PRINCIPLES OF REAL ESTATE 1 TEST PAPER EXAM
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔Market Comparison Approach - ✔✔A means of comparing similar type properties,
which have recently sold, to the subject property. Commonly used in comparing
residential properties.
✔✔Cost Approach - ✔✔An analysis in which a value estimate of a property is derived
by estimating the replacement cost of the improvements, deducting therefrom the
estimated accrued depreciation, then adding the market value of the land.
✔✔Income Approach - ✔✔One of the three methods of the appraisal process generally
applied to income producing property, and involves a three-step process - (1) find net
annual income, (2) set an appropriate capitalization rate or "present worth" factor, and
(3) capitalize the income dividing the net income by the capitalization rate.
✔✔Assessed Value - ✔✔A valuation placed upon a piece of property by a public
authority as a basis for levying taxes on the property.
✔✔Insured Value - ✔✔The cost of replacing a structure completely destroyed by an
insured hazard.
✔✔Depreciated Value - ✔✔The basis of a depreciable asset used to compute the
taxable gain from its sale; the basis is acquisition cost plus capital improvements less
accrued depreciation.
✔✔Land - ✔✔The material of the earth, whatever may be the ingredients of which it is
composed, whether soil, rock, or other substance, and includes free or unoccupied
space for an indefinite distance upwards as well as downwards.
✔✔Bundle of Rights - ✔✔The rights of an owner of a freehold estate to possession,
enjoyment, control, and disposition of real property.
✔✔Mineral Rights - ✔✔The landowner's ability to take minerals from the earth or to sell
or lease this right to others.
✔✔Air Rights - ✔✔The rights in real property to the reasonable use of the air space
above the surface of the land.
✔✔Real Estate - ✔✔Land and everything permanently attached to land.
✔✔Real Property - ✔✔The aggregate of rights, powers, and privileges conveyed with
ownership of real estate.
, ✔✔Personal Property - ✔✔All property that is not land and is not permanently attached
to land; everything that is movable.
✔✔Chattel - ✔✔Personal property.
✔✔Emblements - ✔✔The crops and other annual plantings considered to be personal
property of the cultivator.
✔✔Fixtures - ✔✔Personal property that has become real property by having been
permanently attached or adapted to real property.
✔✔Trade Fixtures - ✔✔Items that are installed by a commercial tenant and are
removable upon termination of the tenancy.
✔✔Condominium - ✔✔A form of ownership of real property recognized in all states that
consists of individual ownership of some aspects and co-ownership in other aspects of
the property.
✔✔Cooperative - ✔✔A form of ownership in which stockholders in a corporation occupy
property owned by the corporation under a lease.
✔✔Planned Unit Development (PUD) - ✔✔A form of cluster zoning providing for both
residential and commercial land uses within a zoned area.
✔✔Mobile Home - ✔✔A structure transportable in one or more sections, designed and
equipped to contain not more than two dwelling units to be used with or without a
foundation systems.
✔✔Time-Share - ✔✔A license or contractual or membership right of occupancy in a
project which is not coupled with an estate in the real property.
✔✔Capital Gain - ✔✔The profit realized from the sale of real estate or other investment.
Capital loss occurs when an investment property or another type of investment is sold at
a loss.
✔✔Homeowners Policy - ✔✔An insurance policy protecting against a variety of
hazards.
✔✔Replacement Costs - ✔✔The insured is covered and reimbursed for the actual cost
of replacing the damaged property.
✔✔PITI - ✔✔An acronym denoting that a mortgage payment includes, principal,
interest, taxes, and insurance.
QUESTIONS AND ANSWERS GUARANTEE A+
✔✔Market Comparison Approach - ✔✔A means of comparing similar type properties,
which have recently sold, to the subject property. Commonly used in comparing
residential properties.
✔✔Cost Approach - ✔✔An analysis in which a value estimate of a property is derived
by estimating the replacement cost of the improvements, deducting therefrom the
estimated accrued depreciation, then adding the market value of the land.
✔✔Income Approach - ✔✔One of the three methods of the appraisal process generally
applied to income producing property, and involves a three-step process - (1) find net
annual income, (2) set an appropriate capitalization rate or "present worth" factor, and
(3) capitalize the income dividing the net income by the capitalization rate.
✔✔Assessed Value - ✔✔A valuation placed upon a piece of property by a public
authority as a basis for levying taxes on the property.
✔✔Insured Value - ✔✔The cost of replacing a structure completely destroyed by an
insured hazard.
✔✔Depreciated Value - ✔✔The basis of a depreciable asset used to compute the
taxable gain from its sale; the basis is acquisition cost plus capital improvements less
accrued depreciation.
✔✔Land - ✔✔The material of the earth, whatever may be the ingredients of which it is
composed, whether soil, rock, or other substance, and includes free or unoccupied
space for an indefinite distance upwards as well as downwards.
✔✔Bundle of Rights - ✔✔The rights of an owner of a freehold estate to possession,
enjoyment, control, and disposition of real property.
✔✔Mineral Rights - ✔✔The landowner's ability to take minerals from the earth or to sell
or lease this right to others.
✔✔Air Rights - ✔✔The rights in real property to the reasonable use of the air space
above the surface of the land.
✔✔Real Estate - ✔✔Land and everything permanently attached to land.
✔✔Real Property - ✔✔The aggregate of rights, powers, and privileges conveyed with
ownership of real estate.
, ✔✔Personal Property - ✔✔All property that is not land and is not permanently attached
to land; everything that is movable.
✔✔Chattel - ✔✔Personal property.
✔✔Emblements - ✔✔The crops and other annual plantings considered to be personal
property of the cultivator.
✔✔Fixtures - ✔✔Personal property that has become real property by having been
permanently attached or adapted to real property.
✔✔Trade Fixtures - ✔✔Items that are installed by a commercial tenant and are
removable upon termination of the tenancy.
✔✔Condominium - ✔✔A form of ownership of real property recognized in all states that
consists of individual ownership of some aspects and co-ownership in other aspects of
the property.
✔✔Cooperative - ✔✔A form of ownership in which stockholders in a corporation occupy
property owned by the corporation under a lease.
✔✔Planned Unit Development (PUD) - ✔✔A form of cluster zoning providing for both
residential and commercial land uses within a zoned area.
✔✔Mobile Home - ✔✔A structure transportable in one or more sections, designed and
equipped to contain not more than two dwelling units to be used with or without a
foundation systems.
✔✔Time-Share - ✔✔A license or contractual or membership right of occupancy in a
project which is not coupled with an estate in the real property.
✔✔Capital Gain - ✔✔The profit realized from the sale of real estate or other investment.
Capital loss occurs when an investment property or another type of investment is sold at
a loss.
✔✔Homeowners Policy - ✔✔An insurance policy protecting against a variety of
hazards.
✔✔Replacement Costs - ✔✔The insured is covered and reimbursed for the actual cost
of replacing the damaged property.
✔✔PITI - ✔✔An acronym denoting that a mortgage payment includes, principal,
interest, taxes, and insurance.
