Champions Principles of Real Estate 2 EXAM TEST Q&A ALREADY PASSED

Champions Principles of Real Estate 2 EXAM TEST Q&A ALREADY PASSED 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 deterioration 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 promissory 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 added 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 Characteristics 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, many 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