North Dakota Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the North Dakota exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The North Dakota 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. North Dakota 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 Dakota Property Valuation — Practice Questions & Answers
116 questions on Property Valuation from the North Dakota real estate question bank. First 10 are free — sign up to unlock all 116.
Q1. In the cost approach to value, reproduction cost differs from replacement cost because:
Explanation
Reproduction cost is the cost to build an exact replica of the existing structure using the same materials and design. Replacement cost is the cost to build a structure of similar utility using current materials and standards.
Q2. Which appraisal principle states that the value of a property is affected by the values of surrounding properties?
Explanation
The principle of progression states that a lower-value property benefits from being located near higher-value properties. The principle of regression states the opposite — a higher-value property may suffer when surrounded by lower-value properties.
Q3. Market value is best defined as:
Explanation
Market value is the most probable price a property would sell for in an open and competitive market between a knowledgeable, willing buyer and seller, neither acting under duress.
Q4. An appraiser makes a negative (-$8,000) adjustment to a comparable. This means:
Explanation
A negative adjustment means the comparable is superior to the subject in a particular feature. The comparable's value is reduced to make it comparable to the subject (CBS: Comparable Better, Subtract).
Q5. The income approach to value is most appropriate for:
Explanation
The income approach is most appropriate for income-producing properties (rental properties, commercial buildings). It estimates value based on the property's ability to generate income.
Q6. The sales comparison approach to value requires the appraiser to:
Explanation
The sales comparison approach involves finding recently sold comparable properties (comps) and making dollar adjustments for differences between the comps and the subject property to estimate value.
Q7. Functional obsolescence in appraisal refers to:
Explanation
Functional obsolescence is a loss in value due to deficiencies in design, layout, or outdated features within the property itself (e.g., only one bathroom in a 4-bedroom house, outdated floor plan).
Q8. External (economic) obsolescence is caused by:
Explanation
External (economic) obsolescence is a loss in value caused by factors outside the property, such as nearby nuisances, economic downturns, or adverse zoning changes. It is typically incurable.
Q9. The principle of substitution states that a buyer will pay no more for a property than the cost of:
Explanation
The principle of substitution states that an informed buyer will pay no more for a property than the cost to acquire an equally desirable substitute property. This principle underlies the sales comparison approach.
Q10. Capitalization rate (cap rate) is calculated by:
Explanation
Cap Rate = Net Operating Income (NOI) / Property Value (or Purchase Price). A higher cap rate indicates a higher return on investment relative to the purchase price.
Q11. Gross Rent Multiplier (GRM) is used to:
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