CHARLES BARNES REAL
ESTATE EXAM PREP
Q: The principle underlying depreciation from physical deterioration
is that - ANSWERS-: a property loses the same increment of value
each year over the economic life of the property.
: Which of the following statements properly describes how to apply
the income capitalization approach to appraisal? - ANSWERS-:
Divide the income a property generates by a rate of return.
Q: Why is real estate traditionally considered a relatively illiquid
economic product? - ANSWERS-: It is often difficult to convert to
cash
When the market for an item has achieved market equilibrium, which
of the following statements is true? - ANSWERS-Supply and demand
are equal, and price and value are equal.
: Lynne just bought a house. She paid $187,500, for it, even though it
had been listed at $195,000. An adjoining property owner, Ken, had
tried to buy the property for $185,000, but had been refused. He now
offers Lynne $190,000 for the house. Lynne is interested, so she hires
an appraiser. The appraiser returns an estimate of value of $200,000.
Which of these numbers can be called the market value? -
ANSWERS-$200,000.00
,Q: Which of the following situations illustrates the principle of
contribution? - ANSWERS-A homeowner adds a third bathroom to a
house and thereby increases the appraised value by $10,000.
The city of Stevensville has declared a moratorium on new
construction. If demand is increasing, what will be the likely effect on
real estate prices in the area? - ANSWERS-Prices rise
A certified appraiser is one who has received certification by -
ANSWERS-the state in which the appraiser operates
The act that required federally-related appraisals to be conducted by a
certified appraiser is known as - ANSWERS-The Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA)
When a property owner combines two adjacent properties to create a
single property with a higher value than the sum of the values of the
two separate properties, the applicable principle of value is called -
ANSWERS-Assemblage
: If there is a significant undersupply of homes in a market,
construction will tend to increase. This is an example of -
ANSWERS-: the market tending toward equilibrium
As a component of real estate value, the principle of substitution
states that - ANSWERS-if two similar properties are for sale, a buyer
will purchase the cheaper of the two.
, A house is being appraised using the sales comparison approach. The
house has three bedrooms, two bathrooms, and a patio. The appraiser
selects a comparable house that has three bedrooms, 3 bathrooms, and
no patio. The comparable house just sold for $200,000. A bath is
valued at $7,000, and a patio at $2,000. Assuming all else is equal,
what is the adjusted value of the comparable? - ANSWERS-
195,000.00
Q: If the price of an item is increasing, one can usually assume that -
ANSWERS-demand for the item is increasing in relation to supply of
the item
Bill Parsons paid $150,000 for a house to operate as a rental property,
figuring that he could rent it out at a rate of $900 a month. In paying a
price based on the propertyG??s ability to generate a desired future
income, Parsons was motivated by the economic principle known as -
ANSWERS-Anticipation
: A town is rapidly growing, but all the buildable vacant lots in the
most desirable area have already been occupied. In this case, it is
likely that the price of existing homes in that area - ANSWERS-Will
increase
: When vacancies are declining in a real estate market, it is common
for the market to experience - ANSWERS-Rising prices
A strength of the income capitalization approach is that it -
ANSWERS-: uses a method that is also used by investors to
determine how much they should pay for an investment property
ESTATE EXAM PREP
Q: The principle underlying depreciation from physical deterioration
is that - ANSWERS-: a property loses the same increment of value
each year over the economic life of the property.
: Which of the following statements properly describes how to apply
the income capitalization approach to appraisal? - ANSWERS-:
Divide the income a property generates by a rate of return.
Q: Why is real estate traditionally considered a relatively illiquid
economic product? - ANSWERS-: It is often difficult to convert to
cash
When the market for an item has achieved market equilibrium, which
of the following statements is true? - ANSWERS-Supply and demand
are equal, and price and value are equal.
: Lynne just bought a house. She paid $187,500, for it, even though it
had been listed at $195,000. An adjoining property owner, Ken, had
tried to buy the property for $185,000, but had been refused. He now
offers Lynne $190,000 for the house. Lynne is interested, so she hires
an appraiser. The appraiser returns an estimate of value of $200,000.
Which of these numbers can be called the market value? -
ANSWERS-$200,000.00
,Q: Which of the following situations illustrates the principle of
contribution? - ANSWERS-A homeowner adds a third bathroom to a
house and thereby increases the appraised value by $10,000.
The city of Stevensville has declared a moratorium on new
construction. If demand is increasing, what will be the likely effect on
real estate prices in the area? - ANSWERS-Prices rise
A certified appraiser is one who has received certification by -
ANSWERS-the state in which the appraiser operates
The act that required federally-related appraisals to be conducted by a
certified appraiser is known as - ANSWERS-The Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA)
When a property owner combines two adjacent properties to create a
single property with a higher value than the sum of the values of the
two separate properties, the applicable principle of value is called -
ANSWERS-Assemblage
: If there is a significant undersupply of homes in a market,
construction will tend to increase. This is an example of -
ANSWERS-: the market tending toward equilibrium
As a component of real estate value, the principle of substitution
states that - ANSWERS-if two similar properties are for sale, a buyer
will purchase the cheaper of the two.
, A house is being appraised using the sales comparison approach. The
house has three bedrooms, two bathrooms, and a patio. The appraiser
selects a comparable house that has three bedrooms, 3 bathrooms, and
no patio. The comparable house just sold for $200,000. A bath is
valued at $7,000, and a patio at $2,000. Assuming all else is equal,
what is the adjusted value of the comparable? - ANSWERS-
195,000.00
Q: If the price of an item is increasing, one can usually assume that -
ANSWERS-demand for the item is increasing in relation to supply of
the item
Bill Parsons paid $150,000 for a house to operate as a rental property,
figuring that he could rent it out at a rate of $900 a month. In paying a
price based on the propertyG??s ability to generate a desired future
income, Parsons was motivated by the economic principle known as -
ANSWERS-Anticipation
: A town is rapidly growing, but all the buildable vacant lots in the
most desirable area have already been occupied. In this case, it is
likely that the price of existing homes in that area - ANSWERS-Will
increase
: When vacancies are declining in a real estate market, it is common
for the market to experience - ANSWERS-Rising prices
A strength of the income capitalization approach is that it -
ANSWERS-: uses a method that is also used by investors to
determine how much they should pay for an investment property
