REVIEW EXAM FOR MODULE 4

1. A site is different from land because

a. Land represents an improved site
b. A site is improved land that is ready to be built upon
c. The land development method is used to value a site
d. No difference exists
2. Land is always valued at
a. Its current land use as though vacant
b. Its highest and best use as though vacant
c. The predominating land uses in the neighborhood
d. The preferred use of the appraisers client
3. Sites can be valued by
a. Sales comparison analysis only
b. Sales comparison and extraction only
c. Income capitalization analysis only
d. Extraction, allocation, and sales comparison
4. In sales comparison analysis, comparable sales are adjusted
a. To the typical property in the market
b. To the other sales
c. To allow for matching up with the other sales
d. To the subject property
5. When estimating the market value of a site, the appraisal should include
a. Three comparable site sales transactions
b. Five to six comparable site sales transactions
c. Seven to eight comparable site sales transactions
d. There is no set number of comparable site sales transactions
6. If market value is sought, the sales comparison approach to site valuation is based
primarily on an analysis of the market behavior of
a. Buyers
b. Sellers
c. Brokers
d. Lenders
7. Adjustments to the prices of comparable sites are measured by
a. Cost to cure any deficiency in the subject property
b. Front footage
c. Square footage
d. The amount a typical buyer will pay more or less for the item
8. In the valuation of land by sales comparison, the order of adjustment should begin with
a. Property rights transferred
b. Access and topography
c. Terms of sale or financing
d. Location
9. A comparable site sold six months ago for P 4,000/sqm. It was 10% superior to the
subject site with respect to location and 15% inferior to the subject with respect to
frontage and shape. The market conditions adjustment is 10% per year. The adjusted sale
price of the comparable site (rounded to the nearest 100 is
a. P 4,300/sqm -10, +15, +10

b. P 4,400/sqm
c. P 4,500/sqm
d. P 4,600/sqm
10. A new and improved non-residential property just sold for P 2,350,000. Direct
construction costs were P 1,260,000 and indirect costs were 15% of direct costs. Builders
overhead and profit were 25% of total costs. What is the land value by extraction (rounded
to P50,000)?
a. P 500,000
b. P 550,000
c. P 600,000
d. P 650,100
11. The valuation of land with a highest and best use as an individual subdivision can be
estimated using
a. The summation of the value of all sites
b. The subdivision development method
c. The allocation method
d. The extraction method
12. An opinion of market value via the sales comparison approach is through the eyes of
a. Well-informed purchasers
b. Well-informed sellers
c. Well-informed brokers
d. Uninformed buyers
13. A major requirement and limitation of the sales comparison approach is that it requires
a. Several new constructions
b. An active market of competitive properties
c. Accurate cost information
d. Accurate information on investors expectation
14. Property sale prices
a. Are negotiated by appraisers
b. Are negotiated between buyers and sellers
c. Are set by brokers
d. Are opinions
15. If the appraisal assignment requires an estimate of market value
a. The sales comparison approach is never applicable
b. The sales comparison approach is usually applicable
c. The sales comparison approach is not applicable because it represents value in use
d. The appraiser should always use the cost approach because it represents the most
similar buyers actions
16. In the application of the sales comparison approach in a market value appraisal,
a. Only closed sales of real property interest can be used
b. Only current listings and closed sales of real property interests can be used
c. Only closed comparable sales, listings and options can be used as indications of value
d. Closed sales, pending sales, current listings, options to purchase, and refusals can be
used as indications of market value
17. Current listings that have been exposed to the open market for a reasonable time
a. Tell the appraiser what the subjects market value cannot exceed
b. Tell the appraiser what the subjects market value is
c. Tell the appraiser what the subjects value in use is
d. Tell the appraiser what the subjects investment value is

18. Units of comparison

a. Rates are difficult to estimate
b. Classifications are difficult to estimate
c. Are items that represent a breakdown of the price based on a significant variable
d. Are the characteristics that cause the prices paid for real estate to vary
19. Which approach is usually the most applicable for appraising residences?
a. Cost
b. Sales comparison
c. Income capitalization
d. Cost and income capitalization
20. Elements of comparison are
a. A weathermans comparison report
b. The characteristics that cause the prices paid for real estate to vary
c. Items that represent the breakdown fo the price based on a significant variable
d. Items that represent the bottom-line price after all of the adjustments
21. Adjustments are made
a. To the subject to make it like the comparables
b. To the comparables to make them like the subject
c. To the subject to make it like the market
d. To the comparables to make them like the market
22. A technique for extracting adjustments directly from the sale prices of comparables
based on the contribution of a single feature is called
a. Grid analysis
b. Paired data analysis
c. Cost analysis
d. Income analysis
23. Adjustments for real property rights conveyed reflect
a. Physical differences in the subject and the comparables
b. The differences in the rights in realty transferred between the subject and
comparables
c. The differences in the market on the effective date and the comparables
d. The differences in the motivations of the sellers and buyers on the date of sale
24. Adjustments for financing terms reflect
a. The differences in the market on the effective date and the comparables
b. The differences in the motivations of the sellers and buyers on the date of sale
c. The differences in sale prices of properties that sold for cash and the ones that sold
with financing
d. The differences in sale prices of properties that sold for cash or market rate financing
and the ones that sold with special financing that favors the buyer
25. A conditions of sale adjustment reflects
a. The differences in the market on the effective date of the appraisal and the dates of
sale of the comparables
b. The differences in sale prices of properties that sold for cash and the ones that sold
with financing
c. The differences between the motivations of the seller and buyer on the date of sale of
a comparable and the typical motivations of buyers and sellers as described in the
definition of value
d. The differences in sale prices of properties that sold from non-related parties
26. Graphic analysis is an example of

a. A quantitative adjustment technique

b. Qualitative analysis
c. Computer valuation using a graphics card
d. A technique used in land valuation only
27. Expenditures made immediately after purchase
a. Reflect anything paid by the buyer during the warranty period
b. Reflect anything that the buyers knew they would have to correct and probably
factored the cost of into the price paid
c. Reflect the cost of replacing the decorating to bring the home up to the buyers
standards
d. Reflect the cost to update the property to the new home market standards
28. Comparative analysis is
a. A general term used to describe the process by which qualitative or quantitative
techniques are used to derive a value opinion in the sales comparison approach
b. The tool used in the cost approach to estimate depreciation to the buildings
c. A tool used to convert income to value in the income approach
d. A term used to describe levels that support construction cost
29. The sales comparison approach requires how many comparisons?
a. 3
b. 4
c. 5
d. No set minimum number
30. Reproduction cost is defined as the cost of
a. Building the improvements exactly as they are on the date of the appraisal
b. Building the improvements exactly as they are on the effective date of appraisal
c. Building the improvements exactly as they would appear if they were new on the
effective date of appraisal
d. Building the improvements with similar quality and utility as of the date of
construction
31. Replacement cost is defined as the cost of
a. Building the subject improvements with the same utility as of the date of the report
b. Building the subject improvements exactly as they stand on the effective date of
appraisal
c. Building the improvements exactly as they would appear if they were new as of the
date of the report
d. Building the improvements with a structure of like utility but new as of the effective
date of valuation
32. Indirect construction costs do not include
a. Architects fees
b. Builders overhead
c. Selling and leasing fees
d. Financing fees
33. Site improvements may be valued at
a. Actual cost plus 10%
b. Historic cost
c. Depreciated historic cost
d. Depreciated reproduction cost
34. Replacement cost is best used
a. To eliminate some functional obsolescence from the cost approach

b. To eliminate all functional obsolescence from the cost approach

c. For non-residential properties only
d. For residential properties
35. The cost approach is based on the
a. Theory of substitution
b. Cost of acquisition
c. Cost of production
d. Assessed value
36. The cost approach is
a. Never a relevant approach for estimating market value
b. Always a relevant approach for estimating market value
c. Most applicable when the subject improvements represent the highest and best use
of the site as though vacant and are relatively new
d. Not required, regardless of the property
37. A convenience store building contains a 310 sqm of building area and has a canopy
measuring 4 meter by 8 meter. The per sqm reproduction cost is estimated at P
15,000/sqm for the building area and P 8,000/sqm for the canopy. The total reproduction
cost new of the entire structure is
a. P 4,906,000
b. P 4,960,000
c. P 6,490,000
d. P 9,460,000
38. The most detailed method of estimating the cost new of a structure is the
a. Quantity survey method
b. Unit-in-place method
c. Trade breakdown or builders method
d. Segregated cost method
39. The unit-in-place cost estimating method is
a. Based on historical cost
b. Based on the market-extracted costs per square meter of the building
c. Based on the cost of each component of the building, including all labor and materials
d. Based on a computerized printout of all labor, materials, and extras
40. A cost-estimating method in which appraisers estimate the current cost of construction
based on the amount paid for the building when it was built is called
a. Cost index trending
b. Segregated cost
c. Cost engineered services
d. Unit-in-place method
41. When appraising an improved property with substantial functional losses, you should
a. Be conservative in the cost new estimate to accommodate those losses
b. Accurately estimate the cost and deal with the obsolescence in the depreciation
estimate
c. Not apply the cost approach because it is too hard
d. Apply the cost approach because it is the only method you have that will give an
accurate indication of value
42. An incurable functional problem is best defined as
a. An item that cannot be physically cured
b. An item that will not return as much in value as it costs to fix

c. An item that is already cured

d. An item that is scheduled to be cured but has not yet been cured
43. If an average cost residential structure has an effective age of 10 years and a
remaining economic life of 25 years, the percentage of depreciation (rounded) is
a. 20%
b. 30%
c. 40%
d. 50%
44. Effective age is
a. The actual age of properties with better-than-normal maintenance
b. Total economic life minus remaining economic life
c. Total utility minus diminished utility
d. Total economic life minus actual age
45. An item of depreciation is curable if
a. The cost to cure is less than the expected increase in value
b. The cost to cure is no greater than the reproduction cost
c. The cost to cure is no greater than the replacement cost
d. It has any remaining economic life
46. A property has inadequate toilet and bath (T & B). Because of maximum occupants of
6 persons, it requires additional of 1 T & B which will cost the owner P 60,000 to build. This
problem is best identified as
a. Physical curable depreciation
b. Functional curable obsolescence
c. External curable obseolescence
d. Functional incurable obsolescence
47. The final value opinion should
a. Be very precise
b. Be rounded to allow the lender to make the loan
c. Be rounded to show that the number is an opinion, not a precise calculation
d. Never be rounded
48. The process by which the appraiser evaluates, chooses, and selects a final value
opinion is known as
a. Review
b. Reconciliation
c. Recalculation
d. Data manipulation
49. Giving a client a range of values rather than a single value opinion
a. Is not allowed by standards rules
b. Implies that you are open to suggestion
c. Allows for a greater probability of correctness
d. Implies that you do not know what you are doing
50. In an appraisal of a property using the 3 approaches to value, each approach resulted
in a different value indication. The indicated value by the cost approach was P
100,000,000, the indicated value by the sales comparison approach was P 93,500,000,
and the indicated value by the Income approach was P 95,000,000. Are you forced to
choose one of these value indications?
a. Yes, always. It is only logical that you use the value estimates that you have
developed.
b. Yes, if one equals the sale price

c. No, you can give the clients any value they want regardless of the data.
d. No, you can choose any one of the numbers or any number between and, in some
cases, slightly above or below the range.
51. If the 3 approaches to value provide 3 different value indications, the appraiser should
a. Average the 3 numbers
b. Choose the highest number to bring in more business
c. Choose the lowest number to limit liability
d. Choose a value opinion that best represents the market for the subject based on all
data available as of the date of the appraisal.
52. How significant is the reported open market sale price of the subject property if the
sale has not closed yet?
a. Insignificant
b. Insignificant because it is only pending
c. Significant because after the deal closes, it will be a comparable sale
d. Significant because the buyers have made a statement with their checkbook
53. A residence has been listed for sale in the MLS for the last 6 months at a price of P
12,400,000, and it has not sold. In this market, the average marketing period is 45 days
for this type of property.
a. The subject propertys market value could be higher or lower than the list price
b. The subject propertys market value could be higher than the list price
c. The subject propertys market value could be lower than the list price
d. The subject propertys market value is less than the list price
54. If the subject is a special purpose property and the value indication by the cost
approach is much higher than the value indication by the sales comparison approach,
what is the typical problem?
a. The cost approach needs to be adjusted (or adjusted more) for the loss in value due
to functional obsolescence
b. The cost approach needs to be adjusted for external obsolescence.
c. The sales comparison approach needs to be adjusted down to make it the same.
d. The income capitalization approach needs to be developed to average the 2 value
indications out.
55. The type of appraisal report
a. Has no influence on the appraisal process
b. Is always the same, regardless of the problem
c. Is determined by the amount of the fee
d. Is determined by the property owner and the loan amount
56. A narrative appraisal report
a. Is no more than 10 pages long
b. Is always a self-contained appraisal report
c. Cannot include the types of grids used in form reports
d. Gives the appraiser the freedom to design the report in the manner that is most
efficient
57. Residential appraisal reports always involve
a. A checklist type of report
b. A summary report
c. A condominium form
d. Various forms and report types, depending on the assignment
58. In an appraisal report, the appraiser must include
a. The effective date of the appraisal and the date of the invoice

b. The effective date of the appraisal and the date of the report
c. The date of the report was written and the date it was ordered
d. The date of report, the effective date of the report, and the date of the invoice was
paid
59. A client ordered an appraisal of his property in Valle Verde 5, Pasig City. The appraiser
developed an opinion of value. Before she could get finish the job, the client cancelled the
order. The appraiser never provided any of her findings to the client orally or in writing.
This appraiser completed an
a. Appraisal only
b. Appraisal report only
c. Appraisal and appraisal report
d. Appraisal review
60. An attorney is reading a document prepared by an appraiser on a vacant lot. The
document states and supports a value of P 1,000,000 on the property. This document is
called a(n)
a. Appraisal only
b. Appraisal report
c. Market Analysis
d. Market value letter
61. An appraisal review assignment
a. Must include the reviewers opinion of the value of the subject property of the report
under review, as of the date of the first appraisal
b. Must not include the reviewers opinion of the value of the subject property of the
report under review, as of the date of the first appraisal
c. Can include the reviewers opinion of the value of the subject property of the report
under review, as of the date of the first appraisal
d. Must include the reviewers opinion of the value of the subject property of the report
under review, as of the date of the review appraisal
62. An appraiser who specializes in review appraisal work
a. Can do a review of any property type providing the appraiser has read a similar report
before
b. Must be competent to do the review or follow the required steps to become
competent
c. Should always be very critical of the report because that is why the appraisal
reviewer is hired
d. Cannot review a report if it is in litigation
63. An appraiser was asked to look at an appraisal report of the subject property prepared
by another appraiser. The client wanted a report that included the appraisers opinion of
the first report and also an independent opinion of value (if different than that of the first
report). The client is asking for a(n)
a. Appraisal assignment only
b. Appraisal report only
c. Appraisal review and an appraisal by the reviewer
d. Consulting assignment
64. An appraiser prepared an appraisal report on a small commercial property. A reviewer
found that there were many small errors in the report. Which of the following statements is
correct?
a. This is not a significant problem under any circumstances and therefore is not an
ethics violation
b. This may be a problem if all the errors are pointing in the same direction

c. Small errors are common in nearly all appraisals and therefore are only human. This is
not a lapse in ethics in any situation.
d. If the errors were about the subject it would indicate an ethical lapse, but if the errors
are regarding the comparable it would be considered normal
65. In an appraisal review assignment, the subject
a. Is the real estate that was appraised by the appraiser under review
b. Is the real property that was appraised by the appraiser under review
c. May be all or part of a report, a workfile, or a combination of these and may be
related to appraisal, appraisal review, or consulting
d. Is the person who wrote the report under review
66. If a reviewer does a poor job of reviewing an appraisal assignment and report,
a. No one will ever or could ever know
b. This may be revealed by a review of the review
c. There is no standard for this work, so USPAP does not apply
d. The standard for review work is a combination of USPAP Standards 1 & 2
67. In a review assignment, the scope of work
a. Must be the same as the appraisal work under review
b. Can be different than the appraisal work under review
c. Must be different than the appraisal work under review
d. Is always limited to drive-by, exterior-only inspections
68. In an appraisal review assignment, the reviewer
a. Cannot offer an opinion of value of the real property shown as the subject in the
appraisal report under review
b. Must give an opinion of value of the real property shown as the subject in the
appraisal report under review if he or she disagrees with the first value opinion
c. May offer an opinion of value for the real property shown as the subject in the
appraisal report under review if the scope of work includes this
d. Must always be prepared to offer an opinion of value for the property listed as the
subject in the appraisal report under review; the reviewer does not have to express this
in the report, but it must be developed and not reported.
69. The principle of ________________ is the basis of the income capitalization approach.
a. Change
b. Substitution
c. Anticipation
d. Modification
70. What are the primary uses of discounted cash flow (DCF) analysis?
a. To calculate the future value and payment
b. To calculate the present value and historical value
c. To calculate the rate of return and future value
d. To calculate the present value and rate of return
71. The subject property has an annual income expectancy of P 750,000, and recent
comparable sales have the following characteristics:
- Sale 1 sold for P 10,000,000 and has an annual net income expectancy of P 980,000
- Sale 2 sold for P 7,500,000 and has an annual net income expectancy of P 750,000
- Sale 3 sold for P 6,500,000 and has an annual net income expectancy of P625,000
- Sale 4 sold for P 5,000,000 and has an annual net income expectancy of P 495,000
What is the market value of the subject property (rounded to the nearest P 500,000)?
a. P 8,000,000
b. P 7,500,000

c. P 7,000,000
d. P 6,500,000
72. What is the expected annual income of a property that recently sold for P 1,000,000
and for which the buyers indicated that they used an overall capitalization rate of 9.25%
a. P 9,250/year
b. P 92,500/year
c. P 925,000/year
d. Cannot be determined with this data
73. The subject property has a potential gross income (PGI) of P 1,000,000, a vacancy and
collection loss of 7%, fixed expenses of P 350,000, variable expenses of P 250,000, and
reserves for replacement of P 70,000. Recent sales of very similar properties in this market
suggest that a capitalization rate of 12% is appropriate. The capitalization rates were
extracted from sales in which the price was divided into the estimate of net operating
income from the broker without reserves. What is the market value of the subject
property?
a. P 3,000,000
b. P 2,750,000
c. P 2,500,000
d. P 2,250,000
74. What is the value of a property with an effective gross income (EGI) of P 4,230,000, an
operating expense ratio (OER) of 32% and an overall capitalization rate of 11%
a. P 22,500,000
b. P 25,000,000
c. P 38,500,000
d. P 42,300,000
75. What is the indicated property value of a property that has a net operating income of P
1,500,000 per year? The value of the land is P 5,500,000. The land capitalization rate is
9.75% and the building capitalization rate is 12.25%. What is the property value (to the
nearest 100,000)
a. P 13,000,000 Solution: NOI = P 1,500,000
b. P 14,000,000
c. P 15,000,000
d. P 16,000,000