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(Mckissock) Residential Market Analysis and Highest & Best Use: Qs & As
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(Mckissock) Residential Market Analysis and Highest &Best Use: Qs & As
A property owner constructs a six-car garage at a cost of $80,000. It only adds
$40,000 in value to the property. What economic principle does this best
demonstrate? Correct Ans - Contribution
What are the four agents of production? Correct Ans - land, labor,
capital, coordination
The principle of contribution is most closely associated with: Correct Ans
- the Sales Comparison Approach (The contributory value of a given
amenity is the public's perception of its actual contribution to value when
considering the overall value of the property as a whole)
When supply is higher than demand, the value of a product: Correct Ans -
declines
Finish the sentence: Profit encourages ___________. Correct Ans -
competition
What is another name for the principle of inclining and declining periods?
Correct Ans - Integration and Disintegration
An appraiser must value the land and the improvements based on the same
use. Which economic principle or theory does this demonstrate? Correct
Ans - Consistent Use (The Consistent Use Theory holds that the land and
the buildings must all be valued considering the same highest and best use of
the property. The appraiser cannot value the land under one use and the
improvements under another use)
When analyzing the life cycle for a neighborhood, which stage is characterized
by equilibrium of supply and demand? Correct Ans - Stability
The principle of surplus productivity is associated with which approach to
value? Correct Ans - Income Approach
,What does USPAP say about market value? Correct Ans - appraisers
are cautioned to identify the exact definition of market value and its authority
What type of value recognizes the cost to replace the improvements but does
not include the land value? Correct Ans - insurance value
The amount of money that a financial institution is willing to lend the
borrower on a particular property is the: Correct Ans - loan value
Which statement is TRUE about property purchase loans and down
payments? Correct Ans - The greater the down payment, the less
chance the borrower will default.
A single-family home is situated in a growing commercial area. The highest
and best use is to raze the home and construct a commercial building. A client
asks an appraiser to value the property as a single-family home, and not under
its highest and best use as a commercial site. What type of value is this client
asking for? Correct Ans - value in use
What type of value is based on the property's current use? Correct Ans -
value in use
Why does insurance value typically not include the value for the land?
Correct Ans - land typically cannot be destroyed
Assessed value is also known as: Correct Ans - ad valorem value
(assessing property owners taxes)
Most real property appraisal assignments are intended to develop an opinion
of: Correct Ans - market value
What type of value includes an operating business with both tangible and
intangible assets? Correct Ans - going concern value
The market value of a property is $255,000 and the loan-to-value ratio is 70%.
What is the loan value for this property? Correct Ans - $178,500
What type of value is generally considered equivalent to market value?
Correct Ans - value in exchange
,How is the type of value used in an appraisal assignment determined?
Correct Ans - the appraiser identifies the type of value, based on the
intended use of the appraisal
The definition of market value included in USPAP Advisory Opinion 22:
Correct Ans - is only an example
When valuing a piece of real property, the appraiser is really valuing:
Correct Ans - the rights of ownership
In relation to real property, the term SLUGER refers to: Correct Ans -
bundle of rights
Which stage of the life cycle does not happen in every neighborhood or
property? Correct Ans - Renewal
When analyzing the life cycle for a neighborhood, what problem is often faced
by appraisers? Correct Ans - the growth cycle may have passed before
they realize it
Data that has already been compiled and is deemed to be reliable is:
Correct Ans - secondary data source
The subject property's assessment record would be considered ________ data.
Correct Ans - specific data
The comparable sales used in an appraisal assignment are considered ______
data. Correct Ans - specific data
What type of data would pertain to a specific property being appraised?
Correct Ans - specific data
Which of these would NOT be an example of general data? Correct Ans -
site size
Most specific data are gathered from a: Correct Ans - primary data
source
, In the purchase of a residential property, how does the principle of
anticipation apply to the buyer's actions? Correct Ans - buyer typically
anticipates the value of the property will increase
What does USPAP state about cost? Correct Ans - it is a fact, or an
estimate of fact
Once the appraiser has gathered all the data, the next step in the process is:
Correct Ans - isolating the information that is relevant to the assignment
When writing an appraisal report, charts and graphs may be used to replace
parts of the narrative explanation. Correct Ans - True
In order to produce credible assignment results, an appraiser should:
Correct Ans - verify all data
What is the likely result of an announcement of the closing of an industrial
plant that is a region's major employer? Correct Ans - decreasing
property values
When we refer to "purchasing power", which question are we asking?
Correct Ans - Are prospective purchasers able to purchase this property?
In a "seller's market", an appraiser is most likely to find: Correct Ans -
a small number of properties available
When supply catches up to demand, what happens in the market? Correct
Ans - the market achieves balance
In determining market supply and demand, questions to be considered by the
appraiser would include all of the following EXCEPT: Correct Ans -
What is the physical condition of the subject property?
How might a local community entice a buyer to purchase a blighted property
and revitalize it? Correct Ans - reduced tax assessment
Which of these is NOT an accepted method of estimating site value?
Correct Ans - surrogate method S
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