Practice Exam

Your score: 58%

You have failed the exam.
Passing score: 70.0
SCORING BREAKDOWN

Correct: 35/60 Incorrect: 25/60

Review answers below

Question 1

To measure depreciation using the age-life method, the appraiser divides the ______ by the
total economic life.

Effective age

Remaining economic life

Reproduction/replacement cost

Site value

Using the age-life method, the appraiser divides the effective age by the total economic life. The
resulting percentage is applied to the reproduction/replacement cost to determine the total cost of
accrued depreciation.

Question 2

Why does an appraiser convert the rent for a subject property to annual dollars per square
foot?

To account for building space that's unusable

 To account for vacancy and collection losses

To compare income from office buildings to income from retail or heavy industrial
buildings

To effectively compare rents from different buildings using a common unit of

measurement

Converting rental income to a per square foot basis allows the appraiser to make effective
comparisons with similar properties to determine the market rent for that type of use.

Question 3

Carmen is a listing agent who provides a competitive market analysis to her sellers. "This
appraisal is just an estimate of value," she tells them. What's wrong with with Carmen has
done?

Appraisals aren't estimates of value, they're market value.

CMAs shouldn't be provided to sellers until after the property is listed.

CMAs shouldn't be referred to as appraisals.

She shouldn't use the term estimate; the sellers may not think she knows what she's
doing.

Comparative (or competitive) market analyses should not be referred to as appraisals. Only certified
appraisers may perform appraisals.

Question 4

What's a real estate investment trust (REIT)?

 A company that owns and operates income-producing real estate and offers
investment opportunities to shareholders in those properties

An area of real estate in which brokers can specialize that caters to commercial
investors

An investment vehicle that allows real estate owners to defer capital gains taxes

A short-term investment opportunity in which individual investors pool their money to

purchase commercial properties

A REIT is a company that owns and operates income-producing real estate and offers investment
opportunities to shareholders in those properties.

Question 5

What two types of data does an appraiser gather?

Computer and hand-written

General and specific

Old and new

Related and non-related

Appraisers gather general data about the economy and area, as well as specific data related to the
property.

Question 6

What's one of the drawbacks of using the allocation method?

 It doesn't account for differences between properties.

It doesn't work well for new construction.

It requires a depreciation calculation.

It's widely used, but the least accurate.

The allocation method isn't widely used and doesn't account for differences between properties.

Question 7

Which of the following land valuation methods uses this formula: Income ÷ capitalization rate =
value?

The abstraction method

The allocation method

The ground rent capitalization method

The sales comparison method

The ground rent capitalization method uses this formula, and can be used to estimate land value when
a ground lease exists or when the land is vacant.

Question 8

The state's claim to property when a property owner dies, leaving no will, heirs or creditors, is
the power of ______.

Condemnation
 Eminent domain

Escheat

Taking

The power of escheat allows the state to claim property when the deceased has no heirs or creditors.

Question 9

Which part of the narrative appraisal report states the purpose of the appraisal, identifies and
describes the subject property, and presents the value conclusion?

Addendum

Analysis and opinions

Factual data

Introduction

The introduction provides a narrative and graphical overview of the entire report and includes this
information.

Question 10

Building codes, zoning laws, and environmental legislation can all influence the value of real
property. How do appraisers refer to this type of value influencer?

Geographic

Governmental
 Physical

Social

The government can influence property value through legislation and regulations, as well as through
policy decisions.

Question 11

When looking at a rectangular government survey system map, where would Section 36 be
located?

The exact center of the township

The northeastern-most section of the township

The southeastern-most section of the township

The southwestern-most section of the township

The numbers on the grid start with Section 1 in the northeastern corner of the township, then follow a
zigzag pattern, with Section 36 in the southeastern-most corner.

Question 12

In which section of the report would the appraiser include the subject property's history, and
its recent sales and listings?

Analysis and opinions

Factual data

Introduction
 Value conclusions

The introduction section provides a narrative and graphical overview of the entire report. It includes the
appraisal's purpose and function, identifies and describes the subject property, and presents the value
conclusion.

Question 13

Justin decided to build a privacy fence around his yard. He thought the fence was along the
property line, but it turns out he built it one foot inside his neighbor's property. What will an
inspector document as existing on the neighboring property?

Easement

Eminent domain

Encroachment

Necessity

An encroachment occurs when someone illegally places a structure or object on another person's
property.

Question 14

Property B, a sales comparable, must be adjusted as follows: Property B has a $10,000 addition
that the subject property doesn't have, and a market timing adjustment of 5%, because prices
have risen 5% since Property B sold. If Property B's sales price were $100,000, what would its
adjusted sales price be?

$105,000

$115,000
 $90,000

$95,000

When adjusting for differences, appraisers first adjust for factors that affect overall property value,
such as financing and time, before adjusting for differences in property features. Start with the
percentage: $100,000 x 1.05 = $105,000. Now adjust downward for the $10,000 to get $95,000.

Question 15

Where on the Uniform Residential Appraisal Report is information about the building's exterior
and interior materials and condition noted?

Improvements

Neighborhood

Sales comparisons

Site

The Improvements section includes ratings of the property's overall condition, interior and exterior
features, the foundation, attic, car storage, and any physical deficiencies or adverse conditions that
would affect the property value.

Question 16

Jaime, an appraiser, is unable to use either the sales comparison approach or the income
capitalization approach to determine a property's value. Given the situation, which of the
following statements is true?

Jaime must notify his client that the transaction will have to go forward without an
appraisal.
 Jaime must submit an incomplete appraisal report.

Jaime must transfer the appraisal request to another appraiser.

Jaime must use the cost approach.

The cost approach must be used if either the sales comparison approach or the income capitalization
approach isn't possible.

Question 17

What type of heating system uses a furnace to heat cool air and transports the warm air via
ducts?

Electric heating system

Forced air system

Hot water system

Radiant system

A forced air system uses ducts to transport heat to areas of the home.

Question 18

What hazard do mining activities, landfills, or agricultural pesticides contribute to?

Groundwater contamination

Leaking underground storage tanks

Vacant properties
 Waste disposal sites

Mining activities, landfills, or agricultural pesticides can contribute to groundwater contamination.

Question 19

Appraiser Chuck writes "s01/15;Unk" in the "date of sale" field in the sales comparison grid of
the URAR. What does this indicate?

The comp's contract fell through in January 2015 for an unknown reason.

The comp's listing agreement expired in January 2015 for an unknown reason.

The comp's settlement date is unknown and the contract date is January 2015.

The comp was settled in January 2015 and the contract date is unknown.

The letter "s" followed by a date indicates the date of a settled sale. If the contract date is known, it can
be indicated after a semi-colon and the letter "c." If unknown, this can be indicated by the abbreviation
"Unk" after the semicolon.

Question 20

To determine the estimated reproduction cost of a subject building using the index method, the
appraiser takes the index factor and multiples it by the ______.

Cost index at time of construction

Estimated accrued depreciation

Original construction cost

 Present cost index

The formula for the index method is: Present index ÷ Index at time of construction x Original cost =
Present cost

Question 21

How is the gross adjustment calculated in the sales comparison approach?

Adding up the positive amounts and subtracting the negative amounts of the
adjustments

Averaging the amounts of the adjustments, ignoring whether the numbers are positive
or negative

Subtracting all of the dollar amounts of the adjustments, ignoring whether the
numbers are positive or negative

Totaling the dollar amounts of the adjustments, ignoring whether the numbers are
positive or negative

When calculating a gross adjustment, appraisers add the dollar amounts of the adjustments, ignoring
whether the numbers are positive or negative.

Question 22

When appraisers look past how a property is being used to determine a more optimal function,
what are they determining?

Cost to replace

Highest and best use

Market value
 Value in use

Highest and best use looks past the current use (if there is one) to determine if there is another use
that provides a higher value.

Question 23

For which of these properties would gross income multiplier be calculated?

Apartment building with 50 units

Condominium building with four units

Duplex used as a rental property

Single-family, owner-occupied home

Remember, rent has four letters. Gross rent multiplier is used for income-producing properties with
four or fewer units. Properties with five or more units use gross income multiplier.

Question 24

Who or which of the following uses the appraisal to determine how much money should be
loaned toward the purchase of the property?

Broker

Buyer

Financial institution

Seller
Financial institutions need an appraisal to determine the amount of money that should be loaned on
the property.

Question 25

When following the Uniform Standards of Professional Appraisal Practice process for real
estate appraisal, an appraiser will _________ after determining the subject property's highest
and best use.

Estimate value of the land

Gather and analyze data

Reconcile values to determine final appraisal value

Use three approaches to estimate the value of the property

The process for appraisal defined by USPAP requires appraisers to estimate the value of the land
after determining highest and best use. This is step five of the process.

Question 26

Darren set up a land trust so that his children could benefit from his real estate investments
after he dies. He asked his financial advisor Tom to manage the trust. Darren is the ______.

Beneficiary

Executor

Trustee

Trustor
The trustor is the person who creates the trust. The trustee is the person who carries out the person's
wishes.

Question 27

A lender requests an appraisal of a property under foreclosure. What type of value is the lender
most likely to be interested in?

Going-concern value

Insured value

Investment value

Liquidation value

The property probably won't fetch market value, but the appraiser can determine a liquidation value
where the sale removes the property from the bank's non-performing assets.

Question 28

Where in a narrative appraisal report does the appraiser state the appraiser's lack of bias or
hidden motive, the truthfulness of the report, and that the appraisal was conducted in
conformance with the prevailing standards of practice?

Addendum

Certificate of appraisal

Introduction

Overview and summary

The appraiser certifies this information in appraiser's certificate of appraisal included in the narrative
appraisal report.

Question 29

The appraiser's operating statement states that the accrual basis method of accounting is
used. What does this mean?

Expenses are classified as fixed or variable.

Expenses have been stabilized in relationship to income.

Income is recorded when earned, and expenses are recorded when incurred.

Income is recorded when received, and expenses are recorded when paid.

The accrual basis is a method of accounting that records income when earned and expenses when
incurred, in contrast to the cash basis.

Question 30

______ real property appraiser is allowed to perform appraisals on any type of real estate.

A certified general

A certified residential

A licensed residential

An apprentice

A certified general real property appraiser has the highest level of education and experience and has
no restrictions on the type or value of property appraised.
Question 31

Which of the following is a true statement about adjustments when using the sales comparison
approach?

Adjustments are made for differences in features, but not for differences in sales
conditions.

Adjustments are made to the comparables, and not to the subject property.

Differences in location rarely require adjustments.

They're always made to the subject property.

The comparables are adjusted up or down based on added or missing features, as compared to the
subject property.

Question 32

Discounted cash flow analysis and annuity capitalization are two forms of what?

Appraisal methods

Cost approach appraisal methods

Direct capitalization

Yield capitalization

Both discounted cash flow analysis and annuity capitalization are forms of yield capitalization, which is
a technique used to determine the value of future income.
Question 33

Which one of the following could be a clue that a property was formerly a waste disposal site?

Birds constantly on the property

Plate covering an oil fill area

Scorch marks on trees surrounding the area

Soft spots, mounds, and discolored soil

Clues to locating a waste disposal site include soft spots, mounds, and discolored soil. Site research
and soil tests can provide a definite answer.

Question 34

In 1978, the federal government banned the use of ______ in housing.

Asbestos

Glue-backed wallpaper

Lead-based paint

Spiral staircases

Due to health risks caused by deteriorating paint releasing lead, lead-based paint has been banned
since 1978. Owners of homes built before 1978 should take precautions to ensure that lead
contamination doesn't occur.

Question 35
What are the two types of adjustments an appraiser can make in the sales comparison
approach?

Actual adjustment and hypothetical adjustment

Dollar adjustment and percentage adjustment

Specific adjustment and overall adjustment

Variable adjustment and fixed adjustment

Appraisers most often make a dollar adjustment to indicate a difference in features. Appraisers may
also make percentage adjustments to show a factor's overall effect on market value.

Question 36

Which type of is very durable, corrosion resistant, and can be used for hot-water distribution
lines, but idoesn't last as long as copper piping?

Aluminum

Brass

Silver

Steel

This describes brass pipe, which may be used for hot-water distribution lines because it can withstand
high temperatures.

Question 37
Alana and Michael want to build a 5,000-square-foot ranch home on two acres of land they just
bought. Once the house is built, how many acres of land will remain unbuilt?

0.88 acres

0.89 acres

1.86 acres

1.89 acres

One acre is equal to 43,560 square feet, so their parcel is 87,120 square feet (43,560 x 2). Subtract
the house's 5,000 square feet from that, and you get 82,120 square feet. Divide that by 43,560, and
you end up with approximately 1.89 acres.

Question 38

Which type of heating system takes cool air and passes it through the heat source using a fan
or blower?

Boiler

Forced air

Hot water

Steam

This is how forced-air heating (usually gas) works.

Question 39

A surveyor created a lot and block survey for a new residential development. The first thing
she did when she surveyed the new neighborhood was to reference a metes and bounds land
description. From there, she divided the land into numbered lots and blocks. This output is
known as a _______.

Benchmark

Monument

Plat map

Rectangular survey

The plat map is a detailed map of the given land, including streets, access roads, and measurements
between features.

Question 40

Which two terms are synonymous and are defined as the amount of rent typical for properties
that are comparable to the subject property?

Contract rent, scheduled rent

Economic rent, market rent

Effective rent, required rent

Paid rent, collected rent

Economic rent and market rent are both used to refer to rent that's considered typical in the market for
a comparable property.

Question 41

A newly constructed home sells for $300,000. The relationship of land to building value in the
market is one-to-three. Using the allocation method, we can determine that the site's value is:
 $100,000

$125,000

$150,000

$75,000

Using this method, the amount allocated to the land will be one of the four total parts or 25%. So,
$300,000 divided by four is $75,000.

Question 42

The idea that money gains or loses value over time describes which concept?

Inflation

Interest

Time is money

Time value of money

Time impacts money in two ways. Money that just sits there loses value over time. Money that earns
interest grows over time.

Question 43

Which of the following describes the amount of income a property can produce if it's fully
occupied and earning market rent?

Effective gross income

 Historical income

Net operating income

Potential gross income

Appraisers use potential gross income as the basis for determining an opinion of value for some types
of income property.

Question 44

When ______ capitalization is used, future income estimates are calculated, then a discount
rate is applied.

Direct

Discounted

Reversion

Yield

This describes the process of yield capitalization, which is often used to value complex commercial
properties.

Question 45

What numbers does the appraiser reconcile to determine the indicated value by the sales
comparison approach for the subject property in the URAR?

The adjusted sales prices of the comparable properties

 The contracted sales prices of the comparable properties

The indicated value by the income approach

The opinion of site value for the comparable properties

The appraiser reconciles the adjusted sales prices of the comparable properties to determine the
indicated value by the sales comparison approach.

Question 46

Kent is an appraiser on his way to a property for a site visit. Which of the following will he do
once he's on site?

Find out the property's legal description

Gather general data about the market area

Get a copy of the purchase agreement for the property he's appraising

Make a sketch to show the shape of the property

Appraisers tend to gather some specific property data-such as the legal description, tax rates, status
of title zoning and codes, and a copy of the purchase agreement-before they visit the property.

Question 47

Physical possibility, financial feasibility, maximum profitability, and ______ are all
considerations when determining highest and best use.

Ability to be leveraged

Legal permissibility
 Liquidity

Rebuilding cost

To determine highest and best use, appraisers or investors will consider legal permissibility, physical
possibility, financial feasibility, and maximum profitability.

Question 48

An appraiser determining the value of a lease interest would see a tenant who is in financial
trouble as a risk, and would likely ______ used in the value calculations as a result.

Decrease the interest rate

Increase the interest rate

Increase the net operating income

Reduce the net operating income

Higher risk usually equates to a higher interest rate being used in the appraiser's calculations.

Question 49

What's supposed to be installed wherever water can be found, such as in bathrooms, kitchens,
basements, utility rooms, garages, outdoors, and near swimming pools, to protect people from
getting electrocuted?

BX

GFCI

NEC
 PVC

GFCI stands for ground fault circuit interrupter. It's designed to trip the power off when potentially
hazardous electrical faults occur.

Question 50

What is the formula NOI ÷ V = R used to calculate?

The capitalization rate

The rate of future growth

The recapture rate

The terminal value

This is the formula to calculate a capitalization rate, which is the expected rate of return on investment.
NOI ÷ V = R means net operating income ÷ value = rate.

Question 51

What's the price at which a willing buyer and a willing seller would strike a deal given normal
market conditions?

Insured value

Market value

Valuation

Value in use
Both appraisers and real estate licensees use market value, although their approaches to determining
market value may differ.

Question 52

With which of the four methods used to find the reproduction cost of a structure does the
appraiser apply a factor to the subject building's original cost that represents the costs of
construction up to the appraisal date?

Index

Quantity survey

Square-foot

Unit-in-place

This is a description of the index method, which is also known as the cost service index method.

Question 53

How many years of income does yield capitalization analyze?

At least 50

One

Several

Two
Direct capitalization analyzes a single year of income, while yield capitalization analyzes cash flows for
multiple future years.

Question 54

Which form of real property ownership (for owners other than married couples) means there's
equal ownership shares with undivided possession rights?

Joint tenancy

Tenancy by the entirety

Tenancy in common

Tenancy in severalty

Joint tenancy provides equal ownership shares with undivided possession rights and requires four
ownership unities: time, title, interest, and possession. Joint tenancy includes the right of survivorship.

Question 55

An office building has a potential gross income of $900,000. The appraiser determines that a
vacancy and collection loss of 20% should be used. What calculation will find the effective
gross income for this property?

900,000 ÷ .20

$900,000 - (900,000 x .20)

$900,000 + (900,000 x .20)

900,000 x .20
The calculation for effective gross income must find the proper amount to be deducted by multiplying
the percentage of loss with the potential gross income.

Question 56

The doctrine of "use it or lose it" is known as the doctrine of ______.

Eminent domain

Escheat

Laches

Taking

The doctrine of "use it or lose it" is laches. You can remember it by the phrase "use it or get latched
out!"

Question 57

Which of the following is the last step in the sales comparison approach?

Compare properties to the subject property and adjust for differences.

Estimate a fair and current market value for the subject property.

Identify features of the subject property that are in demand in the market.

Select recently sold comparables that are substantially similar to the subject property.

As part of the appraisal process, appraisers often use the sales comparison approach, which results in
an estimate of the market value of the subject property.
Question 58

______ covers the joints between walls and ceilings.

Floating

Lead-based paint

Taping

Trim

Decorative trim, such as crown molding, covers joints between walls and ceilings, creating a more
polished look in a room.

Question 59

Claire, a seller, accepted an offer on her home. However, it just appraised for less than the
sales price. What will happen now?

Claire must refund the buyers for the cost of the appraisal.

Claire must take her house off the market.

The appraiser must perform a second appraisal.

The lender will only approve a loan based on the property's appraised value.

The lender will only approve a loan based on the property's appraised value. Most buyers will have an
appraisal contingency should the appraisal come in for less than the sales price.

Question 60
To determine the total reproduction cost of a subject building using the unit-in-place method,
an appraiser multiplies the ______ by the number of units of that component part in the subject
building and then adds them together.

Cost per unit of measure of each component part of the subject property's structure

Cost per unit of measure of the largest component parts of the subject property's
structure

Cost per unit of measure of the ten most expensive component parts of the subject
property's structure

Replacement cost of each component part of the subject property's structure

Using the unit-in-place method, appraisers multiply the cost per unit of measure of each component
part of the subject property's structure by the number of units of that component part in the subject
building, and then add them together to determine the total reproduction cost.