Before you read
Test yourself first: 5 questions
Question 1 of 5
Which element is NOT one of the four essential characteristics that create value (DUST)?
Answer: D. The four elements of value are Demand, Utility, Scarcity, and Transferability (DUST). Cost is not one of them.
Question 2 of 5
A loss in value caused by an outdated floor plan or obsolete feature is:
Answer: A. Functional obsolescence is loss in value from outdated design within the property. External obsolescence comes from outside factors; physical deterioration is wear and tear.
Question 3 of 5
Loss in value caused by a noisy highway newly built next to a home is:
Answer: A. External (economic) obsolescence is loss from factors OUTSIDE the property and is generally incurable by the owner.
Question 4 of 5
A well-maintained home loses value because a new sewage-treatment plant is built next door. This loss is classified as:
Answer: C. External (economic) obsolescence is a loss in value caused by negative factors OUTSIDE the property boundaries, such as a nearby nuisance, and is generally incurable.
Question 5 of 5
All other factors being equal, if the capitalization rate increases while net operating income stays the same, the indicated value of the property will:
Answer: B. Because value equals NOI divided by the cap rate, a higher cap rate (denominator) with constant NOI produces a lower value. Cap rate and value move inversely.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
Value also reflects principles like supply/demand, substitution, and highest & best use.
Factors That Create Value — DUST: FAQs
Is Factors That Create Value — DUST on the real estate exam?
Yes. Valuation & Appraisal is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
