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 should 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 an appraisal and a comparative market analysis (CMA)?

Accepted Answer

An appraisal is a formal, written opinion of value performed by a licensed or certified appraiser, while a CMA is an informal estimate of value prepared by a real estate licensee to help set a listing or purchase price.

Question 3

Which federal law requires licensed or certified appraisers for federally related transactions?

Accepted Answer

FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989) requires that federally related real estate transactions use licensed or certified appraisers.

Question 4

What does the term 'highest and best use' mean in appraisal?

Accepted Answer

Highest and best use is the legal, physically possible, financially feasible, and maximally productive use of a property that produces the greatest value. It is the foundation of every appraisal.

Question 5

What is 'value in use' as opposed to 'value in exchange'?

Accepted Answer

Value in use is the subjective value a property has to a specific user based on its utility to them, while value in exchange (market value) is the objective price the property would command in the open market.

Valuation & Appraisal – Florida Real Estate Salesperson Exam

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