Free 5-question sample test with instant feedback. See how ready you are.
Question 1
What is the definition of 'market value' in real estate appraisal?
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'?
Answer: Value in use is the value a property has to a specific user for a specific purpose, while value in exchange (market value) is the price the property would command in an open, competitive market.
Question 3
Which federal law regulates appraisers and requires state licensing or certification for appraisers involved in federally related transactions?
Answer: Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989 requires state-licensed or state-certified appraisers for federally related real estate transactions.
Question 4
What does the term 'reconciliation' mean in the appraisal process?
Answer: Reconciliation is the final step in the appraisal process where the appraiser reviews and weighs the value estimates from each of the three approaches to arrive at a single, final value opinion.
Question 5
What does the appraisal principle of 'substitution' state?
Answer: The principle of substitution states that the maximum value of a property tends to be set by the cost of acquiring an equally desirable substitute property, assuming no costly delay.