Certified Residential Appraiser Practice Exam

What type of study analyzes the market demand for a specific class of property?

1. Investment Analysis

2. Feasibility Analysis

3. Marketability Study

4. Economic Base Analysis

The correct answer is: Marketability Study

A marketability study is designed specifically to assess the demand for a particular class of property within the marketplace. It involves analyzing various factors such as buyer demographics, trends, local economic conditions, and competing properties. This type of study helps appraisers and real estate professionals understand how well a property is likely to perform in terms of sales or rentals based on current market conditions. By focusing on market demand, a marketability study can provide insights into the viability of a property type in a specific area, making it crucial for developers, investors, and lenders to gauge whether their investment will be successful. The study examines the characteristics of the subject property and identifies potential buyers or tenants, which is essential for making informed decisions about pricing and marketing strategies. This distinction is important because while investment analysis evaluates the potential return on investment of a property, feasibility analysis assesses whether a project is financially and operationally viable. Economic base analysis looks at the economic drivers of a region rather than focusing on a specific property type's market demand. Therefore, the choice of a marketability study is the most appropriate for analyzing market demand for a specific class of property.