AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Principles of Supply and Demand States that when supply is low and demand is high,
prices will increase. And if supply is plentiful and demand is low? Prices will then drop.
Principle of Conformity Claims that maximum value is realized when land use is in
harmony with surrounding standards.
Principles of Regression and Progression States that the presence of higher value or lower
homes near the subject property can change its value.
DUST Is a acronym to help us remember the four characteristics that make real estate
valuable: Demand, Utility, Scarcity and Transferability.
Demand If there are multiple buyers interested in a property, the property with increase in
value.
Utility Properties need to be useful or serve some kind of purpose in order to have value
to a buyer. An empty lot, for example, may not look like it has much utility, but to a buyer who
wants to build a custom home in that area, it's quite useful.
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Scarcity If the amount of housing in an area is low in supply, it grows in value.
Transferability Whether it's government rules or a title issue, anything that limits the
transferability of real estate makes it less valuable.
Appraisal Report A REPORT from a licensed appraiser that's sums up a property's market
value based on collected data. The lender usually asks for this during the mortgage origination
process.*
The Buyer The appraisal report is usually paid by...
The Lender The appraiser that will complete the appraisal report is usually chosen by...
*After a buyers offer is accepted and the LENDER is trying to give the buyer final approval.
Appraisal Review To double-check the accuracy of the appraisal. Conducted by another
professional (either an independent or in-house specialist).
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Market Value Is the price for which a property will sell if offered openly under normal
conditions. (All about the present)
Depreciation The lose of value because of obsolescence (becoming obsolete) or
deterioration.
Effective Age An estimated age that is influenced by the updates and quality of
maintenance of the property.
Comparative Market Analysis (CMA) Uses information regarding recently sold homes in
the area to arrive at an indication of what the fair market value of a similar property would be.
Sales Comparison Approach (or Direct Sales Comparison) An appraiser collects data from
the previous sales of similar properties in the area with similar features: amenities, square
footage, number of rooms, and location.
*Also known as Market Data Approach.
*An appraiser gathers at least three comparison sales, or comparables.
*Used mostly for owner-occupied residential property and vacant land.
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Cost Approach An appraiser needs to estimate the current costs of reconstructing the
property with improvements (the replacement cost). This estimate is added to the value of the
land, and then depreciation of the home since it was first built is subtracted.
*Used mostly for new construction.
Quantity Survey Method The appraiser tallies the value of everything that goes into the
cost.
*Method used for determining value within the cost approach.
Unit-In-Place Method Takes direct and indirect costs into account, combines them into a
simplified cost for a building component.
*Method used for determining value within the cost approach.
Square Foot Method The appraiser estimates a cost per square foot for that specific type
of building and multiplies it by the square footage of the structure.
*Method used for determining value within the cost approach.
Income Approach Determines the amount of income the property could make over a year
and references the sale of other rental properties in the area.
Test Questions And Complete Answers
Principles of Supply and Demand States that when supply is low and demand is high,
prices will increase. And if supply is plentiful and demand is low? Prices will then drop.
Principle of Conformity Claims that maximum value is realized when land use is in
harmony with surrounding standards.
Principles of Regression and Progression States that the presence of higher value or lower
homes near the subject property can change its value.
DUST Is a acronym to help us remember the four characteristics that make real estate
valuable: Demand, Utility, Scarcity and Transferability.
Demand If there are multiple buyers interested in a property, the property with increase in
value.
Utility Properties need to be useful or serve some kind of purpose in order to have value
to a buyer. An empty lot, for example, may not look like it has much utility, but to a buyer who
wants to build a custom home in that area, it's quite useful.
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Scarcity If the amount of housing in an area is low in supply, it grows in value.
Transferability Whether it's government rules or a title issue, anything that limits the
transferability of real estate makes it less valuable.
Appraisal Report A REPORT from a licensed appraiser that's sums up a property's market
value based on collected data. The lender usually asks for this during the mortgage origination
process.*
The Buyer The appraisal report is usually paid by...
The Lender The appraiser that will complete the appraisal report is usually chosen by...
*After a buyers offer is accepted and the LENDER is trying to give the buyer final approval.
Appraisal Review To double-check the accuracy of the appraisal. Conducted by another
professional (either an independent or in-house specialist).
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Market Value Is the price for which a property will sell if offered openly under normal
conditions. (All about the present)
Depreciation The lose of value because of obsolescence (becoming obsolete) or
deterioration.
Effective Age An estimated age that is influenced by the updates and quality of
maintenance of the property.
Comparative Market Analysis (CMA) Uses information regarding recently sold homes in
the area to arrive at an indication of what the fair market value of a similar property would be.
Sales Comparison Approach (or Direct Sales Comparison) An appraiser collects data from
the previous sales of similar properties in the area with similar features: amenities, square
footage, number of rooms, and location.
*Also known as Market Data Approach.
*An appraiser gathers at least three comparison sales, or comparables.
*Used mostly for owner-occupied residential property and vacant land.
, AceableAgent Real Estate Principals 2
Test Questions And Complete Answers
Cost Approach An appraiser needs to estimate the current costs of reconstructing the
property with improvements (the replacement cost). This estimate is added to the value of the
land, and then depreciation of the home since it was first built is subtracted.
*Used mostly for new construction.
Quantity Survey Method The appraiser tallies the value of everything that goes into the
cost.
*Method used for determining value within the cost approach.
Unit-In-Place Method Takes direct and indirect costs into account, combines them into a
simplified cost for a building component.
*Method used for determining value within the cost approach.
Square Foot Method The appraiser estimates a cost per square foot for that specific type
of building and multiplies it by the square footage of the structure.
*Method used for determining value within the cost approach.
Income Approach Determines the amount of income the property could make over a year
and references the sale of other rental properties in the area.
