Principles of Real Estate 2

Question 1

LTV

Answer 1

Loan-to-value ratio
-is the percentage of value or sales price that a lender is willing to finance.

Question 2

Loan to Value (LTV)

Answer 2

Lenders establish loan-to-value guidelines so they will make prudent mortgage loan decision.

Question 3

Principle of Substitution

Answer 3

Therefore, the prices at which similar items are sold in a market tend to be similar. The value of item can be inferred from the price at which a similar is sold.

Question 4

Principle of Regression

Answer 4

The presence of lower-priced properties is “pulling” down the value decreased of the higher-priced property

Question 5

Principle of Progression

Answer 5

The opposite occurs accordingly to the principle of progression, which states that the value of a subject property is increased by the value of surrounding properties.

Question 6

What are the characteristics of value?

Answer 6

Demand, Utility, Scarcity, and Transferability.

Question 7

Demand