RECA Fundamentals Exam Questions And Answers Rated A+

1. Principal of Balance - Answer-value is created and sustained where there is equilibrium 10. Principal of Substitution - Answer-a buyer will pay no more for a property than the cost of acquiring a similar and equally desirable property 11. Principal of Contribution - Answer-value of a property attribute relates to the value it adds to the overall value of the property. basis by which adjustments are made to the sale prices of comparable properties 12. Principal of Progression - Answer-properties in the same area are dissimilar, the property with the lesser value will be enhanced in value its proximity to properties of greater value. 13. Principal of Regression - Answer-where properties in the same area are dissimilar, the property with the greater value will be adversely affected in value by its proximity to properties of lesser value 14. Principal of Anticipation - Answer-value is created for the buyer by the expectation of future benefits, whether based on money or amenities 2. Principal of Change - Answer-economic, political, and social forces are constantly in play and contribute to the dynamic nature of property values 3. Principal of Competition - Answer-excessive profits breed opportunities which then tend to destroy those profits 4. Principal of Consistent Use - Answer-when improved land is in transition to another highest and best use, one use cannot be allocated to the land and another allocated to the building 5. Principal of External Factors - Answer-various factors beyond the property itself can impact its value and these factors may include economic, political, social and physical issues6. Principal of Increasing/decreasing return - Answer-capital improvements add value to a property to a certain point 7. Principal of Surplus productivity - Answer-factors of production that generate net income, which is then attributed to the land and tends to set the value 8. Principal of Supply and Demand - Answer-market value is determined by the interaction of market forces such as the quantity of available properties and the interest of buyers able to purchase them 9. Principal of highest and best use - Answer-considers legal permissibility, physical possibility, financial feasibility and maximum productivity