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Chapter 17 Practice Questions - Page 2

Chapter 17: Real Estate Appraisal. Practice Florida real estate questions and review the explanation for each answer. Page 2.

50 practice questions

  1. Chapter 17 Are Automated Valuation Models (AVMs) considered appraisals under USPAP?
  2. Chapter 17 A home has 2,200 square feet of living area and 400 square feet of garage. The reproduction cost new is $65 per square foot for living area and $45 per square foot for finished garage area. The site measures 80 feet wide by 125 feet deep and is valued at $5 per square foot. The economic life of the home is estimated to be 60 years. The house is 12 years old. The value of the property using the cost-depreciation approach is:
  3. Chapter 17 A limited partnership wishes to purchase an apartment building that has a monthly net income of $3,000 and monthly expenses of $800. If the partnership is to get a 9% return on its investment, what should it pay for the property?
  4. Chapter 17 An income-producing property has a potential annual gross income of $120,000. Vacancy and collection losses are estimated at 5% of potential gross income. Expenses are estimated at $50,000. The estimated value of the property is $640,000. The capitalization rate for this property is:
  5. Chapter 17 You are preparing a CMA for a single-family home that has a swimming pool. You have located a comparable house that sold for $315,000, but it does not have a pool. If a pool is valued at $25,000, which adjustment would you make?
  6. Chapter 17 A building is valued at $250,000 when NOI is capitalized at a rate of 9%. NOI is 45% of effective gross income. The effective gross income is:
  7. Chapter 17 A commercial property has a potential gross income of $75,000. Vacancy and collection losses are 8% of PGI. Additional operating expenses total $25,000. The property has a first mortgage requiring payments of $2,100 per month. Using a capitalization rate of 10%, which amount is an accurate estimate of the property’s value?
  8. Chapter 17 When an appraiser calculates the total amount of money, including all labor and materials, needed to construct a brand new building from the ground up, this figure is specifically referred to as the property's:
  9. Chapter 17 When a real estate appraiser determines the "market value" of a property, which of the following is NOT an underlying assumption of that definition?
  10. Chapter 17 Which approach to estimating the value of real estate is based on the mathematical premise that a property's current worth is directly related to the present value of the future net revenues it can produce?
  11. Chapter 17 Which appraisal approach would an appraiser rely on most heavily when determining the value of a newly constructed municipal fire station?
  12. Chapter 17 property that features a screened-in swimming pool. The best comparable sale they found does NOT have a swimming pool. The appraiser determines the market value of the pool in this neighborhood is $100,000. Which adjustment should the appraiser make?
  13. Chapter 17 When an appraiser is utilizing the cost depreciation approach to value an entire property, which specific method MUST they use to estimate the value of the land itself?
  14. Chapter 17 When utilizing the income capitalization approach to appraise a commercial building, if the appraiser applies a higher capitalization rate while the net operating income (NOI) remains constant, what is the resulting effect on the property?
  15. Chapter 17 A home has 2,000 square feet of living area and 400 square feet of garage. The reproduction cost new is $55 per square foot for the living area and $30 per square foot for the finished garage area. The site measures 80 feet wide by 120 feet deep and is valued at $4 per square foot. The economic life of the home is estimated to be 60 years. The house is 15 years old. What is the value of the property using the cost-depreciation approach?
  16. Chapter 17 A real estate investment trust wishes to purchase an apartment complex that has a monthly net operating income (NOI) of $6,000 and monthly operating expenses of $2,000. If the investors require a 10% rate of return on their investment, what is the maximum amount they should pay for the property?
  17. Chapter 17 A rental building has a potential annual gross income of $875,000. Vacancy and collection losses are estimated at 5%. Operating expenses are $430,000. If the estimated market value of the building is $5,800,000, what is the capitalization rate?
  18. Chapter 17 You are performing an appraisal on a residential property that features a standard, unimproved backyard. You find a highly similar comparable property that recently closed for $410,000. However, the comparable property features a newly built custom outdoor kitchen and fire pit. If the market value of this outdoor kitchen setup is determined to be $32,000, what adjustment must be made to the CMA?
  19. Chapter 17 A building is valued at $950,000 when the net operating income (NOI) is capitalized at a rate of 8%. If the NOI represents exactly 40% of the property's effective gross income, what is the effective gross income?
  20. Chapter 17 An investor is analyzing a small coastal retail plaza that generates a potential gross annual income of $100,000. The local market indicates a standard vacancy and collection loss rate of 10%. The plaza incurs $36,000 in various operating expenses each year. Additionally, the investor will be taking over a commercial loan that requires monthly principal and interest payments of $1,500. If the investor requires a 9% capitalization rate, what is the estimated market value of the property?