Idaho Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Idaho exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Idaho 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. Idaho 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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Idaho Property Valuation — Practice Questions & Answers
115 questions on Property Valuation from the Idaho real estate question bank. First 10 are free — sign up to unlock all 115.
Q1. The income capitalization approach is MOST appropriate for valuing:
Explanation
The income capitalization approach is most appropriate for income-producing properties such as apartment buildings, office buildings, and retail centers. It estimates value based on the property's ability to generate income.
Q2. Functional obsolescence is a loss in value caused by:
Explanation
Functional obsolescence is a loss in value due to outdated or inadequate design features, such as a house with only one bathroom, small closets, or an outdated floor plan that doesn't meet current buyer expectations.
Q3. When comparing sales, an appraiser adjusts for differences between the comparable property and the subject property. If the comparable sold for $300,000 and had a pool (worth $15,000) that the subject property lacks, the adjusted value is:
Explanation
When the comparable has a feature the subject lacks, the appraiser subtracts that feature's value from the comparable's price. $300,000 − $15,000 = $285,000. The adjustment makes the comparable comparable to the subject.
Q4. The principle of substitution states that a buyer will pay no more for a property than:
Explanation
The principle of substitution underlies all three approaches to value: a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property. This principle sets the upper limit of value.
Q5. The cost approach to value is MOST appropriate for:
Explanation
The cost approach is most appropriate for special-use properties (such as churches, schools, and government buildings) that have few comparable sales and are not typically purchased for their income-producing potential.
Q6. In the income capitalization approach, if a property's net operating income (NOI) is $60,000 and the capitalization rate is 6%, what is the property's estimated value?
Explanation
Value = NOI ÷ Cap Rate. $60,000 ÷ 0.06 = $1,000,000. The cap rate represents the required rate of return for the investor.
Q7. Economic (external) obsolescence is caused by:
Explanation
Economic (external) obsolescence is a loss in value caused by factors outside the property, such as a new noisy highway, industrial development in the area, or economic decline of the neighborhood. It is typically incurable.
Q8. When using the sales comparison approach, an appraiser makes adjustments for differences. If the subject property has 3 bedrooms and the comparable has 4 bedrooms (with each bedroom worth $10,000), the appraiser should:
Explanation
The comparable has a feature (extra bedroom) the subject lacks. To make the comparable equivalent to the subject, subtract the value of the extra bedroom from the comparable's price: this reduces the comparable to make it comparable to the (inferior) subject.
Q9. The principle of progression states that:
Explanation
The principle of progression holds that a lower-value property benefits from association with higher-value properties in the area. This is why a modest house in an upscale neighborhood often sells for more than it would in a less desirable area.
Q10. An appraisal is defined as:
Explanation
An appraisal is a professional, unbiased opinion of a property's value performed by a licensed or certified appraiser. It is based on market data and analysis, not the desires of the buyer, seller, or lender.
Q11. Reproduction cost in the cost approach is defined as:
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