Chapter 4

Question 1

attorney

Answer 1

only give legal tax advice to your principals if you are an attorney

Question 2

buyers market

Answer 2

the housing market situation where there is more inventory of homes for sale than purchasers so the seller generally has to lower prices to compete with the numerous other listing available

Question 3

cost approach

Answer 3

this valuation method calculates the current cost of replacing or reproducing the improvement less depreciation, and adds the value of the land, which is never depreciated

Question 4

safe harbor clause

Answer 4

the provision in a listing agreement that provides for a negotiated period (any agreed to time period) after the termination of a listing in which the listing broker may still be entitled to a commission

Question 5

home valuation code of conduct (HVCC)

Answer 5

this code says that appraisals must be ordered by third-party companies, not loan or real estate brokers

Question 6

inventory (MLS)

Answer 6

the number of months supply of home listing “for sale” at a particular time

Question 7

Dual agency

Answer 7

this occurs when the broker represents both the seller and the buyer in a transaction, with the consent of both parties

Question 8

listing package

Answer 8

a packet of forms as agent provides to the seller when taking a listing

Question 9

market data or comparative approach

Answer 9

this approach to valuation is one where the value is indicated by recent sales of comparable properties in the market

Question 10

market value

Answer 10

the amount of cash to be paid for a property on a given date in a fair and reasonable open market sale

Question 11

net income or capitalization approach

Answer 11

this method of valuation is useful primarily in income-producing properties

Question 12

sellers market

Answer 12

the housing market situation where there are fewer homes for sale, and, based on the law of supply and demand, the seller can ask for a higher price