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Principles of real estate II
(Champions) Questions and
Answers (100% Pass)
Functional obsolescence
✓ Refers to the loss in desirability of the style, layout or function of an
element of a property over time
Sales comparison
✓ best indicator of value for existing properties
highest and best use
✓ the legal use for property that gives the greatest return in money
and/or amenities
external obsolescence
✓ the loss in value of a property caused by factors outside the property
itself
principle of contribution
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✓ suggests the value of a property is equal to the sum of the contributory
value of each of its components. most important aspect is that cost
does not equal value
most important aspect of principle of contribution
✓ cost does not equal value (for example...swimming pool)
principle of change
✓ forces acting on a parcel of land are always affecting the value of the
land
principle of anticipation
✓ the purchase price is affected by the expectation of future appeal
and benefits
principle of substitution
✓ the value of a commodity if influenced by the cost of acquiring a
substitute or comparable item.
principle of conformity
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✓ value is maximized when there is a reasonable degree of homogeneity
in a neighborhood
principle of increasing and decreasing returns
✓ when the value added by an improvement exceeds the cost...do not
over improve.
principle of supply and demand
✓ when demand is high and supply is short, prices go up - and vice versa
principle of regression
✓ presence of lower-priced properties in the area will cause a decline in
the value of the subject property
principle of progression
✓ presence of higher-priced properties in the area will cause an increase
in the value of the subject property
principle of competition
Master01 |Excellent Study Material| Latest update
Principles of real estate II
(Champions) Questions and
Answers (100% Pass)
Functional obsolescence
✓ Refers to the loss in desirability of the style, layout or function of an
element of a property over time
Sales comparison
✓ best indicator of value for existing properties
highest and best use
✓ the legal use for property that gives the greatest return in money
and/or amenities
external obsolescence
✓ the loss in value of a property caused by factors outside the property
itself
principle of contribution
Master01 |Excellent Study Material| Latest update
, 1|Page | © copyright Master01| Grade A+
✓ suggests the value of a property is equal to the sum of the contributory
value of each of its components. most important aspect is that cost
does not equal value
most important aspect of principle of contribution
✓ cost does not equal value (for example...swimming pool)
principle of change
✓ forces acting on a parcel of land are always affecting the value of the
land
principle of anticipation
✓ the purchase price is affected by the expectation of future appeal
and benefits
principle of substitution
✓ the value of a commodity if influenced by the cost of acquiring a
substitute or comparable item.
principle of conformity
Master01 |Excellent Study Material| Latest update
, 1|Page | © copyright Master01| Grade A+
✓ value is maximized when there is a reasonable degree of homogeneity
in a neighborhood
principle of increasing and decreasing returns
✓ when the value added by an improvement exceeds the cost...do not
over improve.
principle of supply and demand
✓ when demand is high and supply is short, prices go up - and vice versa
principle of regression
✓ presence of lower-priced properties in the area will cause a decline in
the value of the subject property
principle of progression
✓ presence of higher-priced properties in the area will cause an increase
in the value of the subject property
principle of competition
Master01 |Excellent Study Material| Latest update
