Exam (elaborations)
Idaho Real Estate School Module 2 Questions and Answers 2024
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Idaho Real Estate School Module 2
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Idaho Real Estate School Module 2Principle of Regression and Progression - answerdoes the property conform to its
surroundings (neighbors can have an effect on the value of your property).
Over Improvement - answerland improvement that is more extensive than the
surrounding neighborhood justifies or that can be economically warranted.
Principle of Highest and Best Use - answerprinciple that the best use of a property in
terms of value is the use most likely to produce the greatest net return (in terms of
money or other valued items).
Plottage - answeroccurs when two or more sites are combined, with the result that the
value of the assembled site is worth more than the value of the sum of each of the
individual sites.
Three Approaches to Value - answer1) market data approach (sales comparison).
2) income approach.
3) cost approach.
Sales (Market Data) Comparison Approach - answeran appraisal method using the
principles of substitution to compare similar properties (most reliable approach in
residential transactions).
How to perform necessary adjustments in Market Data Approach? - answerif the
comparable is superior to the subject we deduct from its value. if the comparable is
inferior we add to its value.
When is Cost Approach used? - answerfor schools, churches and hospitals.
Definition of Depreciation - answerthe loss of value from any source.
Physical Deterioration - answera gradual decline caused because of deferred
maintenance (curable).
Functional Obsolescence - answeran out-dated design or feature (possibly curable).
Income Approach - answerbased on the current value of the rights to the future income
(office buildings or duplexes) done by estimating or knowing the potential gross income.
, Capitalization Rate - answerthe rate of return a property will produce on the owner's
investment.
Equation for Income Approach? - answernet operating income (NOI) / capitalization rate
= value
What to do if Appraisal comes in low? - answer1) seller lowers their price to the
appraisal (most common)
2) buyer pays the higher price
3) deal falls through
4) split the difference between the buyer and seller
(most important is to negotiate)
When to hand the Agency Disclosure Brochure (Blue Brochure)? - answerfirst
substantial business contact
Mortgagor/Mortgagee - answerthe mortgagor is the borrower. The mortgagee is the
lender.
Lien Theory State - answera state where the mortgage lender has a lien on the property
and the borrower has title (Idaho is a lien theory state.
Title Theory State - answerlender holds legal title to the mortgaged property until the
mortgagor satisfies the terms and obligations of the loan.
Promissory Note - answera written and signed promise to pay a sum of money at a
specified time under specific terms and conditions.
Main difference between Deed of Trust and Mortgage? - answerthe main differences
appear when a foreclosure action starts.
The types of situations a Mortgage would be used verses a Deed of Trust? - answeran
agriculture property 40+ acres always uses a mortgage.
a non-agriculture property less than 80 acres can use a deed of trust or mortgage.
any type of property over 80 acres is on a mortgage.
Judicial Foreclosure - answerallows the property to be sold by court order after the
mortgagee has given sufficient public notice.
When do buyers receive the ownership to the property in a Contract for Deed (Land
Sales Contracts)? - answeronce they have made the last payment the seller then deeds
the property to the buyer.
Provisions of a Note - answerthe borrower's personal promise to repay a debt according
to agreed-upon terms (it evidences a debt).
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