Property Value and Appraisal accounts for 11 scored questions on the National portion of the Texas sales agent exam. Try 20 free practice questions on value, appraisal methods, depreciation and pricing estimates. Check each answer for an explanation, a common mistake and its source. Four optional Texas-law examples follow separately and do not affect your quiz score.
20 questions on value & appraisal, scored, each with a full explanation after you answer. Every question is also written out below if you would rather study at your own pace.
20 questions
~15 min
National practice only
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Study mode · National principles
Work through the questions at your own pace.
Choose an answer mentally, then open its explanation. Each question has a source and a point to watch. These are original practice questions, not Pearson VUE exam items or a prediction of your result.
1
Choosing an approach for an ordinary home
An owner-occupied home is in a neighborhood with several recent sales of genuinely similar homes. Which approach is likely to provide the strongest direct market evidence?
A.The cost approach alone
B.Direct income capitalization
C.A gross rent multiplier
D.The sales comparison approach
Check answer and explanation
Correct answer: D. The sales comparison approach
Recent, relevant sales let the appraiser compare what buyers paid for similar properties. That supports the sales comparison approach here. It does not mean an appraiser must ignore other approaches needed for a credible result.
Watch for this: Match the approach to the evidence, not just a slogan such as 'every house uses one method.'
Rule: Sales comparison approach; selection of relevant evidence
A comparable sold for $360,000. It has a pool that the subject lacks. Market evidence supports a $15,000 contribution for that pool. With no other differences, what is the adjusted comparable price?
A.$345,000
B.$375,000
C.$360,000
D.$15,000
Check answer and explanation
Correct answer: A. $345,000
Subtract the superior feature's market-supported contribution from the comparable: $360,000 minus $15,000 = $345,000. In this comparison, you adjust the comparable to the subject, not the other way around. The adjustment is not automatically what the pool cost to build.
Watch for this: Comparable better, subtract. Comparable worse, add. Use the market adjustment stated in the question.
Rule: Sales comparison approach; direction and support of adjustments
A recently built fire station has few comparable sales and no meaningful rental evidence. Reliable land and construction-cost data are available. Which approach is especially useful?
A.Direct income capitalization
B.A gross rent multiplier
C.The cost approach
D.A residential rental comparison
Check answer and explanation
Correct answer: C. The cost approach
The cost approach can use the available land and construction evidence when sales and income evidence are thin. Its usefulness still depends on credible costs, land value and depreciation estimates. 'Special purpose' does not make construction cost equal market value.
Watch for this: Choose the method the facts can support, rather than forcing a rental formula onto a non-rental property.
An income property's stabilized annual net operating income is $60,000. A supported capitalization rate is 8 percent. Using direct capitalization, what value is indicated?
A.$480,000
B.$750,000
C.$4,800
D.$7,500,000
Check answer and explanation
Correct answer: B. $750,000
Value = annual NOI divided by the cap rate: $60,000 ÷ 0.08 = $750,000. This is a direct-capitalization indication under the stated assumptions, not a complete appraisal by itself. NOI is before debt service, so do not subtract mortgage payments from the supplied NOI.
Watch for this: Use 0.08, not 8. Multiplying by the rate answers a different question.
Rule: Income approach; direct capitalization and annual net operating income
A home is well maintained, but reaching one bedroom requires walking through another. Buyers pay less because of that layout. What type of depreciation does this illustrate?
A.Physical deterioration
B.External obsolescence
C.Land depreciation for income tax
D.Functional obsolescence
Check answer and explanation
Correct answer: D. Functional obsolescence
The loss comes from the home's layout rather than wear or a condition outside the property. That is functional obsolescence. Whether a redesign would be economically worth doing is a separate question.
Watch for this: A property can be in excellent physical condition and still have a design problem.
A nearby landfill reduces what buyers will pay for an otherwise sound home. The homeowner cannot remove or control the landfill. How is the loss classified?
A.External obsolescence
B.Functional obsolescence
C.Physical deterioration
D.Straight-line tax depreciation
Check answer and explanation
Correct answer: A. External obsolescence
The cause is outside the property, so the loss is external, or economic, obsolescence. It is generally treated as incurable by this owner. That does not mean the outside condition must last forever or that the market can never recover.
Watch for this: Classify the cause of the loss. An off-site nuisance is not wear to the building.
Which figure describes market value rather than market price, construction cost or an asking price?
A.The actual amount paid in a particular transaction
B.The probable price under defined open-market conditions
C.The current expenditure needed to rebuild the property
D.The amount the owner hopes to receive from a buyer
Check answer and explanation
Correct answer: B. The probable price under defined open-market conditions
Market value is an opinion tied to stated sale conditions and an effective date. Those conditions include informed, typically motivated parties and reasonable market exposure. A recorded sale price is evidence to analyze, not an automatic value conclusion.
Watch for this: A price can be observed. Whether it represents market value requires checking the transaction's circumstances.
Rule: 12 CFR 34.42(h); market value versus market price
A warehouse would be physically possible and profitable on a site, but zoning prohibits it and no zoning change is reasonably probable. Which highest-and-best-use test does the proposal fail?
A.Physical possibility
B.Financial feasibility
C.Legal permissibility
D.Maximum productivity
Check answer and explanation
Correct answer: C. Legal permissibility
Profit cannot overcome the stated legal restriction. Highest and best use must satisfy legal permissibility, physical possibility, financial feasibility and maximum productivity. All four matter.
Watch for this: The most profitable imagined use is not necessarily the highest and best use.
Which body provides federal oversight of state appraiser and appraisal-management-company regulatory programs?
A.The Appraisal Subcommittee (ASC)
B.The Appraiser Qualifications Board (AQB)
C.The Appraisal Standards Board (ASB)
D.The Texas Real Estate Commission (TREC)
Check answer and explanation
Correct answer: A. The Appraisal Subcommittee (ASC)
ASC oversees state regulatory programs under the federal framework. AQB sets minimum qualification criteria, while ASB develops USPAP. These are different responsibilities, not interchangeable names for the same licensing office.
Watch for this: Match each name to its job: oversight, qualifications or standards.
A rental's monthly market rent is $2,000. Comparable sales support a monthly gross rent multiplier of 120. What value does this multiplier indicate?
A.$24,000
B.$120,000
C.$2,880,000
D.$240,000
Check answer and explanation
Correct answer: D. $240,000
Multiply the monthly rent by the monthly multiplier: $2,000 × 120 = $240,000. Do not annualize the rent while retaining a monthly multiplier. GRM uses gross rent, so it does not separately account for operating expenses or financing.
Watch for this: Gross rent is not NOI. Match the period and the income measure to the formula.
Three applicable approaches indicate different values. The sales evidence is strong, but the income assumptions are less reliable. What should guide the appraiser's final reconciliation?
A.Giving each result equal weight without further analysis
B.Choosing whichever result reaches the contract price
C.Weighing the relevance and reliability of the evidence
D.Selecting the highest result to protect the owner's equity
Check answer and explanation
Correct answer: C. Weighing the relevance and reliability of the evidence
Reconciliation explains which evidence deserves the most weight. It is not an unexplained arithmetic average. Fannie Mae's guidance permits a properly explained weighted-average technique, so 'an appraiser may never use any averaging' is too broad.
Watch for this: The reasoning behind the weights matters more than whether a calculation happens to use an average.
The appraiser has identified the problem and set the scope of work. Which step belongs before final reconciliation?
A.Commit to the seller's requested figure
B.Verify data and develop relevant approaches
C.Issue the report before inspecting the evidence
D.Set value at the requested loan balance
Check answer and explanation
Correct answer: B. Verify data and develop relevant approaches
The value opinion follows the analysis. The appraiser gathers and verifies relevant information, considers the property's use and develops the approaches needed for credible results. The scope controls the work; a target price does not.
Watch for this: Reconciliation comes after the evidence is developed, not before it.
Rule: Appraisal process; scope, analysis and reporting
Two available homes offer buyers equivalent utility and desirability, with no meaningful difference in purchase timing. Why would the less expensive one limit what buyers pay for the other?
A.The principle of substitution
B.The principle of anticipation
C.The principle of progression
D.The principle of contribution
Check answer and explanation
Correct answer: A. The principle of substitution
Substitution explains why a buyer compares a property with an equally desirable available alternative. It supports sales comparison. The alternatives need not be identical, but a genuinely different benefit can justify a price difference.
Watch for this: An asking price for a non-comparable property does not establish a ceiling by itself.
Land value is $100,000. Replacement cost new of the improvements is $300,000, with $60,000 of accrued depreciation. What is the cost-approach indication?
A.$240,000
B.$400,000
C.$460,000
D.$340,000
Check answer and explanation
Correct answer: D. $340,000
First find the depreciated improvements: $300,000 minus $60,000 = $240,000. Then add the $100,000 land value to get $340,000. The deduction here applies to the improvements, not to the land value.
Watch for this: Do not omit the land, add depreciation or use the owner's original construction bill as today's cost new.
Rule: Cost approach; land plus depreciated improvements
Market evidence shows that a modest home benefits from its location among similar but higher-valued homes. What principle describes that upward influence?
A.Regression
B.Contribution
C.Progression
D.Anticipation
Check answer and explanation
Correct answer: C. Progression
Progression describes the upward influence on the lower-valued property. Regression describes the opposite effect on a higher-valued property among lower-valued alternatives. These are market relationships, not promises that every property will gain or lose a fixed amount.
Watch for this: Follow the direction of the influence on the subject home.
Rule: Principles of value; progression and regression
A builder spends $310,000 on construction, lists a home for $340,000 and sells it for $325,000. What can you conclude without more evidence about the sale conditions?
A.Construction cost establishes market value at $310,000
B.The $325,000 sale price is evidence, not proof of market value
C.The $340,000 asking price establishes current market value
D.All three amounts must represent the same kind of value
Check answer and explanation
Correct answer: B. The $325,000 sale price is evidence, not proof of market value
The figures describe different things: a construction outlay, an asking price and the amount paid. A sale can be strong evidence, but its exposure, motivation, financing and other conditions still matter when estimating market value.
Watch for this: Do not turn one observed transaction into the definition of market value.
A seller wants a broker who is lawfully assisting with a possible listing to compare similar properties and suggest an asking-price range. Which service best fits that purpose?
A.A title examination establishing ownership
B.A home inspection diagnosing building defects
C.A comparative market analysis for pricing
D.A mortgage preapproval assessing the buyer
Check answer and explanation
Correct answer: C. A comparative market analysis for pricing
A CMA supports a pricing discussion using comparable market information. It is not automatically a lender-acceptable appraisal or a guarantee of the eventual sale price. Authority to provide a CMA or BPO depends on applicable law; the Texas examples below explain that state's conditions.
Watch for this: A brokerage price estimate and an appraisal can use sales data without becoming the same service.
Rule: Methods of estimating value; CMA and BPO; Texas illustration: Occupations Code 1103.004(a)(2)
A hypothetical tax notice lists assessed value of $300,000 and taxable value of $250,000 after applicable exemptions. The annual rate is $1.60 per $100 of taxable value. With no other charges or adjustments, what is the tax?
A.$4,000
B.$4,800
C.$40,000
D.$400
Check answer and explanation
Correct answer: A. $4,000
Use the stated taxable value: $250,000 ÷ 100 × $1.60 = $4,000. Using assessed value before the exemptions would produce $4,800. The rate is invented for this exercise, not a statewide Texas rate or a current local quote.
Watch for this: A taxable value is a tax base, not necessarily the property's sale price or market value.
An appraiser estimates the current cost of a building offering the same utility as an older one, using modern materials and design rather than copying its original details. Which cost is being estimated?
A.Original historical cost
B.Reproduction cost new
C.Accrued depreciation
D.Replacement cost new
Check answer and explanation
Correct answer: D. Replacement cost new
Replacement seeks equivalent usefulness with current construction. Reproduction seeks a replica of the original. Neither is automatically the old purchase price or the final market value.
Watch for this: Same utility points to replacement. A copy of the original points to reproduction.
Rule: Cost approach; replacement versus reproduction
Many people want a certain home, but few can pay for it or qualify for financing. Which distinction matters when analyzing demand?
A.Desire alone creates effective purchasing power
B.Effective demand requires ability as well as desire to buy
C.A shortage of listings gives every buyer loan approval
D.Physical durability removes the need for purchasing power
Check answer and explanation
Correct answer: B. Effective demand requires ability as well as desire to buy
Interest alone does not supply the money to complete a purchase. Value analysis considers purchasing power alongside desire, as well as usefulness, scarcity and transferability. This question concerns economic demand, not whether a person likes the property.
Watch for this: An enthusiastic audience is not necessarily a group of financially able buyers.
Rule: Principles of value; effective demand and purchasing power
These use the hypothetical figures in the questions above. Choose the method first, then check the units. None of these examples is a property valuation or a current market quote.
$2,000 monthly rent multiplied by the monthly multiplier 120 = $240,000.
Each task links to its full question, explanation and source. NOI is net operating income; GRM is gross rent multiplier. A monthly multiplier cannot be applied to annual rent without conversion.
Optional supplement · Texas-specific applications
4 Texas rules to keep separate.
These examples require Texas form or statutory knowledge. They are not included in the National quiz or its score. If you only need National practice, you can skip to the study resources.
1
Calling a Texas CMA an appraisal
A Texas sales agent without appraiser credentials prepares a seller's pricing analysis in the ordinary course of the sponsoring broker's business. It carries the required statement and broker's name but is titled 'Appraisal.' Does it satisfy the estimated-price exemption in Section 1103.004(a)(2)?
A.Yes, the disclosure overrides the document title
B.Yes, the broker's name supplies appraiser credentials
C.No, the analysis must not be referred to as an appraisal
D.No, a sales agent may never prepare a written CMA
Check answer and explanation
Correct answer: C. No, the analysis must not be referred to as an appraisal
The exemption requires that the analysis not be called an appraisal. It must also be part of the broker's ordinary business and relate to an actual or potential property transaction or management. The required TREC statement does not cure an incompatible title, and retitling alone does not prove all other requirements are met.
Watch for this: Check the exemption's conditions and the separate TREC delivery requirements. One correct detail does not excuse another defect.
A Texas broker's written BPO includes a 10-point summary, in the broker's own words, that the estimate is not an appraisal. What must change to meet Rule 535.17(c)?
A.Only the size; paraphrasing is acceptable
B.Only the wording; any legible size is acceptable
C.Neither, if the broker signs the document
D.Both: use the prescribed text and at least 12-point font
Check answer and explanation
Correct answer: D. Both: use the prescribed text and at least 12-point font
The rule requires the prescribed statement to be part of the written document, reproduced verbatim in at least 12-point font. This version misses both requirements. Use the exact text in Rule 535.17(b), not this explanation as a replacement disclosure.
Watch for this: Twelve-point type does not fix altered wording, and accurate wording does not fix undersized type.
A Texas residence homestead already qualifies for the Section 23.23 limitation. Last year's appraised value was $300,000, this year's market value is $400,000, and there are no new improvements or other adjustments. What is the maximum appraised value under that limitation?
A.$300,000
B.$330,000
C.$360,000
D.$400,000
Check answer and explanation
Correct answer: B. $330,000
The cap calculation is $300,000 × 1.10 = $330,000, which is below the $400,000 market value. The limitation affects appraised value, not the market-value estimate or a guaranteed maximum tax bill. Eligibility, new improvements, exemptions and tax rates are separate issues.
Watch for this: Do not turn a limit on appraised value into a promise that taxes cannot rise by more than 10 percent.
Choosing a method for Texas property-tax appraisal
A Texas chief appraiser is determining a retail building's market value. What does Tax Code Section 23.0101 require?
A.Consider the three methods and use the most appropriate
B.Use cost for every commercial building in the district
C.Select the method with the highest resulting value
D.Use an equal average without considering reliability
Check answer and explanation
Correct answer: A. Consider the three methods and use the most appropriate
The chief appraiser must consider the cost, income and market data comparison methods and use the most appropriate. This is a Texas property-tax requirement, not the legal source of every National appraisal principle.
Watch for this: The statute calls for relevant method selection, not an automatic highest result or equal average.
Under Rule 535.17(d), a Texas sales agent may prepare, sign and present these estimates for the sponsoring broker. The document must be submitted in the broker's name, and the broker is responsible for it. A real estate license does not by itself confer appraiser credentials.
The official topic has 11 scored items. The counts below describe our 20-question sample, not a promise of which questions you will see. The Texas bonus examples are excluded.
Value & Appraisal: official allocation and free practice coverage
National subtopic
Exam items
Our questions
Concept of value
4
6
Appraisal process
2
3
Methods of estimating value and Broker Price Opinions (BPO)
5
11
A sample is not complete coverage of every possible question. See Pearson VUE's Salesperson outline, section III. Sources beside each answer explain the underlying principle. Texas-specific rules and examples link to their own authority.
Name the task before choosing a formula. Comparing recent sales, estimating the cost of improvements and valuing an income stream are different jobs. Property type is a clue, but the available evidence determines which approaches are useful.
Keep market value, an actual sale price and a tax figure separate. For calculations, write down the units first: annual net operating income, monthly gross rent, a decimal cap rate or tax dollars per $100. Most avoidable errors start by mixing those quantities.
Choose what to study next.
Start with the lesson behind a missed question, then try another problem without notes.
The Salesperson outline assigns 11 scored items: four on concepts of value, two on the appraisal process and five on valuation methods and BPOs. This 20-question set samples all three groups. It does not reproduce the official exam or cover every listed concept. Use the full outline to check gaps such as gross income multipliers and additional principles of value.
Are the Texas CMA and homestead questions part of my score?
No. The four Texas-law examples are separate. Your scored questions cover National principles, including general CMA and tax concepts, without testing Texas-specific font sizes, exemptions or appraisal-cap rules.
Do you always average the three appraisal approaches?
No. Reconciliation weighs the evidence rather than mechanically averaging three figures. A properly explained weighted average may be appropriate under the relevant guidance. An appraisal also need not develop every approach when it is not necessary for credible assignment results.
Is depreciation in an appraisal the same as an income-tax deduction?
No. Appraisal depreciation is a loss in the improvements' value from physical deterioration, functional problems or external influences. Tax depreciation is an accounting deduction governed by tax rules. A tax schedule does not tell you how much the market discounts a particular building.
Can a high score here tell me that I am ready to pass?
Not by itself. These original practice items have not been calibrated against the live exam. Explain why the other choices are wrong, then test the concept with an unfamiliar problem. Treat this score as feedback on this sample, not a readiness prediction.
Can I continue in the web app or download the phone app?
Yes. Use the Open the web app or Get the mobile app buttons. Selected app activities are free, and full access is paid. This website topic-quiz result does not transfer to your account. Sign in to save practice completed inside the app and keep working from there.
Sources and review notes
Reviewed September 6, 2026 for rules effective through September 5, 2026. The allocation follows Pearson VUE's Salesperson outline. Fannie Mae and federal banking guidance illustrate appraisal methods in their own lending contexts; they are not universal requirements for every property. California DRE material supports general concepts, not Texas licensing or tax law. This page is exam preparation, not advice for a transaction.
Use the source beside an answer to check the specific rule.
