IAAO 102 CERTIFICATION SCRIPT
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ land residual technique.
Answer: a standard technique used by appraisers when analyzing property
income is to divide the income between the land and the improvements, then
capitalize the residual land income into a value estimate. This technique is
refferred to as the
◍ Income / Rate = Value.
Answer: The basic equation used in the income approach to value is
◍ overall capitalization rate.
Answer: The weighted average of the land capitalization rate and the
building capitalization rate is known as the:
◍ Direct Capitalization.
Answer: is a method of converting an estimate of a single years income into
value in one direct step
◍ 8.00.
Answer: A property recently sold for $2,000,000. At the time of sale, the
property had a potential gross income of $270,000, and an expected vacancy
loss of $20,000. What is the effective gross income multiplier?
◍ Annually.
Answer: The mortgage capitalization rate is the ratio between the payments
of principal and interest on a mortgage to the original amount borrowed and
is expressed:
◍ Band of investment (mortgage and equity components)Net income ratioDebt
, Coverage ratioBand of investment (land and improvement
components)Derivation from comparable sales.
Answer: Name five methods of developing an overall capitalization rate
◍ Land improvement ratioOperating expense ratioRemaining economic life.
Answer: When developing the overall capitalization rate from market
comparisons, three critical items which must be highly comparable between
comparable sales and the subject property are:
◍ income / rate.
Answer: The formula value equals ________ is one of the generic formulas
used in direct capitalization
◍ 1.11.
Answer: A property has a net operating income of $10,000, interest
payments of $8,000, and principal payments of $1,000. What is the debt
coverage ratio?
◍ Direct Capitalization.
Answer: is different from yield capitalization, in that it does not directly
consider the individual cash flows beyond the first year
◍ Lease.
Answer: Which of the following is defined as a written document in which
the rights to use and occupy land or structures are transferred by the owner
to another for a specified period of time in return for a specified rent?
◍ Convert income into an estimate of value.
Answer: Capitalization is the process used to:
◍ 0.103.
Answer: Given the following information:Building Capitalization rate:
0.11Land capitalization rate: 0.09Land as a percent of total value: 35%What
is the overall capitalization rate by using the band of investment method?
◍ 2.55%.
Answer: The assessment level is 30% of appraised value and the current tax
2026 QUESTIONS WITH SOLUTIONS
GRADED A+
◍ land residual technique.
Answer: a standard technique used by appraisers when analyzing property
income is to divide the income between the land and the improvements, then
capitalize the residual land income into a value estimate. This technique is
refferred to as the
◍ Income / Rate = Value.
Answer: The basic equation used in the income approach to value is
◍ overall capitalization rate.
Answer: The weighted average of the land capitalization rate and the
building capitalization rate is known as the:
◍ Direct Capitalization.
Answer: is a method of converting an estimate of a single years income into
value in one direct step
◍ 8.00.
Answer: A property recently sold for $2,000,000. At the time of sale, the
property had a potential gross income of $270,000, and an expected vacancy
loss of $20,000. What is the effective gross income multiplier?
◍ Annually.
Answer: The mortgage capitalization rate is the ratio between the payments
of principal and interest on a mortgage to the original amount borrowed and
is expressed:
◍ Band of investment (mortgage and equity components)Net income ratioDebt
, Coverage ratioBand of investment (land and improvement
components)Derivation from comparable sales.
Answer: Name five methods of developing an overall capitalization rate
◍ Land improvement ratioOperating expense ratioRemaining economic life.
Answer: When developing the overall capitalization rate from market
comparisons, three critical items which must be highly comparable between
comparable sales and the subject property are:
◍ income / rate.
Answer: The formula value equals ________ is one of the generic formulas
used in direct capitalization
◍ 1.11.
Answer: A property has a net operating income of $10,000, interest
payments of $8,000, and principal payments of $1,000. What is the debt
coverage ratio?
◍ Direct Capitalization.
Answer: is different from yield capitalization, in that it does not directly
consider the individual cash flows beyond the first year
◍ Lease.
Answer: Which of the following is defined as a written document in which
the rights to use and occupy land or structures are transferred by the owner
to another for a specified period of time in return for a specified rent?
◍ Convert income into an estimate of value.
Answer: Capitalization is the process used to:
◍ 0.103.
Answer: Given the following information:Building Capitalization rate:
0.11Land capitalization rate: 0.09Land as a percent of total value: 35%What
is the overall capitalization rate by using the band of investment method?
◍ 2.55%.
Answer: The assessment level is 30% of appraised value and the current tax
