REVIEW QUESTIONS: Market Data Approach

1. The Market Data Approach is also known as:

a. Comparative Sales Approach
b. Market Comparison Approach
c. Sales Comparison Approach
d. All of the above

2. One of the chief advantages of the sales comparison (market data approach) in the
appraisal of real property is that:
a. It is the easiest method for a beginner to learn and use
b. It is more economical and timely
c. There are always a great number of comparable properties in the
neighborhood
d. None of the above

3. The most important variable of the market approach in land valuation is:
a. Sufficient number of recent sales
b. Proper tax records
c. Land and improvements assesses on the same basis
d. Proper tax assessment

4. When using the comparable sales approach, which of the following properties should
be adjusted by the appraiser?
a. The subject property to the comparables
b. The comparables to the subject property
c. The cost approach to the market approach
d. The comparables to the assessed value of the subject property

5. Unit of comparison ratios:

a. Allow appraisers to not make adjustments for size differences
b. Allow for meaningful comparisons of seemingly poor data
c. Usually assimilate the market thinking and behavior of typical buyers
d. All of the above

6. Elements of comparison are:

a. Items that represent the bottom line price after all of the adjustments
b. A weathermans comparison report
c. Items that represent a breakdown of the price based on a significant variable
d. The characteristics that cause the prices paid for real estate to vary

7. The comparative approach considers the sales of similar or substitute properties and
related market data, and establishes a value estimate by processes involving
comparison
a. Cost Approach
b. Income Approach
] c. Allocation
d. Sales Comparison Approach

8. When establishing the market value of a site, the appraiser should include:
a. Seven to eight comparable site sales transactions
b. Five to six comparable site sales transactions
c. There is no set of number of comparable site sales transactions
d. Three comparable site sales transactions
9. Recent sales of comparable sites competitive with the subject site:
a. Are the most reliable guide to the probable current market behavior and
reactions of informed buyers
b. Do not indicate any probable current market behavior and reactions of
informed buyers
c. Both a & b
d. None of these

10. The fundamental economic principle underlying the sales comparison approach to
value is:
a. Anticipation
b. Conformity
c. Highest and best use
d. Substitution

11. To adjust the sale price of a comparable sale with a 10% better location, you should:
a. Add 10% to the price
b. Subtract 10% from the price
c. Multiply the price by 10%
d. None of the above

12. The sales comparison approach involves various elements of comparison. Which of
the following element is NOT one employed in this approach?
a. Cost
b. Property rights being conveyed
c. Conditions of sale
d. Date of sale

13. The increase or decrease in the sales price of a comparable property to arrive at an
indicated value for the property being appraised is referred to as:
a. Fudging
b. Adjustments
c. Reconciliation
d. Capitalization

14. What rental unit of comparison is of primary importance in appraising office

buildings with multiple tenants?
a. Rent per room per year
b. Rent per floor per year
c. Rent per square foot of net rentable area per year
d. Rent per cubic foot of gross leasable area per year

15. A residence has been listed for sale for the last 6 months at a price of P 1,249,000
and has not sold. In this market, the average marketing period is 45 days for this type of
property?
a. The subject propertys market value could be higher than the list price
b. The subject propertys market value could be higher or lower than the list
price
c. The subject propertys market vale is less than list price
d. The subject propertys market value could be lower than the list price

16. If the subject property is 10% superior to the comparable sale and the comparable
was sold for P 1,000,000, what is the indicated value of the subject?
a. P 1,000,000 x 0.90 = P 900,000
b. P 1,000,000 x 1.10 = P 1,100,000
c. P 1,000,000/ 1.10 = P 909,000
d. P 1,000,000 /0.90 = P 1,111,111
17. An appraisal is to be made of a 3-bedroom house. One comparable with 4 bedrooms
was sold for P 5,000,000. The appraiser makes an adjustment of P 500,000 to the
comparable to account for the difference in the number of bedrooms. The adjusted
sales price of the comparable is:
a. P 4,500,000
b. P 5,500,000
c. P 6,000,000
d. P 6,500,000

18. A 7-year old residence is currently valued at P 720,000. What was the original value
if it has appreciated by 60% since it was built?
a. P 270,000
b. P 450,000
c. P 378,000
d. P 1,152,000

19. A comparable site was sold a month ago for P 25,000 per sq.meter. Its location is
considered 15% superior and its shape and topography is 19% inferior to the subject
site. The time adjustment is 12% per year. Determine the adjusted sale price of the
comparable site using straight plus and minus adjustment.
a. P 26,250/sqm
b. P 24,250/sqm
c. P 25,750/sqm
d. P 24,000/sqm

20. A comparable property sold six months ago for P 1,250,000. Market investigation
indicates the following:
Location Adjustment: +5%
Time Adjustment +6%
Age -7%

Given the above information, what is the indicated value based on the comparable
property?
a. P 1,232,250
b. P 1, 300,000
c. P 1,325,000
d. P 1,293,860

21. The appropriate adjustment for time is determined to be 9% per year. The time
adjustment for a comparable property that was sold a year ago for P 100,000 per square
meter is:
a. Less P 9,000/sqm
b. Plus P 6,050/sqm
c. Plus P 9,000/sqm
d. Less P 6,000/sqm

22. If a comparable was sold for P 2,000,000 and has a 2-car garage, adding P 100,000 to
the value, and the subject property does not have a garage, the indicated value of the
subject property would be found by:
a. Subtracting P 100,000 from the subject property
b. Adding P 100,000 to the comparable sale
c. Subtracting P 100,000 from the comparable sale
d. Adding P 100,000 to the subject property
23. If houses in your area have increased in value of 8% during the past year and the
average price of houses sold last year was P 9,500,000, what is the average price of
houses sold today?
a. P 10,100,000
b. P 10,150,000
c. P 10,260,000
d. P 10,300,000

24. A good unit of comparison for an apartment building would be rent per:
a. Room
b. Floor
c. Cubic foot of storage area
d. Linear foot of road frontage

25. In the sales comparison approach, how is the appropriate unit of comparison
chosen?
a. Price per square foot is always used
b. Price per square foot is used except for hotels for which the price per room is
used
c. It depends on the appraisal problem. The appraiser should apply all
appropriate units of comparison, explain differences in wide variation in the
results and choose the most reliable unit
d. It depends on the extent to which each comparable property differs from the
subject property

26. When value is estimated by analyzing sales prices of similar properties

(comparables) recently sold, this is referred to as what approach to value?
a. Income Approach
b. Sales Comparison Approach
c. Cost Approach
d. Sales Value Approach
27. An appraisal is to be made of a 3-bedroom house. One comparable with 2 bedrooms
sold for P 5,000,000. The appraiser makes an adjustment of P 500,000 to the
comparable to account for the difference in the number of bedrooms. The adjusted
sales price of the comparable is:
a. P 4,500,000
b. P 5,500,000
c. P 6,000,000
d. P 6,500,000

28. A sale of residential property from one member of a family to a close relative
normally would be described as which type of sale?
a. Normal market sale
b. Distorted sale
c. Arms length sale
d. Illegal sale

29. The sales comparison or market approach is very popular in the appraisal of
residential property. Which of the following statements is CORRECT in regard to this
approach as it applies to residential property?
a. When selecting comparables, it is not necessary to consider the quality of
construction
b. When using the sales comparison approach, the appraiser compares the
comparable properties to the subject property
c. Comparable sales data that are more than 6 months old should never be used
by an appraiser
d. The sales prices of comparables are always conclusive evidence of market
value in the area.
30. Each comparable approach to value has certain limitations. Which of the following
conditions is a limitation when using the sales comparison approach?
a. The approach is based on historical data
b. There may be too many comparables
c. An active market may exist
d. Both buyers and sellers may be knowledgeable

31. The sales comparison approach is based on a very sound economic assumption that
an informed buyer would pay _____for the property being purchased that what that
buyer would pay to acquire an existing property with the same benefits and utility.
a. Less
b. No more
c. More
d. Considerably less

32. For an appraiser using the sales comparison approach to value, which of the
following types of market would BEST provide confidence and reliability in using such an
appraisal?
a. Sellers market
b. Buyers market
c. Active market
d. Inactive market

33. Which of the following statements is INCORRECT with regards to a comparable being
used as part of the sales comparison approach to value?
a. It should approximate the subject property in terms of size, age, and quality of
construction
b. It should have sold as recently as possible to the date of the appraisal
c. It must be in the same neighborhood as the subject property to be considered
a comparable
d. It must be adjusted to the subject property for differences that can be
identified by the appraiser

34. Which of the following is CORRECT with regards to the sales comparison approach?
a. The comparables are adjusted to the subject property
b. The subject property is adjusted to the comparables
c. The sales comparison approach is never used for income-producing property
d. The sales comparison approach will always result in an estimate derived by
the cost approach

35. When using the sales comparison approach to value, an appraiser may identify
differences between the subject property and the comparables. If so, the peso value of
a positive feature present in the subject property but not present in the comparables is
_____ while the peso value of a feature in the comparables but not in the subject
property is _____.
a. Subtracted, added
b. Added, subtracted
c. Subtracted, subtracted
d. Added, added

36. With the sales comparison approach, the estimated sales price of a comparable
property after additions and/or subtractions have been made to the actual sales price
for improvements and deficiencies, when compared to the subject property, is referred
to as the:
a. Market value
b. Actual sales price
c. Adjusted sales price
d. Economic price
37. The geographic limitation for selecting and using comparables sales depends on
which of the following:
a. Time given to complete the appraisal assignment
b. Size of the subject property
c. Nature and type of property being appraised
d. Fee being paid for the appraisal

38. A comparable property is identical to the subject property being appraised. The
comparable sold 6 months ago for P 1,000,000. As the appraiser, you must make an
adjustment for the time difference between the subject property and the comparable.
You have found a paired sale of low houses, one of which sold one year ago for P
800,000 and the other sold yesterday for P 880,000. What is the proper estimated
adjusted sales price for your comparable?
a. P 880,000
b. P 1,000,000
c. P 1,050,000
d. P 1,100,000

39. In using the comparable sales approach, which of the following conditions often
CANNOT be adapted to the adjustment process?
a. Terms of financing
b. Location
c. Time of sale
d. Non-arms length transaction

40. What is the primary difference between the comparable sales approach and the
market data approach?
a. None, they refer to the same approach
b. The comparable sales approach is a direct approach and the market data
approach is an indirect approach
c. Adjustments must be made when using the comparable sales approach but
not when using the market data approach
d. The comparable sales approach is used for residential property and the
market data approach is used for income-producing property.

41. In arriving at an estimate of value based on selling prices, the appraiser is most
Interested in the date the:
a. Purchase contract was signed
b. Deed was recorded
c. Sale went in escrow
d. Deed was signed

42. The prudent buyer, in purchasing a new home in a new subdivision tract, would
most likely choose a home located:
a. On a key lot
b. In the center of the tract
c. Across from the shopping center
d. Near a bus stop

43. In determining the value of a residential property, an appraiser would:

a. Capitalize the income
b. Use the selling prices of comparable properties
c. Determine the cost of materials new
d. Use the assessment value of the property
44. The total adjustment to each comparable sale price calculated in absolute terms.
Also, all the adjustments, both positive and negative added together to determine
a. Net adjustment
b. Gross adjustment
c. Effective adjustment
d. Comparative analysis

45. An appraiser, in appraising a single-family residence, usees the listing price of other
comparable homes in correlating the data. These prices would tend to establish the:
a. Floor on market value
b. Ceiling on market value
c. Average market value
d. Market value of other neighborhoods

46. In appraising a residence using market data, an appraiser must establish the date of
acceptance of an offer on a comparable property in order to:
a. Indicate prevailing market conditions at the time
b. Indicate the date he has inspected the property
c. Indicate the date the borrower has applied for a loan
d. Indicate future market conditions

47. Which of the following statements is correct in relation to the adjusted sales price
comparison approach?
a. The subject is adjusted to the comparables
b. The comparables are adjusted to the subject property
c. The subject property is valued using its highest and best use
d. Accrued depreciation is subtracted from replacement cost of the subject
property

48. Properties which recently have been sold or leased, which are similar to a particular
property being valued, and which are being used to indicate the value of the property
being appraised, are referred to as:
a. Subject properties
b. Comparable properties
c. Relative properties
d. Identical properties

49. Which of the following conditions must exist in order for the comparable sales
comparison approach to be considered the most reliable appraisal method?
a. The property is new and unoccupied
b. A high rate of inflation exists
c. The properties are held primarily for the production of income
d. Access to reliable market data exist

50. The component into which a property may be divided for purposes of comparison
are termed:
a. Elements of comparison
b. Comparison adjustments
c. Units of comparison
d. Grid units

51. During the sales comparison approach, the appraiser obtains the following adjusted
sales prices of the comparables?
Sale 1 = P 1,485,000
` Sale 2 = P 1,500,000
Sale 3 = P 1,500,000
The final value will be:
a. A weighted average
b. The median price
c. A reconciliation of all data
d. The mean adjusted price

52. Prices used in a direct sales comparison appraisal should be verified by consulting
the:
a. Public records
b. Neighbors
c. Buyer, seller, or broker
d. Title Company

53. Market analysis (conditions), paired sales and abstraction are found in which
approach to appraisal practice?
a. Cost
b. Sales comparison
c. Income
d. Highest and best use studies

54. Market condition (time) adjustments should correctly begin with:

a. A peso amount
b. A percentage
c. A negative adjustment
d. A plus adjustment

55. The most important consideration in the sales comparison approach is:
a. The neighborhood characteristics
b. The property characteristics
c. The adjustments
d. The cost

56. In selecting the best comparable sale, the most important indication is the:
a. Number of gross adjustments
b. Net adjustments
c. Percentage adjustments
d. Quality of data

57. An appraiser is attempting to estimate the value of a house. The subject property
has four bedrooms and a swimming pool. The appraser had found 3 comparables that
have recently sold:

Comparable Sales Price Bedrooms Swimming Pool

1 P 11,000,000 5 No
2 10,100,000 4 No
3 10,400,000 3 Yes

The appraiser estimates that each bedroom has worth of P 1,000,000 while a swimming
pool is worth P 1,500,000

Given the above information, what is the estimated value of the subject property using
the average derived from the comparables?
a. P 10,100,000
b. 10,400,000
c. 11,500,000
d. 12,500,000
58. A comparable property is identical to the subject property being appraised. The
comparable sold six months ago for P1,000,000.00. As the appraiser, you must make an
adjustment for the time difference between the subject property and the comparable.
You have found a paired sale of two houses, one of which sold one year ago for
P800,000.00 and other sold yesterday for P880,000.00. What is the proper estimated
adjusted sales price for your comparable?

(a) P 880,000.00 (c) P1,050,000.00

(b) P1,000,000.00 (d) P1,100,000.00

59. In appraising a single-family residence, an appraiser locates six comparable

properties. After verifying the data, and adjusting the comparables to the subject, the
indicated values are as follows:

Comp #1 P819,000.00 Comp #4 P862,000.00

Comp #2 P836,000.00 Comp #5 P848,000.00
Comp #3 P827,000.00 Comp #6 P827,000.00

If comparabales nos. 1, 3 and 6 are given 10% weight, nos. 2 and 5 are given 20%
weight, and no. 4 is given 30%, what is the indicated value of the subject
property?
(a) P847,200.00 (c) P824,700.00
(b) P842,500.00 (d) P824,700.00

60. A house and lot are prices at P8,800,000.00. The lot alone is valued at
P1,650,000.00. What percentage of the total asking price is attributable to the value of
the lot?
(a) 18.5% (c) 18 %
(b) 19.0% (d) 181/4 %

61. In the appraisal of a new, detached, single-family-residence, a proper weighing

would include
a. The market approach c. The income approach
b. The cost approach d. Both a and c

62. All improvement costs, less depreciation, are subtracted form sales price to derive
land value in the process is called?
a. Ground rent capitalization c. Entrepreneurial enterprise
b. Extraction d. Assemblage