Professional Documents
Culture Documents
1. Cost and value are MOST likely to be similar under which of the
following conditions?
a. Anticipation c. Contribution
b. Balance d. Substitution
10. The legal estate in land that provides the highest degree or
extent of ownership rights recognized by law may be referred to by
which of the following terms?
13. All legal rights, such as riparian rights or easements, that “go
with the land” when title to the land is transferred are known as:
a. Encroachments c. Appurtenances
b. Amenities d. Easements
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a. Lot and block c. Street address
b. Rectangular survey d. Monuments
16. Which of the following terms refers to the right of a person who
owns a property free and clear of any leases?
a. Escheat c. Encroachment
b. Easement d. Assemblage
a. Php50,000 c. P140,000.00
b. Php100,000 d. P150,000.00
Solution:
1. 144,250 x 1.04 = 150,020.00
2. 147,050 x 1.02 = 149,991.00
3. 145,600 x 1.03 = 149,968.00
Total = 449,979.00 / 3 = P149,993 or P150K
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a. A ceiling that is too high c. A poor location
b. Deferred maintenance d. A worn-out roof
28. The building cost estimate method that replicates the contractor’s
development of a bid, and is the most comprehensive way to
estimate building costs, is known as the:
31. The combining of two or more into a single ownership with the
value of the assembled lots being more than the sum of the
values of the individual lots is referred to as:
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35. What is the gross income multiplier for a property with a
current market value of Php570,000 and rents for Php5,000
per month?
37. A mortgage loan for P300,000 at 9 percent per annum for 30 years
has been made. What is the amount of interest for the first month?
39. Which of the following types of lease does NOT provide at least
some protection to the lessor against inflation?
41. A father sells his home to his daughter and her husband. Such a
sale would NORMALLY be described as which of the following
sales?
45. What term best describes the effect of a power plant on the
value of a nearby home?
a. Balance c. Contribution
b. Externalities d. Conformity
46. Which of the following appraisal principles holds that market value
is indicated by the value of another property with similar utility?
47. The specific use of a parcel of land that gives that land the
greatest residual of income is referred to as the land’s:
a. Conformity c. Escheat
b. Encroachment d. Substitution
49. The term lenders often use to refer to the relative amount of
money they will lend on a specific parcel of property is known as:
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a. Purchasing power c. Building codes
b. Interest rates d. Building cycles
51. A worn path crosses an owner’s property. What legal doctrine
would require a potential purchaser to take note of the fact that
there may be an unrecorded prescriptive easement against that
property?
63. In using the sales comparison approach, the appraiser finds that in
terms of location, sale #1 is superior to the subject property but is
inferior to sale #2. The correct procedure would be to adjust:
a. Both sales down to the subject property
b. Both sales up to the subject property
c. Sale #1 down and sale#2 up
d. Sale#1 up and sale #2 down
66. The building cost method that finds the cost of the component parts of
a building through standard cost estimates and then adjusts for the
condition of the component, time and location is known as the:
a. Unit-in-place method c. Break-down method
b. Quantity survey method d. Comparative unit method
a. 5 years c. 12 years
b. 7 years d. 17 years
69. The cost approach to value takes into consideration all of the
following factors EXCEPT:
70. When using the cost approach to value, an appraiser should value the
land as though:
76. What term is used to describe tangible and intangible factors that
enhance the desirability and thus add to the value of real estate?
a. Amenities c. Enhancements
b. Goodies d. Negative externalities
77. In the short run, which of the following conditions has the MOST
effect on real estate prices?
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b. A nonconforming use is likely to arise from changes in zoning
c. A nonconforming use property may be under improved but
cannot be over improved
d. In the sales comparison approach, an appraiser does
not have to make a separate adjustments for the
nonconforming use
80. Owner A gives owner B an easement across A’s land to shorten
the distance B has to travel to reach land he owns. The land B
owns has benefited by this easement and is known as the:
82. An owner of a parcel of land leases the land to a tenant for ten years. The next
day the owner sells the land to a third party. Which of the following statements is
CORRECT?
a. The new owner has an option as to whether to accept the terms of the
lease
b. The tenant may voluntarily terminate the lease
c. The tenant’s leasehold is not affected
d. The tenant legal interest is automatically terminated by operation of
law
a. Income approach
b. Direct sales comparison approach
c. Cost approach
d. All three approaches
85. In estimating the net operating income of a building, one of the necessary steps
is the calculation of “other income”. Which of the following items is NOT
considered other income?
86. A leasehold interest may be created only if the contract rent is:
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87. Suppose a property’s NOI and value are not expected to change
over an investment holding period. What would be the relationship
between the overall rate and the property yield rate?
a. The overall rate would be less than the property yield rate
a. The overall rate would be equal to the property yield rate
b. The overall rate would be greater than the property yield
rate
b. More information is required to determine the
relationship between the overall rate and the property
yield rate
88. Which of the terms BEST describes a pattern of income or cash flow
that is regular and predictable?
a. Reversion c. Annuity
b. Lease d. Payment
a. 0.80 c. 1.11
b. .0.90 d. 1.25 Solution: P800K + P100K / P1M
= .90
a. P82,330 c. P92,210.00
b. P82,438 d. P92,330.00
94. When a property’s vacancy and bad debts is subtracted from the
property’s gross (potential) income, which of the following incomes
is derived?
a. Effective gross income c. Taxable income
b. Net operating income d. Cash flow income
95. The basic equation used in the income approach to value is:
a. Rate divided by income equals value
b. Income divided by rate equals value NOI / Cap. Rate =
Market Value
c. Rate times income equals value
d. Rate plus income equals value
102. What type of analysis identifies land uses that are legally
permissible, physically possible and financially feasible?
a. Sensitivity c. Feasibility
b. Highest and best use d. Supply and demand
103. Included in the definition of highest and best use are certain tests
or criteria that must be met. Which of the following conditions is
NOT a certain in determining the highest and best use of land?
a. Physically possible c. Financially feasible
b. Legally permissible d. Supply and demand
107. The property tax due on real estate is calculated by what method?
a. Dividing the tax rate by the assessed value
b. Multiplying the tax rate by the assessed value
c. Dividing the tax rate by the most probable sales price
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d. Multiplying the tax rate by the most probable sales price
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5. List the components included in each of the following terms:
a. Land : earth surface, below and above; natural things
attached
a. Real estate : same as above ; artificial
things attached
b. Real property : land and real estate + interest or rights of
ownership
6. Multiple Choice
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d. A shopping mall is an example of what type of real estate?
a. Industrial b. Commercial c. Residential d.
Special purpose
e. Laws developed through the years by the courts based on custom
and usage are referred to as
a. The allodial system b. Common law c. Statute law d.
Emblements
o. In the real estate market there are several factors that affect the
supply and demand of real estate. Which of the following would not
affect the supply of real estate?
a. The demographics of the county’s population
b. The availability of building supplies
c. Changes in the local government’s zoning codes
d. The availability of skilled construction labor
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p. The term land includes all of the following except
a. Trees growing on the property
b. The property’s surface
c. Below the property to the center of the earth
d. A shed constructed on the property
7. Multiple Choice
a. What physical characteristic makes real estate easy for local
governments to tax and cause it to be heavily influenced by changes in
the surrounding areas?
a. Indestructibility b. Nonhomogeneity c. Immobility
d. Situs
8. Supply the term that best matches each of the following descriptions.
a. The government power to create laws to protect the public health
and safety and promote the general welfare (police power)
b. Local laws that regulate the control and use of land. (zoning laws)
c. Use in existence prior to the zoning law that is allowed to continue.
(non-conforming use)
d. Changing an area from higher-density use to lower-density use.
(downzoning)
e. Permission for a property owner to use the land in a way not allowed
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under the zoning law. (variance )
f. Enacted to protect the public health and safety from inferior
construction practices. (building codes)
g. Permission granted by a local government to build a specific
structure. (building permit)
a. A document issued by a local government permitting a new
building to be occupied that is issued only if the building is
in compliance with building codes (certificate of occupancy)
h. Wanted by someone with the purchasing power to obtain it.
(demand)
i. Refers to the supply of something in relation to the demand for it.
(scarcity)
j. Satisfies a need. (utility)
l. Ability to pass title to someone else (transferability)
l. The total in pesos for replacing the land and constructing the
improvements on the property (cost)
m. The most probable price for a property if payment is
made in cash and the parties are knowledgeable,
well informed, and acting without pressure (market
value)
n. What a property actually sells for (price)
o. The process of estimating and supporting an opinion of value
(appraisal)
9. Name the economic principle that best fits each description. (Principles of
Values)
a. A property’s value is diminished by P10,000 because it lacks a
garage. (contribution)
b. An owner adds a fourth bedroom to her home and realizes a
significant gain in property value. The addition of a fifth bedroom
a year later results in only a modest increase in value. (increasing
and diminishing balance)
c. A prospective buyer believes a suburb will be passing a rent control
ordinance. (anticipation)
d. After reviewing a property, a buyer decides that its greatest value
could be realized if a strip mall were built on it. (HBU)
e. A developer decides to assemble four adjacent lots so than an office
building can be built. (plottage)
f. A property’s value passes through a renewal phase. (change)
g. A property owner’s house is worth approximately the same as
other similar houses on the block. (substitution)
h. A homeowner’s property value suffers because it is next to a
house that has become rundown. (regression)
i. A homeowner’s property value benefits because it is next to a house
that recently has been renovated. (progression)
j. The value of property is maximized if it is used in the same way as
neighboring properties. (conformity)
k. The value of real estate does not remain constant. (change)
l. Effect on the value of property based on some future event.
(anticipation)
m. Effect of an improvement on a property’s value. (contribution)
n. Property values change as these two forces adjust
themselves in the real estate market. (supply and
demand)
o. Process of merging lots. (assemblage or consolidation)
p. The value of a better property will decrease if it is near a poorer
quality property. (regression)
q. Combining lots to increase the value of the new larger lot over the
sum of the smaller ones. (plottage)
r. The value of a poorer property will increase if it is near a better
quality property. (progression)
s. The one legal use that provides a property its greatest value. ( HBU)
t. The maximum value of a property is equal to the cost of
purchasing an equally desirable property. (substitution)
10. Name the step of the appraisal process that best fits each description.
(Appraisal Process)
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a. The market data, cost and income analysis is performed. ( 3
approaches)
a. This step includes the type of value to be estimated. (define the
problem)
b. The appraiser correlates the results to arrive at a value.
(reconciliation)
b. This step includes information about the area where the property is
located, as well as about the property itself. (collect, analyze data)
c. The last step in the process can take many formats. (prepare
appraisal report)
d. The appraiser identifies the types of data needed and data sources.
(appraisal planning)
11. List the four areas for making adjustments under the sales comparison
approach.
a. Terms of sale (condition of sale)
b. Time element
c. Others (Location and physical character – size, shape,
elevation, terrain
12. What type of property is best suited for the
sales comparison approach?
Residential property; old house and
lot
13. Supply the term that best matches each of the following descriptions.
a. Property similar to the property that has recently sold. (comparable
properties)
b. The property being appraised. (subject property)
c. The sales price of the comparable properties after adjustments are
made. (adjusted sales price)
14. What three types of depreciation are used in the cost approach?
Physical deterioration, functional and economic obsolescence
15. List the methods used to determine the cost of improvements on the
subject property.
a. Quantity survey method
b. Unit in place method
c. Per square meter method
d. Per cubic meter method
e. Index method
16. Name the types of depreciation for each of the following examples.
a. Bedrooms with no closets (functional)
b. An apartment building located near a noisy factory (economic)
c. A building with defective air-conditioning equipment (physical)
d. A condo building located in an area with traffic congestion
(economic)
17. List the four steps to estimating value using the cost approach.
a. Estimate RCN of improvement
b. Estimate depreciation from all causes
c. Deduct depreciation from RCN
d. Add land value
18. What type of property is best suited for the cost approach?
Special purpose properties or relatively new buildings
19. Supply the term that best matches the each of the following descriptions
(Cost approach & depreciation)
20. List the five steps to estimate value using the income approach.
a. Estimate potential gross income
b. Deduct : allowance for vacancy and bad debts = Effective Gross
Income
c. Deduct: operating expenses = Net Operating Income
d. Determine capitalization rate
e. Divide NOI by capitalization rate = Value
21. List the effect on value in the following situations: Market value
increases or decreases?
a. Rate increases ( value decreases)
b. Rate decreases (value increases)
c. Expenses increase ( value decreases)
d. Expenses decrease (value increases)
28. Multiple
Choice
1. The income approach would be best used in
appraising a(n)
a. Single-family residence.
b. Church.
c. Apartment building.
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3. One of the concepts used in appraisal is “highest and best use,”
which refers to
a. The property’s current use.
b. The legal use that will yield the greatest return.
c. Acquiring title to the property through long-standing use.
d. Acquiring a zoning variance for a more valuable use.
8. What is the gross rent multiplier for a property if the annual gross
income from a building is P66,000, net operating income is P29,500
and the building sells for P561,000?
a. 6.5 c. 8.1
b. 7.2 d. 8.5 Solution: P561K / P66K = 8.5
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12. In performing an appraisal of a single-family residence, the
appraiser reduced its value because of functional obsolescence. The
appraiser was referring to
a. Proximity to a waste incinerator b. Special assessments on the
property.
c. A cracked foundation. D. A one-car garage.
13. To determine the listing price of an office building, an appraiser
most likely would use a(n)
a. Income analysis b. Cost analysis.
c. Market analysis. D. Data comparison analysis.
17. The last house in a new development sold for twice the price paid
for the first houses sold in the same development. The higher price is
a result of
a. Supply and demand b. Conformity c. Progression
d. Contribution
18. Which of the following appraisal methods requires that the appraiser
calculate the amount of accrued depreciation?
a. Cost approach b. Income approach
c. Sales comparison approach d. Gross income multiplier
20. A group of investors making very high profits from a shopping mall
most likely would be concerned with the principle of
a. Conformity b. Progression c. Competition d.
Contribution
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22. An appraiser estimating the value of a property with a net income of
P40,000 decides to use an 8 percent capitalization rate instead of a
10 percent rate. Use of the lower rate results in
a. A 2 percent decrease in the appraised value
b. A P1000,000 increase in the appraised value
c. A P1000,000 decrease in the appraised value
d. No change in the appraised value
27. An investor who follows the concept that “the whole is worth more
than the parts” is using the concept of
a. Depreciation b. Progression c. Plottage d. Contribution
30. For a property to have all of the following must be present except
a. Competition b. Utility c. Demand d. Transferability
41. An appraiser would use the cost approach as the primary appraisal
method for a
a. Parking garage b. Condominium c. Shopping mall d. Public
school
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44. To calculate the monthly gross rent multiplier of a property
a. Multiply the monthly gross income by 12
b. Divide the purchase price by the gross monthly income
c. Divide the capitalization rate by the monthly gross income
d. Divide the annual gross income by the purchase price
45. Using the cost approach, an appraiser determines that the value of
a property at P230,000. If the appraiser estimated the cost of
replacing the structures on the property at P160,000 and the land
value at P90,000, what was the amount of accrued depreciation
estimated by the appraiser for the property?
47. An appraiser calculates a separate value for the land when using
the
a. Sales comparison approach
b. Income approach
c. Cost approach
d. Gross rent multiplier approach
48. If an appraiser uses more than one appraisal method and assigns
different weights to the results of each, she is using
a. Substitution
b. Contribution
c. Replacement
d. Reconciliation