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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?
Gross income
Net Income
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
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
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 
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.
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?
Contractor overhead
Construction loan interest
17. When utilizing the Cost Approach method, depreciation must be considered for all components except:
Contractors profit
Equipment rental
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?
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
23. Which of the following should usually be considered when setting up a reserve account?
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.
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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