Real Estate Practice Test

Real Estate Property Value & Appraisal Practice Questions

Property Value & Appraisal makes up 7 of every 50 questions on a Tigertest Real Estate practice test. Here are 10 of the 28 questions on it, each with the answer and the reason.

Updated 2026-11-10 by the Tigertest team. Weighted to the Pearson VUE national salesperson outline (2025), which matches PSI's. Your state portion is separate.

1. 1. A buyer paid $410,000 for a home, but comparable sales show it would most probably sell for $395,000 in a fair, open market. The $395,000 figure is the home's:

   • A.Cost
   • B.Market value
   • C.Assessed value
   • D.Price

   Answer: B. Market value is the most probable price in a competitive, open market with informed parties; $395,000 fits that definition. Price is what one buyer actually paid ($410,000), and cost is what it would take to build the improvements.

2. 2. Which of the following is NOT one of the four essential characteristics that must exist for property to have value?

   • A.Demand
   • B.Utility
   • C.Transferability
   • D.Location

   Answer: D. The four elements of value are demand, utility, scarcity and transferability (DUST). Location strongly influences value through area preference, but it is not one of the four essential elements.

3. 3. A buyer refuses to pay $450,000 for a home because an equally desirable home in the same neighborhood is available for $420,000. This illustrates the principle of:

   • A.Substitution
   • B.Contribution
   • C.Conformity
   • D.Anticipation

   Answer: A. Substitution says a buyer will not pay more for a property than the cost of acquiring an equally desirable substitute. Contribution concerns the value a single component adds, not a choice between competing properties.

4. 4. Values in a subdivision of similar ranch homes stay highest when new homes are built in a compatible style, size and quality. Which principle does this describe?

   • A.Competition
   • B.Regression
   • C.Conformity
   • D.Plottage

   Answer: C. Conformity holds that value is maximized when properties are reasonably similar in style, use and quality. Regression describes what happens to one superior home among inferior ones, not the neighborhood-wide benefit of similarity.

5. 5. An owner spends $40,000 to install an in-ground pool, but an appraiser finds the pool raises the home's market value by only $15,000. Which principle explains this?

   • A.Progression
   • B.Highest and best use
   • C.Contribution
   • D.Substitution

   Answer: C. Under contribution, a component is worth what it adds to market value, not what it cost to install. Substitution compares alternative properties a buyer could choose and does not measure the value of one improvement.

6. 6. A 5,000-square-foot luxury home is built in a neighborhood of modest 1,400-square-foot homes. The luxury home's value will most likely be affected by:

   • A.Regression
   • B.Assemblage
   • C.Progression
   • D.Plottage

   Answer: A. Regression means the value of a superior property is pulled down by surrounding inferior properties. Progression is the opposite case, where a modest home gains from better homes around it.

7. 7. A small, well-kept older cottage sits in a neighborhood where most homes are large new luxury residences. The cottage's value is likely to benefit from:

   • A.Regression
   • B.Contribution
   • C.Functional obsolescence
   • D.Progression

   Answer: D. Progression means a lesser property gains value from proximity to better properties. Regression would apply to the luxury homes, whose values are pulled down by inferior neighbors, not to the cottage.

8. 8. An appraiser finds that a vacant lot, zoned for offices, would produce the highest land value if developed with a small office building. This conclusion identifies the lot's:

   • A.Conforming use
   • B.Highest and best use
   • C.Market price
   • D.Legally nonconforming use

   Answer: B. Highest and best use is the legally permissible, physically possible, financially feasible and maximally productive use of a site. A nonconforming use is an older use that zoning no longer permits, which does not describe a planned, permitted office building.

9. 9. Home prices near a planned commuter rail station begin rising two years before construction starts. Which principle of value does this illustrate?

   • A.Contribution
   • B.Anticipation
   • C.Substitution
   • D.Conformity

   Answer: B. Anticipation says value is the present worth of expected future benefits, so prices rise when buyers expect the station to add convenience. Substitution concerns choosing among equally desirable alternatives and does not explain a rise before anything is built.

10. 10. A developer buys two adjoining lots worth $100,000 each and combines them into one parcel now worth $250,000. The $50,000 increase in value is called:

    • A.Contribution
    • B.Assemblage
    • C.Progression
    • D.Plottage

    Answer: D. Plottage is the added value created when parcels are combined into a more useful whole. Assemblage is the act or process of combining the parcels, not the resulting increase in value.