Massachusetts Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Massachusetts exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Massachusetts Board of Registration of Real Estate Brokers and Salespersons tests when each approach is most appropriate, how adjustments are made in the sales comparison approach, and what factors an appraiser considers vs. ignores. Massachusetts 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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Massachusetts Property Valuation — Practice Questions & Answers
120 questions on Property Valuation from the Massachusetts real estate question bank. First 10 are free — sign up to unlock all 120.
Q1. Which appraisal approach is most appropriate for valuing a single-family residence in a neighborhood with many recent sales?
Explanation
The sales comparison approach (market data approach) is the most appropriate method for valuing residential properties because it directly reflects what buyers are willing to pay based on recent comparable sales.
Q2. An appraiser finds that a comparable home sold for $420,000. It has a garage worth $15,000 that the subject property lacks, and the comparable's lot is $10,000 smaller than the subject's. What is the adjusted sale price?
Explanation
Adjustments are made to the comparable, not the subject. Subtract the garage (+$15,000 feature on the comp) and add for the smaller lot (−$10,000 feature on the comp): $420,000 − $15,000 + $10,000 = $415,000.
Q3. Functional obsolescence in a property refers to:
Explanation
Functional obsolescence is a loss in value resulting from outdated or inefficient design features, such as an inadequate number of bathrooms, outdated kitchens, or a poor floor plan.
Q4. The principle of substitution states that:
Explanation
The principle of substitution is the foundation of the sales comparison and cost approaches: an informed buyer will pay no more for a property than the cost to obtain a property of equal utility.
Q5. The income capitalization approach to value is most appropriate for:
Explanation
The income capitalization approach converts a property's income stream into value and is most appropriate for income-producing properties where investors base purchase decisions on income potential.
Q6. The formula for the income capitalization approach is:
Explanation
Value = Net Operating Income (NOI) ÷ Capitalization Rate. For example, a property with $60,000 NOI and a 6% cap rate would be valued at $60,000 ÷ 0.06 = $1,000,000.
Q7. A property generates $72,000 in net operating income. Comparable properties in the market have a 7.2% cap rate. What is the estimated value?
Explanation
Value = NOI ÷ Cap Rate = $72,000 ÷ 0.072 = $1,000,000.
Q8. Economic obsolescence (external obsolescence) is caused by:
Explanation
Economic (external) obsolescence results from factors outside the property boundaries, such as a nearby nuisance, neighborhood decline, or adverse market conditions. It is generally incurable.
Q9. The cost approach to value is most useful for appraising:
Explanation
The cost approach is particularly useful for special-use properties (churches, schools, government buildings) where there are few comparable sales and no income stream to capitalize.
Q10. Which of the following is NOT one of the four essential elements of value (DUST)?
Explanation
The four elements of value remembered as DUST are: Demand, Utility, Scarcity, and Transferability. 'Scarcity' IS one of the elements — all four are required. Wait — scarcity is correct. The question asks which is NOT; all four (D, U, S, T) are elements. A trick answer would be something like 'Appreciation' which is not part of DUST.
Q11. An appraiser uses three comparable sales to estimate the value of a subject property. The adjusted values of the comparables are $415,000, $422,000, and $418,000. Which value should the appraiser most likely assign?
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