Sample Questions Flashcards
In 1987 8 Appraisal Organizations formed?
The Appraisal Foundation
T/F The appraisal board of trustees acts as the executive board for the TAF?
True
In the 1970s who developed uniform rules for mortgage underwriting?
Fannie Mae and Freddie Mac
Who retains final authority over revisions to USPAP?
ASB - Appraisal Standards Board
Who is responsible for revising USPAP
ASB
Which foundation Advisory Council is made up of non-profit organizations?
TAFAC - The Appraisal Foundation Advisory Council
T/F Valuation advisories issued by the TAF are binding?
False
When did mortgage interest peak?
1980s
Who exercises all authority and power over: subject, style and substance of USPAP?
ASB
Who has authority to amend USPAP?
ASB
What entity is responsible for appointing members to the ASB and AQB?
BOT
When were the first organized appraisal groups formed?
1930s
What is the largest professional appraisal society?
Appraisal Institute
When did the first universally accepted appraisal report appear?
1970s
Does the Equal Credit Opportunity Act (ECOA) apply to vacant land?
No
Is the TAF a for profit organization?
No
When did the secondary mortgage industry come into prominence?
1970s
T/F The fact that an appraiser has previously appraised a property is typically not considered confidential informations under USPAP?
True
T/F If not required to comply with USPAP by law, regulation of agreement, an appraiser may voluntarily choose to comply with USPAP?
True
Is it unethical for an appraiser to offer a reduced fee on an appraisal if the clients loan does not close?
Yes
Can an appraiser only appraise one structure on a property with two structures on it?
No an appraiser must appraise what improvements are currently located on the property
Can an appraisers compensation be dependent on reporting a predetermined value
No
Can an appraiser base their rates on Gross Leasable Area?
Yes
T/F an appraiser may base an appraisal fee on the value of the property?
False
GIS is mapped in?
Layers
T/F Is UAD (Uniform Appraisal Dateset) required for all governmental appraisals?
True
What percent of emails are SPAM?
81%
A program that reclaims data is?
Norton Ghost
What is it called when an owner transfers rights to develop 10 units to another owner?
Transferable Development Rights
An appraisal is described as a (blank) of value?
Opinion
Modern definitions of appraisal replace (blank) with (blank)?
Estimate with Opinion
“the interests, benefits and right inherent in the ownership of real estate
Real Property
T/F Escheat is considered a public restriction on real property ownership?
True
When people buy and sell land and buildings in the marketplace they are selling real property rights?
True
T/F CC&Rs are a public restriction on Real Property
False - Private
A list of expressed assurances and limitations on land use, often found in contracts between land Sub-dividers and lost purchaser is ?
CC&Rs
The interests, benefits, and rights inherent in the ownership of Real Estate is the definition of ?
Real Property
A development right that cannot be used by the landowner, or that the owner chooses not to use, but can be sold to landowner’s in another location?
Transferable Development Rights
Is mobility a characteristic of land?
No
Is an appraisal an Opinion or Estimate of Price?
Opinion
the earth’s surface, both land and water, and anything that is attached to it whether by the course of nature or human hands is what?
Land
Air Rights are considered what kind of rights?
Vertical Rights
T/F Is taxation considered part of police powers?
False, but Zoning, Building Codes, subdivision regulations, electrical codes, plumbing codes and energy codes
Is an area rub personal property?
Yes
The process of eminent domain is administered through what action?
Condemnation
The rectangular survey system is also known as?
Government Survey System
Which System of legal description is based on standardized measurement and consistent rectangles and squares?
Rectangular Survey
What is the fullest and most complete estate?
Fee Simple
Does an easement appurtenant have a dominant or subservient tenant?
Both
What is the most desirable form of time sharing called?
Fee Timeshare
Is Fee Simple a partial estate?
No
Trespassing on the domain of another is called?
Encroachment
What kind of estate is a remainderman found?
Life Interest Estate
Are syndication ownership groups private of public?
Both
Are fee simple estates only for married Couples?
No, Tenancy by the entirety is
What is the most complete form of ownership?
Fee Simple Estate
What is the best kind of deed for the buyer?
Warranty Deeds
T/F Does a deed need to be recorded to be valid?
False
Grantee is the?
Buyer
Grantor is the?
Seller
Is the statute of limitations for oral contracts longer or shorter than written ones?
Shorter
What is a trust deed?
When the title to a property is vested in a trustee until the mortgage lien is paid off?
What does a State’s statute of fraud do?
It requires certain documents be in writing
Contracts are WHAT that the law will enforce?
Promises
Is a contract with a minor valid?
It is if the minor still agrees to it after turning 18
What is binding and enforceable for all parties involved?
A Contract
What is it called when parties to a contract agree to substitute a new contract for the old one?
Novation
A breach of contract is also know as?
Default
T/F Punitive damages are not commonly awarded in breach of contract cases
True
the right of a party to contract to demand the defendant be ordered in the judgement to perform the contract is called?
Specific Performance
A deed that conveys to the grantee title to the property free and clear of all encumbrances, expect those specifically set forth in the document is a?
Warranty Deed
A writ issued by a court ordering someone to do something or prohibiting some act after a court hearing is called?
Injunction
T/F Every city has a statute of frauds?
False, every STATE
T/F a contract is a unilateral agreement?
False, Bilateral Agreement
Feebleness on one side, overpowering strength on the other is called?
Duress
A lease in which the landlord receives stipulated rent and is obligated to pay all of the property’s operating fixed expenses is?
Gross Lease
The correction or change of an existing document by court order upon petition of one of the parties to the document is ?
Reformation
A deed that conveys real property from a seller to a buyer but does not guarantee clear title; used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title is?
Bargain and Sale Deed
A manifestation of willingness to be bound by the terms of an offer made in a manner invited or required by the offer is the definition of
An Offer
Damages awarded in a lawsuit as punishment is an example to others for malicious, evil or fraudulent act is what kind of damage?
Punitive
A written, legal instrument that conveys an estate or interest in real property when it is executed and delivered is a?
Deed
What rules states that written contracts take precedence over oral ones?
Parol Evidence Rule
A cancellation of a contract through mutual agreement of both parties is called?
Recission
A re-conveyance maybe employed if there is a ?
If a deed of trust is recorded and then the loan is paid off, the reconveyance document passes title back to the borrower
T/F according to supply and demand, the price of a commodity varies inversely with supply?
True
A set of arrangement in which buyers and sellers are brought together through the price mechanism; the aggregate of possible buyers and sellers and the transactions between them is a ?
Market
Which type of market is most likely to be characterized by higher prices and shortage of homes for sale?
Seller’s Market
What is one of the most inefficient market types?
Real Property Market
Is Real Estate sensitive to nearby influences?
Yes
In the real property market Demand is?
Dynamic and Subject to immediate change
Is most real property paid for in cash?
No, most get mortgages
The area associated with a subject property that contains its direct competition is the ?
Market Area
In a real property, a market is defined in terms of
Competition
T/F Availability of Mortgages a long-term trend?
False
How is real property unique as an economic good?
it is immovable
A group of complementary land uses; a congruous grouping of inhabitants, buildings or business enterprises is a ?
Neighborhood
A neighborhood characterized by homogeneous land use; apartment, commercial, industrial or agricultural is a ?
District
When supply and demand are out of balance it tends to move towards?
Equilibrium
An active market in which sellers of available properties can obtain higher prices than those obtainable in the immediately preceding period is a ?
Seller’s Market
A neighborhood consists of WHAT land uses, while a district consists of What land uses?
COMPLEMENTARY, HOMOGENEOUS
T/F the burden of managing the investment is one of the reasons why real property investor typically demand higher yields?
True
The “price” of money is expressed as ?
Interest Rate
Board Members of the FED are pointed by whom?
The President, and approved by the Senate
What year was the FED founded?
1913
T/F A 5 year balloon mortgage is not a short-term money instrument?
False
The FEDs efforts to influence the level of economic activity by regulating the availability of money and the rate of interest?
Monetary Policy
A contract that involves the purchaser making payments to the seller until the total purchase price is paid and then the seller delivers the deed is?
Contract of Deed
Who are the primary operators in the secondary mortgage market?
Fannie Mae, Freddie Mac and Ginnie Mae
Up until the 1970s mortgage lending was done at the WHAT level?
Local
FHA mortgages are funded by?
Mortgage Insurance premiums paid by borrowers
Mortgages that are neither insured nor guaranteed by an agency of the gov’t, although they maybe privately insured are called what?
Conventional Mortgages
A pledge described property interest as collateral or security for the repayment of a loan under certain terms and conditions is a
Mortgage
in 1968 FNMA was split into two organizations called?
Fannie Mae and Ginnie Mae
What was the name of the clause in a mortgage that requires the mortgage be paid off in full when the property is sold ?
Due on Sale Clause
What are secondary liens called?
Junior Liens
A grossly over-improved house in neighborhood where no one can afford it is called a lack of ?
Effective Purchasing Power
T/F Building codes have an affect on values?
True
The cost of construction is based on?
Land, Materials and Labor
What is the optimal US unemployment rate?
3-4%
The value of an income property is based primarily on ?
the net income it can produce
What Gov’t agency is responsible for monitoring coastal habitats?
NOAA
Each job in a BASIC industry supports how many service workers?
2-3
Utility
is the ability of a product to satisfy a human want, need or desire
Is transportation and economic force?
No, it is a External Governmental Force
Value is created by?
External Market Forces
Is Police Protection a Social Force?
No, Governmental Force
Total Construction costs are a combination of?
Land, Materials and Labor
The present or anticipated under supply of an item relative to demand for it is ?
Scarcity
Farmsteads are?
Not a form of community living
Are Zoning and Building Codes an environmental influence?
No
How many people live in the average American home?
1-2
T/F cost and Value are the same?
False
The amount asked, offered, or paid for a property it its?
Price
It would take $275,000 to produce a single-family home on the owner’s lot. $275,000 represents the ?
Cost
Exposure time is a WHAT opinion developed by the appraiser?
RETROSPECTIVE
A property owner has a long-term lease for $12 per sq. ft. while the market value is $8 per sq. ft. this is what kind of value?
Intangible
The value of a property according to the tax rolls in ad valorem taxation is the
Assessed Value
The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal is
Exposure Time
The market value definition says that a WHAT time is allowed for exposure in the open market
REASONABLE
Cost is related to what?
Production
Reasonable exposure time can be estimated by what actions?
interviews with market participants, info gathered through sales verification, and statistical info about days on market
What type of property types would Not typically be appraised based for the market value of going concern
A SINGLE FAMILY HOUSE
Do appraisals for insurance clams include land?
No
What is the principle that has it strongest application to income producing properties
ANTICIPATION
When purchasing a home as owner-occupant, the purchase’s anticipated benefits are
Amenities
A $60K garage is built, appraiser research finds the garage only adds $30K in value, this falls under WHAT principle
CONTRIBUTION
The net income that is leftover after the four agents of production are paid is returned to what?
The Land
Each of the 4 agents of production require a return to make it work
True, Land, Labor, Capital and Entrepreneurial effort
When a 8000 sq ft house in in a neighborhood of 1000 sq ft houses the value is diminished by ?
REGRESSION
T/F when developing an opinion of site value of an improved property, an appraiser needs to consider the highest and best use of the property as though it was vacant?
True
In appraisal the concept that the value of an inferior property is enhanced by its association with better properties of the same type is ?
Progression
A recession caused by a factory closing illustrates the principle of what?
Change
The principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium is called?
Balance
The principle of WHAT is the basic principle that underlies all three of the appraisal approaches?
Substitution
Which principle has the strongest application in the valuation of income producing properties ?
ANTICIPATION
When estimating the value of a swimming pool to a residential property, the most important principle is the principle of ?
CONTRIBUTION
The concept that successive increments of one or more agents of production added to fixed amounts of the other agents will enhance income, in dollars, benefits or amenities, at an increasing rate until a maximum return is reached. Then income will decrease until the increment value becomes increasingly less than the value of the added agents is
INCREASING AND DECREASING RETURNS
The 4 Criteria for highest and best use are :
Legally permissible, physically possible, financially feasible and maximally productive
The perception that value is created by the expectation of benefits to be derived in the future is ?
ANTICIPATION
Good things or bad things can happen to the value of your property according to what is located around it is ?
Externalities
What process would an appraiser use to identify sub-markets within a larger market ?
MARKET SEGMENTATION
A subject property’s market area would be defined as
“THE AREA FROM WHERE DEMAND COMES AND THAT CONTAINS ITS COMPETITION”
Which field of study focuses on the economics of individual firms, industries, or consumer segments?
MICROECONOMICS
- The study of the economics of individual spheres of activity or patterns in a specific city if ?
MICROECONOMICS
The process by which sub-markets within a larger market are identified and analyzed is?
MARKET SEGMENTATION
T/F In commercial properties CONSTRUCTION COSTS is not a factor in demand analysis?
True
“an analysis of the market conditions of supply, demand, and pricing or the demographics of demand for a specific property type in a specific area is ?
MARKET STUDY
A market analysis examines the supply and demand for A WHAT of property, while a marketability analysis examines a WHAT property
TYPE, SPECIFIC
“the differentiation of a subject property from other properties on the basis of sub-classification with differing product characteristics is
DISAGGREGATION
T/F INCOME AND WAGE LEVELS are not considered in supply analysis for a residential property?
false
Identifying the most probable user for a particular type of property is a component of ?
Demand
The study of the supply and demand in a specific area for a specific type of property is ?
MARKET ANALYSIS
The objective analysis of observable or quantifiable data indicating a discernible patterns of urban growth, structure, and change may detract from or enhance property values is ?
Market Area Analysis
Researching and analyzing the number of building conversions in the process would be considered part of WHAT kind of analysis
Supply
Fee timesharing
is where the purchase receives a deed that conveys title to a unit for a specific part of the year
type of building development designed as a grouping complementary land uses, such as housing, schools, recreation, retail office and industrial parks, contained within a single master development; usually includes common area and common area maintenance obligations in the form of owners association dues
PUD
REIT
Real Estate Investment Trust - A corporation or trust that combines the capital or many investors to acquire or provide financing for all forms of real property
General Partnership
an ownership arrangement in which all partners share in investment gains and losses an each has personal and unlimited responsibility for all liabilities
Rights of use, occupancy, and control, limited to the lifetime of a designated party, sometimes referred to as the
Life Interest – (formerly Life Estate)
“the ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires”
Leased Fee Interest
Leasehold interest
“the right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease”
an easement that is attached to, benefits, and passes with the transfer of the dominant estate
Easement Appurtenant
Tenancy in Common
– an estate owned by two or more persons, each of whom has an undivided interest. Can be in any form, 1 person owns 50%, 1 person 5%, each owner is separate from another, no right of survivorship, if one person dies ownership is given to their heirs, not the other owners
Joint Tenancy
Joint ownership by two or more persons with the right of survivorship, in this case there is a right of survivorship, if a person dies their ownership goes to the other owners
Does Tenancy in Common or Joint Tenancy have the right of survivorship?
Joint Tenancy
General Partnerships -
an ownership arrangement in which all partners share in investment gains and losses an each has personal and unlimited responsibility for all liabilities
Deed
- a written, legal document that conveys an estate or interest in real property when it is executed and delivered
Grantor
is the seller of the property
Grantee
is the buyer of the property
Grant Deed –
deed containing or having implied by law, some but not all the usual covenants of title, esp. a deed in which the grantor warrants that he or she (1) Has not previously conveyed the estate being granted, (2) has not encumbered the property except as noted in the deed and (3) will convey to the grantee any title to the property acquired after the date of the deed
a deed that conveys real estate from a seller but does not guarantee clear title, used by court officials and fiduciaries to convey property they hold by force of law, but to which they do not hold title
Bargain and Sale Deed
Reconveyance
pass of title to real property back to the original owner, in a deed of trust arrangement, upon liquidation of the debt the property is reconveyed from a third-party trustee to the trustor (borrower)
Contract
a legally binding agreement between two or more persons that represent their promise to do or not to do a particular thing
Offer
a manifestation of willingness to enter into a bargain, which creates in the offeree the power of acceptance
Executory Contract
– is one that has not been fully performed or completed, something is still left to be done. A listing contract is an example
Voidable Contract
is one that results from the failure of the parties to meet some legal requirements.
4 Components of a contract?
Competent Parties, Mutual Agreement, Consideration
Assignment
the act of transferring an interest in property or some right (such as contract benefits) to another. IT is used commonly by lawyers, accountants, business people, title companies and others dealing with property
Novation
- agreement of parties to a contract to substitute a new contract for the old one. It extinguishes(cancels) the old agreement
Operation of Law
Bankruptcy, Statute of Limitations and Alteration of Contract
Remedies for Breach of Contract
Rescission, Reformation and Injunction
Rescission
- the cancellation of a contract by mutual agreement of the parties
Things needed in a RE Contract?
Sale Price, Date of Sale, Sales Concessions, Owner of Record, Legal Description, and Personal Property
Lease
a contract in which the rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent
Flat Rent Lease
A lease with a specified level of rent that continues throughout the lease term
Gross Lease
A lease in which the landlord receives stipulated rent and the landlord is obligated to pay all of the property’s operating and fixed expenses
Net Lease
A lease in which the landlord passes on all expenses to the tenant
Graduated Rental Lease
a lease that provides for specified changes in rent at one or more points during the lease term
What kind of lease is a “sweetheart” deal for Landlords?
Escalator Lease, a lease that allows for the lessor to seek reimbursement of operating expenses after specific criteria have been met
Market Boundaries
area in which properties are located that would be truly comparable or competitive in the mind of a typical buyers
Market Area
the geographic region from which a majority of demand comes and in which the majority of competition is located
District
a neighborhood characterized by homogeneous land use: apartments, commercial, industrial, or agricultural
a group of complementary land uses; a congruous grouping of inhabitants, building, or business enterprises
Neighborhood
Neighborhood is What? and a District is What?
complementary and homogeneous
Short-term RE cycles are caused by?
Interest Rates and amount of credit that is available
Capital Market vs. Money Market
Long to intermediate-term money instruments (mortgages, bonds, stocks) v short-term money instruments (treasury bills, municipal notes)
The FED has how many regional banks, and how many governors?
12 Regional Banks with 7 governors
What is the FNMA?
Federal National Mortgage Association
Mortgage Assumption
when a buyer purchases a house and take over it existing mortgage, rather than getting a new one at higher or less stable rates this is call a mortgage assumption. Today FHA and VA loans may not be assumed by a buyer in this manner
Contract for Deed
where the seller receives regular payments from the buyer, basically the seller provides financing, used when mortgage rates are high, or the seller does not need money
Note and Trust Deed
a seller is financing the sale for the buyer, just as in the contract for deed sale, except that in this case, the seller delivers a warranty deed and legal title is passed right away to the buyer and the seller holds a deed of Trust on the property in the same manner as a financial institution.
Wrap-around Contract
The seller keeps the existing mortgage on behalf of the buyer, plus lends additional money to cover the price paid above the balance of the loan
Amortization
the process of retiring a debt or recovering a capital investment, typically through scheduled, systematic repayment of the principle, a program of periodic contributions to a sinking fund or debt retirement fund
Discount Points
a percentage of the loan amount that a lender charges a borrower for making a loan; may represent a payment for services rendered in issuing a loan or additional interest to the lender payable in advance; also called points. Each discount point is 1% of the original loan amount
Desire
a purchaser’s wish for an item to satisfy human needs or individual wants beyond essential life-support needs
– the ability of an individual or group to participate in a market, to acquire goods and services with cash or its equivalent
Effective Purchasing Power
4 Types of External Market Forces
Governmental, Economic, Social and Environmental
External Governmental Forces
Planning, Zoning, Building Codes, Environmental Restrictions, Taxes, Utilities, Transportation, Education, Cultural, Parks and Rec, Police, Fire & Public Safety
External Economic forces are?
National Economy, Consumer Price Index, Interest Rates, Availability of Financing, Wage Rates, Types of Employment, Unemployment Rates, Cost of Construction, Rental Rates, Rental Vacancies, Expense Levels
What soil type drains better Sandy or Rocky?
Sandy
Value
the monetary relationship between properties and those who buy, sell or use those properties. Value expresses an economic concept
T/F Value is a Fact and Price is an opinion
False, Price is a fact and value is an opinion
Cost
a total dollar expenditure to develop an improvement; applies to either reproduction of an identical improvement or replacement with a functional equivalent, not exchange
Price
the amount paid in exchange for a good or commodity. Price is distinguished from value because price becomes a fact when the transaction is consummated as opposed to value, which is an estimate
Market Value
The most probable price, as of a specified date, in cash, or in terms equivalent to cash
A types of value, stated as an opinion, that presumes the transfer of a property, as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable
Market Value
What items must be included on an appraisal report?
ID of property rights, effective date of the value opinion, specification as to whether cash, or other precisely described financing terms are assumed as the basis of the appraisal, spec as to whether the financing terms are at, below or above market interest rates
Value in Use
the value of a property assuming a specific use, which may or may not be the properties highest and best use on the effective date of the appraisal
Market Value of the Going Concern
the market value of an established and operating business including the real property, personal property, financial assets, and the intangible assets of the business
The principle of anticipation is?
the perception that value is created by the expectation of benefits to be derived in the future
the result of the cause and effect relationship among the forces that influence real property value
Principle of Change
Principle of Supply and Demand
In economic theory the principle that states that the price of a commodity, good, or service varies directly with demand and inversely with supply
T/F is RE the Supply side is dynamic and subject to quick changes?
False
Principle of Competition
Between purchases or tenants, the interactive efforts of two or more potential purchases or tenants to make a sale or secure a lease
“the appraisal principle that states that when several similar commodities, good or services are available, the one with the lowest price will attract the greatest demand and widest distribution
Substitution
Principle of Contribution
The amount a component of a property adds to the total value of the property
The principle that economies outside a property have a positive effect on its value while dis-economies outside a property have a negative effect on its values
Principle of Externalities
Principle of Balance
the principle that real property value is created and sustained when contrasting, opposing, or interacting elements are in a state of equilibrium, 2v1 or 4v1
Principle of Conformity
the principle that real property value is created and sustained when the characteristic of a property conform to the demands of its market
Principle of Progression and Regression
Progression is when a cheaper house is surrounded my more expensive houses and regression is the opposite
Principle of Opportunity Cost
the cost of options forgone or opportunities not or chosen, or what investments we didn’t make to buy real estate
What are the agents of production?
Land, Labor, Capital and entrepreneurial efforts
What are the four criteria for highest and best use?
Legal Permissibility, physical possibility, financial feasibility and maximum productivity
Market Analysis
is the study of supply and demand in a specific area for a specific type of property
Market Area
a property markets area is the area from which it demands is found and that contain its direct competition
Market Area Analysis
the objective analysis of observable and/or quantifiable data indicating discernible patters or urban growth, structure, and change that may detract from or enhance property values; focuses on four sets of considerations that influence value: social, economic, governmental and environmental factors
Microeconomics
individual spheres or activity or patterns and behaviors
Sub-market
a division of a total market that reflects the preferences of a particular set of buyers and sellers
A Fast food restaurant is a WHAT, within the restaurant market?
Sub-market
Market Segmentation
the process by which sub-markets within a larger market
Disaggregation
the actual process by which we separate and define markets, must be taken carefully if we wish to get logical and meaningful results
Elements of Supply Analysis
Existing Stock, volume of new construction, planned construction, availability and price of vacant land. cost of construction, properties offered for sale, conversions in progress and availability of financing
Absorption Rate
the rate at which vacant space in an property or group of properties for sale or lease has been or is expected to be successfully sold or leased
Absorption Period
actual or expected period require from the time a property is initially offered for purchase until all portions have been sold
Marketability Analysis
A study of how a specific property is expected to perform in a specific market, expands on a market analysis by addressing a specific property
Feasibility Analysis
The study of a cost-benefit relationship of an economic endeavor
