Construction Practice Exam With Answers (216 Solved Questions)

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You’ve met Vladimir the appraiser. He likes to tell it like it is. Soon we'll learn more from Vladimir aboutthe appraisal process. Let’s start by reviewing purpose. What purpose do Vladimir and other appraisersserve?To cause a sale to fall throughTo make a real estate agent's life miserableTo sell a propertyTo determine a property's valueYes! An appraiser’s job is to determine a property’s worth or value. Let’s talk more about appraisersand how they differ from real estate professionals.There are some very important differences between an appraiser and a real estateprofessional. Based on the information Vladimir provided in your resource, select the properindividual for each characteristic.Usually hired by the buyer or sellerReal estate professionalAppraiserUsually hired by the lender or buyer, or sometimes the sellerReal estate professionalAppraiserDetermines what a buyer may pay for a propertyReal estate professional

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AppraiserDetermines a property’s worthReal estate professionalAppraiserProvides an estimate of value that may be influenced by the consumerReal estate professionalAppraiserProvides unbiased estimate of valueReal estate professionalAppraiserGreat work differentiating between the characteristics of an appraiser and a real estate professional.We’ve learned that appraisers determine a property’s worth or value. Let’s take a closer look atthese values.As Vladimir tells you, an appraisal may determine many different values. Select the type ofvalue applicable for each item.Price at which the property can be loaned on or sold for at a foreclosure saleMortgage valueInvestment value

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Insured valueOf great importance to a lenderMortgage valueInvestment valueInsured valueReturn on investment a property may provideMortgage valueInvestment valueInsured valueCost to replace or rebuild a propertyMortgage valueInvestment valueInsured valueValue of importance to insurance companiesMortgage value

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Investment valueInsured valueGreat work differentiating the types of values. Value in use and assessed values are also types ofvalue.Market value or fair market value implies certain conditions exist. According to Vladimir,what conditions does fair market value imply?Neither the buyer nor the seller is being forced into an agreement.ImpliedNot impliedThe buyer and seller are acting in their own best interests.ImpliedNot impliedThe property has had reasonable exposure to the market.ImpliedNot impliedThe buyer and seller are related.Implied

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Not impliedThe buyer is using cash or obtaining financing.ImpliedNot impliedYou got it. If any of the implied factors aren't true for a specific transaction, then the price may notrepresent fair market value.The terms appraisal, valuation, and evaluation are confused by many, according to Vladimir.Let’s see if you’re confused. Select the proper term for each condition.Unbiased estimate of value of a specific property on a specific dateAppraisalValuationEvaluationProcess of forming an opinion of a property’s valueAppraisalValuationEvaluationStudy of a property, potentially for land use or marketability

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AppraisalValuationEvaluationGood work matching the terYou heard it from Vladimir: CMAs, BPOs, and appraisals are different. Let’s spend a fewminutes differentiating between these, starting with who prepares each.CMAReal Estate LicenseeCertified AppraiserAppraisalReal Estate LicenseeCertified AppraiserBPOReal Estate LicenseeCertified AppraiserYes! Only certified appraisers can perform appraisals. Any type of valuation you perform as a realestate agent must not be referred to as an appraisal, because, well, it isn’t.You know who prepares each, but for whom are they prepared and what's the general cost?

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Usually prepared for a seller, sometimes a buyerCMAAppraisalBPOUsually prepared for lender, buyer, seller, and sometimes courtsCMAAppraisalBPOUsually prepared for lender (in a foreclosure or short-sale situation) or a relocation companyCMAAppraisalBPONo costCMAAppraisal

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BPOMinimal costCMAAppraisalBPOCost of $400+CMAAppraisalBPOGreat job identifying for whom these items are prepared and the related cost. Although we’ve listed$400 as the approximate cost of an appraisal, this definitely depends on the property beingappraised. Complex commercial properties, for instance, may cost many thousands to appraise.CMAs, BPOs, and appraisals also use slightly different methods when determining value.Sort these based on the methods used.CMAComparable SalesMultiple MethodsAppraisal

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Comparable SalesMultiple MethodsBPOComparable SalesMultiple MethodsRight! CMAs and BPOs generally rely upon comparable sales, while appraisals may use multiplemethods to determine value. This also helps explain why CMAs and BPOs contain a basic tomoderate level of detail and why appraisals are very detailed.As an appraiser, Vladimir’s first step in the valuation process is to identify the problem. Whatare two benefits of stating the problem up front?It helps the appraiser identify how much the property needs to appraise for.It informs the appraiser's approach.It helps the appraiser identify the type of data required.You got it! Identifying the problem up front allows the appraiser to take the correct approach toestimating value and decide the data needed to make a final determination of value.Gather and analyze data - 3Reconocile values to determine final - 7Identify data needed - 2Estimate value of the land - 5Use three approaches to estimate property value - 6Determine highest and best use - 4Valuation ProcessLet’s assume Vladimir has stated the problem (step one in the process). Put the remainingsteps that Vladimir will take in order.Gather and analyze data.

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Step fourStep threeStep sevenStep fiveStep sixStep twoReconcile values to determine final appraisal value.Step fourStep threeStep sevenStep fiveStep sixStep twoIdentify data needed.

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Step fourStep threeStep sevenStep fiveStep sixStep twoEstimate value of the land.Step fourStep threeStep sevenStep fiveStep sixStep twoUse three approaches to estimate property value.

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Step fourStep threeStep sevenStep fiveStep sixStep twoDetermine highest and best use.Step fourStep threeStep sevenStep fiveStep sixStep twoGood work ordering the steps. The last thing Vladimir needs to do is report the results.Vladimir says there's a difference between price, value, and cost. We're apt to believe him.Match the price, value, and cost with the appropriate description.

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What the seller accepts and the buyer paysValuePriceCostWhat the property is worthValuePriceCostWhat it would take to recreate the propertyValuePriceCostVladimir was right. There is a difference. You're right, too. Let's focus more on this cost idea.Vladimir tells you about two types of cost: direct and indirect. Sort the costs into theappropriate buckets.LandDirect Cost

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Indirect CostWood for constructionDirect CostIndirect CostWindowsDirect CostIndirect CostArchitectural feesDirect CostIndirect CostRecording feesDirect CostIndirect CostElectricianDirect Cost

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Indirect CostGreat understanding of the different types of costs. Costs (and other factors) can come into playwhen appraisers do site valuations.Your resource introduced you to the acronym DUST, four factors that influence value. Let’ssee how well you can recall each of the four factors. Match each factor to its description.The ease with which the deed can be transferred and the property put to the desired useTransferabilityScarcityDemandUtilityReflects the market supply, or lack thereofTransferabilityScarcityDemandUtilitySpeaks to the property’s functionTransferability

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