Section: Multiple choice questions
1. An appraisal can be described as a process to produce
A. A statement of value
B. A fixing of value
C. An estimate of value
D. None of the above
2. The value of an object means its
A. Fixed amount
B. Worth, utility or usefulness to someone for some purpose
C. Highest asking price
D. Value for any purpose
3. For appraisal purposes, market value generally may be defined as
A. The most probable selling price
B. The amount of the loan commitment
C. The asking price
D. The highest offer
4. Informal appraisals include
A. Price comparisons made by consumers
B. The familiar "market analysis" made by sales agents
C. Value judgments based on intuition and experience
D. All of the above
5. As contrasted with informal appraisals, formal appraisals
A. Are always in writing
B. Are based primarily on supporting data
C. Depend primarily upon intuition
D. Cannot be easily reviewed
6. Which statement accurately describes a formal appraisal report?
A. It may be either oral or written
B. It may vary in length from a short form or letter to a detailed narrative
C. Its form and contents are governed by professional and legal standards
D. All of the above are true
7. Which of the following statements about the government survey system is false?
A. A township is 36 sections
B. A section is 640 acres
C. A section measures one square mile
D. All sections are the same exact size
8. To be valid, a contract must
A. Include an offer, an acceptance, and consideration
B. Involve competent parties, an act to be performed, legal consideration, a mutual agreement, and the mutuality of obligation
C. Both a. and b.
D. Comply with the Statute of Frauds
9. The bundle of rights includes
A. The right to occupy, exclude others, or to sell
B. The right to borrow against
C. The right to convey by inheritance
D. All of the above
10. When title to property reverts to the state because the owners left no will or heirs, it is because of the government's right of
A. Police power
B. Eminent domain
C. Taxation
D. Escheat
11. Air pollution regulations are based on the governmental authority called
A. Police power
B. Eminent domain
C. Taxation
D. Escheat
12. The appraisal process involves four steps, the first of which is to
A. Choose an appropriate value approach
B. Define the appraisal problem
C. View the property
D. None of the above
13. Which of the following is not an important consideration with regard to the definition of market value?
A. Motives of buyer and seller
B. Informed parties
C. A good location
D. Terms of the sale
14. Which approach to value is considered to be the most direct and reflective of market actions?
A. The sales comparison approach
B. The cost approach
C. The income approach
D. None of these
15. The economic base of a town depends upon
A. Its local services
B. The type of function it serves
C. Its export production
D. Its land-use pattern
16. The land use patterns of a community will often be determined by
A. The town's origin
B. The topography
C. The transportation systems in use
D. All of the above
17. Which of the following is not a characteristic of a perfect market?
A. Large numbers of buyers and sellers
B. Products are similar and interchangeable
C. Government plays a large role
D. Items are small and inexpensive
18. Appraisers study real estate markets in order to
A. Identify changing price levels
B. Evaluate market reaction to property differences
C. Evaluate the strength of various economic forces
D. All of the above
19. When supply and demand are in balance, value is theoretically equal to
A. The original asking price
B. The cost of reproduction, including profit
C. The appraised needed for a loan
D. Value in use
20. Which of the four agents of production is said to be entitled to the "surplus" of productivity?
A. Labor
B. Capital
C. Land
D. Coordination or management
21. If there are no comparable sales available, which method can be used to appraise vacant commercial land?
A. The market method
B. The allocation method
C. The land residual method
D. None of the above
22. When a jurisdiction concludes that environmental impact reports are required on any new development in an area, the likely immediate result is that
A. Developed properties suffer
B. Vacant land values increase
C. Vacant land values decrease
D. None of the above
23. The main physical unit(s) of comparison in the analysis of vacant land are
A. Price per square foot, front foot, or acre
B. Terms of sale, time, location, and physical characteristics
C. Price, topography, view
D. Price per room
24. Cost estimates used in appraisal relate to
A. Typical costs
B. Wholesale costs
C. Actual costs to owner
D. Cost of materials plus labor
25. Which of these is the best definition of appraisal:
A. A scientific calculation of property
B. The process of mathematically measuring value
C. Investigation and measurement of financial parameters
D. The act or process of developing an opinion of value
26. The power of government to regulate for the public health, safety, and welfare is known as:
A. the police power
B. the power of eminent domain
C. states' rights
D. sovereignty
27. An item that is not part of the real estate is considered to be:
A. a fixture
B. an appurtenance
C. an improvement
D. personal property
28. Smith and Jones are neighbors. There is an easement across Jones' property to provide access to Smith's parcel. If Jones sells his property to Brown, Smith:
A. must negotiate a new easement agreement with Brown
B. may continue to use the easement without interruption, regardless of the sale
C. may continue to use the easement unless Brown objects
D. must notify Brown of the existence of the easement
29. Which of the following is not one of the four factors of value:
A. utility
B. scarcity
C. desire
D. cost
30. An example of a social force that could affect real estate values is:
A. wage levels
B. population shifts
C. climate
D. unemployment
31. According to the principle of supply and demand, prices will tend to increase when:
A. supply exceeds demand
B. demand exceeds supply
C. supply and demand are in balance
D. competition increases
32. In defining an appraisal problem, it is important to identify:
A. the use of the appraisal
B. the purpose of the appraisal
C. the scope of work
D. All of the above
33. Which of the following types of depreciation is almost always incurable?
A. Physical deterioration
B. Functional obsolescence
C. External obsolescence
D. None of the above
34. Worn-out carpeting in a house would most likely fall into the category of:
A. curable physical deterioration
B. incurable physical deterioration
C. curable functional obsolescence
D. incurable functional obsolescence
35. In the cost approach to value, the value of the land or site is:
A. ignored
B. estimated separately
C. adjusted on the basis of reproduction cost
D. based on unit cost
36. The effective age of an improvement:
A. depends on the actual age of the improvement
B. is the difference between actual age and economic life
C. is the difference between actual age and remaining economic life
D. is the difference between economic life and remaining economic life
37. Depreciation may be measured by the:
A. breakdown method
B. economic age-life method
C. market extraction (sales-data) method
D. any of the above
38. An estimate of replacement cost would include the cost of all of the following except:
A. entrepreneurial profit
B. super-adequacies in the subject property design
C. construction loan interest
D. property taxes during the construction period
39. If construction costs are 10% higher in the local market than the average costs listed in a cost manual, the appraiser should adjust the unit costs used in the cost estimate by:
A. multiplying them by 10%
B. multiplying them by 110%
C. multiplying them by 90%
D. dividing them by 10%
40. A 20-year-old building is estimated to have a total economic life of 50 years. How much is the value loss?
A. 50%
B. 40%
C. 80%
D. 4/7