CHAMPIONS PRINCIPLES OF REAL ESTATE 2 EXAM WITH COMPLETE SOLUTIONS

CHAMPIONS PRINCIPLES OF REAL
ESTATE 2 EXAM WITH COMPLETE
SOLUTIONS




appraisal - correct answer-value of a property maybe affected by social, economic,
b bb b b b b b b b b b


govt and environmental influences
b b b b




Loan-to-Value Ratio (LTV) - correct answer-The percentage of value or sales price
b b b bb b b b b b b b


that a lender is willing to finance.
b b b b b b b




limited appraisal report - correct answer-exterior only/drive by inspection. deemed
b b b bb b b b b b


bas low risk loan
b b b




highest and best use of property - correct answer-legal use that gives the greatest
b b b b b b bb b b b b b b


return
b




Principal of Contribution - correct answer-cost does not equal value
b b b bb b b b b b




Residential Mortgage Loan Originators (RMLO) - correct answer-Must be certified
b b b b b bb b b b


licence holders and is mandated by the SAFE ACT (TX dept of savings and
b b b b b b b b b b b b b b


mortgage lending)
b b




Principle of Anticipation - correct answer-purchase price is affected by the
b b b bb b b b b b b


expectation of future appeal and benefits
b b b b b b

, Principal of Substitution - correct answer-value of a commodity is influenced by the
b b b bb b b b b b b b b


cost of acquiring subsitute or comparable item
b b b b b b b




Principal of progression - correct answer-value of properties around yours goes up;
b b b bb b b b b b b b


so does yours
b b b




Principal of Regression - correct answer-The Value of more expensive home placed
b b b bb b b b b b b b


in a neighborhood of less expensive homes will drop in value
b b b b b b b b b b b




Market Value - correct answer-the most probable price a property should bring in a
b b bb b b b b b b b b b b


competitive and open market under fair conditions requisit to a fair sale.
b b b b b b b b b b b b




appraisal process - correct answer-The value of a property may be affected by
b b bb b b b b b b b b b


social, economic, governmental and environmental influences. An appraiser must
b b b b b b b b b


always be aware of these influences and possible changes in them that could affect
b b b b b b b b b b b b b b


market value.
b b




Three approaches to value - correct answer-(1) The Sales Comparison Approach
b b b b bb b b b b b b


(2) The Cost Approach,
b b b b


(3) The Income Approach.
b b b




Sales Comparison Approach - correct answer-A value for existing properties method
b b b bb b b b b b b


for comparing similar properties to the subject property. this is the best indicator.
b b b b b b b b b b b b b




Market Data Approach - correct answer-aka: sales comparison approach
b b b bb b b b b




Physical Deterioration - correct answer-Loss of value of a building from its
b b bb b b b b b b b b


reproduction cost, resulting from wear and tear over time.
b b b b b b b b b




Functional Obsolescence - correct answer-loss of desirability of the style, layout or
b b bb b b b b b b b b


function of an element of property over time
b b b b b b b b




External Obsolescence - correct answer-Losses of property value caused by forces
b b bb b b b b b b b


or conditions beyond the borders of the property. ie. zoning, highways
b b b b b b b b b b b




promissary note - correct answer-evidence of a lean. simply a note
b b bb b b b b b b b




Foreclosure - correct answer-secured property may be sold ti satisfy the unpaid
b bb b b b b b b b b b


promissory note.
b b




Primary Mortgage Market - correct answer-the loan origination market where
b b b bb b b b b b


borrowers and lenders negotiate mortgage terms
b b b b b b




funding - correct answer-transferring funds to a title co for disbursement when loan
b bb b b b b b b b b b b


bis approved.
b




Servicing - correct answer-The process of collecting loan monthly payments,
b bb b b b b b b b


keeping records and balances, collecting and paying taxes and insurance
b b b b b b b b b b