Pennsylvania Property Valuation
Practice Questions & Answers (2026)
Property valuation questions on the Pennsylvania exam test the three approaches to value (sales comparison, cost, and income), how appraisals work, and what affects market value. The Pennsylvania State 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. Pennsylvania 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.
Pennsylvania Exam Study Resources
Everything you need to pass — in one place.
Pennsylvania Property Valuation — Practice Questions & Answers
138 questions on Property Valuation from the Pennsylvania real estate question bank. First 10 are free — sign up to unlock all 138.
Q1. The cost approach to value estimates a property's value by:
Explanation
The cost approach estimates value by calculating: land value + cost new of improvements − accrued depreciation. It is most useful for unique properties, new construction, and special-purpose buildings where sales comparables are limited.
Q2. Comparative market analysis (CMA) and an appraisal are different in that:
Explanation
A CMA is a price opinion prepared by a real estate licensee to assist sellers or buyers in pricing decisions. An appraisal is a formal, independent opinion of value prepared by a licensed or certified appraiser and required by lenders for mortgage financing.
Q3. Which principle of value states that overimprovement of a property reduces value relative to the investment made?
Explanation
The principle of contribution holds that the value of any component of a property is measured by how much it contributes to overall value. An overimprovement may cost more than it adds to value — the improvement contributes less than its cost.
Q4. Curable depreciation in the cost approach refers to items where:
Explanation
Curable depreciation (physical or functional) refers to items where the cost to repair or update is justified by the resulting increase in value. For example, replacing worn carpet (cost: $5,000; value added: $6,000) is economically curable depreciation.
Q5. The sales comparison approach to value is most appropriate for:
Explanation
The sales comparison approach (also called the market data approach) is most reliable for residential properties where sufficient comparable sales exist. Appraisers compare the subject property to recently sold similar properties and make adjustments for differences.
Q6. In the income capitalization approach, the capitalization rate is derived by:
Explanation
Cap Rate = Net Operating Income ÷ Property Value (or Sales Price). This formula can be rearranged: Value = NOI ÷ Cap Rate. A lower cap rate indicates a higher value relative to income.
Q7. Functional obsolescence in a property refers to:
Explanation
Functional obsolescence is a loss in value caused by features within the property that are outdated, inadequate, or no longer desirable — such as outdated floor plans, inefficient layouts, or an inadequate number of bathrooms for the market.
Q8. External (economic) obsolescence is different from functional obsolescence because it:
Explanation
External obsolescence is caused by negative factors outside the property, such as proximity to a highway, flight paths, economic decline in the neighborhood, or adverse land use nearby. It is almost always incurable by the property owner.
Q9. The cost approach to value is most useful when appraising:
Explanation
The cost approach estimates value by calculating the replacement cost of improvements minus depreciation, plus land value. It is most reliable for special-purpose properties (churches, schools, government buildings) where few comparable sales exist.
Q10. Which of the following best describes the principle of substitution?
Explanation
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost to acquire an equally desirable alternative. This principle underlies all three approaches to value used in appraisal.
Q11. An appraisal report in Pennsylvania is typically prepared by a licensed or certified appraiser. The term 'market value' means:
128 more Property Valuation questions
Create a free account to unlock all 138 Pennsylvania Property Valuation questions with full explanations.
Free account · No credit card · Instant access to 25 questions
Ready to take the full exam? Start free.
25 free questions · No signup · Instant access to all Pennsylvania topics