Real Estate Appraisal Principles and Methods, Exams of Signal Processing and Analysis

Download Real Estate Appraisal Principles and Methods and more Exams Signal Processing and Analysis in PDF only on Docsity! Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS 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 answerContribution What are the four agents of production? - correct answerland, labor, capital, coordination The principle of contribution is most closely associated with: - correct answerthe 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 answerdeclines Finish the sentence: Profit encourages ___________. - correct answercompetition What is another name for the principle of inclining and declining periods? - correct answerIntegration 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 answerConsistent 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 answerStability The principle of surplus productivity is associated with which approach to value? - correct answerIncome Approach What does USPAP say about market value? - correct answerappraisers 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 answerinsurance value The amount of money that a financial institution is willing to lend the borrower on a particular property is the: - correct answerloan value Which statement is TRUE about property purchase loans and down payments? - correct answerThe greater the down payment, the less chance the borrower will default. Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS 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 answervalue in use What type of value is based on the property's current use? - correct answervalue in use Why does insurance value typically not include the value for the land? - correct answerland typically cannot be destroyed Assessed value is also known as: - correct answerad valorem value (assessing property owners taxes) Most real property appraisal assignments are intended to develop an opinion of: - correct answermarket value What type of value includes an operating business with both tangible and intangible assets? - correct answergoing 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 answer$178,500 What type of value is generally considered equivalent to market value? - correct answervalue in exchange How is the type of value used in an appraisal assignment determined? - correct answerthe 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 answeris only an example When valuing a piece of real property, the appraiser is really valuing: - correct answerthe rights of ownership In relation to real property, the term SLUGER refers to: - correct answerbundle of rights Which stage of the life cycle does not happen in every neighborhood or property? - correct answerRenewal When analyzing the life cycle for a neighborhood, what problem is often faced by appraisers? - correct answerthe growth cycle may have passed before they realize it Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS In a market area, there were 168 single-family sales last year, and there are currently 98 properties on the market. How long will it take to sell this existing inventory? - correct answer7 moths In a market area, there were 168 single-family sales last year, and there are currently 98 properties on the market. What is the monthly absorption rate? - correct answer14 moths A neighborhood in the decline phase of its life cycle may reach a point where the most likely buyer for properties will be: - correct answerinvestors If the market achieves balance, or equilibrium, it is considered to be: - correct answerstable There were 24 sales in a subdivision in the last year, and there are currently 10 properties on the market. What is the monthly absorption rate? - correct answer2 per month There were 24 sales in a subdivision in the last year, and there are currently 10 properties on the market. How long will it take the market to absorb this existing inventory? - correct answer5 months In a market area, there were 327 single-family sales last year, and there were 29 expired listings that did not sell. What is the expiration ratio for this area? - correct answer8% Conclusions derived in the market analysis phase of the appraisal assignment can be used in which approach to value? - correct answerd) all of these The real estate life cycle applies to: - correct answerd) all of these Which of these is NOT an accepted method of estimating site value? - correct answersurrogate method S In a market area, there were 168 single-family sales last year, and there are currently 98 properties on the market. How long will it take to sell this existing inventory? - correct answer7 months How would an appraiser estimate the estimated length of time it will take to sell the existing available inventory in a market? - correct answerabsorption rate During which period in a neighborhood's life cycle will there be a strong demand for additional community infrastructure? - correct answergrowth Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Questions about balance must be answered by the appraiser in order to: - correct answermeasure the trends of the market area Market analysis in appraisals can be divided into _____ distinct categories. - correct answertwo When the market becomes saturated with a certain type of housing, what happens in the market? - correct answermarketing times lengthen How might an appraiser determine if a neighborhood is in the decline phase of its life cycle? - correct answeranalyze the ratio of owner occupied-properties to tenant- occupied properties There is a significant oversupply of high-value homes on the market in Community A, and demand for these homes has not increased. Which statement is FALSE? - correct answerThe value of all homes in the area will decline. What is the first step in the market analysis process? - correct answerdefining the market segment Which statement is TRUE regarding market identification? - correct answerThe market may be subdivided more than once in order to arrive at an appropriate segmentation. When analyzing a market for a high-value home, what is the MOST important consideration? - correct answerthe number of acceptable and qualified buyers in the market for this type of property (not all of these) Which would NOT be an appropriate segmentation for a market analysis? - correct answerResidential - retail - restaurant Market identification involves: - correct answersubdividing the larger market into a workable study area What would be an appraiser's concern in analyzing the market for a high-value residential property? - correct answerHow many buyers can afford to purchase this property in this location? One of the problems in appraising high-value homes is: - correct answerMany of these homes are custom built for their current owners, and may not match the needs and desires of buyers. Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Who is responsible for making an appropriate scope of work decision in an appraisal assignment? - correct answerthe appraiser only If you are appraising in a stable market: - correct answermarket conditions adjustments may not be necessary An investor wants to construct a four-unit apartment building. She engages an appraiser to analyze the market and tell her if the market "needs" such a building, and if the building will be worth what it costs to construct. What type of analysis is this? - correct answerfeasibility analysis Which statement is TRUE regarding the scope of work decision in an appraisal assignment? - correct answerIt is the sole responsibility of the appraiser. Who determines the appropriate level of analysis for appraisal assignment? - correct answerthe appraiser What helps an appraiser determine the appropriate level of analysis to employ in an appraisal assignment? - correct answercommuniciation with the client What type of analysis consists of primary economic research by an analyst? - correct answerfundamental analysis Who determines the appropriate level of analysis for appraisal assignment? - correct answerthe appraiser What does a real estate investor expect in return for tying his or her money up in an investment property? - correct answeran acceptable rate of return A community's total employment is 52,220. The number of total core industry employees is 37,300. For every 10 jobs added in the core industry, how many additional jobs will be generated in the community? - correct answerfour A community's total employment is 52,220. The number of total core industry employees is 37,300. What is the base core multiplier? - correct answer1.4 In most appraisal situations, what is the appraiser's best source for data about the subject property's physical characteristics? - correct answervisual inspection of the subject property What is the most common type of market study that appraisers are asked to complete? - correct answerfeasibility analysis Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS What helps an appraiser determine the appropriate level of analysis to employ in an appraisal assignment? - correct answercommuniciation with the client An appraiser notes that there is a projected increase in production by major employers, which will result in a large increase in area employment. Which of the following conclusions is MOST TRUE? - correct answerAn increase in demand will likely precede an increase in supply. What is typically used to prevent back flow of sewer gasses into homes? - correct answer"p-traps" When analyzing a market, an appraiser notes that there is a projected increase in production by major employers, which will result in an increase in employment. Which of the following conclusions is MOST TRUE? - correct answerAn increase in the supply of housing is necessary. What is an appraiser's responsibility in determining whether the home's footings are at least one foot below the frost line? - correct answerassume the home was inspected at the time it was built An appraiser's highest and best use conclusion is always: - correct answeran opinion The use that produces the optimum value for the property is its: - correct answerHighest and best use The two types of highest and best use analysis are: - correct answeras vacant and as improved What is the reasonably probable and legal use of a property that is physically possible, appropriately supported, financially feasible, and results in the highest value? - correct answerhighest and best use It is a requirement to develop an opinion of the highest and best use of a property: - correct answerin market value appraisal assignments How are existing improvements valued in a market value appraisal assignment? - correct answerbased on their contributory value to the land All appraisal assignments that require a market value opinion imply that: - correct answerthe property will be valued at its highest and best use The market value of the land is always determined based on: - correct answerits highest and best use Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS all of these statements concerning Fannie Mae's position on highest and best use is true, except for - correct answerIf the current improvements clearly do not represent the highest and best use of the site as an improved site, the appraiser should stop and not complete the appraisal report. Is an opinion of highest and best use required in an appraisal that is NOT based on market value? - correct answerNo, but it still may be necessary for credible assignment results In highest and best use analysis, how do we determine maximum productivity? - correct answerthe use that results in the highest land value If the improvements have a negative value, an appraiser must consider __________ in the feasibility analysis. - correct answerdemolition cost Which highest and best use criterion would require an appraiser to consider minimum lot sizes and height restrictions imposed by a local municipality? - correct answerlegally permissible A single-family homesite is worth $40,000. The owner plans to build a 4,000 square foot home on it, at a cost of $600,000. When it is completed, the property will be worth $620,000. Which statement is TRUE regarding the proposed 4,000 square foot home? - correct answerIt is not financially feasible A vacant site is zoned for use as a single-family homesite, and it is unlikely to be changed. As a single-family homesite, the site is worth $75,000. As a commercial site, it would be worth $150,000. What is the highest and best use of this property? - correct answersingle-family homesite Which highest and best use criterion would require an appraiser to consider private deed restrictions? - correct answerlegally permissible Which highest and best use criterion would require an appraiser to consider excavation or filling that may be required in order for a site to accommodate an improvement? - correct answerphysically possible When testing for highest and best use, which criterion (or test) is applied last? - correct answermaximally productive Which highest and best use criterion would require an appraiser to consider the shape of the site? - correct answerphysically possible Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Which highest and best use criterion would require an appraiser to consider what improvements would fit on the site? - correct answerphysically possible Which highest and best use criterion would require an appraiser to consider the availability of public utilities to a site? - correct answerphysically possible Only those uses which produce a positive return are considered _________. - correct answerfinancially feasible When testing for highest and best use, which two criteria (or tests) are applied first? - correct answerlegally permissible and physically possible An appraiser is analyzing a parcel of vacant land, on a back road in a rural area. The owner tells the appraiser he plans to build a fast-food restaurant on the land. There is no zoning, and no other significant land use restrictions. The appraiser determines the highest and best use is NOT to build a fast food restaurant. What is the most likely reason for this conclusion? - correct answerit is not financially feasible Which highest and best use criterion would require an appraiser to consider the need for the land use, or how many similarly-used land areas are in the market area? - correct answerfinancially feasible A single-family home is situated on a commercially-zoned lot. It would not be financially feasible to convert the home to commercial use, because there is not enough demand for commercial properties at this time. Demand for industrial property is very strong; however, a zoning change is unlikely. Demand for commercial properties is expected to increase as the community grows. What is the ultimate highest and best use for this property? - correct answerCommercial use A commercial building which is a legal nonconforming use in a residential neighborhood would be considered: - correct answerover-improvement A single-family residence is located in a commercially-zoned area. Residential sale prices in the area range from $80-90 per square foot. The residence could be converted to offices at a cost of $25 per square foot. Office space in this area is selling at $90-100 per square foot. What is the highest and best use of this property? - correct answercontinue use as a single-family home A property has one acre, in an area where half-acre lots are common. There is a single- family home located at one end of the property, and is situated in such a way that a half- acre site could be sold off and developed without affecting the existing homesite. Which statement best describes this situation? - correct answerThis is an excess land situation. Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use ______________________. - correct answerOf the site as improved Sites may be analyzed using all these methods EXCEPT _______________. - correct answerPrice per cubic foot When demand is higher than supply, the value of a product _____________. - correct answerIncreases The most frequently occurring number of the data being analyzed is the __________. - correct answerMode Market condition adjustments may not be found to be supportable or necessary, if the market place is ___________. - correct answerStable An investor considers building an investment property and the total cost would be $550,000. The investor expects a 15% return on his investment. For this project to be financially feasible, it would have to be worth at least __________ upon completion. - correct answer$632,500 Which is NOT a type of roof? - correct answerMullion Another name for a market segment is a ____________________. - correct answerSubmarket An announcement of the expansion of an industrial plant that is the region's major employer would likely result in ___________________ . - correct answerIncreasing property values Going concern value includes an operating business with ______________________ assets. - correct answerBoth tangible and intangible A neighborhood is characterized by _____________ land uses; whereas a district is composed of _________ land uses. - correct answerComplementary, homogeneous Employing zero lot lines and attach the garage areas between two houses is called ___________ housing. - correct answerUniplex Which of these is NOT one of the four agents of production? - correct answerBuilding Codes The improvements are normally valued for their ___________ value relative to the highest and best use of the land. - correct answerContributory Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Part of the definition of Market Value is that it is the "price that a property should bring in a(n) ________________ market." - correct answerOpen and competitive When appraisers survey the market during a feasibility analysis, they rely primarily on ______________. - correct answerGeneral data Some investors require a higher rate of return because of a greater investment ____________________. - correct answerrisk Markets will generally fall into the following categories, EXCEPT for _______________. - correct answerMixed-Use Mixed-Use - correct answer5 months In a neighborhood, there were 180 single-family sales last year, and there were 60 expired listings that did not sell. What is the expiration ratio for this area? - correct answer25% ________________ involves subdividing the larger market into a workable study area. - correct answerMarket identification _______________ analysis examines the present worth of a future benefit. - correct answerInvestment What is the first step in a feasibility analysis? - correct answerSurvey the market. The ability to sell or transfer the property freely in the marketplace is known as ___________________. - correct answerTransferability Research into the number of actual sales that have occurred in the neighborhood during the previous 12 month period what kind of data? - correct answerprimary A _______________ usually produces general marketing information for a geographic area. - correct answerMarket study The real estate market life cycle will affect the ___________ attitudes of the buying public. - correct answerSocial In the USPAP Scope of Work Rule, it says "Communication with the client is required to establish most of the information necessary for problem identification. However, the identification of relevant characteristics is a judgment made by the _________________. - correct answerAppraiser Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS When the intended use of the appraisal is for a mortgage finance transaction, the assignment normally involves an opinion of _______________ Value. - correct answerMarket A(n) ___________________ is the analysis of a specific property type in a defined area and involves rate differentials measuring the absorption rates for a particular type of property in a given area. - correct answerMarketability study To provide an estimate of the length of time it took to sell properties during the period of analysis, we can look at _______________. - correct answerAbsorption rates. Which highest and best use criterion would require an appraiser to consider the current zoning compliance? - correct answerLegally permissible Inferred analysis is principally performed using ____________data, while Fundamental analysis relies primarily on _____________ data. - correct answerSecondary, Primary A property suffers from functional obsolescence because it lacks air conditioning. Installation of air conditioning would cost $15,000 and would increase the value of the property by $20,000. This functional obsolescence is _________________. - correct answerCurable The ability of the public to be able to purchase a commodity or property is called ______________ purchasing power. - correct answerEffective The structure's ___________________ are included in the GLA. - correct answerFinished areas above grade When improvements are added, such as roads, water and sewer; then _________ becomes _____________. - correct answerLand, a site An Apartment building has rents of $800, $835, $850, $850, and $875 per month. What is the Range of the rents? - correct answer$75 Competition is good for the market -- - correct answerUp to a certain point. Which of these is NOT one of the inherent characteristics of land? - correct answerHomogeneity Which highest and best use criterion would require an appraiser to consider the frontage of the site? - correct answerPhysically possible Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS The legally and physically possible use which will yield the highest probable return on value in the reasonably foreseeable future, is the_______________ Use. - correct answerHighest and Best The ability of market participants to purchase a property is called _________________________________. - correct answerEffective purchasing power Legal, nonconforming uses can take the form of ____________. - correct answerUnder- improvements or over-improvements. Part of the definition of Highest and Best Use is that it is the use that "results in the __________ value." - correct answerHighest Which highest and best use criterion would require an appraiser to consider Setbacks and Site Size restrictions? - correct answerLegally Permissible. A property's present value is directly related to the perceived benefits to be received in the future. This is the Principle of _______________. - correct answerAnticipation With investors, the Principle of Substitution applies to them looking for the highest __________ to be derived from a property. - correct answerIncome In Fannie Mae's definition of value it says that it assumes a reasonable time is allowed for __________________________. - correct answer`Exposure to the open market Appraisersforum.com is an online __________ for appraisers. - correct answerDiscussion board An Apartment building has rents of $800, $835, $850, $850, and $875 per month. What is the Mode of the rents? - correct answer$850 The capacity of a furnace heating system is measured in _______. - correct answerBTUs The owner of a unit in a cooperative owns _______________. - correct answerStock in the corporation A comparable property's room count would be considered what type of data? - correct answerSpecific A property's value is directly related to the ___________ for that type of property. - correct answerDemand Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Another name for Renewal Period is _____________ Period. - correct answerRevitalization Who will ultimately determine what a given amenity will contribute to the overall property value? ________________. - correct answerMarket participants (buyers and sellers) There were 36 sales in a subdivision in the last year, and there are currently 12 properties on the market. What is the monthly absorption rate? - correct answer3 Legally nonconforming use is "a use that was lawfully established and maintained, but no longer conforms to the use regulations of the _______________ in the zone where it is located." - correct answerCurrent zoning To measure the trends of the market area, the appraiser must ask questions about ______________________. - correct answerAll of these items Which is NOT a type of framing? - correct answerMansard Market visualization of the real estate life cycles will ultimately determine the ____________ for these individual properties. - correct answerTypical buyers Which highest and best use criterion would require an appraiser to consider CC&Rs? . - correct answerLegally permissible Part of the definition of Highest and Best Use is that it is "Physically _______________..." - correct answerPossible ________ Land is capable of a separate or alternative use. - correct answerExcess Which of these agencies agree in principle with the ANSI Standards? - correct answerAll of them The ________________ Cycle of a neighborhood is characterized by demand and supply trending toward equilibrium. - correct answerStability "A neighborhood characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural" defines ________. - correct answerDistrict The principle of balance is most closely related to the following principle: _______________. - correct answerSupply and Demand A highest and best use opinion must be developed ____________________________. - correct answerWhen it is necessary for credible assignment results Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS USPAP says that ______________ is a fact, or an estimate of fact. - correct answerCost The principle of Surplus Productivity states that after paying The costs of _____________________________ , any residual income is attributed to the land. - correct answerThe first three agents of production Place these types of siding in historical order; from oldest to newest: - correct answerWood, aluminum, vinyl, composite Regression and Progression are parts of the Principle of ____________________. - correct answerInclining and Declining Periods Market value is generally considered equivalent to ___________________. - correct answerValue in Exchange Competition in the market place is encouraged by ______________. - correct answerProfit Which highest and best use criterion would require an appraiser to consider whether the site is in a flood zone? - correct answerPhysically possible. A property with restaurants and retail shops on the lower level and apartments on levels above is called a(n) ___________ property. - correct answerMulti-Use All properties will go through __________ stages of the life cycle. - correct answerThe first three Who will decide if the individual improvement is in conformance with the neighborhood or not? - correct answerThe appraiser. "The geographic region from which a majority of demand comes and in which the majority of competition is located" is the definition of _________________. - correct answerMarket Area A residential property is currently zoned for residential use, but its highest and best use is expected to change to Light industrial use within the next 2-4 years. The subject property's current use is considered ___________________. - correct answerInterim Use. A loan is $180,000 and the loan-to-value ratio is 90%. What is the Market Value for this property? - correct answer$200,000. Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS Part of the definition of Highest and Best Use is that is the "______________________ use...." - correct answerReasonably probable Which of these is an example of the principle of regression? - correct answerGood quality home in a neighborhood of fair quality homes. Statistical analysis of data is a mechanical means to ascertain estimates using formulas specifically designed for the compilation of ___________________. - correct answerLarge amounts of data All of these are Governmental restrictions on land use EXCEPT ______________________. - correct answerDeed restrictions In a market area, there were 256 single-family sales last year, and there were 64 expired listings that did not sell. What is the expiration ratio for this area? - correct answer20% Generally, which changes more slowly in a real estate market? - correct answerSupply In a Buyer's market, an appraiser is most likely to find____________________. - correct answerA large number of properties available A community's total employment is 77,700. The number of total core industry employees is 55,500. If the core industry adds 850 more jobs, how many additional jobs will be generated in the community? - correct answer340 When testing for legal permissibility, the first thing which should come to the appraiser's mind is the _____________. - correct answerZoning ordinance A community's long range plan is called the ____________. - correct answerMaster Plan A community's total employment is 58,240. The number of total core industry employees is 36,400. If the core industry adds 600 more jobs, how many additional jobs will be generated in the community? - correct answer360 The appraiser uses _____________ data to identify trends in the marketplace. - correct answerGeneral The factors of ______________ are the predominant forces to ultimately determine the value for housing in the marketplace. - correct answerSupply and demand Mckissock Residential Market Analysis and Highest & Best Use| 324 QUESTIONS| WITH COMPLETE SOLUTIONS The elements of nature can affect value. This is called a(n) _____________ force. - correct answerEnvironmental The cost of foregoing one type of investment for another is the Principle of __________________. - correct answerOpportunity Costs Changes in the demand for differing housing styles or housing locations can be the cause of _____________ obsolescence. - correct answerFunctional or external The highest and best form of ownership one can have in real estate is ________________. - correct answerFee simple Data that are readily available from public sources such as the local chamber of commerce, the community city hall, or the area public library is known as __________ data. - correct answerSecondary In Fannie Mae's definition of value it says that it assumes a reasonable time is allowed for __________________________. - correct answerExposure to the open market The principle of Surplus Productivity states that after paying The costs of _____________________________ , any residual income is attributed to the land. - correct answerThe first three agents of production Fannie Mae will only purchase or securitize a mortgage that represents the highest and best use ______________________. - correct answerOf the site as improved There are two or more owners of a property and upon the passing of one of the owners, that owner's share passes to his or her heirs. This type of ownership is _____________________. - correct answerTenants in Common