $345,000.
The indicated average annual appreciation of the shopping center would be? -
ANS-$9,000
In the same market, a 12,000 sf shopping center with similar characteristics sold for
$323,000 five years ago, and another 12,000 sf property sold last year for $365,000.
What is the average annual change per unit (sf) for those comparable properties? -
ANS-$0.87 /sf
Consider a corner vacant lot being appraised and two sales of vacant lots similar to the
subject in most respects except for location.
Comparable A, a corner lot with frontage on two streets, was sold for $12/sf.
Comparable B, an interior lot with frontage on only one street, was sold for $9/sf.
What is the adjustment for Comparable B? - ANS-+33%
, In the cost approach, the valuation of land involves the principle of: - ANS-Highest and
Best use
The cost appraoch is not useful for - ANS-checking value approaches
The cost approach is based on the assumption that: - ANS-the cost to produce a
building plus the cost of the site are an indicator of its value
Reproduction or replacement cost includes all of the following except - ANS-fixed and
variable expenses of operations
The most detailed, complex, costly and time-consuming method of cost estimation is
the: - ANS-quantity survey
Which method of estimating cost considers each building component, as installed,
including the material and labor? - ANS-Unit-in-place
A 30-year-old buidling with an effective age of 20 years has a total life expectancy of 50
years. How much depreciation has occurred? - ANS-40%
A property sold for $125,000 in a cash sale. It was 12 years old and had a site value of
$30,000. The reproduction cost of the building improvements was $102,350. What is the
amount of depreciation overall? - ANS-7.18%
Effective age refers to: - ANS-apparent age, considering the physical condiion and
marketability of a structure
Functional obsolescence is - ANS-The difference between what you have and what you
should have
The three principal methods of estimating depreciation are - ANS-Market extraction,
age-life, and breakdown
An appraiser noted the following about a rental home: Needs exterior paint $750 cost to
cure; Needs new water heater $250 cost to cure; Has one bath in market for two
($4,000 capitalized rent loss); Has poor floor plan ($2,500 capitalized rent loss); Is
located next to a convenience store ($1,200 capitalized rent loss).
How much is curable physical deterioration? - ANS-none of the above
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