Multiple
Choice 15 questions at 4 points each = 60 points potential.
What are
the three types of depreciation considered under the cost approach?
A. cost,
sales, income
B. equity,
debt, market
C.
short-lived, long-lived, non-reproducing
D.
physical, functional, external
________________
stores cluster and ____________ stores disperse
A. comparison,
convenience
B. magnet,
big box
C. retail,
wholesale
D.
convenience, comparison
A
building is 10 years old and has an economic life is 30 years. The cost new is
5000 per square meter. What is the effective rate?
A. 3,333
B. 6,500
C. 1,667
D. 6,667
Can you
value a property if there are no comparable building sales and no income?
A. yes
B. no
If a
property is superior to the subject, what kind of adjustment do you make to the
sale price of the comparable?
A. positive
B. negative
What do you call a situation where you have a tenant but they don’t pay
rent?
A. vacancy
loss
B. equity
loss
C. expense
loss
D. credit
loss
If you
manage your own building, should you charge a management fee in your income
statement?
A. yes
B. no
What
does the reciprocal of the capitalization rate tell you?
A. the
years to recover the purchase price
B. the earnings
to price ratio
C. the
reversion rate
D. the
yield rate
If a
comparable property sold at an 8 percent capitalization rate, and it is
superior to the subject property, what capitalization rate should you use?
A. greater
than 8 percent
B. less
than 8 percent
C. 8
percent
D. between
7 and 9 percent
If a
property sold last year for 100,000 and then resold last week for 124,000, how
much should I adjust for changes in market conditions?
A. +2
percent per month
B. -2
percent per month
C. +5
percent per month
D. no
adjustment necessary
Property
A has a NOI of 100,000 and sold for 1,250,000. Property B has an NOI of 250,000
and sold for 3,125,000.
Which one
has the higher capitalization rate?
A. A
B. B
C. both the
same
I have
analyzed three sales. Sale 1 indicates an 8.0% rate, Sale 2 indicates 7.5%, and
Sale 3 indicates 9.0%.
If I give
Sale 3 a weight of 50% and the other two 25% each, what is the weighted
indication?
A. 8.167%
B. 9.5%
C. 8.375%
D. 8.735%
What
expenses do owners typically not include in their income statements?
A. credit
and vacancy loss
B.
depreciation and interest
C.
management and reserves for replacements
D.
reversion and reconstructed
If the
average capitalization rate is 7 percent, but one sale is judged to be most
comparable and is generating a 9 percent rate, what rate should you use?
A. 7
percent
B. 9
percent
C. between
7 and 9 percent
D. 8
percent
Can a
building be new and still suffer from depreciation?
A. yes
B. no
Short
Answer: 5 questions at 8 points each = 40 points potential
16.
Value the property using the cost approach and the income approach using the
direct capitalization method.
The rectangle-shape land measures 110 meters by 70 meters. The gross building
area is 7,500 square meters. Common area hallways use around 1,200 square
meters. The economic life for buildings in this neighborhood is estimated at 40
years. The building is 16 years old. It costs 1,200 riyals per square meter to
building a new building similar to the subject property. Land values in the
neighborhood are estimated at around 3,000 per square meter.
The building is rented out to seven tenants. They each have 900 square meters.
Two tenants pay 400,000 a year and the other five pay 500,000 a year. You
estimate credit and vacancy loss at 5 percent of potential gross income. Based
on historical operating statements you estimate expenses at 24 percent of the
effective gross income.
You have reviewed recent sales and estimate a capitalization rate of 8 percent.
A. What is your estimate of value under the cost approach?
We will review this question in class.
B. What is your estimate of value under the income approach?
We will review this question in class.
17.
Matched-Pair Analysis. Use the following table to answer the next four questions:
We will review this question in class.
A.
What two comps would you use to make an adjustment for differences in the date
of the sales? What would the percentage
adjustment be?
B.
What two comps would you use to make an adjustment for differences in
sizes? What would the percentage
adjustment be?
C. What two comps would you use to make an adjustment for differences in
locations? What would the percentage
adjustment be?
D. What is the subject property worth? Explain your reasoning.
18.
You have been asked to analyze a property.
The
asking price is 25,000,000
The
land is 3,000 square meters
The
gross building area is 6,000 square meters
10
percent of the building is common area.
The
potential gross income is 500 per square meter of net leasable area.
The
vacancy rate is 5 percent.
The
operating expenses are around 800,000 a year.
A.
What is the property generating in NOI?
1,765,000
B.
What would be the overall capitalization rate if it sold for the asking price?
7.06%
19. What
are the 8 steps in the appraisal process?
Identify the Problem
Determine the Scope of Work
Collect Data and Describe Property
Perform Data Analysis
Determine Land Value
Apply Approaches to Estimate Market Value
Reconcile Indicated Values from the Approaches
Report Final Value Estimate
20. What are the four
transaction adjustments under the sales approach?
Rights Conveyed
Financing
Conditions
Date of the Sale or Market
