Real Estate Valuation
Textbook Exam Questions
Course Introduction
Real Estate Valuation explores the principles, methodologies, and tools used to determine the value of residential, commercial, and industrial properties. The course covers key valuation concepts including market, cost, and income approaches, as well as the impact of economic, legal, and physical factors on property values. Students will analyze current market trends, utilize appraisal techniques, understand the role of valuation in real estate transactions, and apply industry standards and ethical considerations. Practical case studies and hands-on exercises prepare students for professional valuation practice and decision making in real estate markets.
Recommended Textbook
Real Estate Principles A Value Approach 3rd Edition by David Ling
Available Study Resources on Quizplus
23 Chapters
503 Verified Questions
503 Flashcards
Source URL: https://quizplus.com/study-set/3106
Page 2
Chapter 1: The Nature of Real Estate and Real Estate Markets
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61552
Sample Questions
Q1) The demand for real estate derives from the need that participants in the user market have for shelter and convenient access to other locations.The primary participants in the user market include all of the following EXCEPT:
A)owner occupants
B)tenants
C)renters
D)pension fund managers
Answer: D
Q2) In 2007,the housing market was widely viewed as:
A)a resilient asset class that significantly softened the severity of the recession
B)a surging market pushing prices and new construction to unprecedented levels
C)the primary cause of a major economic downturn
D)unrelated to the condition of the U.S.economy
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Legal Foundations to Value
Available Study Resources on Quizplus for this Chatper
26 Verified Questions
26 Flashcards
Source URL: https://quizplus.com/quiz/61551
Sample Questions
Q1) Which of the following is an example of a negative easement appurtenant?
A)A driveway easement across one parcel to another.
B)Rights-of-way for roads.
C)A common drive easement where owners of adjoining lots must permit each other to use a driveway lying on their shaped property line.
D)A scenic easement used to restrict construction on adjacent parcels so as to preserve a valued view.
Answer: D
Q2) An easement is the right to use land for a specific and limited purpose.Which of the following easements involves a relationship between two parcels of land,is a permanent feature of both parcels involved,and gives the dominant parcel some intrusive use of the servient parcel?
A)Affirmative easement appurtenant
B)Negative easement appurtenant
C)Easement in gross
D)License
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Conveying Real Property Interests
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61550
Sample Questions
Q1) The type of deed offered by the grantor is communicated through a phrase such as "does herby grant,bargain,sell and convey unto ..." This clause is referred to as the:
A)recital of consideration
B)words of conveyance
C)covenant
D)habendum clause
Answer: B
Q2) A contract for sale of real estate usually calls for the seller to provide evidence of title as a requisite to completing the sale.Today,the predominant medium through which a seller meets this requirement is by providing:
A)only a title abstract.
B)only an attorney's opinion of title.
C)only a title insurance commitment.
D)only a Torrens certificate.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
5
Chapter 4: Government Controls and Real Estate Markets
Available Study Resources on Quizplus for this Chatper
27 Verified Questions
27 Flashcards
Source URL: https://quizplus.com/quiz/61549
Sample Questions
Q1) State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards.Which of the following federal environmental control laws was responsible for establishing the "Superfund" to finance emergency responses and cleanups of abandoned and unregulated waste dumps?
A)Clean Water Act
B)Resource Conservation and Recovery Act
C)Toxic Substances Control Act
D)Comprehensive Environmental Response Compensation and Liability Act
Q2) The right of government to acquire private property,without the owner's consent,for public use in exchange for just compensation is referred to as:
A)inverse condemnation
B)regulatory taking
C)eminent domain
D)dedication
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Market Determinants of Value
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61548
Sample Questions
Q1) The magnitude of an economic base multiplier depends upon the amount of money that "leaks" out through expenditures outside of the city limits.The economic multiplier tends to be higher with each of the following EXCEPT:
A)A higher percentage of local household income is respent within the city.
B)The larger the city is.
C)The less isolated the city is from other cities.
D)The more tourism a city brings in.
Q2) Cities such as New York are able to host a variety of complex industries because of the development of specialized resources that support their growth.When specialized resources emerge in response to demand from multiple industries,this is referred to as:
A)industry economies of scale
B)agglomeration economies
C)location quotient
D)linkages
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Forecasting Ownership Benefits and Value:
Market Research
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61547
Sample Questions
Q1) Real estate market research is an important process used by analysts to facilitate a better understanding of a property's future profit potential.All of the following statements regarding market research are true EXCEPT:
A)Real estate market research should always be flexible since the research depends directly on the problem at hand.
B)Most data about general real estate is relevant to a given market study.
C)Most important data for a given market study often is not publicly available.
D)Market research should focus specifically on market segments for the property involved,rather than on the aggregate real estate market.
Q2) A new residential development will face competition from other new developments,other builders,and sales of existing homes.To determine if demand in that market segment will be sufficient to justify proceeding with the project,a developer would be most interested in estimating a:
A)capture rate
B)capitalization rate
C)risk-free rate
D)risk premium
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Valuation Using the Sales Comparison and Cost Approaches
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/61546
Sample Questions
Q1) Real estate appraisal is often considered "more art than science," since identifying truly comparable properties is a subjective process.Therefore,it is essential that a comparable property transaction at least meets the requirement that it was fairly negotiated under typical market conditions.Which of the following types of transactions would be most appropriate for use in the sales comparison approach to valuation?
A)Commingled business transactions
B)Low-interest financing programs
C)Real estate auctions
D)Arm's-length transactions
Q2) When employing the sales comparison approach,appraisers must consider numerous adjustments to convert each comparable sale transaction into an approximation of the subject property.Adjustments are divided into two groups: transactional adjustments and property adjustments.All of the following are transactional adjustments EXCEPT:
A)Financing terms
B)Market conditions
C)Conditions of Sale
D)Location
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: Valuation Using the Income Approach
Available Study Resources on Quizplus for this Chatper
22 Verified Questions
22 Flashcards
Source URL: https://quizplus.com/quiz/61545
Sample Questions
Q1) The process of converting periodic income into a value estimate is referred to as income capitalization.Income capitalization models can generally be categorized as either direct capitalization models or discounted cash flow models.Which of the following statements best describes the direct capitalization method?
A)Value estimates are based on a multiple of expected first year net operating income.
B)Appraisers must make explicit forecasts of the property's net operating income for each year of the expected holding period.
C)Appraisers must select the appropriate yield at which to discount future cash flows.
D)The forecast must include the net income produced by a sale of the property at the end of the expected holding perioD.
Q2) When using discounted cash flow analysis for valuation,an appraiser will prepare a cash flow forecast,often referred to as a:
A)restricted appraisal report
B)net operating income statement
C)direct market extraction
D)pro forma
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Real Estate Finance: The Laws and Contracts
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/61544
Sample Questions
Q1) Assume that an individual has just lost his job and has been consistently late paying his bills.The bank recognizes deterioration in the individual's credit score and has notified him that he must pay his home equity line of credit in full.The mortgage clause that makes this possible is known as the:
A)demand clause
B)insurance clause
C)escrow clause
D)exculpatory clause
Q2) In a mortgage agreement,the borrower conveys to the lender a security interest in the mortgage property.The lender,i.e.the individual who receives the mortgage claim,is known as the:
A)broker
B)mortgagor
C)agent
D)mortgagee
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Residential Mortgage Types and Borrower
Decisions
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/61543
Sample Questions
Q1) The Federal Housing Administration (FHA)insures loans made by private lenders that meet FHA's property and credit-risk standards.Which of the following statements concerning FHA insurance is true?
A)The insurance is paid by the lender and protects the lender against loss due to borrower default.
B)The insurance is paid by the borrower and protects the lender against loss due to borrower default.
C)The insurance is paid by the lender and protects the borrower against loss due to lender default.
D)The insurance is paid by the borrower and protects the borrower against loss due to lender default.
Q2) Considered the most common type of home loan,which of the following refers to any standard home loan that is not insured or guaranteed by an agency of the U.S.government?
A)Conventional home loan
B)Federal Housing Administration loan
C)Veterans Affairs loan
D)Section 203 loan
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Sources of Funds for Residential Mortgages
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/61542
Sample Questions
Q1) Total mortgage debt outstanding at the end of 2008 approached $14.6 trillion.Which of the following types of mortgage loans accounts for the greatest percentage of mortgage debt outstanding?
A)Residential (1-4 family)
B)Apartment (multifamily)
C)Commercial
D)Farm
Q2) Suppose that a mortgage bank "locked in" an interest rate for a prospective borrower at 8.5%.However,prior to the loan closing,the market mortgage rate falls to 7.5 %.In this scenario,the mortgage banker would be most concerned with which of the following risks?
A)Interest rate risk.
B)Pipeline fallout risk.
C)Default risk.
D)Liquidity risk.
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 12: Real Estate Brokerage and Listing Contracts
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61541
Sample Questions
Q1) Modern real estate brokerage normally relies on a multiple listing service (MLS)through which brokers have access to each other's listings.Which of the following types of agency agreements is established with the use of a MLS?
A)Single agency agreement
B)Subagency agreement
C)Dual agency agreement
D)Designated agent agreement
Q2) It is common for real estate firms to identify submarkets,such as property types or particular sections of a city,in which they can specialize and concentrate their transaction activity.This practice is referred to as:
A)internet marketing
B)open listing
C)discount brokerage
D)market segmentation
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Contracts for Sale and Closing
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/61540
Sample Questions
Q1) While the principal parties to a transaction must be legally competent for a contract to be valid,it is possible for a party acting on behalf of a principal to obtain this legal right.In order for personal representatives and trustees to be authorized to act on behalf of a principal,a legal instrument commonly referred to as ____________ must be in place.
A)assignment
B)power of attorney
C)mutual assent
D)consideration
Q2) If property owners fail to pay their taxes in a timely fashion,this can create a first lien on the mortgaged property.In order to protect against this,lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?
A)1/12
B)1/6
C)1/4
D)1/2
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: The Effects of Time and Risk on Value
Available Study Resources on Quizplus for this Chatper
21 Verified Questions
21 Flashcards
Source URL: https://quizplus.com/quiz/61539
Sample Questions
Q1) The internal rate of return (IRR)and the net present value (NPV)are tools that are widely used in real estate investment and finance decision making.An investor would most likely pursue an investment if which of the following circumstances was true?
A)The going-in IRR exceeds the investor's required rate of return.
B)The going-in IRR is less than the investor's required rate of return.
C)The NPV is negative.
D)The NPV is equal to zero.
Q2) Suppose an investor deposits $2500 in an interest-bearing account at her local bank.The account pays 2.5% interest compounded annually.If the investor plans on withdrawing the original principal plus accumulated interested at the end of 7 years,what is the total amount that she should expect to receive assuming interest rates do not change?
A)$2,971.71
B)$2,974.89
C)$3,532.43
D)$11,920.93
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 15: Mortgage Calculations and Decisions
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61538
Sample Questions
Q1) Given the following information on a 30-year fixed-payment loan,determine the remaining balance that the borrower has at the end of seven years.Interest Rate: 7%,Monthly Payment: $1,200.
A)$17,143
B)$79,509
C)$164,402
D)$180,369
Q2) With the recent popularity of adjustable-rate mortgages (ARM),lenders have begun to offer ARMs with different adjustment periods.Which of the following ARM choices will most likely have the highest initial rate?
A)Three-year-one-year ARM
B)Five-year-one-year ARM
C)Seven-year-one-year ARM
D)Ten-year-one-year ARM
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Commercial Mortgage Types and Decisions
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/61537
Sample Questions
Q1) Prospective borrowers often submit loan requests directly to lenders.However,commercial loan requests can also be submitted through another channel in which a permanent lender agrees to purchase loans or consider loan requests from a mortgage banker or broker.This type of business relationship is more commonly referred to as a(n):
A)installment sale
B)joint venture
C)correspondent relationship
D)sale-leaseback
Q2) An alternative vehicle for financing commercial property involves having the lender acquire an ownership (equity)interest in the property by supplying a portion of the required equity capital in addition to providing the permanent debt financing.This type of financing arrangement is commonly referred to as a(n):
A)installment sale
B)joint venture
C)land sale-leaseback
D)complete sale-leaseback
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 17: Sources of Commercial Debt and Equity Capital
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/61536
Sample Questions
Q1) One measure of the importance of a publicly traded asset class in the U.S.economy can be calculated by multiplying the number of publicly traded shares by the current market price of the stock.The result of this calculation is more commonly referred to as:
A)market capitalization
B)capitalization rate
C)price-earnings ratio
D)earnings-per-share ratio
Q2) The $6 trillion total market value of commercial real estate can be broken into four quadrants.Which of the following sectors of the commercial real estate market accounts for the largest proportion of market value?
A)Public equity
B)Privately held equity
C)Publicly traded mortgage debt
D)Privately held mortgage debt
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 18: Investment Decisions: Ratios
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61535
Sample Questions
Q1) Given the following information,calculate the effective gross income multiplier for the specific investment.Effective gross income: $49,500,First-year NOI: $18,750,Acquisition price: $520,000,Equity Investment: 20%.
A)0.036
B)0.095
C)10.5
D)27.7
Q2) Given the following information,calculate the going-in capitalization rate for the specific property.First-year NOI: $18,750,Acquisition price: $150,000,Equity Investment: 20%.
A)2.5%
B)12.5%
C)15.6%
D)62.5%
To view all questions and flashcards with answers, click on the resource link above.
Chapter 19: Investment Decisions: NPV and IRR
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61534
Sample Questions
Q1) The internal rate of return (IRR)on a proposed investment is the discount rate that makes the net present value of the investment:
A)greater than zero
B)equal to zero
C)less than zero
D)greater than the opportunity cost of not investing
Q2) Just as it is important for an investor to consider the impact of financial leverage on her return,it is also necessary to account for the effect of income taxes.How would the presence of income taxes impact the levered going-in IRR?
A)Income taxes increase the levered going-in-IRR.
B)Income taxes reduce the levered going-in-IRR.
C)Income taxes do not affect the going-in-IRR.
D)Income taxes cause the levered going-in-IRR to become invalid as a measure of return.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 20: Income Taxation and Value
Available Study Resources on Quizplus for this Chatper
23 Verified Questions
23 Flashcards
Source URL: https://quizplus.com/quiz/61533
Sample Questions
Q1) Congressional legislation has repeatedly altered the period of time over which rental real estate may be depreciated.Currently,residential income producing property (e.g.apartments)may be depreciated over no less than:
A)3 years
B)7 years
C)15 years
D)27 ½ years
Q2) In a like-kind exchange,property owners must meet a number of conditions in order to be eligible to take advantage of this tax deferment.One criterion is for the exchange to be between "like-kind" properties.Which of the following exchanges represents an example of an eligible "like-kind" exchange?
A)An apartment property for a mortgage on an apartment property.
B)A retail property in the U.S.for a retail property in China.
C)An office property for shares in an office REIT.
D)A retail property for an office property,both within the U.S.
To view all questions and flashcards with answers, click on the resource link above. Page 22
Chapter 21: Enhancing Value Through Ongoing Management
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61532
Sample Questions
Q1) When property managers are looking to secure a mix of tenants for which "the whole is greater than the sum of its parts," or in other words a group of tenants that shares similar characteristics such that the experience of living together is mutually beneficial,they are seeking what is referred to as:
A)permanence potential
B)synergism
C)rehabilitation
D)adaptive reuse
Q2) For residential properties,the ratio of prospective rent to gross monthly income is a valuable screening tool in judging a potential tenant's ability to fulfill rent obligations.Generally,this ratio should not exceed:
A)10%
B)20%
C)30%
D)40%
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 22: Leases and Property Types
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/61531
Sample Questions
Q1) The effective rent calculation is a common measure used to compare the true cost of one lease to another.While there are a number of limitations to this methodology,the effective rent calculation captures:
A)interlease risk
B)re-leasing costs
C)the advantages associated with lease flexibility
D)the time value of money
Q2) When the supply of space exceeds the demand,it is common for owners to provide the tenant with a period of free or perhaps reduced rent.This is commonly referred to as a(n):
A)tenant improvement allowance
B)concession
C)sublease
D)expense stop
Q3) In retail property types,rents are quoted on the basis of which of the following?
A)Usable area
B)Gross floor area
C)Gross leasable area
D)Rentable area
To view all questions and flashcards with answers, click on the resource link above.
Page 24
Chapter 23: Development: The Dynamics of Creating Value
Available Study Resources on Quizplus for this Chatper
20 Verified Questions
20 Flashcards
Source URL: https://quizplus.com/quiz/61530
Sample Questions
Q1) Since the architect can be involved in various stages of the development process,there are a number of methods used to compensate him for his services,each of which may depend on the particular phase of development.If the architect provides pre-design services or schematics early in the development process,he will typically be compensated:
A)on an hourly basis
B)as a percentage of construction expenses
C)by a fixed fee plus expenses
D)only if he stays on the project through completion of the construction phase
Q2) After construction has been completed,a developer may decide to seek additional financing.If current interest rates are relatively high,but the developer expects them to decline in the near future,the developer would most likely seek financing in the form of a:
A)subordination agreement
B)miniperm loan
C)take-out commitment loan
D)floor loan
To view all questions and flashcards with answers, click on the resource link above.