Question: Which of the following would have the MOST significant negative effect on the value of a home in a subdivision?

Answer Options: A. The home’s electrical system needs to be updated B. The improvements are more than 30 years old C. The property is located next to a busy freeway D. The property is in a subdivision of very similar-looking houses

Answer: C. The property is located next to a busy freeway

Question: If a property loses value due to neglect and a lack of maintenance, this is considered:

Answer Options: A. external obsolescence B. functional obsolescence C. internal obsolescence D. physical deterioration

Answer: D. physical deterioration

Question: Davis has been trying to sell his house for some time, but buyers seem to be turned off by the odor of a nearby chicken farm. This is an example of:

Answer Options: A. economic depreciation B. external obsolescence C. functional obsolescence D. physical deterioration

Answer: B. external obsolescence

Question: The age that a building appears to be based on wear and tear from physical, functional, or external obsolescence is its:

Answer Options: A. accrued age B. actual age C. chronological age D. effective age

Answer: D. effective age

Question: If a single-family home rents for $1,015 per month and the gross rent multiplier (GRM) is 250, what is the appraiser’s estimate of value?

Answer Options: A. $235,750 B. $253,750 C. $257,500 D. $275,200

Answer: B. $253,750

Question: Hannah is appraising a four-unit apartment building. She finds a comparable property that recently sold for $624,000. Each tenant in the comparable building pays $1,300 rent a month. What is the gross rent multiplier for this property?

Answer Options: A. 10 B. 40 C. 80 D. 120

Answer: D. 120

Question: The gross income multiplier (GIM) differs from the gross rent multiplier (GRM) in that the GIM:

Answer Options: A. applies to only annual income B. considers a property’s profitability C. considers income from all sources D. is not derived using the VIM formula

Answer: C. considers income from all sources

Question: The income approach has limited usefulness when:

Answer Options: A. current market data for rentals of like properties are available B. current rental data and operating statements are not available C. properties with the ability to produce income are considered by potential investors D. property is currently producing income

Answer: B. current rental data and operating statements are not available

Question: The income capitalization method is seen as more accurate than using multipliers to estimate the value of real property because it:

Answer Options: A. considers expenses B. excludes depreciation C. uses annual income D. uses monthly income

Answer: A. considers expenses

Question: Appraiser Allen determines that the two-unit rental property he’s appraising should bring in $6,600 annually per unit in rent and the gross monthly rent multiplier should be about 135. What is Allen’s estimate of value?

Answer Options: A. $89,100 B. $97,778 C. $135,000 D. $148,500

Answer: D. $148,500

Question: Appraiser Allen is looking over an operating statement for an assignment. To arrive at the property’s net operating income, what must Allen consider?

Answer Options: A. Debt service B. Depreciation C. Income tax D. Property tax

Answer: D. Property tax

Question: The rent for each unit of a 10-unit strip mall is $1,000 per month. The annual vacancy rate averages 5%. The expenses for the property come to $30,000 per year with a depreciation of $15,000. What is the NOI?

Answer Options: A. $49,000 B. $54,500 C. $84,000 D. $96,000

Answer: C. $84,000

Question: Operating expenses are the day-to-day costs of running a property. Which of the following is NOT considered when an appraiser prepares an appraisal of an income-producing property?

Answer Options: A. Debt service B. Fixed expenses C. Replacement reserves D. Variable expenses

Answer: A. Debt service