An Alaska appraiser estimates that a property's highest and best use as vacant would be residential development. The highest and best use as improved is a commercial building. This difference suggests:
Why The existing commercial use does not represent the highest and best use of the site — the improvements may contribute negative value Is Correct
Answer B: The existing commercial use does not represent the highest and best use of the site — the improvements may contribute negative value
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
People Also Study
Related Alaska Questions
- An Alaska appraiser using the cost approach calculates the following: land value $150,000, replacement cost new of improvements $400,000, total depreciation $80,000. The indicated value is:Property Valuation
- An Alaska appraiser who determines that an existing commercial building's highest and best use is as a parking lot is suggesting that:Property Valuation
- An Alaska property sold for $485,000. The appraiser determines the land is worth $95,000. The improvements' depreciated value (from the cost approach) is:Property Valuation
- A property owner in Alaska petitions to have their land rezoned from residential to commercial. This process is called:Land Use & Zoning
- An appraiser uses the cost approach for a property and estimates reproduction cost new at $380,000, land value at $75,000, and total depreciation at $55,000. What is the estimated value?Property Valuation
- An Alaska property sells for $500,000. The buyer gets a loan for $400,000. The lender requires an appraisal. The appraiser values the property at $480,000. What is the maximum loan the lender will approve at 80% LTV based on appraised value?Finance
- Permafrost considerations in Alaska often affect building codes and land use in that construction on unstable permafrost may require:Land Use & Zoning
- Asbestos in a commercial building in Alaska poses the greatest risk when:Environmental
Key Terms to Know
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Study This Topic
Practice More Alaska Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →