Real Estate Appraiser Practice Exam

1. A candidate reviewing the exam blueprint wants to confirm the total pool of scored items. Which single figure from the published information answers this?

• A. The fee of approximately $105
• B. The scaled passing score of 75
• C. The count of 110 scored questions
• D. None of the published figures address the number of items

2. Which of the following is described only in approximate terms in the published exam information?

• A. The scaled passing score
• B. The exam fee
• C. The topic weightings
• D. The number of scored questions

3. A deed grants a woman the right to possess and use a property for the rest of her life, with the property passing automatically to her son upon her death. What interest does the son hold during the woman's lifetime?

• A. A fee simple determinable
• B. An easement in gross
• C. A leasehold estate
• D. A remainder interest

4. Two siblings hold title to a property as joint tenants with right of survivorship. One sibling dies. What happens to that sibling's interest in the property?

• A. It converts into a tenancy in common requiring probate
• B. It automatically vests in the surviving sibling by operation of law
• C. It passes according to the deceased sibling's will
• D. It is divided equally among the deceased sibling's heirs under intestacy law

5. For a contract to be legally enforceable, one essential element is that the parties reach a 'meeting of the minds.' Which element does this phrase most directly describe?

• A. Consideration
• B. Mutual assent (offer and acceptance)
• C. Capacity of the parties
• D. Legality of purpose

6. A buyer signs a purchase agreement but is a minor at the time of signing. Which term best describes the general status of a contract entered into by a minor?

• A. Void from the outset
• B. Voidable at the option of the minor
• C. Fully enforceable against the minor
• D. Illegal and unenforceable by either party

7. A statute requires that contracts for the sale of real property be in writing to be enforceable. This requirement is most closely associated with which legal doctrine?

• A. The parol evidence rule
• B. The Statute of Frauds
• C. The doctrine of laches
• D. The doctrine of caveat emptor

8. Two parties sign a written contract that they intend as the complete and final expression of their agreement. One party later tries to introduce evidence of an earlier oral promise that contradicts the writing. Which rule generally bars this evidence?

• A. The doctrine of substantial performance
• B. The parol evidence rule
• C. The mailbox rule
• D. The Statute of Frauds

9. A party to a contract fails to perform its obligations without any legal excuse. What is this failure generally called?

• A. Novation
• B. Rescission
• C. Breach of contract
• D. Assignment

10. After a valid contract is formed, the original parties agree to replace one of the original parties with a new party, extinguishing the old obligation and creating a new one. Which term best describes this arrangement?

• A. Assignment
• B. Novation
• C. Delegation
• D. Accord and satisfaction

11. A seller makes a written offer to sell property and states the offer will remain open until Friday. Before Friday, the seller sells the property to someone else. Absent an option supported by consideration, what is the general status of the original offer?

• A. The offer remains irrevocable until Friday regardless of the seller's actions
• B. The offer may be revoked before acceptance because the promise to keep it open was not supported by consideration
• C. The offer automatically converts into a binding contract on Friday
• D. The offer is void from the moment it was made

12. A home inspector is offered an engagement in which her fee will be paid only if the pending sale of the property closes. Under the standards of practice and ethics, what should she do?

• A. Accept the engagement, since the fee amount itself is reasonable
• B. Decline the engagement, because a fee contingent on whether the sale closes is prohibited
• C. Accept the engagement but disclose the fee arrangement in the written report
• D. Accept the engagement only if the buyer and seller both consent in writing

13. A lender asks an appraiser to take an assignment on the condition that the final report support a value at or above the pending contract price. Which statement best describes the appraiser's obligation?

• A. The appraiser may accept if the condition is documented in the engagement letter
• B. The appraiser may accept because lenders routinely set value expectations
• C. The appraiser must refuse, because accepting an assignment contingent on a predetermined value or a direction in value favoring the client violates the Ethics Rule
• D. The appraiser may accept but must charge a higher fee to offset the risk

14. An appraiser is offered an assignment involving a property type she has never appraised. Under the Competency Rule, which course of action is acceptable?

• A. Accept without comment, since competency is presumed once an assignment is accepted
• B. Decline the assignment; there is no other permissible option
• C. Accept, but omit any discussion of experience from the report
• D. Accept, disclose the lack of competency, take steps to acquire the needed competency, and describe those steps in the report

15. A client asks an inspector to skip the written report and just walk her through the findings verbally to save time. The inspector's engagement must still include a written report because the standards require:

• A. A written report describing the systems and components inspected and stating which were in need of repair or not functioning as intended
• B. A written report only when a material defect is found
• C. A written report only for transactions involving a lender
• D. Whatever form of reporting the client and inspector agree to in the contract

16. After completing an inspection, an inspector recommends a roofing contractor to the client. The contractor later mails the inspector a 'thank you' check for the referral. May the inspector keep it?

• A. No, unless the amount exceeds the inspection fee
• B. No, because an inspector may not accept compensation, directly or indirectly, for referring service providers to inspection clients
• C. Yes, provided the client is told about the payment
• D. Yes, because the payment came after the inspection contract was completed

17. Two months after inspecting a home, an inspector is asked by the buyer to repair, for an additional fee, a plumbing component he flagged in his report. Which response is consistent with the ethics standards?

• A. He must decline, because an inspector may not perform repairs for an additional fee on inspected systems for a period after the inspection, typically twelve months
• B. He may take the job if he discounts the repair fee
• C. He may take the job because the inspection contract has already been performed
• D. He may take the job only if the seller also approves

18. The listing agent on a transaction calls an inspector and asks for a copy of the findings from an inspection performed for the buyer. Absent client authorization or a legal requirement, the inspector should:

• A. Provide the report, since the agent is a party to the transaction
• B. Provide a summary but withhold the full report
• C. Refuse, because inspection findings must be kept confidential unless the client authorizes release or the law requires it
• D. Provide the report only if the agent pays a copy fee

19. When agreeing to take on an appraisal assignment, what does the Scope of Work Rule obligate the appraiser to do?

• A. Perform every possible analysis regardless of the assignment's purpose
• B. Let the client dictate exactly which analyses will be performed
• C. Match the scope of work used in the appraiser's most recent similar assignment
• D. Identify the problem and perform the scope of work necessary to produce credible assignment results

20. An appraiser gave testimony in a court case involving one of her appraisals. The case reached final disposition eighteen months after she prepared the workfile. How long must she retain that workfile?

• A. One year after the testimony is given
• B. Two years after final disposition of the proceeding, because that period is always controlling
• C. At least five years after preparation, because in this case that period expires later than two years after final disposition
• D. Until the report is delivered to the client

21. A buyer's inspection agreement describes the service to be performed. Which description of the engagement is consistent with the standard definition of a home inspection?

• A. An exhaustive technical evaluation in which equipment is dismantled as needed
• B. A non-invasive, visual examination of the readily accessible systems and components, performed for a fee, intended to identify material defects
• C. A free courtesy walkthrough with no obligation to identify defects
• D. A code-compliance certification that includes moving furniture to access every surface

22. A property owner grants a prospective buyer the right to purchase a parcel within 90 days for a nonrefundable payment, but the buyer is not obligated to complete the purchase. Which type of contract does this arrangement create?

• A. A bilateral contract, because both parties made identical promises to perform
• B. A void contract, because the buyer's performance is optional
• C. An executed contract, because payment has already changed hands
• D. A unilateral contract, because only the owner is bound to perform if the buyer chooses to exercise the right

23. A seller promises to convey a parcel to a neighbor 'as a gift' with no payment or exchange of value from the neighbor. Why is this promise generally not enforceable as a contract?

• A. Because only written promises involving real property can lack enforceability
• B. Because gift promises must be recorded with the county to be binding
• C. Because it lacks consideration, an element required to form a valid contract
• D. Because the promise was not notarized

24. Both parties to a signed purchase agreement later agree, in writing, to cancel the contract entirely and release each other from further obligations. What is this action called?

• A. Anticipatory breach
• B. Mutual rescission
• C. Assignment
• D. Novation

25. A buyer under a pending purchase agreement transfers her rights and obligations under that contract to a third party who will complete the purchase in her place, with the seller's consent. What is this transfer called?

• A. Novation
• B. Rescission
• C. Subordination
• D. Assignment

26. A purchase agreement states that the buyer's obligation to close is conditioned on obtaining mortgage approval within 30 days. If the buyer applies in good faith but is denied financing, what is the typical effect on the buyer's obligation to purchase?

• A. The contract automatically converts into a lease-option agreement
• B. The seller may keep the earnest money regardless of the contingency
• C. The buyer is released from the obligation to purchase because the financing contingency was not satisfied
• D. The buyer must still close using cash in place of financing

27. A purchase agreement specifies that if the buyer defaults, the seller's sole remedy is to retain the buyer's earnest money deposit as damages. What is this type of clause called?

• A. A subordination clause
• B. A liquidated damages clause
• C. An indemnification clause
• D. An escalation clause

28. A seller of a unique parcel of real property breaches a valid purchase agreement by refusing to convey title. Because monetary damages may not adequately compensate the buyer for a specific piece of real estate, what remedy might a court order?

• A. Specific performance, compelling the seller to complete the conveyance
• B. Punitive damages against the seller's broker
• C. Rescission of the listing agreement only
• D. Automatic transfer of title without court involvement

29. A purchase agreement includes a clause stating that all specified closing and performance dates must be strictly met or the contract may be terminated. What is this clause commonly called?

• A. A merger clause
• B. A due-on-sale clause
• C. A time-is-of-the-essence clause
• D. An escalation clause

30. A seller receives a buyer's written offer and responds by proposing a higher price instead of accepting the original terms. The buyer then tries to accept the original offer as first written. What is the legal effect of the seller's counteroffer?

• A. The counteroffer terminated the original offer, so the buyer can no longer accept it
• B. The counteroffer is void because only buyers may propose counteroffers
• C. The buyer may accept either the original offer or the counteroffer at his discretion
• D. The original offer remains open until its stated expiration date regardless of the counteroffer

31. A homeowner regularly allows a landscaper to mow the lawn each week without any written or spoken agreement, and pays the invoice left in the mailbox after each visit. What type of contract has likely formed through this conduct?

• A. An option contract giving the homeowner the right to cancel at will
• B. A void contract, because nothing was ever put in writing
• C. A unilateral contract requiring only the landscaper's promise
• D. An implied-in-fact contract, formed through the parties' conduct and course of dealing

32. A signed purchase agreement calls for closing in 45 days, and neither party has yet performed any of the remaining obligations under the contract. What term describes the current status of this contract?

• A. Rescinded
• B. Discharged
• C. Executory
• D. Executed

33. A seller knowingly misrepresents that a property has no history of flooding in order to induce a buyer to sign a purchase agreement, when in fact the property floods regularly. The buyer later discovers the truth. What is the status of the contract?

• A. Voidable at the election of the defrauded buyer
• B. Automatically converted into a lease agreement
• C. Fully enforceable because the buyer signed voluntarily
• D. Void from the outset regardless of the buyer's actions

34. A homeowner signs a listing agreement guaranteeing the broker a commission if the property sells during the listing term, regardless of who procures the buyer, including the owner herself. What type of listing agreement is this?

• A. An exclusive right-to-sell listing
• B. An exclusive agency listing
• C. A net listing
• D. An open listing

35. An appraiser is developing an opinion of market value. Which definition element requires that neither buyer nor seller be under duress?

• A. The requirement that the parties be typically motivated and acting without undue stimulus
• B. The requirement that payment be made in cash
• C. The requirement that the property be listed with a broker
• D. The requirement that the sale close within thirty days

36. An appraiser distinguishes market value from investment value. What does investment value represent?

• A. The value to a specific investor based on that investor's own requirements and expectations
• B. The most probable price in a competitive open market
• C. The cost to reproduce the improvements new
• D. The amount an insurer would pay after a total loss

37. What is the difference between price, cost and value in appraisal terminology?

• A. Price is what was paid, cost is the expenditure to create or acquire, and value is an opinion of worth
• B. Price is an opinion and value is a historical fact
• C. Cost always equals value for new construction
• D. The three terms are interchangeable in an appraisal report

38. An appraiser weighs the three approaches to reach a final opinion of value. What is this final step called?

• A. Averaging the three indications to a single figure
• B. Selecting the highest indication
• C. Selecting the indication closest to the contract price
• D. Reconciliation, in which the appraiser weighs the reliability of each indication rather than averaging them

39. A lot measures 120 feet by 150 feet. How many square feet does it contain, and approximately what fraction of an acre is that?

• A. 18,000 square feet, approximately 0.41 acre
• B. 18,000 square feet, approximately 0.62 acre
• C. 270 square feet, approximately 0.01 acre
• D. 43,560 square feet, exactly one acre

40. A comparable sold for 465,000 dollars and contains 2,500 square feet of gross living area. What is the price per square foot, and what is the main caution in using this unit of comparison?

• A. 186 dollars per square foot, and the measure must be applied only to properties of similar size because price per square foot falls as size rises
• B. 186 dollars per square foot, and the measure applies uniformly regardless of size
• C. 5.38 dollars per square foot
• D. 1,860 dollars per square foot

41. A property is appraised as of a date six months before the report is written. What is this type of assignment called?

• A. A retrospective appraisal, requiring analysis of market conditions as of the earlier effective date
• B. A prospective appraisal
• C. An invalid assignment, since value must be current
• D. A review assignment

42. An appraiser is asked to state an exposure time as part of the assignment. What does exposure time refer to?

• A. The remaining economic life of the improvements
• B. The estimated length of time the property would have been on the market before the hypothetical sale at the appraised value, ending on the effective date
• C. The time expected to elapse after the effective date before a sale occurs
• D. The time the appraiser spent inspecting the property

43. Two appraisers value the same property and reach different conclusions. Does this necessarily indicate that one is wrong?

• A. Yes, because there is a single correct value for every property
• B. No, because value is an opinion and reasonable appraisers applying sound methodology may differ within a range
• C. Yes, and the lower opinion is presumed correct
• D. Yes, and the appraiser with more experience is presumed correct

44. An appraisal report is described as a restricted appraisal report. What is its principal limitation?

• A. The intended user is the client only, and the content may be summarized to a minimal level
• B. The value opinion must be a range rather than a point estimate
• C. It may not be used for any lending purpose ever
• D. It requires no workfile

45. An appraiser assumes, based on incomplete but reasonably reliable information, that a property's septic system is functioning properly, because a full inspection was not feasible within the assignment's scope. What type of assumption is this?

• A. A hypothetical condition
• B. A departure from intended use
• C. An extraordinary assumption
• D. A jurisdictional exception

46. An appraisal report states that its intended use is to assist a lender in evaluating collateral for a mortgage loan. What does 'intended use' describe in this context?

• A. The geographic market area the appraisal covers
• B. The specific purpose the appraiser's opinions and conclusions are to be used for
• C. The identity of the party or parties who will rely on the report
• D. The client's internal filing classification for the report

47. At the very outset of an assignment, before collecting any market data, what is generally the first step in the appraisal process?

• A. Estimating accrued depreciation on the subject improvements
• B. Selecting and analyzing comparable sales
• C. Identifying the problem, including the client, intended use and effective date
• D. Reconciling the value indications from each approach

48. An appraiser derives three value indications from the sales comparison, cost, and income approaches. In reconciling these into a final opinion of value, what is the appraiser's task?

• A. Weighing the reliability and applicability of each indication to form a supported final conclusion
• B. Recomputing all three approaches until they arrive at an identical number
• C. Reporting all three indications separately without selecting a final value
• D. Selecting whichever approach produced the highest indicated value

49. An appraiser gathers information about regional employment trends and citywide housing supply as part of an assignment, separate from data specific to the subject property and its comparables. What category of data is this regional and citywide information?

• A. Specific data
• B. General data
• C. Confirmed data
• D. Extraordinary data

50. Before using a comparable sale in the sales comparison approach, an appraiser contacts a party to the transaction to confirm the sale was not between related family members and involved no unusual financing concessions. What is this step primarily intended to establish?

• A. That the sale reflects arm's-length market conditions suitable for comparison
• B. The comparable's current assessed tax value
• C. The comparable's gross living area
• D. The buyer's intended future use of the property

51. An appraisal report is signed and delivered to the client on March 15, but the opinion of value reflects market conditions and property characteristics as of March 1. Which date governs the value conclusion itself?

• A. Neither date; only the inspection date matters for the value conclusion
• B. March 15, the report date, because that is when the opinion becomes final
• C. The date the client requested the assignment
• D. March 1, the effective date, because that is the point in time to which the value opinion applies

52. A tenant installs a walk-in commercial freezer in a leased restaurant space, intending to remove it and take it to her next location when the lease ends. For appraisal purposes, how should this freezer generally be classified?

• A. As an easement appurtenant to the leasehold
• B. As a trade fixture, generally treated as personal property removable by the tenant
• C. As an encroachment on the leased premises
• D. As real property permanently part of the appraisal

53. An appraiser must determine the scope of work for an assignment. What governs that determination?

• A. What is necessary to produce credible assignment results given the intended use and intended users
• B. Whatever the client requests, without further consideration
• C. The lowest cost approach that produces a number
• D. A fixed standard applied identically to all assignments

54. A client asks an appraiser to accept an assignment with compensation contingent on reporting a value at or above a stated amount. What must the appraiser do?

• A. Decline, because accepting an assignment contingent on a predetermined result violates professional ethics
• B. Accept and disclose the arrangement in the report
• C. Accept if the stated amount appears supportable
• D. Accept if a second appraiser reviews the work

55. An appraiser previously appraised a property and is asked to appraise it again for a new client. What disclosure obligation applies?

• A. The prior report must be furnished to the new client
• B. The appraiser must decline the new assignment
• C. Prior services on the subject within a stated period before accepting the assignment must be disclosed to the prospective client
• D. No disclosure is required because the prior client is confidential

56. How long must an appraiser retain the workfile for an assignment under professional standards?

• A. At least five years after preparation, or at least two years after final disposition of any judicial proceeding in which testimony was given, whichever is longer
• B. One year after preparation
• C. Until the client accepts the report
• D. There is no retention requirement

57. An appraiser is engaged to review another appraiser's report. What is the appraiser's role called and what is the primary focus?

• A. An appraisal review, focused on the quality of the work under review rather than on developing an independent value opinion
• B. A second appraisal, which must reach the same conclusion
• C. A comparative market analysis
• D. An arbitration, binding on both appraisers

58. An appraiser is asked to appraise a property under the hypothetical condition that a proposed rezoning has been granted. What must the report do?

• A. Clearly disclose the hypothetical condition and state that its use might have affected the assignment results
• B. Treat the rezoning as an established fact without comment
• C. Refuse the assignment, since hypothetical conditions are prohibited
• D. Disclose it only if the client requests disclosure

59. A residential appraisal report is delivered to a lender client. Who may the appraiser share the report's contents with absent client permission?

• A. Only parties authorized by the client, along with state enforcement agencies and peer review committees as permitted
• B. Any party to the transaction, including the buyer and seller
• C. The listing agent, since the property is publicly marketed
• D. Anyone, since the report is a public document

60. An appraiser signs a report certification. What does the certification address?

• A. The appraiser's lack of bias or interest in the property, compliance with standards, and disclosure of any significant assistance received
• B. A guarantee that the value opinion is correct
• C. A warranty of the property's physical condition
• D. The client's agreement with the conclusion

61. An appraiser has insufficient comparable sales to develop a credible sales comparison indication for an unusual property. What is the appropriate response?

• A. Use the approach anyway without disclosure
• B. Fabricate comparable adjustments to complete the approach
• C. Decline to state any value opinion
• D. Disclose the exclusion of the approach and explain why it was not necessary or applicable for credible results

62. An appraiser is under pressure from a client to omit a negative property condition from the report so the value opinion appears more favorable. Which USPAP requirement most directly prohibits the appraiser from complying?

• A. The Jurisdictional Exception Rule, which addresses conflicts with state law
• B. The Ethics Rule, which prohibits communicating a misleading or fraudulent report
• C. The Record Keeping requirement, which addresses workfile retention
• D. The Competency Rule, which addresses an appraiser's qualifications

63. Aside from retention duration, what does USPAP's Record Keeping Rule require an appraiser's workfile to contain?

• A. Sufficient information to support the appraiser's analyses, opinions and conclusions in the assignment
• B. Only communications with the client, excluding market data
• C. A copy of every report the appraiser has ever completed, regardless of assignment
• D. Only the final signed report, with no supporting documentation

64. A client asks an appraiser to develop and report an opinion of value specifically designed to support the client's position in an upcoming property tax dispute, shading judgment toward the client's desired outcome. What USPAP principle does this request conflict with?

• A. The prohibition on advocacy, requiring impartial, unbiased analysis
• B. The Scope of Work Rule
• C. The Competency Rule
• D. The Jurisdictional Exception Rule

65. In the sales comparison approach, which principle provides the theoretical foundation?

• A. Substitution, holding that a buyer will pay no more than the cost of acquiring an equally desirable alternative
• B. Escheat, holding that the state may claim ownerless property
• C. Anticipation, holding that value reflects expected future benefits
• D. Increasing returns, holding that added investment always raises value

66. An appraiser needs to extract the market's contribution for a fireplace. Two otherwise identical homes sold for 310,000 with a fireplace and 302,000 without. Which technique is being used and what is the indicated adjustment?

• A. Cost analysis, indicating the fireplace's construction cost
• B. Gross rent multiplier analysis, indicating 8,000 dollars
• C. Depreciation analysis, indicating 8,000 dollars of accrued depreciation
• D. Paired data analysis, indicating an 8,000 dollar adjustment

67. An appraiser is applying adjustments in the sales comparison approach. In what order are transactional and property adjustments generally applied?

• A. Physical adjustments first, then market conditions, then transactional adjustments
• B. Adjustment order has no effect on the result
• C. All adjustments are applied simultaneously as a single percentage
• D. Transactional adjustments such as financing terms and conditions of sale first, then market conditions, then physical and locational adjustments

68. In the cost approach, what is the difference between reproduction cost and replacement cost?

• A. The two terms mean the same thing
• B. Reproduction cost creates an exact replica including any obsolete features; replacement cost creates equivalent utility using current materials and methods
• C. Reproduction cost uses current materials and replacement cost creates a replica
• D. Replacement cost always exceeds reproduction cost

69. An appraiser estimates replacement cost new of 400,000 dollars, accrued depreciation of 25 percent, and land value of 120,000 dollars. What value does the cost approach indicate?

• A. 520,000 dollars
• B. 400,000 dollars
• C. 300,000 dollars
• D. 420,000 dollars

70. An appraiser computes effective age divided by total economic life to estimate depreciation. What method is this?

• A. The market extraction method
• B. The breakdown method
• C. The band of investment method
• D. The age-life, or economic age-life, method

71. A building has a chronological age of 30 years but has been well maintained and modernized, so it presents as roughly 15 years old. What is its effective age?

• A. 15 years, because effective age reflects condition and utility rather than elapsed time
• B. 30 years, because effective age equals actual age
• C. 45 years, the sum of both figures
• D. Effective age cannot be less than chronological age

72. A property's superadequacy is an oversized heating plant far exceeding what the building requires. How is this classified?

• A. Functional obsolescence caused by a superadequacy
• B. Physical deterioration
• C. External obsolescence
• D. Not a form of depreciation at all

73. An appraiser derives a capitalization rate by dividing a comparable property's net operating income by its sale price. What technique is this?

• A. Market extraction, also called the comparable sales method of rate derivation
• B. Band of investment
• C. The effective gross income multiplier method
• D. The debt coverage ratio method

74. An appraiser uses a discounted cash flow analysis rather than direct capitalization. When is this generally more appropriate?

• A. Only for single-family residences
• B. When no market data exists at all
• C. When income is expected to change irregularly over the holding period, such as during lease-up or with staggered lease expirations
• D. When income is stable and unchanging

75. A residential property has a monthly market rent of 2,400 dollars and comparable properties sell at a gross rent multiplier of 168. What value is indicated?

• A. 403,200 dollars
• B. 14,286 dollars
• C. 28,800 dollars
• D. 40,320 dollars

76. An appraiser is analyzing operating expenses for an income property. Which item is excluded from operating expenses?

• A. Mortgage principal and interest payments
• B. Property taxes
• C. Property insurance
• D. A reserve for replacement of short-lived components

77. An appraiser observes that a comparable sale included the seller paying an unusually large amount of the buyer's closing costs. What adjustment category applies?

• A. A financing terms or conditions of sale adjustment, because the concession affected the reported price
• B. A physical characteristics adjustment
• C. A locational adjustment
• D. No adjustment, since the recorded price is the price paid

78. A property is financed with a 75 percent loan carrying a mortgage capitalization rate of 8 percent, and the equity position requires a 12 percent equity dividend rate. Using the band of investment technique, what overall capitalization rate is indicated?

• A. 9.0 percent
• B. 10.0 percent
• C. 8.5 percent
• D. 20.0 percent

79. In a discounted cash flow analysis, an appraiser applies a terminal capitalization rate to the income of the year following the holding period. Why is the terminal rate typically set above the going-in rate?

• A. The property will be older and carry greater uncertainty at resale, so a buyer then would require a higher return
• B. Terminal rates are set by statute above the going-in rate
• C. The terminal rate must equal the discount rate
• D. A higher terminal rate raises the indicated value

80. An appraiser determines the highest and best use of a site as though vacant. Why is this analysis performed separately from the property as improved?

• A. Because vacant land is never taxable
• B. Because the two analyses always reach the same conclusion
• C. Because zoning applies only to vacant land
• D. Because the site's value is estimated independently in the cost approach and the analysis reveals whether existing improvements contribute value

81. A site is zoned for retail use, is physically capable of supporting a retail building, and a retail development would produce the greatest net return. One further test remains. What is it?

• A. Financial feasibility, meaning the use must produce a positive return after all costs
• B. Aesthetic compatibility with the neighborhood
• C. Approval from adjoining owners
• D. The owner's personal preference

82. A site's existing use is an interim use pending a more productive future use. How does an appraiser treat this?

• A. Recognize the interim use as the current highest and best use while the future use is not yet feasible
• B. Value the property only on the future use
• C. Disregard the interim use entirely
• D. Treat the interim use as functional obsolescence

83. An appraiser notes that a parcel's value would increase substantially if combined with an adjoining parcel. What is this concept called?

• A. Progression, the effect of higher-valued neighboring properties
• B. Conformity, the effect of similarity among properties
• C. Plottage, the incremental value created by assemblage of adjoining parcels
• D. Contribution, the value a component adds to the whole

84. An appraiser is evaluating whether a proposed retail use is legally permissible on a site as part of the highest and best use analysis. Which of the following would the appraiser primarily examine?

• A. The projected construction cost of the retail building
• B. The site's soil bearing capacity and drainage
• C. Zoning ordinances, deed restrictions and other legal limitations on use
• D. Whether comparable retail properties are currently profitable

85. An older, functionally obsolete building sits on a site where the land value as though vacant, minus demolition cost, would exceed the property's value as currently improved. Under highest and best use principles, what does this suggest?

• A. The land should remain permanently undeveloped
• B. The highest and best use as vacant may call for demolishing the existing improvement
• C. The existing improvement should be renovated regardless of cost
• D. The site's highest and best use cannot be determined without a full cost approach

86. An appraiser values the land portion of a property based on its potential for commercial redevelopment while valuing the existing residential improvements based on their contribution to continued residential use. What appraisal principle does this practice violate?

• A. The consistent use doctrine, which requires land and improvements to be valued under the same use
• B. The principle of substitution, which governs the sales comparison approach
• C. The scope of work rule, which governs assignment research
• D. The principle of conformity, which relates to neighborhood homogeneity

87. Which of the four forces influencing real estate value includes population characteristics and consumer preferences?

• A. Environmental forces
• B. Economic forces
• C. Social forces
• D. Governmental forces

88. A neighborhood is experiencing rising rents, new construction and increasing occupancy. Which stage of the neighborhood life cycle does this describe?

• A. Growth
• B. Stability
• C. Decline
• D. Revitalization

89. An appraiser observes that supply of comparable properties has increased sharply while demand is unchanged. What is the likely effect on value?

• A. No effect, since value depends only on cost
• B. Downward pressure on value, because increased supply relative to demand reduces the price the market will pay
• C. Upward pressure on value, because more inventory signals a strong market
• D. No effect, since supply and demand do not apply to real property

90. Rising local employment, higher household incomes and falling interest rates are increasing buyers' purchasing power in a market. Which of the four forces influencing real estate value do these factors primarily represent?

• A. Social forces
• B. Physical/environmental forces
• C. Governmental forces
• D. Economic forces

91. A city rezones a corridor from single-family residential to mixed-use commercial, immediately increasing the development potential and value of parcels along the corridor. Which force influencing value is most directly illustrated?

• A. Physical/environmental force
• B. None of the four forces; rezoning does not affect market value
• C. Social force
• D. Governmental force

92. A property is subject to an easement for a utility line crossing the rear of the lot. How should the appraiser treat this?

• A. Analyze whether the easement affects utility and marketability, and reflect any measurable effect in the value opinion
• B. Ignore it, because easements do not affect value
• C. Deduct the full value of the encumbered area in every case
• D. Value the property as though the easement did not exist

93. An appraiser is valuing the leased fee interest in an office building. What does this interest represent?

• A. The landlord's ownership interest subject to the lease, including the right to contract rent and the reversion
• B. The tenant's right to occupy under the lease
• C. The unencumbered fee simple interest
• D. A life estate held by the tenant

94. A tenant's lease requires the tenant to pay all operating expenses, taxes and insurance in addition to rent. What type of lease is this?

• A. A triple net lease
• B. A gross lease
• C. A percentage lease
• D. A graduated lease

95. An appraiser is engaged for a federally related transaction. What licensing requirement applies?

• A. The appraiser must hold the appropriate state license or certification for the property type and value
• B. Any real estate licensee may perform the appraisal
• C. No credential is required if the client is a bank
• D. A federal appraiser license issued by the Appraisal Foundation is required

96. An appraiser is appraising property for a condemnation proceeding. Which valuation concept commonly applies in a partial taking?

• A. Value of the whole before the taking, less value of the remainder after, capturing both the part taken and any damage to the remainder
• B. The assessed value for property tax purposes
• C. Only the value of the land physically taken
• D. The original purchase price plus improvements

97. A subdivision's recorded declaration prohibits homeowners from installing detached structures over a certain height. This type of private limitation on land use is best classified as a:

• A. Police power regulation
• B. Easement in gross
• C. Eminent domain restriction
• D. Restrictive covenant

98. An appraiser is asked to value a property's leasehold estate rather than its leased fee estate. Whose interest is being valued?

• A. The lender's security interest under the mortgage
• B. The easement holder's right of use
• C. The tenant's interest in the remaining lease term
• D. The fee owner's interest in the reversion

99. A government agency exercises eminent domain to acquire a property for a public highway. Under the general legal standard, what must the owner be paid?

• A. Just compensation, generally measured as the property's fair market value
• B. A statutory penalty amount set independently of the property's value
• C. The property's original purchase price adjusted for inflation
• D. The owner's relocation costs only, without regard to property value

100. A contractor completes renovation work on a home but is not paid by the owner. The contractor records a claim against the property to secure payment for the unpaid work. What type of encumbrance has the contractor created?

• A. A deed restriction
• B. A mechanic's lien
• C. A life estate
• D. An easement by necessity