Champions Principles of Real Estate 2 questions with correct answers
Question : appraisal
Correct answer: value of a property maybe affected by social,
economic, govt and environmental influences
Question : Loan-to-Value Ratio (LTV)
Correct answer: The percentage of value or sales price that a
lender is willing to finance.
Question : limited appraisal report
Correct answer: exterior only/drive by inspection. deemed as
low risk loan
Question : highest and best use of property
Correct answer: legal use that gives the greatest return
Question : Principal of Contribution
Correct answer: cost does not equal value
Question : Residential Mortgage Loan Originators (RMLO)
Correct answer: Must be certified licence holders and is
mandated by the SAFE ACT (TX dept of savings and mortgage lending)
Question : Principle of Anticipation
Correct answer: purchase price is affected by the expectation
of future appeal and benefits
Question : Principal of Substitution
Correct answer: value of a commodity is influenced by the
cost of acquiring subsitute or comparable item
Question : Principal of progression
Correct answer: value of properties around yours goes up; so
does yours
Question : Principal of Regression
Correct answer: The Value of more expensive home placed in
a neighborhood of less expensive homes will drop in value
Question : Market Value
Correct answer: the most probable price a property should
bring in a competitive and open market under fair conditions requisit to a fair sale.
Question : appraisal process
Correct answer: The value of a property may be affected by
social, economic, governmental and environmental influences. An appraiser must always be aware of these influences and possible changes in them that could affect market value.
Question : Three approaches to value
Correct answer: (1) The Sales Comparison Approach
(2) The Cost Approach, (3) The Income Approach.
Question : Sales Comparison Approach
Correct answer: A value for existing properties method for
comparing similar properties to the subject property. this is the best indicator.
Question : Market Data Approach
Correct answer: aka: sales comparison approach
Question : Physical Deterioration
Correct answer: Loss of value of a building from its
reproduction cost, resulting from wear and tear over time.
Question : Functional Obsolescence
Correct answer: loss of desirability of the style, layout or
function of an element of property over time
Question : External Obsolescence
Correct answer: Losses of property value caused by forces or
conditions beyond the borders of the property. ie. zoning, highways