LATEST Gold Coast Real Estate Chapter 16 100% SOLUTION 2023//2024

What type of value does an appraiser most commonly estimate? (a) Book (b) Market (c) Insurable (d) Condemnation - ANSWER (b) Market How is investment value best defined? (a) The value to an individual (b) The highest price a property would sell for in an open market (c) The value based on the use of the property (d) The minimum value of a business opportunity - ANSWER (a) The value to an individual Which of the following conditions is necessary for the sales price of a property to equal its market value? (a) The parties cannot be acting in their own self-interest. (b) The property would have to be exposed to the market for an unreasonably short time. (c) There can be no existing liens against the title. (d) The transaction must involve a willing and informed buyer and seller. - ANSWER (b) The property would have to be exposed to the market for an unreasonably short time. What is market value? (a) The amount a buyer is willing to pay (b) The amount a seller is willing to accept (c) The amount that should be paid (d) The amount that was previously paid - ANSWER (c) The amount that should be paid How is a gross rent multiplier calculated? (a) Multiply comparable property sales price by comparable property rent. (b) Divide comparable property sales price by comparable property rent. (c) Multiply comparable property sales price by subject property rent. (d) Divide comparable property sales price by subject property rent. - ANSWER (b) Divide comparable property sales price by comparable property rent. Functional obsolescence includes which of the following? (a) An over-improvement (b) Broken windows (c) A waste water treatment plant next to the subject property (d) A property located in the glide path to an airport - ANSWER (a) An over- improvement Which appraisal approach would be given greater weight when appraising an apartment complex? (a) Cost-depreciation (b) Income approach (c) Comparable sales (d) Land residual - ANSWER (b) Income approach Which appraisal approach is most suitable for estimating the value of a single-family property? (a) Cost-depreciation (b) Sales comparison (c) Income approach (d) Land residual - ANSWER (b) Sales comparison What is the basis for the principle of substitution? (a) An informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with the same or equal utility. (b) Properties will typically hold their value when properties in a neighborhood tend to be similar and conform to common standards. (c) Although a property may have multiple potential uses, one will be the highest and best use. (d) Smaller properties in a neighborhood of large properties will tend to increase in value, while larger properties in an area of smaller properties will tend to decrease in value over time. - ANSWER (a) An informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with the same or equal utility. All of the following methods may be used to estimate replacement/reproduction cost, EXCEPT: (a) Quantity survey (b) Economic age-life (c) Unit-in-place (d) Comparative unit - ANSWER (b) Economic age-life What estimate is a result of income divided by a capitalization rate? (a) Market value (b) The effective gross income (c) Reproduction cost (d) The amount of accrued depreciation - ANSWER (a) Market value If income remains constant and the capitalization rate is reduced, what is the effect on value? (a) Insufficient information is provided to determine the effect. (b) The value decreases. (c) The value increases. (d) There is no effect on the value. - ANSWER (c) The value increases. A new airport built in proximity to a residential neighborhood may cause properties to lose value due to which of the following? (a) Physical deterioration (b) External obsolescence (c) Functional obsolescence (d) Proximity obsolescence - ANSWER (b) External obsolescence In the income approach, a capitalization rate can be derived from which of the following? (a) Tables published nationally by appraisal organizations (b) Rate schedules maintained by lending institutions (c) The interest rate paid on Treasury bills (d) The relationship between sale prices and income of similar properties - ANSWER (d) The relationship between sale prices and income of similar properties