CSLB General Building (B) — All Questions

The most common method an appraiser uses to value a single-family home is the:

• a.Income capitalization approach
• b.Sales comparison (market) approach✓
• c.Gross rent multiplier only
• d.Assessed value approach

The sales comparison approach values a home by comparing it to recent sales of similar nearby properties, with adjustments for differences. The income approach is used mainly for investment property, and the cost approach for special-purpose or new construction.

The appraisal approach that estimates value based on the cost to rebuild the improvements, minus depreciation, plus land value, is the:

• a.Sales comparison approach
• b.Income approach
• c.Cost approach✓
• d.Gross income approach

The cost approach estimates value as the current cost to construct the improvements new, less accrued depreciation, plus the value of the land. It is most useful for new or special-purpose properties with few comparable sales.

The income capitalization approach is MOST appropriate for valuing:

• a.A vacant lot
• b.A brand-new custom home
• c.A historic monument
• d.An income-producing apartment building✓

The income approach converts a property's expected net operating income into value using a capitalization rate, making it ideal for rental and commercial properties. Owner-occupied homes are usually valued by the sales comparison approach.

The principle of 'progression' in valuation states that a property's value tends to:

• a.Increase when surrounded by higher-value properties✓
• b.Decrease when improvements are added
• c.Stay fixed regardless of the neighborhood
• d.Equal exactly its construction cost

Under progression, a lower-valued home benefits from being located among higher-valued homes. The opposite principle, regression, holds that a higher-valued home may be dragged down by surrounding lower-valued properties.

The federal Fair Housing Act prohibits discrimination in housing based on all of the following protected classes EXCEPT:

• a.Race and color
• b.The buyer's occupation or income source in general✓
• c.Religion and national origin
• d.Sex, disability, and familial status

The federal Fair Housing Act protects race, color, religion, national origin, sex, disability, and familial status. General occupation is not a federally protected class, though some state or local laws add protections; requirements can change.

'Steering' is a prohibited fair housing practice in which an agent:

• a.Refuses to make any loan
• b.Charges different commissions to different sellers
• c.Directs prospective buyers toward or away from neighborhoods based on a protected class✓
• d.Advertises a property online

Steering unlawfully channels buyers toward or away from particular areas based on race, national origin, or another protected class. It limits housing choice and violates fair housing law.

'Blockbusting' refers to the illegal practice of:

• a.Refusing to rent to families with children
• b.Setting minimum square footage requirements
• c.Requiring flood insurance
• d.Inducing owners to sell by suggesting that people of a certain protected class are moving into the area✓

Blockbusting involves persuading owners to sell, often at a loss, by exploiting fears about the entry of a protected group into the neighborhood. It is prohibited under fair housing laws.

A lender's illegal refusal to make loans in certain neighborhoods based on their racial or ethnic composition is called:

• a.Redlining✓
• b.Steering
• c.Puffing
• d.Subordination

Redlining is the discriminatory denial of loans or insurance in specific areas based on the makeup of the residents rather than the applicant's qualifications. It is a violation of fair housing and fair lending laws.

Under federal law, sellers and landlords of most housing built before which year must provide a lead-based paint disclosure?

• a.1950
• b.1978✓
• c.1988
• d.2000

Federal law requires lead-based paint disclosure for most residential housing built before 1978, when residential lead paint was banned. Sellers must provide a disclosure and pamphlet and allow the buyer an opportunity to test.

A naturally occurring radioactive gas that can seep into homes and is a common environmental concern in real estate is:

• a.Asbestos
• b.Formaldehyde
• c.Radon✓
• d.Lead

Radon is an odorless, radioactive gas that can accumulate in homes and poses a health risk, and testing is common in some regions. Mitigation systems can reduce indoor radon levels.

A homestead exemption in Texas primarily provides a homeowner with:

• a.A guaranteed sale price
• b.Free title insurance
• c.Exemption from all federal taxes
• d.Protection of the home from certain creditors and a reduction in property taxes✓

The Texas homestead exemption shields a primary residence from many creditors and reduces the taxable value for property tax purposes. Specific dollar amounts and rules are set by law and can change.

In property management, the manager's primary fiduciary duty is to:

• a.Protect the owner's investment and maximize its return within the law✓
• b.Favor tenants over the owner
• c.Personally guarantee rent payments
• d.Set rents below market to fill vacancies quickly

A property manager acts as the owner's agent and must protect and enhance the owner's investment while complying with the law. This includes prudent management of income, expenses, and maintenance.

A lease in which the tenant pays a fixed rent and the landlord pays most property expenses such as taxes and insurance is a:

• a.Net lease
• b.Gross lease✓
• c.Percentage lease
• d.Ground lease

In a gross lease, the tenant pays a flat rent and the landlord covers most operating expenses, common in residential rentals. In a net lease, the tenant pays some or all of those expenses in addition to base rent.

A 'percentage lease' is most commonly used for:

• a.Single-family homes
• b.Vacant agricultural land
• c.Retail stores, where rent is partly based on sales✓
• d.Government office buildings only

A percentage lease charges base rent plus a percentage of the tenant's gross sales, aligning the landlord's income with the tenant's business performance. It is typical in shopping centers and retail settings.

The Americans with Disabilities Act (ADA) generally requires that:

• a.All homes be wheelchair accessible
• b.Landlords pay for tenants' medical care
• c.Only new construction comply with any rules
• d.Public accommodations remove barriers and provide reasonable accessibility✓

The ADA requires places of public accommodation, such as commercial and business facilities, to be accessible and to remove barriers where readily achievable. Separate fair housing rules address reasonable accommodations in residential housing.

Depreciation caused by outdated design, poor floor plan, or obsolete features within the property is called:

• a.Functional obsolescence✓
• b.Economic (external) obsolescence
• c.Physical deterioration
• d.Appreciation

Functional obsolescence is a loss in value from features that are outdated or poorly designed, such as a two-bedroom house with one tiny closet. It arises from conditions within the property rather than external forces.

Loss in property value caused by negative factors outside the property, such as a new highway creating noise, is called:

• a.Functional obsolescence
• b.External (economic) obsolescence✓
• c.Physical deterioration curable by repair
• d.Accrued appreciation

External or economic obsolescence is a loss in value from factors outside the property boundaries, such as nearby nuisances or a declining local economy. It is generally considered incurable by the owner because the cause is off-site.

A comparative market analysis (CMA) prepared by a sales agent to help price a listing is:

• a.A legally certified appraisal
• b.A guarantee of the final sales price
• c.An estimate of value based on comparable sales, not a formal appraisal✓
• d.Required by federal law for every sale

A CMA uses recent comparable sales and market data to help an agent and seller set a competitive list price, but it is not a formal appraisal. Only a licensed or certified appraiser can perform an appraisal for lending purposes.