Aceable Agent - Principles of Real Estate II Exam Notes Questions and Answers

Aceable Agent Principles of Real Estate 2 Exam Questions and Answers 100% Pass Amortization - The repayment of a loan principle over time Arrears - Payment for an item or service after it's received Down Payment - The initial payment made when buying something on credit, a ____________ is paid directly by the buyer to the seller Proration - The allocation or distribution of an annual expense across smaller chunks of time Acreage - A unit of measurement used to determine the size of land; 1 acre = 43560 square feet Appraisal - The value of property, based on factors determined by a certified appraiser General data - Information about the area surrounding a property, this could include the city, region, and neighborhood in which the property is situated Specific Data - Information regarding the property itself 2 | P a g e Katelyn Whitman© 2025, All Rights Reserved. Limited Appraisal - A simple, abbreviated version of a regular appraisal Market Value - The price for which a property would sell if offered openly under normal conditions. This refers to the economic principle, it's the price that a buyer and seller would probably accept Appraised Value - Refers to the value given by a licensed appraiser during the mortgage origination process. Appraisers are chosen by the lender but paid for by the homebuyer. Assessed Value - Refers to the value placed on a property by a governmental unit for use in levying annual real estate taxes Loan-to-Value Ratio (LTV) - The limit on the value of a loan, usually a certain percentage of the home's appraised value or sales price, whichever is lower Subject Property - The property that is being evaluated in any given appraisal Highest and Best Use - What is achieved when a property is used for the most appropriate purpose with the highest returns Principle of Anticipation - The present value of a property is affected by the anticipated income or utility that property will give to the property owner Principle of Contribution - A property's overall value is made of the combined value of each of its parts 3 | P a g e Katelyn Whitman© 2025, All Rights Reserved. Principle of Substitution - The value of something is effected by the cost of getting a similar (substitute) item elsewhere Principle of Change - The condition of a property, the desirability of its location, and the market in which it exists can always change Principle of Conformity - Values are the highest when houses in a neighborhood look roughly the same Principle of Regression - Lower value properties surrounding a subject property are can drag down the value of a property Principle of Progression - Higher value properties of a subject property can bump of the value of a property Sales Comparison Approach - Determining value by comparing the subject property to similar properties ("comps") that have sold recently. It's most commonly used for single family residences. Cost Approach - Determining value by considering how much the same property would cost to build brand new at current prices (replacement cost), then adjusting for depreciation Income Approach - Determining value by considering how much income the property would generate when used as rental property Depreciation - The loss of value because of obsolescence or deterioration 4 | P a g e Katelyn Whitman© 2025, All Rights Reserved. Functional Obsolescence - Loss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing version External Obsolescence - Loss of value caused by negative forces outside the property which are beyond the control of the owner (unfavorable changes in the environment or market) Deterioration - Loss of value caused by physical wear and tear over time Chronological age - The literal age of a property; a hom