Texas SAE Real Estate Appraisal
Exam Review Questions and
Answers34
What is the Gross Rent Multiplier? - ANSWERS -A method to analyze the potential value of
smaller residential investment properties
What is the URAR? - ANSWERS -The Uniform Residential Appraisal Report (URAR) is the most
widely used appraisal reporting document.
Transferability - ANSWERS -Which value-influencing DUST factor addresses the ease with which
the property can be conveyed to another?
Present index ÷ Index at time of construction x Original cost = Present cost
To arrive at the present cost, the appraiser applies a factor that represents the costs of
construction over time up to the appraisal date (present index ÷ index at time of construction)
multiplied by the subject building's original cost. - ANSWERS -Which of the following formulas is
used with the index method to find the reproduction cost?
The same neighborhood - ANSWERS -When possible, comparable sales from ______ should be
used.
A parcel of land, the structures on it, and shared common areas - ANSWERS -Ownership in a
planned unit development consists of ______.
Unpaid taxes become a lien against the property. - ANSWERS -In what way is taxation an
inherent burden on private landownership?
,Deductible on her personal income tax returns
As the resident in a cooperative, her share of mortgage interest and real estate taxes is
deductible on personal income tax returns. - ANSWERS -Bianca wants to buy a cooperative, but
she's unsure that she can afford it. With a cooperative, her share of mortgage interest and real
estate taxes will be ______.
The appraiser, the lender, and the consumer - ANSWERS -The Appraiser Independence
Requirements protect which party or parties?
10X (100,000/10,000) - ANSWERS -Using the gross income multiplier (GIM) valuation method, a
property's sales price is divided by its gross income. If a property has a sales price of $100,000
and gross income of $10,000, what is its GIM?
Appraiser - ANSWERS -Which professional is hired by the buyer and lender to give an opinion of
value of the property?
The appraiser selects the adjusted sales price of the property most like the subject to use as the
indicated value. - ANSWERS -Which of the following best describes how an appraiser reconciles
the adjusted sales prices of the comparable properties to indicate the value of the subject
property?
An estimate of value for a specific purpose, party, and property as of a specific date - ANSWERS
-What is the definition of an appraisal?
Condo Unit - ANSWERS -Which of the following properties requires the appraiser to include
information about the monthly fees charged by the property management, the location of the
subject property within a community, and the areas considered private or public?
Severalty Ownership
Corporations own property owned in severalty, like individuals do. - ANSWERS -If Mega
Corporation owns real property, chances are it owns it in ______.
,Land Trust
A land trust is similar to other trusts except that it's formed specifically to hold real estate. -
ANSWERS -James creates a trust to hold a piece of real estate he owns. He directs a corporate
fiduciary to hold title to the real estate and provides instructions for the management, control,
and disposition of the real estate upon his death. Given that the trust only holds real estate,
James likely set up a(n) ______ trust.
This is a definition of land. - ANSWERS -The earth's surface, extending downward to the center
of the earth and upward to infinity, including permanently-attached natural objects, is called
______.
Building specifications
explain the blueprint and any features that may not be visible on that building plan. - ANSWERS
-Which of these is a written description of a blueprint?
Ground Rent Capitalization Method (GRM) - ANSWERS -What method of land valuation converts
the amount of yearly income a site will produce into a value using a capitalization rate?
Complete the cost approach section of the URAR form - ANSWERS -As part of completing an
appraisal using the cost approach method, what must appraisers do?
Direct Capitalization - ANSWERS -Which of the following analyzes net operating income (NOI)
for a single year, and is used when the property's income isn't expected to vary much over
time?
The _method converts a single year's expected income (or an annual average) into a market
value. This is the expected return on investment the property is capable of producing in a single
year: the first year of ownership.
, Real Property - ANSWERS -Real estate, plus all of the interests, benefits, and rights included in
ownership, is also known as ______.
General Data - ANSWERS -The US Census Bureau is a good source of what type of data needed
by appraisers?
ENERGY STAR®-qualified home - ANSWERS -What's the term for certified energy-efficient homes
that have met specific qualifications?
Ventilation - ANSWERS -The ______ system keeps air fresh by recycling air and removing odors
and pollutants.
Accrued Depreciation - ANSWERS -Which part of the cost approach equation is considered the
most difficult part to estimate accurately?
__is considered the most difficult part of the cost approach equation to estimate accurately,
partially because it can vary considerably based on specific market conditions as of the appraisal
date. In addition, a buyer's measure of depreciation can also vary quite a bit, depending on the
price range of homes in the local area.
Anticipated future income - ANSWERS -When discounted cash flow analysis is used, what's
discounted?
_is discounted to a present value when this method is used.
The Uniform Appraisal Dataset (UAD) provides field-specific instructions for the URAR used by
Fannie Mae and Freddie Mac. - ANSWERS -What guidelines must appraisers follow when
completing the sales comparison section of the URAR?
Metes and bounds, lot and block, and rectangular government survey - ANSWERS -What are the
three most common forms of legal descriptions?
Exam Review Questions and
Answers34
What is the Gross Rent Multiplier? - ANSWERS -A method to analyze the potential value of
smaller residential investment properties
What is the URAR? - ANSWERS -The Uniform Residential Appraisal Report (URAR) is the most
widely used appraisal reporting document.
Transferability - ANSWERS -Which value-influencing DUST factor addresses the ease with which
the property can be conveyed to another?
Present index ÷ Index at time of construction x Original cost = Present cost
To arrive at the present cost, the appraiser applies a factor that represents the costs of
construction over time up to the appraisal date (present index ÷ index at time of construction)
multiplied by the subject building's original cost. - ANSWERS -Which of the following formulas is
used with the index method to find the reproduction cost?
The same neighborhood - ANSWERS -When possible, comparable sales from ______ should be
used.
A parcel of land, the structures on it, and shared common areas - ANSWERS -Ownership in a
planned unit development consists of ______.
Unpaid taxes become a lien against the property. - ANSWERS -In what way is taxation an
inherent burden on private landownership?
,Deductible on her personal income tax returns
As the resident in a cooperative, her share of mortgage interest and real estate taxes is
deductible on personal income tax returns. - ANSWERS -Bianca wants to buy a cooperative, but
she's unsure that she can afford it. With a cooperative, her share of mortgage interest and real
estate taxes will be ______.
The appraiser, the lender, and the consumer - ANSWERS -The Appraiser Independence
Requirements protect which party or parties?
10X (100,000/10,000) - ANSWERS -Using the gross income multiplier (GIM) valuation method, a
property's sales price is divided by its gross income. If a property has a sales price of $100,000
and gross income of $10,000, what is its GIM?
Appraiser - ANSWERS -Which professional is hired by the buyer and lender to give an opinion of
value of the property?
The appraiser selects the adjusted sales price of the property most like the subject to use as the
indicated value. - ANSWERS -Which of the following best describes how an appraiser reconciles
the adjusted sales prices of the comparable properties to indicate the value of the subject
property?
An estimate of value for a specific purpose, party, and property as of a specific date - ANSWERS
-What is the definition of an appraisal?
Condo Unit - ANSWERS -Which of the following properties requires the appraiser to include
information about the monthly fees charged by the property management, the location of the
subject property within a community, and the areas considered private or public?
Severalty Ownership
Corporations own property owned in severalty, like individuals do. - ANSWERS -If Mega
Corporation owns real property, chances are it owns it in ______.
,Land Trust
A land trust is similar to other trusts except that it's formed specifically to hold real estate. -
ANSWERS -James creates a trust to hold a piece of real estate he owns. He directs a corporate
fiduciary to hold title to the real estate and provides instructions for the management, control,
and disposition of the real estate upon his death. Given that the trust only holds real estate,
James likely set up a(n) ______ trust.
This is a definition of land. - ANSWERS -The earth's surface, extending downward to the center
of the earth and upward to infinity, including permanently-attached natural objects, is called
______.
Building specifications
explain the blueprint and any features that may not be visible on that building plan. - ANSWERS
-Which of these is a written description of a blueprint?
Ground Rent Capitalization Method (GRM) - ANSWERS -What method of land valuation converts
the amount of yearly income a site will produce into a value using a capitalization rate?
Complete the cost approach section of the URAR form - ANSWERS -As part of completing an
appraisal using the cost approach method, what must appraisers do?
Direct Capitalization - ANSWERS -Which of the following analyzes net operating income (NOI)
for a single year, and is used when the property's income isn't expected to vary much over
time?
The _method converts a single year's expected income (or an annual average) into a market
value. This is the expected return on investment the property is capable of producing in a single
year: the first year of ownership.
, Real Property - ANSWERS -Real estate, plus all of the interests, benefits, and rights included in
ownership, is also known as ______.
General Data - ANSWERS -The US Census Bureau is a good source of what type of data needed
by appraisers?
ENERGY STAR®-qualified home - ANSWERS -What's the term for certified energy-efficient homes
that have met specific qualifications?
Ventilation - ANSWERS -The ______ system keeps air fresh by recycling air and removing odors
and pollutants.
Accrued Depreciation - ANSWERS -Which part of the cost approach equation is considered the
most difficult part to estimate accurately?
__is considered the most difficult part of the cost approach equation to estimate accurately,
partially because it can vary considerably based on specific market conditions as of the appraisal
date. In addition, a buyer's measure of depreciation can also vary quite a bit, depending on the
price range of homes in the local area.
Anticipated future income - ANSWERS -When discounted cash flow analysis is used, what's
discounted?
_is discounted to a present value when this method is used.
The Uniform Appraisal Dataset (UAD) provides field-specific instructions for the URAR used by
Fannie Mae and Freddie Mac. - ANSWERS -What guidelines must appraisers follow when
completing the sales comparison section of the URAR?
Metes and bounds, lot and block, and rectangular government survey - ANSWERS -What are the
three most common forms of legal descriptions?
