Texas Principles Of Real Estate II – Correctly Answered
Questions
Mixed Numbers Right Ans - A number containing both a whole number and
a fraction (examples: 1⅓; 9⅞)
Improper Fractions Right Ans - a fraction with its numerator equal to or
greater than its denominator
Commission Calculation Right Ans - Sales price X rate of commission = total
commission
Solving for the Commission Rate Right Ans - Commission Rate =
Commission ÷ Price
Solving for the Property's Price Right Ans - Price = Commission ÷
Commission Rate
Profit Right Ans - Profit (or Loss) = Selling price - Original cost
Profit Percentage Right Ans - Percentage of profit = Profit ÷ Original cost
Profit Margin Right Ans - Profit margin = Profit ÷ Selling price
Interest Right Ans - the price paid for the use of borrowed money
3 types of interest calculations Right Ans - Simple interest, add-on interest,
and compound interest
Simple interest Right Ans - Interest = principal x rate x time
Add-on interest Right Ans - loan amount x contracted interest rate x
number of payments
Add-on interest APR Right Ans - APR = 2 x number of payment periods in
one year x total financing charges ÷ (principal, or amount borrowed x
(number of scheduled payments +1)
,Compound interest Right Ans - interest which is computed on the principal
amount plus the accrued interest.
Compound Interest Formula Right Ans - Compound amount = Initial
deposit (1 + Interest rate)n
Points Right Ans - a one-time service charge to the borrower for making
the loan
Two types of points Right Ans - origination fee and discount points
Loan-to-Value Ratio (LTV) Right Ans - expresses the relationship between
a property's purchase price and its loan amount.
Loan-to-Value formula Right Ans - LTV ratio = (Loan amount ÷ Value)
Area of a rectangle Right Ans - Area = length x width
Area of a square Right Ans - Area = side x side
Area of a triangle Right Ans - Area = ½ base x height
Perimeter Right Ans - a lot or other shape is the sum of the length of all its
sides.
Acre Right Ans - A measure of land equal to 43,560 square feet.
Hectare Right Ans - is equal to 10,000 square meters or approximately 2.47
acres.
To convert acres to hectares Right Ans - divide the total acres by 2.47
Appraisal Right Ans - is an unbiased estimate of the nature, quality, value
or utility of an interest in or aspect of identified real estate and related
personalty as of a certain date.
Specific data Right Ans - This is information and details about the subject
property, as well as data (used for comparison) about comparable properties'
costs, income and expenses, sales and other relevant information
,General data Right Ans - This is information about the property's location -
its country, region, city, and, most importantly, its neighborhood
Steps in Appraisal Process Right Ans - 1. Define problem and scope of work
2. Collect, record, and verify the required data
3. Determine the property's highest and best use
4. Estimate the land value
5. Use ALL THREE approaches to estimate value
6. Reconcile the estimated values to determine the final value estimate
7. Communicate the final value estimate
Highest and Best Use Right Ans - Legally permissible
Physically possible
Financially feasible
Maximally productive
Describe the difference between specific and general data Right Ans -
Specific data is information and details about the subject property and the
comparables.
General data is information about the property's location - its country, region,
city, and neighborhood.
Direct sales comparison Right Ans - sales of comparable vacant parcels are
analyzed and adjusted to indicate a value for the subject land
Allocation Right Ans - a typical ratio of land value to total value is derived
from comparable properties and applied to the subject
Extraction Right Ans - land value is estimated by deducting the depreciated
cost of improvements on a property from the total sale price of the property.
Subdivision development analysis Right Ans - costs and profit are deducted
from estimated gross sale prices of subdivided and finished lots, and net sales
proceeds are discounted to present value
Land residual Right Ans - net operating income attributable to the land is
capitalized at market rates to obtain land value
, Ground rent capitalization Right Ans - ground rent of subject is capitalized
at market rates
In the cost approach to value Right Ans - the appraiser estimates a
property's value by adding the land value to the depreciated value of any
improvements to the property
The income approach Right Ans - (sometimes called the "income
capitalization approach") is used by appraisers who need to value commercial
and investment properties
In the sales comparison approach Right Ans - an appraiser examines the
price (or price per unit area) of similar properties recently sold or currently
being sold in the marketplace to come up with comparable value assessments
In the reconciliation step Right Ans - the appraiser looks at each approach
to value and all the data used to determine
Communicating the Appraisal Right Ans - 1. Short- or Long-Form Narrative
Reports
2. Reports
3. Letter or Oral Reports
Valuation Right Ans - is the process of estimating the value of an identified
interest in specific property as of a given date
Types of Value Right Ans - Investment Value
Insured Value
Use Value
Investment value Right Ans - is the amount of the return on an investment
that an income-producing property will produce
Insured value Right Ans - is the face amount a casualty or hazard insurance
policy will pay in case a property is deemed unusable
Use value Right Ans - (also known as value-in-use) of a property is the
value the property holds for the owner. Several factors contribute to this value
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