NAME: ________________________________________________ GOOD LUCK!
PART 1: FUNDAMENTALS
1. The enactment of the Real Estate Service Act created a body that will regulate the real estate service practice. This regulatory body is named
a. Professional Regulatory Commission
b. Professional Regulatory Board of Real Property Practitioners c. Professional Regulatory Board of Real Estate Service d. Professional Regulatory Board for Appraisers
2. This term refers to an official in the local government unit, who performs appraisal and assessment of real properties, including plants, equipment, and machineries, essentially for taxation purposes.
a. Appraiser b. Assessor c. Consultant d. Broker
3. A duly registered and licensed natural person who works in a local government unit and performs appraisal and assessment of real properties, including plants, equipment, and machineries, essentially for taxation purposes is referred to as
a. real estate appraiser b. real estate broker c. real estate consultant d. real estate assessor
4. A duly accredited natural person who performs service for, and in behalf of a real estate broker who is registered and licensed by the Professional Regulatory Board of Real Estate Service for or in expectation of a share in the commission, professional fee, compensation or other valuable consideration is referred to as
a. real estate salesperson b. real estate broker
c. real estate appraiser d. real estate consultant
5. This term refers to a person who conducts valuation/appraisal; specifically, one who possesses the necessary qualifications, license, ability and experience to execute or direct the valuation/appraisal of real property.
a. Appraiser b. Broker c. Assessor d. Consultant
6. Defined as the physical land and those human-made items, which attach to the land. a. Real property
b. Real estate c. Personal property d. Asset
7. The ownership of real estate is called a. bundle of rights.
b. real property.
c. fee simple. d. freehold.
8. Includes all the rights, interests, and benefits related to the ownership of real estate. a. bundle of rights.
b. real property. c. fee simple. d. freehold.
9. A term used for the amount asked, offered, or paid for a good or service. a. Cost
b. Value c. Price
d. Replacement cost
10. The price paid for goods or services or the amount required to create or produce the good or service.
a. Value b. Price c. Cost
d. Selling price
11. An economic concept referring to the price most likely to be concluded by the buyers and sellers.
a. Cost b. Value c. Price d. Market
12. The environment in which goods and services trade between buyers and sellers through a price mechanism.
a. Market b. Medium
c. Stock exchange d. Appraisal
13. A statement of the fundamental measurement principles of a valuation on a specified date.
a. Market value b. Selling price
c. Economic condition d. Basis of value
14. In markets characterised by extreme volatility or severe disequilibrium between supply and demand, the highest and best use of a property may be a / an
a. holding for future use. b. interim use.
c. existing use. d. commercial utility
15. Where land use and zoning are in a state of change, the immediate highest and best use of a property may be a / an
a. interim use. b. present use.
c. residential use. d. commercial use.
16. This principle holds that a prudent person would not pay more for a good or service than the cost of acquiring an equally satisfactory substitute good or service.
a. Principle of highest and best b. Principle of anticipation c. Principle of substitution d. Principle of competition
17. This comparative approach considers the sales, listings or offers of similar or substitute properties and related market data, and establishes a value estimate by processes involving comparison.
a. Market data approach b. Cost approach
c. Income approach d. Contractor’s method
18. This comparative approach considers income and expense data relating to the property being valued and estimates value through a capitalisation process.
a. Market data approach b. Income approach c. Cost approach d. Residual technique
19. This comparative approach considers the possibility that, as an alternative to the purchase of a given property, one could acquire a modern equivalent asset that would provide equal utility.
a. Market data approach b. Income approach c. Cost approach
d. Building residual technique
20. A duly registered and licensed natural person who, for a professional fee, commission or other valuable consideration, acts as an agent of a party in a real estate transaction to offer, advertise, solicit, list, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein.
a. Real estate appraiser b. Real estate salesperson c. Real estate broker d. Real estate developer
21. In asset valuation, this term refers to the adjustments made to the cost of reproducing or replacing the asset to reflect physical deterioration and functional (technical) and external (economic) obsolescence in order to estimate the value of the asset.
a. Deterioration b. Depreciation c. Replacement cost d. Reproduction cost
22. In property appraisal, these are suppositions taken to be true, involving facts, conditions, or situations affecting the subject (property being appraised), or the approach in the valuation.
a. Assumptions b. Market conditions c. Perceptions d. Observations
23. A duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, offers or renders professional advice and judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of lands or improvements thereon; and (ii) the conception, planning, management and development of real estate projects.
a. Real estate broker b. Real estate appraiser c. Real estate consultant d. Real estate developer
24. These are constraints that maybe imposed by clients or by statutory law that would likely to affect valuation.
a. Limiting Conditions b. Assumptions
c. Observations d. Valuation methods
25. A person who possesses the necessary qualifications, ability, and experience to execute/performed a valuation.
a. Appraiser or valuer b. Consultant
c. Broker d. Salesperson
26. Is a valuer or an appraiser who is in the employ of either the entity that owns the assets or the accounting firm responsible for preparing the entity’s financial record and/or reports.
a. External Valuer
b. Public Sector Appraiser c. Internal Valuer d. Valuer General
27. Is a valuer or an appraiser, together with any associates, has no material links with the client, an agent acting on behalf of the client or the subject of the assignment.
a. External Valuer b. Internal Valuer c. Assessor d. Broker
28. As provided for in the Philippine Valuation Standards, the four property types are: a. Real estate, asset, machinery, plant and equipment
b. Real property, personal property, businesses and financial interests c. Real estate, fixture, chattel and trade related
29. Families are more aware of recycling their consumer wastes than ever before. This is an example of which kind of force:
a. Social
b. Governmental c. Economic d. Environmental
30. Absolute ownership subject only to limitations imposed by the country is known as a. Fee simple estate.
b. Leasehold estate. c. Lease fee estate. d. Severalty.
31. A duly registered and licensed natural person who, for a professional fee, compensation or other valuable consideration, performs or renders, or offers to perform services in estimating and arriving at an opinion of or acts as an expert on real estate values, such services of which shall be finally rendered by the preparation of the report in acceptable written form.
a. Real estate appraiser b. Real estate assessor c. Real estate broker d. Real estate consultant
32. Interests in items that are not permanently attached or affixed to real estate and are generally characterized by their moveability.
a. Real estate property b. Fixtures
c. Personal property d. Chattel
33. Any commercial, industrial, service or investment entity pursuing an economic activity is referred to as
a. Financial interests b. Real property c. Personal property d. Business
34. Interests in property resulting from the legal division of ownership interests in businesses and real property, from the contractual grant of an optional right to buy or sell property at a stated price within a specified period, or from the creation or investment instruments secured by pooled real estate assets.
a. Business
b. Financial interests c. Personal property
d. Real estate investment trust
35. The process of acquiring private property for public use is called a. Eminent domain
b. Police power c. Escheat
d. Condemnation
36. A type of business involving a combination of two or more entities that join to undertake a specific project.
a. Syndication
b. Limited partnership c. Joint venture d. General partnership
37. In statistics, this term refers to the difference between the highest and the lowest scores.
a. Standard deviation b. Mode
c. Mean d. Range
38. This economic principle relates to the principle of balance as well as to the principle of contribution. This principle holds that as capital units are added, a certain point is reached where the added units do not contribute value commensurate with their costs.
a. Principle of substitution b. Principle of balance c. Principle of contribution
d. Principle of increasing and decreasing returns
39. The right of government to acquire private property for public use is referred to as a. eminent domain.
b. police power. c. escheat. d. taxation.
40. Tax Imposed on profit presumed have been realized on the sale or disposition of lands and/or buildings.
a. Estate tax
b. Capital gains tax c. Inheritance tax d. Realty tax
41. In statistics, this term refers to the measurement of how much all the scores in a distribution typically deviate or vary from the mean.
a. Standard Deviation b. Variance
c. Mode d. Range
42. An ownership arrangement in which all partners share in investment gains and losses and each is fully responsible for all liabilities.
a. Limited partnership b. General partnership c. Joint venture
d. Syndication
43. Tax imposed on the right to transmit real and personal properties upon death of the property owner (decedent).
a. Inheritance tax b. Capital gains tax c. Estate tax d. Real estate tax
44. Refers to government housing projects which may either be a subdivision or a condominium intended for homeless low-income family beneficiaries
a. Residential subdivision b. Low cost housing c. Socialized housing d. Marginal housing
45. An item that was once personal property that has become part of the real estate is referred to as
a. Real property b. Real estate c. Fixture d. Equipment
46. The purest and most complete form of real estate ownership is a. leased fee estate.
b. Leasehold estate. c. Fee simple. d. Real property.
47. The right of government to regulate land use for the public good. a. Escheat
b. Eminent domain c. Police power d. Taxation
48. This describes the value of an asset that has reached the end of its economic life for the purpose it was made and the asset may still have value for an alternative use or for recycling.
a. Scrap value b. Salvage value c. Market value d. Liquidation value
49. The right of governments to acquire private property for public use, such as a road widening.
a. Eminent domain b. Expropriation c. Police power d. Condemnation
50. A limitation on the use of real estate through a written legal document that is usually recorded.
a. Mortgage
b. Deed restriction c. Lien
d. Chattel
51. This term refer to the conveyance of the right to use part of a land for a specific purpose and thus divide the bundle of rights.
a. Lease
b. Encroachment c. Easement d. Contract
52. A loan or promissory note that is secured by the real estate. a. Lease
b. Mortgage c. Lien
d. Chattel
53. A trespass on another’s land is a from of a / an a. Easement
b. Encroachment c. Mortgage d. Restriction
54. A government restriction imposed on ownership of real estate that actually means going to the state.
a. Eminent domain b. Police power c. Escheat d. Taxation
55. The most common form of ownership where one person or corporation owns the entire bundle of rights, still subject to governmental and private restrictions.
a. Severalty b. Condominium c. Leased fee d. Real property
56. This term means is that the property itself cannot be divided, only the ownership interest.
a. Lease interest b. Real property
c. Undivided interests d. Financial interests
57. A form of ownership in which a corporation owns the land and improvements, and the residents own stock in the corporation. Then, the corporation signs an exclusive lease with the tenant-stockholder.
a. Cooperative b. Condominium c. Time-share d. Severalty
58. A form of partial ownership in which other tenants in common purchase the right of use/occupancy for a specified period of time, say one week per year.
a. Cooperative b. Condominium c. Time-share d. Severalty
59. The final step in the valuation process. a. Identification of the real estate b. Data analysis
c. Correlation of value d. Valuation reporting
60. Communicates to users and third-party readers the value conclusion and confirms the basis of the valuation, the purpose of the valuation, and any assumptions or limiting conditions underlying the valuation.
a. Valuation report b. Valuation process c. Correlation of value d. Valuation approaches
61. The following statements are true when applied to Valuation Standards except a. Standards are statements of recognized principles and concepts
b. Standards are statement of best practice in procurement and reporting c. Standards are statements of accepted definitions
d. Standards prescribe specific methods of valuation for different purposes
62. The value of property to a particular investor, or a class of investors, for identified investment or operational objectives.
a. Investment Value b. Value in use
c. Going concern value d. Market value
63. An amount above the Market Value that reflects particular attributes of an asset that are only of value to a particular purchaser.
a. Plottage value b. Special Value c. Investment value d. Value in use
64. This is a form of ownership in which an owner has an interest (usually fee simple) in a certain unit defined such as the space between the interior walls, the ceiling, and the floor of that unit and the owner also owns a pro-rata share of the common areas (drives, grounds, recreational amenities, etc.) within the development.
a. Cooperative b. Leased fee estate c. Fee simple
d. Condominium
65. An additional element of value created by the combination of two or more interests where the value of the combined interest is worth more than the sum of the original interests.
a. Synergistic value. b. Market value
c. Investment value d. Going concern value
66. The International Financial Reporting Standards adopt these two models for the recognition of property assets in the balance sheet:
a. Cost model and value in use model b. Cost model and fair value model c. Cost model and investment value model d. Cost model and going concern value model
67. Assets owned and/or controlled by governmental or quasi-governmental entities to provide goods or services to the general public.
a. Public sector assets b. Real estate
c. Income generating assets d. Real property
68. This concept is based on the notion that although two or more parcels of real estate may have physical similarities and closely resemble one another, there may be significant differences in how they can be used.
a. Utility b. Value
c. Highest and best use d. Substitution
69. The approach to value perceives value as created by the expectation of future benefits (income streams).
a. Market data approach b. Income approach c. Cost approach d. Allocation
70. This approach to value recognizes that property prices are determined by the market. Market Value can, therefore, be calculated from a study of market prices for
properties that compete with one another for market share. a. Market data approach
b. Cost approach
c. Capitalization process d. Income approach
71. When data are available, this approach to value is the most direct and systematic approach to estimating value.
a. Cost approach b. Income approach
c. Market data approach d. Residual technique
72. Describes a valuation where an entire business is transferred as an operational entity. a. Going concern value
b. Value in use c. Market value d. Investment value
73. This approach to value is also known as the contractor’s method, and is recognized in most countries.
a. Market data approach b. Asset based valuation c. Cost approach d. Income approach
74. A form of real property, arising from the contractual relationship between one who owns the property and one who typically receives a non-permanent right to use the property in return for rental payments or other valuable economic consideration.
a. Lease interests b. Fee simple c. Freehold
d. Condominium
75. In business valuation, this approach may be similar to the cost approach used by appraisers of different types of assets.
a. Income approach b. Market data approach c. Residual technique d. Asset-based approach
76. Specific materials that, by their presence or proximity, may have adverse effect on property value because of their potential to cause harm to life-forms.
a. Fully depreciated buildings and improvements b. Hazardous and toxic substances
c. Non-fruit bearing trees d. Informal settlers
77. The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization.
a. Replacement cost b. Reproduction cost c. Cost to cure
d. Quantity survey method
78. Refers to the loss in value of an asset resulting from wear and tear over time, including any lack of maintenance.
a. Functional obsolescence b. Economic obsolescence c. Deferred maintenance d. Physical deterioration
79. Refers to loss in value that can be caused by advances in technology that result in new assets being capable of a more efficient delivery of goods and services.
a. Functional obsolescence b. Economic obsolescence c. Deferred maintenance d. Physical deterioration
80. A charge against a property in which the property is security for payment of a debt is called a
a. lien. b. mortgage. c. escheat. d. restriction.
81. The Enchanted Kingdom theme park in Sta. Rosa has had a significant impact on uses of land in its vicinity for many years and an influence on the value of that land. Which of the four forces does this represent?
a. Social b. Governmental c. Economic d. Environmental Page 11 of 36
82. A financial modeling technique used in the income approach to value that is based on explicit assumptions regarding the prospective income and expenses of a property or business.
a. Direct capitalization b. Annuity method
c. Discounted cash flow analysis d. Investment method
83. A type of review undertaken to ensure that a valuation meets or exceeds the compliance requirements or guidelines of the specific market and, at a minimum, conforms to Generally Accepted Valuation Principles of the Philippine Valuation Standards.
a. Field review b. Technical review c. Desk review
d. Administrative review
84. The rights and privileges granted to the owner of intangible assets. a. Personal property
b. Bundle of rights c. Intangible property d. Tangible property
85. A valuation review that is limited to the data presented in the report, which may or may not be independently confirmed.
a. Field review b. Technical review c. Desk review
d. Administrative review
86. This theory involves the concept that land cannot be valued under one highest and best use while the improvements are valued based on another highest and best use.
a. Consistent use b. Contribution c. Balance d. Anticipation
87. Refers to a housing program and projects covering houses and lots or homeless only undertaken by the government or the private sector for the underprivileged and homeless citizens.
a. Low cost housing b. Socialized housing c. Subdivision development d. Bliss project
88. A valuation review performed by an appraiser to form an opinion as to whether the analyses, opinions, and conclusions in the report under review are appropriate, reasonable, and supportable.
a. Field review
b. Technical review c. Desk review
d. Administrative review
89. These are individual properties, such as hotels, fuel stations, and restaurants that usually change hands in the marketplace while remaining operational.
a. Specialized properties b. Public sector assets c. Institutional properties d. Trade related properties
90. A revenue-raising procedure, based on the assessed value of property related to a scale of charges defined by statute within a specified time-frame.
a. Gross income taxation b. Ad valorem taxation c. Capital gains taxation d. Estate taxation
91. In mass appraisal, this is the process of analyzing sets of property and market data to determine the specific parameters operating upon a model.
a. Standard deviation b. Range
c. Mode
d. Calibration
92. The practice of appraising multiple properties as of a given date by a systematic and uniform application of appraisal methods and techniques that allow for statistical review and analysis of results.
a. Mass appraisal b. Valuation process c. Multiple regression d. Grid analysis
93. Represents the ownership interest of a lessor owning real estate that is subject to lease to others
a. Leasehold fee estate b. Leased fee estate c. Partial interest d. Bundle of rights
94. Any form of lease rental arrangement in which the lessor receives a form of rental that is based on the earnings of the lessee. Percentage rent is an example.
a. Turnover rent b. Base rent c. Market rent d. Economic rent
95. Rights generally inherent in the ownership of real estate include are referred to as a. Property rights
b. Real property c. Bundle of rights d. Lease interests
96. At the most fundamental level, value is created and sustained by the interrelationship of five factors that are associated with any product, service, or commodity. These factors are –
a. Utility, need, purchasing power, buyers and sellers Page 13 of
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b. Capital markets, money markets, discount rate and reserve requirements c. Utility, scarcity, desire, purchasing power, and transferability d. Location, size, shape, terrain and elevation
97. In property markets, this represents the quantity of property interests that are
available for sale or lease at various prices in a given market within a given period of time, assuming labour and production costs remain constant.
a. Demand
b. Purchasing power c. Desirability d. Supply
98. In property markets, this constitutes the number of possible buyers or renters
seeking specific types of property interests at various prices in a given market within a given period of time, assuming other factors such as population, income, future prices, and consumer preferences remain constant.
a. Demand b. Supply
c. Active market d. Efficient market
99. This economic principle holds that value is simply a function of the present worth of future benefits.
a. Principle of substitution b. Principle of contribution c. Principle of anticipation d. Principle of highest and best use
100. Public sector land valuation and taxation in the Philippines is the domain of two (2) arms of the government, namely:
a. Department of Budget and Management and Local Government Units b. Land Registration Authority and Bureau of Internal Revenue
c. Local Government Units and Bureau of Internal Revenue d. Local Government Units and National Tax Research Center
101. Related to the property itself, this principle holds that value is achieved and maintained when all elements are in proper proportion.
a. Principle of conformity b. Principle of balance c. Principle of contribution
d. Principle of increasing and decreasing returns
102. This economic principle holds that as time and market conditions change, so does supply and demand for real estate, and thus, the value of real estate.
a. Principle of change b. Principle of substitution c. Principle of anticipation
d. Principle of progression or regression
103. This economic principle holds that a prudent purchaser would pay no more for a home than it would cost him or her to build or buy another one.
a. Principle of conformity b. Principle of balance c. Principle of contribution
d. Principle of substitution
104. A valuation review that includes inspection of the exterior and sometimes the interior of the subject property and possibly inspection of the comparable properties to confirm the data provided in the report.
a. Technical review b. Desk review
c. Administrative review d. Field review
105. It is defined as that logical, legal, and most probable use which will yield the greatest net income to the land over a sustained period of time.
a. Interim use b. Actual use
c. Highest and best use d. Existing use
106. An ______________ market is one that is characterized by goods or services that are easily produced and readily transferable, with a large number of buyers and sellers.
a. Active b. Calm c. Inefficient d. Efficient
107. This theory is based on the idea that the greater the volume of an item, the less each incremental volume should cost.
a. Cheaper by the dozen b. Economies of scale c. Anticipation
d. Increasing returns
108. The surplus productivity principle recognizes the four agents of production, which are
a. Land, buildings, other land improvements and machinery b. Plant, machinery, equipment and technology
c. Land, labor, capital and entrepreneurship d. Land, buildings, labor and capital
109. In any enterprise, labor must be paid first, with capital paid after that,
entrepreneurship is then paid. The residual income is attributed to the land (including buildings). This concept is applies in what economic principle affecting values?
a. Economies of scale b. Contribution
c. Balance
d. Surplus productivity
110. This term means coordination or management. a. Capital b. Labor c. Entrepreneurship d. Production Page 15 of 36
111. This comparative approach considers the sales or offers of similar or
substitute properties and related market data, and establishes a value estimate by processes involving comparison.
a. Market data approach b. Income approach
c. Cost approach
d. Development technique
112. The process of orchestrating land, labor, and capital to produce an item. a. Conduction
b. Analysis
c. Entrepreneurship d. Capitalization
113. The forces that impact real estate values are the following: a. Physical, economical, sociological and physiological
b. Population, income level, skill levels and social environ
c. Social, economic, physical or environmental and governmental d. Political, economical, governmental and physical
114. These forces relate to trends in society or culture, and sometimes these forces are imagined while at other times they are based on actual facts and figures.
a. Environmental b. Governmental c. Physical d. Social
115. A / An ______________________ is a group of complementary land uses. a. Zone
b. Area
c. Neighborhood d. Municipality
116. In the application of this technique to estimate value, the building value is estimated as the present value of the residual income attributable to the building of an income producing property.
a. Building residual technique b. Land residual technique
c. Property residual technique d. Development technique
117. The term used to describe the connecting of complementary uses to the homogenous land uses (zone) is
a. linkage. b. road network. c. Passage. d. right-of-way.
118. Neighborhoods and zones alike generally exist in one of four life cycle stages; these are –
a. growth, stability, renovation, and rebirth
b. growth, decline, reconstruction, and revitalization c. growth, stability, decline, and revitalization. d. growth, stability, decline and rebuilding
119. These are assets that embody a cultural, historic, and/ or architectural heritage.
a. Agricultural properties b. Historic properties c. Trade related properties d. Public sector assets
120. The initial stage in a neighborhood or zone’s life cycle. This refers to the period in which the neighborhood or zone is expanding and developing.
a. Revitalization b. Decline c. Stability d. Growth
121. When a neighborhood can no longer compete with other comparable neighborhoods, it usually enters the _________________ stage of its life cycle.
a. Revitalization b. Decline c. Stability d. Growth
122. The act of distinguishing or delineating markets that the appraiser should consider in his data program is called
a. market segregation. b. market analysis.
c. market segmentation. d. market study.
123. In this type of market, goods and services are not readily produced or easily transferable, with no readily identified group of buyers and sellers active in a particular marketplace.
a. Efficient market b. Inefficient market c. Buyer’s market d. Seller’s market
124. The study of a specific market. It is the collection and dissection of data and the conversion of that data to information that can be used for analysis and decision-making by an appraiser or analyst.
a. Marketability study b. Feasibility study c. Market analysis d. Investment analysis
125. A rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Theoretically it should reflect the opportunity cost of capital, i.e., the rate of return the capital can earn if put to other uses having similar risk.
a. Internal rate of return b. Discount rate c. Overall rate d. Investment rate Page 17 of
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126. The three types of market analysis are:
a. Market study, marketability study and feasibility study b. Market data approach, sales comparison approach and offers c. Investment analysis, economic base analysis, monetary analysis d. Statistical study, market study and demographics study
127. The analysis of an environment of buyers/sellers and/or landlords/tenants (lessors/lessees).
a. Marketability study b. Feasibility study c. Market study d. Investment analysis
128. Type of market analysis that addresses the time required to absorb a particular product, and the price or rent level at which that product would be accepted into the marketplace.
a. Marketability study b. Feasibility study c. Market study
d. Investment analysis
129. A ____________ study is simply a comparison of cost versus the value if the project is undertaken.
a. Marketability study b. Feasibility study c. Market study
d. Investment analysis
130. A study undertaken for the purposes of development and investment, the evaluation of investment performance, or the analysis of a transaction involving investment properties.
a. Economic base study b. Market study
c. Feasibility study d. Investment analysis
131. A mortgage secured by a group of properties or a number of lots. a. Blanket mortgage
b. Simple mortgage c. Lein
d. Mechanic’s lien
132. If the contract rent and the market rent are equal, the Leasehold or Lessee’s Interest is _______________, assuming there is no leasehold improvement.
a. Positive lease b. Negative lease c. Zero
d. Balanced
133. This comparative approach to value involves the cost of acquiring equivalent land and constructing an equivalent new structure.
a. Market data approach b. Cost approach c. Income approach
d. Builder’s method
134. In operating lease, the value of the Lessee’s Interest is estimated as the present value
a. of rental payment for remaining life of the lease agreement
b. of rental gain or loss and the value of the leasehold improvement, if any
c. of rental payment plus reversion value of the property at the end of the lease agreement
d. of rental gain or loss plus reversion value of the leasehold improvement, if any 135. A _____________________ leasehold interest is created when the contract rent is
higher than the current market rent. a. Positive
b. Equal c. Zero d. Negative
136. A group of homogenous land uses. a. District
b. Neighborhood c. City
d. Municipality
137. Typically a factor produced by two components, which reflects precise differences between properties and facilitates analysis in the three approaches to value, e.g., price per square meter or square foot, or the ratio of a property’s sale price to its net income (net income multiplier/years’ purchase).
a. Comparable data
b. Elements of comparison c. Units of comparison d. Physical characteristics
138. The cost to create a virtual replica of the existing structure, employing the same design and similar building materials.
a. Replacement cost, new b. Unit-cost-in-place method c. Quantity survey method d. Reproduction cost, new
139. The current cost of a similar new item having the nearest equivalent utility as the item being appraised.
a. Replacement cost, new b. Unit-cost-in-place method c. Quantity survey method d. Reproduction cost, new
140. An asset which has a similar function and equivalent productive capacity to the asset being valued, but of a current design and constructed or made using current materials and techniques.
a. Replacement asset b. Reproduced asset
c. Modern equivalent asset d. Public sector asset
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141. The process of adjusting the replacement cost to reflect that an asset may be technically obsolete or over-engineered, or the asset may have a greater capacity than that required.
a. Reproduction cost, new b. Capitalization
c. Value engineering d. Optimization
142. A real estate mall developer purchases a site with the intent of building a regional mall because the immediate area has a significant number of households and the income level of those households is affluent. What type of force is the neighborhood going through?
a. Social
b. Governmental c. Economic d. Environmental
143. Specific characteristics of properties and transactions that cause the prices paid for real estate to vary.
a. Comparable data b. Units of comparison
c. Elements of comparison d. Comparable sale prices
144. Method of estimating the reproduction cost or replacement cost that combines the direct and indirect costs into a single unit-in-place amount, which when multiplied by the unit measure of the improvement’s component will yield the cost of the component.
a. Unit-in-place b. Comparative c. Quantity survey d. Index or trending
145. The cost of replacing an asset with an equally satisfactory substitute asset; normally derived from the current acquisition cost of a similar asset, new or used, or of an equivalent productive capacity or service potential.
a. Replacement cost b. Unit-cost-in place c. Reproduction cost d. Builder’s method
146. The Subic Freeport Zone is one of the largest developments in Central Luzon. What force does this represent?
a. Social
b. Governmental c. Economic d. Environmental
147. The process by which a least cost replacement option is determined for the remaining service potential of an asset.
a. Reproduction cost, new b. Capitalization
c. Value engineering d. Optimization
148. Method of estimating the reproduction cost or replacement cost that involves the adjustment of the original costs to current costs by a multiplier derived from published cost indexes.
a. Unit-in-place b. Comparative c. Quantity survey d. Index or trending
149. Type of lease which involves the transfer ownership from lessor to lessee. a. Operating lease
b. Financing lease c. Leased fee
d. Leasehold fee
150. Lose in property value are caused by deterioration or obsolescence a. Depreciation
b. Deferred maintenance c. Cost to cure
d. Replacement cost
151. The difference between the cost to reproduce or replace a property and its present value
a. Replacement cost b. Cost to cure c. Depreciation d. Regression
152. Major causes of depreciation are the following except a. Deferred maintenance
b. Physical deterioration c. Functional obsolescence d. External obsolescence
153. Refers to the wear and tear from regular use and the impact of the elements a. Physical deterioration
b. Functional obsolescence c. External obsolescence d. Adverse market condition
154. Method of estimating reproduction or replacement costs by applying the average or typical comparative cost (per square-meter cost) of similar improvements.
a. Quantity survey method b. Unit-in-place method c. Comparative method d. Index or trending method
155. This cost estimate envisions constructing a structure of comparable utility, employing the design and materials that are currently used in the market.
a. Reproduction cost b. Replacement cost c. Quantity survey method d. Unit-in-place method
156. The period of time over which improvements contribute to property value. Page 21 of
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a. Useful life b. Economic life c. Remaining life d. Lifespan
157. Lose in value caused by a flaw in the structure, materials, or design that diminishes the function, utility, and value of the improvement
a. Functional obsolescence b. Economic obsolescence c. Physical deterioration d. Deferred maintenance
158. The period of time over which the components of the improvement may reasonably be expected to perform the functions for which they were designed.
a. Economic life b. Useful life c. Remaining life d. Used life
159. The age indicated by the condition and utility of a structure a. Used life
b. Chronological life c. Effective age d. Actual age
160. A method of estimating depreciation that involves the development of a depreciation estimate by studying sales of comparable properties that have depreciated to a similar degree as the improvement.
a. Cost to cure method b. Component method
c. Market extraction method d. Observed condition method
161. A method of estimating depreciation whereby the appraiser estimates the total economic life expectancy of the existing structure as well as its effective age, based on an analysis of sales of similar structures
a. Age-life method b. Component method c. Market extraction method d. Observed condition method
162. The estimated period from the actual age of a component to the end of its total useful life expectancy.
a. Remaining economic life b. Remaining useful life c. Actual age
d. Effective age
163. An impairment of the utility or salability of an improvement or property due to negative influences outside the property.
a. Functional obsolescence b. Physical deterioration c. Adverse market condition d. Economic obsolescence
164. Sometimes called historical age or chronological age, is the number of years that have elapsed since building construction was completed.
a. Effective age b. Actual age
c. Remaining useful life d. Remaining economic life
165. A method of estimating the reproduction cost or replacement cost that involves a complete cost itemization of all direct and indirect cost to be incurred or incurred in the construction of an improvement.
a. Index method
b. Cost-in-place method c. Quantity survey method d. Comparative method
166. Primarily used to allocate a known amount of total depreciation, estimated by either the market extraction method or the age-life method, into its components
a. Component method b. Market extraction method c. Age-life method
d. Breakdown method
167. The process of retiring a mortgage or debt over a specified time period. a. Debt service
b. Installment c. Amortization d. Equity
168. Represents the money earned for the right to use capital. a. Equity
b. Amortization c. Interest
d. Principal amount
169. Also known as debt service. a. Amortization
b. Equity c. Installment d. Payment
170. Credit regulation devices that the Bangko Sentral ng Pilipinas can use to regulate the supply of money.
a. Lending rates and amortization rates b. Capitalization rates and mode of payments c. Discount rates and reserve requirements d. Production of new bills and disposal of old bills
171. The government’s management of revenues (taxes) and expenses (appropriations) is called a. monetary policy b. fiscal policy c. repayment policy d. credit policy Page 23 of 36
172. The Philippines’ fiscal policy is managed by the a. Bangko Sentral ng Pilipinas
b. Department of Finance
c. Department of Budget and Management d. Department of Justice
173. The estimated amount for which a property, or space within a property, should lease on the date of valuation between a willing lessor and a willing lessee on
appropriate lease terms in an arm’s-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion
a. Contract rent b. Market rent c. Rental rate d. Leased fee
174. Financial vehicles with traditional maturities or investment periods of less than one year.
a. Capital markets b. Cash deposits c. Time deposits d. Money markets
175. In the income approach to value, reconstructed operating statements specify that the income projection is subject to the assumption that the property is run by a / an
a. expert competent management. b. average competent management. c. inefficient operator.
d. substandard management.
176. Financial vehicles with usual maturities of more than one year. a. Capital markets
b. Cash deposits c. Time deposits d. Money markets
177. In this technique the land value is estimated as the present value of the residual income attributable to the land of an income producing property.
a. Building residual technique b. Development technique c. Land residual technique d. Discounted cash flow analysis
178. A loan for personal property and secured by personal property. a. Real estate mortgage
b. Chattel mortgage c. Liens
d. Blanket mortgages
179. ________________________________________ specify that the income projection is subject to the assumption that the property is run by a reasonably efficient operator or average competent management.
a. Operating statements supplied by client
b. Operating statements supplied by agent of client
c. Operating statements reconstructed by the appraiser d. Operating statements reconstructed by the internal auditor 180. The process of converting an income stream into value.
a. Capitalization b. Investment analysis c. Market analysis d. Depreciation
181. The resulting amount of reducing the annual potential gross income by a vacancy allowance amount.
a. Gross profit
b. Net operating income c. Effective net income d. Effective gross income
182. Operating expenses are deducted from the effective gross income to determine the
a. annual net operating income for the property. b. annual net profit for the property.
c. annual gross profit for the property. d. annual depreciation of the property.
183. Process of converting income into value by dividing a single year’s stabilized net operating income, by an all-risks rate.
a. Yield capitalization
b. Discounted cash flow analysis c. Direct capitalization
d. Valuation approach
184. In the application of the discounted cash flow analysis to operating real properties, the value of the property is estimated as the net present value of
a. The series of periodic net operating incomes.
b. The reversion value, anticipated at the end of the projection period.
c. The series of periodic net operating incomes, along with an estimate of the reversion value, anticipated at the end of the projection
period.
d. The value of the business at the end of the projection period.
185. Profit-making entities operating to provide consumers with products or services.
a. Financial interests b. Real property c. Public sector asset d. Businesses
186. A credit regulation device of the BSP that refers to the percentage of deposits that must be retained by banks.
a. Discounted rates b. Fiscal policy c. Credit regulation d. Reserve requirement Page 25 of 36
187. In the application of the discounted cash flow analysis to development properties, the value of the properties is estimated as the present value of the
a. The series of net cash flows that are discounted over the projected development and marketing periods.
b. The series of periodic net operating incomes, along with an estimate of the reversion value, anticipated at the end of the projection period.
c. The series of dividends and the value of the business at the end of the projection period.
d. The series of periodic net operating incomes.
188. This capitalization process considers the time value of money, and is applied to a series of net operating incomes for a period of years.
a. Direct capitalization b. Yield capitalization c. Discounted rate d. Internal rate of return
189. The estimated period over which existing improvements are expected to continue to contribute to property value
a. Remaining useful life b. Effective age
c. Actual age
d. Remaining economic life
190. A method that is used to build a capitalization rate using just two components; financing and equity.
a. Build-up method b. All risks method
c. Band of investment method d. Gross income multiplier method
191. Defines the percentage number used to determine the current value of a property based on estimated future operating income.
a. Absorption rate b. Selling rate c. Buying rate
d. Capitalization rate
192. Acquisition of private land by the government for public use could be undertaken thru the following procedures, except
a. Negotiated sale or purchase b. Expropriation
c. Exchange or barter d. Foreclosure
193. A _________________ leasehold interest is created when the market rent is greater than the contract rent.
a. Negative b. Equal c. Zero d. Positive
194. The rate that equates the present value of the net cash flows of a project with the present value of the capital investment.
a. Discounting rate b. Overall rate
c. Internal rate of return d. Recapture rate
195. This rate reflects both the return on the invested capital and the return of the original investment, which are basic considerations of potential investors.
a. Discounting rate b. Overall rate
c. Internal rate of return d. Recapture rate
196. The rent specified by a given lease arrangement. a. Economic rent
b. Market rent c. Contract rent d. Rental rate
197. The following are standard tests for highest and best of real property, except a. physically possible
b. politically permissible c. financially feasible d. maximally productive
198. Applicable to real estate improvements, the rate warranted by prudent investors that will represent the return on investment (usually the interest rate or capitalization rate) and the return of investment, for improvements, this is
represented by the recapture rate. a. Discounting rate
b. Overall rate
c. Internal rate of return d. Recapture rate
199. Interest Rate + Recapture Rate equals a. Discounting rate
b. Overall rate
c. Internal rate of return d. Return on investment
200. This government or public restriction to ownership provides that if a person dies without a will and heirs, that person is said to have died intestate, and that person’s property transfers to the state.
a. Eminent domain b. Police power c. Escheat d. Expropriation Page 27 of 36
PART 2: PROFESSIONAL PRACTICE
1. If a property’s net income ratio is 0.80, what is its operating expense ratio? a. 0.02
b. 2.0 c. 0.80 d. 0.20
2. An office building was recently sold for P60,000,000. Given the following information: Gross potential income : P12,000,000
Vacancy factor : 10%
Expenses : 45% of effective gross income Annual mortgage payment : P4,500,000
Equity : P12,500,000
What is the equity dividend rate or cash-on-cash rate of return? a. 7.48%
b. 12.00% c. 11.52% d. 7.50%
3. For the office building above and the same information, what is the over-all rate of return for the property?
a. 8.58% b. 12.00% c. 7.50%
d. 9.90%
4. If the land value in a subdivision has increased by 12% during the past year and the average price of land sold last year was P 1,560,000, what is the average price of land sold today?
a. P 1,372,800 b. P 1,716,000 c. P 1,572,500 d. P 1,747,200
5. A commercial property producing an annual gross income of P768,500 was sold two months ago for P5,620,000. What is the property’s gross income multiplier?
a. 7.50 b. 7.40 c. 7.31 d. 8.50
6. What is the value of a property with a building value of P2,400,000, a land
capitalization rate of 8.0%, building overall rate of 14% and net operating income of P545,000?
a. P 4,012,000 b. P 6,812,500 c. P 4,921,000 d. P 5,012,500
7. To adjust the sale price of a comparable sale with a 10% better location, you should a. Add 10% to the sale price of the comparable
b. Multiply the sale price of comparable by 10%
c. Subtract 10% from the price of the subject of appraisal d. Subtract 10% from the sale price of the comparable
8. Subject of appraisal is a 4-bedroom house. Based on the following paired data gathered, what would be estimated value of the subject of appraisal?
Market data:
3-bedroom house was recently sold for P 6,455,000 2-bedroom house was recently sold for P 6,250,000
a. P 6,455,000 b. P 6,600,000 c. P 6,660,000 d. P 6,665,000
9. A residential house was constructed in 2001 for P 12,568,000. The cost index published at that time was 178.20. The current cost index from the same cost reporting service is 360.70. What is the current indicated reproduction cost of the residential house?
a. P 25,439,000 b. P 25,349,000 c. P 25,136,000 d. P 25,316,000
10. What is the indicated value of a 6-year-old building with a floor area of 360 square meters, if the current cost of construction of similar buildings is P15,000 per square
Page 29 of 36
meter of the floor area, and the estimated depreciation of the building is 2% per year? a. P 4,572,000 b. P 4,752,000 c. P 5,400,000 d. P 5,752,000
11. A building has a rental income of P 60,600 per month. Using an annual gross rent multiplier of 15, the value of the building would be estimated at –
a. P 909,000 b. P 10,800,000 c. P 727,200 d. P 10,908,000
12. The value of a property consisting of land and building with an annual net operating income of P330,000 and with an over-all capitalization rate of 12.50% is –
a. P 2,640,000 b. P 2,750,000 c. P 2,400,000 d. P 2,570,000
13. Which of the following estimates would result in a capitalization rate of 8% -a. Property value of P 2,500,000, potential gross income of P 200,000 b. Property value of P 2,500,000, effective gross income of P 200,000
c. Property value of P 2,500,000, net operating income of P 200,000 d. Property value of P 4,000,000, net operating income of P 320,800
14. The property subject of appraisal is 15% superior than the subject of a comparable sale. The comparable was sold for P2,212,000, what is the indicated value of the subject?
a. P 1,880,200 b. P 1,923,500 c. P 2,602,400 d. P 2,543,800
15. An office building has depreciated by 50% since it was built 25 years ago. If it would cost P 39,200,000 to build today, and if similar sites are for P 25,000,000, what is the estimated market value of the property today?
a. P 64,200,000 b. P 48,520,000 c. P 44,600,000 d. P 54,600,000 16. Assume the following:
Annual net operating income of the property : P 1,100,000
Land value : P 4,500,000
Interest rate : 8%
Recapture rate : 4%
What is the property value by the building residual technique? a. P 10,666,667
b. P 11,666,667 c. P 9,666,667 d. P 12,666,667
17. Mr. B owns a parcel of land leased to Mr. C at an annual rental rate of P1,000,000. The lease has a remaining life of 6 years. What is the present value of the rentals if the interest rate is 10% per year? Present worth factor for annuity is 4.35526 and lump sum is 0.56447.
a. P 4,355,260 b. P 3,386,820 c. P 1,771,573 d. P 1,771,561
18. A building was constructed 10 years ago and is well-maintained that based on the observation of the appraiser its condition is similar to other 6-year-old buildings. The effective age of the building is
a. 10 years b. 4 years c. 6 years d. 16 years
19. A building was constructed 10 years ago and is well-maintained that based on the observation of the appraiser its condition is similar to other 6-year-old buildings. The actual age of the building is
a. 10 years b. 4 years c. 6 years d. 16 years
20. The reproduction cost new of a commercial building is estimated to be P80,000,000. The building should have an economic life of 50 years, and it is now five years old. However, based on the observation of the appraiser its effective age is similar to other 10-year-old building due to poor maintenance. What is its value of the building (exclusive of land value)?
a. P 72,000,000 b. P 64,000,000 c. P 80,000,000 d. P 75,000,000
21. A 10-year-old building is currently valued at P7,200,000. What was its original value if it has appreciated by 60% since it was built?
a. P 4,320,000 b. P 2,880,000 c. P 4,500,000 d. P 5,142,900
22. The appropriate adjustment for time is determined to be 8% per year. The time adjustment for a comparable property that was sold a year ago for P10,000 per square meter is
a. Less P 800 per square meter b. Plus P 1,000 per square meter c. Plus P 800 per square meter d. Less P 1,000 per square meter
23. A lessee is renting a commercial space with a base rent of P7,000 per month plus 5% of the gross sales exceeding P100,000 per month. The lessee’s gross sales last year was P1,600,000. How much rent was paid last year?
a. P 184,000 b. P 104,000 Page 31 of
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c. P 84,000 d. P 114,000
24. A 30-year mortgage covering 75% of property value can be obtained from a bank for 8.5%. The mortgage constant is 0.092. Equity for this type of property requires 12% return.
a. 9.00% b. 9.90% c. 10.00% d. 10.50%
25. What would be recapture rate of a building having a remaining economic life of 12 years –
a. 112% b. 88% c. 8.33% d. 8.00%
26. In a property residual capitalization approach, what is the value of an improved property with a net income of P180,000 a year, an interest rate of 8% and a recapture rate of 2%?
a. P1,800,000 b. P 2,250,000 c. P 3,000,000 d. P 1,500,000
27. A house and lot is priced at P7,500,000. The lot alone is valued at P2,531,250. What is the percentage of the total asking price is attributed to the house?
a. 33 ¾ % b. 33 ¼ % c. 66 ¼ % d. 66 ¾ %
28. A vacant lot is rented for a car display for P24,000 per month. The interest rate applicable to this type of property is 8%. Compute the value of the property by income approach.
a. P2,400,000 b. P2,600,000 c. P2,800,000 d. P3,600,000
29. If a particular buyer requires a recapture of the building portion of the price in 30 years, what is the indicated recapture rate of the building?
a. 3% b. 3 ½% c. 3 1/3% d. 3 ¼%
30. Mr. A is leasing a 60-square meter commercial space for P3,000 per square meter per year. Research indicate that similar space have a going market rate of P3,200 per square meter per year. What is the rental gain realized by Mr. A per year?
a. P 1,200 b. P 12,000
c. P 2,400 d. P 24,000
31. A house and lot is priced at P8,800,000. The lot alone is valued at P1,650,000. What percentage of the total asking price is attributable to the value of the lot?
a. 18.5 % b. 19.0 % c. 18 ¾ % d. 18 ¼ %
32. A property with an annual net income of P336,000 was sold for P4,200,000. The remaining life of the building is 40 years. Land value is P1,200,000. What is the overall rate for the property?
a. 6.00% b. 7.00% c. 8.00% d. 9.00%
33. A comparable land was sold a year ago for P30,000 per square meter. Its location is considered 15% inferior and its shape and topography is 10% superior to the subject site. The time adjustment is 3% per year. Determine the adjusted sale price of the comparable site.
a. P 29,400 per square meter b. P 32,400 per square meter c. P 30,600 per square meter d. P 38,400 per square meter
34. A property with an annual net operating income of P336,000 was sold for P4,200,000. The remaining life of the building is 40 years. Land value is P1,200,000. What is the value of the building?
a. P 3,000,000 b. P 2,000,000 c. P 2,500,000 d. P 3,500,000
35. A property was sold for P60,000,000. Using the rule-of-thumb of building-to-land ratio of 4:2, what is the value of the building?
a. P 20,000,000 b. P 30,000,000 c. P 40,000,000 d. P 50,000,000
36. A 10-year old residential apartment has a reproduction cost of P6,250,000, broken down into P 2,500,000 representing the structural component, and P 3,750,000 for the other component . Yearly allowance for ordinary structural deterioration is 2%, while the depreciation rate for the curable component is 5% per year. Economic obsolescence result in a rental loss of P60,000 per year. What is the estimated value of the building?
a. P 5,150,000 b. P 3,875,000 c. P 3,275,000 d. P 3,775,000
37. A comparable property sold six months ago for P1,250,000. Market investigation indicates the following:
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