1 of 10 - The cost approach to value may be derived by:
Total Land Valuation + Depreciated Value of Building = Value of Property Cost Approach
Total Land Valuation + Undepreciated Value of Building = Value of Property Cost Approach
Total Land Valuation - Building Valuation = Value of Property Cost Approach
Total Land Valuation + Building Valuation = Value of Property Cost Approach
You answered correctly
2 of 10 - Judy and Xavier are planning a very large addition to their home. The kitchen will be doubled in size with a new hearth room, and a large new master suite will complete the renovation. They live in a neighborhood of houses in the $500,000 range. This addition will change the appraisal value of their home substantially. Which principle of value applies?
Assemblage
Competition
Contribution
Regression and Progression
You answered incorrectly
Within the principle of contribution, the value of one component, such as a remodeled kitchen, of a property is based on the value it adds to the value of the property as a whole. How much value the kitchen adds to the property as a whole equates to the value of the kitchen itself.
3 of 10 - Shanta, a property manager of a retail center, is using the Income Capitalization Approach in trying to project future earnings for the partners who own the center. She first estimates the annual potential gross income, subtracts an appropriate allowance for vacancy and collection losses to arrive at a gross income, deducts operating expenses (including debt service and mortgage payments). This gives her the Net Operating Income. She then applies a capitalization rate to the net income to determine the value. Did she use the correct steps?
Yes, Shanta went through all four steps correctly, debt service and mortgage payments may be included.
No, when Shanta was deducting operating expenses, she included debt service and mortgage payments when they shouldn't have been included.
No, Shanta should have added an appropriate allowance for vacancy and collection losses instead of subtracting these items.
None of the Above.
You answered incorrectly
Using the income capitalization approach, first estimate potential annual gross income and subtract the vacancy allowance and collection losses. To that, add non-rental income to determine annual gross income and then subtract annual operating expenses, not to include debt service or mortgage payments, to determine NOI. Apply cap rate to determine value.
4 of 10 - Which of the following is not a level of licensing for real estate appraisers?
Residential License
Certified Residential Real Estate Appraiser
Certified General Real Estate Appraiser
Certified Specialized Real Estate Appraiser
You answered incorrectly
The four levels of licensing for real estate appraisers in California include the Residential License, the Certified Residential License, the Certified General License, and the Trainee License.
5 of 10 - Maria, a single mother of three, has been saving to buy the family's first home. Her budget is limited, but there is a home she can easily afford on the market. Unfortunately, there have been zoning changes in the area, and a twenty-four hour convenience store is located across the street. Is this deterioration curable or incurable?
Curable
Incurable
It may be curable if the surrounding neighborhood is well-maintained and the upkeep is good. If the remainder of the area is on the decline, it is probably incurable.
Both A and C
You answered incorrectly
Changes in zoning that create external obsolescence are almost always incurable. The property owner has no control over the results of the zoning change.
6 of 10 - Which of the following equations is the correct application of the capitalization rate?
Net Operating Income divided by Capitalization Rate = Value Memory Tool - IRV = Value.
Capitalization Rate divided by Net Operating Income = Value Memory Tool - IRV = Value.
Net Operating Income divided by Capitalization Rate = Value
Value divided by Net Operating Income = Capitalization Rate
You answered incorrectly
Divide the Cap Rate into the net operating income to identify the property's value, or NOI ÷ Cap Rate = Value.
7 of 10 - Mrs. Jenkins has lived in her little 1940s cottage for forty years. Her home is immaculately maintained; it has a beautiful, well-manicured garden, and is just as lovely inside as outside. Unfortunately, the same cannot be said for the rest of her neighborhood. Other neighbors have let their properties go downhill. There is absolutely no curb appeal to any of the other homes in her neighborhood. Mrs. Jenkins' neighborhood is definitely in decline. Which type/types of depreciation applies/apply?
Economic, Environmental, or External Obsolescence
Physical Deterioration
Functional Obsolescence
Physical Deterioration and Functional Obsolescence
You answered incorrectly
With economic, environmental, or external obsolescence, the property loses value due to factors outside of the property itself over which the owner has no control, such as in this case where Mrs. Jenkins has no control over the condition of her neighbors' properties even though those properties are bringing down the value of Mrs. Jenkins' property.
8 of 10 - Jose has heard rumors that a zoning change will be taking place involving a piece of undeveloped sale property. Jose buys the property in hope the zoning change will take place, making the property much more valuable on the market. Which principle of value applies?
Regression and Progression
Anticipation
Contribution
Conformity
You answered incorrectly
Within the principle of anticipation, property can increase or decrease in value in expectation of something in the future, such as appreciation or rezoning.
9 of 10 - An appraiser is appraising a property that was built 65 years ago. The home has wonderful architectural charm, hardwood floors, and beautiful original molding, but it also has tiny bathrooms, and the closet space is nonexistent. Which type/types of depreciation applies/apply?
Physical Deterioration and Functional Obsolescence
Economic and Functional Obsolescence
Economic, Environmental, and Internal Obsolescence
Functional Obsolescence
You answered incorrectly
The property has depreciated and lost value due to the functional obsolescence of the bathrooms and inadequate closet space. Whether or not the obsolescence is curable or incurable depends largely on the cost to enlarge the bathrooms and add closet space, or if such modifications are even possible.
10 of 10 - A local school has been destroyed by fire. Nothing has been salvaged and the school will have to completely rebuilt. What are the three methods of determining the cost of rebuilding?
Estimate the value of the land; Determine the replacement or reproduction cost; and Deduct all accrued depreciation.
Square Foot Cost; Unit in Place; and Quantity Survey Method
Square Foot Cost; Value of Land Estimation; and Quantity Survey Method
Value of Land Estimation; Unit in Place; and Deduct all accrued depreciation.
You answered incorrectly
Reproduction or replacement cost can be determined by the square foot cost using outside measurement, unit in place based on construction cost per unit of measure of individual components, and quantity survey method estimating material and labor on a unit cost basis.
