Exam Prep (McKissock) Questions with correct Answers

Exam Prep (McKissock) Questions with correct Answers What does not include physical mobility, but rather the control and possession of all the rights of ownership? Purchasing Power If an appraiser is valuing real property by sales comparison, whose actions is he or she LEAST likely to consider? Government Agencies Which value characteristic implies the presence of a need or demand, which considers the monetary power to fill that need? Desire The rights and benefits inherent in the ownership of a parcel of land would be defined as: Real Property Which statement is TRUE regarding appraisers and value? Market value is only one type of value; appraisers estimate other types of value as well. What is the motivation of an individual, group of persons, or business entity involving the purchase of an item? Desire What is the focal point of a real property appraisal? The value of ownership rights USPAP cautions appraisers to use the definition of market value that is specified in the DEFINITIONS section of USPAP. False. Which methods are most appropriate to the sales comparison approach? Economics and Statistics Appraiser Abigail is appraising a newer, high-tech steel mill. In delineating her market, which of these should she most likely consider? Properties within a region or several-state area Which market is inefficient? Real estate market The growth rate is higher in Community A than Community B, because Community A has public water and sewage available. As a result, property values are higher in Community A. This is an example of what force affecting the market? Environmental A large, old, dilapidated commercial building sits in an economically depressed section of the city. There are no market participants who have the financial capability to renovate and use such a large building. This is an example of what force? Economic Which statement is TRUE regarding the appraisal development process? Development and reporting are two separate and distinct functions Harry is preparing a real property appraisal report for his client. Which USPAP Standard must he follow when preparing this report? STANDARD 2 An appraiser inspects a subject property, which is a vacant apartment building. The appraiser's measurements and field notes from the inspection would be considered what type of data? Specific Data An appraiser is valuing a small apartment building. The appraiser gathers information on demographics and employment trends, which is useful in analyzing the market. This would be considered what type of data? General Data The appraisal development process and appraisal reporting process are considered to be one function. False In the appraisal process, what type of data pertains only to the subject property and comparables? Specific Data Dave is completing a market value appraisal on an office building. Which statement will most likely be TRUE regarding his highest and best use analysis? He will have to develop two highest and best use opinions. What is the most profitable use to which a property can be put? Highest and best use When considering legal permissibility and current land use regulations, an appraiser must also consider __________. Reasonably probable modifications of land use regulations Margot is appraising a vacant site which is suitable for commercial development. In selecting comparable sales, what would likely be her most important consideration? Sales should have the same highest and best use A property is improved with a building, and is valued at $425,000. It would cost $50,000 to raze and remove the building, and the value of the vacant site would be $500,000. Under this scenario, razing and removing the building would be considered ____________. Financially feasible An appraiser takes secondary data on a sale from the local MLS, and personally verifies elements of the transaction and the physical characteristics of the property with the purchaser. This sale would now be considered what type of data? Primary Data A building owner installs a new "green" roof on the structure at a cost of $300,000. The value of the building only increases by $200,000 as a result of the new roof. This demonstrates which economic principle? Contribution Value is a fact, or an estimate of fact. False The Concentric Zone Model includes which zones? Commuter, residential, working class, transition, factory, Loop or Central Business District Which statement is FALSE regarding the sales comparison approach? When the appraiser has an understanding of value influences in the market, the approach is more reliable. Cyndi contacts the buyer and verifies that a comparable sale she is using was purchased on the open market, between a typically-motivated seller and buyer, who were not related to each other. What type of sale is this? Arm's length transfer What is the primary purpose of the sales comparison approach? To arrive at a value indication for the subject property The sales comparison approach is primarily based on what principle? Substitution A property being appraised has a debt coverage ratio of 1.1. What does this mean? The property generates enough income to make the mortgage payment. Peggy blackmails Frank into selling his property to her. The sale appears in the local MLS and is reported in the local assessment office as a valid sale. Is this an arm's length transfer? No The sales comparison approach is most effective when the subject and comparable sales all have the same potential highest and best use. True What helps appraisers understand and apply accurate analysis in the evaluation of real estate? Statistical techniques The empirical rule states that in a bell-shaped curve, what percentage of observations will fall within two standard deviations of the mean? 95 Measures of central tendency include all of the following EXCEPT: Variance What is the principle which holds that in a bell-shaped curve, 68% of the observations will fall within one standard deviation of the mean? Empirical rule What is the foundation of statistical analysis? Accurate data What can be used to demonstrate any variable that clusters around the mean? Normal distribution curve What kind of data is observed, but not measured? Qualitative data What is another word for a variable? Variate When analyzing an industrial building, an appraiser notes that it has 25,000 square feet. This is an example of _______ data. Quantitative A sampling technique is: Random, Cluster and Stratified