MOCK EXAM 1

PROFESSIONAL APPRAISAL PRACTICE

1. To be considered as a comparable, a property
A. a must have been sold within the past 5 years
B. must be competitive with the subject
C. must have been sold by an open-market transaction
D. both B and C

2. For a building, effective age is best defined as

A. the average age of the roof
B. the actual age divided by the age-life
C. the age of other property in equivalent condition and utility the chronological age of the building
D. the period over which the building may be effectively used

3. The construction of a luxury home in a neighborhood almost completely developed with one and
two bedroom apartments would ___.
A. produce external obsolescence
B. be called an under improvement
C. results in plottage value
D. results in neighborhood amenities

4. In discounted cash flow analysis, the reversion to be received at the end of the holding period is
___.
A. a separate cash flow
B. an annuity in arrears
C. an ordinary annuity
D. percentage of annual income

5. Cost indexes offered by standardized services are used to ___.

A. derive units of comparison
B. catalog building component
C. estimate operating expenses
D. update past cost into current cost

6. Which type of property is subject to ad valorem taxation?

A. property owned by a religious organization and used for religious purpose
B. new industrial plants that state and local governments have induced, with tax exemption as an
incentive, to locate within their jurisdictions
C. commercial property with more that 50% nonprofit tenants
D. state colleges and universities

Question for # 7:
A Real Estate Property was valued and assessed by Mun Assessor of Lemery, Batangas. In the
following amount and rate:
Kind of Property Market Value Assessment Level Basic Realty Tax Tax Rate SF
Land P5.0M 50% 2% 1%
Building P15.0M 80% 2% 1%
Machineries P3.0M 80% 2% 1%

7. Total taxes (basic and sef) for one-year discount is 10%?

A. P304,200
B. P152,100
C. P456,300
D. P216,000

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
8. Price is ___.
A. market value
B. a historical fact
C. most probable sales price
D. all of the above

9. Which of the is NOT an agent of production?

A. land
B. transportation
C. labor
D. capital

10. Which principle of value best affirms that the maximum value of property generally cannot
exceed the cost of its replacement?
A. increasing and decreasing returns
B. supply and demand
C. substitution
D. balance

11. A building is depreciated at 3.33% per year on a straight-line basis. What is the estimated useful
life of the building?
A. 40 years
B. 30 years
C. 35 years
D. 10 years

12. The cost approach NOT useful for ___.

A. checking value approaches
B. appraising institutional or special-use properties
C. estimating the value of new property
D. appraising older homes in an active market

13. Compared with other assets, real estate is ___.

A. immobile
B. expensive
C. long-lived
D. mortgagable
E. all of the above

14. Adjustments to the property rights conveyed, financing, conditions of sale, date of sale,
and location are often made to the of the comparable property.
A. unit price
B. actual sales price
C. price per square foot
D. gross income multiplier

15. In applying gross rent multiplier analysis to the subject property, the appraiser would use the
A. market rental
B. actual rent being paid
C. rent currently asked by the owner
D. rent offered by a potential tenant

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
16. Functional utility depends on ___.
A. zoning
B. wear and tear on the structure
C. tastes and standards
D. age of the equipment

17. The three basic approaches used to estimate value are ___.
A. cost, sales comparison, and use
B. cost, sales comparison, and market data
C. cost, sales comparison, and production
D. cost, sales comparison, and income capitalization

18. The value estimate provided in an appraisal ___.

A. changes with the use to which it is put
B. changes with the function of the appraisal
C. remains the same regardless of use
D. depends upon the use or function of the appraisal

19. The dimensions of a warehouse are customarily measured from ___.

A. a roof line
B. the midpoint of exterior wall
C. the inside of finished wall
D. the outside of finished wall

20. A technique in income capitalization in which the analyst need not distinguish interest rates from
capital recovery rates, but that is most useful for comparable income:
A. direct capitalization
B. building residual
C. land residual
D. bank of investment

21. An allowance for vacancy and collection loss is estimated as a percentage of ___.
A. net operating income
B. before-tax cash flow
C. effective gross income
D. potential gross income

22. Which of the following criteria most completely define “highest and best use”?
A. legally authorized, politically viable, and socially acceptable
B. physically possible, comparable to other uses in the neighborhood, and legally authorized
C. physically possible, legally permissible, financially feasible, and generating a higher present land
value than any other use
D. comparable to other uses in the neighborhood, physically possible, and generating a higher present
land value than any other use

23. The identification and study of a pertinent market is called ___.

A. market analysis
B. neighborhood review
C. property research
D. market reflection

24. Dareal Yap hired your realty company to compute for the value of his property near Malacanang
with an area of 3,200 square meters and cost per sq.m is P120,000. The property has a corner
influence of 30% because of its location. You evaluated that it has a topography advantage of 25%
and a plottage of 10% because of its shape. Compute the value of the property.

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
A. P600,000,000
B. P595,200,000
C. P633,600,000
D. P700,000,000

25. In appraisal, accrued depreciation is really an estimate of ___.

A. physical deterioration
B. capital recovery
C. diminished utility
D. sinking fund factor

26. The best unit of comparison for vacant land is ___.

A. the total lot
B. a combination of square foot and front foot units
C. the linear foot
D. the unit considered important by the market

27. In estimating the market value of a comparable sale, an appraiser must consider all of the
following EXCEPT;
A. whether the transaction was made in cash, terms equivalent to cash, or other precisely revealed
terms
B. whether the property had reasonable exposure in a competitive market
C. whether a fair sale was transacted, with neither the seller nor the buyer acting under duress
D. whether the replacement cost of the property corresponds to its market value

28. The direct sales comparison approach is better than the income or cost approach because ___.
A. fewer comparable properties are require, so it is easier to outline the results to clients
B. there are fewer mathematical calculations, so there is less chance of mathematical errors
C. it is always easier to obtain data for the direct sales comparison approach
D. none of the above true

29. Value in use is ___.

A. subjective
B. objective
C. readily measurable
D. a market phenomenon

30. Which of the following approaches would probably be given the most weight in appraising a large
office building?
A. reproduction cost
B. income capitalization
C. subdivision development
D. market absorption

31. Assemblage is ___.

A. always reflect in the market value
B. the act of bringing to or more smaller lots into common ownership for use
C. inappropriate for parcels two or more hectares
D. uneconomical

[Link] estate markets ___.

A. are international in scope
B. meet none pf the criteria of a perfect market
C. are centralized in nature
D. consist of used property only

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE

33. The total income anticipated from income property operations after vacancy and collection
allowances and operating expenses are deducted is
A. net operating income
B. before-tax cash flow
C. effective gross income
D. potential gross income

34. This identifies a property in such a way that it cannot be confused with any other property.
A. coded map book
B. full city survey
C. legal description
D. engineering report

35. The first step in the appraisal process is to ___.

A. define the problem to be solved
B. gather relevant data
C. analyze the data
D. inspect the property

36. When reconciling the adjusted sales prices of comparables, the greatest emphasis should be given
to ___.
A. the average
B. the median
C. the mode
E. none of the above

Question for # 37-38:

A Real Estate Property was valued and assessed by Mun Assessor of Lemery, Batangas. In the
following amount and rate:
Kind of Property Market Value Assessment Level Basic Realty Tax Tax Rate SF
Land P5.0M 50% 2% 1%
Building P15.0M 80% 2% 1%
Machineries P3.0M 80% 2% 1%

37. Basic realty tax before discount for one quarter?

A. P84,500
B. P169,000
C. P 120,000
D. P 60,000

38. Total Special Education Fund Tax for one year before discount?
A. P84,500
B. P169,000
C. P 120,000
D. P 60,000

39. In analyzing obsolescence, the test of curability of a component in a building is whether the cost
to cure is no greater than the ___.
A. expected increase in value
B. reproduction cost new
C. replacement cost
D. installation cost

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
40. The appraisal of an established 20-year-old motel on a road with numerous competitive motels
would most likely be based on the ___.
A. square foot are of improvements
B. number of units
C. reproduction cost
D. gross rent multiplier

41. The “as of” date in an appraisal report is ___.

A. the date to which the value applies
B. immaterial to the value estimate
C. the date on which the report is delivered
D. the date on which the property will be conveyed

42. In analyzing the environment and market area, it is best to ___.

A. start at the general level and work down to the specific
B. start at the specific and work up to the general level
C. limit the analysis to the national level
D. limit the analysis to the local level

43. Inflation tends to increase the value of ___.

A. fixed income securities
B. mortgages
C. deeds in lieu of foreclosure
D. real estate

44. The subject property has 85% occupancy. What conclusion would you most likely draw if the
typical occup0nacy rate in the area was 95%?
A. Advertising is average.
B. The rents are high.
C. The rents are low.
D. Management is good.

45. All of the following will affect the market value of a property EXCEPT;
A. political factors
B. legal use restriction
C. acquisition cost to present owner
D. economic factors

46. An appraisal of a specific-purpose for insurance purpose would depend most heavily on ___.
A. book value
B. highest and best use
C. cost estimate
D. specialty value

47. The length of a tract of land along a street is called ___.

A. depth
B. width
C. frontage
D. abutment

48. What amount will accumulate if we deposit 5,000 at the end of each year for the next 5 years?
Assume an interest of 6% compounded annually.
A. P1,500
B. P18,000
C. P28,185.46

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
D. 14,165.89

49. A ___ use must be to be considered as a possible alternative for highest and best used.
a. physically and legally possible and financially feasible
b. physically and legally possible
c. Already in existence and legal
d. Physically possible and appropriate

50. Using the 4-3-2-1 depth rule, if a 10-hectare belonging to different owners namely; Villar, Allan,
BBM and Digong was sold for P5B, what is the share of each owner?
A. Villar = P3B, Allan = P1.5B, BBM = P1B, Digong = P2B
B. Villar = P2B, Allan = P1.5B, BBM = P1B, Digong = P500M
C. Villar = P2B, Allan = P1B, BBM = P1B, Digong = P1B
D. Villar = P4B, Allan = P3B, BBM = P2B, Digong = P1B

51. Reproduction or replacement cost includes all of the following EXCEPT;

A. an outdated kitchen
B. construction of a freeway near the property
C. the presence of an earthquake fault nearby
D. building restrictions in the community

52. When a site has improvements on it, the highest and best use ___.
A. is its existing use
B. is its potential use
C. depends on whether or not the existing use is changeable
D. may be different from its existing use

53. The period over which existing improvements are expected to continue to contribute to property
value is their ___.
A. effective age
B. period of diminishing returns
C. remaining economic life
D. chronological age

54. It is ___ for an appraiser to receive or pay finders or referral fees.

A. reasonable
B. unethical
C. necessary
D. customary

55. Which is the last step in reconciliation?

A. identify which of the three approaches is used
B. apply to judgment to the data collected
C. review previous work and analysis
D. select a final value of estimate

56. Political forces affecting value may include ___.

A. life-styles and living standards
B. topography
C. athletic levels and recreation facilities
D. government spending and taxation policy

57. All of the following are ways to delineate a neighborhood EXCEPT;

A. natural barriers
B. utility service

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
C. income characteristics
D. political boundaries

58. Another financial institution offers to give you a rate of 6% compounded semiannually. How
much will your 10,000 grow to in five years at this rate?
A. P 3,000
B. P 13439.16
C. P 18,000.00
D. P 12,486.69

59. The principle of states that buyer will not pay more for a site than for another equally desirable
one.
A. anticipation
B. substitution
C. balance
D. conformity

Question for # 60-63

Rebisco bought 50 hectares of land at P700 per sq.m. If the medium subd. development costs of
P1,000/sq.m. is based on the saleable area which is 60% of the gross area, compute the following
given the projected gross mark up is 80% of the total unit cost/sqm of the saleable lots.

60. Total land acquisition cost;

A. P350,000,000
B. P300,000,000
C. P360,000,000
D. P400,000,000

61. Total Development cost;

A. P350,000,000
B. P300,000,000
C. P360,000,000
D. P400,000,000

62. Total unit costs per sq.m. of the saleable lots;

A. P2,167 sqm
B. P3,160 sqm
C. P2,160 sqm
D. P3,167 sqm

63. Selling price per sq.m.

A. P2,167 sqm
B. P3,160 sqm
C. P2,160 sqm
D. P3,167 sqm

64. In appraising a residential property by the cost appraiser considers the ___.
A. sales prices of comparable properties
B. deprecation of the land
C. depreciation of improvements
D. potential for new competition

65. The effective age and the useful life of a building represent judgments made by the ___.
A. appraiser
B. buyer

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
C. property owner
D. tax assessor

66. In appraising a residence, adjustments are NOT made to the comparable property for ___.
A. age
B. terms of sale
C. lot value
D. assessed valuation

67. Markets in residential real estate are ___.

A. equivalent to those for securities
B. related to physical boundaries
C. local
D. physically obscure

68. The concept that the value of a particular components is measure by the amount that its absence
would detract from the value of the whole is ___.
A. opportunity cost
B. contribution
C. substitution
D. conformity

69. All of the following are sources of comparable sales EXCEPT;

A. public records
B. mortgage services
C. brokers
D. appraisers

70. The purpose of a ___ is to analyzed a property potential for success

a. feasibility study
b. marketability study
c. market segmentation study
d. appraisal report

71. Cash on cash return is ___.

A. the annual cash flow divided by the equity investment
B. an internal rate of return that represents annual income and all gains or losses prorated to an
effective annual amount
C. a percentage or decimal rate that, when divided into a periodic income amount, offers a lump-sum
capital value for income
D. a value that does not change with time

72. A commercial property producing an annual gross income of P390,000 was sold two months ago
for P3,412,500. What is the property's gross income multiplier?
A. 8.75 Gross Income Multiplier
B. 8.65 Gross Income Multiplier
C. 11.42 Gross Income Multiplier
D. 11.43 Gross Income Multiplier

73. The area and community analysis section of an appraisal report ___.
A. should “sell” the community
B. should describe the community objectively
C. is a study by the estate’s industrial development commission
D. considers the negative aspects only

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
74. Location decision involve analysis on which three level?
A. general, specific, detailed
B. country, state, community
C. residential, commercial, industrial
D. region, neighborhood, site

75. Units of comparison are used in ___.

A. only the sales comparison approach
B. only the cost approach
C. only the income capitalization approach
D. A, B and C

76. It is to provide a value range to a client who request it and understand its meaning and use.
A. foolish
B. appropriate
C. un ethical
D. approximate

77. Cumulative percentage adjustments may be used ___.

A. when the characteristics are interdependent
B. when the characteristics are independent
C. when dollar figures are available
D. when unimproved properties are being appraised

78. The property under appraisal is a 25 year-old apartment building producing a net operating
income of P50,000 a year. Compute the value of the property? assuming a remaining economic life of
40 years for the building at 10.5% interest rate and land value is
A. P428,073
B. P328,073
C. P417,573
D. P378,073

79. An appraiser ___.

A. determines the price
B. defends value
C. estimates price
D. estimates value

80. Final value estimates should be rounded to reflect the ___.

A. absence of good data
B. property’s location
C. fact that a selling price will probably be a round number
D. lack of precision associated with an opinion

81. For an appraiser to use the assistance of another appraiser is ___.

A. inconsiderate
B. unethical
C. illegal
D. ethical

82. Sales data descriptions of an appraisal report contain ___.

A. details about each comparable sale
B. an analysis of the date, using the value approaches
C. the investigation of market forces
D. analysis of the street each comparable property is on

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE

83. In the cost approach ___ is deducted after estimating the cost to reproduce an existing structure.
A. cash equivalence
B. cost to maturity
C. legal factors
D. depreciation

84. Price and value are ___.

A. not necessarily the same
B. synonymous
C. different, depending on financing terms
D. almost the same in an active market

85. You can afford to put 10,000 in a savings account today that pays 6% interest compounded
annually. you have 5 years from now if you make no withdrawals?
A. P14,782.26
B. P14,382.26
C. P13,782.26
D. P13,382.26

86. A person owning less than the entire bundle of rights has ___.
A. escheat
B. personal property
C. a fee simple title
D. a partial interest

87. What amount will accumulate if we deposit 5,000 at the beginning of each year for the next 5
years? Assume an interest of 6% compounded annually.
A. P29,876.59
B. P29,276.59
C. P29,576.59
D. P29,676.59

88. The land development method is used to estimate the value of vacant acreage that is ready to be
subdivided. This method requires ___.
A. study of current sales of subdivided lots
B. the projection of land of subdivided lots
C. RTC approval
D. Both A and B

89. Which of the following reports is usually not prepared by a real estate appraiser?
A. marketability study
B. economic study
C. feasibility study
D. transportation network study

90. You want to buy a house 5 years from now for 150,000. much should you invest today to yield
150,000 in 5 years?
A. P112,088.73
B. P113,088.73
C. P122,088.73
D. P114,088.73

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
91. What amount must you invest today at 6% compounded annually so that you can withdraw 5,000
at the end of each year for the next 5?
A. P21,061.82
B. P22,061.82
C. P21,081.82
D. P22,081.82

92. The value added to total property value by a particular component is an example of the principle
of
A. substitution
B. contribution
C. anticipation
D. conformity

93. The form of an appraisal report ___.

A. has no influence on the appraisal process
B. is the same, regardless of the problem
C. is set by the amount of the fee
D. is determined by the appraiser

94. The terms financing, whether good or bad ___.

A. have no effect on the market price
B. have no effect on the market value
C. have no effect on affordability
D. depend on fiscal and monetary policy

95. Any recent sale of a subject property being appraised ___.

A. should be considered confidential
B. cannot, under any circumstances, be considered in estimating the current market value of the
property
C. should be discussed in appraisal report
D. was not an arms length sale

96. A formal appraisal must include the ___.

A. date of value estimate
B. signature of the property
C. identification of property appraised
D. all of the above

97. Environment hazards that an appraiser must be conscious of include all of the following except
___.
A. asbestos
B. radon
C. drano
D. urea formaldehyde

98. The utility of real estate is its ___.

A. attractiveness to the trained observer
B. longevity
C. capacity to satisfy human needs and desires
D. effective demand

99. The objective of the appraisal should be stated in the report ___.
A. the market needs it
B. it define the problems and identifies the value sought

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 MOCK EXAM 1
PROFESSIONAL APPRAISAL PRACTICE
C. it identifies the function of the report
D. it absolves the appraiser of liability

100. The highest and best use of the site is its ___.
A. existing use
B. most probable use
C. immediate next used
D. synonymous with ordinary and necessary value

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