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Principles of real estate II (Champions) Exam with complete solutions
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- Principles Of Real Estate II Exam With
Principles of real estate II (Champions) Exam with complete solutions
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Principles of real estate II (Champions)Exam with complete solutions
Functional obsolescence - -Refers to the loss in desirability of the style,
layout or function of an element of a property over time
-Sales comparison - -best indicator of value for existing properties
-highest and best use - -the legal use for property that gives the greatest
return in money and/or amenities
-external obsolescence - -the loss in value of a property caused by factors
outside the property itself
-principle of contribution - -suggests the value of a property is equal to the
sum of the contributory value of each of its components. most important
aspect is that cost does not equal value
-most important aspect of principle of contribution - -cost does not equal
value (for example...swimming pool)
-principle of change - -forces acting on a parcel of land are always affecting
the value of the land
-principle of anticipation - -the purchase price is affected by the expectation
of future appeal and benefits
-principle of substitution - -the value of a commodity if influenced by the
cost of acquiring a substitute or comparable item.
-principle of conformity - -value is maximized when there is a reasonable
degree of homogeneity in a neighborhood
-principle of increasing and decreasing returns - -when the value added by
an improvement exceeds the cost...do not over improve.
-principle of supply and demand - -when demand is high and supply is
short, prices go up - and vice versa
-principle of regression - -presence of lower-priced properties in the area
will cause a decline in the value of the subject property
-principle of progression - -presence of higher-priced properties in the area
will cause an increase in the value of the subject property
, -principle of competition - -the absence of competition will cause prices to
increase in the marketplace. Increased competition will bring prices down.
-characteristics of value - -DUST; demand, utility, scarcity, transferability
-market value - -the most probable pice a property should bring in a
competitive and open market under all conditions requisite to a fair sale.
-types of appraisal reviews - -desk review and field review`
-desk review - -a type of appraisal review. reviews cover a checklist of items
as they analyze the appraisal report
-field review - -a type of appraisal review. many lenders, especially high LTV
loans, will order a field review of the appraisal. Independent third-party
appraiser will review the report, then verify the information.
-limited appraisal - -a type of appraisal review. some lenders accept this
drive-by type of review for low LTV or low risk loans.
-ad valorem taxes - -based on the assessed value of the property and the
existing tax rate.
-assessed value - -value set on the property for tax purposes. never a
reliable estimate of market value
-USPAP - -standards that have been established by the Appraisal Standards
Board of the Appraisal Founation
-appraisal - -an appraiser's opinion of value
-URAR - -Universal Residential Appraisal Report; Fannie Mae 1004
-three approaches to value - -sales comparison approach, cost approach,
income approach
-chronological age - -the actual age of the property in years
-effective age - -estimate of age based on the condition of the property
-Gross Rent Multiplier - -part of income approach, used if there are a lot of
rental properties in the area.
-GRM - -Gross Rent Multiplier. Sales Price ÷ monthly rent
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