Principles of real estate II (Champions) Exam Questions with Accurate Answers

Functional obsolescence - ANSWER-Refers to the loss in desirability of the style, layout or function of an element of a property over time Sales comparison - ANSWER-best indicator of value for existing properties highest and best use - ANSWER-the legal use for property that gives the greatest return in money and/or amenities external obsolescence - ANSWER-the loss in value of a property caused by factors outside the property itself principle of contribution - ANSWER-suggests the value of a property is equal to the sum of the contributory value of each of its components. most important aspect is that cost does not equal value most important aspect of principle of contribution - ANSWER-cost does not equal value (for example...swimming pool) principle of change - ANSWER-forces acting on a parcel of land are always affecting the value of the land principle of anticipation - ANSWER-the purchase price is affected by the expectation of future appeal and benefits principle of substitution - ANSWER-the value of a commodity if influenced by the cost of acquiring a substitute or comparable item. principle of conformity - ANSWER-value is maximized when there is a reasonable degree of homogeneity in a neighborhood