IAAO Course 300 Questions And Answers Rated A+.
Scope of Work Rule - correct answer. 1. Identify the problem to be solved
2. Determine and perform the scope of work necessary to develop credible assignment results
3. Disclose the scope of work in the report
Scope of work acceptabi...
Scope of Work Rule - correct answer. 1. Identify the problem to be solved
2. Determine and perform the scope of work necessary to develop credible assignment
results
3. Disclose the scope of work in the report
Scope of work acceptability - correct answer. When it meets or exceeds:
1. Expectations of parties who are regularly intended users for similar assignments and
2. What an Appraiser's peers actions would be in performing the same or similar
assignments
Economic Basis of Model Building - correct answer. Supply factors relate to
availability and thus reflect such things as Cost, interest rates, and economic conditions.
Demand factors include characteristics to buyers, such as construction quality,
condition, and location.
Basic Income Models - correct answer. 1. NOI Model
MV = NOI / OAR
2. GI Model
MV = GI x GIM
Model Development - correct answer. 1. Specification
2. Calibration
3. Quality Assurance
Specification - correct answer. What data to include in the model and in what format
1. Additive
, 2. Multiplicative
3. Hybrid (generic)
Additive Model Structure - correct answer. Each of the variables are independent from
the other variables. A change in one variable does not directly impact any other
variables
MV = ($/sqft x sqft) + ($/plumbing fixture x #fixtures) + ($/car stall x #/cars) + ...
Multiplicative Model Structure - correct answer. Each of the variables are
interdependent. Any change to one variable will have an impact on all of the other
variables.
Hybrid (generic) Model Structure - correct answer. Combines both additive and
multiplicative model structures
Finding Net Operating Income (NOI) - correct answer. 1. Potential Gross Income
(PGI) 100% occupancy at market rent (market rent is the prevailing rent in the open
market, not the rent called for in a lease)
2. Minus Vacancy and Collection Loss (V&C) - any money lost from units not being
rented or from people not paying rent
3. Plus Miscellaneous Income (Misc Inc) - income from secondary sources, such as
clubhouse rentals, health club memberships, storage rentals, and vending or laundry
machines
4. Equals Effective Gross Income (EGI) - this 100% of the actual money made by the
real property operation.
5. Minus Allowable Expenses and Reserves (Exp & Res) - expenses that have to do
with the operation of the real estate and not the business. Reserves are items that will
wear out before the bone structure, such as carpet, roof, air conditioners, etc. Reserves
are expensed on a prorated basis (ie. Carpet lasts 5 years so if it costs $2, =
$400 allowable deduction per year)
6. Equals Net Operating Income (NOI) - the income remaining after expenses and
reserves. This is the "I" in the IRV formula
Capitalization Rate - correct answer. The term capitalization means to convert income
into an estimate of value. A capitalization rate is used in converting net income (NOI)
into an estimate of value.
Direct Capitalization Rate - correct answer. Net operating income (NOI) divided by the
market value (sale price) of the property.
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