TREBS EXAM PREP - NATIONAL SECTION III
QUESTIONS & ANSWERS
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - Answer -C. An estimate of the most probable price
it should bring. Market price is the sold price. Value without improvements would be the
value of only the land.
N3. The theoretical appraisal principle on which the market data approach is based is
the:
A. Principle of supply and demand
B. Principle of substitution
C. Principle of increasing and diminishing returns
D. Principle of conformity - Answer -B. Principle of substitution. Supply and demand
means if there are few properties and many buyers the price will be high. If there are
few buyers and many properties, the price will be low. Principle of conformity means
that the maximum value is realized when there is conformity in an area. Zoning results
in conformity in a neighborhood.
N3. Which of the following is NOT an element of value?
A. Highest and best use
B. Utility
C. Effective demand
D. Scarcity - Answer -A. Highest and best use. Remember the acronym DUST when
thinking about the elements of Value: Demand, Utility, Scarcity, and Transferability.
N3. One influence on the market value of a property is the law of __________.
A. The Homeowner's Association
B. Consumer protection
C. Rentability
D. Supply and demand - Answer -D. Supply and demand. If the supply of houses
increases, prices fall. If the supply of houses is scarce for the market demand, prices
will rise (sometimes dramatically).
N3. What is the principle that states optimum value is present when residences within a
neighborhood are similar to one another?
A. Principle of conformity
B. Principle of Increasing returns
C. Principle of progression
D. Principle of contribution - Answer -A. The principle of conformity. Through local
zoning ordinances, the government encourages conformity by restricting land use. A
, market also sets standards of conformity, especially in terms of price. For example, the
value of an over-improved property may decline or regress toward the value level of
surrounding, conforming properties. The styles and uses of the properties in an area
may conform for several reasons: economic influences, shared preferences of owners,
and enforcement of uniform standards by means of zoning.
N3. What is the perception that real property is a continually appreciating asset?
A. Principle of change
B. Principle of timing
C. Principle of anticipation
D. Principle of progression - Answer -C. Principle of anticipation. In the real estate
market, the current value of a property usually is not based on its historical prices or the
cost of creation. Value is based on market participants' expectations of future
acquisition benefits. The value of an owner-occupied property is based primarily on
expected advantages, amenities, and pleasures of ownership and occupancy.
N3. Several $150,000 homes were built in an area where the existing homes had a
value of $400,000. The value of the existing homes declined. Which real estate principal
applies?
A. Regression
B. Competition
C. Substitution
D. Integration - Answer -A. Regression. The $150,000 homes brought the $400,000
homes down in value. Regression means the homes have gone down in value.
N3. If two parcels are combined into one larger parcel that is worth more than the total
value of the individual parcels, that added value is called:
A. Adage
B. Estatage
C. Rentage
D. Plottage - Answer -D. Plottage. Plottage is combining two or more parcels of land
making the one property value higher than if the properties were sold individually. The
process of putting the properties together is called "assemblage."
N3. Tom has combined two lots into one large lot to make the land more valuable. The
process of joining the lots is called:
A. Joining
B. Assemblage
C. Assessment
D. Depreciation - Answer -B. Assemblage. Assemblage is the process of combining the
two lots (plottage).
N3. What would create a conflict of interest for an appraiser when appraising a
property?
A. Charging a set standard fee
B. Charging a commission based on the value of the property
QUESTIONS & ANSWERS
N3. The market value of a parcel of real estate is:
A. Its cost
B. Its value without improvements
C. An estimate of the most probable price it should bring
D. A measure of past expenditures - Answer -C. An estimate of the most probable price
it should bring. Market price is the sold price. Value without improvements would be the
value of only the land.
N3. The theoretical appraisal principle on which the market data approach is based is
the:
A. Principle of supply and demand
B. Principle of substitution
C. Principle of increasing and diminishing returns
D. Principle of conformity - Answer -B. Principle of substitution. Supply and demand
means if there are few properties and many buyers the price will be high. If there are
few buyers and many properties, the price will be low. Principle of conformity means
that the maximum value is realized when there is conformity in an area. Zoning results
in conformity in a neighborhood.
N3. Which of the following is NOT an element of value?
A. Highest and best use
B. Utility
C. Effective demand
D. Scarcity - Answer -A. Highest and best use. Remember the acronym DUST when
thinking about the elements of Value: Demand, Utility, Scarcity, and Transferability.
N3. One influence on the market value of a property is the law of __________.
A. The Homeowner's Association
B. Consumer protection
C. Rentability
D. Supply and demand - Answer -D. Supply and demand. If the supply of houses
increases, prices fall. If the supply of houses is scarce for the market demand, prices
will rise (sometimes dramatically).
N3. What is the principle that states optimum value is present when residences within a
neighborhood are similar to one another?
A. Principle of conformity
B. Principle of Increasing returns
C. Principle of progression
D. Principle of contribution - Answer -A. The principle of conformity. Through local
zoning ordinances, the government encourages conformity by restricting land use. A
, market also sets standards of conformity, especially in terms of price. For example, the
value of an over-improved property may decline or regress toward the value level of
surrounding, conforming properties. The styles and uses of the properties in an area
may conform for several reasons: economic influences, shared preferences of owners,
and enforcement of uniform standards by means of zoning.
N3. What is the perception that real property is a continually appreciating asset?
A. Principle of change
B. Principle of timing
C. Principle of anticipation
D. Principle of progression - Answer -C. Principle of anticipation. In the real estate
market, the current value of a property usually is not based on its historical prices or the
cost of creation. Value is based on market participants' expectations of future
acquisition benefits. The value of an owner-occupied property is based primarily on
expected advantages, amenities, and pleasures of ownership and occupancy.
N3. Several $150,000 homes were built in an area where the existing homes had a
value of $400,000. The value of the existing homes declined. Which real estate principal
applies?
A. Regression
B. Competition
C. Substitution
D. Integration - Answer -A. Regression. The $150,000 homes brought the $400,000
homes down in value. Regression means the homes have gone down in value.
N3. If two parcels are combined into one larger parcel that is worth more than the total
value of the individual parcels, that added value is called:
A. Adage
B. Estatage
C. Rentage
D. Plottage - Answer -D. Plottage. Plottage is combining two or more parcels of land
making the one property value higher than if the properties were sold individually. The
process of putting the properties together is called "assemblage."
N3. Tom has combined two lots into one large lot to make the land more valuable. The
process of joining the lots is called:
A. Joining
B. Assemblage
C. Assessment
D. Depreciation - Answer -B. Assemblage. Assemblage is the process of combining the
two lots (plottage).
N3. What would create a conflict of interest for an appraiser when appraising a
property?
A. Charging a set standard fee
B. Charging a commission based on the value of the property
