IBBI Valuation Exam – MCQ’s - Land & Building

Sample Multiple Choice Questions (with Answers and Explanations)

Q1. Which Act governs the registration of property documents in India?

A) Transfer of Property Act, 1882
B) Indian Contract Act, 1872
C) Registration Act, 1908
D) Real Estate Regulation Act, 2016
Answer: C) Registration Act, 1908
Explanation: It outlines the procedure and legal requirements for registering property-related
documents to ensure valid title transfer.

Q2. What is the most appropriate valuation method for land in an active urban real estate market?
A) Cost Approach
B) Income Approach
C) Market Approach
D) Residual Method
Answer: C) Market Approach
Explanation: It uses recent sales of similar properties to assess current market value and is ideal
for active property markets.

Q3. Which valuation method is best suited for an office building that earns monthly rent?
A) Market Approach
B) Income Approach
C) Cost Approach
D) Profit Method
Answer: B) Income Approach
Explanation: This method capitalizes the net income from the property to estimate its value. It is
most appropriate for income-generating assets.

Q4. Which law governs the levy of stamp duty on property transactions in India?
A) Indian Evidence Act
B) Indian Stamp Act, 1899
C) Transfer of Property Act
D) Companies Act
Answer: B) Indian Stamp Act, 1899
Explanation: This Act regulates the collection of stamp duty on documents such as sale deeds
and lease agreements.

Q5. Which authority regulates registered valuers in India under the Companies Act?
A) SEBI
B) RERA
C) RBI
D) IBBI
Answer: D) IBBI
Explanation: The Insolvency and Bankruptcy Board of India is the regulatory body for registered
valuers, governed under the Companies Act, 2013 and Valuer Rules, 2017.

Q6. What does FAR stand for in the context of building development?
A) Floor Area Ratio
B) Final Allocation Rate
C) Floor Adjustment Ratio
D) Final Area Report
Answer: A) Floor Area Ratio
Explanation: FAR is the ratio of total built-up area permitted to the plot size, regulated by
development authorities.

Q7. In the Cost Approach, which of the following is subtracted from the replacement cost to arrive at
value?
A) Interest Rate
B) Rental Yield
C) Depreciation
D) Market Value
Answer: C) Depreciation
Explanation: The Cost Approach estimates value by subtracting depreciation (physical,
functional, economic) from the cost of constructing a similar property.

Q8. Which of the following documents legally proves ownership of land?

A) Power of Attorney
B) Agreement to Sell
C) Sale Deed
D) Letter of Intent
Answer: C) Sale Deed
Explanation: A registered sale deed is the most legally recognized document to prove ownership
of property.

Q9. Which of the following is not a type of depreciation used in valuation?

A) Physical Deterioration
B) Functional Obsolescence
C) Economic Obsolescence
D) Inflationary Depreciation
Answer: D) Inflationary Depreciation
Explanation: Inflation is a financial factor, not a type of property depreciation. The other three
are recognized depreciation types in valuation.

Q10. Which principle suggests that the value of a property is influenced by surrounding properties?
A) Principle of Substitution
B) Principle of Contribution
C) Principle of Conformity
D) Principle of Change
Answer: C) Principle of Conformity
Explanation: This principle states that a property's value is enhanced when it conforms in style
and use to surrounding properties.

Q11. What is the key assumption of the Principle of Substitution in valuation?

A) A property must match surrounding structures
B) Income from a property must be constant
C) A buyer will not pay more than the cost of a substitute
D) Value increases with time
Answer: C) A buyer will not pay more than the cost of a substitute
Explanation: This principle assumes that rational buyers won’t pay more for a property than the
cost to acquire a similar one with equal utility.

Q12. Which of the following is considered a direct cost in real estate valuation?
A) Architect’s Fees
B) Developer’s Profit
C) Building Contractor’s Charges
D) Interest on Capital
Answer: C) Building Contractor’s Charges
Explanation: Direct costs include materials and labor used in construction. Contractor charges
fall under this category, unlike fees or profits which are indirect.

Q13. What is the primary document examined to verify land ownership and title?
A) Mutation Certificate
B) Encumbrance Certificate
C) Title Deed / Sale Deed
D) Patta
Answer: C) Title Deed / Sale Deed
Explanation: The Title Deed or Sale Deed is the legally binding proof of ownership and is critical
in any valuation or transaction.

Q14. Which is not a method of valuation under Rule 18 of Companies (Registered Valuers and
Valuation) Rules, 2017?
A) Income Method
B) Market Method
C) Cost Method
D) Survey Method
Answer: D) Survey Method
Explanation: The three recognized methods are Market, Income, and Cost. “Survey Method” is
not listed as a formal valuation method.

Q15. Which principle states that the value of a component is dependent on its contribution to the
whole property?
A) Principle of Balance
B) Principle of Substitution
C) Principle of Contribution
D) Principle of Change
Answer: C) Principle of Contribution
Explanation: This principle holds that an element’s value is based on what it adds (or detracts)
from the value of the whole property.

Q16. What does the term “encumbrance” refer to in real estate?

A) Tax exemption
B) Right to sublease
C) Legal liability or claim on the property
D) Area measurement error
Answer: C) Legal liability or claim on the property
Explanation: An encumbrance is any claim (like a mortgage, lien, or lease) that limits the owner’s
title or use of the property.

Q17. What is the usual basis of value used for fair market transactions?
A) Investment Value
B) Distress Value
C) Fair Value
D) Market Value
Answer: D) Market Value
Explanation: Market Value is the most commonly used basis in fair market transactions. It
assumes a willing buyer and seller, acting prudently.

Q18. Which of the following is an indirect cost in the valuation of a building?

A) Steel and cement
B) Labor charges
C) Architect’s fees
D) Excavation cost
Answer: C) Architect’s fees
Explanation: Indirect costs are those not directly tied to the physical construction, such as
professional fees, approvals, and taxes.

Q19. Which document is checked to ensure there are no legal dues on the property?
A) Title Deed
B) Encumbrance Certificate
C) Patta
D) Development Agreement
Answer: B) Encumbrance Certificate
Explanation: The EC lists all transactions and charges registered on the property. A clean EC
ensures no legal or financial burdens.

Q20. What is the Residual Method of Valuation mainly used for?

A) Heritage buildings
B) Vacant agricultural land
C) Land for development projects
D) Properties under dispute
Answer: C) Land for development projects
Explanation: The Residual Method is used when land is to be developed. It subtracts
development and profit costs from the final value to arrive at land value.

Q21. Which of the following methods of valuation is most commonly used for residential
apartments in a city?
A) Income Approach
B) Cost Approach
C) Market Approach
D) Development Approach
Answer: C) Market Approach
Explanation: Residential properties are usually valued based on recent comparable sales in the
vicinity, making the Market Approach most suitable.

Q22. Which document proves that a building plan is approved by the municipal authority?
A) Completion Certificate
B) Commencement Certificate
C) Sanctioned Building Plan
D) Title Deed
Answer: C) Sanctioned Building Plan
Explanation: The sanctioned plan is issued by the municipal or development authority and
confirms that the construction is legally approved.
Q23. What is Net Operating Income (NOI) in the context of property valuation?
A) Rent + Interest
B) Gross Rent – Property Tax
C) Gross Income – Operating Expenses
D) Net Profit – Depreciation
Answer: C) Gross Income – Operating Expenses
Explanation: NOI is the income a property generates after operating expenses, used in the
Income Approach for valuation.

Q24. Which concept implies that a property's value is influenced by the anticipation of future
benefits?
A) Principle of Progression
B) Principle of Change
C) Principle of Anticipation
D) Principle of Conformity
Answer: C) Principle of Anticipation
Explanation: This principle states that the current value of a property is influenced by expected
future income or utility.

Q25. Which of the following is a functional obsolescence?

A) A building with peeling paint
B) A warehouse with poor location
C) A house with only one bathroom for four bedrooms
D) A structure damaged by flood
Answer: C) A house with only one bathroom for four bedrooms
Explanation: Functional obsolescence is the loss in value due to outdated design or poor layout,
reducing utility despite physical soundness.

Q26. What does the ‘plinth area’ of a building refer to?

A) Total carpet area
B) Built-up area at the floor level
C) Super built-up area
D) Terrace and balcony area
Answer: B) Built-up area at the floor level
Explanation: Plinth area is the area covered by the building at the floor level, including internal
and external walls but excluding open spaces.

Q27. Which term denotes the percentage of the total plot area that can be built upon?
A) Built-up Ratio
B) FAR
C) Ground Coverage
D) Density Index
Answer: C) Ground Coverage
Explanation: Ground coverage is the ratio of the built-up area on the ground floor to the total
plot area, expressed as a percentage.

Q28. What is the term for additional built-up area permitted beyond the base FAR, usually for a fee?
A) Leased Floor Area
B) Development Premium
C) Transferable Development Right (TDR)
D) FSI
Answer: C) Transferable Development Right (TDR)
Explanation: TDR is a tool allowing developers to buy additional FSI (Floor Space Index) rights
from another plot owner or authority for additional construction.

Q29. Which of the following would be considered economic obsolescence?

A) Leakage in plumbing
B) Lack of car parking
C) Introduction of a waste dumping yard nearby
D) Old-fashioned interior design
Answer: C) Introduction of a waste dumping yard nearby
Explanation: Economic obsolescence is caused by external factors that negatively impact a
property’s value, like undesirable developments in the neighborhood.

Q30. What is the typical sequence in a valuation process?

A) Inspection → Analysis → Purpose → Report
B) Purpose → Inspection → Analysis → Report
C) Report → Purpose → Analysis → Inspection
D) Analysis → Report → Purpose → Inspection
Answer: B) Purpose → Inspection → Analysis → Report
Explanation: A proper valuation begins with identifying the purpose, followed by property
inspection, analysis of data, and finally, reporting the valuation.

Q31. Which of the following is not required for a Registered Valuer as per IBBI regulations?
A) Net worth of ₹1 crore
B) Membership with a Registered Valuer Organisation
C) Passing the valuation examination
D) Having prescribed educational qualifications
Answer: A) Net worth of ₹1 crore
Explanation: There is no net worth requirement. However, one must pass the exam, have
qualifications, and be a member of an RVO.
Q32. What does FSI stand for in building construction?
A) Floor Surface Index
B) Floor Space Index
C) Fixed Site Investment
D) Floor Size Indicator
Answer: B) Floor Space Index
Explanation: FSI (or FAR) defines how much floor space can be built relative to the plot area.

Q33. The Income Approach is most applicable for valuing which of the following?
A) Open Land
B) Owner-occupied House
C) Rented Shopping Mall
D) Heritage Building
Answer: C) Rented Shopping Mall
Explanation: Income Approach is used when a property generates regular income like rent.

Q34. What is the unit of land measurement commonly used in West Bengal?
A) Biswa
B) Bigha
C) Acre
D) Kanal
Answer: B) Bigha
Explanation: Bigha is a traditional unit used in West Bengal, although the size can vary by region.

Q35. Which method estimates land value by subtracting construction cost and developer’s margin
from the anticipated sale price?
A) Cost Method
B) Income Method
C) Development Method
D) Comparison Method
Answer: C) Development Method
Explanation: Development Method or Residual Method is used for properties with potential
development value.

Q36. Which of the following is a part of carpet area in a flat?

A) Lift shaft
B) Balcony
C) Bathroom
D) Staircase
Answer: C) Bathroom
Explanation: Carpet area includes internal usable spaces like rooms, kitchen, bathroom, etc., but
excludes balcony and common areas.
Q37. What does a Completion Certificate signify?
A) The building plan has been sanctioned
B) Final property tax has been paid
C) Construction is complete as per approved plan
D) Title has been transferred
Answer: C) Construction is complete as per approved plan
Explanation: Issued by municipal authorities, it confirms the building complies with sanctioned
plans and bye-laws.

Q38. Which of the following documents is necessary to check zoning regulations for a plot?
A) Encumbrance Certificate
B) Master Plan / Zonal Development Plan
C) Completion Certificate
D) Sale Deed
Answer: B) Master Plan / Zonal Development Plan
Explanation: These documents provide land-use classifications and allowable developments as
per urban planning norms.

Q39. What does the term yield in real estate usually refer to?
A) Construction cost per sq.ft
B) Stamp duty on transaction
C) Rate of return on investment
D) Appreciation over time
Answer: C) Rate of return on investment
Explanation: Yield indicates how much income is generated from an investment property, usually
expressed as a percentage of its value.

Q40. Which Act regulates urban land ceiling and regulation in India (historically)?
A) Urban Land (Ceiling and Regulation) Act, 1976
B) Urban Planning Act, 1954
C) Town and Country Planning Act
D) Urban Settlement Act
Answer: A) Urban Land (Ceiling and Regulation) Act, 1976
Explanation: This Act aimed to prevent hoarding of urban land, although it has been repealed in
many states.

Q41. In which valuation approach is the concept of “Replacement Cost” used?

A) Market Approach
B) Cost Approach
C) Income Approach
D) Development Approach
Answer: B) Cost Approach
Explanation: The Cost Approach estimates the value of a building by calculating the
replacement/reproduction cost minus depreciation.

Q42. What is the term for the difference between the land value and the value of the entire
property including the building?
A) Net Worth
B) Gross Margin
C) Building Value
D) Depreciated Replacement Cost
Answer: C) Building Value
Explanation: The value of the entire property minus land value gives you the value of the
building.

Q43. Which document confirms that a property has no legal claims or mortgages against it?
A) Sale Deed
B) Khata Certificate
C) Encumbrance Certificate
D) Building Plan Approval
Answer: C) Encumbrance Certificate
Explanation: An EC is a legal document that proves the property is free from monetary or legal
liabilities.

Q44. Which of the following is NOT a feature of the Market Approach to valuation?
A) Relies on comparable sales
B) Suitable in active market
C) Uses future income
D) Based on current market trends
Answer: C) Uses future income
Explanation: Market Approach does not use income data. Future income is used in the Income
Approach.

Q45. What is obsolescence in the context of property valuation?

A) Increase in value due to renovation
B) Change in location
C) Loss in value due to outdated design or external factors
D) Variation in rental yield
Answer: C) Loss in value due to outdated design or external factors
Explanation: Obsolescence reduces the value of a property without any physical damage. It can
be functional or economic.
Q46. What is typically excluded from the cost estimation under the Cost Approach?
A) Cost of materials
B) Labor charges
C) Profit margin of developer
D) Sale price of comparable property
Answer: D) Sale price of comparable property
Explanation: Cost Approach doesn't use sale prices; it estimates construction cost minus
depreciation. Comparable prices are used in Market Approach.

Q47. Which principle in valuation refers to the idea that similar properties should sell for similar
prices?
A) Principle of Conformity
B) Principle of Change
C) Principle of Substitution
D) Principle of Balance
Answer: C) Principle of Substitution
Explanation: This principle says a rational buyer won’t pay more for a property than a similar
alternative.

Q48. What is a Title Deed?

A) Building Plan
B) Proof of residence
C) Document proving ownership of property
D) Rent Agreement
Answer: C) Document proving ownership of property
Explanation: A Title Deed is the primary legal document showing the transfer and ownership of
property.

Q49. In the Income Approach, which of the following is most crucial?

A) Cost of construction
B) Comparable sale prices
C) Rental income and expenses
D) FAR norms
Answer: C) Rental income and expenses
Explanation: The Income Approach is based on the income the property can generate,
considering operational expenses.

Q50. What is meant by “highest and best use” in valuation?

A) The most profitable use that is legally permissible and physically possible
B) Use suggested by local broker
C) Use according to owner’s desire
D) Use that fetches the highest taxes
Answer: A) The most profitable use that is legally permissible and physically possible
Explanation: “Highest and Best Use” is a standard valuation principle referring to the use of land
or property that yields the highest return.

Q51. Which principle suggests that improvements to a property have diminishing returns beyond a
certain point?
A) Principle of Anticipation
B) Principle of Contribution
C) Principle of Balance
D) Principle of Increasing Returns
Answer: C) Principle of Balance
Explanation: This principle states that the maximum value is achieved when improvements are
balanced and not excessive for the location or type of property.

Q52. What is carpet area?

A) Total area including walls and balcony
B) Built-up area minus bathroom
C) Area within internal walls usable by occupant
D) Plot area
Answer: C) Area within internal walls usable by occupant
Explanation: Carpet area is the net usable floor area inside the apartment, excluding walls,
balconies, and common areas.

Q53. Which of the following is included in super built-up area?

A) Only staircase
B) Only private area
C) Private area + proportionate share of common areas
D) Garden area
Answer: C) Private area + proportionate share of common areas
Explanation: Super built-up area includes the actual usable area (carpet) plus a share in
corridors, lifts, stairs, etc.

Q54. What is the valuation date in a valuation report?

A) Date of physical inspection
B) Date of report submission
C) Date as on which value is determined
D) Date of title deed
Answer: C) Date as on which value is determined
Explanation: The valuation date is the specific point in time for which the value is assessed,
regardless of when the report is prepared.
Q55. What is external obsolescence?
A) Value loss due to internal design flaws
B) Deterioration of paint
C) Loss in value due to changes in surrounding environment
D) Aging of building structure
Answer: C) Loss in value due to changes in surrounding environment
Explanation: External (economic) obsolescence is caused by outside factors like pollution, noisy
roads, or new regulations.

Q56. A valuer must comply with which set of standards for valuation assignments in India?
A) IFRS
B) Indian Accounting Standards
C) Valuation Standards issued by IBBI
D) AS-10
Answer: C) Valuation Standards issued by IBBI
Explanation: IBBI has notified valuation standards that all registered valuers must follow under
Rule 18 of the Valuers Rules.

Q57. Which of the following does not affect land value directly?
A) Location
B) Government zoning regulations
C) Shape of plot
D) Interior decoration
Answer: D) Interior decoration
Explanation: Land value is affected by external and structural factors. Interior finishes impact
building value, not land value.

Q58. Which method is typically used for valuation of schools, hospitals, and public buildings?
A) Market Approach
B) Income Approach
C) Cost Approach
D) Residual Method
Answer: C) Cost Approach
Explanation: Such properties often lack direct income or comparable sales, so valuation is based
on construction cost minus depreciation.

Q59. In the valuation process, what does inspection help determine?

A) Title ownership
B) Past sale history
C) Physical condition and locational attributes
D) Stamp duty payment
Answer: C) Physical condition and locational attributes
Explanation: Inspection allows the valuer to assess the physical features, maintenance,
occupancy, and neighborhood characteristics.

Q60. Which of the following would be most suitable for agricultural land valuation?
A) Development Method
B) Income Approach
C) Cost Approach
D) Profit Method
Answer: B) Income Approach
Explanation: Agricultural land is valued based on its productive potential and income it can
generate, making the Income Approach suitable.

Q61. What is the key assumption of the Profit Method of valuation?

A) Income from rent is stable
B) Property can be developed for commercial use
C) Property generates profit from business conducted on it
D) Market prices are volatile
Answer: C) Property generates profit from business conducted on it
Explanation: The Profit Method is used when the value of the property depends on profits
earned from business activity carried out on it (e.g., hotels, cinemas).

Q62. Which of the following is not a component of depreciation?

A) Physical deterioration
B) Functional obsolescence
C) External obsolescence
D) Registration charges
Answer: D) Registration charges
Explanation: Depreciation affects the value of the structure over time. Registration charges are
transactional and not related to depreciation.

Q63. The Fair Market Value is defined as:

A) The price fixed by the government
B) The average price of similar properties
C) The price at which a willing buyer and seller would transact in an open market
D) Cost of construction
Answer: C) The price at which a willing buyer and seller would transact in an open market
Explanation: Fair market value reflects what a knowledgeable and willing buyer would pay to a
knowledgeable and willing seller in a competitive market.

Q64. Which technique is used to estimate the value of land by deducting development costs and
builder’s profit from the sale price of developed plots?
A) Income Approach
B) Residual Land Value Method
C) Rent Capitalization Method
D) Contingent Valuation Method
Answer: B) Residual Land Value Method
Explanation: Residual method is used when land is to be developed; value is found by
subtracting all costs from the gross development value.

Q65. The rate of capitalization in the Income Approach is inversely proportional to:
A) Risk
B) Net operating income
C) Present value
D) Capital value
Answer: D) Capital value
Explanation: Capital value = Net Operating Income / Capitalization Rate. A higher rate results in
lower value and vice versa.

Q66. What is salvage value?

A) Cost of repairs
B) Land value
C) Value of an asset after useful life
D) Depreciated replacement cost
Answer: C) Value of an asset after useful life
Explanation: Salvage value is the estimated residual value of a building or structure at the end of
its useful life.

Q67. Plinth area refers to:

A) Carpet area plus wall thickness
B) Built-up area including walls
C) Super built-up area
D) Usable open terrace
Answer: A) Carpet area plus wall thickness
Explanation: Plinth area includes the carpet area and the thickness of the walls at the floor level.

Q68. A property located on a corner plot usually has:

A) Lower value due to more road frontage
B) No effect on value
C) Higher value due to better access and visibility
D) Depreciated cost
Answer: C) Higher value due to better access and visibility
Explanation: Corner plots generally command a premium due to visibility, accessibility, and dual
road frontage.
Q69. Contingent liabilities of a property:
A) Are always included in valuation
B) May impact valuation depending on likelihood and materiality
C) Are ignored in valuation
D) Are considered only for income-generating properties
Answer: B) May impact valuation depending on likelihood and materiality
Explanation: Contingent liabilities (like pending litigations) are considered if they significantly
affect marketability or future income.

Q70. What is the primary source of information for sales comparison under the Market Approach?
A) Owner’s statement
B) Municipal tax receipts
C) Registered sale deeds and circle rates
D) Capital gains statement
Answer: C) Registered sale deeds and circle rates
Explanation: Market Approach relies on actual sale transactions recorded in sale deeds, and
official guideline/circle rates for comparison.

Q71. Which approach is typically used for valuation of heritage buildings or religious properties?
A) Income Approach
B) Cost Approach
C) Market Approach
D) Development Approach
Answer: B) Cost Approach
Explanation: Since such properties do not generate income or have a market value, cost
approach is most appropriate to assess their value based on construction cost and depreciation.

Q72. What does FSI stand for in real estate development?

A) Fixed Sale Index
B) Floor Size Index
C) Floor Space Index
D) Final Sale Intimation
Answer: C) Floor Space Index
Explanation: FSI (also known as FAR – Floor Area Ratio) is the ratio of built-up area to the total
plot area.

Q73. Which of the following is a non-physical form of obsolescence?

A) Cracks in walls
B) Outdated floor plan layout
C) Roof leakage
D) Settlement of foundation
Answer: B) Outdated floor plan layout
Explanation: Functional obsolescence includes non-physical deficiencies like outdated layouts or
inadequate design relative to current needs.

Q74. The unit rate method of valuation is most suitable when:

A) Land is irregular
B) Market data is unavailable
C) Construction is recent and standard
D) Income is erratic
Answer: C) Construction is recent and standard
Explanation: Unit rate method uses prevailing per sq.ft construction cost and is suitable for
standard, recently constructed properties.

Q75. The discount rate used in DCF analysis reflects:

A) Inflation only
B) Tax benefits
C) Risk and time value of money
D) Depreciation
Answer: C) Risk and time value of money
Explanation: The discount rate in discounted cash flow (DCF) analysis captures the risk of cash
flows and the time value of money.

Q76. The Income Approach is not suitable for:

A) Residential flats for self-use
B) Leased commercial offices
C) Shopping malls
D) Rental apartments
Answer: A) Residential flats for self-use
Explanation: Self-occupied residential flats do not generate income, hence Income Approach
cannot be applied effectively.

Q77. Which of the following is a valuation premise?

A) Transfer fee
B) Replacement cost
C) Highest and Best Use
D) Carpet area
Answer: C) Highest and Best Use
Explanation: Premise of valuation includes assumptions like going concern, orderly sale, highest
and best use, etc.
Q78. The Valuation Date refers to:
A) Date of sale
B) Date of site inspection
C) Effective date for valuation opinion
D) Date of agreement
Answer: C) Effective date for valuation opinion
Explanation: The valuation date is the date as of which the value opinion is applicable, and may
be different from inspection or reporting dates.

Q79. Which is a direct cost in construction?

A) Architect fees
B) Legal charges
C) Foundation excavation
D) Loan interest
Answer: C) Foundation excavation
Explanation: Direct costs are related to construction activity on site like labor, materials, and
excavation, unlike soft costs.

Q80. The term capitalization in valuation means:

A) Writing off an expense
B) Estimating cost
C) Converting income to value
D) Increasing building height
Answer: C) Converting income to value
Explanation: Capitalization involves converting expected income from a property into its present
value using a cap rate.

Q81. What is the primary factor influencing the location value of land?
A) Shape of the land
B) Size of the building
C) Proximity to infrastructure and amenities
D) Cost of construction
Answer: C) Proximity to infrastructure and amenities
Explanation: Location value is primarily driven by how close the property is to roads, transport
hubs, markets, schools, etc.

Q82. The profit method of valuation is typically used for:

A) Government land
B) Agricultural land
C) Hotels and cinema halls
D) Vacant land
Answer: C) Hotels and cinema halls
Explanation: Profit method is used when property value depends on business profits like hotels,
theaters, petrol pumps, etc.

Q83. A valuer’s responsibility under the Companies (Registered Valuers and Valuation) Rules, 2017
includes:
A) Quoting lowest fees
B) Advertising aggressively
C) Maintaining confidentiality
D) Providing guarantees for value
Answer: C) Maintaining confidentiality
Explanation: As per the code of conduct, a valuer must maintain confidentiality, avoid conflict of
interest, and maintain independence.

Q84. The scrap value of a building refers to:

A) Market value
B) Salvageable material value at end of life
C) Land value
D) Fair market rent
Answer: B) Salvageable material value at end of life
Explanation: Scrap value is the residual value of materials (like steel or bricks) after the building's
useful life ends.

Q85. In valuation terms, Easement rights are:

A) Ownership of property
B) Right to use someone else's land for a specific purpose
C) Tax rights
D) Shareholding rights
Answer: B) Right to use someone else's land for a specific purpose
Explanation: Easements are legal rights to use another person’s land, such as for access or
utilities.

Q86. Which valuation approach is commonly used in insurance valuations?

A) Income Approach
B) Cost Approach
C) Market Approach
D) Residual Approach
Answer: B) Cost Approach
Explanation: Insurance valuation focuses on replacement/reproduction cost, hence cost
approach is used.
Q87. A plot of land is rectangular, 60 m by 30 m. What is the area in square meters?
A) 1800 sq. m
B) 900 sq. m
C) 1200 sq. m
D) 2000 sq. m
Answer: A) 1800 sq. m
Explanation: Area = Length × Width = 60 × 30 = 1800 square meters.

Q88. What is the meaning of latent defect?

A) Visible damage
B) Legal ownership defect
C) Hidden construction defect not easily visible
D) Defect in location
Answer: C) Hidden construction defect not easily visible
Explanation: Latent defects are hidden flaws in construction or structure that may not be
immediately apparent.

Q89. When a valuer uses market data from recently sold comparable properties, he is using:
A) Cost approach
B) Income approach
C) Comparative approach
D) Profit method
Answer: C) Comparative approach
Explanation: This method involves comparing similar recently sold properties to estimate value.

Q90. What is reversionary value?

A) Scrap value after demolition
B) Value receivable on property after lease expiry
C) Construction cost
D) Rental income
Answer: B) Value receivable on property after lease expiry
Explanation: Reversionary value is the future value of a property after the lease term ends and it
can be re-let or sold.

Q91. Which of the following best defines freehold land?

A) Land with limited lease period
B) Land owned by government
C) Land with perpetual ownership without restrictions
D) Land under tenant's control
Answer: C) Land with perpetual ownership without restrictions
Explanation: Freehold ownership implies full and absolute ownership of land, as opposed to
leasehold which is time-bound.
Q92. Which principle assumes that a prudent buyer will not pay more for a property than the cost to
acquire a similar substitute?
A) Principle of Balance
B) Principle of Substitution
C) Principle of Anticipation
D) Principle of Contribution
Answer: B) Principle of Substitution
Explanation: This principle forms the basis of many valuation methods, especially the market and
cost approaches.

Q93. Which of the following does not affect depreciation in the cost approach?
A) Physical wear and tear
B) Functional obsolescence
C) Land value
D) External obsolescence
Answer: C) Land value
Explanation: Depreciation is applied to improvements (buildings), not to land. Land is not
depreciated.

Q94. In which situation is the residual method of valuation typically used?

A) When valuing agricultural land
B) When valuing a factory building
C) When assessing potential of redevelopment land
D) For rental income properties
Answer: C) When assessing potential of redevelopment land
Explanation: Residual method calculates land value by subtracting development costs and profits
from the anticipated value of the completed project.

Q95. What does a negative easement refer to?

A) A restriction preventing certain actions on the land
B) A license to construct
C) A tax liability
D) An error in mutation
Answer: A) A restriction preventing certain actions on the land
Explanation: A negative easement prohibits the servient landowner from doing something that
would otherwise be lawful (e.g., building that blocks light).

Q96. A comparable sale used in valuation should be:

A) Located in a different city
B) From a different asset class
C) Similar in location, size, and time
D) Older than 10 years
Answer: C) Similar in location, size, and time
Explanation: For accurate valuation using the market approach, the property compared should
be similar in key characteristics.

Q97. Which method uses the net operating income and capitalization rate?
A) Cost method
B) Sales comparison method
C) Income capitalization method
D) Residual method
Answer: C) Income capitalization method
Explanation: The capitalization method converts net income into value using a capitalization rate
(NOI ÷ Cap Rate = Value).

Q98. What is plinth area?

A) Built-up area excluding walls
B) Total plot area
C) Built-up area measured at floor level including walls
D) Carpet area
Answer: C) Built-up area measured at floor level including walls
Explanation: Plinth area is the area measured at the floor level of the building, including walls,
but excluding open spaces.

Q99. Time adjustment in a comparable sale is used when:

A) The sale property is smaller in size
B) The sale took place at a different point in time
C) It is located in a rural area
D) It is an under-construction property
Answer: B) The sale took place at a different point in time
Explanation: Adjusting for time ensures that the market appreciation or depreciation is factored
into the valuation.

Q100. Which term refers to the highest legal interest one can hold in real estate?
A) Leasehold
B) Freehold
C) Mortgage
D) Easement
Answer: B) Freehold
Explanation: Freehold is the strongest form of ownership with full rights to use, transfer, and
inherit.
Q101. In valuation, the cost approach is most suitable when:
A) The property generates consistent rental income
B) Comparable sales data is abundant
C) The building is new or special purpose
D) Property is under litigation
Answer: C) The building is new or special purpose
Explanation: The cost approach is appropriate for unique or new buildings where comparables or
income data are not available.

Q102. Which of the following would be considered functional obsolescence?

A) A building damaged by fire
B) A property next to a factory
C) A building with outdated design
D) Road widening reducing land size
Answer: C) A building with outdated design
Explanation: Functional obsolescence occurs when a structure becomes less desirable due to
outdated features or layout.

Q103. Highest and Best Use (HBU) must meet all the following except:
A) Legally permissible
B) Financially unviable
C) Physically possible
D) Maximally productive
Answer: B) Financially unviable
Explanation: HBU must be legally permissible, physically possible, financially feasible, and
maximally productive.

Q104. External obsolescence is generally:

A) Curable
B) Caused by internal defects
C) Due to economic factors outside the property
D) Due to structural problems
Answer: C) Due to economic factors outside the property
Explanation: External obsolescence arises from changes in surrounding environments such as
pollution, zoning changes, etc., and is usually incurable.

Q105. What is Net Present Value (NPV) used for in valuation?

A) To calculate construction cost
B) To assess market value
C) To estimate future cash flows discounted to present
D) To determine depreciation
Answer: C) To estimate future cash flows discounted to present
Explanation: NPV is a financial metric used to value investment opportunities by discounting
future cash flows to present value.

Q106. A valuation report issued by a Registered Valuer under IBBI should include all except:
A) Valuer's registration number
B) Inspection certificate
C) Valuation methodology
D) Date of valuation
Answer: B) Inspection certificate
Explanation: An inspection certificate is not mandatory in the report; however, details of
inspection and methodology used are essential.

Q107. The income approach in valuation is most appropriate for:

A) Vacant land
B) Industrial property
C) Owner-occupied bungalow
D) Leased office building
Answer: D) Leased office building
Explanation: Income approach is used where income generation is the primary driver of value,
like leased properties.

Q108. What does the term of years absolute refer to?

A) Leasehold estate for fixed period
B) Ownership with no conditions
C) Right of way
D) Mortgaged land
Answer: A) Leasehold estate for fixed period
Explanation: A term of years absolute is a type of leasehold estate that lasts for a fixed duration.

Q109. A valuer must maintain records of valuation assignments for at least:

A) 1 year
B) 3 years
C) 5 years
D) 10 years
Answer: C) 5 years
Explanation: According to the Companies (Registered Valuers and Valuation) Rules, 2017, a
valuer must keep records for 5 years.

Q110. What is dual valuation?

A) Estimating cost and price together
B) Valuation for both buyer and seller
C) Providing two valuations for different purposes
D) Simultaneous use of two methods
Answer: C) Providing two valuations for different purposes
Explanation: Dual valuation involves conducting two separate valuations for different
stakeholders or statutory purposes.

Q111. Which of the following is not a method of land valuation?

A) Comparative method
B) Income capitalization method
C) Replacement cost method
D) Gross profit method
Answer: D) Gross profit method
Explanation: Gross profit method is used in accounting and not in property valuation. The other
three are recognized valuation methods.

Q112. The term "reinstatement cost" refers to:

A) Scrap value of property
B) Market value of land
C) Cost to rebuild a property to current standards
D) Insurance claim amount
Answer: C) Cost to rebuild a property to current standards
Explanation: Reinstatement cost is the cost to replace or rebuild the asset to its original state
using modern materials and methods.

Q113. What is valuation date in a valuation report?

A) Date of property inspection
B) Date report is submitted
C) Date as of which the value is estimated
D) Date of legal verification
Answer: C) Date as of which the value is estimated
Explanation: Valuation date is the effective date for which the value has been determined, which
may differ from inspection or report date.

Q114. Under the IBC, valuation reports are required from:

A) Chartered Engineers
B) Company Secretaries
C) Two Registered Valuers
D) Income Tax Officers
Answer: C) Two Registered Valuers
Explanation: The Insolvency and Bankruptcy Code (IBC) mandates appointment of two registered
valuers for fair and liquidation value estimation.
Q115. The Discounted Cash Flow (DCF) method is based on:
A) Comparable sales
B) Construction cost
C) Future income projection
D) Market speculation
Answer: C) Future income projection
Explanation: DCF projects future income and discounts it to present value to determine property
worth.

Q116. What does the term encumbrance mean in relation to real estate?
A) A freehold estate
B) A burden like a mortgage or lien
C) A registered gift
D) A clear title
Answer: B) A burden like a mortgage or lien
Explanation: An encumbrance restricts the owner's ability to freely transfer property and affects
the title, e.g., mortgage or easement.

Q117. The plinth area of a building refers to:

A) Total carpet area
B) Built-up area at the floor level
C) Area of parking
D) Plot size
Answer: B) Built-up area at the floor level
Explanation: Plinth area is the area occupied by the building on the ground, measured at the
floor level of the basement or ground floor.

Q118. In valuation terms, yield refers to:

A) Growth rate of crops
B) Annual return on investment
C) Rate of interest on loan
D) Capital gain
Answer: B) Annual return on investment
Explanation: Yield is the income return on an investment, usually expressed as a percentage of
the property's cost or value.

Q119. A Registered Valuer must renew registration with IBBI every:

A) 1 year
B) 2 years
C) 3 years
D) 5 years
Answer: C) 3 years
Explanation: As per the Companies (Registered Valuers and Valuation) Rules, 2017, registration is
valid for 3 years and must be renewed thereafter.

Q120. What is a negative easement?

A) Right to build on another’s land
B) Restriction on someone else from doing something
C) Right to collect crops
D) Right of inheritance
Answer: B) Restriction on someone else from doing something
Explanation: A negative easement prevents a landowner from undertaking certain actions (e.g.,
blocking light or air).

Q121. Which of the following best defines “life interest” in property?

A) Full ownership rights
B) Leasehold interest
C) Right to use property during one’s lifetime
D) Mortgage interest
Answer: C) Right to use property during one’s lifetime
Explanation: Life interest gives a person the right to possess or derive benefits from a property
for their lifetime without ownership.

Q122. Stamp duty on a property transaction is generally calculated based on:

A) Construction cost
B) Circle rate or consideration value, whichever is higher
C) Plinth area
D) Property insurance value
Answer: B) Circle rate or consideration value, whichever is higher
Explanation: Stamp duty is usually levied on the higher of the declared transaction value or the
government-set circle rate.

Q123. Land locked property refers to:

A) Property not having legal documents
B) Property surrounded by water
C) Property with no direct access to road
D) Property that is under litigation
Answer: C) Property with no direct access to road
Explanation: A landlocked property does not have legal access to public roads, which can affect
its value and usability.

Q124. In valuation, the cost of acquisition refers to:

A) Fair market value
B) Historical purchase price plus improvements and legal fees
C) Circle rate
D) Assessed value by municipality
Answer: B) Historical purchase price plus improvements and legal fees
Explanation: It includes the original purchase price, registration charges, legal expenses, and cost
of improvements.

Q125. The Right to Light is an example of:

A) Negative easement
B) License
C) Leasehold right
D) Adverse possession
Answer: A) Negative easement
Explanation: It restricts neighbors from constructing anything that blocks natural light to your
property.

Q126. Unit rate method of valuation is most commonly used for:

A) Agricultural land
B) Heritage buildings
C) Apartment blocks
D) Industrial machinery
Answer: C) Apartment blocks
Explanation: This method uses per unit rate (e.g., per square foot or meter) and is suitable for
flats or commercial buildings.

Q127. What is escalation clause in a real estate agreement?

A) Clause for default remedy
B) Clause to revise rent or cost based on inflation
C) Clause for cancellation
D) Clause for title transfer
Answer: B) Clause to revise rent or cost based on inflation
Explanation: Escalation clause allows for an increase in price or rent based on predefined factors
like inflation, cost index, etc.

Q128. Which is not a valuation standard recognized in India?

A) IVS
B) Ind AS
C) ICAI Valuation Standard
D) IBBI Valuation Standard
Answer: B) Ind AS
Explanation: Ind AS are accounting standards, not valuation standards. The other three are
recognized valuation frameworks.
Q129. Sinking fund is set up to:
A) Build new structures
B) Replace building materials
C) Provide for future replacement of a wasting asset
D) Pay employee salaries
Answer: C) Provide for future replacement of a wasting asset
Explanation: A sinking fund is a reserve created for replacing an asset (like a building or
machinery) over time.

Q130. The contingent liability in property valuation refers to:

A) Fixed expenses
B) Future possible liabilities depending on events
C) Rent received
D) Property tax
Answer: B) Future possible liabilities depending on events
Explanation: Contingent liabilities are uncertain potential obligations (e.g., pending legal cases,
conditional penalties) that may impact property value.

Q131. The term “encumbrance” in property means:

A) Building plan approval
B) Ownership rights
C) Legal liability or charge on the property
D) Title deed
Answer: C) Legal liability or charge on the property
Explanation: Encumbrance includes mortgages, liens, or unpaid dues that legally burden the title
of the property.

Q132. The physical life of a building refers to:

A) Legal ownership period
B) Duration for which the building is legally permitted
C) Estimated time until building becomes physically unusable
D) Time period before a tenant vacates
Answer: C) Estimated time until building becomes physically unusable
Explanation: Physical life is the period during which a structure remains physically sound and
usable.

Q133. What is the effective age of a building?

A) Age since purchase
B) Chronological age
C) Age after considering depreciation and condition
D) Age of surrounding infrastructure
Answer: C) Age after considering depreciation and condition
Explanation: Effective age considers the condition, upkeep, and obsolescence to estimate the
real usable life remaining.

Q134. Which of the following is NOT a method of land valuation?

A) Comparative method
B) Rental capitalization method
C) Reinstatement method
D) Belting method
Answer: C) Reinstatement method
Explanation: Reinstatement (or replacement) method applies to buildings, not land. Land is
valued using comparative, belting, or other direct methods.

Q135. The market approach in valuation is primarily based on:

A) Replacement cost
B) Rental income
C) Comparable property sales
D) Government rate
Answer: C) Comparable property sales
Explanation: Market approach uses recent sales data of similar properties to estimate fair market
value.

Q136. Which of the following is a direct cost in property development?

A) Advertising expenses
B) Architect’s fee
C) Construction material
D) Legal fee
Answer: C) Construction material
Explanation: Direct costs are those directly tied to physical construction, such as labor and
materials.

Q137. The yield in a rental property is:

A) Annual rent × 100 / Property value
B) Property value / Rent
C) Maintenance cost / Rent
D) Stamp duty / Circle rate
Answer: A) Annual rent × 100 / Property value
Explanation: Yield is the return (in %) earned annually from rental income based on the
property’s capital value.
Q138. Eminent domain refers to:
A) Government purchase of property at market value
B) Government’s right to take private property for public use with compensation
C) Illegal seizure of land
D) Mortgage foreclosure
Answer: B) Government’s right to take private property for public use with compensation
Explanation: Eminent domain allows the state to acquire land for public use, subject to fair
compensation.

Q139. Which of the following is considered a non-depreciable asset?

A) Factory building
B) Residential flat
C) Land
D) Furniture
Answer: C) Land
Explanation: Land is not depreciated as it does not wear out or become obsolete, unlike
buildings or machinery.

Q140. A title search in land valuation aims to:

A) Measure the land
B) Check road access
C) Verify ownership history and encumbrances
D) Estimate circle rate
Answer: C) Verify ownership history and encumbrances
Explanation: Title search ensures clear and marketable ownership and helps discover any legal
claims on the property.

Q141. What is the main purpose of a valuation report?

A) Marketing the property
B) Legal clearance
C) Provide professional opinion of value
D) Title verification
Answer: C) Provide professional opinion of value
Explanation: A valuation report is issued by a registered valuer to state their professional opinion
on the fair value of the asset as of a specific date.

Q142. Which of the following methods is appropriate for valuing a vacant plot in a developed area?
A) Cost method
B) Income method
C) Comparative method
D) Residual method
Answer: C) Comparative method
Explanation: The comparative method uses recent sales data of similar plots and is most
effective for valuing vacant land.

Q143. A belting method is typically used in valuation of:

A) Factory shed
B) Agricultural land
C) Roadside commercial land
D) Hilly terrain plots
Answer: C) Roadside commercial land
Explanation: The belting method considers land in belts of distance from the main road, valuing
the front portion at a higher rate.

Q144. Depreciation due to outdated plumbing systems is an example of:

A) Economic obsolescence
B) Physical deterioration
C) Functional obsolescence
D) Legal obsolescence
Answer: C) Functional obsolescence
Explanation: Functional obsolescence includes loss in value due to outdated design or features
that reduce utility.

Q145. The term reversionary value refers to:

A) Value of a leasehold interest
B) Present value of future rights after expiry of lease
C) Market value at current date
D) Taxable value of property
Answer: B) Present value of future rights after expiry of lease
Explanation: Reversionary value is the estimated value of the property when possession reverts
to the owner after a lease expires.

Q146. In income approach, capitalization rate (Cap Rate) is:

A) Rent / Maintenance cost
B) Rent × 12
C) Net income / Property value
D) Property value / Net income
Answer: C) Net income / Property value
Explanation: Cap rate helps estimate property value by dividing net income by capitalization rate.

Q147. Guidance value is also known as:

A) Fair market value
B) Circle rate
C) Rent agreement
D) Court valuation
Answer: B) Circle rate
Explanation: Circle rate or guidance value is the minimum value set by the government for
property transactions and stamp duty calculation.

Q148. Which of the following is NOT a part of the cost approach?

A) Land cost
B) Depreciated cost of building
C) Income from property
D) External development charges
Answer: C) Income from property
Explanation: Income is considered in the income approach, not in the cost approach which relies
on construction cost, land cost, and depreciation.

Q149. Which of the following increases the value of a residential property?

A) Poor neighborhood
B) Easement rights
C) Good road connectivity
D) Pending litigation
Answer: C) Good road connectivity
Explanation: Proximity to infrastructure, such as roads, schools, and markets positively impacts
property valuation.

Q150. Plinth area includes:

A) Carpet area only
B) Built-up area excluding walls
C) Area covered by building at floor level including walls
D) Super built-up area
Answer: C) Area covered by building at floor level including walls
Explanation: Plinth area is the built-up covered area measured at the floor level of the building,
including walls.

Q151. Which of the following is excluded from the super built-up area?
A) Lobby
B) Staircase
C) Lift shaft
D) Car parking in open area
Answer: D) Car parking in open area
Explanation: Super built-up area includes proportionate common areas like lobby, staircase, and
lift, but not open parking spaces.
Q152. A valuer must avoid conflict of interest to comply with:
A) Legal Metrology Act
B) Companies Act
C) Code of Conduct under Valuation Rules
D) Taxation laws
Answer: C) Code of Conduct under Valuation Rules
Explanation: As per the Companies (Registered Valuers and Valuation) Rules, 2017, valuers must
follow ethical conduct, avoiding conflicts of interest.

Q153. The gross development value (GDV) is used in:

A) Capital gains calculation
B) Residual land valuation
C) Municipal tax estimation
D) Cost method
Answer: B) Residual land valuation
Explanation: GDV represents the estimated value of the completed project and is essential in the
residual method for valuing land.

Q154. The income capitalization method is best used when:

A) No rental income is available
B) Reliable income and expenses can be estimated
C) Land value is unknown
D) The asset is not leased
Answer: B) Reliable income and expenses can be estimated
Explanation: The method capitalizes the net operating income into value, suitable when stable
and reliable cash flows are present.

Q155. The effective age of a building is:

A) Time since construction
B) Age based on appearance and condition
C) Age based on lease date
D) Registration date
Answer: B) Age based on appearance and condition
Explanation: Effective age considers wear and tear, condition, and maintenance level, and may
differ from chronological age.

Q156. Which document is essential to confirm ownership of land?

A) Site plan
B) Occupancy certificate
C) Sale deed
D) Municipal tax receipt
Answer: C) Sale deed
Explanation: The sale deed is a legal document establishing ownership, making it crucial in
property transactions and valuation.

Q157. In valuation terms, “obsolescence” refers to:

A) Value increase over time
B) Legal encumbrances
C) Loss of value due to age, design, or surroundings
D) Cost of construction
Answer: C) Loss of value due to age, design, or surroundings
Explanation: Obsolescence causes depreciation and can be physical, functional, or external in
nature.

Q158. Which rate of interest is typically used in the Discounted Cash Flow (DCF) method?
A) Prime Lending Rate
B) Cap Rate
C) Discount Rate reflecting investor expectations
D) Stamp duty rate
Answer: C) Discount Rate reflecting investor expectations
Explanation: DCF discounts future cash flows using a rate that reflects the risk and return
expectations of investors.

Q159. Which of these is NOT an example of a legal encumbrance?

A) Mortgage
B) Leasehold interest
C) Government acquisition notice
D) Building age
Answer: D) Building age
Explanation: Building age may affect value but is not a legal encumbrance like mortgage or
leasehold rights.

Q160. A valuation report for a listed company must be submitted under which provision?
A) SEBI (LODR) Regulations
B) FEMA Act
C) RBI Circular
D) Companies Act – Section 247
Answer: A) SEBI (LODR) Regulations
Explanation: SEBI (Listing Obligations and Disclosure Requirements) Regulations mandate
valuations in certain cases like related-party transactions.

Q161. The “depreciated replacement cost” (DRC) method is mostly applied for:
A) Rental residential flats
B) Commercial offices in CBD
C) Public infrastructure like schools or hospitals
D) Leased shopping malls
Answer: C) Public infrastructure like schools or hospitals
Explanation: DRC is used when the asset doesn’t generate income, valuing it on the basis of cost
to replace minus depreciation.

Q162. A valuer must retain records of valuation for at least:

A) 3 years
B) 5 years
C) 7 years
D) 10 years
Answer: B) 5 years
Explanation: As per Companies (Registered Valuers and Valuation) Rules, 2017, a valuer must
retain records for a minimum of 5 years.

Q163. In real estate, the term “undivided share of land” (UDS) refers to:
A) A separate plot of land
B) Share in total land attached to a flat
C) Agricultural land title
D) Freehold commercial property
Answer: B) Share in total land attached to a flat
Explanation: UDS is the proportionate share in the land on which the apartment is built.

Q164. Which of the following is NOT a part of market analysis in valuation?

A) Economic indicators
B) Comparable properties
C) Legal title search
D) Supply-demand trends
Answer: C) Legal title search
Explanation: Market analysis involves economic and property-related trends; title search is a
legal due diligence step.

Q165. What is a cap rate (capitalization rate)?

A) Rate used for bank loans
B) Stamp duty rate
C) Ratio of net income to property value
D) Construction cost per sq.ft
Answer: C) Ratio of net income to property value
Explanation: Cap rate = Net Operating Income / Current Market Value. It indicates return on
property investment.
Q166. A valuation approach that involves adjusting land prices of nearby transactions is known as:
A) Income approach
B) Cost approach
C) Sales comparison approach
D) Residual method
Answer: C) Sales comparison approach
Explanation: The sales comparison approach uses recent comparable transactions to arrive at
market value, making adjustments as needed.

Q167. Functional obsolescence arises when:

A) Building is old
B) Design is outdated or no longer suitable
C) Property is under litigation
D) Market crashes
Answer: B) Design is outdated or no longer suitable
Explanation: Functional obsolescence refers to loss in value due to inadequacies or defects in
design or utility.

Q168. In valuation, site development cost includes:

A) Construction of the building
B) Landscaping and drainage
C) Bank interest
D) Brokerage charges
Answer: B) Landscaping and drainage
Explanation: Site development costs cover physical infrastructure such as roads, water,
sewerage, and landscaping on raw land.

Q169. A building's gross annual rental income is ₹24 lakhs, and operating expenses are ₹4 lakhs. If
the cap rate is 10%, the property value is:
A) ₹240 lakhs
B) ₹200 lakhs
C) ₹250 lakhs
D) ₹220 lakhs
Answer: B) ₹200 lakhs
Explanation:
Net Income = ₹24L – ₹4L = ₹20L
Value = Net Income / Cap Rate = ₹20L / 0.10 = ₹200L

Q170. Encumbrance certificate is obtained from:

A) Registrar of Companies
B) Tehsildar office
C) Sub-Registrar office
D) Municipal corporation
Answer: C) Sub-Registrar office
Explanation: The Sub-Registrar office issues encumbrance certificates, confirming if a property
has any legal dues or liabilities.

Q171. Which of the following is considered a latent defect in a property?

A) Cracks visible on wall
B) Unregistered title deed
C) Leaky pipe inside wall
D) Open land dispute
Answer: C) Leaky pipe inside wall
Explanation: Latent defects are hidden faults not apparent on inspection, like concealed
leakages.

Q172. A valuer must obtain consent of the client to:

A) Use standard valuation techniques
B) Refer valuation to a peer
C) Disclose confidential valuation data
D) Use government land rates
Answer: C) Disclose confidential valuation data
Explanation: Valuers are bound by confidentiality and must not disclose valuation details without
client consent.

Q173. In the residual land valuation method, value is calculated as:

A) Income – depreciation
B) Development cost + profit
C) Gross development value – development cost
D) Rental income × cap rate
Answer: C) Gross development value – development cost
Explanation: Residual method derives land value by subtracting development cost and profits
from anticipated sale value.

Q174. Under the Companies (Registered Valuers and Valuation) Rules, 2017, a valuer must have
experience of at least:
A) 1 year
B) 3 years
C) 5 years
D) 10 years
Answer: B) 3 years
Explanation: Rule 4 lays down that the applicant must have at least three years of post-
qualification experience.
Q175. A valuer is expected to maintain independence from:
A) Government departments
B) Public opinion
C) Client’s relatives
D) All stakeholders involved
Answer: D) All stakeholders involved
Explanation: Independence ensures unbiased and objective valuation by maintaining distance
from all parties.

Q176. A leasehold interest in land generally means:

A) Ownership in perpetuity
B) Temporary ownership subject to conditions
C) Saleable freehold
D) Gifted land
Answer: B) Temporary ownership subject to conditions
Explanation: Leasehold grants rights for a fixed term, subject to terms and conditions by the
lessor.

Q177. Which of the following is not an approach to valuation?

A) Market approach
B) Cost approach
C) Income approach
D) Political approach
Answer: D) Political approach
Explanation: There are three main approaches—market, cost, and income. "Political" has no
relevance to valuation.

Q178. Market rent refers to:

A) Rent paid by tenant
B) Rent agreed by landlord
C) Rent achievable in open market for similar properties
D) Controlled rent as per state rules
Answer: C) Rent achievable in open market for similar properties
Explanation: Market rent is the estimated amount for which a property would lease in an open
and competitive market.

Q179. A flat purchased in a cooperative society gives you:

A) Absolute land title
B) Tenancy right
C) Membership share and occupancy right
D) Lease agreement
Answer: C) Membership share and occupancy right
Explanation: Cooperative societies transfer shares and grant right to occupy, not absolute
ownership of land.

Q180. In a valuation report, an assumption must be:

A) Hidden
B) Clearly disclosed
C) Kept confidential
D) Avoided
Answer: B) Clearly disclosed
Explanation: Assumptions form the basis of value estimation and must be transparently stated in
the report.

Q181. Under the cost approach, the valuation is primarily based on:
A) Demand and supply
B) Historical cost
C) Depreciated replacement cost of the asset
D) Potential future income
Answer: C) Depreciated replacement cost of the asset
Explanation: Cost approach considers the present cost to replace the asset minus depreciation.

Q182. Which method is best suited to value a vacant plot in a developed area?
A) Income approach
B) Cost approach
C) Residual method
D) Comparable method
Answer: D) Comparable method
Explanation: Comparable sales method is most effective for valuing plots in areas with frequent
land transactions.

Q183. Which of the following would generally be considered a fixture in a property?

A) Sofa
B) Refrigerator
C) Kitchen cabinets
D) Curtains
Answer: C) Kitchen cabinets
Explanation: Fixtures are permanently attached to property; kitchen cabinets are typically fixed
and not movable.

Q184. Functional obsolescence in a property valuation refers to:

A) Loss due to market decline
B) Wear and tear
C) Loss in value due to outdated design or layout
D) Natural disaster
Answer: C) Loss in value due to outdated design or layout
Explanation: Functional obsolescence arises when a property loses value due to poor layout,
design flaws, etc.

Q185. Which of these documents is most crucial in verifying legal ownership of a land parcel?
A) Property tax receipt
B) Electricity bill
C) Registered sale deed
D) Encumbrance certificate
Answer: C) Registered sale deed
Explanation: A registered sale deed is legal proof of ownership, showing title transfer from seller
to buyer.

Q186. A valuation report must include all of the following EXCEPT:

A) Scope of work
B) Market overview
C) Auditor’s opinion
D) Valuation assumptions
Answer: C) Auditor’s opinion
Explanation: Valuation reports don’t include an auditor’s view—it’s outside the valuer's scope.

Q187. The unit of measurement for land area typically used in urban India is:
A) Hectare
B) Square kilometre
C) Acre
D) Square metre
Answer: D) Square metre
Explanation: Square metre is the standard unit of area used in urban planning and land valuation
in India.

Q188. Which of the following valuation approaches is most applicable for a cinema hall?
A) Cost approach
B) Income capitalization approach
C) Comparable approach
D) Development method
Answer: B) Income capitalization approach
Explanation: A cinema hall generates income, making income-based valuation the most
appropriate.
Q189. The highest and best use principle considers:
A) The oldest structure on land
B) Any speculative future development
C) Legal, physically possible and economically feasible use
D) Government ownership
Answer: C) Legal, physically possible and economically feasible use
Explanation: Highest and best use is that use which is legally permissible, physically possible, and
financially feasible.

Q190. Which act governs the registration of immovable properties in India?

A) Companies Act
B) Indian Contract Act
C) Registration Act, 1908
D) Land Acquisition Act
Answer: C) Registration Act, 1908
Explanation: The Registration Act, 1908 governs the registration of documents relating to
immovable property in India.

Q191. Which of the following is a direct cost in construction?

A) Site office expense
B) Legal consultation fees
C) Cost of bricks and cement
D) Valuer’s fee
Answer: C) Cost of bricks and cement
Explanation: Direct costs relate directly to construction (materials, labor), unlike overheads and
professional fees.

Q192. Which valuation method is most appropriate for a toll bridge project?
A) Cost approach
B) Comparable sales approach
C) Income approach
D) Residual approach
Answer: C) Income approach
Explanation: Infrastructure assets like toll bridges generate cash flows, making income-based
valuation suitable.

Q193. The term "encumbrance" generally means:

A) Plot area
B) Marketability of land
C) Legal right or liability affecting property
D) Stamp duty
Answer: C) Legal right or liability affecting property
Explanation: Encumbrances (like mortgages, easements) affect transferability and legal clarity of
title.

Q194. A valuer's working papers must be retained for a minimum of:

A) 1 year
B) 3 years
C) 5 years
D) 10 years
Answer: C) 5 years
Explanation: As per IBBI rules, working papers must be preserved for 5 years for regulatory and
legal purposes.

Q195. The physical deterioration of a property is caused by:

A) Functional obsolescence
B) Poor layout
C) Natural wear and tear
D) Zoning changes
Answer: C) Natural wear and tear
Explanation: Physical deterioration is loss in value due to age, weather, and lack of maintenance.

Q196. Which document is generally prepared by the Registrar of Land Records?

A) Occupancy certificate
B) Patta or Record of Rights (RoR)
C) Commencement certificate
D) Building plan approval
Answer: B) Patta or Record of Rights (RoR)
Explanation: The RoR or Patta is an official land record that identifies ownership and rights.

Q197. The replacement cost is based on:

A) Original purchase cost
B) Cost of replicating an identical asset
C) Market demand
D) Speculative value
Answer: B) Cost of replicating an identical asset
Explanation: Replacement cost reflects how much it would cost to recreate the asset with similar
utility.

Q198. Under IBBI guidelines, a valuer must be:

A) Chartered Accountant only
B) Advocate or lawyer
C) Registered with a Registered Valuers Organisation (RVO)
D) Government employee
Answer: C) Registered with a Registered Valuers Organisation (RVO)
Explanation: Valuers must be enrolled with a recognised RVO and registered with IBBI.

Q199. Which is a non-depreciable asset among the following?

A) Building
B) Lift
C) Land
D) Machinery
Answer: C) Land
Explanation: Land does not depreciate since its useful life is indefinite and it is not subject to
wear and tear.

Q200. Which of the following best defines fair value?

A) Cost plus margin
B) Price agreed between unrelated, willing parties in an orderly transaction
C) Government guidance value
D) Auction reserve price
Answer: B) Price agreed between unrelated, willing parties in an orderly transaction
Explanation: Fair value is the most probable price in a competitive and open market under no
compulsion.