REE 3043 FINAL EXAM ACTUAL QUESTIONS AND
SOLUTIONS GRADED A+
✔✔The Freddie Mac: Home Value Suite is: - ✔✔An automated valuation system which
combines complex regression with repeat sales and other statistical techniques such as
Bayesian analysis.
✔✔A comparable property sold 12 months ago for $200,000. This sale price is adjusted
to a normal sale price of $180,000. If the appropriate adjustment for market conditions
(without compounding) is 0.3% per month, what would be the market-adjusted normal
sale price of the comparable property? - ✔✔$186,480
✔✔Calculate the capitalization rate given the following information:
Sale price:
$10,000,000
Net operating income:
$750,000
Potential gross income:
3,000,000
income: - ✔✔7.5%
✔✔Using the direct capitalization approach, what approximate value should the
appraiser estimate for a property whose one-year net operating income equals
$200,000, the "cap rate" for this class of properties is .098 and the multiple, M0 = 10.2?
- ✔✔$ 2,040,000
✔✔Calculate the net operating income, given the following information:
Potential gross income: $700,000
Capitalization rate: 9%
Vacancy and collection losses: 15%
Selling expenses: 5%
Sales price: $4,000,000 - ✔✔$360,000
✔✔Given the following information, what is the effective gross income?
Property: 6 office units
Contract rents per unit: $6000 per month
Vacancy and collection losses: 15%
Operating expenses: 30%
CAPEX: 10% - ✔✔$367,200
, ✔✔A comparable property sold 6 months ago for $300,000. The adjustments for the
various elements of comparison have been calculated as follows:
Location: - 5%
Market conditions: + 8%
Physical characteristics: + $10,000
Financing terms: - $10,000
Conditions of sale: 0
Legal characteristics: 0
Use: 0
Non-realty items: - $5,000
What is the comparable's final adjusted sales price? - ✔✔$302,540
✔✔Operating expenses can be divided into two categories: variable and fixed
expenses. Which of the following best exemplifies a fixed expense? - ✔✔Local property
taxes.
✔✔An appraiser estimates that a property will produce NOI1 of $50,000, the required
yield, Y0, is 12 percent, and the growth rate, g, is 2.0 percent. What is the total property
value? - ✔✔$500,000
✔✔ When a buyer of a property with an existing mortgage loan acquires the property
and signs the note for an existing loan, the buyer is acquiring the property: - ✔✔by
assumption.
✔✔Which of these points in a mortgage loan would be addressed in the mortgage
(possibly in the note as well)? - ✔✔Escrows
✔✔The Real Estate Settlement Procedures Act does which of these: - ✔✔All of these
statements are correct.
( Requires that the borrower be able to inspect the closing statement a day before the
actual closing. Prohibits kickbacks between vendors of closing-related services and
lenders. Requires that a borrower receive a good faith estimate of closing costs shortly
after a loan application.Requires the use of a standard settlement statement for a
mortgage loan closing.)
✔✔A type of loan that has grown in volume in recent years, which has raised concerns
about predatory lending practices, is the: - ✔✔sub-prime mortgage.
✔✔With what type of loan security arrangement is the deed held by a neutral party and
returned upon payment of the mortgage in full? - ✔✔Deed of trust.
✔✔Bob lost his job and has been consistently late paying his bills. The bank recognizes
a deterioration in Bob's credit score and has notified him that he must pay his home
SOLUTIONS GRADED A+
✔✔The Freddie Mac: Home Value Suite is: - ✔✔An automated valuation system which
combines complex regression with repeat sales and other statistical techniques such as
Bayesian analysis.
✔✔A comparable property sold 12 months ago for $200,000. This sale price is adjusted
to a normal sale price of $180,000. If the appropriate adjustment for market conditions
(without compounding) is 0.3% per month, what would be the market-adjusted normal
sale price of the comparable property? - ✔✔$186,480
✔✔Calculate the capitalization rate given the following information:
Sale price:
$10,000,000
Net operating income:
$750,000
Potential gross income:
3,000,000
income: - ✔✔7.5%
✔✔Using the direct capitalization approach, what approximate value should the
appraiser estimate for a property whose one-year net operating income equals
$200,000, the "cap rate" for this class of properties is .098 and the multiple, M0 = 10.2?
- ✔✔$ 2,040,000
✔✔Calculate the net operating income, given the following information:
Potential gross income: $700,000
Capitalization rate: 9%
Vacancy and collection losses: 15%
Selling expenses: 5%
Sales price: $4,000,000 - ✔✔$360,000
✔✔Given the following information, what is the effective gross income?
Property: 6 office units
Contract rents per unit: $6000 per month
Vacancy and collection losses: 15%
Operating expenses: 30%
CAPEX: 10% - ✔✔$367,200
, ✔✔A comparable property sold 6 months ago for $300,000. The adjustments for the
various elements of comparison have been calculated as follows:
Location: - 5%
Market conditions: + 8%
Physical characteristics: + $10,000
Financing terms: - $10,000
Conditions of sale: 0
Legal characteristics: 0
Use: 0
Non-realty items: - $5,000
What is the comparable's final adjusted sales price? - ✔✔$302,540
✔✔Operating expenses can be divided into two categories: variable and fixed
expenses. Which of the following best exemplifies a fixed expense? - ✔✔Local property
taxes.
✔✔An appraiser estimates that a property will produce NOI1 of $50,000, the required
yield, Y0, is 12 percent, and the growth rate, g, is 2.0 percent. What is the total property
value? - ✔✔$500,000
✔✔ When a buyer of a property with an existing mortgage loan acquires the property
and signs the note for an existing loan, the buyer is acquiring the property: - ✔✔by
assumption.
✔✔Which of these points in a mortgage loan would be addressed in the mortgage
(possibly in the note as well)? - ✔✔Escrows
✔✔The Real Estate Settlement Procedures Act does which of these: - ✔✔All of these
statements are correct.
( Requires that the borrower be able to inspect the closing statement a day before the
actual closing. Prohibits kickbacks between vendors of closing-related services and
lenders. Requires that a borrower receive a good faith estimate of closing costs shortly
after a loan application.Requires the use of a standard settlement statement for a
mortgage loan closing.)
✔✔A type of loan that has grown in volume in recent years, which has raised concerns
about predatory lending practices, is the: - ✔✔sub-prime mortgage.
✔✔With what type of loan security arrangement is the deed held by a neutral party and
returned upon payment of the mortgage in full? - ✔✔Deed of trust.
✔✔Bob lost his job and has been consistently late paying his bills. The bank recognizes
a deterioration in Bob's credit score and has notified him that he must pay his home
