Question 1

What is the definition of 'market value' as used in real estate appraisal?

Accepted Answer

Market value is the most probable price a property would bring in a competitive, open market under fair sale conditions, with both buyer and seller acting knowledgeably and without undue pressure.

Question 2

What is the difference between 'value in use' and 'value in exchange'?

Accepted Answer

Value in use is the subjective value a property has to a specific user for a specific purpose, while value in exchange (market value) is the objective price the property would command in the open market.

Question 3

What are the four essential elements of value remembered by the acronym 'DUST'?

Accepted Answer

DUST stands for Demand, Utility, Scarcity, and Transferability — all four must be present for a property to have market value.

Question 4

Which federal law requires appraisers of federally related transactions to be state-licensed or state-certified?

Accepted Answer

FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) requires that appraisers for federally related transactions be state-licensed or state-certified.

Question 5

What is a Comparative Market Analysis (CMA) and who typically prepares it?

Accepted Answer

A CMA is an informal estimate of market value prepared by a real estate licensee (not a licensed appraiser) that compares similar recently sold properties to help price a listing or assist a buyer.

Valuation & Appraisal – California Real Estate Salesperson Exam

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