Champions Principles of Real Estate 2 Exam Questions with Correct Answers

Champions Principles of Real Estate 2 Exam Questions with Correct Answers appraisal - ANSWER value of a property maybe affected by social, economic, govt and environmental influences Loan-to-Value Ratio (LTV) - ANSWER The percentage of value or sales price that a lender is willing to finance. limited appraisal report - ANSWER exterior only/drive by inspection. deemed as low risk loan highest and best use of property - ANSWER legal use that gives the greatest return Principal of Contribution - ANSWER cost does not equal value Residential Mortgage Loan Originators (RMLO) - ANSWER Must be certified licence holders and is mandated by the SAFE ACT (TX dept of savings and mortgage lending) Principle of Anticipation - ANSWER purchase price is affected by the expectation of future appeal and benefits Principal of Substitution - ANSWER value of a commodity is influenced by the cost of acquiring subsitute or comparable item Principal of progression - ANSWER value of properties around yours goes up; so does yours Principal of Regression - ANSWER The Value of more expensive home placed in a neighborhood of less expensive homes will drop in value Market Value - ANSWER the most probable price a property should bring in a competitive and open market under fair conditions requisit to a fair sale. appraisal process - ANSWER The value of a property may be affected by social, economic, governmental and environmental influences. An appraiser must always be aware of these influences and possible changes in them that could affect market value. Three approaches to value - ANSWER (1) The Sales Comparison Approach (2) The Cost Approach, (3) The Income Approach. Sales Comparison Approach - ANSWER A value for existing properties method for comparing similar properties to the subject property. this is the best indicator. Market Data Approach - ANSWER aka: sales comparison approach Physical Deterioration - ANSWER Loss of value of a building from its reproduction cost, resulting from wear and tear over time.