Final Mock Exam 250 Questions With Answers

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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
Page 1 of 50
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
Page 2 of 50 Mock Examination - Fundamentals

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.
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.
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
d. Real property, machinery, equipment and plant
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
d. Chattel
33. Any commercial, industrial, service or investment entity pursuing an economic activity is
referred to as
a. Financial interests
b. Real 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
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).
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.
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.
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.
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
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
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
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
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
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
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
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.
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
2013
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
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).

c. Market study
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.
c. Market study
129. A ____________ study is simply a comparison of cost versus the value if the project is
undertaken.
c. Market study
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
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.
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
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
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
d. Unit-in-place method
156. The period of time over which improvements contribute to property value.
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
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.
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
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
B
c. repayment policy
d. credit policy
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
A
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
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
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
d. Recapture rate
199. Interest Rate + Recapture Rate equals

a. Discounting rate
b. Overall rate
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
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
Solution:
OER = 1-NIR
OER = 1-.80
ANS = .20 (D)
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%
Solution:
GPI P12,000,000
Less: Vacancy 10% (1,200,000)
EGI P10,800,000
Less: Exp. 45% (4,860,000)
NOI P 5,940,000
Less: Debt Service P (4,500,000)
BTCF(before tax & cashflow)P 1,440,000
DIVIDEND RATE OR COC = BTCF/EQUITY

DIVIDEND RATE OR COC = P1,440,000/P12,500,000
ANS = 11.52% (c)
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%
SOLUTION:
RO = NOI / SP
RO = 5,940,000 / 60,000,000
ANS. = 9.9% (d)

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
SOLUTION:
AVERAGE SELLING PRICE = 1,560,000 X 1.12
ANS. P1,747,200 (d)
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
SOLUTION:
GIM = SALES PRICE / GROSS INCOME
GIM = 5,620,000/768,500
ANS. = 7.31 (c)
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
SOLUTION:
Given:
Building Value P2,400,000
Land Cap Rate 8.0%
Building Rate 14%
NOI P545,000

Philippine Association of Realty Appraisers, Inc. PARA
Comprehensive Real Estate Property Appraisal Seminar and Training CREASAT
2013
Income Due to Building = BV x BR

Income Due to Building = P 2,400,000 x 14%
Income Due to Building = 336,000
Income Due to Land = NOI – Income Due to Building

Income Due to Land = P545,000 – 336,000
Income Due to Land = P209,000
Land Value = Income Due to Land / Land Rate

Land Value = P209,000 / 8%
Land Value = P2,612,500
Total Value = Building Value + Land Value

Total Value = P2,400,000 + 2,612,500
Ans. Total Value = P5,012,500 (d)
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
SOLUTION:
Value of 2BR: P6,250,000
Value of 3BR: P6,455,000
Value of 4BR = P6,455,000 + (6,455,000 – 6,250,000)
Ans. Value of 4BR = P6,660,000 (c)

2013
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
SOLUTION:
Given:
House Built 2001 P12,568,000
Cost index 2001 178.20
Current index 360.70
? Current Reproduction Cost of the Property/House
RCN NEW = 12,568,000 x (360.70/178.20)

Ans. RCN NEW = P25,439,268.24 (a)
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 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
SOLUTION:
RCN = 360 x P15,000
RCN =P5,400,000
Less: Depreciation (2%x6xRCN) = P (648,000)
Ans. Value =P4,752,000 (b)
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

2013
b. P 10,800,000
c. P 727,200
d. P 10,908,000
SOLUTION:
Annual Rental Income (P60,600 x 12mos). =P 727,200
Gross Rent Multiplier = 15
P727,000 x 15
Ans. P10,908,000 (d)
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
SOLUTION:
Given: Property Value ?
NOI - P 330,000
OCR – 12.50%
Value = 330,000 / 12.50%

Ans. Value = P2,640,000 (a)
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

2013
SOLUTION:
Ans. P2,212,000 x 1.15% = P2,543,800 (d)
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
SOLUTION:
RCN = 39,200,000
Less: Depreciation =(19,600,000)
Building Value = 19,600,000
Land Value = 25,000,000
Ans. Property Market Value = 44,600,000 (c)
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
SOLUTION:
Income to Land = 4,500,000 x 8%
Income to Land = 360,000
Income to Building = NOI – Income to Land

Income to Building = 1,100,000 – 360,000
Income to Building = P740,000
Building Value = P740,000 / (8% +4%)

Building Value P740,000 / .12
Building Value P6,166,666.67
Total Property Value = Land Value + Building Value

2013
Total Property Value = P4,500,000 + 6,166,666.67

Ans. Total Property Value = P10,666,666.67 (a)
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
SOLUTION:
Present Value = 1,000,000 x Annuity Factor 4.35526
Ans. Present Value = P4,355,260(a)
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
SOLUTION:
RCN = P 80,000,000
Less: Accrued Depreciation = (16,000,000) computed as follows [10%/50% x RCN]

2013
Ans. Building Value = P64,000,000(b)
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
SOLUTION:
Original Value = P7,200,000 / (1/60%)
Ans. Original Value = P4,311,377.25 (a)
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
SOLUTION:
P10,000 x 8% = P800
Ans. Plus P800/sqm (c)
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
c. P 84,000
d. P 114,000
SOLUTION:
Annual Rent = P7,000 x 12
Annual Rent = P84,000
Gross Sales = P1,600,000

Less: Threshold = (1,200,000) [100,000 x 12)
= P 400,000
Overage Rent = P 20,000 [400,000 x 5%)
Total Rent = 84,000 + 20,000

2013
Ans. Total Rent = 104,000(b)
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%
SOLUTION:
RO = (.75 x .092) + (.25 x .12)
RO = .069 + .03
Ans. RO = .099 or 9.90% (b)
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
SOLUTION:
NOI = P180,000/yr
IR = 8%
RR = 2%
Value = 180,000 / (8% + 2%)

Ans. Value = 1,800,000(a)
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 %

2013
SOLUTION:
HL P7,500,000
Less: Land (2,531,250)
House Value P4,968,750
Ans. P4,968,750 / 7,500,000

Ans. = 66.25% or 66 ¼ % (c)
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
SOLUTION:
Annual Rent P24,000 x 12 = P288,000
IR = 8%
Value = I/R
Value = 288,000 / 8%
Ans. Value = P3,600,000(d)
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%

2013
SOLUTION:
RR = 1/30
Ans. RR= 3.33% (c)
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
SOLUTION:
Market Rent P3,200
Contract Rent P3,000
Gain = P3,200 – P3,000
Gain = P200 x 60sqm
Ans. Gain = P12,000 (b)
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 %
SOLUTION:
HL Value P8,800,000
Land Value 1,650,000
Value of Land percentage P1,650,000/8,800,000

Ans. Value of Land percentage = 18.75% or 18 ¾ %(c)
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%
SOLUTION:

2013
SP = P4,200,000
Income = 336,000
ORR HL = 336,000 / 4,200,000

Ans. = .08 or 8% (c)
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
SOLUTION:
Comparable Land P30,000
Location +15%
Shape -10%
Time Adjstment 3%/yr
= P30,000 +15% - 10% +3%

= P30,000 +4,500 – 3,000 + 900
Ans. =P32,400(b)
OR
100% +15% - 10% + 3% = 1.08%
= P30,000 x 1.08%
Ans=P32,400(b)
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
SOLUTION:
Given:
HL Value P4,200,000

2013
Land Value (1,200,000)

Ans. Building Value P3,000,000 (a)
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
SOLUTION:
= SP P60,000,000
Ratio = 4+2=6
= P60,000,000/6
=P10,000,000 x building ratio of 4
Ans.=P40,000,000 (c)
OR
= P60,000,000 x 4/6
Ans.=P40,000,000 (c)
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

2013
d. P 3,775,000
SOLUTION:
RCN P6,250,000 as follows:
Structural Component P2,500,000
Other Component P3,750,000
Deterioration – 2%/yr
Depreciation Rate 5%/yr
Economic Obsolescence rental loss P60,000/yr
Building Value -=?
RCN Structural = 2,500,000 - [ 2%x10xRCN]

RCN Structural = 2,500,000 – 500,000
RCN Structural = 2,000,000
RCN O. Component = 3,750,000 - [ 5%x10xRCN]

RCN O. Component = 3,750,000 – 1,875,000
RCN O. Component = 1,875,000
Total RCN = 2,000,000 +1,875,000

Ans. Total RCN = 3,875,000(b)
37. A comparable property sold six months ago for P1,250,000. Market investigation indicates
the following:
Location adjustment : +5%
Time adjustment : +6%
Age adjustment : -7%
Given the above information, what is the indicated value based on the comparable
property?
a. P1,232,250
b. P1,300,000
c. P1,325,000
d. P1,293,860
SOLUTION:
=SP P1,250,000 + (SP x(5% +6% -7%))
= P1,250,000 + P50,000
Ans. =P1,300,000(b)
38. What is the reversion value of a property with an estimated market value of P12,540,000 2
years from now at an interest rate of 10% per year?
a. P 15,048,000
b. P 15,173,400
c. P 10,363,635
2013
d. P 10,157,400
SOLUTION:
Reversion Value = FV / (1+i)^r
Reversion Value= 12,540,000 / (1+.1)^2
Reversion Value= 12,540,000 / 1.21
Ans. Reversion = P10,363,636.36(c)
39. A comparable property is identical to the subject property being appraised. The
comparable was sold six months ago for P1,000,000. As the appraiser, you must make an
adjustment for the time difference between the subject property and the comparable.
You have found a paired sale of two houses, one of which was sold one year ago for
P800,000, and the other sold yesterday for P880,000. What is the proper estimated
adjusted sales price for your comparable?
a. P880,000
b. P1,000,000
c. P1,050,000
d. P1,100,000
SOLUTION:
P1,000,000 – sold 6mos.
P800,000 – sold 1 yr ago
P880,000 – sold yesterday
=P880,000/800,000
= 1.10% or 10% in value in 1 year
=1.05 x P1,000,000 time adjustment
Ans.=P1,050,000 adjusted sales price(c)
40. If a property has a net income ratio of 0.75 and a gross income multiplier of 9, what is the
indicated over-all capitalization rate?
a. 6.75%
b. 8.33%
c. 2.78%
d. 12.00%
SOLUTION:
GIM = 9
NIR =.75

2013
Net Income Ratio = Net Income/Gross Income

Gross Rent Multiplier = Sales Price / Gross Income
= .75/9
Ans. =8.33%(b)
41. Corporation T is to lease a parcel of land for 1 year at P2,000,000. Research indicate that
similar land have a market rent of P2,200,000 per year. What is the estimated value of the
leasehold interest if the rental payment is to be paid as a lump sum amount today and
the interest rate is 10%?
a. P 200,000
b. P 220,000
c. P 180,000
d. P 181,818
SOLUTION:
Contract Rent/yr P2,000,000
Market Rent/yr P2,200,000
Value ?
Present Value = V / (1+i)^r
P200,000 / 1.1
Ans. P181,818(d)
42. A commercial structure is a rectangle with sides of 80 meters and 145 meters and the
current local cost to build a similar structure is P18,500 per square meter. What is the
estimated construction cost of the structure?
a. P 214,600,000
b. P 208,800,000
c. P 218,600,000
d. P 215,600,000
= 80 x 145 x P18,500
Ans. =P214,600,000(a)
Questions nos. 47 to 49 are based on the following information:

2013
Building Value : P50,000,000

Net Operating Income : P8,350,000
Building Capitalization Rate : 14%
Land Capitalization Rate : 9%
43. What is the residual income to the land?

a. P 1,350,000
b. P 4,500,000
c. P 3,850,000
d. P 70,000,00
Income of Land = ?
Total Income – Income of Building
=P8,350,000 – (50,000,000 x 14%)
=P8,350,000 – 7,000,000
Ans.= P1,350,000(a)
44. What is the value of the land?

a. P 4,500,000
b. P15,000,000
c. P 9,642,850
d. P 42,777,750
=Land Income / land Cap Rate

=P1,350,000 / .09
Ans=P15,000,000(b)
45. What is the total value of the property?

a. P 54,500,000
b. P 65,000,000
c. P 59,642,850
d. P 92,777,750
For questions nos. 46 to 50:

Subject of appraisal is a house and lot and the comparables are as follows:
SUBJECT DATA 1 DATA 2 DATA 3 DATA 4 DATA 5
PRICE ??? P1,450,000 P1,360,000 P1,350,000 P1,410,000 P1,530,000
TYPE OF DATA SALE SALE SALE SALE OFFER

2013
LOCATION GOOD GOOD GOOD POOR GOOD GOOD
TYPE OF CONCRETE CONCRETE TIMBER CONCRETE TIMBER CONCRETE

CONSTRUCTION
NO. OF 3 3 3 3 4 3
BEDROOMS
46. What is the adjustment for type of data – sale vs. offer?
a. P 120,000
b. P 80,000
c. P 170,000
d. P 180,000
47. What is the adjustment for location?

a. P 100,000
b. P 10,000
c. P 60,000
d. P 110,000
48. What is the adjustment for type of construction?

a. P 180,000
b. P 120,000
c. P 60,000
d. P 90,000
49. What is the adjustment for no. of bedrooms?

a. P 50,000
b. P 60,000
c. P 120,000
d. P 40,000
50. What is the estimated value of the property assuming the data have equal importance?
a. P 1,451,000
b. P 1,451,100
c. P 1,452,300
d. P 1,450,000
--- NOTHING FOLLOWS ----
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Final Mock Exam 250 Questions With Answers

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NAME: ________________________________________________

7. The ownership of real estate is called

Page 2 of 50 Mock Examination - Fundamentals

14. In markets characterised by extreme volatility or severe disequilibrium between supply

Page 3 of 50 Mock Examination - Fundamentals

Page 4 of 50 Mock Examination - Fundamentals

44. Refers to government housing projects which may either be a subdivision or a

52. A loan or promissory note that is secured by the real estate.

53. A trespass on another’s land is a from of a / an

59. The final step in the valuation process.

67. Assets owned and/or controlled by governmental or quasi-governmental entities to

72. Describes a valuation where an entire business is transferred as an operational entity.

Page 12 of 50 Mock Examination - Fundamentals

88. A valuation review performed by an appraiser to form an opinion as to whether the

Page 15 of 50 Mock Examination - Fundamentals

Page 16 of 50 Mock Examination - Fundamentals

110. This term means coordination or management.

115. A / An ______________________ is a group of complementary land uses.

126. The three types of market analysis are:

127. The analysis of an environment of buyers/sellers and/or landlords/tenants (lessors/lessees).

131. A mortgage secured by a group of properties or a number of lots.

136. A group of homogenous land uses.

150. Lose in property value are caused by deterioration or obsolescence

154. Method of estimating reproduction or replacement costs by applying the average or

159. The age indicated by the condition and utility of a structure

160. A method of estimating depreciation that involves the development of a depreciation

163. An impairment of the utility or salability of an improvement or property due to negative

169. Also known as debt service.

171. The government’s management of revenues (taxes) and expenses (appropriations) is

172. The Philippines’ fiscal policy is managed by the

d. Discounted cash flow analysis

178. A loan for personal property and secured by personal property.

179. ________________________________________ specify that the income projection is subject to

180. The process of converting an income stream into value.

Page 29 of 50 Mock Examination - Fundamentals

185. Profit-making entities operating to provide consumers with products or services.

196. The rent specified by a given lease arrangement.

199. Interest Rate + Recapture Rate equals

PART 2: PROFESSIONAL PRACTICE

DIVIDEND RATE OR COC = BTCF/EQUITY

Page 33 of 50 Mock Examination - Fundamentals

Page 34 of 50 Mock Examination - Fundamentals

Income Due to Building = BV x BR

Income Due to Land = NOI – Income Due to Building

Land Value = Income Due to Land / Land Rate

Total Value = Building Value + Land Value

8. Subject of appraisal is a 4-bedroom house. Based on the following paired data

Page 35 of 50 Mock Examination - Fundamentals

RCN NEW = 12,568,000 x (360.70/178.20)

Page 36 of 50 Mock Examination - Fundamentals

Value = 330,000 / 12.50%

13. Which of the following estimates would result in a capitalization rate of 8% -

Page 37 of 50 Mock Examination - Fundamentals

16. Assume the following:

Income to Building = NOI – Income to Land

Building Value = P740,000 / (8% +4%)

Total Property Value = Land Value + Building Value

Page 38 of 50 Mock Examination - Fundamentals

Total Property Value = P4,500,000 + 6,166,666.67

Page 39 of 50 Mock Examination - Fundamentals

Ans. Building Value = P64,000,000(b)

Gross Sales = P1,600,000

Page 40 of 50 Mock Examination - Fundamentals