Real Estate Practice - Chapter 15: Real Property Value

Real Estate

Property Valuation

Appraisal Laws

FIRREA

Appraisers Certification Act

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| Attempts: 134 | Questions: 15

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1. "Price" by contrast, is the amount of money a seller is asking for a property or the amount of money a buyer offers on a property for sale or the actual amount of money that is paid for a property through a purchase and sale. Price is a fact while value is a subjective opinion.

True

False

The explanation for the given correct answer is that the statement accurately describes the difference between price and value. Price refers to the actual monetary amount associated with a property, whether it is what the seller is asking, what the buyer offers, or what is paid in a transaction. On the other hand, value is a subjective opinion that can vary from person to person. Therefore, the statement correctly states that price is a fact while value is a subjective opinion.

Explanation

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About This Quiz

Real Estate Practice - Chapter 15: Real Property Value - Quiz

This Real Estate Practice quiz covers key concepts in property value and appraisal. It assesses understanding of the differences between price and value, the legal framework governing property appraisals, and specific requirements for becoming a certified appraiser in Pennsylvania.

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2. The "Sales Comparison Approach" to appraising is based on comparing the subject property with comparable properties. These "comps" should be as similar as possible to the subject property, be as close in proximity to the subject property, and preferably the "comps" should be based on sales in the previous 6 months to one year.

True

False

The Sales Comparison Approach is the most common approach to determine value for Residential properties.

Explanation

The Sales Comparison Approach is the most common approach to determine value for Residential properties.

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3. The "Cost Approach" to value is based on the assumption that the market value of a property can be determined by calculating the actual cost of building and land.

True

False

The Cost Approach sets the highest value.

Explanation

The Cost Approach sets the highest value.

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4. If correcting any form of physical deterioration would increase the value of the property by an amount that equals or exceeds the cost it would be considered an example of curable physical deterioration.

True

False

If correcting any form of physical deterioration would result in an increase in the value of the property that is equal to or greater than the cost of the repair, it would be considered an example of curable physical deterioration. This means that the property's value can be restored by fixing the deterioration, making it a worthwhile investment. Therefore, the statement is true.

Explanation

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5. A comparative market analysis (CMA) can be prepared by a seller and his or her real estate agent, can be presented to a buyer, and is considered as a valid appraisal.

True

False

Because this analysis does not represent a formal appraisal of real estate but rather a simple gathering of factual data, it can be performed by real estate licensees and given to sellers and buyers as factual data, as long as it is accompanied by the required disclosure statement indicating that it is NOT an appraisal.

Explanation

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6. To comply with federal law, Pennsylvania passed a certification law in 1990 that more strictly regulated the appraisal of real estate. It is known as the Appraisers Certification Act.

True

False

The statement is true because it states that Pennsylvania passed a certification law in 1990 to regulate the appraisal of real estate. This law, known as the Appraisers Certification Act, was enacted to ensure compliance with federal regulations.

Explanation

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7. An appraisal of real property is an estimate of value that is dermined by the seller and the seller's real estate agent.

True

False

An appraisal of real property is a professional estimate of value that is determined by technical analysis. It can only be conducted by an eligible professional with care and precision.

Explanation

An appraisal of real property is a professional estimate of value that is determined by technical analysis. It can only be conducted by an eligible professional with care and precision.

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8. Capitalization is the process of determining the present value of a property from its future income.

True

False

This is done by dividing the annual net income by the capitalization rate.

Explanation

This is done by dividing the annual net income by the capitalization rate.

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9. "Market price" is the worth of a property in the marketplace. "Market value" is the actual price at which a property is sold.

True

False

Market value is the worth of a property in the marketplace.

Market price is the actual price at which a property sold.

Explanation

Market value is the worth of a property in the marketplace.

Market price is the actual price at which a property sold.

Submit

10. The requirements for the Pennsylvania appraisal license will become more strict as of January 1, 2008 and will substantially increase the required hours of approved course instruction for appraisal certification.

True

False

The statement suggests that the requirements for the Pennsylvania appraisal license will become stricter and will require more hours of approved course instruction for appraisal certification starting from January 1, 2008. This implies that the answer is true.

Explanation

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11. A 1989 federal law known as the "Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), mandates state licensing or certification for real estate salesperson.

True

False

FIRREA mandates state licensing or certification of APPRAISERS. This federal law requires that only appraisers certified by each state can perform appraisals involving federally related transactions; one involving the financing of a real estate transaction with a federal institution or agency.

Explanation

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12. Constant traffic, excessive noise, environmental pollution, a high crime rate could all significantly decrease the market value of a property. This is an example of curable external depreciation.

True

False

This would be an example of INcurable external depreciation.

Explanation

This would be an example of INcurable external depreciation.

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13. Real estate "Value" is the relationship between a person and what a person wants. Therefore, it is through subjective feelings, emotions, and desires of people that value is determined.

True

False

The explanation for the given correct answer is that real estate value is indeed subjective and determined by the feelings, emotions, and desires of individuals. It is not solely based on objective factors such as location, size, or amenities. Different people may assign different values to the same property based on their personal preferences and needs. Therefore, the statement that real estate value is the relationship between a person and what a person wants is true.

Explanation

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14. To become a Pennsylvania Certified General Appraiser one must serve a 24 month apprenticeship for 2500 hours of related appraisal experience, complete 120 hours of classroom instruction in required courses and pass the Pennsylvania general appraiser's examination.

True

False

These are the requirements for a residential appraiser from 1993-2007.

As of 2008, requirements for a residential appraiser increased: 1) 24-month apprenticeship for 2500 hours, 2) Associates Degree or 21 credits, 3) 200 hours classroom instruction in required courses and pass residential appraisers exam.

Explanation

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15. In the "Unit-In-Place Method" an appraiser would itemize the cost of each component that goes into new construction of a building and the labor involved in installing each component.

True

False

The method described in this question is called "Quantity Survey Method" (it is one of the 3 methods used in a Cost Approach)

Explanation

The method described in this question is called "Quantity Survey Method" (it is one of the 3 methods used in a Cost Approach)

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