Principlle II chapter 2 Flashcards
What does one acre equal?
A. 0.0015625 square miles
B. 4,840 square yards
C. 43,560 square feet
D. All of the above
D. All of the above
Which statement regarding points is NOT true?
A. In real estate mortgages, a point refers to the origination fee charged by the lender
B. Each point is equal to 1% of the amount of the loan.
C. The primary purpose of buying discount points from the lender is to reduce your closing costs.
D. If a bank charges an up-front fee for the loan, it often expressed in terms of points.
C. The primary purpose of buying discount points from the lender is to reduce your closing costs.
Which of the following payments are not paid in arrears?
A. Rent
B. Mortgage principal
C. Interest in a proration
D. Mortgage interest
A. Rent
A statutory year has 365 days.
A. True
B. False
B. False
Which statement is NOT true regarding prorations at closing for a real estate contract?
A. All property tax prorations will be a credit for the seller.
B. Prorations can be a credit or debit for either party.
C. Sellers must pay their fair share of property taxes.
D. Buyers must pay their fair share of pre-paid interest.
A. All property tax prorations will be a credit for the seller.
A banker’s or statutory year has ________ number of days.
A. 365
B. 30
C. 360
D. 370
C. 360
A farmer sold one section of land for $1,000 per acre. How much did the farmer receive from the sale of the land?
A. $1,000
B. $60.000
C. $649,000
D. $640,000
D. $640,000
Jim owns 1,920 acres of land. How many sections does he own?
A. 3
B. 2,200
C. 640
D. 10
A. 3
A lot is 150’ × 200’. How many square feet are in the lot?
A. 30,000
B. 70,000
C. 15,000
D. 45,000
A. 30,000
Length × Width × Height =?
A. A section
B. Square foot
C. Cubic feet
D. Mile
C. Cubic feet
What can be prorated? A. Taxes B. Interest C. Rents D. All of the above
D. All of the above
To be an appraiser trainee, the applicant must be at least 18 years old.
A. True
B. False
A. True
An Appraiser Trainee is a person who is authorized (approved, but not licensed) by TALCB to gain legal real estate appraisal experience under the supervision of a Certified General or Certified Residential Real Estate Appraiser.
A. True
B. False
A. True
A Licensed Residential Appraiser is a person who is licensed by TREC and has met the educational, experience, and examination requirements for licensing.
A. True
B. False
A. True
An appraisal is an assessment or estimation of the worth, or value of real estate.
A. True
B. False
A. True
The Principle of Substitution states that the maximum value of a property is set by the cost of purchasing a substitute property of the same value.
A. True
B. False
A. True
Real Property: Includes the entire “bundle of rights.”
A. True
B. False
A. True
Metes and Bounds is part of the Rectangular Survey System.
A. True
B. False
B. False
Assessed Value is the value of a property set by an insurance company.
A. True
B. False
A. True
The fundamental premise of the cost approach is that a potential user of real estate won’t, or shouldn’t, pay more for a property than it would cost to build an equivalent.
A. True
B. False
A. True
Reconciliation is the weighting of the findings from the approaches and forming an opinion of the value of the property.
A. True
B. False
A. True
To determine fair market value, residential agents choose the cost approach.
A. True
B. False
B. False
Price is just one element to be taken into consideration when determining market value.
A. True
B. False
A. True
What the property sold for is the market value and what it is worth is the price.
A. True
B. False
B. False
Fannie Mae and Freddie Mac require an appraiser to comply with FNMA guidelines.
A. True
B. False
A. True
Real estate agents are allowed to do appraisals.
A. True
B. False
B. False
Physical deterioration, functional obsolescence, and economic obsolescence are forms of depreciation.
A. True
B. False
A. True
Generally, listings expire because they have been overpriced.
A. True
B. False
A. True
With the cost approach, the land is appraised as if it were improved.
A. True
B. False
B. False
What does NOT hold true for economic obsolescence?
A. Is a form of depreciation caused by factors that are not on the property, in the property, or even within the property lines.
B. Is caused by factors like the neighborhood experiencing a rise in crime.
C. Is something that is curable by the homeowner.
D. Is caused by economic factors such as problems in the job market.
C. Is something that is curable by the homeowner.
What statement is NOT true for the Gross Rent Multiplier Approach?
A. This approach values a rental property based on the amount of rent an investor can collect each year.
B. This approach is before considering any taxes, insurance, utilities, and other expenses associated with the property,
C. This approach is a quick and easy way to measure whether a property is worth the investment.
D. This approach uses a cap rate as a percentage value.
D. This approach uses a cap rate as a percentage value.
What is plottage?
A. The process of combining adjacent parcels of land into one larger parcel.
B. The increase in value realized by combining adjacent parcels of land into one larger parcel.
C. The increase in the value of an asset over time.
D. The same thing as assemblage.
B. The increase in value realized by combining
Which statement about a Comparative Market Analysis is NOT true?
A. An examination of the prices at which similar properties in the same area recently sold.
B. An examination of three or four comps with the same features.
C. Will include a “subject property” and multiple “comparable properties” also know as “comps.”
D. An approach used in real estate to determine the value of a property by considering other similar properties that have recently sold.
B. An examination of three or four comps with the same features.
With a CMA, agents can rarely find comps with the same features and adjustments have to be made to match the subject property.
Which approach is used to appraise specialized properties?
A. The income approach
B. The market approach
C. The cost approach
D. The Comparative Market Analysis
C. The cost approach
Who may appraise 1-4 Residential Units without regard to transaction value or complexity?
A. A Residential Appraiser
B. A Certified Residential Real Property Appraiser
C. A Licensed Residential Real Property Appraiser
D. A Certified General Real Property Appraiser
B. A Certified Residential Real Property Appraiser
The Certified General Real Property Appraiser is qualified to appraise all types of real property.
An appraiser is the one responsible for performing a comparative market analysis.
A. True
B. False
B False
Real estate agents NOT appraisers perform a comparative market analysis for their clients to help them determine a price to list when selling a home or a price to offer when buying a home.
What is NOT a requirement for an appraiser trainee?
A. An appraiser trainee may perform appraisals or appraiser services only under the active, personal and diligent direction and supervision of a supervisory appraiser.
B. An appraiser trainee may be supervised by only one supervisory appraiser.
C. An appraiser trainee must complete an approved Appraiser Trainee/Supervisory Appraiser course within four years before the expiration date of the appraiser trainee’s current license and provide proof of completion to the Board.
D. Appraiser trainees must maintain an appraisal log and appraisal experience affidavits on forms approved by the Board, for the license period being renewed.
B. An appraiser trainee may be supervised by only one supervisory appraiser.
During the training process, an appraiser trainee may be supervised by more than one supervisory appraiser.
A Competitive Market Analysis (CMA) is most often prepared by a/an: A. Inspector B. Lender C. Real estate agent D. Appraiser
C. Real estate agent
A real estate agent is allowed to do a Competitive Market Analysis (CMA). Only an appraiser can do an appraisal.
Adjustments for differences between the subject property and the comparable property are made to:
A. The subject property
B. The comparable property
C. Either property as indicated by the appraiser’s findings
D. The appraiser’s final estimate of the value of the subject property
Rationale: The correct answer is B. The comparable property. We adjust the comparables to find a value for the subject property.
B. The comparable property
The comparable property. We adjust the comparables to find a value for the subject property.
The process of combining two parcels of land into one larger parcel that is worth more than the total value of the individual parcels is called: A. Adage B. Estatage C. Rentage D. Assemblage
D. Assemblage.
Assemblage is the process of combining two or more parcels of land to form a larger parcel. Plottage value is the result of combining the parcel to make a larger more valuable property.
The most widely used approach for estimating construction costs is:
A. Square foot method
B. Gross rent multiplier
C. Income approach
D. Capitalization
A. Square foot method.
A building similar to our subject building cost $150.00 per square foot to build. Our subject building is 10,000 square feet in area. $150 multiplied by 10,000 square feet is $1,500,000. This is the estimated construction cost using the square foot method.
If two parcels are combined into one larger parcel that is worth more than the total value of the individual parcels, that added value is called:
A. Adage
B. Estatage
C. Rentage
D. Plottage
D. Plottage
Plottage value is the result of combining the parcel to make a larger more valuable property.
In the market approach, a real estate appraiser looks for data on sales of comparable properties that have occurred within the last: A. Six months B. Ten days C. Year D. 30 days
A. Six months
Which of the following results from factors outside the property? A. Functional obsolescence B. Physical deterioration C. Economic obsolescence D. Curable depreciation
C. Economic obsolescence
Which of the following estimates of value is most likely to provide only a rough estimate of the value of the rental property? A. Cost approach B. Gross rent multiplier C. Income approach D. Market approach
B. Gross rent multiplier
