Question 1

Comparable properties must be chosen from those homes that have been sold,or have been listed for sale,most recently and that are located in the same city as the subject property.

Accepted Answer

A) True 
 B)False

Question 2

When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood,he is said to have:

Accepted Answer

A)  Under-improved the property
B)  Over-improved the property
C)  Reached the point of increasing returns
D)  Exceeded the breakeven point B

Question 3

When the value of public goods exceeds their cost,the effect on house prices is called the "capitalization effect."

Accepted Answer

A) True 
 B)False

Question 4

The objective of appraisal is to:

Accepted Answer

A)  Establish the highest possible price that a property can sell for
B)  Establish the most probable price that would be paid for a property under competitive market conditions
C)  Establish the market value for a property's land without any structures (such as a house) 
D)  Establish the market value for a property if the property is put to its highest and best use

Question 5

Cluster analysis using location quotients and/or employment multipliers provides a snapshot of employment at a point in time but does not provide a forecast of future employment in a specific industry.

Accepted Answer

A) True 
 B)False

Question 6

When using the cost approach to valuation,current market data for land values must be obtained.

Accepted Answer

A) True 
 B)False

Question 7

The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.

Accepted Answer

A) True 
 B)False

Question 8

If mortgage interest rates increase,demand for purchased housing tends to increase.

Accepted Answer

A) True 
 B)False  False

Question 9

The appraised value of a property usually represents the:

Accepted Answer

A)  Actual value of the property
B)  Actual selling price of the property
C)  Actual opinion of an appraiser
D)  Actual replacement value of the property

Question 10

Housing futures contracts allow investors to speculate on changes in home prices without actually owning a home.

Accepted Answer

A) True 
 B)False

Question 11

One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements best describes the "wealth effect"?

Accepted Answer

A)  Households with equity in their houses are wealthier than households that rent their housing
B)  Expected appreciation in assets,such as home equity,may increase spending on other goods and services in the economy
C)  Economists believe that wealthier households have a positive effect on the housing market,while low-income households have a negative effect
D)  A 10 percent increase in homeownership is associated with a 12 percent increase in economic growth

Question 13

Which of the following is NOT tax deductible for homeowners?

Accepted Answer

A)  Points in mortgage loans
B)  Mortgage interest
C)  Property taxes
D)  Maintenance expenses

Question 14

The influence on property values brought about by a net benefit related to the value of public goods less their cost is referred to as:

Accepted Answer

A)  A capital gain
B)  A capital loss
C)  The capitalization effect
D)  The depreciation effect

Question 15

A property is purchased for $200,000 with an 80 percent LTV.After five years,the owner's equity is $80,000.What would be the approximate annual expected appreciation rate on home equity (annual EAHE) ?

Accepted Answer

A)  13.9%
B)  14.9%
C)  20.0%
D)  80.0%
E)  100%

Question 16

The capitalization effect:

Accepted Answer

A)  Is one of the major factors leading to housing bubbles
B)  Has no impact on housing prices
C)  Relates the quality of public services that individuals receive relative to the taxes that are paid for the services
D)  Relates the interest rate on mortgage loans to the value of residential real estate

Question 17

Population increases are usually associated with increases in demand and house price appreciation.

Accepted Answer

A) True 
 B)False

Question 18

Assume that houses in an area appreciate at the rate of 4 percent a year.A borrower expects to have a loan-to-value ratio of 90 percent.What is the approximate expected appreciation rate on home equity (EAHE) ?

Accepted Answer

A)  4.0%
B)  10%
C)  20%
D)  40%

Question 19

Mortgage interest and property taxes are deductible for federal income tax purposes for homeowners.

Accepted Answer

A) True 
 B)False

Question 20

A location quotient is the ratio of total employment to base employment.

Accepted Answer

A) True 
 B)False  False

Exam 7: Single-Family Housing: Pricing, investment, and Tax Considerations

Comparable properties must be chosen from those homes that have been sold,or have been listed for sale,most recently and that are located in the same city as the subject property.

Correct AnswerverifiedShow Answer

When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood,he is said to have:

Correct AnswerverifiedB

When the value of public goods exceeds their cost,the effect on house prices is called the "capitalization effect."

Correct AnswerverifiedShow Answer

The objective of appraisal is to:

Correct AnswerverifiedShow Answer

Cluster analysis using location quotients and/or employment multipliers provides a snapshot of employment at a point in time but does not provide a forecast of future employment in a specific industry.

Correct AnswerverifiedShow Answer

When using the cost approach to valuation,current market data for land values must be obtained.

Correct AnswerverifiedShow Answer

The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.

Correct AnswerverifiedShow Answer

If mortgage interest rates increase,demand for purchased housing tends to increase.

Correct AnswerverifiedFalse

The appraised value of a property usually represents the:

Correct AnswerverifiedShow Answer

Housing futures contracts allow investors to speculate on changes in home prices without actually owning a home.

Correct AnswerverifiedShow Answer

One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.

Correct AnswerverifiedShow Answer

Which of the following statements best describes the "wealth effect"?

Correct AnswerverifiedShow Answer

Which of the following is NOT tax deductible for homeowners?

Correct AnswerverifiedShow Answer

The influence on property values brought about by a net benefit related to the value of public goods less their cost is referred to as:

Correct AnswerverifiedShow Answer

A property is purchased for $200,000 with an 80 percent LTV.After five years,the owner's equity is $80,000.What would be the approximate annual expected appreciation rate on home equity (annual EAHE) ?

Correct AnswerverifiedShow Answer

The capitalization effect:

Correct AnswerverifiedShow Answer

Population increases are usually associated with increases in demand and house price appreciation.

Correct AnswerverifiedShow Answer

Assume that houses in an area appreciate at the rate of 4 percent a year.A borrower expects to have a loan-to-value ratio of 90 percent.What is the approximate expected appreciation rate on home equity (EAHE) ?

Correct AnswerverifiedShow Answer

Mortgage interest and property taxes are deductible for federal income tax purposes for homeowners.

Correct AnswerverifiedShow Answer

A location quotient is the ratio of total employment to base employment.

Correct AnswerverifiedFalse

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