Arizona Real Estate Broker Exam — All Questions
3 questions
Which approach to value does an appraiser rely on most for a single-family home in an established subdivision?
- a.The sales comparison approach✓
- b.The cost approach
- c.The gross rent multiplier approach
- d.The income capitalization approach
The sales comparison approach analyses recent sales of similar properties and adjusts them for differences, which is the most reliable evidence of value where an active market of comparable homes exists. The cost approach carries most weight for new or special-purpose buildings with few comparables, and income capitalization for income-producing property. A gross rent multiplier is a rough screening tool, not a full approach.
How does a broker's comparative market analysis differ from an appraisal?
- a.It must follow the same standards as an appraisal report
- b.It is more accurate because the broker knows the local market
- c.It may be used in place of an appraisal by a mortgage lender
- d.A pricing opinion, not a certified valuation by an appraiser✓
A comparative market analysis is a licensee's opinion of a likely selling price, prepared to help a client set a listing or offer price. An appraisal is an independent valuation prepared by a licensed or certified appraiser under professional standards, and it is what a lender relies on for underwriting. The two are not interchangeable, and presenting a market analysis as an appraisal misleads the client.
Which form of depreciation is generally considered incurable in an appraisal?
- a.Functional obsolescence from an outdated kitchen
- b.External obsolescence from causes off the property✓
- c.Physical deterioration from deferred maintenance
- d.Physical deterioration of a worn floor covering
External or economic obsolescence arises from influences outside the property boundary, such as a new industrial neighbour or a decline in the local economy, and the owner cannot cure it by spending money on the property. Physical deterioration and most functional obsolescence are curable where the cost to fix is justified by the value added. Curability in appraisal turns on that cost-benefit test, not on how visible the defect is.