Texas Principles of Real Estate II (2024 / 2025) Exam | Guide with Questions and Verified Answers | 100% Correct
Question:
Principle of Contribution
Answer:
A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.
Question:
Principle of Competition
Answer:
Holds that profits tend to breed competition and excess profits tend to breed ruinous completion.
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Question:
Principle of Change
Answer:
Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely the result of cause and effect.
Question:
Reconciliation
Answer:
taking values indicated by the various approaches used and reconciliating into one single value
Question:
Comparative Market Analysis(CMA)
Answer:
An analysis of the competition in the marketplace that a property will face upon sale attempts.
Question:
Sellers net return
Answer:
seller profit once closing costs, commissions, and other fees have been subtracted. The amount the seller walks away with after a sale. 2 / 4
Question:
Appraisal Process
Answer:
1) State the problem - What is the appraised being done for; new home purchase, refinance, home equity loan or other purpose 2) List the data needed and the sources of the data 3) Gather, record, and verify all the necessary data in step 2 - very time consuming 4) determining the highest and best use of the property 5) value estimated from each of three appraisal methods 6) Reconciliation - takes all three approaches and values and reconciles it into one single value.
After all steps are completed, appraiser takes what he has learn and conveys that to the client. Where he gives his opinion and how he came to the appraisal value.
Question:
Appraisal reporting - information actually sent to client
Answer:
1) Opinion of value and date it was recorded 2) The purpose on which the appraisal was done 3) Description of the neighborhood and surrounding areas of the subject property - demographics 3 / 4
4) Factual data with respect to each of the three appraisal methods; sales of recently sold similar properties 5) Analysis and interpret the data collected 6) Presentation with enough detail to state and prove his final number, with supporting documents and data points.
Question:
Insured Value
Answer:
The cost of replacing a structure completely destroyed by an insured hazard.
Question:
Book Value
Answer:
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
Question:
Assessed Value
Answer:
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
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