Principles of Real Estate 2 Champion Questions and Correct Solutions 2024/2025

Principles of Real Estate 2 Champion Questions and Correct Solutions 2024 What does D.U.S.T. stand for? - Answer -Demand, Utility, Scarcity, Transferability the percentage of value or sales price that a lender is willing to finance - Answer -Loan to Value Ratio (LTV) the value of a property is equal to the sum of the contributory value of each of its component parts. - Answer -principle of contribution the forces acting on a parcel of land are always affecting the value of the land - Answer -PRINCIPLE OF CHANGE the legal use that gives the greatest return in money and/or amenities. - Answer -HIGHEST AND BEST USE the purchase price is affected by the expectation of future appeal and benefits. - Answer -PRINCIPLE OF ANTICIPATION value is maximized when there is a reasonable degree of homogeneity, or sameness, in a neighborhood. - Answer -principle of conformity reduction in value of property from causes such as deterioration or obsolescence. - Answer - Depreciation 1. Physical deterioration 2. functional obsolesce 3. external obsolesce - Answer -Types of depreciation the loss in a property's value due to daily wear and tear. - Answer -Physical deterioration The legal procedure under which property may be sold to satisfy an unpaid promissory note - Answer -Foreclosure the value of a commodity is influenced by the cost of acquiring a substitute or comparable item. - Answer -principle of substitution appraisal - Answer -someones opinion of value.The actual age of the property in years. - Answer -Chronological Age The appraiser's estimate of the age of the house based upon its ongoing maintenance and upgrades. - Answer -Effective Age TYPES OF APPRAISAL REVIEWS - Answer -1. Desk Review 2. Field Review to improve property when the value added by the improvement exceeds cost of the improvement. - Answer -PRINCIPLE OF INCREASING AND DECREASING RETURNS demand for real estate is great and the supply is short, prices in the marketplace go up. - Answer - PRINCIPLE OF SUPPLY AND DEMAND The presence of lower-priced properties in the area will cause a decline in the value of the subject property - Answer -PRINCIPLE OF REGRESSION The absence of competition will cause prices to increase in the marketplace - Answer -PRINCIPLE OF COMPETITION Acronym for Characteristics of Value - Answer -D.U.S.T. The price a willing seller will sell for and the price a willing buyer will pay. - Answer -Market value Most common misunderstood appraisal concept? - Answer -Market Value Does price equal value? - Answer -No, many factors go into determining the market value of a property. Ad valorem - Answer -according to value What are taxes based on? - Answer -Assessed Value Appraiser must follow what? - Answer -Uniform Standards of Professional Appraisal Practice (USPAP). URAR is commonly referred as - Answer -1004 Uniform Residential Appraisal Report (URAR) is known as - Answer -Fannie Mae 1004 or Freddie Mac form 70 Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation - Answer -USPAP Value - Answer -Does not always equal price If a type of property in a market area is too abundant, it has reduced value - Answer -Scarcity Many lenders, especially when dealing with high-LTV loans, will order this type of appraisal - Answer - Field