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IAAO 112 QUESTIONS WITH 100% CORRECT
SOLUTIONS | GUARANTEED SUCCESS.
Potential Gross Income - correct answer- Annual gross income
Market rent - correct answer- The rental income a property
would most probably command in the open market
Balance - correct answer- The principle that real property value
is created and sustained when contrasting, opposing, or
interacting elements are in a state of equilibrium. (Value is
maximized when the 4 agents of production are in their proper
allocation.)
Conformity - correct answer- States that overall,the prices of an
area will be maximized if structures are conforming
Progression - correct answer- (Under conformity) Is the concept
that the value of an inferior property is enhanced by its
association with better properties.
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Regression - correct answer- (Under conformity) Is the concept
that the value of a superior property is adversely affected by its
association with an inferior property of the same type.
Opportunity cost - correct answer- The cost of options foregone
or opportunities not chosen. The selection of an investment
means an alternative was not selected.
Substitution - correct answer- The appraisal principle that
states when several similar or alternative commodities, goods,
or services are available, the one with the lowest price will
attract the greatest demand
H&BU fact - correct answer- As long as the value of the
property "as improved" is greater than the value of the site "as
vacant"; the highest and best use is usually the current use. If
the highest and best use of the site as improved is not the
same as the highest and best use as though vacant, the
highest and best use as improved is referenced to as the
highest and best 'interim' or 'transitional' use of the property.
4 tests of highest and best use - correct answer- Physically
possible, legally permitted, financially feasible, maximally
productive.
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Physically possible - correct answer- (Under 4 tests of h&bu).
Topography, soil conditions, subsurface water, land area, land
shape.
Legally permitted - correct answer- (Under 4 tests of h&bu):
setbacks, subdivision restrictions, easements, building heights,
area allowed to be occupied by structures, density, the above
are subject to change making judgments difficult.
Financially feasible - correct answer- (Under 4 tests of h&bu):
rents, expenses, absorption rates, construction costs, discount
rates, profit levels (models should be made for each use to
estimate the residual land value, after considering the costs to
construct the ideal improvement.
Market value - correct answer- The most probable price which
a property should bring in a competitive, open market under all
conditions requisite to a fair sale, the buyer and seller each
acting prudently and knowledgeably, and assuming the price is
not affected by undue stimulus.
Components of real property rights - correct answer-
Ownership entity, financial interest, legal estate (fee simple,
leased fee, leasehold)
IAAO 112 QUESTIONS WITH 100% CORRECT
SOLUTIONS | GUARANTEED SUCCESS.
Potential Gross Income - correct answer- Annual gross income
Market rent - correct answer- The rental income a property
would most probably command in the open market
Balance - correct answer- The principle that real property value
is created and sustained when contrasting, opposing, or
interacting elements are in a state of equilibrium. (Value is
maximized when the 4 agents of production are in their proper
allocation.)
Conformity - correct answer- States that overall,the prices of an
area will be maximized if structures are conforming
Progression - correct answer- (Under conformity) Is the concept
that the value of an inferior property is enhanced by its
association with better properties.
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Regression - correct answer- (Under conformity) Is the concept
that the value of a superior property is adversely affected by its
association with an inferior property of the same type.
Opportunity cost - correct answer- The cost of options foregone
or opportunities not chosen. The selection of an investment
means an alternative was not selected.
Substitution - correct answer- The appraisal principle that
states when several similar or alternative commodities, goods,
or services are available, the one with the lowest price will
attract the greatest demand
H&BU fact - correct answer- As long as the value of the
property "as improved" is greater than the value of the site "as
vacant"; the highest and best use is usually the current use. If
the highest and best use of the site as improved is not the
same as the highest and best use as though vacant, the
highest and best use as improved is referenced to as the
highest and best 'interim' or 'transitional' use of the property.
4 tests of highest and best use - correct answer- Physically
possible, legally permitted, financially feasible, maximally
productive.
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Physically possible - correct answer- (Under 4 tests of h&bu).
Topography, soil conditions, subsurface water, land area, land
shape.
Legally permitted - correct answer- (Under 4 tests of h&bu):
setbacks, subdivision restrictions, easements, building heights,
area allowed to be occupied by structures, density, the above
are subject to change making judgments difficult.
Financially feasible - correct answer- (Under 4 tests of h&bu):
rents, expenses, absorption rates, construction costs, discount
rates, profit levels (models should be made for each use to
estimate the residual land value, after considering the costs to
construct the ideal improvement.
Market value - correct answer- The most probable price which
a property should bring in a competitive, open market under all
conditions requisite to a fair sale, the buyer and seller each
acting prudently and knowledgeably, and assuming the price is
not affected by undue stimulus.
Components of real property rights - correct answer-
Ownership entity, financial interest, legal estate (fee simple,
leased fee, leasehold)
