Residential Sales Comparison and Income Approach Flashcards
(288 cards)
1
Q
How many comparables are typically used by appraisers in the Sales Comparison Approach?
A
No less than three
2
Q
When choosing comparables, the appraiser analyzes:
A
Location, amenities, market conditions, Sales or financing concessions, Motivations of sellers and buyers, property rights
3
Q
The Sales Comparison Approach was previously known as the:
A
Market Approach, Market Data Approach, Direct Sales Comparison Approach
4
Q
“The perception that value is created by the expectation of benefits to be derived in the future” is the definition of the principle of
A
Anticipation
5
Q
“The result of the cause and effect relationship among the forces that influence real property value” is the definition of the principle of
A
Change
6
Q
Of the three appraisal approaches, the Sales Comparison Approach relies most heavily on the economic principle of:
A
Substitution
7
Q
“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
A
Balance
8
Q
“In appraisal, off-site conditions that affect a property’s value” is part of the definition of the principle of
A
Externalities
9
Q
“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
A
Progression
10
Q
Which of the following is the sales comparison formula?
A
Price of comparable ± adjustments = value of subject
11
Q
The first step in the Sales Comparison Approach procedure is
A
Research the market
12
Q
Adjustments made in the sales comparison process always start with:
A
The comparable
13
Q
An outdated name for the Sales Comparison Approach is
A
Market approach
14
Q
The final step in the Sales Comparison Approach procedure is
A
Reconcile the value indications
15
Q
The COMPETENCY RULE of USPAP says an appraiser must have “the _______________________ to complete the assignment competently.”
A
Knowledge and experience
16
Q
How many comparables are typically used by appraisers in the Sales Comparison Approach?
A
No less than three
17
Q
Which of the following is NOT a common unit of comparison when appraising 2-4 unit properties?
A
Price per SF of GLA
18
Q
A transaction could be verified with all of the following parties EXCEPT
A
Another appraiser, A verification should be made with a party to the transaction; such as the buyer or seller - but not an appraiser
19
Q
“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises” is the definition of
A
Neighborhood
20
Q
“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces” is the definition of
A
General data
21
Q
“The geographic region from which a majority of demand comes and in which the majority of competition is located” is the definition of
A
Market area
22
Q
Specific data must be gathered concerning
A
Both the property being appraised and the comparable sale properties
23
Q
When collecting comparable sales information, you can collect data concerning all of the following EXCEPT:
A
The purchaser’s ethnic background
24
Q
A web site that is a portal to over 200 federal agencies is
A
usa.gov
25
The “normal course of business” in an area is determined by:
Both actions of appraiser's peers and expectations of intended users, The “normal course of business” in an area is determined by the actions of both appraiser's peers and the expectations of parties who are regularly intended users for similar assignments.
26
There are ______ basic elements of comparison in the Sales Comparison Approach.
10
27
MLS information is compiled for the convenience and use of
Sales agents
28
Which can be the largest?
Market area
29
Age of residents and average family size would be categorized as ___________ factors.
Social
30
"A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises” is the definition of
Neighborhood
31
"Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics” is the definition of
Specific data
32
“Data that relates to the four forces that affect real property values—social, economic, governmental, and environmental forces” is the definition of
General data
33
When discussing verification, HUD says that __________ by itself, is not considered a verification source.
MLS
34
Lenders might be sources of information in all of the following areas EXCEPT
Lease terms
35
Attorneys may need appraisals for all the following reasons EXCEPT
Mortgage loans
36
"A type of market area characterized by homogeneous land use, e.g., apartment, commercial, industrial, agricultural” is the definition of
District
37
Which of the following would likely NOT be a source of comparable sales?
Title report
38
Qualitative analysis is used for elements that
Cannot be given a numerical value
39
The process by which a value indication is derived in the Sales Comparison Approach is called
Comparative Analysis
40
Comparative analysis may employ quantitative analysis and qualitative analysis
Separately or together
41
An analysis technique in which nearly identical properties are analyzed to isolate a single characteristic's effect on value or rent is called
Paired data analysis
42
"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.
Trend
43
A property sold for $250,000 and then sold later in the same year for $237,000. What was its percentage of decline?
5.2%, 237,000 ÷ 250,000 = .948 or 94.8%. 1.00 - .948 = .052 or 5.2%
44
The procedure in which we employ just plusses and minuses in sales comparison is called ______________ analysis.
Relative Comparison
45
Which of the following is NOT a form of qualitative analysis?
Graphic Analysis
46
"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.
Qualitative
47
"In the Sales Comparison Approach, the process of accounting for differences between comparables that are not quantified” is the definition of _________ analysis.
Qualitative
48
"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.
Trend
49
Which of the following is NOT a form of qualitative analysis?
Graphic Analysis
50
What is the name of the process by which a value indication is derived in the Sales Comparison Approach?
Comparative Analysis
51
Which is NOT a form of quantitative analysis?
Ranking Analysis
52
The procedure in the Sales Comparison Approach in which we employ just pluses and minuses is called ______________ analysis.
Relative comparison
53
A property sold for $225,000 and then sold 6 months later for $245,000. What was its average percentage of increase per month?
1.5%, $245,000 ÷ $225,000 = 1.09 or 9%. 9% ÷ 6 = 1.5% per month.
54
Which of the following is FALSE, concerning quantitative analysis?
It cannot be given a numerical value
55
“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
Partial interest
56
“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
Fee simple estate
57
In traditional appraisal theory, the first step in the adjustment sequence is an adjustment for
Real property rights appraised
58
“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 servient estate but no dominant estate” is the definition of a(an)
Easement in Gross
59
A leasehold interest may have value when
The Contract Rent is less than Market Rent
60
When appraising a 4-unit property and at least one unit is leased, the property rights would be
Leased fee estate, When appraising a 4 unit property and at least one unit is leased, the property rights would be leased fee estate.
61
"The right to perform a specific act on a property owned by another" is the definition of
Affirmative Easement
62
“Trespassing on the domain of another” is the definition of
Encroachment
63
“A multi-unit structure, or a unit within such a structure, with a condominium form of ownership” is the definition of a
Condominium
64
The most desirable form of timesharing is called ___________ timesharing.
Fee
65
Which statement is TRUE about syndications?
They can be either a private or public partnership.
66
Which ownerships include a right of survivorship?
Joint Tenancy and Tenancy by the Entirety
67
A limited partnership has
Both general and limited partners
68
When appraising a 4-unit property and at least one unit is leased, the property rights would be
Leased fee estate
69
"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
Partial Interest
70
"An estate held by two or more persons, each of whom has an undivided interest” is the definition of
Tenancy in common, An ownership with undivided interest by two or more people is called Tenancy in Common.
71
Which is NOT a form of partial interest?
Fee simple estate
72
A remainderman is found in a _________ interest.
Life
73
___________ interest is defined as the ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires.
Leased fee
74
In traditional appraisal theory, the first item in the adjustment sequence is
Real property rights appraised
75
Which of the following adjustment elements typically applies only to income-producing properties?
Economic characteristics
76
"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 servient estate but no dominant estate” is the definition of an
Easement in Gross
77
The sequence of adjustments is determined by the _______ and through analysis of the _______.
Market, data
78
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 $ _________.
0, $25,000
79
“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
Mortgage
80
Which of the following is a guaranteed loan?
VA
81
An ARM is
An adjustable rate mortgage
82
The primary participants in the secondary mortgage market are
Fannie Mae, Freddie Mac, and Ginnie Mae
83
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?
$4,568.75
84
Mortgage assumptions are:
Attractive when rates are rising
85
Cash equivalency adjustments are typically made when
A transaction involved non-market financing
86
Mortgages that are either insured by the FHA or guaranteed by the VA:
Tend to offer favorable terms
87
The term ARM means
Adjustable rate mortgage
88
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.
Junior
89
Mortgages with payments that start out low and gradually increase are called _____________ loans.
Graduated payment
90
The primary participants in the secondary mortgage market are
Fannie Mae, Freddie Mac, and Ginnie Mae
91
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 $ _________.
0, $15,000
92
A cash equivalency adjustment is required when the loan is:
Seller financed, A seller financing a buyer may charge an interest rate that is different from market rates and terms, either more or less favorable that market rates. If the rate and terms are significantly different, it may have affected the purchase price and an adjustment would be justified. FHA and VA loans are generally considered at market rates and would not need a cash equivalency adjustment, though they may need a seller concessions adjustment if that was present.
93
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?
$4,568.75
94
Mortgage assumptions are
Attractive when rates are rising
95
Market condition adjustments are also commonly known as:
Time adjustments
96
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?
Adjust the property sale price by $15,000
97
The definition of arms-length is a transaction between ___________ parties acting in their own _______ interests.
Unrelated, best
98
Changes in a market cycle may be cyclical, one-time-only, ___________ and ____________.
Seasonal, exponential
99
The life cycle of a market area typically includes the stages of growth, _____________, decline and _______________.
stability, revitalization
100
Long-term market cycles are:
Caused by national or international conditions
101
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:
Adjust the comparables from their contract date of sale to the effective date of the appraisal
102
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?
1.50%, $354,800 - $312,500 = $42,300. $42,300 ÷ 312,500 = .135. .135 ÷ 9 = 0.015 or 1.5%
103
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?
$170,000
104
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
Adjust the comparables from their contract date of sale to the effective date of the appraisal
105
A home sold five months ago for $232,000. Since then, property values have appreciated by 1% per month. (Use simple interest.) The appraiser estimates that its inferior location depreciates the total value by 10%. What is its estimated value?
$219,240
106
The real estate market tends to be
An early responder to short-term economic cycles
107
Which would NOT typically be a cause of duress that could result in a transaction that would not be considered arms-length?
Sale to a corporation
108
The life cycle of a market area typically includes the stages of growth, _____________, decline and _______________.
Stability, revitalization
109
You live in a winter resort town. Real estate prices typically rise 20% during autumn and winter. A house sold for $200,000 in July. What would it sell for in January?
$240,000, With your 12C enter: 200,000 ENTER 120% Answer is $240,000.
110
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?
$21,000
111
Changes in a market cycle may be cyclical, one-time-only, ___________ and ____________.
Seasonal, exponential
112
If a sale is not arms-length, the appraiser
May either discard it or use it with adjustments
113
The concept of real estate value being linked to location comes to us from the economist
Alfred Marshall
114
A district is an area characterized by ____________ land use.
Homogeneous
115
“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises” is the definition of
Neighborhood
116
“The geographic region from which a majority of demand comes and in which the majority of competition is located........” is the definition of
Market area
117
The definition of neighborhood has changed from a grouping of __________ to a grouping of ____________ people, buildings and uses.
Homogeneous, congruous
118
What is one of the best ways to determine neighborhood boundaries?
Driving around the area
119
For residential properties, location on a(n) _____________ is generally the most preferable.
Cul-de-sac
120
Site factors might include all of the following EXCEPT
Construction quality
121
Whenever possible, your comparables should be in
The same market area as your subject
122
Which would not normally constitute a market area boundary?
A public bus line
123
Whenever possible, your comparables should be in
The same market area as your subject
124
What is one of the best ways to determine neighborhood boundaries?
Driving around the area
125
Which would NOT be a factor when analyzing utilities at a site?
Access roads
126
Which term concentrates more on where people live and work?
Market area
127
"The geographic region from which a majority of demand comes and in which the majority of competition is located. Depending on the market, a market area may be further subdivided into components such as primary, secondary, and tertiary market areas, or the competitive market area may be distinguished from the general market areas” is the definition of
Market area
128
7 of 9 A market area is usually
No set size
129
Site factors might include all of the following EXCEPT
Construction quality
130
Which would NOT be considered market area factors?
Encroachments
131
Senior developments or historic areas could be examples of
Sub-districts, hose are called sub-districts. They are a segment of another district.
132
Business, medical, or theater areas could be types of
Districts
133
“A group of complementary land uses; a congruous grouping of inhabitants, buildings, or business enterprises” is the definition of
Neighborhood
134
Fannie Mae requires the appraiser to _______________ the factors in the neighborhood that may affect the market value or marketability of the properties in the market area.
Research, analyze, and report on
135
A market area is usually
No set size
136
A district is an area characterized by ____________ land use.
Homogeneous
137
Quality is determined by
The materials and construction practices used during the building process
138
An appraiser can reasonably assume that
Most homes in a subdivision are of the same general quality
139
When describing the area of a small lot, we usually use
Square Feet
140
Condition is determined by
The maintenance and care the house has received
141
“The age of property that is based on the amount of observed deterioration and obsolescence it has sustained” is the definition of _________ age.
Effective
142
“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.
Useful
143
In the appraisal of a single-family residence, a finished basement should
Be calculated separately from the GLA
144
A broken windowpane an example of
Deferred maintenance
145
"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
Deferred maintenance
146
"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.
Useful
147
Historical age is another name for _____________ age.
Chronological
148
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?
1.8%, $295,000 - $50,000 = $245,000. $245,000 ÷ $312,000 = .785. 1.00 - .785 = .215 or 21.5% depreciated. 21.5 ÷ 12 = 1.8% per year
149
When describing the area of a small lot (less than 1 acre), we usually use
Square feet
150
Quality is determined by
The materials and construction practices used during the building process
151
Fannie Mae says for units in condominiums, the appraiser should use ____________ dimensions to calculate the Gross Living Area.
Interior
152
“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.
Useful
153
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?
$16,000
154
Standard terminology for describing the style of a residence would not include
One story
155
Which of these is one of the written real property appraisal report options identified in USPAP?
Appraisal Report, USPAP requires an appraisal report to be identified as an Appraisal Report or a Restricted Appraisal Report.
156
Which of the following is NOT a required exhibit for Fannie Mae appraisal reports?
Interior floor plan showing doors and closets
157
Which of the following property types should NOT be reported on the URAR?
Unit in a condominium
158
In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the gross adjustment?
$18,000
159
In a comparable sale, the adjustments were +$5,000, -$3,000, +$2,500, -$4,500, and -$3,000. How much is the net adjustment?
-$3,000
160
“The sum of the positive and negative adjustments made to a comparable sale price ” is the definition of
Net adjustment, "The sum of the positive and negative adjustments made to a comparable sale price is the definition of net adjustment.
161
Fannie Mae expects an explanation when the net adjustments exceed ____% and the gross adjustments exceed _____%.
There is no set number
162
Fannie Mae requires a sales history of the subject property for ____ years and the comparable properties for ____ years.
3, 1
163
Fannie Mae's Market Conditions Addendum is also known as Form
1004MC
164
Fannie Mae stipulates that a prior sales history for the comparable sales is required as measured from the
Date of the closing of the comparable sale
165
"The illegal purchase and resale of property at an artificially inflated price; usually requires collusion among the borrower, loan officer, and appraiser, with the victim being the lender or investor” is the definition of
Flipping
166
Fannie Mae requires an interior floor drawing
Only if the floor plan is a atypical or functionally obsolete
167
Which of these is one of the written report options identified by USPAP?
Appraisal Report
168
Fannie Mae expects an explanation when the net adjustments exceed ____% and the gross adjustments exceed _____%.
There is no set number
169
The Appraisal Standards Board has expressed the opinion that the level of information in a URAR report is consistent with:
an Appraisal Report
170
USPAP requires an appraisal report to be identified as one of the following types:
Restricted Appraisal Report
171
Which of these is one of the written report options identified by USPAP?
Appraisal Report
172
An appraisal for which of the following property types should NOT be reported on the URAR?
Manufactured home
173
“The sum of the positive and negative adjustments made to a comparable sale price” is the definition of
Net adjustment
174
The most common methodology used to value residential investment properties is the
Gross Rent Multiplier
175
The Principle of Anticipation is the basis for which valuation methodology?
Income Capitalization Approach
176
Residential investment properties are typically considered to be ____________ properties.
One- to four-unit
177
Historically, which investment has typically produced the highest overall rate of return?
Real estate
178
Historically, which investment typically produces the lowest overall rate of return?
Savings account
179
“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
Amenity
180
In addition to estimating the Market Value of the fee simple interest in an income producing property, an appraiser can also estimate its
Investment Value, Leasehold Value and Leased Fee Value
181
Which investment typically incurs the highest burden of management?
Real estate
182
__________ is often referred to as the "bundle of rights".
Real property
183
"The value created by a proven property operation; considered as a separate entity to be valued with a specific business establishment” is the definition of __________ Value.
Going Concern
184
"The amount a component of a property adds to the total value of the property. Contribution may or may not be equivalent to the cost to add the component” is the definition of the principle of
Contribution
185
Which investment has historically entailed the most risk?
Stocks
186
The primary principle upon which the Cost and Sales Comparison approaches are based is the principle of
Substitution
187
If you are appraising a specialized industrial property you might estimate ________ Value.
Use, An industrial property would result in Use Value. The owners would be using the property for production of income.
188
The most common methodology used to value residential investment properties is the
Gross Rent Multiplier
189
The Principle of Anticipation is most closely associated with which valuation methodology?
Income Capitalization Approach
190
The HP 12C works to an internal accuracy of ____ decimal places.
12
191
The HP 12C calculator includes the following functions:
Financial, statistical and programming
192
The “shift” keys on the HP 12C are _____________ colored.
Blue and gold
193
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?
$39,732.19
194
Your stock went from $95 to $148.25 in 5 years. What is the average change per year?
11.21%, 11.21% Solution 95 ENTER 148.25 Delta % 5 ÷
195
A property was listed on June 14, 2011 and sold on February 14, 2012. How many days was it on the market?
245
196
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?
$5,458.26
197
Your stock went from $88 to $127.25 in 5 years. What is the average change per year?
8.92%
198
The “shift” keys on the HP 12C are _____________ colored.
Blue and gold
199
A lot is 445.24 feet by 118.39 feet. How many acres is that?
1.21
200
In your office, for the first quarter, Sam appraised 45 houses, Sue appraised 52 and you appraised 41. What percent did you appraise?
30%
201
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?
$37,490.63, 38,750 ENTER 10% - 7.5% + Answer is $37,490.73
202
You bought a house for $285,000 and sold it for $248,500, minus a 5% commission. What percent did you lose?
17.2%, $248,500 X .95 = $236,075. Using your 12C, enter: $285,000 ENTER $236,075 Delta% Answer is 17.2%
203
The HP 12C works to an internal accuracy of ____ decimal places.
12
204
You take a 240 day note on September 14, 2012. When will it be due?
May 12, 2013
205
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?
$37,490.63
206
The HP 12C calculator includes the following functions:
Financial, statistical and programmable
207
In the Six Functions of a Dollar table, column ___ is also called the annuity column.
2
208
Compounding is used to solve for ___________ values, whereas discounting solves for ___________ values.
Future, present
209
What is the future value of $20,000 if you deposited it today in a savings account paying 9% interest per year, and left it, without making any other deposits, for 12 years?
$56,253.30
210
In the Six Functions of a Dollar table, column ___ is also called the Discount Factor column.
4
211
What is the annual mortgage payment necessary to amortize a $230,000 mortgage for 15 years at 9% interest?
$28,533.57
212
At a 9% annual “discount” rate, what is the present worth of a 20 year mortgage note that gives you annual payments of $3,500?
$31,949.91
213
"The continuous and systematic additions to a principal sum over a series of successive time periods so that previously earned interest earns interest" is the definition of
Compound interest
214
At a 9% annual “discount” rate, what is the present worth of a 20 year mortgage note that gives you annual payments of $7,500?
$68,464.10
215
"Conversion of benefits received in the future (e.g., periodic incomes, cash flows, reversion) to present value” is the definition of
Discounting
216
What is the annual mortgage payment necessary to amortize a $185,000 mortgage for 25 years at 9% interest?
$18,834.11, .101806 X $185,000 = $18,834.11
217
What is the sinking fund factor amount if you planned to replace the boiler of your investment property (at a cost of $30,000) in 12 years and you expected the funds to grow at the rate of 9% per year?
$1,489.53
218
What is the annual mortgage payment necessary to amortize a $250,000 mortgage for 20 years at 9% interest?
$27,386.50
219
In the Six Functions of a Dollar table, column ___ is the Sinking Fund Factor Column.
3
220
A value can be developed through the Income Cap. Approach by either
Dividing an income by a rate or multiplying it by a multiplier
221
The reciprocal of 4 is
.25
222
Total income from a property before deducting any expenses, customarily stated on an annual basis" is the definition of
Gross Income
223
A ratio of one year's NOI provided by an asset to the value of the asset; used to convert income into value in the application of the Income Cap Approach" is the definition of
Capitalization Rate
224
A proprety sold for $132,000. Its Contract Rent was $775 and its Market Rent was $850. What was the GRM?
155.3
225
When calculating a GRM, appraisers should use Rent
Gross Monthly Unfurnished
226
"The actual rental income specified in a lease" is the definition of REnt
Contract
227
A 3-unit property sold for $155,000. Its contract Rent for each unit was $950 per month and its Market Rent was $900 per month. What is the GRM?
57.4, $900 x 3 = $2700. $155,000/2700 = 57.4
228
"the most probable rent that a property should bring in a competitive and open market reflecting the conditions and restrictions of a specified lease agreement, including the rental adjustment and revaluation, permitted uses, use restrictions, expense obligations. terms, concessions, renewal and purchase options, and tenant improvements (TIs)" is the definition of rent
Market
229
GIMs are employed with gross income stream
Effective or potential
230
"the relationship or ratio between the sale price or value of a property and its periodic gross rental income" is the definition of
Gross Rent Multiplier
231
A rate is the __________ of a multiplier
Reciprocal
232
In every statistical distribution there is always a _________ but there may not be a ____________.
Median, mode
233
A motel has a gross annual income of $458,000 and its total operating expenses are $201,500. What is its expense ratio?
44%
234
Which measure of central tendency is least affected by extreme values?
Median
235
When using the Fannie Mae 1007 form, an appraiser is expected to ________ any utilities that may be included in the comparable property rental amounts.
subtract
236
With regard to the Income Approach, the major difference between the old 1993 URAR form and the current 2005 URAR form is that
the current form provides more space for the appraiser to support the Market Rent and GRM figures
237
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
a rent concession
238
Fannie Mae form 1007 is titled
Single Family Comparable Rent Schedule
239
"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
Median
240
With regard to the Income Approach, the principal difference between the old 1993 URAR form and the current 2005 URAR form is that
the current form provides more space for the appraiser to support the Market Rent and GRM figures
241
"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
Net Operating Income
242
"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
Effective Gross Income
243
“The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted” is the definition of
Potential Gross Income
244
The main difference between gross and net income is
Operating expenses
245
Replacement reserves might be established for all of the following items EXCEPT
Foundations
246
Potential Gross Income plus other income minus ___________ equals ______________.
allowance for vacancies, Effective Gross Income
247
In Form 216, the income and expenses have to be projected for the next ____ months.
12
248
Lenders use _____________ income when underwriting loans for 2 to 4 unit residential properties.
Operating
249
In actual practice, the Operating Income Statement (Form 216) is typically prepared by:
The appraiser
250
“The total income attributable to real property at full occupancy before vacancy and operating expenses are deducted” is the definition of
Potential Gross Income
251
In Form 216, the income and expenses have to be projected for the next ____ months.
12
252
Which would NOT be considered a management expense?
Plumbing repairs
253
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 EGI?
$47,376, 2 X $900 = $1,800. 2 X $1,200 = $2,400. $1,800 + $2,400 = $4,200. $4,200 X 12 = $50,400. $50,400 X .06 = $3,024. $50,400 - $3,024 = $47,376.
254
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?
$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.
255
"The sum of all fixed and variable operating expenses and the replacement allowance cited in the appraiser's operating expense estimate” is the definition of
Total operating expenses
256
Which type of income considers vacancies?
Effective Gross
257
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 NOI?
$25,851, 2 X $900 = $1,800. 2 X $1,200 = $2,400. $1,800 + $2,400 = $4,200. $4,200 X 12 = $50,400. $50,400 X .06 = $3,024. $50,400 - $3,024 = $47,376. $47,376 - $21,525 = $25,851.
258
"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
Effective Gross Income
259
What is our starting point when calculating Net Operating Income?
Potential Gross Income
260
The main difference between gross and net income is
Operating expenses
261
Potential Gross Income – Vacancies and Credit Loss = ____________________.
Effective Gross Income, PGI - Vacancies and Credit Loss = Effective Gross Income.
262
Which would NOT be classified as “other income”?
Rental Income
263
“Total income from a property before deducting any expenses, customarily stated on an annual basis” is the definition of
Gross income
264
Which of these unit indicators was a new addition to the March 2005 version of the SRIPAR?
Sale price per bedroom, Sale price per bedroom was a new addition to the Mar 05 version of the SRIPAR.
265
2 of 3 What is the form number for the Fannie Mae SRIPAR form?
1025
266
What does SRIPAR stand for?
Small Residential Income Property Appraisal Report
267
In the current SRIPAR (Mar 05) unit indicators are developed from ___________ figures.
Both gross and adjusted, In the new SRIPAR (Mar 05) unit indicators are developed from both gross and adjusted figures.
268
In the current SRIPAR (Mar 05) you must reconcile a minimum of _______ value indicators.
7
269
Adjustments for quality, condition and energy efficiency can be made in the _________ of the SRIPAR.
Sales comparison grid, Adjustments for quality, condition and energy efficiency can be done in the sales comparison grid of the SRIPAR.
270
A property sold for $140,000. It had two 5 room apartments, two 4 room apartments and a 3 room studio apartment. What did it sell for per room?
$6,667
271
Income and value are _______ and move in the same direction.
Interdependent
272
The Income Approach is required by Fannie Mae for properties appraised on the ______________ form.
1025
273
Where do you address the strengths and weaknesses of each approach of the SRIPAR form?
In the reconciliation section, You address the strengths and weaknesses of each approach of the SRIPAR form in the reconciliation section.
274
In the current SRIPAR (Mar 05) you must reconcile a minimum of _______ value indicators.
7
275
Which technique is commonly used for estimating the value of small residential income properties?
Gross Rent Multiplier
276
The Income Approach is required by Fannie Mae when appraising properties on the ________form.
1025
277
What is the form number for the Fannie Mae SRIPAR form?
1025
278
Which of the following indicators was on the old SRIPAR form?
All of the above were on the old form
279
To obtain a higher net income you should choose a property that
Is energy efficient
280
Ranking of the comparable sales in order of _________ makes a logical and persuasive argument.
Desirability
281
All of these topics should be part of your reconciliation process, except for
Chain of title
282
In the sales comparison reconciliation, how many sales should we have before we consider using a statistical analysis?
6 or more
283
The most common definition of Market Value defines it as "the __________ price that a property __________ bring..."
Most probable, should
284
Standards Rule 1-1(c) of USPAP says an appraiser must “not render appraisal services in __________________ manner...”
A careless or negligent
285
"A phase of a valuation assignment in which two or more value indications are processed into a value opinion, which may be a range of value, a single point estimate, or a reference to a benchmark value " is the definition of
Reconciliation
286
“Details about the property being appraised, comparable sale and rental properties, and relevant local market characteristics” is the definition of
Specific data
287
“The number of years elapsed since an original structure was built” is sometimes described by all of the following terms EXCEPT?
Effective age
288
A comparable property sold 3 months ago for $186,000. The market shows appropriate adjustments to be: Market conditions adjustment +$5,500 Location adjustment +$7,500 Quality adjustment -$12,000. What is the adjusted sales price of the comparable?
$187,000
