Property Valuation
In Hawaii, an appraiser uses a 5% cap rate for a residential rental property and a 7% cap rate for a commercial property. This reflects that:
AA. Residential properties are more valuable than commercial ones
BB. Higher cap rates indicate higher perceived risk and/or lower expected price relative to income✓ Correct
CC. Commercial properties always have lower value
DD. Cap rates are arbitrary and interchangeable
Explanation
A higher cap rate reflects greater perceived risk. Residential properties (5% cap) in Hawaii's stable market command lower cap rates; commercial properties with more risk have higher cap rates.
Related Hawaii Property Valuation Questions
- What is a 'desk review appraisal' and how does it differ from a full appraisal?
- Which appraisal approach is most commonly used to value single-family residences in Hawaii?
- When appraising an income-producing property in Hawaii, an appraiser would most likely use the:
- In Hawaii, the term 'economic life' of an improvement refers to:
- In Hawaii's competitive resort market, which factor would most likely increase a property's market value?
- Which type of depreciation in the cost approach refers to loss in value due to factors outside the property, such as a nearby industrial facility?
- A Hawaii home appraiser notes that the property has an outdated floor plan that reduces its marketability. This is an example of:
- In Hawaii, which type of depreciation is curable?
Practice More Hawaii Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Hawaii Quiz →