Alabama Real Estate Practice Exam

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Prepare for the Alabama Real Estate Exam. Utilize flashcards and multiple-choice questions, each coupled with hints and explanations. Ace your upcoming test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What does effective gross income (EGI) account for in property appraisal?

Expenses only
Potential income and vacancy losses
Capital repairs
Appreciation value

The correct answer is: Potential income and vacancy losses

Effective gross income is a valuable component in property appraisal as it takes into account both the potential income and potential losses due to vacancies. This helps to provide a more accurate and realistic assessment of the property's potential income. Options A, C, and D are incorrect because they do not fully consider all potential aspects of the property's income and expenses. Option A only considers expenses without taking into account potential income, which can greatly impact the overall value of the property. Option C only accounts for capital repairs and does not consider other sources of income or potential losses. Option D refers to appreciation value, which is not directly related to the property's income potential.