REAL 5080 FINAL QUESTIONS & VERIFIED ANSWERS
The three approaches to value used by real estate appraisers are the: - Answers -
Income, cost, and sales comparison approach
Which cash flow would be referred to as the property level cash flow? - Answers - Net
operating income
Basic assumptions in the definition of market value - Answers - 1. the seller receives
cash or its equivalent
2. both buyer and seller are knowledgable about the current market conditions
3. value will be as of a specific date
4. the property will sell with reasonable exposure.
Which of the following is not a step in the cost approach? - Answers - Estimate the
future cash flows of depreciation
Steps in the cost approach? - Answers - 1. estimate costs of improvements as if new
2. estimate accrued depreciation
3. estimate value of the land
Costs considered by an appraiser when estimating NOI - Answers - -prop. insurance
-prop. management
-upkeep and maintenance
-depreciation is not considered
what is the cap rate when the property's income stream and value are not expected to
change over the holding period? - Answers - -same as the yield rate.
Finds the annual decline in cash flow before the investors annual yield falls below a
minimum level? - Answers - Risk absorption capacity (RAC)
Distinction between market price and market value? - Answers - Market price is what it
sells for, market value is what it's worth to the buyer.
Excess Rent - Answers - the amount by which the actual rental income exceeds the
most probable rent the property would command in the market at the time of the
appraisal
When land is improved so that it is ready to be used for a specific purpose it s called -
Answers - a site
Plattage and plottage - Answers - are important factors in expected use (highest and
best use) analysis
The three approaches to value used by real estate appraisers are the: - Answers -
Income, cost, and sales comparison approach
Which cash flow would be referred to as the property level cash flow? - Answers - Net
operating income
Basic assumptions in the definition of market value - Answers - 1. the seller receives
cash or its equivalent
2. both buyer and seller are knowledgable about the current market conditions
3. value will be as of a specific date
4. the property will sell with reasonable exposure.
Which of the following is not a step in the cost approach? - Answers - Estimate the
future cash flows of depreciation
Steps in the cost approach? - Answers - 1. estimate costs of improvements as if new
2. estimate accrued depreciation
3. estimate value of the land
Costs considered by an appraiser when estimating NOI - Answers - -prop. insurance
-prop. management
-upkeep and maintenance
-depreciation is not considered
what is the cap rate when the property's income stream and value are not expected to
change over the holding period? - Answers - -same as the yield rate.
Finds the annual decline in cash flow before the investors annual yield falls below a
minimum level? - Answers - Risk absorption capacity (RAC)
Distinction between market price and market value? - Answers - Market price is what it
sells for, market value is what it's worth to the buyer.
Excess Rent - Answers - the amount by which the actual rental income exceeds the
most probable rent the property would command in the market at the time of the
appraisal
When land is improved so that it is ready to be used for a specific purpose it s called -
Answers - a site
Plattage and plottage - Answers - are important factors in expected use (highest and
best use) analysis
