Texas Principles of Real Estate 2 - Champions Exam Questions with correct Answers

appraisal - ANSWER-defined as an appraiser's opinion of value. Loan-to-Value Ratio (LTV) - ANSWER-is the percentage of value or sales price that a lender is willing to finance. Principle of Substitution - ANSWER-According to this principle, a commodity's value is influenced by the cost of acquiring a substitute or comparable item. Principle of Regression - ANSWER-The presence of lower-priced properties in the area will cause a decline in the value of the subject property. Principle of Progression - ANSWER-States that the value of a subject property is increased by the value of surrounding properties. Principle of Competition - ANSWER-States that the absence of competition will cause prices to increase in the marketplace. For a property to have value, it must have four characteristics: - ANSWER-DUST- demand, utility, scarcity, transferability. Market Value - ANSWER-is 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 institutions (Fannie Mae, Freddie Mac). Ad valorem - ANSWER--according to value -taxes are assessed based upon the assessed value of the property and the current tax rate.