Multiple choice questions – 2 points each x 40 = 80 points possible
1.
What is real estate?
A.
land and buildings
B.
a bundle of rights
C.
an industry
D.
all of the above
2. What
is an example of intangible property?
A.
automobile
B.
lease agreement
C.
land
D.
iPhone case
3.
Can the cost of something be different than the value?
A.
yes
B.
no
4.
Is real property tangible or intangible?
A.
tangible
B.
intangible
C.
both
D.
neither
5.
What three markets interact in real estate?
A.
users, capital, property
B.
land, labor, capital
C.
capital, financial, money
D.
debt, equity, capital
6.
If a property income is 100,000 and the capitalization rate is 8 percent, what
is the value indication?
A.
80,000
B.
800,000
C.
1,250,000
D.
250,000
7.
If a property value is 700,000 and the capitalization rate is 9 percent, what
is the income?
A.
63,000
B.
7,777,777
C.
77,000
D.
6,300,000
8.
What is the
strongest possessory interest estate?
A. leased
fee
B. fee
simple
C.
leasehold
D.
tenancy at sufferance
A.
ownership until the death of someone
B. a
leasehold right
C. tenancy
at sufferance
D.
all of the above
10.
Do
leaseholds have titles to property?
A. yes
B. no
11. What
type of deed is most preferred?
A.
quitclaim deed
B.
sheriff’s deed
C. warranty
deed
D. seller
deed
12. An
easement is a ________________
A. non-possessory
right in real estate.
B. debt
C. loan
D. tenancy
at sufferance
13. What
right is most preferred?
A. easement
B. license
C. servient
D.
appurtenant
14. Can you sell property and retain some of the rights?
A. yes
B. no
15. Do real
estate contracts require consideration?
A. yes
B. no
16. What are three powers that government exercises over real estate?
A. habeas
corpus, regulation, taxation
B.
taxation, taking, regulation
C. taking,
taxation, easement
D.
regulation, taxation, habeas corpus
17. What is
an externality?
A. costs or
benefits on a third party
B.
leasehold interest
C. condemnation
C. condemnation
D.
inversion
18. When
the Saudi government needs land to build a road, do they have to pay the owner?
A. yes
B. no
19. If the
Saudi employment in the finance sector is 10 percent and the Riyadh local
quotient is 2.7, what is the local employment rate in that sector?
A. 27%
B. 270%
C. 3.7%
D. 12.7%
20. ________________
stores cluster and ____________ stores disperse
A. comparison,
convenience
B. magnet,
big box
C. retail,
wholesale
D.
convenience, comparison
21. What
two perspectives are considered under the Highest and Best Use Analysis?
A. as
vacant and as improved
B.
technically feasible, financially feasible
C. cost
approach and DCF
D.
retrospective, prospective
22. Can you
have more than one highest and best use?
A. yes
B. no
23. What
are three type of depreciation considered under the cost approach?
A. cost,
sales, income
B. equity,
debt, market
C.
short-lived, long-lived, non-reproducing
D.
physical, functional, external
24. A
building is 20 years old and has an economic life is 30 years. The cost new is
5000 per square meter. What is the effective rate?
A. 3,333
B. 6,500
C. 1,667
D. 6,667
25. Calculate
the value of the subject property under the cost approach:
Land value: 2,000,000
Building size: 1,000 square meters
Building cost new: 5,000 SAR per square meter.
Estimated economic life: 40 years
Building age: 10 years
Land value: 2,000,000
Building size: 1,000 square meters
Building cost new: 5,000 SAR per square meter.
Estimated economic life: 40 years
Building age: 10 years
A.
5,750,000
B.
7,000,000
C.
3,250,000
D. 6,666,666
26. If a
property is superior to the subject, what kind of adjustment do you make to the
sale price?
A. positive
B. negative
27. What do you call a situation where you have a tenant but they don’t pay rent?
A. vacancy
loss
B. equity
loss
C. expense
loss
D. credit
loss
28. If you
manage your own building, should you charge a management fee in your income
statement?
A. yes
B. no
29. What
does the reciprocal of the capitalization rate tell you?
A. the
years to recover the purchase price
B. the
price to earnings ratio
C. the
reversion rate
D. the
yield rate
30. If a
comparable property sold at an 8 percent capitalization rate, and it is
superior to the subject property, what capitalization rate should you use?
A. greater
than 8 percent
B. less
than 8 percent
C. 8
percent
D. between
7 and 9 percent
31. If a
property sold last year for 100,000 and then resold last week for 125,000, how
much should I adjust for changes in market conditions?
A. +2
percent per month
B. -2
percent per month
C. +5
percent per month
D. no
adjustment necessary
32. A
comparable property sold for 4000 per square meter. It is considered 5 percent
better in terms of location and 15 percent inferior in terms of age and
condition. What is the indicated rate per square meter for the subject
property?
A. 3,200
B. 3,600
C. 4,400
D. 4,800
33. A comparable property sold for 5000 per
square meter. It is considered 10 percent inferior in terms of location and 20
percent inferior in terms of age and condition. What is the indicated rate per
square meter for the subject property?
A. 5,500
B. 4,500
C. 7,500
D. 3,500
This question was dropped. The correct indication was 6,500. If you calculated the correct score and noted the calculation you were given 2 bonus points.
34. What
expenses do owners typically not include in their income statements?
A. credit
and vacancy loss
B. depreciation
and interest
C.
management and reserves for replacements
D.
reversion and reconstructed
35. If the
market capitalization rate is 8 percent, and the subject property is generating
100,000 in net operating income, and the comparables are inferior to the
subject property, what would the value indication be?
A.
1,250,000
B. more
than 1,250,000
C. less
than 1,250,000
D. not
enough information
36. If the
average capitalization rate is 7 percent, but one sale is judged to be most
comparable and is generating a 9 percent rate, what rate should you use?
A. 7
percent
B. 9
percent
C. between
7 and 9 percent
D. 8
percent
37. Can a
building be new and still suffer from depreciation?
A. yes
B. no
38. Can
land have a negative value?
A. yes
B. no
39. What is
generally the most appropriate appraisal approach for single family residential
properties?
A. cost
B. sales
C. income
D.
discounted cash flow
40. Can you
value a property if there are no comparable sales and no income?
A. yes
B. no
Short
Answer – 5 points each x 2 questions = 10 points possible
1. Sale Rate
1 12%
2 10%
3 9%
If you
consider sale 3 to be the most comparable, and give it 70 percent of the
weight, what would be the indicated rate?
12% x 15% = 1.8%
10% x 15% = 1.5%
9% x 70% = 6.3%
= 9.6%
2. What are
the four considerations in highest and best use?
Physically Possible
Legally Permissible
Financially Feasible
Maximally Productive
Analysis
Question – 10 points
Consider
the following comparable sales data. What is your estimate of a value for the
subject property and explain why.
Will discuss in class
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