Principles of Real Estate 2 Champion Exam With 100% Correct Answers 2024

Principles of Real Estate 2 Champion Exam With 100% Correct Answers 2024 What does D.U.S.T. stand for? - answer✔✔Demand, Utility, Scarcity, Transferability the percentage of value or sales price that a lender is willing to finance - answer✔✔Loan to Value Ratio (LTV) the value of a property is equal to the sum of the contributory value of each of its component parts. - answer✔✔principle of contribution the forces acting on a parcel of land are always affecting the value of the land - answer✔✔PRINCIPLE OF CHANGE the legal use that gives the greatest return in money and/or amenities. - answer✔✔HIGHEST AND BEST USE the purchase price is affected by the expectation of future appeal and benefits. - answer✔✔PRINCIPLE OF ANTICIPATION value is maximized when there is a reasonable degree of homogeneity, or sameness, in a neighborhood. - answer✔✔principle of conformity reduction in value of property from causes such as deterioration or obsolescence. - answer✔✔Depreciation 1. Physical dete rioration 2. functional obsolesce 3. external obsolesce - answer✔✔Types of depreciation the loss in a property's value due to daily wear and tear. - answer✔✔Physical deterioration The legal procedure under which property may be sold to satisfy an unpaid pr omissory note - answer✔✔Foreclosure the value of a commodity is influenced by the cost of acquiring a substitute or comparable item. - answer✔✔principle of substitution appraisal - answer✔✔someones opinion of value. The actual age of the property in years. - answer✔✔Chronological Age The appraiser's estimate of the age of the house based upon its ongoing maintenance and upgrades. - answer✔✔Effective Age TYPES OF APPRAISAL REVIEWS - answer✔✔1. Desk Review 2. Field Review to improve property when the value ad ded by the improvement exceeds cost of the improvement. - answer✔✔PRINCIPLE OF INCREASING AND DECREASING RETURNS demand for real estate is great and the supply is short, prices in the marketplace go up. - answer✔✔PRINCIPLE OF SUPPLY AND DEMAND The presence of lower -priced properties in the area will cause a decline in the value of the subject property - answer✔✔PRINCIPLE OF REGRESSION The absence of competition will cause prices to increase in the marketplace - answer✔✔PRINCIPLE OF COMPETITION Acronym for C haracteristics of Value - answer✔✔D.U.S.T. The price a willing seller will sell for and the price a willing buyer will pay. - answer✔✔Market value Most common misunderstood appraisal concept? - answer✔✔Market Value Does price equal value? - answer✔✔No, man y factors go into determining the market value of a property. Ad valorem - answer✔✔according to value What are taxes based on? - answer✔✔Assessed Value Appraiser must follow what? - answer✔✔Uniform Standards of Professional Appraisal Practice (USPAP). URAR is commonly referred as - answer✔✔1004 Uniform Residential Appraisal Report (URAR) is known as - answer✔✔Fannie Mae 1004 or Freddie Mac form 70 Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation - answer✔✔USPAP Value - answer✔✔Does not always equal price If a type of property in a market area is too abundant, it has reduced value - answer✔✔Scarcity Many lenders, especially when dealing with high -LTV loans, will order this type of appraisal - answer✔✔Field Review 3 approaches to value are - answer✔✔1. Sales Comparison Approach 2. Cost Approach 3. Income Approach appraiser focuses on recent sales in dete rmining the value of the subject - answer✔✔SALES COMPARISON APPROACH How many comparison sales will and appraiser gather? - answer✔✔Minimum of 3. some lenders require 4 The degree to which a comparable is adjusted in 2 ways - answer✔✔1. Net adjustment 2. gross adjustment the absolute adjustments made to the comparable, considering those that are positive and negative - answer✔✔Net Adjustments - the sum of all adjustments, whether or not they are positive or negative - answer✔✔Gross Adjustments the market va lue of the property considers how much a new structure of this size and type would currently cost to build. - answer✔✔COST APPROACH loss in desirability of the style, layout, or function of an element of a property over time. - answer✔✔Functional obsolesce nce to the loss in value of a property caused by factors outside of the property itself - answer✔✔External obsolescence Process of estimating the value of an income -producing property by capitalization of the annual net income. - answer✔✔INCOME APPROACH Gross Rent Multiplier formula - answer✔✔GRM = Sales Price ÷ Monthly Rent Value = Income ÷ Return - answer✔✔Income Capitalization Formula What is the final step in the appraisal process? - answer✔✔Reconciliation What is the percentage of value or sales price that a lender is willing to finance? - answer✔✔loan-to-value ratio (LTV) How many hours of education required for Appraiser Trainee? - answer✔✔75 hours How many appraiser trainee's can one person sponsor at one time? - answer✔✔No more than 3