Oregon Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Oregon exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Oregon Real Estate 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. Oregon 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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Oregon Property Valuation — Practice Questions & Answers
118 questions on Property Valuation from the Oregon real estate question bank. First 10 are free — sign up to unlock all 118.
Q1. The income capitalization approach to value is most useful for appraising:
Explanation
The income capitalization approach values property based on its income-producing potential. It is the primary method for appraising income-producing properties like apartment buildings, retail centers, and office buildings.
Q2. A property produces a net operating income (NOI) of $60,000 per year. If the capitalization rate is 6%, the property's estimated value using the income approach is:
Explanation
Value = NOI ÷ Capitalization Rate. $60,000 ÷ 0.06 = $1,000,000. The cap rate reflects the market's expected return on investment for that property type and location.
Q3. Economic obsolescence (external obsolescence) differs from functional obsolescence in that economic obsolescence:
Explanation
Economic (external) obsolescence results from factors outside the property's boundaries — such as proximity to a noisy highway, industrial area, or neighborhood economic decline. Unlike some functional obsolescence, external obsolescence is typically incurable.
Q4. In real estate appraisal, the term 'market value' is best defined as:
Explanation
Market value is defined as the most probable price a property would sell for in a competitive and open market under fair conditions, with both buyer and seller acting prudently and knowledgeably, and the price not affected by undue pressure.
Q5. In the sales comparison approach, 'adjustments' are made to the comparable sales to account for differences between the comparables and the subject property. If a comparable sold for $350,000 but lacks a garage that the subject has (valued at $20,000), the adjusted sale price of the comparable is:
Explanation
When the comparable is inferior to the subject (it lacks a feature the subject has), you ADD the value of that feature to the comparable's sale price. $350,000 + $20,000 = $370,000. The adjustment makes the comparable equivalent to the subject property.
Q6. The principle of 'substitution' in real estate appraisal states that:
Explanation
The principle of substitution states that a buyer will not pay more for a property than the cost of acquiring a comparable substitute. This principle underpins all three appraisal approaches: sales comparison, cost, and income.
Q7. Functional obsolescence in a property is BEST illustrated by:
Explanation
Functional obsolescence refers to a loss in value due to an outdated or inadequate feature within the property itself. A four-bedroom home with only one bathroom is functionally obsolete — the layout does not meet current market expectations.
Q8. The cost approach to appraisal is MOST applicable when:
Explanation
The cost approach is most useful for special-use properties (churches, schools, government buildings, etc.) that have few comparable sales and are not typically income-producing. It estimates value as the cost to reconstruct the improvements, less depreciation, plus land value.
Q9. An appraiser is estimating a property's value using a gross rent multiplier (GRM) of 140. The monthly rent is $1,800. What is the estimated value?
Explanation
GRM is calculated as: Value = Monthly Rent × GRM. $1,800 × 140 = $252,000. The GRM is a simple, quick method to estimate value based on the relationship between a property's price and its gross rent.
Q10. Regression and progression are appraisal principles that mean:
Explanation
The principle of regression states that a high-value property will decline in value if surrounded by lower-value properties. Progression is the opposite — a lower-value property benefits in value from being located among higher-value properties.
Q11. In an appraisal, the process of 'reconciliation' refers to:
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