Residential Sales Comparison and Income Approaches Final Exam Questions with Answers, Exams of Economics

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Residential Sales Comparison and Income Approaches Final Exam Questions with Answers When choosing comparables, the appraiser analyzes: - Correct Answers All of the above (Location, amenities, market conditions Sales or financing concessions Motivations of sellers and buyers, property rights All of the above) How many comparables are typically used by appraisers in the Sales Comparison Approach? - Correct Answers No less than three The Sales Comparison Approach was previously known as the: - Correct Answers Market Data Approach (Cost Comparison Approach Income Approach Market Data Approach None of the above) Of the three appraisal approaches, the Sales Comparison Approach relies most heavily on the economic principle of: - Correct Answers Substitution "The perception that value is created by the expectation of benefits to be derived in the future" is the definition of the principle of - Correct Answers Anticipation "The principle that real property value is created and sustained when contrasting, opposing or interacting elements are in a state of equilibrium" is the definition of the principle of - Correct Answers Balance "The concept that a lower-priced property will be worth more in a higher-priced neighborhood than it would in a neighborhood of comparable properties" is the definition of the principle of - Correct Answers Progression "In appraisal, off-site conditions that affect a property's value" is part of the definition of the principle of - Correct Answers Externalities Adjustments made in the sales comparison process always start with: - Correct Answers The comparable Which of the following is the sales comparison formula? - Correct Answers Price of comparable ± adjustments = value of subject The first step in the Sales Comparison Approach procedure is - Correct Answers Research the market The COMPETENCY RULE of USPAP says an appraiser must have "the _______________________ to complete the assignment competently." - Correct Answers Knowledge and experience The principle of competition can be between - Correct Answers Purchasers and tenants as well as between sellers and landlords The principle of supply and demand states that price and demand move in a (an) ________ relationship. - Correct Answers Direct but not proportional In researching the market, an appraiser researches - Correct Answers (Closed sales only Prior sales and closed sales only Options to purchase and contracts only All of the above) All of the above The appraisal principle that states "real property value is created and sustained when the characteristics of a property conform to the demands of its market" is the principle of - Correct Answers Conformity The final step in the Sales Comparison Approach procedure is - Correct Answers Reconcile the value indications Which of the following is the Sales Comparison Approach formula? - Correct Answers Price of comparable ± adjustments = value of subject "The result of the cause and effect relationship among the forces that influence real property value" is the definition of the principle of - Correct Answers Change The first step in the Sales Comparison Approach procedure is to - Correct Answers Research the market Which of the following is NOT a common unit of comparison when appraising 2-4 unit properties? - Correct Answers Price per SF of GLA (they use GBA) The principles of progression and regression are illustrations of what happens when the principle of ______________ is violated. - Correct Answers Balance When is the Sales Comparison Approach NOT the best way to estimate value? - Correct Answers When the property is highly unusual In residential properties, anticipated future benefits are amenities. They may include all of the following EXCEPT - Correct Answers Tax benefits Examination of a title report might reveal all of the following EXCEPT - Correct Answers Interest Rates The process by which a value indication is derived in the Sales Comparison Approach is called - Correct Answers Comparative Analysis Comparative analysis may employ quantitative analysis and qualitative analysis - Correct Answers Separately or together Qualitative analysis is used for elements that - Correct Answers Cannot be given a numerical value A property sold for $250,000 and then sold later in the same year for $237,000. What was its percentage of decline? - Correct Answers 5.2% An analysis technique in which nearly identical properties are analyzed to isolate a single characteristic's effect on value or rent is called - Correct Answers Paired data analysis "A quantitative technique used to identify and measure trends in the sale prices of comparable properties; useful when sales data on highly comparable properties is lacking, but a broad database on properties with less similar characteristics is available. Market sensitivity is investigated by testing various factors that influence sale prices" is the definition of ___________ analysis. - Correct Answers Trend "The process of accounting for differences (such as between comparable properties and the subject property) that are not quantified; may be combined with quantitative analysis" is the definition of ____________ techniques. - Correct Answers Qualitative The procedure in which we employ just plusses and minuses in sales comparison is called ______________ analysis. - Correct Answers Relative Comparison Which of the following is NOT a form of qualitative analysis? - Correct Answers Graphic Analysis A rent loss can be capitalized by - Correct Answers Either dividing by a rate or multiplying by a multiplier "A quantitative technique used to identify and measure adjustments to the sale prices of comparable properties; useful when sales data on highly comparable properties are lacking, but a broad database on properties with less similar characteristics is available" is the definition of ___________ analysis. - Correct Answers Trend An appraiser identifies a value-related difference between the subject property and a comparable property in terms of remodeling; however the appraiser is unable to extract a specific dollar adjustment. What is the BEST course of action for the appraiser? - Correct Answers Handle the difference through qualitative analysis A property sold for $225,000 and then sold 6 months later for $245,000. What was its average percentage of increase per month? - Correct Answers 1.5% ($245,000 ÷ $225,000 = 1.09 or 9%. 9% ÷ 6 = 1.5% per month) Comparative analysis may employ - Correct Answers Both quantitative and qualitative analysis separately or together In ranking analysis, the data is ranked in ____________ order. - Correct Answers Ascending or descending "Quantitative techniques used to identify and measure adjustments to the sale prices of comparable properties; a variant of statistical analysis in which an appraiser interprets graphically displayed data visually or through curve fit analysis" is the definition of - Correct Answers Graphic Analysis A property sold for $225,000 and then sold later in the same year for $207,000. What was its percentage of decline? - Correct Answers 8% "A qualitative technique for analyzing comparable sales; used to determine whether the characteristics of a comparable property are inferior, superior, or equal to those of the subject property" is the definition of _____________ analysis. - Correct Answers Relative comparison "A quantitative technique used to identify and measure adjustments to the sale prices of comparable properties; useful when sales data on highly comparable properties are lacking, but a broad database on properties with less similar characteristics is available" is the definition of ___________ analysis. - Correct Answers Trend Which of the following is FALSE, concerning quantitative analysis? - Correct Answers It cannot be given a numerical value What is the name of the process by which a value indication is derived in the Sales Comparison Approach? - Correct Answers Comparative Analysis "In the Sales Comparison Approach, a quantitative adjustment technique in which adjustments are based on cost indicators, such as depreciated building cost, cost to cure, or permit fees" is the definition of - Correct Answers Cost Analysis "In the Sales Comparison Approach, the process of accounting for differences between comparables that are not quantified" is the definition of _________ analysis. - Correct Answers Qualitative "A numerical (dollar or percentage) adjustment to the indicated value of a comparable property to account for the effect of a difference between two properties on value" is the definition of - Correct Answers Quantitative adjustments A 1,900 square-foot home with a double garage sold for $210,000. A home very similar except it had 2,000 square feet of living area and only a single garage, recently sold for $208,000. It has been determined that the indicated adjustment for square feet of living area is $30.00 per square foot. Which is the indicated adjustment for the difference in garages? - Correct Answers $5,000 (100sqft difference * 30 = 3000 - (-2000 SP difference) = 5000) Which is NOT a form of quantitative analysis? - Correct Answers Ranking Analysis In traditional appraisal theory, the first step in the adjustment sequence is an adjustment for - Correct Answers Real property rights apprised "Divided or undivided rights in real estate that represent less than the whole, i.e., a fractional interest such as a tenancy in common, easement, or life interest" is the definition of - Correct Answers Partial interest "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat" is the definition of - Correct Answers Fee simple estate "The right to perform a specific act on a property owned by another" is the definition of - Correct Answers Affirmative Easement When appraising a 4-unit property and at least one unit is leased, the property rights would be - Correct Answers Leased fee estate "An easement that benefits a legal person or entity (individual, corporation, partnership, LLC, government entity, etc.) and not a particular tract of land; an easement having a servant estate but no dominant estate" is the definition of a (an) - Correct Answers Easement in Gross A leasehold interest may have value when - Correct Answers The Contract Rent is less than Market Rent The most desirable form of timesharing is called ___________ timesharing. - Correct Answers Fee "Trespassing on the domain of another" is the definition of - Correct Answers Encroachment "A multiunit structure, or a unit within such a structure, with a condominium form of ownership" is the definition of a - Correct Answers Condominium A property has a first mortgage of $120,000, a second mortgage of $30,000, and a third mortgage of $15,000. It is foreclosed and sold for $145,000. The holder of the third mortgage gets $________ and the holder of the second mortgage receives $ _________. - Correct Answers 0, $25,000 "A pledge of a described property interest as collateral or security for the repayment of a loan under certain terms and conditions" is the definition of a - Correct Answers Mortgage An ARM is - Correct Answers An adjustable rate mortgage A purchaser bought a property for $215,000, put 15% down and borrowed the rest at 6.75% interest for 25 years. The lender charged 2.5 points at the closing. How much was paid for the points? - Correct Answers $4,568.75 ($215,000 X .85 = $182,750. $182,750 X .025 = $4,568.75) The primary participants in the secondary mortgage market are - Correct Answers Fannie Mae, Freddie Mac, and Ginny Mae Mortgage assumptions are: - Correct Answers Attractive when rates are rising Another name for a land contract is a (n) - Correct Answers Installment sale contract Mortgages that are either insured by the FHA or guaranteed by the VA: - Correct Answers Tend to offer favorable terms Cash equivalency adjustments are typically made when - Correct Answers A transaction involved non-market financing "Liens placed on a property after a previous lien has been made and recorded; a lien made subordinate to another by agreement" are called __________ liens. - Correct Answers Junior Most _______________were chartered primarily to provide residential mortgages for the local areas. - Correct Answers Savings and loans With a land contract, title passes when the seller delivers the deed _________. - Correct Answers When the total price is paid Mortgage assumptions are - Correct Answers Attractive when rates are rising A property has a first mortgage of $125,000, a second mortgage of $30,000, and a third mortgage of $10,000. It is foreclosed and sold for $140,000. In this situation, the holder of the third mortgage gets $________ and the holder of the second mortgage receives $ _________. - Correct Answers 0, $15,000 A mortgage that is not fully amortized at maturity and requires a lump sum payment of the outstanding balance at the end is called a ____________ mortgage. - Correct Answers Balloon A "point" is ___% of _______________. - Correct Answers 1, loan amount Cash equivalency adjustments are typically made when: - Correct Answers A transaction involved non-market financing Market condition adjustments are also commonly known as: - Correct Answers Time adjustments The definition of arms-length is a transaction between ___________ parties acting in their own _______ interests. - Correct Answers Unrelated, best Your research of a comparable sale reveals that the purchase price was $200,000, but the purchaser realized the property needed extensive repairs to the mechanical systems. The estimated cost to cure the problems was $15,000 but the actual costs turned out to be $20,000. What should you do? - Correct Answers Adjust the property sale price by $15,000 Long-term market cycles are: - Correct Answers Caused by national or international conditions Changes in a market cycle may be cyclical, one-time-only, ___________ and ____________. - Correct Answers Seasonal, exponential The life cycle of a market area typically includes the stages of growth, _____________, decline and _______________. - Correct Answers stability, revitalization The real estate market tends to be: - Correct Answers An early responder to short- term economic cycles You are in a very hot real estate market with values going up monthly by 2%, and lenders are taking months to process transactions, creating extended closing times. As an appraiser, you should: - Correct Answers Adjust the comparables from their contract date of sale to the effective date of the appraisal You live in a summer resort town. Real estate prices typically drop 15% during autumn and winter. A house sold for $200,000 in July. What would it sell for in December? - Correct Answers $170,000 ($200,000 X .85 = $170,000) A property sold in November for $312,500. It sold again 9 months later for $354,800. What was its average monthly rate of appreciation? - Correct Answers 1.50% ($354,800 - $312,500 = $42,300. $42,300 ÷ 312,500 = .135. .135 ÷ 9 = 0.015 or 1.5%) "An element of comparison in the Sales Comparison Approach; comparable properties can be adjusted for differences in the motivations of either the buyer or a seller in a transaction" is the definition of - Correct Answers Conditions of sale Which of the following would NOT be classified as a short term trend for market cycles? - Correct Answers Income levels Market condition adjustments are also commonly known as - Correct Answers Time adjustments You are in a very hot real estate market with values going up monthly by 2%, and lenders are taking months to process transactions, creating extended closing times. As an appraiser, you should - Correct Answers Adjust the comparables from their contract date of sale to the effective date of the appraisal Which of the following would NOT be classified as a long term trend for market cycles? - Correct Answers Interest rates If a sale is not arms-length, the appraiser - Correct Answers May either discard it or use it with adjustments A property sold for $256,000 and sold again 11 months later for $289,000. What was its percent of increase? - Correct Answers 12.9% (289k - 256k = 33k, 33k / 256k = .129) The definition of arms-length is a transaction between ___________ parties under no _______. - Correct Answers Unrelated, duress Your subject is located in an area where property values have been rising consistently at 1.5% a month for the past twelve months. You have located a comparable that is practically identical to your subject. It sold seven months ago for $200,000. How much should you adjust the price? - Correct Answers $21,000 (21k * .015 = 3k, 3k * 7 = 21k) In the Sales Comparison Approach, which of these factors should be adjusted for before the others? - Correct Answers Market conditions Long-term market cycles are - Correct Answers Caused by national or international conditions Which of the following is LEAST LIKELY to be a factor that can help you analyze changes in local market conditions? - Correct Answers Foreclosure rates nationally A property sold in October for $412,500. It sold again 9 months later for $471,900. What was its average (not compounded) monthly rate of appreciation? - Correct Answers 1.6% (The question is asking for the "average" monthly not the "compounded" rate of increase. The average rate is found by finding the total change, dividing that by the original price which will give the total percentage change. That is divided by the number Which would not normally constitute a market area boundary? - Correct Answers A public bus line Whenever possible, your comparables should be in: - Correct Answers The same market area as your subject For a residential property, location on a (n) _____________ is generally the most preferable. - Correct Answers Cul-de-sac Quality is determined by - Correct Answers The materials and construction practices used during the building process When describing the area of a small lot, we usually use - Correct Answers Square Feet An appraiser can reasonably assume that - Correct Answers Most homes in a subdivision are of the same general quality Condition is determined by - Correct Answers The maintenance and care the house has received "The age of property that is based on the amount of observed deterioration and obsolescence it has sustained" is the definition of _________ age. - Correct Answers Effective "The period of time over which a structure may reasonably be expected to perform the function for which it was designed" is the definition of ______________ life. - Correct Answers Useful In the appraisal of a single-family residence, a finished basement should - Correct Answers Be calculated separately from the GLA "Items of wear and tear on a property that should be fixed now to protect the value or income- producing ability of the property, such as a broken window, a dead tree, a leak in the roof, or a faulty roof that must be completely replaced. These items are almost always curable" is the definition of - Correct Answers Deferred maintenance A broken windowpane an example of - Correct Answers Deferred maintenance "The period of time over which a structure may reasonably be expected to perform the function for which it was designed" is the definition of __________ life. - Correct Answers Useful "The estimated period during which improvements will continue to contribute to property value" is the definition of - Correct Answers Remaining economic life Standard terminology for describing the style of a residence would not include - Correct Answers One story In the appraisal of a single-family residence, a finished basement should: - Correct Answers Be calculated separately from the GLA A property sells for $450,000 and the site value is $120,000. The cost new of the improvements is $572,000. What is the percentage of depreciation? - Correct Answers 42% ($450,000 - $120,000 = $330,000. $572,000 - $330,000 = $242,000. $242,000 ÷ $572,000 = .42 or 42 %.) "Curable, physical deterioration that should be corrected immediately..." is the definition of - Correct Answers Deferred maintenance items "The number of years elapsed since an original structure was built" is the definition of ___________ age. - Correct Answers Chronological A property sells for $350,000 and the site value is $60,000. The cost new of the improvements is $480,000. What is the dollar amount of depreciation indicated by this sale? - Correct Answers $190,000 ($350,000 - $60,000 = $290,000. $480,000 - $290,000 = $190,000.) Fannie Mae says for units in condominiums, the appraiser should use ____________ dimensions to calculate the Gross Living Area. - Correct Answers Interior "The period of time over which a structure may reasonably be expected to perform the function for which it was designed" is the definition of _________ life. - Correct Answers Useful The condition of a single-family residence is determined by - Correct Answers The maintenance and care the house has received If a property is depreciating at the rate of 1.7% per year, what is its economic life? - Correct Answers 58.8 years (1.00 ÷ 0. 017 = 58.8 years) Comparable 2 sold for $340,000 and Comparable 3 sold for $318,000. They were very similar except that Comparable 2 had a three-car garage and three acres of land whereas Comparable 3 had a two-car garage and two acres of land. Through a paired data analysis we are able to ascertain that the contributory value of a three-car garage versus a two-car garage is $6,000. How much is the contributory value of the additional acre of land? - Correct Answers $16,000 ($340,000 - $318,000 = $22,000. $22,000 - $6,000 for the garage = $16,000 for the land.) When describing the area of a small lot (less than 1 acre), we usually use - Correct Answers Square feet The concept of _______ life is logical but is of little use to appraisers. - Correct Answers Useful Historical age is another name for _____________ age. - Correct Answers Chronological Which is an example of a deferred maintenance item? - Correct Answers these entire Plumbing leak Missing shingles Peeling paint on exterior shutters) All of the following are items that indicate poor construction practices EXCEPT - Correct Answers Not enough landscaping The age that the property appears to be, based on maintenance and updating, is its___________ age. - Correct Answers Effective Which would NOT be considered as an energy efficient item? - Correct Answers Stainless steel appliances "The ability of a property or building to be useful and to perform the function for which it is intended according to current market tastes and standards" is the definition of - Correct Answers Functional utility A property sells for $295,000 and the site value is $50,000. The reproduction cost of the improvements is $312,000. The house is 12 years old. What is the average annual percent of depreciation? - Correct Answers 1.8% (295k - 50k = 245k, 312k-245k = 67k, 67k / 12 = 5583.33, 5583.33/ 312000 = .018) Which of these is one of the written real property appraisal report options identified in USPAP? - Correct Answers Appraisal Report Which of the following property types should NOT be reported on the URAR? - Correct Answers Unit in a condominium Which of the following is NOT a required exhibit for Fannie Mae appraisal reports? - Correct Answers Interior floor plan showing doors and closets In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and - $3,000. How much is the net adjustment? - Correct Answers -$3,000 In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and - $3,000. How much is the gross adjustment? - Correct Answers $18,000 "The sum of the positive and negative adjustments made to a comparable sale price” is the definition of - Correct Answers Net adjustment Residential investment properties are typically considered to be ___________ properties. - Correct Answers One- to four-unit The Principle of Anticipation is the primary basis for which valuation methodology? - Correct Answers Income Capitalization Approach Multiplying the effects of the equity money is called - Correct Answers Leveraging "A tangible or intangible benefit of real property that enhances its attractiveness or increases the satisfaction of the user, but is not essential to its use" is the definition of - Correct Answers Amenity The decision to purchase by an investor is motivated more by the property's __________ and ____________. - Correct Answers Income, risk If you are appraising a specialized industrial property you might estimate ________ Value. - Correct Answers Use In an appraisal of the leased fee interest, a lease that is below Market Rent could have a ________ effect on value. A lease that is above Market Rent could have a _________ effect on value. - Correct Answers Negative, positive "A value that cannot be imputed to any part of the physical property, e.g., the excess value attributable to a favorable lease or mortgage, the value attributable to goodwill" is the definition of ___________ value. - Correct Answers Intangible The "shift" keys on the HP 12C are _____________ colored. - Correct Answers Blue and gold The HP 12C works to an internal accuracy of ____ decimal places. - Correct Answers 12 The HP 12C calculator includes the following functions: - Correct Answers Financial, statistical and programming How much is [(25.5 + 77 - 12) + (83 x 2.6)] ÷ 19.3? - Correct Answers 15.87 (15.87. Solution 25.5 ENTER 77 + 12 - 83 ENTER 2.6 X + 19.3 ÷) You started with $9,267.55 in your bank account. You made the following withdrawals: $187.44, $1,520.00, and $3,650.75. You made the following deposits: $1,500.00, $650.00, and $128.75. What is your current bank balance? - Correct Answers $6,188.11 ($6,188.11. Solution 9267.55 ENTER 187.44 - 1520 - 3650.75 - 1500 + 650+ 128.75 +) You are renting rooms for $425 per month, but the weekly rate is $175 and the daily rate is $30. What is the amount for a stay of 8 months, 2 weeks, and 5 days? - Correct Answers $3,900 ($3,900. Solution GOLD CLR REG 425 STO 1 175 STO 2 30 STO 3 RCL 1 8 X RCL 2 2 X + RCL 3 5 X +) You buy a new SUV for $41,550. You get a 10% rebate applied to the purchase price but pay 5% state sales tax and 1.25% county sales tax. What is the net amount you have to pay? - Correct Answers $39,732.19 ($39,732.19. Solution 41550 ENTER 10 % - 6.25 % +) A property was listed on June 14, 2011 and sold on February 14, 2012. How many days was it on the market? - Correct Answers 245 (245 Solution 6.142011 ENTER 2.142012 g Delta DYS) Your stock went from $95 to $148.25 in 5 years. What is the average change per year? - Correct Answers 11.21% (11.21% Solution 95 ENTER 148.25 Delta % 5 ÷) A property was listed on June 18, 2011 and sold on January 14, 2012. How many days was it on the market? - Correct Answers 210 The HP 12C has ______ storage registers. - Correct Answers 20 You started with $8,652.91 in your bank account. You made the following withdrawals: $123.65, $1,420.00, and $3,250.75. You made the following deposits: $1,200.00, $250.00, and $149.75. What is your current bank balance? - Correct Answers $5,458.26 (8,652.91 ENTER 123.65 - 1,420 - 3,250.75 - 1,200 + 250 + 149.75 * Answer is $5,458.26) How much is [(114.8 - 66.2) + (47 + 13.8)] X (12 + 46.5 - 2.8)? - Correct Answers 6,093.58 ([(114.8 - 66.2) + (47 + 13.8)] X (12 + 46.5 - 2.8) becomes [(48.60) + (60.80)] X (55.70) = (109.40) X (55.70) = 6,093.58.) You bought a house for $285,000 and sold it for $248,500, minus a 5% commission. What percent did you lose? - Correct Answers 17.2% ($248,500 X .95 = $236,075. Using your 12C, enter: $285,000 ENTER $236,075 Delta% Answer is 17.2%) Your stock went from $222 to $118.75 in 3 years. What is the average change per year? - Correct Answers -15.5% (222 ENTER 118.75 Delta% 3 ÷ Answer is -15.50%) In your office, for the first quarter, Sam appraised 45 houses, Sue appraised 52 and you appraised 41. What percent did you appraise? - Correct Answers 30% (45 ENTER 52 + 41+ 41%T = .30 or 30%) Your apartment building has 18 units rented at $950 per month, 26 units rented at $1,100 and 8 units rented at $1,250 per month. How much is the total annual rent? - Correct Answers $668,400 (18 ENTER 950 X 26 ENTER 1,100 X + 8 ENTER 1,250 X + 12 X Answer is $668,400) You are renting rooms for $450 per month, but the weekly rate is $150 and the daily rate is $25. What is the amount for a stay of 6 months, 2 weeks, and 3 days? - Correct Answers $3,075 (6 X $450 + 2 X $150 + 3 X $25 = $3,075) How much is [(782 - 414.5 + 23) + (25 x 3.9)] ÷ 36.4? - Correct Answers 13.41 ((782 - 414.5 + 23) + (25 x 3.9) ÷ 36.4 becomes (390.50) + (87.50) ÷ 36.4 = 488 ÷ 36.4 = 13.41) You work in a store and have a 25% off sale. Price these 3 items: $19.95, $29.50 and $33.25. - Correct Answers $14.96, $22.13, $24.94 (75 STO 1 19.95 ENTER RCL 1 % Answer is $14.96 Then 29.50 ENTER RCL 1 % Answer is $22.13 Then 33.25 ENTER RCL 1 % Answer is $24.94) How much is [(23.5 + 73 - 5) + (72 x 2.5)] ÷ 16.9? - Correct Answers 16.07 ([(23.5 + 73-5) + (72 x 2.5)] ÷ 16.9 becomes [(91.5) + (180)] ÷ 16.9 = (271.5) ÷ 16.9 = 16.07) An owner sells his house for $395,500. The sales commission is 5.75%. What is the net amount received by the owner? - Correct Answers $372,758.75 ($395,500 X .0575 = $22,741.25. $395,500 - $22,741.25 = $372,758.75) You started with $1,845.55 in your bank account. You made the following withdrawals: $432.50, $1,245.00, and $1,550.00. You made the following deposits: $1,500.00, $450.00, $19.35, and $552.90. What is your current bank balance? - Correct Answers $1,140.30 (1,845.55 ENTER 432.5 - 1,245 - 1,550 - 1,500 + 450 + 19.35 + 552.9 + Answer is $1,140.30) You buy a new SUV for $38,750. You get a 10% rebate but pay 6% state sales tax and 1.5% county sales tax. What is the net amount you have to pay? - Correct Answers $37,490.63 (38,750 ENTER 10% - 7.5% + Answer is $37,490.73) Your stock went from $88 to $127.25 in 5 years. What is the average change per year? - Correct Answers 8.92% (88 ENTER 127.25 Delta% 5 ÷ Answer is 8.92%) A lot is 1,456.5 feet by 782.5 feet. How many acres is that? - Correct Answers 26.16 An owner sells her house for $269,500. The sales commission is 5% and she agrees to pay 1.5% towards the buyer's closing costs. How much does she receive? - Correct Answers $251,982.50 ($269,500 X .05 = $13,475. $269,500 X .015 = $4,042.50. $269,500 - $13,475 - $4,042.50 = $251,982.50) You take a 240 day note on September 14, 2012. When will it be due? - Correct Answers May 12, 2013 (9.14.2012 ENTER 240 g Date Answer is 5,12,2013 or 12-May 13 0 In the Six Functions of a Dollar table, which columns solve for future values? - Correct Answers 1, 2, 3 How much do I have to put aside each year, at 5% interest, to accumulate $9,000 to replace a boiler in 15 years? - Correct Answers $397.22 ($397.22. f CLEAR FIN, g BEG, 15n, 5i, 9000, CHS FV, PMT) If I put $29,000 in the bank at 1.75% interest for 9 years - how much will I have? - Correct Answers $33,900.63 ($33,900.63 f CLEAR FIN, 9 n, 1.75 I, 29000 CHS PV, FV) If I put $3,500 in the bank at the beginning of every year for 6 years, at 2.0% interest - how much will I have at the end? - Correct Answers $22,519.99 ($22,519.99. f CLEAR FIN, g BEG, 6n 2i 3500 CHS PMT FV) You want to purchase a bond that matures at $100,000 in 10 years with no periodic interest payments. If it is discounted at 3.375% annual yield, how much will you have to invest now to buy the bond? - Correct Answers $71,753.78 ($71,753.78 CLR FIN 10n 3.375i 100000 CHS FV PV) What is the present value today to an investor of an $186,000 mortgage bearing 5.2% interest and which provides for interest only payments annually with all principal due and payable at the end of 9 years, if the buyer of the mortgage requires a 12% yield? - Correct Answers $-118,608.30 (To solve this problem you would first calculate the interest payments by entering the following: 186000 [ENTER] .052 [x]. The display will show 9,672 which is the annual interest payment. You need to use the [CHS] key to make that a negative number before you enter it into the [PMT] key. You will then enter the final balloon payment into the [FV] key. It will be the 186,000 because the mortgage has interest only payments so no principal is paid to reduce the balance. Be sure to use the [CHS] key to make that a negative number because it is also an outflow just like the annual interest payment. You will then enter the number of periods and the required interest rate (discount rate) and ask for the Present Value. The keystroke sequent would be: 186000 [ENTER] .052 [x] [CHS] [PMT] 9 [n] 186000 [CHS] [FV] 12 [i] [PV]. The display will show 118,608.30.) What's the value today of the right to receive a lump sum of $37,000 in 8 years, discounted at 7%? - Correct Answers $21,534.34 ($21,534.34 CLR FIN 8n 7i 37000 CHS FV PV) A $92,800 mortgage, with 6.4% interest, has a monthly payment of $631.39. How many years was the original term of the loan? - Correct Answers 24 (24 CLR FIN 6.4 g i 92800 CHS PV 631.39 PMT n 12 ÷) A $265,000 mortgage has monthly payments for 25 years, at 5.50% interest. How much are the monthly payments? - Correct Answers $1,627.33 ($1,627.33 CLR FIN 25 g n 5.5 g i 265000 CHS PV PMT) If a 30 yr. mortgage, with an interest rate of 6.2%, has monthly payments of $1,163.69; what was original mortgage amount? - Correct Answers $190,000 ($190,000 CLR FIN 30 g n 6.2 g i 1163.69 PMT PV) A $212,500 mortgage, with 6.75% interest, has a monthly payment of $1,615.77. How many years was the original term of the loan? - Correct Answers 20 (6.75 GI, 212,500 PV, 1,615.77 CHS PMT, n, 12 ÷ Answer is 20) What's the value today of the right to receive a lump sum of $250,000 in 12 years, discounted at 8%? - Correct Answers $ 99,278.44 (12n, 8i, 250,000 CHS FV, PV Answer is $99,278.44) How much do I have to put aside at the beginning of each year, at 6% interest, to accumulate $7,000 to replace a boiler in 10 years? - Correct Answers 501.01 ([g] [BEG] 10n, 6i, $7,000 CHS FV, PMT Answer is $501.01) A Homeowner's Association needs to build up $40,000 to replace the roofs in 8 years. They can expect 5% interest. What is the quarterly deposit necessary to achieve the required balance? - Correct Answers $ 1,011.67 (First, change the calculator to use "BEG" (under the 7 key) since the deposits will be at the beginning of each quarter. Then enter 40000 [FV]; 8 [enter] 4 X [n]; 5 [enter] 4 [divide] [I]; 0 [PV]; then press [PMT]. Display will be 1,011.67 which is the quarterly payment necessary.) If I put $75,000 in the bank at 3.5% interest for 17 years - how much will I have? - Correct Answers $134,600.67 (17n, 3.5i, $75,000 CHS PV, FV Answer is $134,600.67) If I put $5,000 at the beginning of each year in an account that pays me 5.5%, how much will I accumulate in my reserve account at the end of 15 years? - Correct Answers $118,205.70 ([g] [BEG] 15n, 5.5i, $5,000 CHS PMT, FV Answer is $118,205.70) If I put $2,500 in the bank at the beginning of every year for 8 years, at 4.0% interest - how much will I have at the end? - Correct Answers $23,956.99 ([g] [BEG] 8n, 4i, $2,500 CHS PMT, FV Answer is $23,956.99) How much do I have to put aside each year, at 6% interest, to accumulate $7,000 to replace a boiler in 10 years? - Correct Answers $501.01 ([g] [BEG] 10n, 6i, $7,000 CHS FV, PMT Answer is $501.01) How much do I have to put aside each year, at 4% interest, to accumulate $12,000 to repave a parking lot in 7 years? - Correct Answers $1,460.88 ([g] [BEG] 7n, 4i, $12,000 CHS FV, PMT Answer is $1,460.88) A 30 year mortgage, with an interest rate of 5.9%, has monthly payments of $1,097.30. What was original mortgage amount? - Correct Answers $185,000 (30 Gnu, 5.9 GI, 1,097.30 CHS PMT, PV Answer is $185,000) A $224,000 mortgage has monthly payments for 30 years, at 5.75% interest. How much are the monthly payments? - Correct Answers $1,307.20 (30 Gnu, 5.75 GI, 224,000 CHS PV, PMT Answer is $1,307.20) We have a $124,500 mortgage, for 25 years and the monthly payment is $840.63. What is the interest rate? - Correct Answers 6.5% A 25 year mortgage, with an interest rate of 7.8%, has monthly payments of $1,327.58. What was original mortgage amount? - Correct Answers $175,000 What's the value today of the right to receive a lump sum of $27,000 in 7 years, discounted at 7%? - Correct Answers $16,814.24 (7n, 7i, 27,000 CHS FV, PV Answer is $16,814.24) What is the worth today of a $214,000 mortgage that will give me annual interest payments of 6.8% for 12 more years, discounted at 6.8%? - Correct Answers $214,000.00 (With interest only payments there will be no principal reduction so the future value will be the same as the original balance. $214,000 X .068 = $14,552.00 annual interest payment. Enter 214000 CHS FV, 12n, 6.8i 14,552 CHS PMT PV Answer is $214,000.00) A $72,800 mortgage, with 7.4% interest, has a monthly payment of $559.28. How many years was the original term of the loan? - Correct Answers 22 (7.4 GI, 72,800 PV, 559.28 CHS PMT, n, 12 ÷ Answer is 22.) How much should I pay today for a contract that will give me a lump sum of $175,000 in 5 years, discounted at 6%? - Correct Answers $130,770.18 A mortgage is written in the amount of $195,000, for 20 years, and the monthly payment is $1,511.83. What is the annual interest rate? - Correct Answers 7.0% (20 Gnu, 195,000 PV, 1,511.83 CHS PMT I, 12 X Answer is 7.0%) A $136,500 mortgage has monthly payments for 25 years, at 6.75% interest. How much are the monthly payments? - Correct Answers $943.09 (25 Gnu, 6.75 GI, 136,500 CHS PV, PMT Answer is $943.09.) If I put $9,000 in the bank at the beginning of each year for 10 years, at 4.5% interest - how much will I have at the end? - Correct Answers $115,570.61 ([g] [BEG] 10n, 4.5i, $9,000 CHS PMT, FV Answer is $115,570.61) If I invest $50,000 at 4.5% interest, how much will be available when I retire in 8 years? - Correct Answers $71,105.03 (50000 * 1.045^8) A motel has a gross annual income of $458,000 and its total operating expenses are $201,500. What is its expense ratio? - Correct Answers 44% ($201,500 ÷ $458,000 = .44 or 44 %.) In order to entice a prospective tenant to sign a lease, an apartment building owner offers one month of free rent. This would be considered - Correct Answers a rent concession The Fannie Mae 1007 form is used to - Correct Answers estimate the Market Rent of the subject property Fannie Mae form 1007 is titled - Correct Answers Single Family Comparable Rent Schedule With regard to the Income Approach, the major difference between the old 1993 URAR form and the current 2005 URAR form is that - Correct Answers the current form provides more space for the appraiser to support the Market Rent and GRM figures When using the Fannie Mae 1007 form, an appraiser is expected to ________ any utilities that may be included in the comparable property rental amounts. - Correct Answers subtract A motel has a gross annual income of $246,000 and its total operating expenses are $103,300. What is its expense ratio? - Correct Answers 42% ($103,300 ÷ $246,000 = .42) "The sum of a series of values divided by the number of values in the group" is the definition of - Correct Answers Mean Which is true of the mode? - Correct Answers There may not be a mode. "A measure of central tendency; the value of the middle item in an uneven number of items arranged or arrayed according to size or the arithmetic average of the two central items in an even number of items similarly arranged" is the definition of - Correct Answers Median With regard to the Income Approach, the principal difference between the old 1993 URAR form and the current 2005 URAR form is that - Correct Answers the current form provides more space for the appraiser to support the Market Rent and GRM figures When using the Fannie Mae 1007 form, an appraiser is expected to __________ any utilities that may be included in the comparable property rental amounts. - Correct Answers subtract motel has a gross annual income of $458,000 and its total operating expenses are $201,500. What is its expense ratio? - Correct Answers 44% The GRM approach is most appropriate when appraising ______________ residential properties. - Correct Answers One to four units What is the mean of the following GRMs? 105.0, 104.0, 103.2, 106.0, 110.4, 107.2, 104.0, 106.0, 105.5, 102.0 - Correct Answers 105.3 Which of the following would NOT be a typical lease term? - Correct Answers Easements What is the median of the following GRMs? 105.0, 104.0, 103.2, 106.0, 110.4, 107.2, 104.0, 106.0, 105.5, 102.0 - Correct Answers 105.2 Sale prices and rent at time of sale: $125,000 - $950; $120,000 - $900; $134,500 - $1000; $145,000 - $1100; $128,000 - $950; $116,000 - $900. What is the median rent? - Correct Answers $950 An apartment complex has a gross annual income of $418,000 and the expense ratio is 38%. How much is the total operating expenses? - Correct Answers $158,840 (418k*.38) Sale prices and rent at time of sale: $125,000 - $950; $120,000 - $900; $134,500 - $1000; $145,000 - $1100; $128,000 - $950; $116,000 - $900. What is the mode of the rents? - Correct Answers $900 and $950 "The region or area over which something is found, is distributed, or occurs" is the definition of - Correct Answers Range Sale prices and rents at time of sale: $125,000 - $950; $120,000 - $900; $134,500 - $1000; $145,000 - $1100; $128,000 - $950; $116,000 - $900. What is the mean of the GRMs? - Correct Answers 132.5 If you are in a market area in which there are rent controls: - Correct Answers Don't use the GRM approach What is the mode of the following GRMs? 105.0, 104.0, 103.2, 106.0, 110.4, 107.2, 104.0, 106.0, 105.5, 102.0 - Correct Answers 104 and 106 (bi-modal) How many comparable sales are needed to derive a reliable GRM? - Correct Answers At least 5 or 6 "The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted" is the definition of - Correct Answers Potential Gross Income "The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income" is the definition of - Correct Answers Effective Gross Income "The actual or anticipated net income that remains after all operating expenses are deducted from Effective Gross Income but before mortgage debt service and book depreciation are deducted” is the definition of - Correct Answers Net Operating Income Potential Gross Income plus other income minus ___________ equals ______________. - Correct Answers allowance for vacancies, Effective Gross Income Replacement reserves might be established for all of the following items EXCEPT - Correct Answers Foundations The main difference between gross and net income is - Correct Answers Operating expenses Lenders use _____________ income when underwriting loans for 2 to 4 unit residential properties. - Correct Answers Operating In Form 216, the income and expenses have to be projected for the next ____ months. - Correct Answers 12 In actual practice, the Operating Income Statement (Form 216) is typically prepared by: - Correct Answers The appraiser When using Form 216 where at least one of the units is owner occupied - Correct Answers Do not use any rent for the owner-occupied space Effective Gross Income - __________________ = Net Operating Income. - Correct Answers Operating expenses Potential Gross Income - Vacancies and Credit Loss = ____________________. - Correct Answers Effective Gross Income A 4-unit property has two units rented at $900 per month, and two units rented at $1,200 per month. The Vacancy and Collection Loss rate is 6%. Total operating expenses are $21,525. What is the PGI? - Correct Answers $50,400 (2 X $900 = $1,800. 2 X $1,200 = $2,400. $1,800 + $2,400 = $4,200. $4,200 X 12 = $50,400.) "The anticipated income from all operations of the real estate after an allowance is made for vacancy and collection losses and an addition is made for any other income" is the definition of - Correct Answers Effective Gross Income Reconciliation takes place - Correct Answers Throughout the report Standards Rule 1-1(c) of USPAP says an appraiser must "not render appraisal services in __________________ manner..." - Correct Answers A careless or negligent All of these topics should be part of your reconciliation process, except for - Correct Answers Chain of title When analyzing comparable sales, pay more attention to adjustments made in the _____________ of the sales grid. - Correct Answers Upper part - Transactional elements Ranking of the comparable sales in order of _________ makes a logical and persuasive argument. - Correct Answers Desirability Which would not be a part of the review process of your reconciliation? - Correct Answers Do you have enough rental comparables to be able to accurately estimate the Market Rent of the subject? Which of these is not a reason why we should expect differences in the adjusted sales process of comparable sales? - Correct Answers All of these are possible reasons. (The real estate market is imperfect. We cannot always have access to 100% of the information we need. It is rare to find perfectly informed buyers and sellers, acting unemotionally.) "The criteria that enable an appraiser to form a meaningful, defensible conclusion about the final value opinion. Value indications are tested for the appropriateness of the approaches and adjustments applied, the accuracy of the data, and the quantity of evidence analyzed" is the definition of - Correct Answers Reconciliation criteria According the definition of "appraisal" in USPAP, a value opinion must be numerically expressed as - Correct Answers Any of these choices (A specific amount A range of numbers A relationship to a previous value opinion or numerical benchmark) When we do a reconciliation of the Sales Comparison Approach, what is the proper procedure? - Correct Answers Let the data fall wherever it does. The most common definition of Market Value defines it as "the __________ price that a property __________ bring..." - Correct Answers Most probable, should Adjustments to comparable sales should be made when there is _________________ difference between a sale and the subject property. - Correct Answers A significant, measurable Prior to accepting an assignment an appraiser must have the _____________ to complete the assignment competently. - Correct Answers Knowledge and experience The most basic form of concurrent ownership is - Correct Answers Tenancy in common What is the future value of an annuity if you deposited $4,000 each year for 11 years into a savings account paying 3.25% interest per year? - Correct Answers $53,581.14 (https://www.calculator.net/future-value-calculator.html? cyearsv=13&cstartingprinciplev=25000&cinterestratev=4.75&ccontributeamountv=0&cia dditionat1=beginning&printit=0&x=56&y=28) All of the following are examples of negative easements EXCEPT - Correct Answers Access right of way "The actual or anticipated net income that remains after all operating expenses are deducted from Effective Gross Income but before mortgage debt service and book depreciation are deducted" is the definition of - Correct Answers Net Operating Income "When several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution" is the definition of the Principle of - Correct Answers Substitution "The appraisal principle that states that when several similar or commensurate commodities, goods, or services are available, the one with the lowest price will attract the greatest demand and widest distribution" is the definition of the Principle of - Correct Answers Substitution A district is characterized by ____________ land uses, where a neighborhood is characterized by _______________ land uses. - Correct Answers Homogeneous, complementary Your stock went from $123.50 to $219.25 in 6 years. What is the average change per year? - Correct Answers 12.92% You live in a ski resort town. Real estate prices typically drop 20% during spring and summer. A house sold for $350,000 in January. What would it sell for in July? - Correct Answers $280,000 A property sold for $167,000 and then a year later for $178,000. What was the percentage of appreciation? - Correct Answers 6.6% The life cycle of a market area typically includes the stages of ________, stability, decline and _______________. - Correct Answers Growth, revitalization What is the future value of $25,000 if you deposited it today in a savings account paying 4.75% interest per year, and left it, without making any other deposits, for 13 years? - Correct Answers $45,702.76 (https://www.calculator.net/future-value-calculator.html? cyearsv=13&cstartingprinciplev=25000&cinterestratev=4.75&ccontributeamountv=0&cia dditionat1=beginning&printit=0&x=56&y=28 PMT made at beginning) The Income Approach is required by Fannie Mae for __________ properties, but not for ___________ properties. - Correct Answers 3 unit, 1 unit What is the future value of an annuity if you deposited $1,500 each year for 7 years into a savings account paying 9% interest per year? - Correct Answers $15,042.71 (https://www.calculator.net/future-value-calculator.html? cyearsv=7&cstartingprinciplev=0&cinterestratev=9&ccontributeamountv=1500&ciadditio nat1=beginning&printit=0&x=73&y=30 PMT made at beginning) Fannie Mae says that neighborhood boundaries may be identified by all of the following EXCEPT - Correct Answers Ethnic makeup of the residents A property recently sold for $265,000 and land value was estimated to be $50,000. The cost new of the improvements today would be $362,000. The property is 22 years old. What is the present depreciated cost of the improvements? - Correct Answers $215,000 (362,000 - 265,000 = 97,000, 362,000 - 97,000 = 265,000, 265,000 - 50,000 = 215,000) All of the following are types of qualitative techniques EXCEPT - Correct Answers Graphic analysis How much is [(68.7 - 42.8 + 17) - (2.68 x 3.6)] ÷ 1.71? - Correct Answers 19.45 A 4 unit property sold for $182,000. Its Contract Rent for each unit was $975 per month and its Market Rent was $925 per month. In a fee simple appraisal what would be the GIM? - Correct Answers 4.1 (4 X $925 = $3,700. 3,700 X 12 = $44,400. $182,000 ÷ 44,400 = 4.1 Fee simple appraisal always uses market rents not contract rents and the GIM (Gross Income Multiplier) uses the annual rents not monthly as does the GRM (Gross Rent Multiplier).) A comparable property sold 3 months ago for $162,000. The market shows appropriate adjustments to be: Market conditions adjustment +$8,500 Location adjustment +$5,000 Quality adjustment -$10,000. What is the adjusted sales price of the comparable? - Correct Answers $165,500 You buy a new motor home for $55,125. You get a 15% rebate but pay 7% state sales tax and 2.5% county sales tax. What is the net amount you have to pay? - Correct Answers $51,307.59 The ________________ Approach is the most commonly used approach for appraising residential property. - Correct Answers Sales Comparison What is the sinking fund factor amount if you planned to replace the swimming pool of your investment property (at a cost of $50,000) in 12 years and you expected the funds to grow at the rate of 6% per year? - Correct Answers $2,796.09 If a 30 year mortgage, with an interest rate of 7.25%, has monthly payments of $1,978.31; what was original mortgage amount? - Correct Answers $290,000 "A lump-sum payment or series of payments to the lender that reduces the interest payments of the borrower" is the definition of - Correct Answers Buy down A property recently sold for $265,000 and land value was estimated to be $50,000. The cost new of the improvements today would be $362,000. The property is 22 years old. What is the annual % of depreciation? - Correct Answers 1.85% "The right to use another's land for a stated purpose" is the definition of - Correct Answers Easement A parcel of vacant land sold for $300,000 and then one year later sold for $325,000. What was the percentage of appreciation indicated by this sale and re-sale? - Correct Answers 8.3% Which of the following is NOT an element of comparison in the Sales Comparison Approach? - Correct Answers Depreciation A property has a first mortgage of $200,000, a second mortgage of $50,000, and a third mortgage of $20,000. It is foreclosed and sold for $245,000. The holder of the third mortgage gets $_______ and the holder of the second mortgage receives $ _________. - Correct Answers 0, $45,000 A property owner wants to replace his roof in 10 years. How much must he invest annually at 4.5% compound interest to accumulate $12,000 to replace the roof? - Correct Answers $934.49 Using a discount rate of 6.25%, what is the worth today of a mortgage with a current balance of $186,000, bearing 4.5% interest, annual payments of 11,625.00 then all due and payable at the end of 18 years? - Correct Answers 156,646.72 "A business arrangement in which two or more persons jointly own a business and share in its profits and losses" is the definition of - Correct Answers Partnership At a 7.5% annual "discount" rate, what is the present worth of $100,000 if you will not receive it for another 15 years? - Correct Answers $33,796.60 (https://www.calculator.net/present-value-calculator.html? c1futurevalue=100000&c1yearsv=15&c1interestratev=7.5&x=126&y=33#future-money PVFM) How much is [(143.45 + 235.70 - 17) + (45.8 x 17.2)] ÷ (4.5 x 32)? - Correct Answers 7.99 A property was listed on August 12, 2011 and sold on February 14, 2012. How many days was it on the market? - Correct Answers 186 A $144,000 mortgage has monthly payments for 25 years, at 6.40% interest. How much are the monthly payments? - Correct Answers $963.32 (https://www.dollartimes.com/loans/mortgage-rate.php?length=25&amount=144000) A mortgage that is not fully amortized at maturity and requires a lump sum payment of the outstanding balance is called a ____________ mortgage. - Correct Answers Balloon A property recently sold for $265,000 and land value was estimated to be $50,000. The cost new of the improvements today would be $362,000. The property is 22 years old. What is the percent of total depreciation? - Correct Answers 41% (265k - 50k = 215k, 362k - 215k = 147k, 147k / 362k = .41) "The period over which improvements to real estate contribute to property value" is the definition of _____________ life. - Correct Answers Economic A parcel of vacant land sold for $300,000 and then one year later sold for $325,000. What was the percentage of appreciation indicated by this sale and re-sale? - Correct Answers 8.3% An apartment complex has a gross annual income of $418,000 and the expense ratio is 38%. How much is the total operating expenses? - Correct Answers 158.840 at a 9% annual discount rate, what is the present worth of a 250000 lump sum if you will not receive it for another 12 years? - Correct Answers on calculator: 12n, 9i, 25000 chess five, pave =8,888.37