exam

Question 1

A single-family residence doesNOTreach its full value because it is located in an industrial area. This illustrates the appraisal principle of

a. competition.
b. plottage.
c. conformity.
d. increasing and diminishing return.

Answer 1

c. conformity.

Question 2

The market value of a property is

Answer 2

the most probable price a property should bring.

Question 3

What should be done to the sales price of the comparable property if it is missing features that are present in the subject property?

Answer 3

It should be increased.

Question 4

Which creates a lien against the property as security for the debt?

Answer 4

Deed of trust

Question 5

Charging interest in excess of the maximum rate of interest set by state law is called

Answer 5

usury.

Question 6

Which originate loans with either their own money or funds borrowed from other institutions?

Answer 6

Mortgage bankers

Question 7

In an amortized loan, the initial payments are applied mainly to

Answer 7

the interest.

Question 8

Donna gives Tom a general warranty deed that doesNOTmention an existing mortgage lien on the property. This is a violation of the covenant

a. of seisin.
b. of quiet enjoyment.
c. of further assurance.
d. against encumbrances.

Answer 8

d. against encumbrances.

Question 9

What kind of notice refers to information that is available in the public record?

Answer 9

Constructive

Question 10

A brief history of all the documents affecting title is

Answer 10

an abstract of title.

Question 11

A bedroom without a closet is an example of what type of depreciation?

Answer 11

Functional obsolescence

Question 12

The final step in the cost approach for estimating value of property is to

Answer 12

add estimated land value to the depreciated cost of the building and other site improvements.

Question 13

The first step in estimating property value using the income approach is to estimate

Answer 13

annual potential gross income.

Question 14

A loan that isNOTinsured or guaranteed by a government agency against default of the borrower is called

a. a VA loan.
b. a conventional loan.
c. an FHA loan.
d. a nonconventional loan.

Answer 14

b. a conventional loan.

Question 15

What kind of title policy is guaranteed for the amount paid for the property?

Answer 15

Owner’s

Question 16

The purpose of the Real Estate Settlement Procedures Act (RESPA) is to

Answer 16

ensure that buyers and sellers know all settlement costs.

Question 17

If the seller’s debits are greater than the seller’s credits on the closing statement, the seller will

Answer 17

pay cash at closing.

Question 18

The appraisal principle of value stating that the maximum value of a property tends to be set by the cost of purchasing an equally desirable and valuable property is

Answer 18

substitution.

Question 19

In which approach to value does an appraiser base the property’s value on reproduction cost?

Answer 19

Cost

Question 20

Which isTRUEof the reconciliation process in determining a property’s estimate of value?

a. The process of reconciliation averages the three indications of value computed by an appraiser: the sales comparison approach, the cost approach, and the income approach.
b. The income approach would be given the greatest weight in valuing an apartment building.
c. The cost approach would be given the greatest weight in valuing an existing single-family residence.
d. The sales comparison approach would be given the greatest weight in valuing churches, libraries, and schools.

Answer 20

b. The income approach would be given the greatest weight in valuing an apartment building.

Question 21

The market value of a property is

Answer 21

the most probable price a property should bring.

Question 22

What should be done to the sales price of the comparable property if it is missing features that are present in the subject property?

Answer 22

It should be increased.