Question 1

When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood, he is said to have:

Accepted Answer

A)   Under-improved the property
B)   Over-improved the property
C)   Reached the point of increasing returns
D)   Exceeded the breakeven point

Question 2

When calculating taxes, the difference between the acquisition cost and selling price of a house is called:

Accepted Answer

A)   Ordinary income
B)   Amortization
C)   Capital gain
D)   Deferred income

Question 3

A housing bubble occurs when there is a big increase in the supply of homes.

Accepted Answer

A) True 
 B)False

Question 4

The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.

Accepted Answer

A) True 
 B)False

Question 5

When using the cost approach to valuation, current market data for land values must be obtained.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements best describes the "wealth effect," as described in the textbook?

Accepted Answer

A)   Households with equity in their houses are wealthier than households that rent their housing
B)   Expected appreciation in assets, such as home equity, may increase spending on other goods and services in the economy
C)   Economists believe that wealthier households have a positive effect on the housing market, while low-income households have negative effect
D)   A 10 percent increase in homeownership is associated with a 12 percent increase in economic growth

Question 7

Assume that houses in an area appreciate at the rate of 4 percent a year. A borrower expects to have a loan-to-value ratio of 90 percent. What would be the approximate expected appreciation rate on home equity EAHE) ?

Accepted Answer

A)   4.0%
B)   4.4%
C)   10%
D)   20%
E)   40%

Question 8

Federal income tax policy has generally been thought to:

Accepted Answer

A)   Discourage homeownership
B)   Encourage renting
C)   Increase interest rates
D)   Encourage homeownership

Question 9

If mortgage interest rates increase, demand for purchased housing tends to increase.

Accepted Answer

A) True 
 B)False

Question 10

The objective of appraisal is to:

Accepted Answer

A)   Establish the highest possible price that a property can sell for
B)   Establish the most probable price that would be paid for property under competitive market conditions
C)   Establish the market value for a property's land without any structures such as a hous
D)   Establish the market value for a property if the property is put to its highest and best use

Question 11

The capitalization effect:

Accepted Answer

A)   Is one of the major factors leading to housing bubbles
B)   Has no impact on housing prices
C)   Relates the quality of public services that individuals receive relative to the taxes that are paid for the services
D)   Relates the interest rate on mortgage loans to the value of residential real estate

Question 12

One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.

Accepted Answer

A) True 
 B)False

Exam 7: Single Family Housing: Pricing, Investment, and Tax Considerations

One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.

Correct Answer
verified

When using the cost approach to valuation, current market data for land values must be obtained.

Correct Answer
verified

Assume that houses in an area appreciate at the rate of 4 percent a year. A borrower expects to have a loan-to-value ratio of 90 percent. What would be the approximate expected appreciation rate on home equity EAHE) ?

Correct Answer
verified

Federal income tax policy has generally been thought to:

Correct Answer
verified

When calculating taxes, the difference between the acquisition cost and selling price of a house is called:

Correct Answer
verified

When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood, he is said to have:

Correct Answer
verified

The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.

Correct Answer
verified

If mortgage interest rates increase, demand for purchased housing tends to increase.

Correct Answer
verified

A housing bubble occurs when there is a big increase in the supply of homes.

Correct Answer
verified

The objective of appraisal is to:

Correct Answer
verified

Which of the following statements best describes the "wealth effect," as described in the textbook?

Correct Answer
verified

The capitalization effect:

Correct Answer
verified

Exam 7: Single Family Housing: Pricing, Investment, and Tax Considerations

One concern of appraisers when using the sales comparison approach is that financing benefits paid for by a seller of a property may result in a selling price for the comparable property that is lower than the market value.

Correct AnswerverifiedShow Answer

When using the cost approach to valuation, current market data for land values must be obtained.

Correct AnswerverifiedShow Answer

Assume that houses in an area appreciate at the rate of 4 percent a year. A borrower expects to have a loan-to-value ratio of 90 percent. What would be the approximate expected appreciation rate on home equity EAHE) ?

Correct AnswerverifiedShow Answer

Federal income tax policy has generally been thought to:

Correct AnswerverifiedShow Answer

When calculating taxes, the difference between the acquisition cost and selling price of a house is called:

Correct AnswerverifiedShow Answer

When a homeowner improves some aspect of his property far in excess of comparable properties in the neighborhood, he is said to have:

Correct AnswerverifiedShow Answer

The appraisal function is purely objective; an appraiser's judgment is not part of the decision process.

Correct AnswerverifiedShow Answer

If mortgage interest rates increase, demand for purchased housing tends to increase.

Correct AnswerverifiedShow Answer

A housing bubble occurs when there is a big increase in the supply of homes.

Correct AnswerverifiedShow Answer

The objective of appraisal is to:

Correct AnswerverifiedShow Answer

Which of the following statements best describes the "wealth effect," as described in the textbook?

Correct AnswerverifiedShow Answer

The capitalization effect:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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