TEXAS PRINCIPLES OF REAL ESTATE II FINAL PAPER
2025/2026 QUESTIONS WITH ANSWERS GRADED A+
✔✔What does an appraiser do after he or she decides which value approaches to use?
- ✔✔Determines the type of data needed & the sources to be consulted, then collects
the data
✔✔What is the definition of highest and best use? - ✔✔Legally permissible
Physically possible
Financially feasible
Maximally productive
✔✔What does allocation mean? - ✔✔A typical ratio of land value derived from
comparable properties & applied to the subject
✔✔The cost approach would be most reliable for which type of property? - ✔✔Special
use properties such as public or gov't structures (county courthouses marinas, unique
properties)
✔✔The income approach is more used for appraising what type of property? -
✔✔Commercial and investment properties
✔✔What forms can appraisal reports take? - ✔✔> Short- or long-form narrative reports,
> Form reports,
> Letter or oral reports
✔✔Several fast-food chain restaurants located on the same major street attract more
buyers than one fast-food restaurant would sitting by itself. Which principle of value
does this show? - ✔✔Competition
✔✔What is the principle of value that says a property is at its highest value when it
conforms with and fits into its surroundings? - ✔✔Conformity
✔✔Eric and Sarah had a new home built for $275,000. They have the largest home on
the block. Eric and Sarah's home will probably be affected by which principle of value? -
✔✔Rregression
✔✔The principle of supply and demand says the value of a property depends on what?
- ✔✔How many properties are available in an area, property prices, the number of
prospective buyers, and the price buyers are willing to pay
✔✔What is it called when a buyer will not pay more for a home than what the buyer
would pay for another home that is equally attractive and available? - ✔✔Substitution
,✔✔What is Progression? - ✔✔When lesser properties increase in value due to higher
properties in that vicinity
✔✔What is Regression? - ✔✔When higher properties decrease in value due to lesser
properties in the vicinity
✔✔Depreciation refers to a loss in value of a property due to factors such as what? -
✔✔> Wear and tear
> Age
> Poor location
✔✔When an appraiser is determining a property's value, what types of properties are
being compared to the one being appraised? - ✔✔Recently sold
✔✔The principle of supply and demand says the value of a property depends on what?
- ✔✔Number of properties in the area, Property prices, Number of prospective buyers
✔✔What's the difference between reproduction cost and replacement cost? -
✔✔Reproduction cost is the cost at today's prices of producing an exact duplicate of the
current building, including its improvements and its flaws.
Replacement cost is the construction cost at today's prices of producing a similar or
equivalent structure.
✔✔What approach uses the principle of substitution, which says that a buyer will not
pay more for the subject property, than they would pay for a property that is similar in
characteristics and amenities? - ✔✔Sales comparison approach which is based on the
principle of substitution
✔✔The income value approach is based on which two priciples? - ✔✔Anticipation and
Substitution
✔✔Gross rent multiplier formula - ✔✔Sales price ÷ Gross rent = Gross rent multiplier
✔✔Gross income multiplier - ✔✔Sales price ÷ Gross annual income = Gross income
multiplier
✔✔For what types of property would an appraiser use a gross rent multiplier? -
✔✔Single-family homes & duplexes. These could produce income but are not primarily
income producing properties
✔✔Estimated value formula - ✔✔Monthly rent x GRM = Estimated value
✔✔Four levels of real property appraisal classifications - ✔✔1. Appraiser Trainee
, 2. Licensed Residential Appraiser
3. Certified Residential Appraiser
4. Certified General Appraiser
✔✔The cost approach would be most reliable for what property? - ✔✔County court
houses
✔✔The income capitalization approach (income approach) is more specifically used for
appraising? - ✔✔Income or rental properties
✔✔A licensed residential appraiser must? - ✔✔provide 1000 hrs of real estate appraisal
experience
✔✔Appraisals are done to determine? - ✔✔Value
✔✔What is the first step in the cost valuation approach? - ✔✔Approximate land value
as if it were vacant
✔✔What is it called when an improvement to a property makes a change in the
properties value? - ✔✔Contribution
✔✔The appraisal process is? - ✔✔An ordered procedure
✔✔What is the major component of the total property value that does not depreciate? -
✔✔Land value
✔✔What aspects of a property site should a licensee consider when collecting
information about a sellers property for analysis? - ✔✔Shape, Landscape, Position &
orientation
✔✔Who decides on the final listing price? - ✔✔Seller
✔✔Which factors assist in determining the value of a home at any point in time? -
✔✔Location, Condition, Financing trends
✔✔Appraisers should look for comparable that have sold with in the last how many
months? - ✔✔3 to 6
✔✔When doing a CMA, what is the minimum number of sold properties that should be
included? - ✔✔Three (3)
✔✔Why should a licensee keep in mind that the information on pending sales is not a
reliable as on sold homes? - ✔✔Sale price could be lower or higher than the listing price
2025/2026 QUESTIONS WITH ANSWERS GRADED A+
✔✔What does an appraiser do after he or she decides which value approaches to use?
- ✔✔Determines the type of data needed & the sources to be consulted, then collects
the data
✔✔What is the definition of highest and best use? - ✔✔Legally permissible
Physically possible
Financially feasible
Maximally productive
✔✔What does allocation mean? - ✔✔A typical ratio of land value derived from
comparable properties & applied to the subject
✔✔The cost approach would be most reliable for which type of property? - ✔✔Special
use properties such as public or gov't structures (county courthouses marinas, unique
properties)
✔✔The income approach is more used for appraising what type of property? -
✔✔Commercial and investment properties
✔✔What forms can appraisal reports take? - ✔✔> Short- or long-form narrative reports,
> Form reports,
> Letter or oral reports
✔✔Several fast-food chain restaurants located on the same major street attract more
buyers than one fast-food restaurant would sitting by itself. Which principle of value
does this show? - ✔✔Competition
✔✔What is the principle of value that says a property is at its highest value when it
conforms with and fits into its surroundings? - ✔✔Conformity
✔✔Eric and Sarah had a new home built for $275,000. They have the largest home on
the block. Eric and Sarah's home will probably be affected by which principle of value? -
✔✔Rregression
✔✔The principle of supply and demand says the value of a property depends on what?
- ✔✔How many properties are available in an area, property prices, the number of
prospective buyers, and the price buyers are willing to pay
✔✔What is it called when a buyer will not pay more for a home than what the buyer
would pay for another home that is equally attractive and available? - ✔✔Substitution
,✔✔What is Progression? - ✔✔When lesser properties increase in value due to higher
properties in that vicinity
✔✔What is Regression? - ✔✔When higher properties decrease in value due to lesser
properties in the vicinity
✔✔Depreciation refers to a loss in value of a property due to factors such as what? -
✔✔> Wear and tear
> Age
> Poor location
✔✔When an appraiser is determining a property's value, what types of properties are
being compared to the one being appraised? - ✔✔Recently sold
✔✔The principle of supply and demand says the value of a property depends on what?
- ✔✔Number of properties in the area, Property prices, Number of prospective buyers
✔✔What's the difference between reproduction cost and replacement cost? -
✔✔Reproduction cost is the cost at today's prices of producing an exact duplicate of the
current building, including its improvements and its flaws.
Replacement cost is the construction cost at today's prices of producing a similar or
equivalent structure.
✔✔What approach uses the principle of substitution, which says that a buyer will not
pay more for the subject property, than they would pay for a property that is similar in
characteristics and amenities? - ✔✔Sales comparison approach which is based on the
principle of substitution
✔✔The income value approach is based on which two priciples? - ✔✔Anticipation and
Substitution
✔✔Gross rent multiplier formula - ✔✔Sales price ÷ Gross rent = Gross rent multiplier
✔✔Gross income multiplier - ✔✔Sales price ÷ Gross annual income = Gross income
multiplier
✔✔For what types of property would an appraiser use a gross rent multiplier? -
✔✔Single-family homes & duplexes. These could produce income but are not primarily
income producing properties
✔✔Estimated value formula - ✔✔Monthly rent x GRM = Estimated value
✔✔Four levels of real property appraisal classifications - ✔✔1. Appraiser Trainee
, 2. Licensed Residential Appraiser
3. Certified Residential Appraiser
4. Certified General Appraiser
✔✔The cost approach would be most reliable for what property? - ✔✔County court
houses
✔✔The income capitalization approach (income approach) is more specifically used for
appraising? - ✔✔Income or rental properties
✔✔A licensed residential appraiser must? - ✔✔provide 1000 hrs of real estate appraisal
experience
✔✔Appraisals are done to determine? - ✔✔Value
✔✔What is the first step in the cost valuation approach? - ✔✔Approximate land value
as if it were vacant
✔✔What is it called when an improvement to a property makes a change in the
properties value? - ✔✔Contribution
✔✔The appraisal process is? - ✔✔An ordered procedure
✔✔What is the major component of the total property value that does not depreciate? -
✔✔Land value
✔✔What aspects of a property site should a licensee consider when collecting
information about a sellers property for analysis? - ✔✔Shape, Landscape, Position &
orientation
✔✔Who decides on the final listing price? - ✔✔Seller
✔✔Which factors assist in determining the value of a home at any point in time? -
✔✔Location, Condition, Financing trends
✔✔Appraisers should look for comparable that have sold with in the last how many
months? - ✔✔3 to 6
✔✔When doing a CMA, what is the minimum number of sold properties that should be
included? - ✔✔Three (3)
✔✔Why should a licensee keep in mind that the information on pending sales is not a
reliable as on sold homes? - ✔✔Sale price could be lower or higher than the listing price
