CSLB General Building (B) — All Questions
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The appraisal approach that estimates value by comparing recently sold similar properties is the:
- a.Cost approach
- b.Sales comparison approach✓
- c.Income approach
- d.Gross rent multiplier approach
The sales comparison approach estimates value by analyzing recent sales of comparable properties and adjusting for differences. It is the primary method for valuing single-family homes. It rests on the principle of substitution.
The appraisal approach most appropriate for valuing an income-producing apartment building is the:
- a.Cost approach
- b.Income approach✓
- c.Sales comparison approach
- d.Assessment approach
The income approach values property based on the income it produces, often by capitalizing net operating income. It is best suited to investment and commercial properties such as apartment buildings. The cost and sales comparison approaches are more common for other property types.
A property has a gross annual rent of $30,000 and a gross rent multiplier of 9. What is the indicated value?
- a.$270,000✓
- b.$210,000
- c.$300,000
- d.$333,000
The gross rent multiplier method multiplies gross rent by the GRM: $30,000 x 9 = $270,000. The GRM is a quick screening tool derived from comparable sales. It does not account for expenses, unlike the full income approach.
In the cost approach, the appraiser estimates value by:
- a.Capitalizing the net operating income
- b.Multiplying gross rent by a factor
- c.Adding land value to the depreciated cost of improvements✓
- d.Comparing only to foreclosure sales
The cost approach estimates value as the cost to replace or reproduce the improvements, minus depreciation, plus the land value. It is especially useful for new, unique, or special-purpose properties. Depreciation accounts for physical, functional, and external loss in value.
A parcel of land measures 200 feet by 300 feet. How many square feet does it contain?
- a.60,000✓
- b.50,000
- c.6,000
- d.600,000
Area of a rectangle is length times width: 200 ft x 300 ft = 60,000 square feet. This is a basic measurement calculation used throughout real estate. For reference, one acre is 43,560 square feet.
Approximately how many acres is a parcel containing 87,120 square feet?
- a.1 acre
- b.3 acres
- c.2 acres✓
- d.4 acres
One acre equals 43,560 square feet, so divide: 87,120 / 43,560 = 2 acres. Memorizing 43,560 square feet per acre is essential for land math. Many exam problems convert between square feet and acres.
A home sells for $320,000 and the total commission rate is 6%. What is the total commission?
- a.$16,000
- b.$32,000
- c.$21,000
- d.$19,200✓
Multiply the sale price by the commission rate: $320,000 x 0.06 = $19,200. This total is typically split between the listing and selling brokerages, then between broker and salesperson. Commission rates are negotiable, not set by law.
A $19,200 total commission is split 50/50 between the listing and selling brokerages, and the listing salesperson keeps 60% of their brokerage's share. How much does that salesperson earn?
- a.$9,600
- b.$5,760✓
- c.$11,520
- d.$3,840
Each brokerage gets 50% of $19,200 = $9,600. The listing salesperson keeps 60% of $9,600 = $5,760, and the brokerage keeps the remaining 40%. Commission splits are set by the agreement between broker and salesperson.
A key responsibility of a property manager is to:
- a.Personally guarantee the owner's mortgage
- b.Appraise the property for lending purposes
- c.Set property tax rates for the county
- d.Maximize the owner's return while maintaining the property's value✓
A property manager's core duty is to protect the owner's investment by maximizing income and preserving or enhancing the property's value. This includes marketing, leasing, maintenance, and financial reporting. The manager acts as the owner's fiduciary agent.
A property owner wants a 12% annual return on a $250,000 investment. What annual net income must the property generate?
- a.$25,000
- b.$36,000
- c.$30,000✓
- d.$12,000
Multiply the investment by the desired rate: $250,000 x 0.12 = $30,000 of annual net income needed. This is the inverse of the cap rate calculation, where income divided by value gives the rate. Investors use this to test whether a property meets their return target.
A property management agreement between an owner and a property manager typically creates:
- a.A buyer agency relationship
- b.No agency relationship at all
- c.A general agency relationship✓
- d.A subagency to the tenant
A property management agreement generally makes the manager a general agent, authorized to handle a range of ongoing tasks on the owner's behalf. This is broader than the special agency of a listing broker hired for one transaction. The manager owes fiduciary duties to the owner.
The process of weighing the value estimates from multiple appraisal approaches into a final opinion of value is called:
- a.Reconciliation✓
- b.Amortization
- c.Capitalization
- d.Depreciation
Reconciliation is the final step of an appraisal where the appraiser weighs the results of the different approaches to arrive at a single value opinion. It is a judgment process, not a simple averaging. The appraiser gives most weight to the most reliable approach for that property.
A comparable property sold for $310,000 but has an extra bathroom worth $10,000 that the subject property lacks. To adjust, the appraiser would:
- a.Add $10,000 to the comparable's price
- b.Subtract $10,000 from the comparable's price✓
- c.Add $10,000 to the subject's price
- d.Make no adjustment
In the sales comparison approach, adjustments are made to the comparable, not the subject. Because the comparable is superior by one bathroom, the appraiser subtracts its $10,000 value to reflect what it would have sold for if it matched the subject. Superior features are subtracted, inferior ones added.
A tenant who remains in possession after the lease expires without the landlord's consent creates a:
- a.Tenancy at sufferance✓
- b.Tenancy at will
- c.Estate for years
- d.Periodic tenancy
A tenancy at sufferance arises when a tenant stays past the lease term without permission, becoming a holdover tenant. It gives the tenant the least protection, and the landlord may pursue eviction. If the landlord accepts rent, it may convert to a periodic tenancy.
A lease with a definite beginning and ending date, such as a one-year lease, is an:
- a.Estate for years✓
- b.Estate at will
- c.Estate at sufferance
- d.Periodic estate
An estate for years is a leasehold with a fixed, definite term that ends automatically on the stated date without notice. A periodic estate renews for successive periods until proper notice is given. Both are common residential leasing arrangements.
The Americans with Disabilities Act (ADA) most directly requires that:
- a.Public accommodations remove barriers so people with disabilities have access✓
- b.All homes be rebuilt for accessibility
- c.Landlords pay for tenants' medical care
- d.Brokers hire only licensed contractors
The ADA requires places of public accommodation, such as offices and stores, to provide access to people with disabilities by removing barriers where readily achievable. It applies to commercial facilities and public spaces. Fair housing laws separately address accessibility in housing.
A buyer's agent notices visible mold and water staining during a showing. The best practice is to:
- a.Say nothing to avoid alarming the buyer
- b.Personally guarantee the home is safe
- c.Recommend the buyer obtain a professional inspection✓
- d.Tell the buyer to ignore it since it is cosmetic
Agents are not experts on defects, so the prudent practice is to advise the client to hire a qualified inspector to evaluate potential problems like mold. This protects the buyer and limits the agent's liability. Agents should never conceal known material conditions.
A property manager prepares an operating budget mainly to:
- a.Set the sale price of the building
- b.Calculate the owner's income taxes
- c.Project income and expenses to guide financial decisions✓
- d.Determine the mortgage interest rate
An operating budget forecasts the property's expected income and expenses, helping the manager plan for maintenance, reserves, and cash flow. It is a key financial management tool. Comparing actual results to the budget reveals how the property is performing.