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PRINCIPLES OF REAL ESTATE 2
CHAMPION EXAM WITH 1 00%
CORRECT ANSWER S
Question : appraisal
CORRECT ANSWER : defined as an appraiser's opinion
of value.
Question : Loan-to-Value Ratio (LTV)
CORRECT ANSWER : is the percentage of value or
sales price that a lender is willing to finance.
Question : Principle of Substitution
CORRECT ANSWER : According to this principle, a
commodity's value is influenced by the cost of acquiring a substitute or comparable item.
Question : Principle of Regression
CORRECT ANSWER : The presence of lower-priced
properties in the area will cause a decline in the value of the subject property.
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Question : Principle of Progression
CORRECT ANSWER : States that the value of a subject
property is increased by the value of surrounding properties.
Question : Principle of Competition
CORRECT ANSWER : States that the absence of
competition will cause prices to increase in the marketplace.
Question : For a property to have value, it must have four
characteristics: DUST
CORRECT ANSWER : demand, utility, scarcity,
transferability.
Question : Market Value
CORRECT ANSWER : is the most probable price a
property should bring in a competitive and open market under all conditions requisite to a fair sale, under
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guidelines published by federal lending institutions (Fannie Mae, Freddie Mac).
Question : Ad valorem
CORRECT ANSWER : -according to value-taxes are
assessed based upon the assessed value of the property and the current tax rate.
Question : appraisal process
CORRECT ANSWER : The value of a property may be
affected by social, economic, governmental, and environmental influences
Question : Three approaches to value
CORRECT ANSWER : 1) Sales Comparison
Approach.2) Income Approach.3) Cost Approach.
Question : Sales Comparison Approach
CORRECT ANSWER : -Also known as the market data
approach, the appraiser focuses on recent sales in
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determining the value of the subject.-is used as the best indicator of value for existing properties.
Question : Cost Approach
CORRECT ANSWER : the market value of the property
considers how much a new structure of this size and type would currently cost to build.
Question : Depreciation
CORRECT ANSWER : - A reduction in the value of a
property due to deterioration or obsolescence. -Types of depreciation include physical deterioration, functional obsolescence, and external obsolescence.
Question : Functional Obsolescence
CORRECT ANSWER : is the loss in the desirability of
the style, layout, or function of an element of a property over time.