1
Principles of real estate II (Champions) Questions
and Answers updated (100% Pass)
Functional obsolescence - (answer)Refers to the loss in desirability of the style,
layout or function of an element of a property over time
Sales comparison - (answer)best indicator of value for existing properties
highest and best use - (answer)the legal use for property that gives the
greatest return in money and/or amenities
external obsolescence - (answer)the loss in value of a property caused by
factors outside the property itself
principle of contribution - (answer)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 - (answer)cost does not
equal value (for example...swimming pool)
principle of change - (answer)forces acting on a parcel of land are always
affecting the value of the land
, 2
principle of anticipation - (answer)the purchase price is affected by the
expectation of future appeal and benefits
principle of substitution - (answer)the value of a commodity if influenced by
the cost of acquiring a substitute or comparable item.
principle of conformity - (answer)value is maximized when there is a
reasonable degree of homogeneity in a neighborhood
principle of increasing and decreasing returns - (answer)when the value added
by an improvement exceeds the cost...do not over improve.
principle of supply and demand - (answer)when demand is high and supply is
short, prices go up - and vice versa
principle of regression - (answer)presence of lower-priced properties in the
area will cause a decline in the value of the subject property
principle of progression - (answer)presence of higher-priced properties in the
area will cause an increase in the value of the subject property
principle of competition - (answer)the absence of competition will cause prices
to increase in the marketplace. Increased competition will bring prices down.
, 3
characteristics of value - (answer)DUST; demand, utility, scarcity, transferability
market value - (answer)the most probable pice a property should bring in a
competitive and open market under all conditions requisite to a fair sale.
types of appraisal reviews - (answer)desk review and field review`
desk review - (answer)a type of appraisal review. reviews cover a checklist of
items as they analyze the appraisal report
field review - (answer)a type of appraisal review. many lenders, especially high
LTV loans, will order a field review of the appraisal. Independent third-party
appraiser will review the report, then verify the information.
limited appraisal - (answer)a type of appraisal review. some lenders accept this
drive-by type of review for low LTV or low risk loans.
ad valorem taxes - (answer)based on the assessed value of the property and
the existing tax rate.
Principles of real estate II (Champions) Questions
and Answers updated (100% Pass)
Functional obsolescence - (answer)Refers to the loss in desirability of the style,
layout or function of an element of a property over time
Sales comparison - (answer)best indicator of value for existing properties
highest and best use - (answer)the legal use for property that gives the
greatest return in money and/or amenities
external obsolescence - (answer)the loss in value of a property caused by
factors outside the property itself
principle of contribution - (answer)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 - (answer)cost does not
equal value (for example...swimming pool)
principle of change - (answer)forces acting on a parcel of land are always
affecting the value of the land
, 2
principle of anticipation - (answer)the purchase price is affected by the
expectation of future appeal and benefits
principle of substitution - (answer)the value of a commodity if influenced by
the cost of acquiring a substitute or comparable item.
principle of conformity - (answer)value is maximized when there is a
reasonable degree of homogeneity in a neighborhood
principle of increasing and decreasing returns - (answer)when the value added
by an improvement exceeds the cost...do not over improve.
principle of supply and demand - (answer)when demand is high and supply is
short, prices go up - and vice versa
principle of regression - (answer)presence of lower-priced properties in the
area will cause a decline in the value of the subject property
principle of progression - (answer)presence of higher-priced properties in the
area will cause an increase in the value of the subject property
principle of competition - (answer)the absence of competition will cause prices
to increase in the marketplace. Increased competition will bring prices down.
, 3
characteristics of value - (answer)DUST; demand, utility, scarcity, transferability
market value - (answer)the most probable pice a property should bring in a
competitive and open market under all conditions requisite to a fair sale.
types of appraisal reviews - (answer)desk review and field review`
desk review - (answer)a type of appraisal review. reviews cover a checklist of
items as they analyze the appraisal report
field review - (answer)a type of appraisal review. many lenders, especially high
LTV loans, will order a field review of the appraisal. Independent third-party
appraiser will review the report, then verify the information.
limited appraisal - (answer)a type of appraisal review. some lenders accept this
drive-by type of review for low LTV or low risk loans.
ad valorem taxes - (answer)based on the assessed value of the property and
the existing tax rate.
