Assignmetn 17

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New York Institute of Technology, Westbury *

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Finance

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Jan 9, 2024

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Real Estate Division

View Assignment Aman Preet Singh Student No: 4304704 Course: Real Estate Trading Services Licensing Course 2023 Assignment No: 17 You have submitted this assignment on 2023-10-29 . Green border - Questions answered correctly. Red border - Questions answered incorrectly. If you would like to print your assignment questions for future reference, you can do so by clicking the button below: Print this assignment Question 1 Luigi is using the comparative approach of appraisal to value a house and has found a recent sale which he thinks is a good comparable to the subject property. The subject property has a swimming pool while the comparable does not. Swimming pools are a desirable amenity and a selling feature in this area. However, the subject property features a dated kitchen whereas the comparable has been updated with new appliances and stone countertops. When adjusting for these differences, he will: add the value of the swimming pool to the comparable and add the value of the kitchen updates to the subject property. add the value of the swimming pool to the comparable and subtract the value of the kitchen updates from the comparable. add the value of the swimming pool to the comparable and subtract the value of the kitchen updates from the subject property. subtract the value of the swimming pool from the subject property and add the value of the kitchen updates to the subject property. Correct Answer: 2 This question requires you to adjust a comparable using the comparative approach of appraisal. The general rule when making adjustments is that the appraiser adjusts the comparables to make them identical to the subject. In this case, you would add the value of the swimming pool to the comparable, and subtract the value of kitchen updates from the comparable. Question 2 A three-storey, 45 year old, Tudor style home has the entrance way located so that one enters through the dining room. As well, the ceiling height on the main floor is only six feet, which was an acceptable height when the home was first built. These would be examples of: functional curable depreciation. functional incurable depreciation. physical curable depreciation. physical incurable depreciation. Correct Answer: 2 This question requires you to distinguish between the various types of depreciation. In this case, the Tudor house has very low ceilings and a poor main floor plan with the entrance way located in the dining room. These would both be examples of functional incurable depreciation. Go to My Courses Page

Question 3 The deteriorating roof tiles of a ranch style home that was built in the late 1990s would be classified as: incurable physical depreciation. incurable functional depreciation. curable physical depreciation. curable functional depreciation. Correct Answer: 3 Incurable depreciation refers to depreciation that is not economically worthwhile to correct. Deteriorating rooftiles can be corrected without completely rebuilding and therefore, it is considered curable depreciation. Functional depreciation refers to items of an outdated design which cause a decline in value. Physical depreciation represents the loss in value due to physical wear and tear. Deteriorating rooftiles would be classified as curable physical depreciation. Question 4 Consider the following statements with respect to the comparative approach of appraisal. A. An appraiser can use the consumer price index to adjust a non-recent sale price to the appropriate level of value at the appraisal date because changes in the value of consumer products usually coincide with changes in the value of property. B. Common area charges need not be included in the market value of a condominium unit because these charges are market related and are standard from project to project. C. One problem in applying the comparative approach is the difficulty in establishing similarity. This problem is compounded when there are few comparable properties. D. No adjustments for value are required for vendor takeback mortgages where the contract rate of interest is different from the prevailing market rate of interest given the stable and low market interest rate environment of recent years. Which of the above statements are FALSE? A and C only C and D only A, B, and D only All of the above Correct Answer: 3 Statements A, B, and D are false. Statement A is false because general price indices such as the consumer price index are irrelevant to the appraisal of one particular property since changes in the value of consumer products are not necessarily the same as changes in the value of property. Statement B is false because common area charges need to be included since they are not standard, rather they vary from project to project. Statement D is false because a differential in the contract rate and market rate (notwithstanding a stable and low interest rate environment), requires a finance adjustment to make it comparable with the subject property. Question 5 Atlas Appraisal Services Ltd is appraising a warehouse using the Cost Approach. The warehouse has an estimated economic life of 25 years and a salvage value of $5,000 at the end of that time. The current replacement cost is $1,500,000. If the effective age of the warehouse is 5 years at the time of the appraisal, what is the estimate for incurable physical depreciation using the straight-line method of depreciation? $60,000 $299,000 $59,800 $300,000

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