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1. Fair market value does not depend upon which of the following?
Buyer and seller are not using the same real estate agent
Both parties are well informed
A reasonable time is allowed in the open market
 Buyer and seller are typically motivated
2. Which of the following most directly affects value?
Neighborhood
 Gross income
 Net Income
 Condition
3. Cash flow usually increases in the years after purchase due to all of the following except which?
Decreasing vacancies in the local market
 Moving into a higher income tax bracket
 Inflation
 Reduction in loan principal
4. Valuation methods do not include which of the following?

Market Income Approach
 Cost Approach
 Gross Rent Multiplier Approach
 Payback Rate Approach

5. Professional appraisers do not usually use which of the following valuation methods?
Market Data Approach
 Gross Rent Multiplier Approach
Income Approach
 Cost Approach
6. Which of the following valuation methods is usually most accurate for duplexes?
Income Approach
 Price Per Unit Approach
 Market Data Approach
 Cost Approach
7. Which of the following is not a factor in determining reserve account requirements for a particular building component?
Useful life
 Age
 Appraised value
 Replacement cost
8. Which of the following is the correct formula for calculating value using the income approach method?
Value = NOI/Cap Rate
 Value = NOI X Cap Rate
Value = Cap Rate/NOI
None of the above
9. The rate of return expected from investment in real estate is usually greater than the CD rate because of which of the following?
Management burden
 Higher risk 
 Non-liquidity
 All of the above
10. What is usually the best source for the current cap rate when valuing a large apartment building?
The Wall Street Journal
The professional appraiser who appraised your residence when you last refinanced it
 Determining it yourself
Your local Board of Realtors
11. The same cap rate would usually be used for appraising a 24-unit apartment complex and a 96-unit apartment complex.
True
 False
12. How complicated one needs to make a valuation analysis depends least upon which one of the following factors?
Size of the property
 Age of the property
 Loan-to-value ratio of planned financing
 Condition of the property
13. What is the minimum equipment needed to properly value a 50-unit apartment complex.
Super computer
 Handheld calculator
 400 MHz desktop or notebook computer
 Pencil and paper
14. Which of the following expenses usually does not have to be considered when valuing a residential property using the Income Approach?
City rent tax
 Landscape maintenance
 House electricity
 Property tax
15. The Cost Approach valuation methods includes which of following information?

Land value
 Improvements cost
 Accrued depreciation
 All of the above

16. Indirect costs of construction does not include which of the following?
Design
 Contractor overhead
 Construction loan interest
 Permits
17. When utilizing the Cost Approach method, depreciation must be considered for all components except:
Contractors profit
 Equipment rental
 Lot
 Construction period insurance
18. When utilizing the Income Approach method of valuation, which expense is usually easiest to verify?
Adequate insurance
 Current property tax
 Landscape maintenance
 Repairs & maintenance
19. How does one usually reconcile the different methods of valuation?
Calculate the arithmetic average
 Use the value in the middle
Weigh the applicability of each method
 Calculate the root mean square average
20. Lenders often evaluate the property utilizing which of the following methods?
Debt coverage ratio
 Cash-on-cash return
 Financial market rates of return
 Cash-flow-to-loan ratio
21. Which of the following must be considered when valuing the land for a Cost Approach valuation?
Location
 Size
 Date of sale
 All of the above
22. Which of the following would usually be considered least important when making adjustments using the Market Data Approach to value a duplex?
Floor plan
 Size
 Rents
 Neighborhood
23. Which of the following should usually be considered when setting up a reserve account?
Carpeting
 Roofing
 Exterior Painting
 All of the above
24. Investors should usually hire a professional appraiser to determine what price to offer for a 16-unit apartment building.
True
 False
25. Which of the following information is not required in order to determine the NOI of a property?
Gross income
 Accrued depreciation
Reserve account
 Management fee
26. The theory of capitalization most often used by real estate appraisers is:
Band of Investment Theory
 Risk Evaluation Theory
 Direct Comparison Theory
Comparison of Quality Attributes Theory

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