Basic Appraisal Procedures, 3/e

Hondros Learning™

Final Examination #2 – Answer Key

1.Which exterior siding material has a type known as T-111?

  1. brick
  2. stucco
  3. vinyl
  4. wood

Reference: Page 86

2. If a personal property item has been conveyed with a sales transaction, any adjustment deemed necessary to address the item’s inclusion would be applied to

  1. conditions of sale.
  2. financing terms.
  3. market conditions.
  4. property rights conveyed.

Reference: Page 112

3.If the gross rent multiplier is 180 and monthly rent is $600, what is the value indication?

  1. $108,000
  2. $110,000
  3. $160,000
  4. $180,000

Reference: Page 136

4.Which is a TRUE statement regarding the reconciliation process as described by Standards Rule 1-6?

  1. final value opinion must be from within the indicated value range
  2. indications produced must be averaged
  3. reconciliation applies only in market value assignments
  4. reconciliation is a two-part process

Reference: Page 160

5.When the value opinion includesall of the tangible and intangible assets of a business, the type of value in the assignment is

  1. assessed value.
  2. going concern value.
  3. investment value.
  4. value in use.

Reference: Page 200

6.If the current transaction of a subject property has been found to include considerations that would exclude the transaction from being considered arm’s length, and the dollar amount of the influence is not quantifiable, the appraiser must

  1. apply at least a minimal adjustment.
  2. avoid using the transaction as a future comparable sale.
  3. notify the client before proceeding.
  4. withdraw from the assignment.

Reference: Page 187

7.What is one key difference between a restricted appraisal report and other reporting options?

  1. can’t be used for financing
  2. client is the only intended user
  3. not as credible
  4. only good for one day

Reference: Page 23

8.A rectangular parcel of land containing five acres has 600 feet of road frontage. How many feet deep is the parcel?

  1. 363
  2. 378
  3. 495
  4. 660

Reference: Page 60

9.The component of a structure on which the foundation restsis a

  1. footer.
  2. joist.
  3. pier.
  4. slab.

Reference: Page 70

10.Sale #1 sold for $60,000 and the appraiser has determined that it is 15% superior to the subject property. What is the indicated value of the subject?

  1. $51,000
  2. $58,500
  3. $61,500
  4. $69,000

Reference: Page 117

11.With the information given, calculate the value of an apartment building using direct capitalization.

Effective GrossIncome: $150,000; Monthly OperatingExpenses: $2,000

Overall Capitalization Rate: 9%

  1. $1,134,000
  2. $1,400,000
  3. $1,644,444
  4. $1,666,667

Reference: Pages 138 – 141

12.Calculate the percent of depreciation for a house using the age-life method.

Current Building Cost: $200,000; Effective Age: 25 Years; Actual Age: 40 Years

Remaining Economic Life: 50 Years

a. 27.78%

b. 33.33%

c. 50.00%

d. 62.50%

Reference: Pages 155 & 156

13.Using the ground rent capitalization method, what is the indicated value of the subject site?

Comparable Sale Price: $225,000; Comparable Net Operating Income: $18,000

Subject Net OperatingIncome: $16,500

  1. $132,000
  2. $179,348
  3. $206,250
  4. $226,027

Reference: Pages 171 & 174

14.The amount paid for a particular property is known as

  1. market cost.
  2. market opinion.
  3. market price.
  4. market value.

Reference: Page 184

15.Geologic characteristics of a parcel of land include

  1. air quality.
  2. climate.
  3. soil type.
  4. transportation.

Reference: Page 54

16.In the new construction process, which is an action for which an appraiser is typically responsible?

  1. certifying compliance with building codes
  2. issuing an occupancy permit
  3. notifying building authorities of completion
  4. recertifying completion per plans/specs

Reference: Pages 74 & 75

17.The rental amount according to lease terms is defined as

  1. contract rent.
  2. effective rent.
  3. market rent.
  4. term rent.

Reference: Page 130

18.Exposure time occurs

a.before the property has been recognized by the typical buyer.

b.if the highest and best use cannot be achieved immediately.

c.prior to the effective date of the appraisal.

d.when the property has been on the market too long.

Reference: Page 6

19.A comparable sale that sold for $102,000 requires the adjustments below. What percent is the total of gross adjustments?

Location: +$5,000;Condition: -$7,500;Physical Characteristics: +$2,500

  1. 0%
  2. 4.9%
  3. 9.8%
  4. 14.7%

Reference: Pages 120 & 121

20.Which is a TRUE statement regarding replacement cost and reproduction cost?

  1. Both consider external obsolescence.
  2. Deterioration is cured in replacement cost.
  3. Reproduction cost reproduces functional obsolescence.
  4. There is never a difference between the terms.

Reference: Page 147

21.The type of value used for the purpose of calculating real estate taxes is known as

  1. ad valorem.
  2. assessed value.
  3. mass value.
  4. special assessment value.

Reference: Page 186

22.What level of detail is indicated by USPAP, as a minimum, for reporting significant analysis in an Appraisal Report?

  1. describe
  2. narrate
  3. state
  4. summarize

Reference: Page 23

23.Which might require a use variance rather than an area variance to be permissible in a strictly residential neighborhood?

  1. adding two more stories than permitted on the house to provide more livability
  2. constructing an eight-car garage to store the owner’s car collection
  3. converting a garage to a sales area for pottery made by the owner
  4. expanding the house beyond a side yard setback to build a gourmet kitchen

Reference: Page 50

24.What is a key difference in the certification contained in Form 2000/1032 One-Unit Residential Appraisal Field Review Report, when compared to other industry appraisal forms?

  1. Any value opinions developed are included in the certification.
  2. Certification does not require a signature.
  3. No individual may provide significant professional assistance.
  4. Reviewer’s fee must be stated in the certification.

Reference: Page 224

25.Which is NOT one of the considerations within the four tests of highest and best use?

  1. conformity with zoning and other use regulations
  2. consistency with the current use of property
  3. maximum economic return will be realized
  4. shape, topography, and site area could accommodate the ideal improvement

Reference: Page 97

26.If the subject is 5% superior to the comparable due to size and 10% inferior due to location, what adjustment is made to the comparable?

  1. -15%
  2. -5%
  3. +5%
  4. +15%

Reference: Pages 120 & 121

27.Which is a true statement about the appraiser’s workfile?

  1. The file requires a systematic and orderly flow of information.
  2. The original signed appraisal report must be in the file.
  3. A workfile is not necessary for oral reports used as testimony in court.
  4. A workfile preserves evidence of the appraiser’s observance of USPAP.

Reference: Page 26

28.The duration of time during which a structure may be financially efficient is its

  1. chronological age.
  2. economic life.
  3. effective age.
  4. observable life.

Reference: Page 153

29.Why might the price paid for real estate NOT be a good indicator of market value?

  1. The parties in the transaction were not materially related.
  2. The property was exposed for slightly more than a year when the average days on market was 365+ days.
  3. The seller was not knowledgeable about the value of the property.
  4. The transaction was facilitated by a broker who was paid a fee.

Reference: Page 186

30.An assignment that specifies only exterior inspection of the subject property is being performed. Given the results will be credible, the appraiser’s conclusions regarding property characteristics that he or she has not personally observed will typically require the use and disclosure of a(n)

  1. extraordinary assumption.
  2. jurisdictional exception.
  3. statutory guideline.
  4. unsupported conclusion.

Reference: Page 10

31.The appraiser has the responsibility in the scope of work to ensure that the

  1. client agrees with the value opinion.
  2. property’s highest and best use is met.
  3. value opinion is credible.
  4. value opinion will withstand time.

Reference: Page 15

32.The property described below is selling for $2,700 per acre. What is the total purchase price?

S ½ of SW ¼ of SW ¼ of Section 6

N ½ of NW ¼ of Section 7

  1. $216,000
  2. $243,000
  3. $270,000
  4. $324,000

Reference: Page 62

33.What is the primary purpose of a drain trap?

  1. catch items that may have dropped into the drain
  2. keep debris from entering the sewer line
  3. prevent water from rushing out
  4. stop the backflow of gases and fumes

Reference: Page 80

34.When an appraiser breaks down the comparable data into a price per square foot, what is the appraiser analyzing?

  1. comparative elements
  2. components of value
  3. elements of value
  4. units of comparison

Reference: Page 110

35.An appraiser has been offered an opportunity to appraise a property that he previously appraised one year ago. Given there is no agreement of confidentiality with the client in the previous assignment, may he accept this assignment?

  1. No, an appraiser may not accept an assignment on the same property within three years of the prior assignment.
  2. No, since an appraisal was recently performed, he may be biased about certain aspects of the home.
  3. Yes, as long as he discloses the previous service for the property to the client and in the subsequent report certification.
  4. Yes, as long as he does not disclose that he had previously appraised the property.

Reference: Pages 23 & 24

36.When residential uses are allowed in a commercial zone, but commercial uses are not allowed in a residential zone, the zoning is referred to as

  1. grandfathered.
  2. non-conforming.
  3. pass-through.
  4. a variance.

Reference: Pages 49 & 50

37.Which is part of a structure’s mechanical system?

  1. appliances
  2. roof
  3. foundation
  4. water heater

Reference: Page 87

38.Determine the effective gross income of an occupied property from the information provided.

2 Units @ $650 per Month; 2 Units @ $800 per Month; Fixed Expenses $530 per Month; Vacancy Rate 3.5%; Variable Expenses $220 per Month

  1. $24,582
  2. $25,800
  3. $33,582
  4. $34,800

Reference: Pages 138 & 139

39.Which disclosure must be made in an appraisal report when an extraordinary assumption has been used in an assignment?

  1. The appraiser is not responsible for the results when extraordinary assumptions are used.
  2. The extraordinary assumption made by the appraiser is known to be false.
  3. The results could change if the extraordinary assumption is found to be false.
  4. The use of the extraordinary assumption has made the report less credible.

Reference: Page 11

40.A type of framing or construction method where the structure is built one story at a time, with each story serving as a base for the next story is referred to as

  1. balloon framing.
  2. joist and rafters framing.
  3. platform framing.
  4. post and beam framing.

Reference: Page 72

41.If the south boundary of a township section fronted on a public highway, how many feet of highway frontage would the SE 1/4 of the section have?

  1. 660
  2. 1,320
  3. 2,640
  4. 10,890

Reference: Page 34

42.Cost estimates include direct costs and indirect costs. Which is NOT a specific indirect cost?

  1. appraisal, accounting, consulting, and legal fees
  2. architectural and engineering fees
  3. contractor's profit and overhead
  4. real estate taxes during construction

Reference: Page 148

43.Which principle applies when the appraiser concludes on an interim highest and best use and prohibits the valuation of land at one use while valuing the improvements at another?

  1. principle of conformity
  2. principle of consistent use
  3. principle of contribution
  4. principle of diminishing returns

Reference: Page 98

44.If a site is triangular in shape and has 250 feet along the road and a depth of 300 feet, what is the site area in acres?

  1. 0.6971
  2. 0.7069
  3. 0.8052
  4. 0.8609

Reference: Page 100

45.The improvements for a property are projected to have a cost new of $975,000. Once completed, the improved property is estimated to have an annual net operating income of $73,600. 81.48% of the income is assigned to the building. The land capitalization rate is 3.70%. Rounded to the nearest one-thousand dollars, what is the value of the land?

  1. $353,000
  2. $368,000
  3. $397,000
  4. $401,000

Reference: Page 171

46.When appraising a large land parcel for which the highest and best use is residential development, the valuation technique most applicable would be the

  1. allocation method.
  2. ground rent capitalization method.
  3. land residual method.
  4. subdivision analysis method.

Reference: Pages 172 & 173

47.When using the Individual Condominium Unit Appraisal Report, one important difference from the URAR is that

  1. condominiums are always attached and never free-standing.
  2. neighborhood characteristics of the subject are omitted.
  3. no cost approach is developed or reported for condominium units.
  4. there is no income approach, as condominiums cannot be tenant-occupied.

Reference: Page 221

48.Complementary land uses are typically found in a

  1. district.
  2. neighborhood.
  3. restricted zone.
  4. subdivision.

Reference: Page 41

49.When an appraiser is developing his own opinion of value in the course of an appraisal review assignment, the service being provided is

  1. based upon an extraordinary assumption.
  2. both an appraisal review and an appraisal.
  3. not permitted by USPAP.
  4. outside of appraisal practice.

Reference: Page 184

50.An appraiser is completing an appraisal of a single-family residential property for a mortgage lender subject to Fannie Mae requirements, using the URAR reporting form.Which would MOST apply to the appraiser’s reporting requirements?

  1. Mortgage Industry Standards Maintenance Organization
  2. Uniform Appraisal Dataset
  3. Uniform Collateral Data Portal
  4. Uniform Loan Delivery Dataset

Reference: Page 215