ACEABLE AGENT PRINCIPLES OF
REAL ESTATE 2 CORRECT 100%
Amortization - ANSWER The repayment of a loan principle over time
Arrears - ANSWER Payment for an item or service after it's received
Down Payment - ANSWER The initial payment made when buying something on credit,
a ____________ is paid directly by the buyer to the seller
Proration - ANSWER The allocation or distribution of an annual expense across smaller
chunks of time
Acreage - ANSWER A unit of measurement used to determine the size of land; 1 acre =
43560 square feet
Appraisal - ANSWER The value of property, based on factors determined by a certified
appraiser
General data - ANSWER Information about the area surrounding a property, this could
include the city, region, and neighborhood in which the property is situated
Specific Data - ANSWER Information regarding the property itself
Limited Appraisal - ANSWER A simple, abbreviated version of a regular appraisal
Market Value - ANSWER 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 - ANSWER 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 - ANSWER 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) - ANSWER 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 - ANSWER The property that is being evaluated in any given appraisal
Highest and Best Use - ANSWER What is achieved when a property is used for the
most appropriate purpose with the highest returns
,Principle of Anticipation - ANSWER 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 - ANSWER A property's overall value is made of the combined
value of each of its parts
Principle of Substitution - ANSWER The value of something is effected by the cost of
getting a similar (substitute) item elsewhere
Principle of Change - ANSWER The condition of a property, the desirability of its
location, and the market in which it exists can always change
Principle of Conformity - ANSWER Values are the highest when houses in a
neighborhood look roughly the same
Principle of Regression - ANSWER Lower value properties surrounding a subject
property are can drag down the value of a property
Principle of Progression - ANSWER Higher value properties of a subject property can
bump of the value of a property
Sales Comparison Approach - ANSWER 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 - ANSWER 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 - ANSWER Determining value by considering how much income the
property would generate when used as rental property
Depreciation - ANSWER The loss of value because of obsolescence or deterioration
Functional Obsolescence - ANSWER 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 - ANSWER 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 - ANSWER Loss of value caused by physical wear and tear over time
Chronological age - ANSWER The literal age of a property; a home built 30 years ago
has a ________________ age of 30
, Effective Age - ANSWER An estimated age that is influenced by the updates and quality
of maintenance of the property; a 30 year house that has been well cared for might
have an effective age of 15
Federal Deposit Insurance Corportation - ANSWER created by Congress in 1933 to
insure deposits, supervise financial institutions, make large financial institutions
resolvable, and manage receiverships
Commercial Banks - ANSWER designed to be sage depositories and lenders for a
multitude of commercial banking activities, relying mainly on demand deposits (checking
accounts) for their basic supply of funds
Credit Unions - ANSWER provide members with a source of funding for personal
property and, more recently, real estate mortgage loans
Savings Banks - ANSWER Play an active and important role in local real estate
financing activities, providing long-term mortgage loans with funds derived from
customer savings accounts
Life Insurance Companies - ANSWER prefer investments in large projects such as
shopping centers as opposed to smaller loans for home mortages and construction
loans
Mortgage Bankers - ANSWER not bankers in the traditional sense, but as private
entrepreneurs, their income is derived from fees received for originating and servicing
real estate loans
Mortgage Brokers - ANSWER bring together borrowers and lenders and earns a fee for
that service
Fannie Mae - ANSWER a government-sponsored enterprise created to act as a
secondary mortgage market facility that could purchase, hold, and sell FHA-insured
loans
Freddie Mac - ANSWER a government-sponsored enterprise created in 1970 to further
support the secondary mortgage market, specifically to support smaller thrift banks
Ginnie Mae - ANSWER a Government National Mortgage Association is a government-
owned entity that supports the secondary mortgage market by guaranteeing timely
payment of principal and interest on privately issued mortgage-baked securities (MBS)
collateralized by FHA, VA, or other government -insured or guaranteed mortgages
Balloon Payment - ANSWER a payment made at the mortgage term's end that is
comparatively much larger than the payments that preceded it
REAL ESTATE 2 CORRECT 100%
Amortization - ANSWER The repayment of a loan principle over time
Arrears - ANSWER Payment for an item or service after it's received
Down Payment - ANSWER The initial payment made when buying something on credit,
a ____________ is paid directly by the buyer to the seller
Proration - ANSWER The allocation or distribution of an annual expense across smaller
chunks of time
Acreage - ANSWER A unit of measurement used to determine the size of land; 1 acre =
43560 square feet
Appraisal - ANSWER The value of property, based on factors determined by a certified
appraiser
General data - ANSWER Information about the area surrounding a property, this could
include the city, region, and neighborhood in which the property is situated
Specific Data - ANSWER Information regarding the property itself
Limited Appraisal - ANSWER A simple, abbreviated version of a regular appraisal
Market Value - ANSWER 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 - ANSWER 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 - ANSWER 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) - ANSWER 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 - ANSWER The property that is being evaluated in any given appraisal
Highest and Best Use - ANSWER What is achieved when a property is used for the
most appropriate purpose with the highest returns
,Principle of Anticipation - ANSWER 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 - ANSWER A property's overall value is made of the combined
value of each of its parts
Principle of Substitution - ANSWER The value of something is effected by the cost of
getting a similar (substitute) item elsewhere
Principle of Change - ANSWER The condition of a property, the desirability of its
location, and the market in which it exists can always change
Principle of Conformity - ANSWER Values are the highest when houses in a
neighborhood look roughly the same
Principle of Regression - ANSWER Lower value properties surrounding a subject
property are can drag down the value of a property
Principle of Progression - ANSWER Higher value properties of a subject property can
bump of the value of a property
Sales Comparison Approach - ANSWER 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 - ANSWER 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 - ANSWER Determining value by considering how much income the
property would generate when used as rental property
Depreciation - ANSWER The loss of value because of obsolescence or deterioration
Functional Obsolescence - ANSWER 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 - ANSWER 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 - ANSWER Loss of value caused by physical wear and tear over time
Chronological age - ANSWER The literal age of a property; a home built 30 years ago
has a ________________ age of 30
, Effective Age - ANSWER An estimated age that is influenced by the updates and quality
of maintenance of the property; a 30 year house that has been well cared for might
have an effective age of 15
Federal Deposit Insurance Corportation - ANSWER created by Congress in 1933 to
insure deposits, supervise financial institutions, make large financial institutions
resolvable, and manage receiverships
Commercial Banks - ANSWER designed to be sage depositories and lenders for a
multitude of commercial banking activities, relying mainly on demand deposits (checking
accounts) for their basic supply of funds
Credit Unions - ANSWER provide members with a source of funding for personal
property and, more recently, real estate mortgage loans
Savings Banks - ANSWER Play an active and important role in local real estate
financing activities, providing long-term mortgage loans with funds derived from
customer savings accounts
Life Insurance Companies - ANSWER prefer investments in large projects such as
shopping centers as opposed to smaller loans for home mortages and construction
loans
Mortgage Bankers - ANSWER not bankers in the traditional sense, but as private
entrepreneurs, their income is derived from fees received for originating and servicing
real estate loans
Mortgage Brokers - ANSWER bring together borrowers and lenders and earns a fee for
that service
Fannie Mae - ANSWER a government-sponsored enterprise created to act as a
secondary mortgage market facility that could purchase, hold, and sell FHA-insured
loans
Freddie Mac - ANSWER a government-sponsored enterprise created in 1970 to further
support the secondary mortgage market, specifically to support smaller thrift banks
Ginnie Mae - ANSWER a Government National Mortgage Association is a government-
owned entity that supports the secondary mortgage market by guaranteeing timely
payment of principal and interest on privately issued mortgage-baked securities (MBS)
collateralized by FHA, VA, or other government -insured or guaranteed mortgages
Balloon Payment - ANSWER a payment made at the mortgage term's end that is
comparatively much larger than the payments that preceded it
