PRINCIPLES OF REAL ESTATE II
QUESTIONS WITH COMPLETE
SOLUTION
y14. Using the market approach to value in appraising a property, which statement would be true? - The
comparable with the least adjustments is given the most weight.
14. The conversion of future income into present value is known as - capitalization.
14. In appraising an historically significant residence built in the Victorian era using the cost approach, an
appraiser will probably appraise it on the basis of its - reproduction cost.
14. Vacant land would best be appraised using: - the sales comparison approach.
14. Which of the following results from factors outside the property? - economic obsolescence.
14. Which of the following would have the highest appraised value using the Income approach? - -
Apartment with a Net Operating Income of $400,000 using a cap rate of 10%
-Office Building with a Net Operating Income of $410,000 using a cap rate of 9%
-Warehouse with a Net Operating Income of $390,000 using a cap rate of 8%
♥Shopping center with a Net Operating Income of $350,000 using a cap rate of 7%
(idk why find out why)
14. Seller motivation is considered most in the - competitive market analysis.
14. The principle that holds that maximum value is realized when a reasonable degree of homogeneity is
present in a neighborhood is known as the principle of - conformity.
14. After all adjustments are made to a comparable property, its comparative value for appraisal
purposes is known as its - adjusted market price.
14. Which of the following is most likely to provide only a rough estimate of the value of a rental
property? - Gross rent multiplier.
14. Appraisal standards that are used for the valuation process are established by the Uniform Standards
of Professional Appraisal Practice. (USPAP) - True
14. The three approaches to establishing value of a property are the market approach, the sales
comparison approach and the cost approach. - False
, (market approach, income approach, cost approach??)
14.The cost approach takes into account the land value, the cost of rebuilding the structure less
depreciation. - True
14. When comparing previous sales, adjustments are made to the subject property in order to determine
its market value. - False
14. Landscaping is not given value in an appraisal. - False
14. The competitive market analysis is the estimate of value done by real estate licensees. - True
14. The gross rent multiplier is a calculated number used on income producing properties that provides a
way to compare market values. - True
14. The reproduction cost method is more practical than the replacement cost method of determining
value. - False
14. Economic obsolescence is defined as loss of value due to external forces or events. - True
14. Operating expense is subtracted from effective gross income to obtain the net operating cost. - True
15. With regard to mortgage theory, which of the pledge methods is dominant in Texas? - The deed of
trust.
15. Comparing a deed of trust to a mortgage, which of the following would be unique to the deed of
trust? - Power of sale.
15. What clause in a mortgage allows the lender to demand immediate payment of the entire loan if the
borrower defaults? - The acceleration clause.
15. In Texas, after a deed of trust foreclosure sale, the period of redemption given to the borrower - ends
when the property is sold in foreclosure.
15. The borrower in a deed of trust is the - trustor.
15. Which of the following clauses would be found in a deed of trust but not in a mortgage? - A power of
sale clause.
15. Evidence of the amount and terms of a borrower's debt to a lender is provided by means of - a
promissory note.
15. If a borrower fails to make payments when due, the lender may demand immediate payment of the
entire balance under the terms of the - acceleration clause.
15. The clause that gives the lender the right to call in the note if the mortgaged property is sold or
otherwise conveyed by the borrower is known as - the due on sale clause.
15. If the trustee should die or be dissolved before the debt secured by a deed-of-trust is paid off, a
successor may be named by - the beneficiary.
15. Hypothecation is when the borrower has possession of the property during the time he is paying off
his mortgage. - True
QUESTIONS WITH COMPLETE
SOLUTION
y14. Using the market approach to value in appraising a property, which statement would be true? - The
comparable with the least adjustments is given the most weight.
14. The conversion of future income into present value is known as - capitalization.
14. In appraising an historically significant residence built in the Victorian era using the cost approach, an
appraiser will probably appraise it on the basis of its - reproduction cost.
14. Vacant land would best be appraised using: - the sales comparison approach.
14. Which of the following results from factors outside the property? - economic obsolescence.
14. Which of the following would have the highest appraised value using the Income approach? - -
Apartment with a Net Operating Income of $400,000 using a cap rate of 10%
-Office Building with a Net Operating Income of $410,000 using a cap rate of 9%
-Warehouse with a Net Operating Income of $390,000 using a cap rate of 8%
♥Shopping center with a Net Operating Income of $350,000 using a cap rate of 7%
(idk why find out why)
14. Seller motivation is considered most in the - competitive market analysis.
14. The principle that holds that maximum value is realized when a reasonable degree of homogeneity is
present in a neighborhood is known as the principle of - conformity.
14. After all adjustments are made to a comparable property, its comparative value for appraisal
purposes is known as its - adjusted market price.
14. Which of the following is most likely to provide only a rough estimate of the value of a rental
property? - Gross rent multiplier.
14. Appraisal standards that are used for the valuation process are established by the Uniform Standards
of Professional Appraisal Practice. (USPAP) - True
14. The three approaches to establishing value of a property are the market approach, the sales
comparison approach and the cost approach. - False
, (market approach, income approach, cost approach??)
14.The cost approach takes into account the land value, the cost of rebuilding the structure less
depreciation. - True
14. When comparing previous sales, adjustments are made to the subject property in order to determine
its market value. - False
14. Landscaping is not given value in an appraisal. - False
14. The competitive market analysis is the estimate of value done by real estate licensees. - True
14. The gross rent multiplier is a calculated number used on income producing properties that provides a
way to compare market values. - True
14. The reproduction cost method is more practical than the replacement cost method of determining
value. - False
14. Economic obsolescence is defined as loss of value due to external forces or events. - True
14. Operating expense is subtracted from effective gross income to obtain the net operating cost. - True
15. With regard to mortgage theory, which of the pledge methods is dominant in Texas? - The deed of
trust.
15. Comparing a deed of trust to a mortgage, which of the following would be unique to the deed of
trust? - Power of sale.
15. What clause in a mortgage allows the lender to demand immediate payment of the entire loan if the
borrower defaults? - The acceleration clause.
15. In Texas, after a deed of trust foreclosure sale, the period of redemption given to the borrower - ends
when the property is sold in foreclosure.
15. The borrower in a deed of trust is the - trustor.
15. Which of the following clauses would be found in a deed of trust but not in a mortgage? - A power of
sale clause.
15. Evidence of the amount and terms of a borrower's debt to a lender is provided by means of - a
promissory note.
15. If a borrower fails to make payments when due, the lender may demand immediate payment of the
entire balance under the terms of the - acceleration clause.
15. The clause that gives the lender the right to call in the note if the mortgaged property is sold or
otherwise conveyed by the borrower is known as - the due on sale clause.
15. If the trustee should die or be dissolved before the debt secured by a deed-of-trust is paid off, a
successor may be named by - the beneficiary.
15. Hypothecation is when the borrower has possession of the property during the time he is paying off
his mortgage. - True
