Practice Exam

Your score: 55%

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

Correct: 33/60 Incorrect: 27/60

Review answers below

Question 1

The accuracy of the market extraction method depends on an accurate reproduction cost new
estimate for subject property improvements and ______.

Actual comparable sales of both improved properties and vacant sites

Actual construction and deprecation costs for the comparable properties

A current sales price for the subject property

An accurate estimation of the subject property's remaining economic life

The accuracy of the market extraction method also depends on whether there are comparable sales of
both improved properties and vacant sites available.

Question 2

Discounted cash flow analysis and annuity capitalization are forms of ______.

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 future income value.

Question 3

The amount of money returned from an investment is the ______.

Capitalization

Cash flow

Reversion

Yield

Yield and cash flow both describe return on investment, but cash flow is the amount of income after
expenses are deducted.

Question 4

What term describes the value of an income property at resale or at the end of a lease period?

Capitalization

Cash flow

Reversion
 Yield

Income property is valued according to the return on investment and the return of investment, such as
property resale or reversion.

Question 5

Which of the following loans may require compliance with Appraiser Independence
Requirements?

Commercial

Conventional

FHA

VA

AIR may apply to conventional loans used to purchase a single-family dwelling of one to four units.
Federally insured or guaranteed loans (such as FHA or VA or commercial loans) are exempt.

Question 6

What should a real estate licensee do if her client insists on waiving the appraisal contingency?

Ask the client to sign a disclaimer.

Forbid the client from waiving the contingency.

Give the client legal advice.

Tell the client it's fine.

If your buyer client wants to waive the appraisal contingency, ask the buyer to sign a disclaimer stating
that he or she knows the risks associated with waiving the contingency.

Question 7

Related to the legal test of a fixture, in the acronym MARIA, what do the two As stand for?

Acceptability of the fixture and agreement of the parties

Adaptability of item and accessibility to the property

Adaptability of item to land's use and agreement of the parties

Allowable use and acceptable use

The two As in MARIA stand for adaptability of the item to the land's use and agreement of the parties.

Question 8

When property values increase in a newly developed area, the neighborhood is in what stage of
its life cycle?

Decline

Equilibrium

Growth

Rejuvenation

The growth stage is characterized by market acceptance when property values are increasing.
Question 9

Natural items, such as trees and bushes, as well as man-made items, such as fences and
buildings, that are permanently attached to the property are considered ______ and are part of
the real property being conveyed in a real estate transaction.

Accessories

Fixtures

Landscaping

Trade fixtures

These are examples of fixtures, which are anything that's permanently attached to land, and include
natural and man-made items. The courts use five basic tests to determine whether an item is a fixture
or personal property.

Question 10

With which of the four methods used to find the reproduction cost of a structure does the
appraiser add the itemized costs-including direct and indirect expenses-of building or
installing all of a new structure's component parts?

Index

Quantity survey

Square-foot

Unit-in-place
This is a description of the quantity survey method. Indirect costs include items such as a building
permit, a land survey, and overhead expenses. Direct costs include site preparation and building
construction.

Question 11

Larry is an appraiser who wants to get a general idea of the value of land for a home. He knows
there's a one-to-four relationship between land values and building values in the area. He's
using this relationship to calculate the approximate market value of the land. What method is
he using?

Allocation method

Cost analysis

Extrapolation method

Sales comparison

This describes the allocation method. This method works best for new construction. One of the
drawbacks of using this method is that it doesn't take into account differences between properties.

Question 12

Although you've told her that the value of a modular home is basically the same as a site-built
one and that the quality may even be better, Sandy absolutely refuses to buy a modular home.
What tell-tale sign of a modular home should you look for during showings?

A HUD code label affixed to the exterior siding

A label installed in the cabinet underneath the kitchen sink

A Modular Home label attached to the interior of the front door

 A steel chassis underneath the home

Modular homes require a label to be installed in the cabinet underneath the kitchen sink. Because they
were manufactured in controlled-environment factories and made to withstand transportation across
roads and highways, in some ways, modular homes are considered to be better quality than site-built
homes.

Question 13

According to national standards for measuring square footage of a dwelling, which space
should be included?

Attached accessory apartment

Garage

Unfinished attic

Unfinished basement

Garages and unfinished spaces may be included as unfinished square footage only.

Question 14

The total sales price of a property is $350,000. The cost of improvements less depreciation is
$50,000. Using the abstraction method, what's the land value?

$150,000

$250,000

$300,000
 $400,000

The sales price of the property ($350,000) less the cost of improvements minus depreciation (50,000)
is $300,000.

Question 15

Appraisers need general data, including information about the physical characteristics of a
market area. Which of the following is a good source for this type of information?

Area maps

Financial statements

Register of Deeds

Tax assessor records

Appraisers will find information about the physical characteristics, climate, and natural resources from
area maps and other sources.

Question 16

What's the first step an appraiser takes when using 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.
Before comparing the subject property to others on the market, appraisers must know the
characteristics of the subject property that are in demand.

Question 17

Billy is considering a career as a real estate appraiser. Which of these skills should he be
prepared to develop?

Negotiation

Presentation

Research and analysis

Sales

Appraisers do a lot of number crunching, but not much sales or negotiation.

Question 18

You're the listing agent for the Andersons and their property has been the subject of a bidding
war. The contracted sales price with the winning bidder is $50,000 above list price. What
primary risk do the parties face?

Higher closing costs

Increased taxes

Litigation

Lower appraisal

When property prices ratchet up outside of initial market value (list price), an appraiser may have
trouble locating comparable sales to justify the inflated price.
Question 19

Sam is looking at a residential structure and trying to determine how much longer from that
point in time the house can be used as a residence. What's Sam measuring?

Economic life

Effective age

Physical life

Remaining economic life

Sam is measuring the structure's remaining economic life, which is the period of additional time after
the appraisal that a structure can be used for its original purpose.

Question 20

Once Greg and Caitlin were married, they decided to purchase a home together. Since it was a
shotgun wedding after a weekend in Vegas, they made sure that their ownership included the
right of survivorship as well as protection from the other spouse attempting to sell the house
from under them. Though not recognized in all states, the most likely form of co-ownership
under which they would make this purchase is ______.

Estate in severalty

Joint tenancy

Tenancy by the entirety

Tenancy in common
Tenancy by the entirety is concurrent ownership between two married people as an integrated legal
unit. This includes the right of survivorship as well as a requirement that conveyance can only happen
when both parties consent to it.

Question 21

What type of information would an appraiser gather from transit authorities?

Environmental data

General data

Site data

Specific data

Transit authorities would be a good source of information about types of public transportation available
in a market, which is general data that appraisers need.

Question 22

Which measure of time, with regard to depreciation, is the age a structure appears to be?

Economic life

Effective age

Physical life

Remaining economic life

This is the definition of effective age. A structure's effective age can be higher or lower than its
chronological age, depending on the structure's original construction quality, and the care and updates
it's received since then.

Question 23

The accuracy of the market extraction method depends on whether there are actually
comparable sales of both improved properties and vacant sites and ______.

A current sales price for the subject property

An accurate estimation of the subject property's remaining economic life

An accurate reproduction cost new estimate for subject property improvements

An accurate reproduction cost new estimate for the comparable properties

The accuracy of the market extraction method also requires that the estimate of reproduction cost new
for subject property improvements is accurate.

Question 24

The second step of the appraisal process that a qualified appraiser will use is to _______.

Determine highest and best use

Gather and analyze data

Identify data needed

State the problem

The second step of the appraisal process defined by the Uniform Standards of Professional Appraisal
Practice is to identify the data needed to solve the problem that's been identified.

Question 25

Convert 0.19 to a percentage.

0.0019%

0.19%

1.9%

19%

To convert a decimal to a percent, you move the decimal point two places to the right and add the
percent sign.

Question 26

Which of the following approaches to value uses a capitalization rate?

Cost approach

Income approach

Price approach

Sales comparison approach

Capitalization uses income and value and rate and is useful in the income approach to value.
Question 27

The Appraiser Qualifications Board has set a minimum of 150 hours of appraiser education for
which category of qualified appraiser?

Apprentice real property appraiser

Certified general real property appraiser

Certified residential real property appraiser

Licensed residential real property appraiser

A licensed real property appraiser must complete 150 hours of appraisal courses and must also have
an associate's degree or 30 hours of college-level education.

Question 28

If an appraisal is lower than the agreed-upon sales price, what steps can the seller take?

A second appraisal can be ordered, although there should be good reason to

question the first appraisal.

A second appraisal can be ordered, but it's always the buyer's expense.

A second appraisal can be ordered, but the seller must pay for it.

A second appraisal can be ordered, which typically turns out to be higher.

It's rare for a second appraisal to help, and it can sometimes backfire. For that reason, a second
appraisal should be ordered only if there's good reason to question the validity of the first one.
Question 29

The Appraiser Qualifications Board has set a minimum of 75 hours of appraiser education for
which category of appraisers?

Appraiser trainee

Certified real property appraiser

Journeyman real property appraiser

Licensed residential real property appraiser

Appraiser licensing has four categories. The lowest level is appraiser trainee, which requires 75 hours
of appraiser education.

Question 30

To determine the estimated reproduction cost of a subject building using the square-foot
method, the appraiser takes the ______ and multiples it by the cost per square foot of a
recently constructed comparable structure.

Cost of the non-living areas and improvements of the subject property

Cost of the non-living areas of the subject property

Regional multiplier for the region in which the subject property is located

Square footage of the subject building's living area

Using the square foot method, the appraiser multiplies the cost per square foot of a recently
constructed comparable structure by the number of square feet in the subject building.

Question 31
The Appraiser Qualifications Board has set a minimum of 200 hours of appraiser education for
which category of qualified appraiser?

Apprentice real property appraiser

Certified general real property appraiser

Certified residential real property appraiser

Licensed residential real property appraiser

A certified residential real property appraiser must complete 200 hours of appraisal courses and must
also have a bachelor's degree or higher.

Question 32

When using the sales comparison approach to value, what might it mean if there's a large total
adjustment needed for a comparable property?

The comparable is much less valuable than the subject property.

The comparable is much more valuable than the subject property.

The comparable is nearly identical to the subject property.

The property may not be a reliable comparable for the subject property.

If there's a large total adjustment, it may mean that the property is too different from the subject and
therefore not reliable as a comparable property. Appraisers may explain their selection in such a case.

Question 33
What's another name for the profit made from an investment, which is usually expressed as an
interest rate or discount rate?

Capitalization rate

Capital recapture

Dividend

Return on investment

Return on investment is another name for the profit made from an investment.

Question 34

The assessed value of a condominium is usually higher than a similar ______ because of
outright ownership.

Cooperative

Single-family home

Townhome

Vacation property

Because cooperatives are not owned outright, the assessed value of a cooperative typically is lower
than that of a condominium.

Question 35

Which house style is characterized by flat roofs, earth-toned stucco walls, and Native American
and Spanish Colonial influences?
 Colonial

Prairie

Pueblo

Ranch

The Pueblo style is popular in Southwestern states and draws influence from Native American and
Spanish styles.

Question 36

Tim, an appraiser, is using the cost approach to determine property value. Which of the
following property types is Tim most likely appraising?

Condominium

Cooperative

Newly built commercial property

Single-family residence built in the 1980s

The cost approach is most often used with newly constructed properties, unique properties, and
special purpose use properties. The approach isn't used with condos or co-ops, and isn't used as often
with older properties, because it's difficult to accurately estimate depreciation.

Question 37

An appraiser considers several factors when selecting comparable properties as part of the
sales comparison approach, including whether they are similar in location, size, and features to
the subject property. Which of these factors will also be a consideration?
 Broker's commission

Demographics

Financing terms

Lender used

The appraiser reviews the financing terms of the comparable property's sale, as well as the market
conditions and conditions of the sale. These are all factors that may affect the price paid.

Question 38

Government regulation of a property that deprives the landowner of the economic value of the
property without compensation from the government is called ______.

Condemnation

Eminent domain

Escheat

Inverse condemnation

Inverse condemnation occurs when government takes private property, either physically or by the
effect of regulation on the property value, without offering the owner just compensation as is required
by eminent domain.

Question 39

In terms of age of sale, which of the following properties is the best comparable property?

Property A is an active listing.

 Property B was sold nine months ago.

Property C was sold three months ago.

Property D was sold a year-and-a-half ago.

While any of these properties might be used as a comparable in the sales comparison approach, the
most recently sold property is the best choice, if all other factors are similar.

Question 40

A capitalization rate is applied to the ______ when using an income capitalization method of
appraisal.

Effective gross income

Gross rent multiplier

Net operating income

Potential gross income

Net operating income represents the future income that must be capitalized in order to find a present
value.

Question 41

Which of the following is a true statement about how adjustments are made in the sales
comparison approach?

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

 Appraisers adjust downward when a comparable is missing a feature found in the
subject property.

Appraisers adjust upward when a comparable is missing a feature found in the

subject property.

Only three adjustments per comparable property are allowed; otherwise it's not
considered sufficiently similar.

All adjustments are made to the comparable properties' sales prices to make them as similar as
possible to the subject property.

Question 42

Jason, your client, is developing a subdivision of 140 houses. He may place deed restrictions
on as many as ______ properties.

140 (100%)

35 (up to 25%)

70 (up to 50%)

Zero

Deed restrictions can be placed on an individual property, an entire subdivision, or a neighborhood.

Question 43

Which of the following is an arm's length transaction?

James buys his own listing.

 Meredith buys her mother's home.

The buyer and seller are unknown to one another.

Two neighbors trade houses.

An arm's length transaction means that the property has no insider deals, and only the usual market
pressure applies.

Question 44

When a property's value is dropping because the neighboring property's yard is filled with
trash, it's an example of ______.

Depreciation

Progression

Regression

Substitution

When the value of a higher-quality property is reduced by an adjacent lower-quality property, this is
called regression.

Question 45

In a trust, the trustee is the person who ______.

Creates the trust

Is empowered to void the trust for any reason

 Makes sure the terms of the trust are carried out

Receives the benefits of the trust

The trustee is the person in charge of carrying out the terms of the trust.

Question 46

Which of the following statements regarding the annuity method is true?

Annuity tables assume the investment recapture rate will be greatest in the first few
years of the investment term.

Annuity tables assume the same investment recapture rate for every year of the
investment.

The straight-line method of recapture assumes the investment recapture rate will be
greater in the beginning of the investment than in its last years.

The straight-line method of recapture assumes the same recapture rate for every year
of the investment.

Annuity tables take into account the fact that the recapture rate will vary over time (with a slower
recapture in the earliest years, and a greater recapture in the investment's last years), while the
straight-line method of recapture assumes the same recapture rate for every year of the investment
term.

Question 47

John is an appraiser valuing a piece of property that consists of 20 acres of land and several
buildings. He'll be using the land residual technique. Which of the following is a true statement?

Neither the value of the land or the buildings is known.

 The value of the buildings is known.

The value of the land is known.

This technique will calculate a typical rate of return for the investment.

The land residual technique is used when the value of the building(s) is known. In order for the
technique to be used, a typical cap rate must be known.

Question 48

At what point during ownership may a property owner place a restriction on a deed?

After owning the property for 10 years or more

After owning the property for five years or more

Any time

Only upon construction, and only by the developer

A property owner can place a restriction on a deed any time during ownership. This restriction may run
with the land forever (appearing on all future deeds) or it may have a time limit.

Question 49

An abandoned or otherwise unused commercial or industrial site with suspected contaminants

is known as what?

A brownfield

A Brown Zone
 A space that cannot be used

A special use landfill

A brownfield is an abandoned or otherwise unused commercial or industrial site with suspected

contaminants.

Question 50

Which of the following is the cost of replacing a building in the case of total loss?

Insured value

Investment value

Mortgage value

Value in use

Insured value should be the cost of replacement in the event the property's destroyed.

Question 51

Which of the following statements applies to reproduction cost?

It should be noted as a condition of the appraisal that it's impossible to create an

exact duplicate of the subject property in today's marketplace.

The building upon which the cost is based should be approximately the same as the
subject building with regard to size and use.

The exact type of materials or workmanship that went into making the subject
property unique doesn't have to be considered.
 The same materials and technique that went into constructing the subject property
must be used as part of the analysis.

When it comes to estimating reproduction costs for a building, appraisers must look at the cost of
locating and using the same materials made with the same design and style, and by using the same
technique, as how the subject property was constructed.

Question 52

Convert 78% to a decimal.

0.078

0.78

7.08

7.8

To convert a percent to a decimal, move the decimal point two places to the left and drop the percent
sign.

Question 53

Who is responsible for developing the Uniform Standards of Professional Appraisal Practice
(USPAP) that licensed appraisers must follow?

Appraisal Practices Board

Appraisal Qualifications Board

Appraisal Standards Board

 Appraisal Subcommittee

USPAP is the responsibility of the Appraisal Standards Board.

Question 54

Which of these is an example of a home type rather than a house style?

Prairie

Pueblo

Ranch

Two-story

Home types include two-story, one-and-a-half-story, one-story, split-level, split-entry, and factory-built.

Question 55

You're a builder who wants to follow the national standards for measuring the square footage
of a home you've built. Which of the following areas do you include?

A master suite

An unfinished attic with six-foot ceilings

Attached garage

Detached pool house

Under the national standards, neither unfinished spaces nor detached structures are included when
measuring a home's square footage.
Question 56

One benefit to landscaping is that it ______.

Increases noise levels

Increases surface water

Reduces soil erosion

Unveils unsightly areas

Landscaping doesn't increase surface water. Landscaping can conceal unsightly areas, reduce noise
levels, define spaces, provide shading, and reduce soil erosion.

Question 57

What is a bound?

A line that runs east to west

A line that runs north to south

A physical feature that defines the boundaries of the land

The direction and distance of a line forming the boundary of a property

Bounds (boundaries) are physical features that define the boundaries or borders of the land.

Question 58
Claire's lender told her that her home purchase would require an appraisal because it's a
"federally related transaction." What do we know about the loan?

The loan involves a federal financial agency or regulatory authority.

The loan is being partially funded by foreign investors, requiring federal oversight.

The loan is being partially funded by the federal government.

The loan is for more than $350,000 which requires federal approval.

A federally related transaction is a transaction for sale, lease, purchase, investment, or exchange of
real property in which a federal financial agency or regulatory authority is involved (e.g., FNMA).

Question 59

When recording neighborhood growth in the Neighborhood section on the Uniform Residential
Appraisal Report, an appraiser will select what status if a neighborhood is fully developed?

In-balance

Rapid

Slow

Stable

If a neighborhood is fully developed, its growth is stable. If many lots are available, the growth rate
may be rapid, stable, or slow.

Question 60
Rico is an appraiser who is performing a valuation on a property. What's another term for what
Rico is doing?

Analytical exercise

CMA

Formal appraisal

Price opinion

Another term for a valuation is a formal appraisal.