Real Estate 84 Chapter 4 Real Estate Practice
1. Which of the following is not a desirable characteristic in a neighborhood?
A. High level of owner-occupancy
B. High level of vacancies
C. High level of conformity
D. Gently rolling topography
Correct Answer: B
Explanation: A high level of vacancies in a neighborhood, unless it is still in the construction
stage, indicates a neighborhood in decline.
2. A house has a living room, a dining room, a kitchen, a family room, an office, three bedrooms,
two and a half baths, four rooms in a partially finished basement, and a three-car garage. What is
the total room count for the house?
A. 8
B. 10
C. 12
D. 14
Correct Answer: A
Explanation: When calculating total room count, do not include bathrooms, basement rooms, or
the garage. In this case, that leaves eight rooms.
3. Which of the following phrases describes the objective value that would be placed on a
property by a buyer in an open market?
A. Value in use
B. Value in exchange
C. Market value
D. Both B and C
Correct Answer: D
Explanation: Value in exchange, or market value, is the objective value that a property has in
the open market. Value in use is the subjective value placed on a property by its owner or user.
4. Which of the following is not an example of a nuisance?
A. Frequent heavy fog
B. Freeway noise
C. Only one bathroom for three bedrooms
D. Odors from nearby sausage factory
Correct Answer: C
Explanation: A nuisance is a problem, either man- made or natural, that is external to a property
but that affects the owner's use or enjoyment of the property.
, 5. Which of the following appraisal methods is a competitive market analysis based on?
A. Sales comparison approach
B. Cost approach
C. Income approach
D. Land residual approach
Correct Answer: A
Explanation: A CMA is based on the sales comparison approach to appraisal, which determines
the value of residential property using recent sales prices of comparable properties.
6. Which of the following is not a step in preparing a competitive market analysis?
A. Choose comparable properties
B. Make adjustments to comparable properties
C. Gather information about the subject property's neighborhood
D. Calculate the replacement cost of the subject property
Correct Answer: D
Explanation: A CMA does not inquire into the replacement cost of the subject property. It is
based on the sales comparison approach to appraisal, rather than the cost approach.
7. The decision of what price to set for a home ultimately belongs to the:
A. agent
B. seller
C. appraiser
D. lender
Correct Answer: B
Explanation: The agent may suggest a range of prices that would be appropriate, but ultimately
the decision of what price to charge belongs to the sellers.
8. The subject property has three bedrooms and a fireplace. Comparable A has three bedrooms
and no fireplace; it is valued at $310,000. Comparable B has four bedrooms and a fireplace; it is
valued at $360,000. A bedroom is valued at $30,000 and a fireplace is valued at $10,000. If
you're using only two comparables, an appropriate range of values for the subject property would
be:
A. $320,000 to $330,000
B. $310,000 to $360,000
C. $320,000 to $350,000
D. $330,000 to $340,000
Correct Answer: A
Explanation: To adjust Comparable A, add the value of the fireplace that it doesn't have
($310,000 + $10,000 = $320,000). To adjust Comparable B, subtract the value of the fourth
bedroom that the subject property doesn't have ($360,000 - $30,000 = $330,000). The range of
1. Which of the following is not a desirable characteristic in a neighborhood?
A. High level of owner-occupancy
B. High level of vacancies
C. High level of conformity
D. Gently rolling topography
Correct Answer: B
Explanation: A high level of vacancies in a neighborhood, unless it is still in the construction
stage, indicates a neighborhood in decline.
2. A house has a living room, a dining room, a kitchen, a family room, an office, three bedrooms,
two and a half baths, four rooms in a partially finished basement, and a three-car garage. What is
the total room count for the house?
A. 8
B. 10
C. 12
D. 14
Correct Answer: A
Explanation: When calculating total room count, do not include bathrooms, basement rooms, or
the garage. In this case, that leaves eight rooms.
3. Which of the following phrases describes the objective value that would be placed on a
property by a buyer in an open market?
A. Value in use
B. Value in exchange
C. Market value
D. Both B and C
Correct Answer: D
Explanation: Value in exchange, or market value, is the objective value that a property has in
the open market. Value in use is the subjective value placed on a property by its owner or user.
4. Which of the following is not an example of a nuisance?
A. Frequent heavy fog
B. Freeway noise
C. Only one bathroom for three bedrooms
D. Odors from nearby sausage factory
Correct Answer: C
Explanation: A nuisance is a problem, either man- made or natural, that is external to a property
but that affects the owner's use or enjoyment of the property.
, 5. Which of the following appraisal methods is a competitive market analysis based on?
A. Sales comparison approach
B. Cost approach
C. Income approach
D. Land residual approach
Correct Answer: A
Explanation: A CMA is based on the sales comparison approach to appraisal, which determines
the value of residential property using recent sales prices of comparable properties.
6. Which of the following is not a step in preparing a competitive market analysis?
A. Choose comparable properties
B. Make adjustments to comparable properties
C. Gather information about the subject property's neighborhood
D. Calculate the replacement cost of the subject property
Correct Answer: D
Explanation: A CMA does not inquire into the replacement cost of the subject property. It is
based on the sales comparison approach to appraisal, rather than the cost approach.
7. The decision of what price to set for a home ultimately belongs to the:
A. agent
B. seller
C. appraiser
D. lender
Correct Answer: B
Explanation: The agent may suggest a range of prices that would be appropriate, but ultimately
the decision of what price to charge belongs to the sellers.
8. The subject property has three bedrooms and a fireplace. Comparable A has three bedrooms
and no fireplace; it is valued at $310,000. Comparable B has four bedrooms and a fireplace; it is
valued at $360,000. A bedroom is valued at $30,000 and a fireplace is valued at $10,000. If
you're using only two comparables, an appropriate range of values for the subject property would
be:
A. $320,000 to $330,000
B. $310,000 to $360,000
C. $320,000 to $350,000
D. $330,000 to $340,000
Correct Answer: A
Explanation: To adjust Comparable A, add the value of the fireplace that it doesn't have
($310,000 + $10,000 = $320,000). To adjust Comparable B, subtract the value of the fourth
bedroom that the subject property doesn't have ($360,000 - $30,000 = $330,000). The range of
