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IAAO 101 Practice Tests-Graded A
List the four tests that the appraiser must make in the analysis of the highest and best use. - correct Answer-1. Legally Permissible
- Physically Possible
- Financially Feasible
- Most Productive _______ ________ is a parcel of land and any structures or improvements that are permanently affixed thereto. - correct Answer-Real Estate Property is considered ________ if it can be moved without causing any damage or change to either the item of property or the structure to which it is attached. - correct Answer-Personal Assessment level times the tax rate equals the ________ ______ ______. - correct Answer-Effective Tax Rate The property tax is a/an ____ _______ tax, meaning it is based on the value. - correct Answer-Ad Volorem The assessor is responsible for the _______, ________, and __________ of all taxable property. - correct Answer-Discovery, Listing, Valuation The taxable location of personal property is referred to as its ________. - correct Answer-Situs An estimate of value, usually in writing, of an adequately described property, as of a given date, is termed a/an _______________. - correct Answer-Appraisal A jurisdiction's tax rate is determined by dividing the ______________ to be derived from the property tax by the ________ ____________ _______ of the taxing jursidiction. - correct Answer-Revenue or Budget/Total Assessed Value The type of value usually estimated by the assessor is __________ value. - correct Answer-Market The ____________ ____ _______ reflects the ratio between the current tax bull and the property value. - correct Answer-Effective Tax Rate
In order for a property to have value, it must have __________, ___________, ________________, and ______________ _____________ __________. - correct Answer-Utility, Scarcity, Desirability, Effective Purchasing Power The use that generates the highest net return to a property over a reasonable time period is called its __________ ___ _____ ___. - correct Answer-Highest and Best Use The principle of _______ states that maximum value of a neighborhood is attained when the uses of land are perfectly complementary. - correct Answer-Balance Which appraisal principle affirms that land cannot be valued on the basis of one use while improvements are valued on the basis of another? - correct Answer-Consistent Use _____________ is the point at which the forces of supply and forces of demand meet. - correct Answer-Equilibrium List the two types of highest and best use analysis. - correct Answer-1. As If Vacant
- As If Improved The typical life cycle of a neighborhood includes ______, ________, _________, and _____________. - correct Answer-Growth, Stability, Decline, Revitalization What elements of the marketplace are most likely to contribute to a change in demand?
- correct Answer-1. Consumer Taste/Preferences
- Consumer Income
- Price of Related Commodities
- Consumer Expectations
- Price of the Commodity Market value is defined as the most probable price of a property in terms of money, assuming A. Buyer and seller are typically motivated. B. A reasonable time is allowed for exposure in the open market. C. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto. D. All of the above - correct Answer-D. All of the above _______ refers to the amount of goods that producers are willing to sell at a given price during a specified time period. - correct Answer-Supply Ownership of all legal rights to property is limited by government in four ways: - correct Answer-1. Taxation
- Eminent Domain
- Police Power
- Escheat
The four forces that influence value and must be considered in neighborhood analysis are as follows: - correct Answer-1. Physical (Environmental)
- Economic
- Governmental
- Social The typical life cycle of a neighborhood can be extended or shortened by changes in __________ factors. - correct Answer-Economic An area of complementary land uses in which all properties are similarly influenced by the four forces affecting value is termed a/an ___________. - correct Answer- Neighborhood Municipal services, planning, and zoning are examples of _______________ factors that affect neighborhoods. - correct Answer-Governmental What are the four elements of supply? - correct Answer-1. Cost of Production
- Price of Goods
- Entrepreneurs' Expectations
- Number of Sellers The underlying principle for the three approaches to appraisal is _______________. - correct Answer-Substitution The fours factors affecting land values are as follows: - correct Answer-1. Physical (Environmental)
- Economic
- Governmental
- Social The principle of _________ ______________ states that returns to land are what remain after returns to labor, management, and capital are satisfied. A. Supply and Demand B. Surplus Productivity C. Change D. Anticipation - correct Answer-B. Surplus Productivity List the six methods of land valuation: - correct Answer-1. Direct Sales Approach
- Allocation
- Abstraction
- Anticipated Use or Development
- Capitalization of Ground Rent
- Land Residual Technique
A complete set of ___________ maps showing boundaries, parcel sizes, sales information, and other relevant features of all parcels in a jurisdiction is a necessary tool for assessors. - correct Answer-Cadastral The practice of measuring the direction of property lines with compass bearings and the distance with measuring chains or tapes in order to obtain a property description is known as _______ ___ ________. - correct Answer-Metes and Bounds A township in the Public Land Survey System contains __ sections, with each section containing ___ acres. - correct Answer-36, 640 When land is valued by using the direct sales comparison approach, sales must first be __________ into homogeneous groups. - correct Answer-Stratified Improvements such as streets, sidewalks, and the availability of utilities are considered _________ improvements. - correct Answer-Off-Site Which method of land valuation compares the property being appraised to comparable vacant parcels that have recently sold? - correct Answer-Direct Sales Comparison Front foot, square foot and acre are examples of basic _____ of __________. - correct Answer-Units of Comparison In the direct sales comparison approach to land valuation, adjustments are always made to the ______________ property, never to the _________ property. - correct Answer-Comparable, Subject If a comparable lot that sold is superior in some aspect to the subject lot, a _________ adjustment would be made to the comparable property. - correct Answer-Negative A method of valuing land that subtracts the depreciated value of the improvement from the sale price is known as _____________. - correct Answer-Abstraction The preferred method of valuing land if adequate data are available is the A. Abstraction Method B. Allocation Method C. Cost of Development Method D. Direct Sales Comparison Method - correct Answer-D. Direct Sales Comparison Method A land-to-building ratio of 1:4 means land represents __ percent of the value. - correct Answer- The appropriate map scale for suburban areas and small towns is _______. - correct Answer-1"=200'
B. 1.
C. 13.
D. 133.00 - correct Answer-A. 0. _________ divided by the assessed value equals the tax rate. A. Market value B. Millage C. Budget D. Assessment level - correct Answer-C. Budget Assessment level times the tax rate equals the A. Effective tax rate B. Nominal tax rate C. Taxable value D. Market value - correct Answer-A. Effective tax rate Given the following, compute a tax rate using dollars per hundred--Budget: $6,000,000; Market value: $800,000,000; Assessment level: 50%; Non-property tax revenue: $1,000, A. $11. B. $6. C. $1. D. $1.25 - correct Answer-D. $1. _____________ is the physical land and everything permanently attached to it. A. Chattel B. Real property C. Real estate D. All of the above - correct Answer-C. Real estate Which of the following is a governmental restriction to the "bundle of rights?" A. Lien B. Eminent domain C. Lease D. Easement - correct Answer-B. Eminent domain Which of the following is a basic right associated with the ownership of property? A. To use B. To lease or rent C. To enter or leave D. All of the above - correct Answer-D. All of the above In order for a property to have value, it must have utility, scarcity, desirability, and effective purchasing power. The economic forces that determine scarcity are A. Supply and demand B. Anticipation and change
C. Increasing and decreasing returns D. Progression and regression - correct Answer-A. Supply and demand __________ is the point at which the forces of supply and demand meet--the point of balance. A. Changes in supply B. Changes in demand C. Equilibrium D. All of the above - correct Answer-C. Equilibrium A ____________ interest is ownership of all the rights in a property, except those reserved by the government, and with no private encumbrances. A. Possessory B. Leasehold C. Leased fee D. Fee simple - correct Answer-D. Fee simple In the appraisal process, data collection requires the assessor to collect ___________________. A. General data B. Specific data C. Comparative data D. All of the above - correct Answer-D. All of the above Which of the following is not one of the four great forces by which value is created, maintained, modified, or destroyed? A. Economic B. Conceptual C. Social D. Governmental - correct Answer-B. Conceptual A ______________ may be defined as an area of complementary land uses in which all properties are similarly influenced by the four forces affecting value. A. Tract B. Lot C. Neighborhood D. Subdivision - correct Answer-C. Neighborhood Using the allocation method of land valuation, the land value for the subject would be, given the following: [Parcel A, Land value: $50,000; Improvement value: $150,000], [Parcel B, Land value: $100,000; Improvement value: $300,000], and [Subject property, Total value: $300,000]. A. $100, B. $60, C. $75, D. None of the above - correct Answer-C. $75,
D. All of the above - correct Answer-D. All of the above Stratification is the first step in analyzing land sales and the primary sort is by ______________. A. Zoning B. Market area C. Land use regulations D. Probable future use - correct Answer-B. Market area A 70'x120' site with level ground and an average view and located south of Route 66 is being appraised. Sale 1 sold recently for $50,000, is 80'x120', has hilly ground and a fair view, and is located north of Route 66. Sale 2 sold 4 months ago for $54,500, is 60'x120', has level ground and a good view, and is located south of Route 66. Lots located south of Route 66 are considered 10% more desirable than lots located north of Route 66. A good view is worth 15% more, and a fair view is work 15% less. Level ground is worth 10% more than hilly ground. Lot sizes that vary more than 1,000 square feet require a 10% adjustment. Lot values have been increasing at a rate of 0.5% per month. The indicated value of the subject lot would be ___________. A. $60, B. $61, C. $65, D. $62,500 - correct Answer-D. $62, A unit of comparison that would be applicable to agricultural farmland or larger rural residential tracts would be the _________ ___ _____. - correct Answer-Price per acre In the selection of comparable properties in the sales comparison approach, list four comparability items that should be considered. - correct Answer-1. Financing
- Similar in Location
- Market Conditions
- Similar in Size, Age List the order of adjustments in the sales comparison approach. - correct Answer-1. Financing
- Market Conditions
- Location or Other Physical Characteristics Which method of determining adjustments in the sales comparison approach cannot be used to determine market conditions (changes in value over time)? - correct Answer- Depreciated Cost The first step in the sales comparison approach is to define the appraisal problem. List the five items that need to be included in defining the appraisal problem. - correct Answer-1. Identify the Property to be Appraised
- Determine the Property Rights to be Appraised
- Define the Purpose and Function to be Appraised
- Specify the Date of the Appraisal
- Define the Type of Value The subject property is a duplex located on a 9,000-square-foot lot. The total value of this property is $280,000. There are two sales that are similar, and the improvement value is well documented. Sale 1 sells currently for $300,000, with an improvement vale of $240,000. Sale 2 sold 12 months ago for $250,000, with a current improvement value of $220,000. The lot size for both Sale 1 and 2 is 9,000 square feet. Values in this area have been increasing at a rate of 10% per year. Using the allocation method of land valuation, the indicated value of the lot for the subject property would be __________. A. $55, B. $56, C. $60, D. $70,000 - correct Answer-B. $56, Given the following [Sale price: $220,000; Cost new of improvement: $260,000; Depreciation: $90,000], what is the indicated land value? A. $40, B. $50, C. $70, D. None of the above - correct Answer-B. $50, The principle illustrating that market value is determined by such factors as zoning, rent controls, interest rate, and so on is ________. A. Anticipation B. Contribution C. Consistent use D. Change - correct Answer-D. Change The appropriate map scale for urban areas is __________. A. 1"=50' B. 1"=200' C. 1"=200' D. 1"=400' - correct Answer-C. 1"=100' A lot measures 242'x1800'. What is the value of the lot if the land is worth $60,000 per acre? A. $600, B. $60, C. $1,600, D. None of the above - correct Answer-A. $600, The _________ unit would be the appropriate unit when pedestrian access is an important consideration. A. Square foot B. Front foot
Building A was constructed 20 years ago at a cost of $400,000. The index 20 years ago was 200. The current index is 350. Reproduction cost for Building A would be _____________. - correct Answer-$700, Cost components such as the floor or roofing are considered ______________ costs, and are expressed as cost per square foot. - correct Answer-Horizontal The easiest, fastest, and most widely used method of estimating cost is the __________ _______ method. - correct Answer-Comparative unit Which of the following is a desirable feature of a cost manual? A. Applicable to most structure types B. Based on actual costs C. Suitable for computerization D. All of the above - correct Answer-D. All of the above The difference between the market value of an improvement and its cost at the time of appraisal is termed _______________. - correct Answer-Depreciation The five methods of measuring depreciation are - correct Answer-1. Sales Comparison Method
- Capitalization of Income Method
- Economic Age-Life Method
- Modified Economic Age-Life Method
- Observed Condition (Breakdown) Method Property B sold for $180,000 with an estimated land value of $80,000. The RCN for the improvement is $200,000. Depreciation is ______%. - correct Answer-50% Curable physical deterioration is measured by ____ ___ ____. - correct Answer-Cost to cure _________ obsolescence is a loss in value due to a deficiency, modernization, or superadequacy within the structure. - correct Answer-Functional ___________ obsolescence is a loss in value resulting from a decrease in utility and desirability caused by factors outside the property's boundaries. - correct Answer- External Incurable physical depreciation is measured by the ___________________. - correct Answer-Age-life method If a depreciation table started at 0% and went to 40%, a percent good table would start at _____ and go to _____. - correct Answer-100%, 60%
Which method of estimating depreciation is the most detailed? Its use is required in the writing of demonstration appraisal reports. - correct Answer-Observed Condition (Breakdown) Method An item classified as a short-lived item has a new cost of $5,000. Its actual age is 5 years and its total useful life is 20 years. The dollar amount of depreciation would be ________. - correct Answer-$1, A two-story residence has only one bath, which is located on the second floor. If a second bath had been included on the first floor when the residence was originally constructed, RCN would be $11,500. The cost to install (cure) the second bath today would be $13,500. The amount of functional obsolescence would be ___________. - correct Answer-$2, A residence is located on a street that has become a very busy thoroughfare. It rents for $800 per month. Residences not located on the busy street rent for $825 per month. The GRM for this area is 150, and the land-to-building ratio is 1:4. The indicated amount of external obsolescence is __________. - correct Answer-$3, A residence has an RCN of $200,000. Items classified as curable physical deterioration have an RCN of $10,000 and a cost to cure of $12,000. Incurable physical deterioration--short-lived items have an RCN of $40,000 and a depreciation amount of $18,000. The actual age for the residence is 6 years, and the total useful life is 60 years. The total amount of physical deterioration for the residence would be ________. - correct Answer-$45, If the cost to cure a functional deficiency within a residence exceeds the increase in value added to the property, it is called ___________ functional obsolescence. - correct Answer-Incurable The principle of __________ holds that the value of a property tends to be set by the price that would be paid to acquire a property of similar utility and desirability within a reasonable amount of time. - correct Answer-Substitution The principle of _________ is the underlying principle in the adjustment process in the sales comparison approach. - correct Answer-Contribution A major principle in the sales comparison approach holds that the relationship between a property and its environment must be in ____________ in for a property to reflect its optimum market value. - correct Answer-Balance A major advantage to the sales comparison approach is that it reflects the actions of __________ and ___________ in the market. - correct Answer-Buyers, Sellers
