Alaska Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Alaska exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Alaska Real Estate Commission tests when each approach is most appropriate, how adjustments are made in the sales comparison approach, and what factors an appraiser considers vs. ignores. Alaska candidates often struggle with income approach calculations — particularly gross rent multiplier (GRM) and net operating income (NOI) — and with the cost approach depreciation calculations. These are high-difficulty math and concept questions where careful study of the explanations pays off significantly on exam day.
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Alaska Property Valuation — Practice Questions & Answers
176 questions on Property Valuation from the Alaska real estate question bank. First 10 are free — sign up to unlock all 176.
Q1. The appraisal approach most commonly used to value single-family residential properties in Alaska is the:
Explanation
The sales comparison approach is the most commonly used method for valuing single-family residential properties. It compares the subject property to recently sold comparable properties and adjusts for differences. In rural Alaska where sales data may be limited, the cost approach may also be used.
Q2. In Alaska's remote areas, an appraiser may have difficulty using the sales comparison approach because:
Explanation
In remote areas of Alaska with very few transactions, finding adequate comparable sales is a significant appraisal challenge. Appraisers may need to use sales from larger geographic areas, older sales, or rely more heavily on the cost approach.
Q3. Depreciation in real estate appraisal refers to:
Explanation
In appraisal, depreciation is a loss in property value from any cause. Physical deterioration includes wear and tear; functional obsolescence includes outdated features; external (economic) obsolescence is caused by factors outside the property.
Q4. A property generates annual net operating income (NOI) of $60,000. Using a capitalization rate of 8%, the estimated value using the income approach is:
Explanation
The income approach formula is: Value = NOI ÷ Cap Rate. $60,000 ÷ 0.08 = $750,000. This approach is most applicable for income-producing properties such as apartment buildings and commercial real estate.
Q5. The principle of substitution in appraisal holds that:
Explanation
The principle of substitution underlies all three appraisal approaches. It states that an informed buyer will pay no more for a property than the cost of acquiring an equally desirable substitute, whether by purchase or construction.
Q6. When a licensed appraiser estimates the value of a property, the appraiser is providing an opinion of:
Explanation
An appraisal is an opinion of market value — the most probable price a property would sell for in a competitive and open market under fair sale conditions. Market value is distinct from assessed value (used for taxation) or insurance value.
Q7. A comparable sale used in the sales comparison approach requires a positive adjustment when:
Explanation
In the sales comparison approach, if the comparable property is inferior to the subject in a given feature, the appraiser adds a positive adjustment to the comparable's sale price. Memory tip: if the comp is worse, add value — 'CBS': comparable better, subtract.
Q8. External obsolescence affecting a property's value is caused by:
Explanation
External obsolescence (also called economic or locational obsolescence) is caused by factors outside the property's boundaries, such as proximity to an airport, industrial facility, or economic decline in the surrounding area. It is typically incurable.
Q9. In the sales comparison approach, an appraiser adjusts the comparable sale price when:
Explanation
In the sales comparison approach, adjustments are made to the comparable (not the subject). If the comparable is superior to the subject (e.g., has a garage the subject lacks), the appraiser subtracts from the comparable's price. If the comparable is inferior, the appraiser adds to it. The goal is to estimate what the comparable would have sold for if it were like the subject.
Q10. The income capitalization approach to value is MOST appropriate for:
Explanation
The income capitalization approach converts expected future income into a present value estimate. It is the primary approach for valuing income-producing properties such as apartment buildings, commercial buildings, and other investment real estate. It is generally not appropriate for owner-occupied homes or vacant land.
Q11. An appraiser uses the cost approach for a property and estimates reproduction cost new at $380,000, land value at $75,000, and total depreciation at $55,000. What is the estimated value?
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