SET 1 - PRACTICE EXAMINATION

FUNDAMENTALS OF REAL ESTATE APPRAISAL

(100 POINTS - 25%)
INSTRUCTION: Choose the best answer. Read the questions carefully and encircle the letter of
your choice. Try to answer the questions based on your appreciation and understanding supported
with theories and principles. Mark only one answer for each item by shading the box
corresponding to the letter of your choice on the answer sheet provided. STRICTLY NO
ERASURES ALLOWED.

MULTIPLE CHOICE
1) The following are several methods of estimating depreciation, except –

A. Useful life method

B. Market Extraction method
C. Break-down method
D. Age-life method

2) The three approaches of estimating value are –

A. replacement, income, and reproduction

B. cost, direct sales comparison, and income capitalization
C. reproduction, cost, and income
D. cost, income, and replacement

3) The highest and best use of a site is its –

A. Existing use
B. Immediate next use
C. Ordinary and necessary use
D. Most probable use that is legally and physically possible and provides the highest
financial returns

4) The length of a tract of land along a street is called –

A. Depth
B. Frontage
C. Width
D. Abutment

5) A large home built in an area of small cottage is an example of –

A. Land regression
B. Over-improvement
C. Under-improvement
D. Functional obsolescence

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 6) The period over which a building may be profitably used is its –

A. Actual life
B. Useful life
C. Physical life
D. Effective life

7) An improvement's remaining economic life is –

A. its chronological age

B. its effective age minus its chronological age
C. its effective age
D. the future time span over which the improvement is expected to generate benefits

8) The date of sale of a comparable identifies –

A. the motivation for the sale

B. the point in time when adjustments take place
C. the terms of sale
D. the market conditions when the sale was made

9) A sale between relatives is suspected to be –

A. A bona fide sale

B. A sale made at a distorted price
C. an arm's length sale
D. a seller-financed sale

10) It includes the ground or soil and everything which is attached to the earth whether by
nature or by man.

A. Land
B. Other land improvements
C. Building
D. Real property

11) Maximum area for acquisition of a former natural born Filipino for
residential purposes is –

A. 5,000 square meters of urban land or 3 hectares of rural land

B. 1,000 square meters of urban land or 1 hectare of rural land
C. 10,000 square meters of urban land and 10 hectares or rural land
D. 50,000 square meters of urban land or 30 hectares of rural land

12) When one or two parcels are consolidated so that its increment in value as whole is
much more than the total sum of the value of each parcel of land separately owned is
called –
A. Cost value
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 B. Economic value
C. Market value
D. Plottage value

13) Which of the following is not a category of lands?

A. Forest and Unclassified lands

B. Protected areas
C. Privately owned land
D. Alienable and disposable (A&D)

14) At present about 24.2 million parcels are within A&D allocated as follows:

A. 13 million already titled and 11.2 million untitled lands

B. 13.1 million already titled and 11.1 million untitled lands
C. 13.2 million already titled and il million untitled lands
D. 12 million already titled and 12 million untitled lands

15) Property rights are anchored on –

A. Article XIII Section 1 of the Philippine Constitution

B. Civil Code of the Philippine
C. Philippine Constitution and Social Justice Rights
D. Fundamentals of Property Ownership

16) The following are land tenure for urban and rural areas, except –

A. Absolute ownership
B. Less than absolute
C. Fee simple or freehold
D. Lease Fee or Leasehold

17) The right of the government to acquire private property for public use upon
payment of just

A. Police Power
B. Expropriation
C. Escheat
D. Eminent Domain

18) The estimated period over which the property as anticipated may profitably
be utilized is –

A. useful life
B. economic life
C. remaining economic life
D. cycle

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 19) Value is created and sustained by the interrelationship of four factors namely

A. Location, use, size, area

B. Utility, desire, scarcity, purchasing power
C. Utility, location, desire, size
D. Location, shape, area, scarcity

20) A declaration which states that upon expiration of 2 years of holding a property
claimed, the person(s) unlawfully deprived of participation thereof upon presentation of a
verified petition from the registered heirs, legatees, creditors, the Register of Deeds shall
cancel the two (2) years liens annotated on title without a court order.

A. Sec 86, PD 957

B. Sec 87, PD 957
C. Sec 4, Rule 74
D. Sec 89, PD 957

21) It is the reversion of private property to the State due to intestate death of
the principal.

A. Escheat
B. hereditary
C. Escrow
D. Sole heir

22) The power of eminent domain is exercised through the right of condemnation
which means that the public authority taking the property should not follow a legal
procedure

A. True
B. False
C. It depends on the jurisdiction.
D. The statement is incomplete.

23) Refers to an interest belonging to the tenants created by virtue of a lease contract.

A. Leasehold Estate
B. Economic
C. Contract rent
D. Leased fee estate

24) The taking of real property to create a public park illustrates –

A. Escheat
B. Police Power
C. Eminent Domain
D. Encroachment

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 25) Refers to the sudden removal of land from one parcel to another.

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 A. Distribution
B. Avulsion
C. Alluvium
D. Substitution

26) In Eminent Domain cases, the courts have determined (just Compensation to mean

A. Current market value plus compensation for anticipated future benefits.

B. Fair market value of the property
C. The market value at the time the property was bought by the current owner.
D. All of the above

27) An individually owned parcel which includes a share of common areas is a –

A. PUD
B. Condominium
C. Stock cooperative
D. Life estate

28) Private deed restrictions often are enforced through a –

A. Zoning variance
B. Zoning board
C. Housing cooperative
D. Homeowner's association

29) The acquisition of title by adverse possession or open and uninterrupted possession
in the concept of owner is –

A. Prescription
B. Avulsion
C. Accretion
D. Alluvion

30) To be admitted to the licensure examination for real estate service, a candidate
should be:

A. American Citizen with reciprocal arrangement

B. Citizen of China with special arrangement
C. Citizen of the Philippines
D. Indonesian with Filipina spouse

31) No foreigner may be admitted to take the board exam nor be granted with the Special
or Temporary permit to practice in the Philippines unless there is –

A. Foreign Intervention
B. Foreign request
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 C. Foreign reciprocity
D. Foreign arrangement

32) In order that a candidate may be deemed to have passed the examination, he/ she
must have obtained in all subjects with no rating below in any subject.

A. 65% in all subjects; 75%

B. 75% in all subjects; 50%
C. 55% in all subjects; 75%
D. 65% in all subjects; 50%

33) The PRC Professional I.D. shall be renewed every –

A. 3 years
B. yearly
C. 2 years
D. 5 years

34) The only accredited and integrated professional organization of Real Estate
Service Practitioners is –

A. Philippine Institution of Real Estate Service Practitioners (PhilRES)

B. Philippine Institute of Real Estate Service Professionals (PhilRES)
C. Philippine Institute of Real Estate Service Practitioners (PhilRES)
D. Philippine Institute of Real Estate Service (PhilRES)

35) The highest price estimated in terms of money that a real property is acquired by a
buyer who is willing to buy and a seller who is willing to sell but is not obliged or anxious
to sell; both of whom have adequate knowledge of the actual and potential use of the
property offered for reasonable time in the open market and neither parties under pressure
to buy or sell.

A. Market Value
B. Valuation
C. Value in Use
D. Value in Exchange

36) The amount and duration of the Professional Indemnity Insurance of Real
Estate Appraiser is

A. P 10,000 every 3 years

B. P 20,000 every 2 years
C. P 50,000 every 5 years
D. P 20,000 every 3 years

37) Licensed and accredited persons found violating any provision of RA#9646 and
its IRR shall be imposed with a fine of –

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 A. P150,000 and/or 2 years imprisonment
B. P100,000 and/or at least 2 years imprisonment
C. P100,000and at least 2 years imprisonment
D. P150,000and at least 2 years imprisonment

38) Unlicensed persons found violating any provision of RA#9646 and its IRR shall
be imposed with a fine of –

A. P300,000 and/or 2 years imprisonment

B. P200,000 and at least 2 years imprisonment
C. P300,000 and at least 2 years imprisonment
D. P200,000 and/or at least 4 years imprisonment

39) Lawyers of PRC shall assist PRBRES in implementing the provision of RA#/964
and shall act as _against Illegal practitioners and/or violators.

A. Investigator
B. Sheriff
C. Prosecutor
D. Lawyers

40) The following represents the official seal of the-PRBRES, except –

A. Building, blue, green, violet

B. Land, structures, trees & fruits; green lines, rising sun
C. Red, white, blue, yellow, gold
D. Blue, green, sun & rays, map of the Philippines

41) The following are the meaning of the seal of the PRBRES, which one is not correct?

A. Land - real estate; structures - improvement on land; trees & fruits -agriculture
produce; green lines - real estate practitioners
B. Red, white, blue, yellow - color of the Philippine flag, blue - service; green -
environment & ecology
C. Land - prime rice land; red - alertness, vigilance
D. Sun and rays - life & light; rising sun-vital role of RESP in Philippine progress;
map of the Philippines - the Philippine archipelago

42) Social, economic, governmental and environmental influences that affect

property value is called?

A. Laws
B. Forces
C. Factor
D. Consequences

43) Land is unique because –

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 A. No two parcels have the same soil composition
B. No two parcels have the same owner
C. No two parcels can occupy the same space on the face of the earth
D. No two parcels have the same tax levies

44) The value of real estate is determined in the market mainly by its –

A. Price
B. Financing
C. Productivity
D. Location

45) In real estate, the following terms refers to improvements, except –

A. Buildings and Machines

B. Trees, machineries and Buildings
C. Buildings, fences, walkways, etc.
D. Bundle of Rights

46) One of the limitations on the exercise of right in fee simple is Eminent Domain and
in the exercise thereof it requires compliance of –

A. appraisal process for the estimation of real property value

B. just compensation for specific types of financial loss.
C. due process for the taking of property through condemnation
D. both B and C

47) Price and value are –

A. Not necessarily the same

B. Synonymous
C. Different, depending on financing terms
D. Close together in an inactive market

48) Market price is the amount for which a property –

A. Will sell
B. Could sell
C. Should sell
D. Was sold -

49) Which of the following statements is false?

A. Real property refers to an item that is temporarily fixed to a real estate

B. Asset values change with time when markets change with supply and demand
C. Appraising is the art and science of estimating the value of an asset
D. Assets typically requiring appraisal include real and personal property

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 50) In CARP, the retention limit of landowner is –

a. 5 hectares for the landowners and 3 hectares per child irrespective of age
b. 5 hectares for the landowner and 3 hectares per child who should be at least 15
years old and actually tilling or managing the land
c. 5 hectares for the landowner and 3 hectares per child who should be at least 15
years old
d. 5 hectares for landowner and 5 hectares per child whether or not they till or
manage the land

51) This law concerns natural-born Filipino citizens who has lost their Philippine
citizenship and would like to acquire private land herein for 1,000 sqm in urban area or 1
hectare in rural area for a maximum of 2 lots situated in different municipalities/cities

A. RA#7042 C. RA#9225
B. PD#957 D. BP#185

52) In appraising, the data requirements are set by the

A. Client C. User
B. Appraiser D. Company

53) The law pertaining to natural born Filipino citizen who has lost their Philippine
Citizenship and has legal capacity to enter into contract may be a transferee of private
land of a maximum area of 5, 000 sqm in urban area or 3 hectares of rural lands.

A. Free Patent Law C. Citizenship Retention and Acquisition Law

B. Philippine Constitution D. Foreign Investment Act of 1991

54) Refers to a body responsible for the inculcating the skills and knowledge of the Real
Estate Professionals is called –

A. CPE Council C. CPD Council

B. CPE Committee D. CPD Committee

55) The PRBRES shall be appointed by after being recommended by PRC and
nominated by PhilRES- the AIPO of Real Estate Professionals

A. Congress C. DOLE Secretary

B. PRC Chairman D. President of the Philippines

56) Law referring to the Agrarian Reform in October 21, 1972 is –

A. PD#27 c. EO#129
B. RA#6657 d. EO#128

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 57) The following are valid transactions involving agricultural lands, which one is not?

A. Sale of private parties regardless of hectares executed before the effectivity of CARP
provided, the sale was registered with the Registered of Deeds within 3months from
June 15, 1988
B. Sale to private parties executed before the effectivity of CARP covering areas to be
retained in favor of transferees whose total landholdings including the land to be
acquired do not exceed 5 hectares
C. Sale to private parties executed after the effectivity of CARP covering areas to
be retained in favor of transferees whose total landholdings including the land to
be acquired do not exceed 5 hectares
D. Sale in favor of the government, Land Bank of Debt.of Agrarian Reform regardless
of hectarages; Sale by the beneficiaries after 10 years from the issuance and
registration of Certificate of Land Ownership Awards (CLOAs)

58) Tenants may be awarded five (5) hectares of unirrigated lands and if
irrigated lands.

A. 5 hectares c. 4 hectares
B. 6 hectares d. 3 hectares

59) The criteria for CARP coverage is –

A. Its need for CARP purposes and suitability of the land

B. Suitability of the land for agriculture and its possibility of acquisition
C. Its size and location and possibility of acquisition
D. Suitability of the land and abusive landowners

60) As an Appraiser you were asked to do an assignment that includes a discounted

cash flow analysis, a technique which you have not been using. You should –

A. Disclose the lack of knowledge and/or experience to the client after accepting
the assignment
B. Take all necessary or appropriate the steps to complete the assignment
competently
C. Turn down the assignment
D. Associate with a colleague reasonably believed to have the necessary experience

61) A deceased owner died intestate without any debt or obligation, the document to
be executed by the sole heir transfer title of the land is called –

A. Affidavit of Self-Adjudication c. Extra-judicial Settlement of Estate

B. Deed of Conveyance d. Deed of Sale

62) Real Estate Practitioners shall be governed by the following Rules of Conduct
and Practices, which one is not?

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 A. Relation to the government c. relation to the Colleagues and Association
B. Relation to the Client d. Relation to the Relatives

63) The golden Rule States –

A. Treat others as you wanted them to be treated

B. Treat others as you like them to treat you
C. Do not do unto others what you want others do to you
D. Do unto others what you do not want others do unto you

64) What are mandatory information to be reflected in the communications that the
Real Estate Appraiser signs in compliance with Section of RA#9546?

A. License numbers, PRC I.D Number., PhilRES Number & Receipt Number and
PTR including the validity thereof
B. License number, PhilRES Number and Receipt Number and PTR including
the validity thereof
C. License number, PhilRES Number and Receipt Number including the validity thereof
D. License number, PRC I.D Number, PhilRES Number and PTR including the
validity thereof

65) To the ethical Appraiser, the principle of full disclose dictates that vital information
that can affect the property or the transaction should be disclosed and explains to his
client. Which one of the following is contrary to an ethical disclosure?

A. Changes or planned changes in zoning affecting the property

B. Your opinion of future land values in the vicinity of the property
C. Opinion as to the basis of your appraisal
D. Methodologies adopted

66) In case of a complaint filed by a Professional Appraiser against a colleague who is

a member of PhilRES, the Appraiser should –

A. File a complaint and exhaust all remedies within PhilRES

B. File a complaint at the PRBRES
C. File a complaint at the Barangay
D. File a complaint at the court with competent jurisdiction

67) That profession bond of the Real Estate Appraiser is for the purpose of
.

A. P20,000; as requirement by the law

B. P20,000; as requirement for the renewal of Profession I.D
C. P20,000; indemnification of his profession
D. P20,000; indemnification of his ability to the affected person

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 68) This is the annualized yield rate or rate on capital that is generated or capable of
being generated within an investment portfolio over the period of ownership.
A. Overall Capitalization Rate c. Yield Rate
B. Discount Rate d. Internal Rate of Return

69) The principle of anticipation is –

A. Past oriented c. Substitution oriented

B. Future oriented d. involves the “as per” date for an appraisal

70) If the typical occupancy rate in the vicinity of the Subject is 95%, what
conclusion would you have about the Subject that has 100% occupancy?

A. It is well advertised c. the rental is low

B. The rental is high d. Management is incompetence

71) Which type of study test the ability of various proposed improvement to
meet investment objectives?

A. Market c. Marketability
B. Feasibility d. Cost-benefit

72) Which principle of value best confirms that values is the present worth of
expected future benefits?

A. Balance c. Supply and demand

B. Substitution d. Anticipation

73) The gross rent multiplier (GIM) is often used in –

A. Market Data Approach for single-family residence

B. Income capitalization approach for income generating property
C. Cost approach
D. Income Approach for complex family residence

74) Refers to a type of rental paid by tenants in ac commercial property based on sales
generated for a period and which is considered less reliable for appraisal purposes because
it is not guarantee is called –

A. Market rent c. Effective rent

B. Contract rent d. Percentage rent

75) Rent paid over the base rent is called –

A. Overage rent c. Effective rent

B. Contract rent d. Percentage rent

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 76) A starting point in most real estate income analyses, which is the amount of
money that the property would bring in if completely occupied the whole year and all the
tenants paid their rentals.
A. Gross income c. Effective Gross Income
B. Potential Gross Income d. Net Operating Income

77) The cost of identical utility or exact replica to the Subject property is called –

A. Replacement Cost c. Reproduction Cost

B. Cost d. Original Cost

78) The conclusion as to be highest and best use is part of making –

A. The Initial Estimate of value c. The Mid Estimate of value

B. The Final Estimate of value d. Progressive Estimate of Value

79) The period of right of Redemption in pacto de retro sale depends on the agreement of

A. The parties in which no cases shall exceed 10 years

B. The parties in which no case shall exceed 8 years. In the absence thereof, the
period shall be 4 years
C. The parties in which no case shall exceed 10 years. In the absence thereof, the
period shall be 2 years
D. The parties in which no case shall exceed 10 years. In the absence thereof, the
period shall be four years

80) The age indicated by the condition and utility of the structure is called –

A. Economic Age c. Estimated Age

B. Effective Age d. Actual Age

81) Lands of the public domain are classified into –

A. agricultural, residential, timberlands, and industrial

B. agricultural, mineral, timberlands, or forest and national park
C. commercial, agricultural, residential, resort and institutional
D. commercial, agricultural, residential, mineral, industrial, timberland and Special

82) A method of construction or reproduction cost estimating is –

A. Cost Method
B. Straight-line Method
C. Quantity Survey Method or Volume Method or Area Method
D. Market Method

83) The cost to build and exact replica at appraisal date is –

A. Replacement Cost c. Unit in Place Cost

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 B. Reproduction Cost d. Direct Cost

84) An owner of a parcel of land leased the land to a tenant for 10 years. The next day
to the owner sells the land to a 3rd party. Which of the following statements is
CORRECT?

A. The tenant’s legal interest in automatically terminated by operation of law

B. The tenant’s leasehold is not affected
C. The new owner has an option as to whether to accept the terms of the lease
D. The tenant may voluntarily terminate the lease

85) Refers to a deed use to return real property title to the registered owner when
the mortgage secured by the deed is fully paid.

A. Warranty deed c. Reconveyance Deed

B. Quitclaim deed d. Tax deed

86) The process of changing the use of an apartment building to a

condominium ownership is called –

A. Interim use c. Proration

B. Variance d. Conversion

87) The extension of some improvements like: building, fence or driveway traversing
the legal boundary of an adjoining lot is –

A. Easement c. Emblements
B. Right-of-Way d. Encroachment

88) A mixed use condo project wanted to amend its Master Deed, what will basis of
the majority vote?

A. Per unit ownership c. per unit sqm. value

B. Per unit floor area d. Per unit no. of occupants

89) Ownership of foreigners in a townhouse project located city is limited to –

A. 51% of the units c. 40% of the units

B. No limits d. 60% of the units

90) Mr. PJ owned a unit in LTBG Tower. He can sell the unit to anybody unless there is –

A. Provision for right of first refusal

B. Delinquency in condominium dues
C. A mortgage on the condominium unit
D. An amount of unpaid real estate taxes

91) The Subdivision and Condominium Buyers Protective Decree:

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 A. PD#1216 c. PD#1096
B. PD#957 d. PD#1586

92) A voluntary transfer or conveyance of private property by private owner like: sale
or donation is considered –

A. Reclamation c. Inheritance
B. Private Grant d. Involuntary Grant

93) In RA#7160, the appraisal of real property shall be based on –

A. Current fair market value c. Declaration of lot owner

B. Actual use of the property owner d. Independent appraiser’s value

94) The entire parcel of real property divided including all structures thereon refers to –

A. Condominium Unit c. Condominium

B. Condominium Project d. Common area

95) In foreign Investments Act of 1991, a former natural born Filipino who became
an Australian citizen may not acquire land for the following purpose –

A. Lease the land c. Business purpose

B. Agricultural purposes d. Put up a plant

96) PTB Corporation mortgaged its property to a bank. For failure to pay its obligation
the collateral property was foreclosed and sold at public auction. What is maximum
period to redeem the property, if the certificate of sale is not yet registered?

A. 3 months (juridical person) c. 2 months

B. 180 days d. 60 days

97) Republic Act number 6552, or the Maceda Law is also referred to as the:

A. Realty Installment and Protective Decree

B. Realty installment and Buyer’s Protective Decree
C. Realty Installment Consumer Act
D. Realty installment Buyer’s Protection Act

98) If a unit owner has unpaid assessments, the notice of assessment will be considered
a lien on the condominium unit if –

A. The notice of assessment was registered with the Register of Deeds

B. The notice of assessment was given to the unit owner
C. The notice of assessment was registered with HLURB
D. The notice of assessment was registered with the Treasurer’s Office

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 99) Mr. Fajardo’s house was constructed 15-years ago. Because he keeps it in
excellent condition, it appears as much wear a typical 8-year old house. The house has an
effective age of –
A. 7 years c. 12 years
B. 8 years d. 15 years

100) A property has 25 apartment units: 15 two-bedroom unit renting for P6,000 per
month each and 10 one bedroom unit renting for P3,000 per month each. There are 14-two
bedroom unit occupied and 8-one bedroom occupied. The potential gross income is –

A. P1.248M c. P1.440M
B. P1.249M d. P1.500M

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