Champions Principles of Real Estate 2 Exam Questions with correct Answers

Appraisal - ANSWER-an appraiser's opinion of value Loan to Value (LTV) - ANSWER-the percentage of an asset's market value that a lender is willing to finance Principle of Contribution - ANSWER-value of a part is determined by its contribution to the total value of the property rather than by its cost Principle of Substitution - ANSWER-The maximum value of a property tends to be set by the cost of purchasing an equally desirable substitute property. Characteristics of Value (DUST) - ANSWER-Demand Utility Scarcity Transferability Market Value - ANSWER-the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, under guidelines published by federal lending institution (Fannie Mae, Freddie Mac) ad valorem - ANSWER-according to value Market Data Approach - ANSWER-A means of estimating value by comparing similar properties. Used when there is an active market and where comparables can be identified. Also called comparable sales approach. subject property - ANSWER-The property being appraised