North Carolina Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the North Carolina exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The North Carolina Real Estate Commission (NCREC) tests when each approach is most appropriate, how adjustments are made in the sales comparison approach, and what factors an appraiser considers vs. ignores. North Carolina 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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North Carolina Property Valuation — Practice Questions & Answers
121 questions on Property Valuation from the North Carolina real estate question bank. First 10 are free — sign up to unlock all 121.
Q1. In the sales comparison approach, a positive adjustment to a comparable sale means:
Explanation
A positive adjustment means the comparable is inferior to the subject in a particular feature. Value is added to the comparable to make it equal to the subject. Remember: CBS (Comparable Better, Subtract; Comparable Worse, Add).
Q2. Highest and best use is defined as the use that is:
Explanation
Highest and best use is the legally permissible, physically possible, financially feasible, and maximally productive use that results in the highest property value.
Q3. What is the gross rent multiplier (GRM) for a property that sells for $180,000 and rents for $1,500 per month?
Explanation
GRM = Sale Price / Monthly Rent = $180,000 / $1,500 = 120.
Q4. Plottage value refers to:
Explanation
Plottage (or assemblage) refers to the increase in value that results from combining several smaller adjacent parcels into one larger parcel. The combined value typically exceeds the sum of the individual values.
Q5. The sales comparison approach to value is most appropriate for:
Explanation
The sales comparison approach is the primary method for valuing single-family homes because there are typically enough comparable sales available.
Q6. An adjustment in the sales comparison approach for a feature the subject property HAS but the comparable does NOT have requires the appraiser to:
Explanation
If the subject has a feature the comparable lacks, the comparable is inferior; therefore, add to the comparable's sales price to indicate what it would have sold for with that feature.
Q7. The income approach to value uses which formula?
Explanation
The income approach includes direct capitalization (V = NOI / Cap Rate) and the Gross Rent Multiplier method (Value = GRM x Monthly Rent), both of which are income-based.
Q8. In the cost approach, what does accrued depreciation include?
Explanation
Accrued depreciation in the cost approach includes all three types: physical deterioration (wear and tear), functional obsolescence (outdated features), and external (economic) obsolescence (outside forces).
Q9. A property generates $18,000 annual net operating income and the market cap rate is 6%. What is the indicated value?
Explanation
Value = NOI / Cap Rate = $18,000 / 0.06 = $300,000.
Q10. What is the principle of substitution in real estate?
Explanation
The principle of substitution holds that the maximum value of a property is set by the cost of acquiring an equivalent substitute, which is the foundation of the sales comparison and cost approaches.
Q11. Functional obsolescence in a property might be caused by:
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