Basic Appraisal Principles Exam

Basic Appraisal Principles Exam

Question 1. What is the primary purpose of a real estate appraisal?

• To determine the assessed value for tax purposes
• To estimate the market value of a property
• To set an asking price for a seller
• To evaluate a property's insurance replacement cost

Answer: B

Explanation: The main goal of an appraisal is to estimate the market

value, which is the most probable price a property would bring in a competitive and open market.

Question 2. Which of the following is NOT typically the role of a licensed appraiser?

• Providing an unbiased opinion of value 1 / 4

Basic Appraisal Principles Exam

• Negotiating sales contracts
• Preparing appraisal reports
• Analyzing market data

Answer: B

Explanation: Appraisers provide opinions of value, not negotiate

contracts, which is the role of a real estate agent or broker.

Question 3. How does an appraisal differ from a Comparative Market Analysis (CMA)?

• Appraisals are less detailed
• CMAs are always performed by licensed appraisers
• Appraisals are prepared by licensed appraisers and are more detailed

and regulated

• CMAs are used for loan underwriting 2 / 4

Basic Appraisal Principles Exam

Answer: C

Explanation: Appraisals are formal, regulated reports by licensed

appraisers, while CMAs are informal estimates prepared by real estate agents.

Question 4. Which economic principle states that value is created when a property is in harmony with its surroundings?

• Substitution
• Conformity
• Contribution
• Anticipation

Answer: B

Explanation: The principle of conformity states that maximum value is

realized when a property is in harmony with its surroundings. 3 / 4

Basic Appraisal Principles Exam

Question 5. The principle of substitution is best described as:

• Value is determined by the cost to reproduce the property
• No one pays more for a property than a comparable substitute
• A property's value depends on its future income
• Value declines as competition increases

Answer: B

Explanation: The principle of substitution means buyers won't pay more

than they would for a comparable substitute property.

Question 6. Which of the following is an example of the principle of anticipation?

• A buyer expects a new school nearby, raising property values
• / 4