REE 4103 TEST 1 QUESTIONS
WITH REVISED AND UPDATED
ANSWERS
Short-lived items refer to - Answer-• Items requiring periodic replacement (carpet)
• Economic life normally same as physical life
Subtracting an improvement's current market value from its reproduction cost new
indicates: - Answer-• Accrued depreciation
The effective age of a building will probably exceed its actual age when: - Answer-• An
inadequate maintenance program has been used
The land on which a 10-year-old house is located is valued at $128,000, and the
reproduction cost of the dwelling is $92,000. Straight-line depreciation is 2 percent per
year, applied to the building only. If there is not other obsolescence, what is the
indicated value of the property? - Answer-• $202,200
The land on which a 10-year-old house is located is valued at $28,000, and the
reproduction cost of the dwelling is $92,000. Straight-line depreciation is 2 percent per
year, applied to the building only. If there is not other obsolescence, what is the
indicated value of the property? - Answer-• $101,600
The period of time over which improvements contribute to property value is called -
Answer-• Economic life
The period over which a building may be profitably used is its - Answer-• Useful life
he three principal methods of estimating depreciation are - Answer-• Market extraction,
age-life, and breakdown
Useful life is - Answer-• The period of time over which a structure may reasonably be
expected to perform the function for which it was designed.
Which of the following best illustrates curable functional obsolescence?
• Poor room layout with immovable load-bearing walls
• Poorly located building support columns on an office floor
• Inadequate electrical wiring in an older single-family house
• A narrow, short carport that can be enlarged at a low cost
,• Stains on the ceiling due to water penetration - Answer-• A narrow, short carport that
can be enlarged at a low cost
Which of the following is NOT a type of depreciation?
• Entrepreneurial loss
• External obsolescence
• Physical deterioration
• Functional obsolescence
• Economic obsolescence - Answer-• Entrepreneurial loss
The cost approach is based on the assumption that: - Answer-• The cost to produce a
building plus the cost of the site are an indicator of its value.
Cost is:
. - Answer-• The actual amount of expenditure necessary to acquire or produce
something.
• Reproduction cost is the cost of creating an exact replica of the improvements, using
the same materials, design, layout, and level of craftsmanship.
• Replacement cost is the cost of building an improvement of equal utility, but using
modern materials, techniques, layout, and design
Entrepreneurial profit is the profit made by the: - Answer-• A market-derived figure that
represents the amount an entrepreneur receives for his or her contribution to a project
and risk
Economic life is: - Answer-• The period of time over which improvements contribute to
property value is called
A property being appraised has a house with 5 large bedrooms, one small bathroom
and room for a second bathroom. A properly designed house would have at least two
bathrooms. To take into account the number of bathrooms, the appraiser should deduct
for which of the following. - Answer-***
Which of the following methods is not a usual method for estimating replacement cost of
the improvements of an apartment complex? - Answer-***
Depreciation is defined as the difference between the: - Answer-• Difference between
the contributory value of an improvement and its cost at the time of appraisal
1. Residential sites are often valued using
A price per square foot
A price per animal unit month
A price per room
A price per cubic meter - Answer-A price per square foot
Land is always valued considering
, Its highest and best use as improved.
Its highest and best use as though vacant.
The improvements thereon
The likelihood of conversion to commercial zoning - Answer-Its highest and best use as
though vacant.
The land valuation technique that relies on an analysis of ratios of land value to property
value is
Allocation
Extraction
Interpolation
Land residual - Answer-Allocation
You are asked to appraise a vacant building lot. The neighborhood is about 75% built
up. Most lots in the area are from 55 to 65 feet wide; the lot under appraisal is 60 feet.
Comparable sales indicate that lots are selling at $120 to $150 per front foot. What is a
good estimate of the price range for this lot?
$9,000 - $11,000
$7,200 to $9,000
$5,400 to $6,750
$6,600 to $11,250 - Answer-$7,200 to $9,000
In the subject property's neighborhood, improved properties are selling for prices in a
range of $140,000 to $160,000. Research reveals a typical land value-to-total property
value ratio of 20%. What is the range of value for a similar site in this neighborhood?
$14,000 to $16,000
$16,000 to $20,000
$22,000 to $25,000
$28,000 to $32,000 - Answer-$28,000 to $32,000
If the site represents 40% of the total value in a particular neighborhood, how much land
value would be allocated from a $200,000 sale of a single family home? - Answer-
$80,000
In the subject property's neighborhood, improved properties are selling for prices in a
range of $140,000 to $160,000. Research reveals a typical land value-to-total property
value ratio of 20%. What is the range of value for a similar site in this neighborhood? -
Answer-• $28,000 to $32,000
Land can be valued by - Answer-Sales comparison, land residual, allocation, and
extraction
The land valuation technique that relies on an analysis of ratios of land value to property
value is - Answer-Allocation
