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RECA Residential Unit 5 Questions with 100% Verified Answers
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RECA Residential Unit 5 Questions with 100%Verified Answers
What is the Principle of Contribution and how does it relate to the CMA? - ✅✅The value of any
property component is measured by how much it adds to the property's market value or net
income by its presence, or detracts from the value/net income by its absence. The value of a
property component depends on its contribution to the value/net income and not its cost to
create or its depreciation cost. The Principle of contribution is the foundation for the CMA.
What is the appropriate sequence for making adjustments for the 3 areas of comparables for a
CMA? - ✅✅1. Time 2. Location 3. Physical characteristics (rooms, bathrooms, garages)
Formula for determining percentage time adjustments - ✅✅((New Sale price - old sale price) /
old sale price) x 100 = ___ % / number of months between sales
When. creating a CMA and listing adjusted sales price of comparable, how should the numbers
be rounded? - ✅✅to the nearest hundred dollars. For example $247,532 should be rounded to
$247, 500
When creating a CMA and using comparables is it okay to bring all of the numbers down to a
value per square metre/foot? - ✅✅No. REPs are cautioned not to compare using per square
foot/metre value
When creating a CMA and adjusting sales price of comparables, when a comparable property
does not include the same key feature or attribute as the subject property, is the adjustment
amount added or subtracted to the sale price of the comparable? - ✅✅Added (so that the
property missing the feature can be closer comparable to the subject property that has the
extra feature)
Which of the following is best to arrive at the estimated value for a subject property once all
adjustments are made to comparables? A) Average the adjusted sale price of all of the
comparable properties B) Use the adjusted sales price from the best comparable property C)
, Find the midpoint between the highest and lowest adjusted sale price - ✅✅B) Use the
adjusted sale price from the best comparable property
What is the MRF - ✅✅Monthly rental Factor. Used for analyzing the income of a subject
property that has a single income-producing unit (eg. single-family residence).
Formula for calculating the MRF (Monthly Rental Factor) - ✅✅MRF = value divided by Gross
Monthly income
Formula to determine Value of Property - ✅✅Value = Monthly rental factor x Gross Monthly
income
What is GIM? - ✅✅Gross income multiplier. elates the total rents produced by the revenue
property to its value. Appropriate for properties with a small number of income producing units
(eg. 4plex)
Formula for Gross Income Multiplier (GIM) - ✅✅Gross Income Multiplier = value divided by
effective Gross Income
Formula for value of subject property using effective gross income (EGI) - ✅✅Value = Effective
Gross Income x GIM
Two types of Accounting Systems - ✅✅1. Cash accounting (records cash/revenue when
received/expenses when they are paid). 2. Accrual accounting (recognizes revenue and
expenses when the transaction occurs)
Difference between Cash accounting and Accrual accounting? - ✅✅Cash accounting records
when revenue/expenses are received/paid. Accrual accounting records when the transaction
occurs. Most organizations use accrual accounting as it more accurately reflects their financial
position.
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