Aceable Agent Principles of Real Estate 2 Key Terms Exam Questions with 100% Correct Answers

Aceable Agent Principles of Real Estate 2 Key Terms Exam Questions with 100% Correct Answers Profit - answera financial gain or increase in value. Loss - answera financial loss or decrease in value. Interest - answermoney repaid regularly at a specified rate as compensation for money lent. Principal - answerthe amount lent to a borrower to purchase a house. Mortgage - answera secured loan that is tied to real estate, where the borrower has to pay the money back to the lender on a set schedule and amount of payments; also "liens against property" or "claims on property" Amortization - answerrepayment of a loan principal over time based on predetermined schedule of payments. Arrears - answerpayment for an item or service after it is received. Proration - answerthe allocation or distribution of an annual expense across smaller chunks of time. Appraisal - answerthe value of a property, based on factors determined by the opinion of a certified appraiser. General Data - answerinformation about the area surrounding a property; this could include the city, region, and neighborhood in which the property is situated. Specific Data - answerinformation regarding the property itself. Limited appraisal - answera simpler, abbreviated version of a regular appraisal. Market Value - answerthe price for which a property will sell if offered openly under normal conditions. This refers to the economic principle; it's the price that a buyer and seller would probably accept. Appraised Value - answerrefers to the value given by a licensed appraiser during the mortgage origination process. Appraisers are chosen by lenders but paid for by the home- buyer. Assessed Value - answerrefers to the value placed on a property by a governmental unit for use in levying annual real estate taxes. Loan-to-value Ratio (LTV) - answerthe limit on the value of a loan, usually a certain percentage of the home's appraised value or sales price, whichever is lower. Principle of Anticipation - answerthe present value of a property is affected by the anticipated income or utility that property will give its property owner. Principle of Contribution - answerA property's overall value is made up of the combined value of each of its parts. Principle of Substitution - answerthe value of something is affected by the cost of getting a similar (substitute) item elsewhere. Principle of Change - answerthe condition of a property, the desirability of its location, and the market in which it exists can always change. Principle of Conformity - answervalues are highest when the hoes in a neighborhood look roughly the same. Principle of Regression - answerlower-value properties surrounding a subject property can drag down the value of the property. Principle of Progression - answerhigher-value properties surrounding a subject property can bump up the value of the property. Principles of Supply and Demand - answerwhen supply is low and demand is high, prices increase. When supply is plentiful and demand is low, prices drop. Sales Comparison Approach - answerdetermining value by comparing the subject property to similar properties ("comps") that have sold recently. It's most commonly used for single family residences. Cost Approach - answerdetermining value by considering how much the same property would cost to build brand new at current prices (replacement cost), then adjusting for depreciation. Income Approach - answerdetermining value by considering how much income the property could generate when used as rental property. Functional obsolescence - answerloss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing version. External obsolescence - answerloss in value caused by negative forces outside the property which are beyond the control of the owner (unfavorable changes in the environment or market) Reconciliation - answerwhen an appraiser compares estimates made using different techniques (cost approach, sales approach, and/or income approach) and come to a single number for value. Field Review - answerwhen a third-party appraiser is sent back out to the property to check the validity of the first appraisal. Comparative Market Analysis (CMA) - answerthis is a report generated by a license holder that compares the prices of recently sold homes ("comps") in order to estimate the fair market value of a similar property. Fair Market Value - answerthe price for which a property will sell if offered openly under normal conditions. Primary Mortgage Market - answerthe arena in which borrowers and lenders meet up for the purposes of negotiating loans terms of a mortgage transaction. Secondary Mortgage Market - answerthe marketplace where home loans and their servicing rights are bought and