What this section covers: Concept and principles of value, Appraisal process and federal oversight, Sales comparison, cost and income approaches, CMA, BPO, assessed value.
5 free practice questions
Click an answer: you see at once whether it is right, with the explanation.
-
Question 1A home sold for $410,000 because the buyer was desperate to move quickly, although similar homes sell for about $390,000. The $410,000 is the:
Show the answer
Answer: A — Market price.
Market price is what was actually paid in a given sale. Market value is the most probable price in a competitive, open market with typically motivated, informed buyers and sellers, which here is about $390,000.
Checked against: National outline III.A.1 Market value vs. market price
-
Question 2Which group lists the four characteristics that give real estate value?
Show the answer
Answer: B — Demand, utility, scarcity and transferability.
Value exists when there is effective demand, the property has utility, it is scarce and it can be transferred. The list of immobility, indestructibility, uniqueness and situs mixes physical and economic characteristics of land.
Checked against: National outline III.A.2 Characteristics of value
-
Question 3An appraiser must value a church that rarely sells and produces no rental income. Which approach is most useful?
Show the answer
Answer: C — Cost approach.
The cost approach (land value plus cost of the improvements minus depreciation) is the most reliable for special-purpose properties such as churches, schools and public buildings, which have few comparable sales and no income.
Checked against: National outline III.C.2 Cost approach
-
Question 4A new highway interchange brings heavy noise next to a well-kept home and lowers its value. This loss is:
Show the answer
Answer: D — External (economic) obsolescence.
External or economic obsolescence is a loss of value caused by factors outside the property, such as noise, traffic or a declining area. The owner cannot fix it, so it is considered incurable.
Checked against: National outline III.C.2.b Physical deterioration, functional, and economic obsolescence
-
Question 5A single-family rental sold for $180,000 and rents for $1,500 a month. What is its gross rent multiplier (GRM)?
Show the answer
Answer: D — 120.
For houses, GRM = sale price divided by monthly gross rent: $180,000 / $1,500 = 120. A gross income multiplier for commercial property uses annual income instead.
Checked against: National outline III.C.4 Gross rent and gross income multipliers
Instant access: by paying you request immediate access to the digital content and acknowledge you lose your right to cancel.
More Real Estate Exam (national portion) practice
Full free Real Estate Exam (national portion) practice test
Mixed questions, test format and official rules.
Real property, legal descriptions and land use practice questions
5 free questions
Ownership, transfer and title practice questions
5 free questions
Contracts and agency practice questions
5 free questions
Real estate practice and fair housing questions
5 free questions
Disclosures and environmental issues practice questions
5 free questions
Financing and settlement practice questions
5 free questions
Real estate math practice questions
5 free questions
Pearson VUE and PSI are trademarks of their owners. passmock is not affiliated with or endorsed by Pearson VUE, PSI Services, any state real estate commission or department, or any real estate school. Original practice questions, not questions from the real test.
Short on time? A professional can help
Prefer to work with a professional? A tutor, a prep course or a driving school: we can pass your request to up to 3 partners. Free, no obligation; passmock does not teach. How to choose.