Exam Prep - National Section III - Trebs
2024 (100% Correct)
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - ANSWERSC. An estimate of the most probable price it should bring.
Market price is the sold price. Value without improvements would be the value of only the land.
N3. The theoretical appraisal principle on which the market data approach is based is the:
A. Principle of supply and demand
B. Principle of substitution
C. Principle of increasing and diminishing returns
D. Principle of conformity - ANSWERSB. Principle of substitution. Supply and demand means if there are
few properties and many buyers the price will be high. If there are few buyers and many properties, the
price will be low. Principle of conformity means that the maximum value is realized when there is
conformity in an area. Zoning results in conformity in a neighborhood.
N3. Which of the following is NOT an element of value?
A. Highest and best use
B. Utility
C. Effective demand
D. Scarcity - ANSWERSA. Highest and best use. Remember the acronym DUST when thinking about the
elements of Value: Demand, Utility, Scarcity, and Transferability.
N3. One influence on the market value of a property is the law of __________.
A. The Homeowner's Association
B. Consumer protection
, C. Rentability
D. Supply and demand - ANSWERSD. Supply and demand. If the supply of houses increases, prices fall. If
the supply of houses is scarce for the market demand, prices will rise (sometimes dramatically).
N3. What is the principle that states optimum value is present when residences within a neighborhood
are similar to one another?
A. Principle of conformity
B. Principle of Increasing returns
C. Principle of progression
D. Principle of contribution - ANSWERSA. The principle of conformity. Through local zoning ordinances,
the government encourages conformity by restricting land use. A market also sets standards of
conformity, especially in terms of price. For example, the value of an over-improved property may
decline or regress toward the value level of surrounding, conforming properties. The styles and uses of
the properties in an area may conform for several reasons: economic influences, shared preferences of
owners, and enforcement of uniform standards by means of zoning.
N3. What is the perception that real property is a continually appreciating asset?
A. Principle of change
B. Principle of timing
C. Principle of anticipation
D. Principle of progression - ANSWERSC. Principle of anticipation. In the real estate market, the current
value of a property usually is not based on its historical prices or the cost of creation. Value is based on
market participants' expectations of future acquisition benefits. The value of an owner-occupied
property is based primarily on expected advantages, amenities, and pleasures of ownership and
occupancy.
N3. Several $150,000 homes were built in an area where the existing homes had a value of $400,000.
The value of the existing homes declined. Which real estate principal applies?
A. Regression
B. Competition
C. Substitution
D. Integration - ANSWERSA. Regression. The $150,000 homes brought the $400,000 homes down in
value. Regression means the homes have gone down in value.
2024 (100% Correct)
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - ANSWERSC. An estimate of the most probable price it should bring.
Market price is the sold price. Value without improvements would be the value of only the land.
N3. The theoretical appraisal principle on which the market data approach is based is the:
A. Principle of supply and demand
B. Principle of substitution
C. Principle of increasing and diminishing returns
D. Principle of conformity - ANSWERSB. Principle of substitution. Supply and demand means if there are
few properties and many buyers the price will be high. If there are few buyers and many properties, the
price will be low. Principle of conformity means that the maximum value is realized when there is
conformity in an area. Zoning results in conformity in a neighborhood.
N3. Which of the following is NOT an element of value?
A. Highest and best use
B. Utility
C. Effective demand
D. Scarcity - ANSWERSA. Highest and best use. Remember the acronym DUST when thinking about the
elements of Value: Demand, Utility, Scarcity, and Transferability.
N3. One influence on the market value of a property is the law of __________.
A. The Homeowner's Association
B. Consumer protection
, C. Rentability
D. Supply and demand - ANSWERSD. Supply and demand. If the supply of houses increases, prices fall. If
the supply of houses is scarce for the market demand, prices will rise (sometimes dramatically).
N3. What is the principle that states optimum value is present when residences within a neighborhood
are similar to one another?
A. Principle of conformity
B. Principle of Increasing returns
C. Principle of progression
D. Principle of contribution - ANSWERSA. The principle of conformity. Through local zoning ordinances,
the government encourages conformity by restricting land use. A market also sets standards of
conformity, especially in terms of price. For example, the value of an over-improved property may
decline or regress toward the value level of surrounding, conforming properties. The styles and uses of
the properties in an area may conform for several reasons: economic influences, shared preferences of
owners, and enforcement of uniform standards by means of zoning.
N3. What is the perception that real property is a continually appreciating asset?
A. Principle of change
B. Principle of timing
C. Principle of anticipation
D. Principle of progression - ANSWERSC. Principle of anticipation. In the real estate market, the current
value of a property usually is not based on its historical prices or the cost of creation. Value is based on
market participants' expectations of future acquisition benefits. The value of an owner-occupied
property is based primarily on expected advantages, amenities, and pleasures of ownership and
occupancy.
N3. Several $150,000 homes were built in an area where the existing homes had a value of $400,000.
The value of the existing homes declined. Which real estate principal applies?
A. Regression
B. Competition
C. Substitution
D. Integration - ANSWERSA. Regression. The $150,000 homes brought the $400,000 homes down in
value. Regression means the homes have gone down in value.
