Module 15 Quiz Flashcards
What type of rate is used in the calculation of ad valorem taxes of real property?
A) nominal rate
B) mill rate
C) capitalization rate
D) period rate
B) mill rate
A motel off the interstate has a property tax of $7,500. The effective tax rate in the area is 1.5 percent of the market value. If the tax assessment ratio is 60 percent, what is the mill rate applicable to this motel property
expressed in mills?
A) 37.5 mills
B) 10.67 mills
C) 25 mills
D) 15 mills
C) 25 mills
$7,500 tax divided by 0.015 effective tax rate = $500,000 market value. $500,000 x 0.60 assessed ratio equals $300,000 assessed value.
Divide the taxes by the assessed value to derive the mill rate. Here are the calculations: $7,500 / $300,000 = 0.025 mill rate and then multiply this rate times 1,000 to get 25 mills.
As an alternative, you could have taken 60 percent of the tax to derive $4,500 and divided that by 0.015 to get the assessed value of $300,000. The remaining calculations would be the same as before, that is to divide
the tax of $7,500 by the assessed value.
A purchaser applied for a 70% mortgage, and the seller agreed to pay 4 points on the mortgage. If the seller paid $5,600 in points, what was the selling price of the property?
A) $140,000
B) $200,000
C) $114,286
D) $238,000
B) $200,000
Note:
1) $5,600 / .04 = $140,000 (but you’re not done!)
2) $140,000 / .70 = $200,000
A purchaser applied for an 80% mortgage, and the seller agreed to pay 2 points on the mortgage. If the seller paid $3,500 in points, what was the selling price of the property?
A) $187,500
B) $218,750
C) $175,000
D) $210,000
B) $218,750
Note:
1) $3,500 / .02 = $175,000 (but you’re not done!)
2) $175,000 / .80 = $218,750
Maurice purchased a property for $187,500. After one year, he sold the property for $200,000. What is the percentage increase over the year of ownership?
A) 6.67%
B) 6.30%
C) 6.25%
D) 6.70%
A) 6.67%
Carrie’s boutique store is valued at $395,000. If the owner’s equity in the property is 35%, how much mortgage debt does Carrie have in her retail store?
A) $138,250
B) $276,500
C) $256,750
D) $296,250
C) $256,750
Thompson paid an annual property tax this year of $2,940. If the mill rate is 28 and the assessed ratio is 60 percent of market value, what market value did the assessor assign to the Thompson property?
A) $175,000
B) $157,500
C) $262,500
D) None of these answers
A) $175,000
Note: $2,940 / 28 = 105 x 1,000 = $105,000 / 0.60 = $175,000.
The alternative method is $2,940 / 0.028 = $105,000 and then divide that by 60 percent to derive $175,000
A homeowner with a 24’ X 40’ home adds an addition with dimensions of 12’ X 20’, what is the percentage increase in the home’s area?
A) 25.00%
B) 2.00%
C) 2.50%
D) 20.00%
A) 25%
Note: 240/960 (or use calculator)
An existing building contains 2,500 square feet of space on each of four floors. The site contains a total of 50,000 square feet. What is the floor area ratio?
A) 0.05
B) 0.20
C) 0.10
D) 0.15
B) 0.20
Note: don’t forget t0 2,500 * 4 for each of the four floors
Sue purchased a property for $100,000. After making
improvements, she sold the property for 10% more than she paid for it. What is the new sale price?
$110,000
Note: Use T-Bar
Or
$100,000 (base) × 1.10 (percent applied) = $110,000
Jim purchased a property for $100,000. He later sold the property during a down market period for 10% less.
What is the new price?
$90,000
Note: $100,000 (base) × 0.90 (percent applied) = $90,000
Think of the new price as 90% of the original purchase price.
Sue sold her property for $110,000. This price is 10% more than what she paid for it.
What was the original purchase price?
$100,000
Note:
$110,000 / 1.10 (percent applied) = $100,000 (Base)
Jim sold his property for $90,000 during a down market period. This price was 10% less than what he paid for it.
What was the original purchase price?
$100,000
Note: Or $90,000 / 0.90 (percent applied) = $100,000 (Base)
Jacquelyn sold her condominium for $126,000. This price was 5% more than she paid for it.
What was the original purchase price?
Clue. First, decide whether the problem has supplied the base number to which a percent is applied, or if you have to apply the percent to another number to obtain the base. Next consider whether the base is inferior or superior.
$120,000
Note: $126,000 / 1.05 (percent applied) = $120,000 (Base)
An appraiser selected a property that sold for $253,000 as a comparable sale in an assignment. If the sale is 15% superior to the subject property, what is the value of the subject property?
Clue. The wording used in this question is a bit tricky and makes it confusing whether the comparable sale or the subject property is the base. Moreover, appraisers adjust the comparable sale, not the subject property. However, when you run into a question like this, treat the subject property as the base and solve it.
$220,000
Note: $253,000 / 1.15 = $220,000
Check: $220,000 × 1.15 = $253,000