Property ValuationIntermediateArizona Exam

Interim use in appraisal refers to:

AThe current use while awaiting higher and best use developmentCorrect

BA temporary use while the building is under construction

CThe use mandated by current zoning

DAn illegal but tolerated use of property

Why The current use while awaiting higher and best use development Is Correct

Answer A: The current use while awaiting higher and best use development

Interim use is a temporary use of land that is not its highest and best use but represents the best use pending development to the highest and best use. Land may be used for farming while awaiting commercial development.

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.

Key Property Valuation Terms in This Question

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

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Key Terms to Know

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

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