Fundamentals of Real Estate Appraisal, 10th Edition
By William L. Ventolo, Jr. and Martha R. Williams, JD
Editor’s Note
At Dearborn™ Real Estate Education, we are proud of our reputation for providing the most complete, current, and accurate information in all our products. We are committed to ensuring the kind of quality you rely on. Please note the following changes, which will be reflected in the next printing of Fundamentals of Real Estate Appraisal.
Chapter 8Data Collection
Page 230In Exercise 8.6, the down payment amount should be $50,000 instead of $60,000.
Chapter 11The Cost Approach—Part II: Depreciation
Page 298In the table in Exercise 11.5, the observed depreciation for floors should be 45 instead of 25. The answer key is based on an observed depreciation of 45%.
Chapter 12The Sales Comparison Approach
Page 324Under the Commercial Area heading at the bottom of the page, the sales price of property G should be $286,000 instead of $268,000.
Chapter 13The Income Capitalization Approach
Page 357On the second line of Exercise 13.4, Using the form below should say Using the form on page 359.
Answer Key
Page 483The answers for Exercise 1.1 and Exercise 1.2 are switched.
The answer for Exercise 1.1 should read as follows:
An appraiser’s compensation should not depend on the estimate of value obtained, to avoid even the appearance of impropriety. The appraiser’s compensation may, however, reflect the complexity of the work required in dealing with the subject property.
The answer for Exercise 1.2 should read as follows:
All of the courses listed would benefit a professional appraiser because they touch on topics that must be understood in order to prepare a well-reasoned appraisal report.
Page 490There is an answer provided for Exercise 3.4 but there is no Exercise 3.4 in the book. The following text should be deleted:
Exercise 3.4
1.The grantor of a quitclaim deed makes no warranty that he or she actually owns any interest to convey in the described property; any interest that is owned, however, will be conveyed by the deed.
2.Recording a deed serves notice to the world of the title transfer if the deed is recorded in the country where the property is located.
Page 499The answer listed for Exercise 8.6 is the answer for Exercise 8.7. The answer for Exercise 8.7 is not provided.
The answer for Exercise 8.6 should read as follows (*note that in Exercise 8.6 on page 230, the down payment amount should be $50,000 instead of $60,000):
Because the cash equivalency of a loan at the same interest rate is known, the factor that results from that loan can be applied to the loan that is the subject of the problem.
$150,000 $175,000 = 0.8571428, rounded to 0.857
$200,000 ×0.857 = $171,400
$171,400 is the cash equivalent of a loan of $200,000 at 7 percent interest.
The answer for Exercise 8.7 should read as follows:
1.Records on previous appraisals; county clerk’s office; principals involved; brokers or salespeople
2.Sale 2 should be dropped from consideration because of its age. Sale 5 should be dropped because it has three more rooms than the subject; if the only difference was its having only one bathroom, it could still be considered as a comparable.
Page 501The answer currently listed for Question 4 is intended to be the second part of the answer to Question 3. This error shifted the rest of the answers down. The answers for Questions 3–8 should read as follows:
3.Sales comparison method; allocation method; abstraction method; subdivision development method; ground rent capitalization; land residual method.
The sales comparison approach is preferred whenever sales of similar vacant sites are available. The underlying presumption is that recent sales of comparable sites competitive with the subject site are the most reliable guide to the probable current market behavior and reactions of informed buyers.
4.b
5.c
6.a
7.b
8.c
There are only 8 review questions for that chapter, so number 9 does not need to appear in the answer key.
Page 523The answer for Exercise 13.2 should read as follows:
Apartment rental income$96,000
Income from washers and dryers1,900
Rent on parking space___5,400
Potential gross income$103,300
Pages 523–525The answers for Exercise 13.3, 13.4, 13.5, and 13.6 are mismatched and/or incorrect.
The answer for Exercise 13.3 should read as follows:
Apartment rental income$96,000
Income from washers and dryers1,900
Rent on parking space___5,400
Potential gross income$103,300
Six units provide 312 possible weeks of rent
(6 × 52 = 312)
Six weeks of vacancy means a 2% vacancy loss
(6 312 = .019)
Vacancy and collection losses
(2% + 3% = 5%) × $103,3005,165
Effective gross income$98,135
The answer for Exercise 13.4 should read as follows:
Potential gross income$210,000
Allowance for vacancy and collection losses– 9,900
Effective gross income$200,100
Variable expenses:
Salaries—janitor$ 9,200
Employee benefits600
Management6,000
Natural gas (+25%)15,500
Water3,800
Electricity8,700
Janitorial supplies 700
Redecorating2,000
Legal and accounting fees2,400
Fixed expenses:
Taxes (+20%)7,200
Reserves for replacement2,500
Total operating expenses58,600
Net operating income$141,500
The answer for Exercise 13.5 should read as follows:
1.a
2.b
3.d
4.c
5.a
The answer for Exercise 13.6 should read as follows:
Sale No.AdjustmentGIM
1+8.9
2–10.9
3–17.0
4+10.7
5–5.3
Sales 3 and 5 appear out of line. The range for the subject, then, is between 8.9 and 10.9, and weighted toward the high side by the indicated adjustments.
Our estimate:
GIM = 10.8
Value of subject property = $18,000 × 10.8 = $194,400
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