Question 1

The objective of appraisal is to:

Accepted Answer

The objective of an appraisal is to determine the most probable price that a property would sell for under competitive market conditions, which is essentially its market value.

Question 2

Federal income tax policy has generally been thought to:

Accepted Answer

Federal income tax policy has historically encouraged homeownership by allowing deductions for mortgage interest and property taxes. This policy is aimed at promoting a stable housing market and incentivizing individuals to invest in real estate.

Question 3

The capitalization effect:

Accepted Answer

The answer of The capitalization effect:
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Question 4

An appraisal usually contains three approaches to valuation. Which of the following is NOT one of those approaches?

Accepted Answer

The three approaches to valuation in an appraisal are the Market Approach, the Cost Approach, and the Income Approach. The Ratio Approach is not a commonly used approach in real estate appraisal.

Question 5

When calculating taxes, the difference between the acquisition cost and selling price of a house is called:

Accepted Answer

The difference between the acquisition cost (the cost to purchase the property) and selling price of a house is called a capital gain. This is usually subject to capital gains tax.

Question 6

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

Over-improving a property means spending more money on improvements than the value of the property can support or compared to similar homes in the neighborhood. This often leads to a lower return on investment when it comes time to sell the property.

Question 7

The subject of an appraisal has only two bedrooms, but one of the comparables used in the appraisal has three. If the adjustment for a third bedroom is $5,000, the adjustment would be:

Accepted Answer

The comparable property has an extra bedroom, so its selling price should be adjusted downward by $5,000 to make it more comparable to the subject property.

Question 8

The appraised value of a property usually represents the:

Accepted Answer

The appraised value of a property represents the actual opinion of an appraiser, who has used professional judgment and standardized methods to evaluate and estimate the value of the property. The appraised value is not necessarily the actual value or selling price of the property, nor is it the replacement value.

Question 9

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

The influence on property values resulting from the net benefit (benefits minus cost) associated with public goods or services is known as the capitalization effect. This effect captures the additional value that property owners attribute to their property due to the availability of public goods such as good schools, low crime rates, or beautiful parks. The capital gain and capital loss relate to an increase or decrease in property value resulting from market fluctuations, while the depreciation effect refers to a decline in property value due to wear and tear or obsolescence.

Question 10

When considering the federal income tax treatment for housing, which of the following is tax deductible?

Accepted Answer

Interest on mortgage loans is tax deductible.

Question 11

Which of the following would NOT result in an increase in housing demand?

Accepted Answer

Higher interest rates increase the cost of borrowing, making it more difficult and costly for individuals to obtain mortgages and finance home purchases. This decreases housing demand. The other choices - population growth, employment growth, and higher household income - typically result in an increase in housing demand as more people have the means and desire to purchase homes.

Question 12

Which of the following is NOT tax deductible for homeowners?

Accepted Answer

Maintenance expenses for personal residences are generally not tax deductible, unless they are related to home office expenses or rental properties.

Quiz 7: Single Family Housing: Pricing, Investment, and Tax Considerations