Real Estate Market

Question 1

1 of 255Functional Classification

Answer 1

The process by which all roads are grouped into classes or systems according to the character of service they are intended to provide. Functional class defines the part that any particular road or street should play in serving the flow of trips through a highway network.

Question 2

2 of 255Lessor

Answer 2

One who conveys the rights of occupancy and use to others under lease agreement.

Question 3

3 of 255Fixture

Answer 3

Any piece of personal property which becomes permanently affixed to a piece of real property.

Question 4

4 of 255Aesthetic Value

Answer 4

The additional value a property enjoys based on subjective criteria such as look or appeal.

Question 5

5 of 255Second Mortgage

Answer 5

A loan secured by the equity in a home, when a primary mortgage already exists.

Question 6

6 of 255Average Daily Traffic (ADT)

Answer 6

A 24-hour traffic volume that should be qualified by stating a time period.

Question 7

7 of 255State Rule

Answer 7

In condemnation, the process of determining just compensation by estimating the value of the portion to be acquired as part of the whole property plus the net severance damages; maybe referred to as a taking plus damages rule. See also before and after rule.

Question 8

8 of 255Highest and Best Use of Land or Site as Though Vacant

Answer 8

Among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements.

Question 9

9 of 255Which of the following value types is based on the replacement cost of physical items that are subject to loss?

Answer 9

Insurable value

Question 10

10 of 255Consequential Damages

Answer 10

Damage to property arising as a consequence of a taking over and above direct damages.

Question 11

11 of 255Blighted Area

Answer 11

Any region of a city or town that has fallen into disrepair or otherwise has become undesirable.

Question 12

12 of 255Automated Valuation Model (AVM)

Answer 12

1. Computer software that queries property and market data, analyzes comparable property and market information to assign a value or range of value to a particular property, or generates metrics applicable to assessing the credibility of valuation-related statements. 2. An AVM is a computer software program that analyzes data using an automated process. For example, AVMs may use regression, adaptive estimation, neural network, expert reasoning, and artificial intelligence programs. The output of an AVM is not, by itself, an appraisal. An AVM’s output may become a basis for appraisal or appraisal review if the appraiser believes the output to be credible for use in a specific assignment. An appraiser can use an AVM as a tool in the development of an appraisal or appraisal review. However, the appropriate use of an AVM is, like any tool, dependent upon the skill of the user and the tool’s suitability to the task at hand.

Question 13

13 of 255Which of the following is not included in demographic influences that appraisers need to consider?

Answer 13

Family stigmatization

Question 14

14 of 255Closing Costs

Answer 14

All appropriate costs generated by the sale of property which the parties must pay to complete the transaction. Costs may include appraisal fees, origination fees, title insurance, taxes and any points negotiated in the deal.

Question 15

15 of 255Contingency

Answer 15

Something that must occur before something else happens. Often used in real estate sales when a buyer must sell a current home before purchasing a new one. Or, when a buyer makes an offer that requires a complete home inspection before it becomes official.

Question 16

16 of 255Which one of the following types of value refers to the nominal value of a property that has reached the end of its economic life?

Answer 16

Salvage

Question 17

17 of 255Pipeline Easement

Answer 17

The right to construct, operate, and maintain a pipeline over the lands of others within prescribed geographical limits. The language of the easement determines the extent of the rights granted.

Question 18

18 of 255Purpose of an Appraisal

Answer 18

The objective of an assignment – e.g., in an appraisal assignment, to develop an opinion of the defined value of any real property interest.

Question 19

19 of 255Which of the following is most similar to the concept of return on capital?

Answer 19

Interest rate

Question 20

20 of 255Recorder

Answer 20

A local government employee whose role it is to keep records of all real estate transactions within the jurisdiction.

Question 21

21 of 255Which term refers to the lump sum that an investor receives at the termination of an investment?

Answer 21

Reversion

Question 22

22 of 255Amortization

Answer 22

The repayment of a loan through regular periodic payment.

Question 23

23 of 255Down Payment

Answer 23

An amount paid in cash for a property, with the intent to mortgage the remaining amount due.

Question 24

24 of 255Spot Zoning

Answer 24

An exception to the general zoning regulations; permits specific, usually small, parcels of land to be zone for a use that is not permitted in the surrounding area. See also zoning variance.

Question 25

25 of 255Remnant

Answer 25

A remainder that has negligible economic utility or value due to its size, shape, or other detrimental characteristics; also called on economic remainder or uneconomic remnant. See also remainder.

Question 26

26 of 2551031 Exchange

Answer 26

A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes. Taxes on capital gains are not charged on the sale of a property if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment.

Question 27

27 of 255Debt

Answer 27

An obligation to repay some amount owed. This may or may not be monetary.

Question 28

28 of 255Errors and Omissions Insurance

Answer 28

An insurance policy taken out by appraisers to cover their liability for any mistakes made during the appraisal process.

Question 29

29 of 255Which of the following is not considered general data?

Answer 29

Comparable sales

Question 30

30 of 255Which of the following terms means that the title reverts to the state when a person dies without a will and leaves no heirs?

Answer 30

Eminent domain

Question 31

31 of 255Ginnie Mae

Answer 31

Government National Mortgage Association (GNMA) - A wholly owned corporation created in 1968 within the U.S. Department of Housing and Urban Development to serve low-to moderate-income homebuyers.

Question 32

32 of 255Which of the following is not an important factor in national and regional trends that affect real estate values?

Answer 32

Foreign exchange rates

Question 33

33 of 255Clear Title

Answer 33

Ownership of property that is not encumbered by any counterclaim or lien.

Question 34

34 of 255Prime Rate

Answer 34

The interest rate that banks and other lending institutions charge other banks or preferred customers.

Question 35

35 of 255Mortgagor

Answer 35

The entity that borrows money in a real estate transaction.

Question 36

36 of 255Principal

Answer 36

The amount owed on a mortgage which does not include interest or other fees.

Question 37

37 of 255Market Value

Answer 37

1. The most probable price that the specified property interest should sell for in a competitive market after a reasonable exposure time, as of a specified date, in cash, or in terms equivalent to cash, under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, for self-interest, and assuming that neither is under duress. 2. A type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal. An appraiser is cautioned to identify the exact definition of market value, and its authority, applicable in each appraisal completed for the purpose of market value. (USPAP)

Question 38

38 of 255Which of the following is general data that an appraiser should consider when performing an appraisal?

Answer 38

Economic influences

Question 39

39 of 255Full Taking

Answer 39

The entire taking of the full real property interest of a parcel for public use under the power of eminent domain; requires the payment of compensation. See also partial taking.

Question 40

40 of 255Appreciation

Answer 40

The natural rise in property value due to market forces.

Question 41

41 of 255Special Use Permit

Answer 41

Permission granted by a local zoning agency that authorizes a use as a special exemption to the applicable zoning. A special use permit in a residentially zoned area might allow for construction of a church or hospital. Such uses are considered conditional uses, only permitted upon the approval of the zoning authority. Sometimes referred to as a conditional use permit.

Question 42

42 of 255Master Plan

Answer 42

A comprehensive, long-range official plan that guides the physical growth and development of the community, combined with the basic regulatory and administrative controls needed to attain the physical objectives; includes land-use plan, thoroughfare plan, community facilities plan, and public improvements program. Master plans are usually revised periodically (e.g., every five years). In some jurisdictions, the master plan takes precedence over the existing zoning. See also comprehensive plan.

Question 43

43 of 255Regression

Answer 43

In appraisal, the concept that the value of a superior property is adversely affected by its association with an inferior property of the same type. See also progression.

Question 44

44 of 255Range of Value

Answer 44

In final reconciliation, the range in which the final market value opinion of a property may fall; usually stated as the interval between a high and low value limit.

Question 45

45 of 255Credit

Answer 45

A loan of money for the purchase of property, real or personal. Credit is either secured by an asset, such as a home, or unsecured.

Question 46

46 of 255Letter of Transmittal

Answer 46

Any type of written letter, memorandum, or statement that serves as a notice of delivery from the appraiser to the client of a report containing an opinion or conclusion concerning real estate; often a brief document in the introduction to an appraisal report that formally presents the report to the person for whom the appraisal was prepared.

Question 47

47 of 255Primary Data

Answer 47

Information that is gathered in its original form by the analyst. See also secondary data.

Question 48

48 of 255Commercial Property

Answer 48

Income-producing property such as office buildings, retail buildings, hotels, banks, restaurants, service outlets, and owner-occupied properties that are capable of becoming income-producing should the owner so decide; usually zoned for business purposes.

Question 49

49 of 255Highest and Best Use of Property as Improved

Answer 49

The use that should be made of the property as it exists. An existing improvement should be renovated or retained so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one.

Question 50

50 of 255Physical Possibility

Answer 50

One of the criteria for highest and best use of a property must meet; the land must be able to accommodate the size and shape of the ideal improvement.

Question 51

51 of 255Which of the following is the definition of a ‘leased fee estate’?

Answer 51

The rights enjoyed by the owner of a leased property

Question 52

52 of 255Final Reconciliation

Answer 52

The last phase in the development of the value opinion in which two or more value indications derived from market data are resolved into a value opinion, which may be either a final range of value for a single point estimate.

Question 53

53 of 255Distressed Property

Answer 53

A mortgaged property which has been foreclosed on.

Question 54

54 of 255Partial Taking

Answer 54

The taking of part of any real property interest for public use under the power of eminent domain; requires the payment of compensation.

Question 55

55 of 255Fee Simple Estate

Answer 55

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Question 56

56 of 255Foreclosure

Answer 56

The process whereby a lender can claim the property used by a borrower to secure a mortgage and sell the property to meet the obligations of the loan.

Question 57

57 of 255Real Property Rights Conveyed

Answer 57

An element of comparison in the sales comparison approach; comparable properties can be adjusted for differences in the real property rights involved in a transaction.

Question 58

58 of 255Grantor

Answer 58

Any person who gives away ownership of a piece of property.

Question 59

59 of 255Lender

Answer 59

The person or entity who loans funds to a buyer. In return, the lender will receive periodic payments, including principal and interest amounts.

Question 60

60 of 255Bundle of Rights Theory

Answer 60

The concept that compares property ownership to a bundle of sticks with each stick representing a distinct and separate right of the property owner, e.g., the right to use real estate, to sell it, to lease it, to give it away, or to choose to exercise all or none of these rights.

Question 61

61 of 255Scarcity

Answer 61

An economic principal that dictates the price of a good or service through the interaction of supply and demand. When an item is scarce, its price tends to rise, given a constant demand. Real Estate is a classic example of scarcity.

Question 62

62 of 255Estate

Answer 62

1. A right or interest in property. Defines an owner’s degree, quantity, nature, and extent of interest in real property. There are many different types of estates, including freehold (fee simple, determinable fee, and life estate) and leasehold. To be an estate in land, an interest must allow possession (either now or in the future) and be differentiated primarily by its duration. 2. The net worth of an entity at appointment time. Possessions left to heirs upon death are often referred to as the estate.

Question 63

63 of 255Highway Easement

Answer 63

A right granted or taken for the construction, maintenance, and operation of the highway.

Question 64

64 of 255Co-Maker

Answer 64

A second party who signs a loan, along with the borrower, and becomes liable for the debt should the borrower default.

Question 65

65 of 255Condemnation

Answer 65

The official process by which a property is deemed to be uninhabitable or unusable due to internal damage or other external conditions. The process by which a government agency takes private property for public use.

Question 66

66 of 255Plat

Answer 66

1. A plan, map, or chart of a city, town, section, or subdivision indicating the location and boundaries of individual properties. 2. A map or sketch of an individual property that shows property lines and may include features such as soils, building locations, vegetation, and topography. 3. A map intended to show the division of land into lots or parcels. Upon recordation with the appropriate authorities, land included in the plat can thenceforth be legally described by reference to the plat, omitting a metes and bounds description.

Question 67

67 of 255Agent

Answer 67

A person who has been appointed to act on behalf of another for a particular transaction.

Question 68

68 of 255Lien

Answer 68

Any claim against a piece of property resulting from a debt or other obligation.

Question 69

69 of 255Salvage Value

Answer 69

The price expected for a whole property (e.g., a house) or a part of a property (e.g., a plumbing fixture) that is removed from the premises usually for use elsewhere.

Question 70

70 of 255Which of the following is defined as the study of the supply and demand conditions for a specific type of property in a specific area?

Answer 70

Market analysis

Question 71

71 of 255Absorption Rate

Answer 71

The ratio of the number of properties in an area that have been sold against the number available. Used to show the volatility of a market.

Question 72

72 of 255What form of zoning adjustment is likely to result in an increase in value?

Answer 72

Downzoning

Question 73

73 of 255Parcel Identification Number

Answer 73

A numeric or alphanumeric label that uniquely identifies a parcel. Government property assessors use various systems, many with common features. A growing number of these systems include geocoding. The Government Survey system is often used as a basis for parcel identification.

Question 74

74 of 255Loss of Access

Answer 74

Depriving an abutting owner of the inherent rights of ingress and to egress from the highway or street.

Question 75

75 of 255Commission

Answer 75

A percentage of the sales price or a fixed fee negotiated by an agent to compensate for the effort expended to sell or purchase property.

Question 76

76 of 255Mortgagee

Answer 76

The entity that lends money in a real estate transaction.

Question 77

77 of 255Which of the four agents of production is the last agent to be satisfied?

Answer 77

Capital

Question 78

78 of 255Desktop Appraisal

Answer 78

An appraisal in which the appraiser’s scope of work does not include an inspection of the subject property or comparables.

Question 79

79 of 255Closing

Answer 79

The process whereby the sale of a property is consummated with the buyer completing all applicable documentation, including signing the mortgage obligation and paying all appropriate costs associated with the sale (CLOSING COSTS).

Question 80

80 of 255Highest and Best Use

Answer 80

The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Alternatively, the probable use of land or improved property - specific with respect to the user and timing of the use - that is adequately supported and results in the highest present value.

Question 81

81 of 255Prospective Opinion of Value

Answer 81

A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies the value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.

Question 82

82 of 255Deed-In-Lieu (of Foreclosure)

Answer 82

A document given by a borrower to a lender, transferring title of the property. Often used to avoid credit-damaging foreclosure procedures.

Question 83

83 of 255Escrow

Answer 83

An amount retained by a third party in a trust to meet a future obligation. Often used in the payment of annual taxes or insurance for real property.

Question 84

84 of 255Mitigation of Damages

Answer 84

The legal responsibility of a plaintiff to make reasonable efforts, after an injury or breach of contract, to alleviate the effects of the injury or breach. If the defendant can show that the plaintiff failed to mitigate damages, the plaintiff’s recovery may be reduced.

Question 85

85 of 255Amortization Term

Answer 85

The length of time over which an amortized loan is repaid. Mortgages are commonly amortized over 15 or 30 years.

Question 86

86 of 255Inspection

Answer 86

The examination of a piece of property, its buildings or other amenities.

Question 87

87 of 255Earnest Money Deposit

Answer 87

A cash deposit made to a home seller to secure an offer to buy the property. This amount is often forfeited if the buyer decides to withdraw his offer.

Question 88

88 of 255Adjusted Basis

Answer 88

The value of an asset (property or otherwise) that includes the original price plus the value of any improvement, and less any applicable depreciation.

Question 89

89 of 255Loan-To-Value Ratio (LTV)

Answer 89

The comparison of the amount owed on a mortgaged property to its market value.

Question 90

90 of 255Equity Buildup

Answer 90

The natural increase in the amount of equity an owner has in a property, accumulated through market appreciation and debt repayment.

Question 91

91 of 255Field Review

Answer 91

An appraisal review for which the scope of work includes inspection of the exterior and sometimes interior of the subject property and possibly inspection of the comparable properties to confirm the data provided in the report. A field review is generally performed using a customized checklist that covers the items examined in the desk review and may also include confirmation of market data, research to gather additional data, and verification of the software used in preparing the report.

Question 92

92 of 255Lessee

Answer 92

One who has the right to occupancy and use of the property of another for a period of time according to a lease agreement.

Question 93

93 of 255Which of the following statements about local zoning ordinances is incorrect?

Answer 93

Zoning may allow the same area to have multiple uses.

Question 94

94 of 255Certificate of Reasonable Value (CRV)

Answer 94

Usually based on an independent appraisal, a CRV for a particular property establishes the maximum amount which can be secured by a VA mortgage.

Question 95

95 of 255Liquid Asset

Answer 95

Any asset which can be quickly converted into cash at little or no cost, or cash itself.

Question 96

96 of 255General Lien

Answer 96

A broad-based claim against several properties owned by a defaulting party.

Question 97

97 of 255Veterans Affairs, Department of (VA)

Answer 97

The successor to the Veteran’s Administration, this government agency is responsible for ensuring the rights and welfare of our nation’s veterans and their dependents. Among other duties, the VA guarantees home loans made to veterans.

Question 98

98 of 255American Society of Appraisers

Answer 98

An organization of appraisal professionals and others interested in the appraisal profession.

Question 99

99 of 255Insurable Title

Answer 99

The title to property which has been sufficiently reviewed by a title insurance company, such that they are willing to insure it as free and clear.

Question 100

100 of 255Realtor

Answer 100

A real estate agent or broker who is a member of the National Association of Realtors.

Question 101

101 of 255Which of the following is not true regarding eminent domain?

Answer 101

Fair market value must be compensated

Question 102

102 of 255Which of the following steps in the valuation process occurs last?

Answer 102

Reconciliation of the results.

Question 103

103 of 255Which study examines the profitability of a proposed property?

Answer 103

Feasibility study

Question 104

104 of 255Recording

Answer 104

The filing of a real estate transaction with the appropriate government agent (normally the RECORDER). A real estate transaction is considered final when it is recorded.

Question 105

105 of 255Larger Parcel

Answer 105

In governmental land acquisitions, the tract or tracts of land that are under the beneficial control of a single individual or entity and at the same, or an integrated, highest and best use. Elements of consideration by the appraiser in making a determination in this regard are contiguity, or proximity, as it bears on the highest and best use of the property, unity of ownership, and unity of highest and best use. In most states, unity of ownership, continuity, and unity of use are the three conditions that establish the larger parcel for the consideration of severance damages. In federal and some state cases, however, contiguity is sometimes subordinated to unitary use.

Question 106

106 of 255Scope of the Project Rule

Answer 106

In eminent domain, any decrease or increase in the fair market value of real property, prior to the date of valuation, caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project other than that due to physical deterioration within the reasonable control of the owner. (See Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (P.L. 91-646) 42 U.S.C. §4651 (3).)

Question 107

107 of 255Home Inspection

Answer 107

A complete examination of a building to determine its structural integrity; uncover any defects in materials, systems or workmanship; uncover any potential infestations or damage from infestations; uncover any potential health, safety, environmental or building code issues. A home inspection is NOT what an appraiser does.

Question 108

108 of 255Damages

Answer 108

In condemnation, the loss in value to the remainder in a partial taking of property. Generally, the difference between the value of the whole property before the taking in the value of the remainder after the taking is the measure of the value of the part taken and the damages to the remainder. Note that different regions of the country and different courts may use terms such as consequential damages and severance damages differently.

Question 109

109 of 255Which type of value is used for tax appraisals?

Answer 109

Assessed value

Question 110

110 of 255Oral Appraisal Report

Answer 110

A report that is transmitted orally. See also written appraisal report.

Question 111

111 of 255Executor (Personal Representative)

Answer 111

An individual or other legal person designated in a will to settle the estate of the deceased person.

Question 112

112 of 255Lease

Answer 112

A contract in which the rights to use and occupy land or structures are transferred by the owner to another for a specified period of time in return for specified rent.

Question 113

113 of 255Maximum Productivity

Answer 113

One of the four criteria the highest and best use of a property must meet; the selected land-use must yield the highest value of the possible uses.

Question 114

114 of 255Certified General Appraiser

Answer 114

Generally, any professional who has met the local or state requirements, and passed the appropriate certification exam, and is capable of appraising any type of property.

Question 115

115 of 255Private Mortgage Insurance (PMI)

Answer 115

A form of mortgage insurance provided by private, non-government entities. Normally required when the LOAN TO VALUE RATIO is higher than 80%. Insurance provided by a private mortgage lender to protect against loss caused by a borrower’s default on a residential or commercial mortgage loan.

Question 116

116 of 255Bill of Sale

Answer 116

A physical receipt indicating the sale of property.

Question 117

117 of 255Principal, Interest, Taxes, and Insurance (PITI)

Answer 117

The most common constituents of a monthly mortgage payment.

Question 118

118 of 255Appraisal Principles

Answer 118

The basic building blocks of the property valuation process, including property inspection, market analysis and basic economics.

Question 119

119 of 255Broker

Answer 119

An individual who facilitates the purchase of property by bringing together a buyer and a seller.

Question 120

120 of 255NonLiquid Asset

Answer 120

Any asset which cannot be quickly converted into cash at little or no cost.

Question 121

121 of 255Homeowner’s Association

Answer 121

An organization of homeowners in a particular neighborhood or development formed to facilitate the maintenance of common areas and to enforce any building restrictions or covenants.

Question 122

122 of 255Contribution

Answer 122

The concept that the value of a particular component is measured in terms of the amount it adds to the value of the whole property or as the amount that its absence would detract from the value of the whole. The principle of contribution is the basis for the adjustment process in the sales comparison approach.

Question 123

123 of 255Interim Use

Answer 123

The temporary use to which a site or improved property is put until it is ready to be put to its future highest and best use.

Question 124

124 of 255Final Opinion of Value

Answer 124

The opinion of value derived from the reconciliation of value indications and stated in the appraisal report; may be expressed as a single point, as a range, or in relation to a benchmark.

Question 125

125 of 255Which of the following terms is defined as the most probable price for which property should sell to a knowledgeable buyer in a competitive market?

Answer 125

Market value

Question 126

126 of 255Certificate of Title

Answer 126

A document designating the legal owner of a parcel of real estate. Usually provided by a title or abstract company.

Question 127

127 of 255Which of the following is not a component of supply?

Answer 127

Absorption

Question 128

128 of 255Real Estate Agent

Answer 128

A licensed professional who facilitates the buying and selling of real estate.

Question 129

129 of 255Homeowner’s Insurance

Answer 129

A policy which covers a homeowner for any loss of property due to accident, intrusion or hazard.

Question 130

130 of 255Preservation Easement

Answer 130

A voluntary legal agreement that becomes part of the chain of title thereby protecting a historic, archaeological, or cultural resource. Tax benefits may arise from granting a preservation easement to a qualified organization dedicated to historic preservation. As differentiated from a conservation easement.

Question 131

131 of 255Secondary Data

Answer 131

Information that is not gathered in its original form by the analyst. See also primary data.

Question 132

132 of 255Just Compensation

Answer 132

In condemnation, the amount of loss for which a property owner is compensated when his or her property is taken. Just compensation should put the owner in as good a position as he or she would be if the property had not been taken.

Question 133

133 of 255Point

Answer 133

A percentage of a mortgage amount (one point = 1 percent).

Question 134

134 of 255Going-Concern Value

Answer 134

1. The market value of all the tangible and intangible assets of an established an operating business with an indefinite life, as if sold in aggregate; more accurately termed the market value of the going concern. 2. The value of an operating business enterprise. Goodwill may be separately measured but is an integral component of going concern value when it exists and is recognizable.

Question 135

135 of 255Mortgage Life Insurance

Answer 135

A policy that fulfills the obligations of a mortgage when the policy holder dies.

Question 136

136 of 255Accretion

Answer 136

The natural growth of a piece of land resulting from forces of nature.

Question 137

137 of 255Open Space

Answer 137

Any land which has not had any significant buildings or structures erected on it. Most often used to describe desirable neighborhood features like parks.

Question 138

138 of 255Financial Feasibility

Answer 138

One of the four criteria the highest and best use of a property must meet; the ability of a property to generate sufficient income to support the use for which it was designed.

Question 139

139 of 255Limiting Condition

Answer 139

A condition that limits the use of a report.

Question 140

140 of 255Community Property

Answer 140

In many jurisdictions, any property which has been acquired by a married couple. The ownership of the property is considered equal unless stipulated otherwise by both parties.

Question 141

141 of 255Construction Loan

Answer 141

A loan made to a builder or homeowner that finances the initial construction of a property, but is replaced by a traditional mortgage one the property is completed.

Question 142

142 of 255Personal Representative (Executor)

Answer 142

An individual or other legal person designated in a will to settle the estate of a deceased person.

Question 143

143 of 255Legal permissibility

Answer 143

One of the four criteria the highest and best use of a property must meet; a property use that is either currently allowed or most probably allowed under zoning codes, building codes, environmental regulations, and other applicable laws and regulations that govern land use.

Question 144

144 of 255Which of the following is true regarding supply and demand in the real estate market?

Answer 144

An increase in supply results in increased demand

Question 145

145 of 255Rural

Answer 145

An area outside of an established urban area or metropolitan district that typically lacks urban and suburban services such as sewers, city water, public transportation, etc.

Question 146

146 of 255Marketability Analysis

Answer 146

A process for examining the productive attributes of the specific property, its demand and supply, and its geographic market area. Marketability analysis is an essential part of the highest and best use conclusion for every valuation appraisal.

Question 147

147 of 255Chattel

Answer 147

Any personal property which is not attached to or an integral part of a property. Chattel is not commonly taken into consideration when appraising the value of real property.

Question 148

148 of 255Market Participants

Answer 148

The parties involved in the transfer of property rights. Includes buyers, sellers, lessors, lessees, and brokers and their agents.

Question 149

149 of 255Federal Housing Administration (FHA)

Answer 149

A sub-agency of the U.S. Department of Housing and Urban Development created in the 1930’s to facilitate the purchase of homes by low-income, first-time home buyers. It currently provides federally subsidized mortgage insurance for private lenders.

Question 150

150 of 255Special Assessment

Answer 150

1. An assessment against real estate levied by a public authority to pay for public improvements, e.g., sidewalks, street improvements, sewers; also called betterment tax. 2. An amount levied against individual owners in a condominium or cooperative to cover their proportionate shares of a common expense.

Question 151

151 of 255Proximity Damage

Answer 151

An element of severance damage that is caused by the remainder’s proximity to the improvement being constructed (e.g., a highway); may also arise from proximity to an objectionable characteristic of a site or improvement (e.g., dirt, dust, noise, vibration).

Question 152

152 of 255Sale Price

Answer 152

The actual price a property sells for, exclusive of any special financing concessions.

Question 153

153 of 255Interest Rate

Answer 153

A percentage of a loan or mortgage value that is paid to the lender as compensation for loaning funds.

Question 154

154 of 255Fee Simple

Answer 154

A complete, unencumbered ownership right in a piece of property.

Question 155

155 of 255Real Estate

Answer 155

An identified parcel or tract of land, including improvements, if any. (USPAP)

Question 156

156 of 255Deposit

Answer 156

Cash given along with an offer to purchase property, Also called EARNEST MONEY.

Question 157

157 of 255Desk Review

Answer 157

An appraisal review in which the reviewer’s scope of work does not include an inspection of the subject property.

Question 158

158 of 255Which of the following value types assumes a less than adequate market exposure time?

Answer 158

Liquidation value

Question 159

159 of 255Legal Description

Answer 159

The description of a piece of property, identifying its specific location in terms established by the municipality or other jurisdiction in which the property resides. Often related in specific distances from a known landmark or intersection.

Question 160

160 of 255Severance

Answer 160

1. The act of removing anything attached or affixed to land, or a part of the land itself, that causes a change of its character from real property to personal property. 2. The separation of mineral ownership from land ownership; a conveyance of land in which mineral rights are expected or reserved. 3. The termination of a joint tenancy or a tenancy in common.

Question 161

161 of 255Encumbrance

Answer 161

Any claim or liability that affects our limits the title to property. An encumbrance can affect the title such as the mortgage or other lien, or it can affect the physical condition of the property such as an easement. An encumbrance cannot prevent the transfer of possession, but it does remain after the transfer.

Question 162

162 of 255Condominium Conversion

Answer 162

Commonly, the conversion of a rental property such as an apartment complex into a CONDOMINIUM-style complex where each unit is owned rather than leased.

Question 163

163 of 255Government Mortgage

Answer 163

Any mortgage insured or guaranteed by a government agency, such as the FHA or VA.

Question 164

164 of 255Certified Residential Appraiser

Answer 164

A sub-classification of appraiser who is only licensed to appraise residential property, usually up to four units.

Question 165

165 of 255Condominium

Answer 165

1. A form of ownership in which each owner possesses the exclusive right to use and occupy an allotted unit plus an undivided interest in common areas. 2. A multi-tenant structure, or a unit within such a structure, with a condominium form of ownership.

Question 166

166 of 255Deed of Release

Answer 166

A document which dismisses a lien or other claim on a property.

Question 167

167 of 255Seondary Mortgage Market

Answer 167

An economic marketplace where mortgage bankers buy and sell existing mortgages.

Question 168

168 of 255Real Property

Answer 168

The interests, benefits, and rights inherent in ownership of real estate. (USPAP)

Question 169

169 of 255Collateral

Answer 169

An asset which is placed at risk to secure the repayment of a loan.

Question 170

170 of 255Neighborhood Life-Cycle

Answer 170

The evolution of neighborhood use and demographics over time. Economic fluctuations, municipal zoning changes and population shifts can affect the life cycle.

Question 171

171 of 255Geographic Information Systems (GIS)

Answer 171

A system or process that electronically captures, stores, analyzes, manages, and presents data linked to location, primarily and map form. Layers of the illustrative information can be selected and displayed such as aerial photography, topographic maps, flood maps, streets and roads, earthquake information, zoning overlays, political boundaries, and other forms of geographically referenced data.

Question 172

172 of 255Mortgage Insurance Premium (MIP)

Answer 172

A fee that is often included in mortgage payments that pays for mortgage insurance coverage.

Question 173

173 of 255Progression

Answer 173

In appraisal, the concept that the value of an inferior property is enhanced by its association with better properties of the same type. See also regression.

Question 174

174 of 255Forfeiture

Answer 174

The loss of property or money due to the failure to meet the obligations of a mortgage or loan secured by that property.

Question 175

175 of 255Which of the following is not a consideration when determining highest and best use?

Answer 175

Environmentally friendly

Question 176

176 of 255Probate

Answer 176

The legal process of settling an estate after a person has died. A petition must be filed with the court and a personal representative must be appointed. The personal representative is responsible for the following: 1. Collection of inventories and appraisal of assets of the person who has died. 2. Protection of the estate’s assets. 3. Payment of decedent’s debts. 4. Distribution of the remaining assets to the proper parties as provided by law.

Question 177

177 of 255Zone

Answer 177

A specific area within a municipality or other jurisdiction which conforms to certain guidelines regarding the use of property in the zone. Typical zones include single-family, multi-family, industrial, commercial and mixed-use.

Question 178

178 of 255Mortgage Insurance

Answer 178

A policy that fulfills that obligations of a mortgage when the policy holder defaults or is no longer able to make payments.

Question 179

179 of 255Property

Answer 179

Any item which is owned or possessed.

Question 180

180 of 255Like-Kind Property

Answer 180

Any property which is substantially similar to another property.

Question 181

181 of 255Federal Deposit Insurance Corporation (FDIC)

Answer 181

The U.S. Government agency created in 1933 which maintains the stability of and public confidence in the nation’s financial system by insuring deposits and promoting safe and sound banking practices.

Question 182

182 of 255Amortization Schedule

Answer 182

The breakdown of individual payments throughout the life of an amortized loan, showing both principal contribution and debt service (interest) fees.

Question 183

183 of 255Special Benefits

Answer 183

In eminent domain valuation, the benefits that arise from the peculiar relation of the land in question to the public improvement, usually resulting from a change in its highest and best use. Special benefits may accrue to multiple parcels (such as all four quadrants of a newly constructed freeway interchange) because the parcels are directly benefitted in a similar manner, if not the same degree.

Question 184

184 of 255Expert Testimony

Answer 184

Testimony of persons who are presumed to have special knowledge of, or skill in, a particular field due to education, experience, or study. The Daubert and Kumho Tire decisions of the US Supreme Court discussed four considerations in determining the reliability of expert testimony - testing, peer review, error rates, and acceptability and the relevant scientific community.

Question 185

185 of 255Partial Interest

Answer 185

Divided or undivided rights in real estate that represent less than the whole (a fractional interest). A shared ownership in a piece of property. May be divided among two or more parties.

Question 186

186 of 255Relocation Service

Answer 186

Any company or agency that assists corporate employees in relocating from one place to another. Services may include hiring and coordinating real estate agents, moving companies, utilizes and the like.

Question 187

187 of 255Chain of Title

Answer 187

The complete history of ownership of a piece of property.

Question 188

188 of 255First Mortgage

Answer 188

The primary loan or mortgage secured by a piece of property.

Question 189

189 of 255Mineral Rights

Answer 189

The legal right to exploit and enjoy the benefits of any minerals located below the surface of a parcel of land.

Question 190

190 of 255Mortgage Broker

Answer 190

A person or organization that serves as a middleman to facilitate the mortgage process. Brokers often represent multiple mortgage bankers and offer the most appropriate deal to each buyer.

Question 191

191 of 255Bridge Financing

Answer 191

An interim loan made to facilitate the purchase of a new home before the buyer’s current residence sells and its equity is available to fund the new purchase.

Question 192

192 of 255Quitclaim Deed

Answer 192

A legal document which transfers any ownership an individual has in a piece of property. Often used when the amount of ownership is not known or is unclear.

Question 193

193 of 255Rail Easement

Answer 193

The right for the construction, maintenance, and operation of a rail line on a property.

Question 194

194 of 255Appraisal Report

Answer 194

The end result of the appraisal process usually consists of one major, standardized form such as the Uniform Residential Appraisal Report form 1004, as well as all supporting documentation and additional detail information. The purpose of the report is to convey the estimated value of the subject property and support that estimate with corroborating information.

Question 195

195 of 255Bona Fide

Answer 195

Made or carried out in good faith; sincere.

Question 196

196 of 255Metes and Bounds

Answer 196

A traditional way of describing property, generally expressed in terms of distance from a known landmark or intersection, and then following the boundaries of the property back to its point of beginning.

Question 197

197 of 255Misrepresentation

Answer 197

A statement by one party in a transaction that is incorrect or misleading. Some misrepresentations are deemed to be intentional and thus may constitute fraud. Others, however, some are rendered through simple mistakes, oversights or negligence.

Question 198

198 of 255County State Aid Highway (CSAH)

Answer 198

Specialized form of county road that is part of the state aid system. County State Aid routes are eligible for funding from the County State Aid Highway Fund.

Question 199

199 of 255Leasehold Estate

Answer 199

A type of property ‘‘ownership’’ where the holder actually has a long-term lease on the property.

Question 200

200 of 255Which of the government’s powers allows it to establish zoning ordinances and building codes to protect the safety and health of the public?

Answer 200

Condemnation

Question 201

201 of 255Conventional Mortgage

Answer 201

A traditional, real estate financing mechanism that is not backed by any government or other agency (FHA, VA, etc.).

Question 202

202 of 255Caveat Emptor

Answer 202

Literally translated: ‘‘Let the buyer beware.’’ A common business tenet whereby the buyer is responsible for verifying any and all claims by the seller of property.

Question 203

203 of 255Pole Line Easement

Answer 203

An easement for the construction, maintenance, and operation of a pole line, usually for the transmission of electric power.

Question 204

204 of 255Remainder

Answer 204

1. A future possessor read interest in real estate that is given to a third-party and matures upon the termination of a limited or determinable be. For example, A gives B a life estate in A’s farm for B’s lifetime. A also gives C an interest in the farm to take effect upon B’s death. C has a remainder interest. 2. In eminent domain condemnation, that portion of a larger parcel remaining in the ownership of the property owner after a partial taking. See also larger parcel.

Question 205

205 of 255Personal Property

Answer 205

1. Owned items which are not permanently affixed to the land. 2. Identifiable tangible objects that are considered by the general public as being “personal” - for example, furnishings, artwork, antiques, gems and jewelry, collectibles, machinery and equipment; all tangible property that is not classified as real estate. (USPAP) 3. Consists of every kind of property that is not real property; movable without damage to itself or the real estate; subdivided into tangible and intangible. Also called personalty.

Question 206

206 of 255Flood Insurance

Answer 206

Supplemental insurance which covers a homeowner for any loss due to water damage from a flood. Often required by lenders for homes located in FEMA-designated flood zones.

Question 207

207 of 255Neighborhood

Answer 207

A subsection of a municipality that has been designated by a developer, economic forces or physical formations.

Question 208

208 of 255Eminent Domain

Answer 208

The right of government to take private property for public use upon the payment of just compensation. The Fifth Amendment of the U.S. Constitution, also known as takings clause, guarantees payment of just compensation upon appropriation of private property.

Question 209

209 of 255Ranch House

Answer 209

An architectural style typified by a single-story, low-roof construction. Popular in the western U.S.

Question 210

210 of 255Fixed-Rate Mortgage (FRM)

Answer 210

A mortgage which has a fixed rate of interest over the life of the loan.

Question 211

211 of 255Affirmation

Answer 211

A declaration that a certain set of facts are truthful.

Question 212

212 of 255Conformity

Answer 212

The appraisal principle that real property value is created and sustained when the characteristics of the property conform to the demands of its market.

Question 213

213 of 255Leased Fee Interest

Answer 213

A freehold (ownership interest) for the possessory interest has been granted to another by creation of a contractual landlord-tenant relationship (i.e., a lease).

Question 214

214 of 255Which phase of the economic cycle does a buyer’s market occur?

Answer 214

Decline

Question 215

215 of 255Certificate of Occupancy

Answer 215

Issued by an appropriate jurisdictional entity, this document certifies that a building complies with all building codes and is safe for use or habitation.

Question 216

216 of 255Deed of Reconveyance

Answer 216

A document which transfers ownership of a property from a Trustee back to a borrower who has fulfilled the obligations of a mortgage.

Question 217

217 of 255Joint Tenancy

Answer 217

A situation where two or more parties own a piece of property together. Each of the owners has an equal share and may not dispose of or alter that share without the consent of the other owners.

Question 218

218 of 255Setback

Answer 218

Zoning regulations that designate the distance a building must be set back from the front, rear, and sides of the property lines.

Question 219

219 of 255Competition

Answer 219

1. Between purchasers or tenants, the interactive efforts of two or more potential purchasers or tenants to make a sale or secure a lease. 2. Between sellers or landlords, the interactive efforts of two or more potential sellers or landlords to complete a sale or lease. 3. Among competitive properties, the level of productivity and amenities or benefits characteristic of each property considering the advantageous or disadvantageous position of the property relative to the competitors.

Question 220

220 of 255Which principle of value best describes the affect an industrial plant would have on residential property values in a surrounding neighborhood?

Answer 220

Supply and demand

Question 221

221 of 255Which of the following is defined as the land and anything permanently attached to the land?

Answer 221

Real estate

Question 222

222 of 255Deed

Answer 222

A document indicating the ownership of a property.

Question 223

223 of 255Affordability Analysis

Answer 223

A calculation used to determine an individual’s likelihood of being able to meet the obligations of a mortgage for a particular property. Takes into account the down payment, closing costs and on-going mortgage payments.

Question 224

224 of 255Grantee

Answer 224

Any person who is given ownership of a piece of property.

Question 225

225 of 255Deed of Surrender

Answer 225

A document used to surrender any claim a person has to a property.

Question 226

226 of 255Fannie Mae

Answer 226

A private, shareholder-owned company that works to make sure mortgage money is available for people to purchase homes. Created by Congress in 1938, Fannie Mae is the nation’s largest source of financing for home mortgages.

Question 227

227 of 255Owner Occupied

Answer 227

The state of property wherein the owner occupies at least some portion of the property.

Question 228

228 of 255Marketability

Answer 228

The relative desirability of a property (for sale or lease) in comparison with similar or competing properties in the area. That is, a property with poor marketability would be inferior to competing properties in terms of location, condition, access, etc. Conversely, a property with good marketability has superior features or condition in comparison with competing properties.

Question 229

229 of 255Annual Percentage Rate (APR)

Answer 229

The rate of annual interest charged on a loan.

Question 230

230 of 255Equity

Answer 230

The difference between the fair market value of a property and that amount an owner owes on any mortgages or loans secured by the property.

Question 231

231 of 255Housing Starts

Answer 231

Newly constructed housing units; includes both single-family and multifamily domiciles.

Question 232

232 of 255Metropolitan Area

Answer 232

The accumulated land in and around a city or other municipality which falls under the political and economic influence of that entity.

Question 233

233 of 255Sale-Leaseback

Answer 233

A financing arrangement in which real property is sold by its owner-user, who simultaneously leases the property from the buyer for continued use. Under this arrangement, the seller receives cash from the transaction and the buyer is assured a tenant.

Question 234

234 of 255Mortgage

Answer 234

A financial arrangement wherein an individual borrows money to purchase real property and secures the loan with the property as collateral.

Question 235

235 of 255Asset

Answer 235

Any item of value which a person owns.

Question 236

236 of 255Deed of Trust

Answer 236

A document which transfers title in a property to a trustee, whose obligations and powers are stipulated. Often used in mortgage transactions.

Question 237

237 of 255Insurable Value

Answer 237

That portion of the value of an asset or asset group that is acknowledged or recognized under the provisions of an applicable loss insurance policy.

Question 238

238 of 255Redevelopment

Answer 238

The development or improvement of cleared or undeveloped land in an urban renewal area; technically includes the direction of buildings and other development and improvement of the land by private or public redevelopers to whom the land has been made available.

Question 239

239 of 255HUD-1 Statement

Answer 239

A standardized, itemized list published by the U.S. Department of Housing and Urban Development (HUD), of all anticipated closing costs connected with a particular property purchase.

Question 240

240 of 255Planned Unit Development (PUD)

Answer 240

A type of building development designed as a group of complementary land uses, such as housing, schools, recreation, retail, office, and industrial parks, contained within a single master development. A coordinated, real estate development where common areas are shared and maintained by an owner’s association or other entity.

Question 241

241 of 255Reasonable

Answer 241

In law, just, rational, appropriate, ordinary, or usual in the circumstances. It may also refer to care, cause, compensation, doubt (in criminal trial), and a host of other actions or activities.

Question 242

242 of 255Wilma and Paul agree on how much Wilma is going to pay Paul for Paul’s house. Wilma and Paul have agreed on the:

Answer 242

price.

Question 243

243 of 255Which of the following is not one of the four essential elements of value?

Answer 243

Transferability

Question 244

244 of 255Default

Answer 244

The condition in which a borrower has failed to meet the obligations of a loan or mortgage.

Question 245

245 of 255Mortgage Banker

Answer 245

A financial institution that provides primary and secondary mortgages to home buyers.

Question 246

246 of 255Original Equity

Answer 246

The amount of cash a home buyer initially invests in the home.

Question 247

247 of 255Before and After Rule

Answer 247

In eminent domain valuation, a procedure in which just compensation is measured as the difference between the value of the entire property before the taking and the value of the remainder after the taking.

Question 248

248 of 255Change

Answer 248

The result of the cause and effect relationship among the forces that influence real property value.

Question 249

249 of 255Servicer

Answer 249

A financial institution which collects mortgage payments from borrowers and applies the appropriate portions to principal, interest and any escrow accounts.

Question 250

250 of 255Drive By Appraisal

Answer 250

An appraisal in which the scope of work includes an exterior-only viewing of the subject property.

Question 251

251 of 255Master Association

Answer 251

An umbrella organization that is made up of multiple, smaller homeowners associations. Often found in very large developments or condominium projects.

Question 252

252 of 255Delinquency

Answer 252

The state in which a borrower has failed to meet payment obligations on time.

Question 253

253 of 255Real Estate Market

Answer 253

Buyers and sellers of particular real estate and the transactions that occur among them.

Question 254

254 of 255Adjustable-Rate Mortgage (ARM)

Answer 254

A type of mortgage where the interest rate varies based on a particular index, normally the prime lending rate.

Question 255

255 of 255Corporate Relocation

Answer 255

A situation where a person’s employer pays all or some of the expenses associated with moving from one location to another, usually over a substantial distance. Relocation expenses often include the amounts, such as brokerage fees, incurred in the selling and buying of the employee’s primary residence.