PRINCIPLES OF REAL ESTATE 2 (CHAMPIONS 2025/2026) QUESTIONS AND
ANSWERS WITH COMPLETE SOLUTIONS
Loan-to-Value Ratio (LTV) - ANSWER the percentage of value or sales
price that a lender is willing to finance.
When calculating the loan to value ratio: - ANSWER The lender will use
the sales price or appraised value, whichever is lower.
In the process of principle of the substitution: - ANSWER The prices at
which similar items are sold in a market tend to be similar. The value of
the item can be inferred from the price at which a similar item is sold.
Principle of Progression - ANSWER The value of a subject property is
increased by the value of surrounding properties.
For a property to have value it must have four characteristics: - ANSWER
Demand,Utility,Scarcity, Transferability
In the Appraisal Process: - ANSWER The value of a property may be
affected by social, economic, governmental and environmental
, influences. An appraiser must always be aware of these influences and
possible changes in them that could affect market value.
The sales comparison approach is used as: - ANSWER The best indicator
of value for existing properties, most often used for residential
properties.
Functional obsolescence is - ANSWER The loss in desirability of the
style, layout, or function of an element of a property over time.
External obsolescence refers to: - ANSWER The loss in value of the
property caused by factors outside of the property itself.
Consummation is: - ANSWER The closing of a real estate transaction in
which all appropriate documents are signed, and the proceeds of the
mortgage loan are disbursed by the lender.
The Equal Credit Opportunity Act: - ANSWER prohibits discrimination in
any aspect of a credit transaction.
Secondary Market exists for: - ANSWER Purchase and sale of existing
mortgages to investors.
ANSWERS WITH COMPLETE SOLUTIONS
Loan-to-Value Ratio (LTV) - ANSWER the percentage of value or sales
price that a lender is willing to finance.
When calculating the loan to value ratio: - ANSWER The lender will use
the sales price or appraised value, whichever is lower.
In the process of principle of the substitution: - ANSWER The prices at
which similar items are sold in a market tend to be similar. The value of
the item can be inferred from the price at which a similar item is sold.
Principle of Progression - ANSWER The value of a subject property is
increased by the value of surrounding properties.
For a property to have value it must have four characteristics: - ANSWER
Demand,Utility,Scarcity, Transferability
In the Appraisal Process: - ANSWER The value of a property may be
affected by social, economic, governmental and environmental
, influences. An appraiser must always be aware of these influences and
possible changes in them that could affect market value.
The sales comparison approach is used as: - ANSWER The best indicator
of value for existing properties, most often used for residential
properties.
Functional obsolescence is - ANSWER The loss in desirability of the
style, layout, or function of an element of a property over time.
External obsolescence refers to: - ANSWER The loss in value of the
property caused by factors outside of the property itself.
Consummation is: - ANSWER The closing of a real estate transaction in
which all appropriate documents are signed, and the proceeds of the
mortgage loan are disbursed by the lender.
The Equal Credit Opportunity Act: - ANSWER prohibits discrimination in
any aspect of a credit transaction.
Secondary Market exists for: - ANSWER Purchase and sale of existing
mortgages to investors.
