Aceable Agent Principles of Real Estate 2 Exam Questions with Correct Answers

Aceable Agent Principles of Real Estate 2 Exam Questions with Correct Answers Amortization - answerThe repayment of a loan principle over time Arrears - answerPayment for an item or service after it's received Down Payment - answerThe initial payment made when buying something on credit, a ____________ is paid directly by the buyer to the seller Proration - answerThe allocation or distribution of an annual expense across smaller chunks of time Acreage - answerA unit of measurement used to determine the size of land; 1 acre = 43560 square feet Appraisal - answerThe value of property, based on factors determined by a certified appraiser General data - answerInformation about the area surrounding a property, this could include the city, region, and neighborhood in which the property is situated Specific Data - answerInformation regarding the property itself Limited Appraisal - answerA simple, abbreviated version of a regular appraisal Market Value - answerThe 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 - answerRefers 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 - answerRefers to the value placed on a property by a governmental unit for use in levying annual real estate taxes Loan-to-Value Ratio (LTV) - answerThe 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 - answerThe property that is being evaluated in any given appraisal Highest and Best Use - answerWhat is achieved when a property is used for the most appropriate purpose with the highest returns Principle of Anticipation - answerThe present value of a property is affected by the anticipated income or utility that property will give to the property owner Principle of Contribution - answerA property's overall value is made of the combined value of each of its parts Principle of Substitution - answerThe value of something is effected by the cost of getting a similar (substitute) item elsewhere Principle of Change - answerThe condition of a property, the desirability of its location, and the market in which it exists can always change Principle of Conformity - answerValues are the highest when houses in a neighborhood look roughly the same Principle of Regression - answerLower value properties surrounding a subject property are can drag down the value of a property Principle of Progression - answerHigher value properties of a subject property can bump of the value of a property Sales Comparison Approach - answerDetermining 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 - answerDetermining 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 - answerDetermining value by considering how much income the property would generate when used as rental property Depreciation - answerThe loss of value because of obsolescence or deterioration Functional Obsolescence - answerLoss 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 - answerLoss 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 - answerLoss of value caused by physical wear and tear over time Chronological age - answerThe literal age of a property; a home built 30 years ago has a ________________ age of 30 Effective Age - answerAn 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 Reconciliation - answerWhen an appraiser compares estimates using different techniques (cost approach, sales approach, and/or income approach) and comes to a single number for value Appraisal Report - answera report from a licensed appraiser that sums up a property's market value based on collected data Appraisal Review - answera review of the appraisal report to make sure the appraisal meets the lender's standards Desk Review - answerWhen a lender carries an appraisal review at the desk (as opposed to sending someone to the field) to make sure the original appraisal is accurate Field Review - answerWhen a third party appraiser is sent back out to the property to check the validity of the first appraisal Fair Market Value - answerThe price for which a property will sell if offered openly under normal market conditio