You can expect to see eight questions on the end-of-course exam and eight questions on the state exam from this unit.

Learning Objectives

After successfully completing this unit, you will be able to
• describe federal and state regulations pertaining to appraising,
• identify the appraiser’s fiduciary relationship,
• identify the economic and physical characteristics of real estate that affect market value,
• explain what the Uniform Standards of Professional Appraisal Practice (USPAP) is and how it affects the appraisal process of real property,
• distinguish among the various types of value,
• define market value and describe its underlying assumptions,
• distinguish among value, price and cost,
• describe the four characteristics of value,
• distinguish among the principles of value,
• differentiate among the three approaches to estimating the value of real property,
• estimate value of subject property using Comparable Sales Approach,
• estimate value of subject property using Cost Approach,
• estimate value of subject property using Income Approach,
• reconcile three approaches to establish final value estimate,
• calculate value using gross multiplier analysis, and
• explain how to prepare a Comparative Market Analysis (CMA), comparing and contrasting with sales comparison approach.

Key Terms

automated valuation modelsprinciple of substitution
comparative market analysis (CMA)progression
cost-depreciation approachreconciliation
depreciationreplacement cost
economic lifereproduction cost
federally related transactionsales comparison approach
gross income multiplier (GIM)situs
gross rent multiplier (GRM)subject property
highest and best useUniform Standards of Professional Appraisal
income approachUniform Standards of Professional Appraisal Practice (USPAP)
market value


Real estate licensees should know the basics of appraising in order to better communicate with buyers and sellers about market value of properties. While licensees are legally allowed to perform appraisals, there are many rules and restrictions that discourage that activity. However, licensees regularly prepare comparative market analyses to help buyers and sellers understand the current market.