Indiana Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Indiana exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Indiana Professional Licensing Agency tests when each approach is most appropriate, how adjustments are made in the sales comparison approach, and what factors an appraiser considers vs. ignores. Indiana 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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Indiana Property Valuation — Practice Questions & Answers
128 questions on Property Valuation from the Indiana real estate question bank. First 10 are free — sign up to unlock all 128.
Q1. An appraisal conducted for mortgage lending purposes is typically ordered by:
Explanation
For mortgage lending purposes, the appraisal is ordered by the lender (not the buyer or agent) to ensure the collateral (the property) is worth at least the loan amount. The borrower typically pays the appraisal fee.
Q2. Physical deterioration that can be repaired or corrected economically is called:
Explanation
Curable physical deterioration refers to physical deterioration (such as worn carpets or peeling paint) that can be repaired at a cost equal to or less than the resulting increase in value. It is economically worthwhile to fix.
Q3. Which principle of value states that the value of a lesser-quality property is enhanced by being located near more valuable properties?
Explanation
The principle of progression holds that the value of a lesser-quality property is increased by its proximity to higher-value properties. Conversely, the principle of regression holds that a higher-value property is pulled down by surrounding lower-value properties.
Q4. A duplex generates $18,000 annually in gross rent. The gross rent multiplier (GRM) for comparable properties is 85. What is the estimated property value?
Explanation
Value = Annual Gross Rent × GRM. $18,000 × 85 = $1,530,000. Note: GRM can be applied to annual or monthly rent, so be sure to use consistent figures.
Q5. The sales comparison approach to value is MOST appropriate for:
Explanation
The sales comparison approach is most reliable for residential properties where there are sufficient recent comparable sales in the marketplace.
Q6. In the income approach, Net Operating Income (NOI) is calculated as:
Explanation
NOI equals effective gross income (potential gross income minus vacancy and credit losses) minus all operating expenses, excluding debt service.
Q7. The cost approach to value estimates property value by:
Explanation
The cost approach calculates value as the estimated land value plus the cost to replace or reproduce the improvements minus accrued depreciation.
Q8. An appraisal is an estimate of value as of:
Explanation
An appraisal estimates value as of a specific effective date stated in the report, which may differ from when the appraisal was completed or delivered.
Q9. Regression in real estate valuation means that:
Explanation
The principle of regression states that a higher-value property located among lower-value properties will be negatively impacted and its value will be pulled downward.
Q10. Functional obsolescence is a loss in value caused by:
Explanation
Functional obsolescence results from deficiencies or superadequacies within the property itself, such as outdated floor plans, inadequate plumbing, or poor layout.
Q11. Which of the following is an example of external (economic) obsolescence?
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