Free 5-question sample test with instant feedback. See how ready you are.
Question 1
What is the definition of 'market value' as used in real estate appraisal?
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)?
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?
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?
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'?
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.