Texas Principles of Real Estate II Questions & Answers 100% Correct!

Mixed Numbers - ANSWERSA number containing both a whole number and a fraction (examples: 1⅓; 9⅞) Improper Fractions - ANSWERSa fraction with its numerator equal to or greater than its denominator Commission Calculation - ANSWERSSales price X rate of commission = total commission Solving for the Commission Rate - ANSWERSCommission Rate = Commission ÷ Price Solving for the Property's Price - ANSWERSPrice = Commission ÷ Commission Rate Profit - ANSWERSProfit (or Loss) = Selling price - Original cost Profit Percentage - ANSWERSPercentage of profit = Profit ÷ Original cost Profit Margin - ANSWERSProfit margin = Profit ÷ Selling price Interest - ANSWERSthe price paid for the use of borrowed money 3 types of interest calculations - ANSWERSSimple interest, add-on interest, and compound interest Simple interest - ANSWERSInterest = principal x rate x time Add-on interest - ANSWERSloan amount x contracted interest rate x number of payments Add-on interest APR - ANSWERSAPR = 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 - ANSWERSinterest which is computed on the principal amount plus the accrued interest. Compound Interest Formula - ANSWERSCompound amount = Initial deposit (1 + Interest rate)n Points - ANSWERSa one-time service charge to the borrower for making the loan Two types of points - ANSWERSorigination fee and discount points Loan-to-Value Ratio (LTV) - ANSWERSexpresses the relationship between a property's purchase price and its loan amount. Loan-to-Value formula - ANSWERSLTV ratio = (Loan amount ÷ Value) Area of a rectangle - ANSWERSArea = length x width Area of a square - ANSWERSArea = side x side Area of a triangle - ANSWERSArea = ½ base x height Perimeter - ANSWERSa lot or other shape is the sum of the length of all its sides. Acre - ANSWERSA measure of land equal to 43,560 square feet. Hectare - ANSWERSis equal to 10,000 square meters or approximately 2.47 acres. To convert acres to hectares - ANSWERSdivide the total acres by 2.47 Appraisal - ANSWERSis 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 - ANSWERSThis 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 - ANSWERSThis is information about the property's location - its country, region, city, and, most importantly, its neighborhood Steps in Appraisal Process - ANSWERS1. 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