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IAAO RES Residential Case Study Exam– COMPLETE
QUESTIONS AND DETAILED SOLUTIONS LATEST
UPDATE THIS YEAR-JUST RELEASED
IAAO RES Residential Case Study Exam
SUMMARIZED EXAM COVERAGE (point form)
The RES Case Study Exam is based on IAAO Course 300 (Fundamentals of Mass Appraisal) and the
associated case study workshop (Course 851). It tests the ability to apply mass appraisal principles to a
residential valuation problem. The exam consists of seven sections:
• General Appraisal Concepts – Market value definition, appraisal principles (substitution,
anticipation, supply/demand), mass appraisal vs. single-property appraisal, scope of work,
identification of the problem, highest and best use, exposure time, data requirements (property
characteristics, sales, income, cost), ad valorem taxation, assessment ratios, tax rates.
• Land Valuation – Allocation, abstraction, subdivision development, land residual, sales
comparison, site size adjustments (economies of scale vs. diseconomies of scale), frontage,
depth, corner influence, site characteristics (topography, shape, utilities), valuation of excess
land vs. surplus land.
• Cost Approach – Replacement cost vs. reproduction cost, cost manuals (Marshall & Swift,
Means), quantity survey, unit-in-place, comparative unit, methods of estimating replacement
cost (cost manuals, index methods, contractor bids), calculation of accrued depreciation
(physical deterioration, functional obsolescence, external obsolescence), short-lived vs.
long-lived components, depreciation methods (age-life, breakdown, market extraction), curable
vs. incurable depreciation.
• Depreciation – Physical deterioration (curable vs. incurable), functional obsolescence (curable
vs. incurable; superadequacy vs. deficiency), external (economic) obsolescence (incurable;
location, environmental, market factors), measurement of depreciation (market extraction,
age-life, breakdown methods).
• Sales Comparison Approach – Selection of comparable sales, units of comparison (price per
square foot, per room, per unit), adjustment sequence (transactional adjustments: financing,
conditions of sale, market conditions; property adjustments: location, physical characteristics,
economic characteristics), paired sales analysis, adjustment techniques (additive, multiplicative,
grid adjustment, sensitivity analysis), reconciliation.
• Gross Rent Multiplier (GRM) – Derivation from comparable sales, calculation of effective gross
income, use of GRM for valuation of residential income properties (duplexes, small apartment
buildings, single-family rentals), limitations of the approach, gross income multiplier (GIM), net
income multiplier (NIM), effective gross income multiplier (EGIM), application of GRM in mass
appraisal.
• Ratio Studies and Statistics – Assessment ratio (appraised value ÷ sale price), median vs. mean
(measures of central tendency), coefficient of dispersion (COD), price-related differential (PRD),
coefficient of variation (COV), confidence intervals, standard deviation, measures of uniformity
(COD), measures of vertical equity (PRD), regression analysis (R-squared, standard error), ratio
study design (sampling, stratification), evaluation of appraisal performance for equalization,
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sales chasing (criteria for detecting), outlier analysis, use of ratio studies to calibrate CAMA
models.
QUESTION 1: A jurisdiction is implementing a new mass appraisal system for single-family residences.
The assessor wants a measure that indicates the typical percentage deviation of individual property
ratios from the median ratio. Which statistic should be used?
A) Coefficient of Variation (COV)
B) Price-Related Differential (PRD)
C) Coefficient of Dispersion (COD)
D) R-Squared
Answer: C – The COD measures uniformity by calculating the average absolute deviation from the
median, divided by the median. A low COD indicates good appraisal uniformity.
QUESTION 2: An appraiser values a single-family home using the sales comparison approach. Three
comparables require adjustments for market conditions (time), location, and living area. What is the
proper sequence for applying these adjustments?
A) Location, living area, then market conditions
B) Market conditions, then property adjustments
C) Living area, location, then market conditions
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D) Any sequence is acceptable as long as all adjustments are applied
Answer: B – Transactional adjustments (market conditions, financing, conditions of sale) are applied first
to bring the comparable sale price to current market terms. Property adjustments follow.
QUESTION 3: A property has a sale price
of 300,000.Itsassessedvalueis300,000.Itsassessedvalueis225,000. The jurisdiction has a statutory
assessment ratio of 80%. What is the assessment ratio for this property?
A) 0.75 (75%)
B) 0.80 (80%)
C) 0.85 (85%)
D) 1.33 (133%)
Answer: A – Assessment ratio is assessed value divided by sale price. 225,000÷225,000÷300,000 = 0.75
or 75%. This suggests the property is under-assessed relative to the statutory 80% level.
QUESTION 4: A mass appraisal model for residential properties uses regression analysis. The R-squared
of the model is 0.75. What does this indicate?
A) 75% of the variation in sale prices is explained by the model
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B) The model has a high level of vertical inequity
C) The coefficient of dispersion is 0.75
D) The model is invalid for ad valorem purposes
Answer: A – R-squared measures the proportion of variance in the dependent variable (sale price) that
is explained by the independent variables.
QUESTION 5: An assessor is reviewing assessment ratio studies. The Price-Related Differential (PRD) is
1.08. What does this indicate about the assessment level?
A) Low--priced properties are over-assessed relative to high--priced properties
B) High--priced properties are over--assessed relative to low--priced properties
C) The median ratio is significantly higher than the mean
D) The coefficient of dispersion exceeds 20%
Answer: B – PRD = mean ratio ÷ weighted mean ratio. A PRD > 1.03 (or > 1.05 per IAAO) suggests
high--valued properties are over-assessed relative to low--valued properties (progressive assessment).
QUESTION 6: The subject property is a 2,000 sq ft ranch with a 2-car attached garage. A comparable sale
of 1,800 sq ft with a 2-car attached garage sold
IAAO RES Residential Case Study Exam– COMPLETE
QUESTIONS AND DETAILED SOLUTIONS LATEST
UPDATE THIS YEAR-JUST RELEASED
IAAO RES Residential Case Study Exam
SUMMARIZED EXAM COVERAGE (point form)
The RES Case Study Exam is based on IAAO Course 300 (Fundamentals of Mass Appraisal) and the
associated case study workshop (Course 851). It tests the ability to apply mass appraisal principles to a
residential valuation problem. The exam consists of seven sections:
• General Appraisal Concepts – Market value definition, appraisal principles (substitution,
anticipation, supply/demand), mass appraisal vs. single-property appraisal, scope of work,
identification of the problem, highest and best use, exposure time, data requirements (property
characteristics, sales, income, cost), ad valorem taxation, assessment ratios, tax rates.
• Land Valuation – Allocation, abstraction, subdivision development, land residual, sales
comparison, site size adjustments (economies of scale vs. diseconomies of scale), frontage,
depth, corner influence, site characteristics (topography, shape, utilities), valuation of excess
land vs. surplus land.
• Cost Approach – Replacement cost vs. reproduction cost, cost manuals (Marshall & Swift,
Means), quantity survey, unit-in-place, comparative unit, methods of estimating replacement
cost (cost manuals, index methods, contractor bids), calculation of accrued depreciation
(physical deterioration, functional obsolescence, external obsolescence), short-lived vs.
long-lived components, depreciation methods (age-life, breakdown, market extraction), curable
vs. incurable depreciation.
• Depreciation – Physical deterioration (curable vs. incurable), functional obsolescence (curable
vs. incurable; superadequacy vs. deficiency), external (economic) obsolescence (incurable;
location, environmental, market factors), measurement of depreciation (market extraction,
age-life, breakdown methods).
• Sales Comparison Approach – Selection of comparable sales, units of comparison (price per
square foot, per room, per unit), adjustment sequence (transactional adjustments: financing,
conditions of sale, market conditions; property adjustments: location, physical characteristics,
economic characteristics), paired sales analysis, adjustment techniques (additive, multiplicative,
grid adjustment, sensitivity analysis), reconciliation.
• Gross Rent Multiplier (GRM) – Derivation from comparable sales, calculation of effective gross
income, use of GRM for valuation of residential income properties (duplexes, small apartment
buildings, single-family rentals), limitations of the approach, gross income multiplier (GIM), net
income multiplier (NIM), effective gross income multiplier (EGIM), application of GRM in mass
appraisal.
• Ratio Studies and Statistics – Assessment ratio (appraised value ÷ sale price), median vs. mean
(measures of central tendency), coefficient of dispersion (COD), price-related differential (PRD),
coefficient of variation (COV), confidence intervals, standard deviation, measures of uniformity
(COD), measures of vertical equity (PRD), regression analysis (R-squared, standard error), ratio
study design (sampling, stratification), evaluation of appraisal performance for equalization,
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sales chasing (criteria for detecting), outlier analysis, use of ratio studies to calibrate CAMA
models.
QUESTION 1: A jurisdiction is implementing a new mass appraisal system for single-family residences.
The assessor wants a measure that indicates the typical percentage deviation of individual property
ratios from the median ratio. Which statistic should be used?
A) Coefficient of Variation (COV)
B) Price-Related Differential (PRD)
C) Coefficient of Dispersion (COD)
D) R-Squared
Answer: C – The COD measures uniformity by calculating the average absolute deviation from the
median, divided by the median. A low COD indicates good appraisal uniformity.
QUESTION 2: An appraiser values a single-family home using the sales comparison approach. Three
comparables require adjustments for market conditions (time), location, and living area. What is the
proper sequence for applying these adjustments?
A) Location, living area, then market conditions
B) Market conditions, then property adjustments
C) Living area, location, then market conditions
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D) Any sequence is acceptable as long as all adjustments are applied
Answer: B – Transactional adjustments (market conditions, financing, conditions of sale) are applied first
to bring the comparable sale price to current market terms. Property adjustments follow.
QUESTION 3: A property has a sale price
of 300,000.Itsassessedvalueis300,000.Itsassessedvalueis225,000. The jurisdiction has a statutory
assessment ratio of 80%. What is the assessment ratio for this property?
A) 0.75 (75%)
B) 0.80 (80%)
C) 0.85 (85%)
D) 1.33 (133%)
Answer: A – Assessment ratio is assessed value divided by sale price. 225,000÷225,000÷300,000 = 0.75
or 75%. This suggests the property is under-assessed relative to the statutory 80% level.
QUESTION 4: A mass appraisal model for residential properties uses regression analysis. The R-squared
of the model is 0.75. What does this indicate?
A) 75% of the variation in sale prices is explained by the model
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B) The model has a high level of vertical inequity
C) The coefficient of dispersion is 0.75
D) The model is invalid for ad valorem purposes
Answer: A – R-squared measures the proportion of variance in the dependent variable (sale price) that
is explained by the independent variables.
QUESTION 5: An assessor is reviewing assessment ratio studies. The Price-Related Differential (PRD) is
1.08. What does this indicate about the assessment level?
A) Low--priced properties are over-assessed relative to high--priced properties
B) High--priced properties are over--assessed relative to low--priced properties
C) The median ratio is significantly higher than the mean
D) The coefficient of dispersion exceeds 20%
Answer: B – PRD = mean ratio ÷ weighted mean ratio. A PRD > 1.03 (or > 1.05 per IAAO) suggests
high--valued properties are over-assessed relative to low--valued properties (progressive assessment).
QUESTION 6: The subject property is a 2,000 sq ft ranch with a 2-car attached garage. A comparable sale
of 1,800 sq ft with a 2-car attached garage sold
