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When will an area's population have the greatest affect on the real estate market?

When the population is changing significantly

All sales of real estate must be reported on which IRS form?

1099-S All sales of real estate must be reported. The reporting is done on IRS Form 1099-S. While the closing agent has the primary reporting responsibility, if the reporting is not done by the closing or escrow agent, the responsibility falls first to the lender and next to the real estate broker.

Which of the following properties is subject to subdivision laws? A lot being divided into four or fewer parcels

A lot being divided into four or fewer parcels would be a short subdivision, which would still be subject to subdivision laws. All of the other properties would be exempt.

Lead Paint Problems

Lead has been used in paint for centuries. It increases durability and has a color depth quality. In the United States it is estimated that: Almost all houses built before 1940 have lead in the paint Seventy percent (70%) of houses built between 1940 and 1959 have lead in the paint Twenty percent (20%) of houses built between 1960 and 1978 have lead in the paint

One advantage for real estate investors is that real estate investments can be financed, rather than purchased in cash. What is the name for this attribute?

Leverage The ability to leverage a real estate investment is another advantage. Real estate is commonly financed, unlike some other investments that must be purchased for cash.

Jim is an auto mechanic who owns his own repair shop and was planning to retire in a few years. Learning that his landlord intends to triple the rent when Jim's lease runs out next month, Jim has decided to close the shop and retire early. What is the most realistic way to estimate the value of Jim's business?

Liquidation value A contrast to liquidation value, which is the value of the cash value of the components of an asset or business.

Using the cost approach to value, what does the "effective age" of a property mean?

The condition of improvements relative to similar structures Effective age refers to the condition of the improvements today relative to similar structures and to their current usefulness.

Which of the following triggers a capital gains tax

The property is sold A gain is taxable when realized (when the property is sold).

Due to serious health effects of lead, all states have created tough lead laws for: controlling exposure to lead-based paints, testing and remediation, and mandatory disclosure requirements

The residential use of lead-based paint was banned in 1978.

Which of these is a way to measure housing supply?

The time needed for all listed homes to sell under current market conditions Often measured using a metric estimating the months of supply, the amount of time it would take for all currently-listed homes to sell under current market conditions.

Tax Shelter: A financial arrangement that minimizes tax liability

Though all markets rise and fall, low interest rates and an unpredictable stock market ensure that real estate will remain a popular investment now and in the future. Buyers and sellers of investment real estate, residential and commercial, have special concerns and need brokers with expertise in the area

When a property use is downzoned, this might create a conflict between the new zoning and the land uses currently in existence. What is this use called? Nonconforming

When a new zoning ordinance is enacted, particularly when property is downzoned, a conflict is frequently created between the new ordinance and land uses already in existence. When this occurs, the preexisting conflicting use is referred to as a nonconforming use.

If there is a profit earned from real estate, when does the capital gains tax become due?

When the property is sold Capital gains tax is due when the property is sold or from some other transfer that qualifies as a taxable event.

For more information about on-site sewage treatment and disposal systems, visit the Florida Department of Health website:

http://www.floridahealth.gov/environmental-health/onsite-sewage/index.html

According to the U.S. Department of Housing and Urban Development (HUD), about 35% of surveyed homes (37.1 million) have lead-based paint. Of those 37.1 million homes, 93% were built before 1978 (2011 American Healthy Homes Survey). The Centers for Disease Control and Prevention (CDC) estimates that there are over half a million children under the age of 5 who have elevated levels of lead in their bloodstreams.

https://www.cdc.gov/nceh/lead/

A built-in swimming pool, tennis court, and restaurant that increase the value of property are called

amenities Amenities are either man made or natural factors that enhance an individual's enjoyment of a property. A subdivision that contains a recreation center with a swimming pool is a factor that will positively affect property values.

Which of the following would be most pertinent to a developer's choice of floorplans in a new condominium community?

Consumer tastes and preferences

Identify this architectural style:

Victorian

A home purchased for $180,000 and sold 14 years later for $290,000, after receiving a new paint job ($3,000), having a new deck constructed in the backyard ($3,500), and having all of the appliances replaced ($5,000). With a 14-year depreciation of $25,000, what is the net taxable gain on the sale of the property?

$126,500 Gross sales price: $290,000. Basis: $180,000 + $8,500 (new paint job is maintenance, not improvement) - $25,000 = $163,500 Net taxable gain: $290,000 - $163,500 = $126,500

If an apartment complex has a net operating income of $225,000, and the selected capitalization rate for the building is 8%, what would be the value of the apartment?

$2,812,500 Divide the NOI by the cap rate. $225,000 / .08 = $2,812,500

Which of the following services is a closing agent NOT able to provide?

Correct or alter documents during a transaction A closing agent cannot correct or otherwise alter documents relating to a transaction.

Using the sales comparison approach to value, when comparing square footage a comparison should be within what percentage of the subject property?

10% The square footage should be 10% percent more or less than the subject property.

A sample copy of a Lead-Based Paint Disclosure can be found here:

https://cloud.onlineed.com/resources/00001318.pdf

In a neighborhood that consists predominantly of Victorian-style homes, a property owner decides to construct a ranch-style home. Because of this, the new home will likely have a lower property value than the surrounding homes because of what reason?

Aesthetic standards Aesthetic standards refer to what are deemed acceptable architectural styles. Generally, properties that conform to the norm effect value in a positive or neutral manner. Properties that do not conform to the norm will generally suffer a loss in value.

Real estate value is durable because land is what?

Indestructible While buildings and other improvements can depreciate or appreciate in value depending on market conditions and the condition of the property itself, land is durable - indestructible, even - and does not depreciate in value.

Generally, schools, hospitals and churches are issued what by the zoning authority Conditional use permits

Because there is no specific zoning category for special use buildings such as hospitals and schools, the zoning authority will issue a limited number of conditional use permits to accommodate the community needs.

Identify this architectural style:

Cape Cod This is a cape cod-style house, with a low, broad, boxy shape and a pitched roof that slopes down almost to the tops of the windows. This design typically also includes a one-and-a-half story setup with a steep, gabled roof and double-hung windows with shutters.

When sold, what kind of tax rates is real estate subject to?

Capital gains tax rates One of the attractive features of real estate is that the increase in value of a real estate asset, when sold, is subject to capital gains tax rates.

Identify this architectural style

Craftsman Craftsman houses make extensive use of rustic, natural materials such as stone and wood, and are marked by broad overhanging eaves with exposed rafter ends, deep porches often sheltered by pergolas or trellises, shingled exterior walls ending in sloping stone foundations and natural earthy colors.

Identify this architectural style:

Which IRC property class is a house bought to remodel and immediately sell (to "flip")?

Dealer Real property purchased with the intent to improve it for immediate resale is dealer property.

Which valuation method is based on the buyer's desired level of cash flow?

EBITDA Another approach to valuing a business is based upon a financial buyer's desire to purchase a business based upon its cash flow. Certain types of business are amenable to this type of valuation. Under this method a multiplier factor is applied to the business' Earnings Before Interest, Depreciation, and Amortization (EBITDA).

"Boot" is associated with

Exchanging Boot is anything of value given in an exchange that is not like-kind property.

What will a closing agent do if both parties can not agree on the disposition of funds?

File an interpleader action with the court

Broker Bob receives 55% of all commissions he generates. He just sold a property listing for $250,000 at 6% brokerage commission. How much will Broker Bob earn in commission for this sale? $8,250

First calculate the amount of the total commission. ($250,000 x .06 = $15,000). Next, determine Bob's commission ($15,000 x .55 = $8,250).

9 3/5 % as a decimal, rounded to 3 decimal places, is: 0.096

First deal with the fraction part of the total number. To convert 3/5 to a decimal, divide 3 by 5. The result is .6 and when .6 is added to the number 9 it become 9.6. When 9.6 percent is expressed as a decimal, the decimal point must be moved to the left two places, with the result of .096.

An investor paid $650,000 for a four-plex. Each unit rents for $950 per month. If the investor's annual expenses total $8,000, what is the rate of return he will earn on his $650,000? 5.78%

First, calculate the net operating income. This is done by first calculating the amount of annual rents received and then subtracting from the annual rent figure the annual expenses. ( $950 x 4 units x 12 months = $45,600) Subtract the annual expenses from the gross rental income to arrive at the net operating income ($45,600 - $8,000 = $37,600) Then divide the net income by the amount paid for the building to arrive at the annual rate of return. ($37,600 / $650,000 = .0578). After that, convert the decimal to a whole to a percent by moving the decimal two places to the right. (5.78%)

If a property owner feels that their property is improperly zoned they can petition for a rezoning

If a property owner believes that his/her property has been improperly zoned, that owner may petition the local appeals board for a rezone or zoning amendment.

The old saying that the three most important factors in real estate are location, location, and location is due to which characteristic of real estate?

Immobility Real estate's immobility makes location of paramount importance in determining value.

A property that is so long and narrow that it would be difficult to build a structure on suffers from this.

Its size and shape The size and shape of a parcel of land will affect its value. If the lot is narrow or too small to meet the minimum zoning requirements, the value of the property will be less than a property that is adequate in size and shape to accommodate development.

Molds and Fungi

Molds and Fungi Some fungi can be hazardous to health under ideal conditions. Micro-fungi are only visible through a microscope, while plaster and wood-rotting fungi are known as macro-fungi since they produce visible spores. Most molds and fungi do not cause health problems. They are found on plants, foods, dry leaves, and other organic materials. Molds and fungi perform a valuable function by assisting to break down dead material.

Which of the following services is a closing agent NOT able to provide?

Offer legal advice regarding the transaction A closing agent cannot offer legal advice regarding a transaction.

A property with its backyard neighboring a beautiful park might not have increased property values if a large brick wall was erected between the property and the park, and the property faced the street. What is the name for this factor affecting property value?

Orientation Orientation of the improvements on a property refers to the location and siting of the improvements on the property in relation to factors that may contribute to the enjoyment of the property. For example, a structure sited on a property to take advantage of views, the sun, or privacy, will positively affect value.

A lot measures 97' X 125'. The zoning code specifies maximum lot coverage of 55%. The maximum size of a house, in whole numbers, would be: 6,668 sq. ft.

Remember, the house size cannot exceed the 55% set in the zoning code. First, calculate the square footage of the city lot (97' x 125' = 12,125 sq. ft.). Then multiply the lot square footage by the amount of permissible lot coverage. (12,125 sq. ft. x .55 = 6,668.75 or 6,668 sq. ft. in whole numbers)

Underground Storage Tanks

Since pioneer times, various sources of fuel have been used to heat homes. In most places, wood is the most obvious and readily available fuel. As furnaces began to become a standard modern convenience, sawdust and even coal became the fuel of choice for these early systems.

A property owner who needs a small exception to current zoning rules to avoid unnecessary hardship would apply for this. A variance

The owner could apply for a variance with the local zoning authority, which is authorization to build a structure that is otherwise prohibited by the zoning ordinance.

.02 as a percent would be: 2%

To convert to a percent, move the decimal point 2 places to the right, which turns .02 into 2%.

Identify this architectural style:

Tudor Hallmarks of the Tudor style include decorative half-timbering, steep roof pitches, massive ornate chimneys, prominent cross-gable on the façade, and tall, narrow windows with multiple small panes.

To qualify for an exclusion from capital gains taxation on a residential property, the homeowner must

have owned and occupied the property for two of the past five years. The homeowner must have owned and occupied the property for two of the previous five years.

What kind of risk does property insurance protect against?

Specific Other risks have more to do with the investment itself than the business climate. These are called "specific" or "unsystematic" risks.

Which law requires obtaining permits any time contaminants or pollutants will be released into the air or water?

Pollution Control Laws Pollution control laws require separate permits any time a land use will involve the release of contaminants or pollutants into the air or water.

The appraiser-client is different from the real estate agent-client relationship. Which best describes this difference?

The appraiser must perform in an impartial manner without regard to the interests of the client; the real estate agent must work in the best interest of their client. In the preparation of the appraisal report, and in the final opinion as to value that the report will represent, the appraiser must always perform in an impartial manner without regard to the interests of the client. In the appraisal relationship, the appraiser must remain totally impartial and independent, while at the same time adhering to the basic fiduciary responsibilities of a principal-agent relationship.

9. How much tax liability would a single homeowner have on the sale of a home that they have occupied for the last 5 years if their capital gain is $168,000?

$0 The homeowner will have no federal income tax liability on the $168,000 capital gain if the property was owned and occupied by the seller for more than two of the last five years. The $168,000 does not exceed the $250,000 profit exemption for a single person.

3. Taking advantage of IRC Section 1031, how long does a taxpayer have to close escrow on a replacement property?

180 days The Internal Revenue Code requires the taxpayer to identify the replacement within 45 days and close the transaction within 180 days of the sale of the relinquished property.

Taking advantage of IRC Section 1031, how long does a taxpayer have to close escrow on a replacement property?

180 days The Internal Revenue Code requires the taxpayer to identify the replacement within 45 days and close the transaction within 180 days of the sale of the relinquished property.

The following examples will demonstrate how these adjustments are made:

An appraiser is appraising a property in the $500,000 price range. The appraiser has located a recently closed comparable property very similar to the subject property except for the fact that the subject property has been professionally landscaped. The subject property's professionally landscaped yard is valued at $25,000, while the comparable has a yard that represents a basic landscape package. The comparable property sold for $525,000. The appraiser would add $25,000 to the value of the comparable property. The adjustment would result in a value of $550,000 for the comparable property. What is really being said here is if the comparable property had had the professionally landscaped yard, it would have sold for $550,000 and not $525,000.

Radon levels can be localized. This means that radon can be a problem limited to specific geographic areas, such as local communities or even states. Although radon levels can be localized, any house can have a radon problem. For example, two houses located next to each other can have dramatically different radon levels. General radon concentrations in the local area or state should not be relied upon as an indicator for a specific house.

Any house in any area could have a radon problem.

Identify this architectural style

Which of the following is NOT the responsibility of a closing agent?

Compel both parties to fulfill all obligations It is not the closing agent's function to force parties to fulfill their contractual obligations.

In a neighborhood where all the houses reflect the same standard of quality and upkeep, a property will likely be appraised at a higher value because of what principle?

Conformity Conformity refers to the principle that for optimum value, a property must conform to the demands of the marketplace. The marketplace will usually demand that properties be similar in quality, upkeep, age, and design.

Which of the following would be most pertinent to a developer's choice of floorplans in a new condominium community?

Consumer tastes and preferences Successful developers of new communities will target their designs, floorplans, and amenities to particular customer groups' tastes and preferences.

An area that includes mostly residential housing will typically have properties appraised at a higher value than an area of mixed residential and commercial use because of this principle.

Homogeneity Homogeneity refers to a high degree of similarity of use relating to the properties in a specific area. Homogeneity tends to stabilize property values. For example, in an area where there is mixed use, such as residential interspersed with commercial and industrial, the values will tend to be unstable. In contrast, properties located in an area of similar properties of similar quality and use, the values will tend to stabilize in a positive manner.

Real estate's value can rise or sink due to changes in the nearby areas that have nothing to do with the property's condition or maintenance levels. This is due to which characteristic of real estate?

Immobility The value of real estate depends greatly on the surrounding area, and that value will continue to be heavily influenced by changes in that surrounding area.

Of the following appraisal principles, which represents the value cycle?

Integration, equilibrium, and decline Any property will experience a value cycle. This cycle is comprised of three phases: integration, equilibrium and decline. When new land is developed and improved, its value is at its peak. This value is referred to as the state of integration. After this phase of the cycle, the property will experience a period of stabilization in value. This stage is known as equilibrium. After a period, the property will experience the decline stage of the cycle as the structure and properties are not as well kept up. The appraiser will determine where the property is in the value cycle.

If the average apartment rental in an area is around $1,200, but the average mortgage payment on a $300,000 home is only $800, then the property values of homes for purchase in the area would increase because of what economic factor?

Interest rates If interest rates drop, more individuals will be able to afford a monthly mortgage payment. If fact, if interests rates are low enough, a mortgage payment may be less than rent for a comparable property and, as a result, demand for property to purchase will increase and property prices will rise.

Zoning vs. Private Restrictions (CC&Rs)

It is important to remember that when the zoning requirements are in conflict with the private restrictions imposed by the CC&Rs (Covenants, Conditions, & Restrictions), then the more restrictive of the two must be met. A common example of this occurs when zoning allows a minimum square footage lot smaller than that required by the CC&Rs. For example, a community's zoning requires a minimum lot size of 15,000 square feet and the CC&Rs require a minimum lot size of one half acre (21,780 square feet). Thus, all lots must adhere to the CC&Rs requirement of one-half acre, since it is the more restrictive of the two.

The Effects of Lead on Human Health

Lead that is ingested or inhaled enters the bloodstream, where it ordinarily passes through the body in a few days. However, lead can lodge itself in brain tissue, the bones and in other body soft tissues where it can remain permanently, causing health problems. It can be the source of health problems in both adults and children, although the problems in children are especially of concern to health-care professionals.

Local Building Regulations Local building codes are permitted as amendments to the state code, but only if the amendment addresses a unique local condition and is more stringent than the Florida Building Code. Local codes will determine land use, fire safety, sanitation, density, building setbacks, and wind requirements. Local codes apply to site improvement, foundation work, installation of utilities, and placement and anchoring of manufactured houses.

Local codes cannot regulate the construction of manufactured houses

Water can also be a source of radon gas. Municipal water supply systems are usually not a source of radon. But when the water supply for the house is a ground well through rock, or in bedrock that is releasing radon, it is possible for radon to become trapped in the water and released when the water becomes vapor, such as with a hot shower, laundry, or other steam producing uses for the water. Radon levels are known to increase as much as 200 times beyond the action level because of released radioactivity from a shower.

Radon is a greater threat in structures with poor ventilation

Which of the following actions on the part of a listing agent is a violation of RESPA Section 9?

Requiring the use of a specific title company as condition of sale It is a violation of RESPA Section 9 for a seller to directly or indirectly require that title insurance be obtained from a specific title insurance company as a condition of sale.

Identify this architectural style

Building Contractors

With very few exceptions, a contractor license is required for building contractors operating within the State of Florida. The contractor license is issued by the DBPR's Construction Industry Licensing Board. The Board issues licenses in 21 categories, from air conditioning to underground utility and excavation.

How much tax liability would a single homeowner have on the sale of a home that they have occupied for the last 5 years if their capital gain is $168,000?

If Steve paid $30,000 to remodel his kitchen, over a 30-year economic life, how much would Steve be able to deduct from his taxes that year?

$1,000 If the new kitchen has an economic life of 30 years, Steve would be able only to deduct $1,000 in the year in which it was installed against the gross income of the property ($30,000 divided by 30 years or $1,000 per year).

What would be the maximum homeowner tax exemption that a married couple with two children could receive from federal income taxes on capital gains after having occupied the home for more than two years?

$500,000 As of August 5, 1997, homeowners are allowed an exemption from federal income taxation on capital gains of personal residential property of a profit up to $250,000 for single taxpayers and $500,000 for couples married at the time of the sale. This exemption is available every two years. This means that the property must be owned and occupied by the owner for at least two of the past five years in order for the full exemption to be applicable.

If an appraiser using the cost approach to value determines that a 20 year old structure, with an economic life expectancy of 50 years, is in "poor" condition, he may add 30% to the actual age of the property to determine it's effective age. What would the property's remaining economic life then be?

24 years To determine the structures remaining economic life, increase its actual age (20 years) by 30% (26 years) to get its effective age, then subtract its effective age from its economic life (50 - 26 = 24 years).

An appraiser uses a comparable property with a slightly raised and older wood patio valued at roughly $1,500, while the subject property has a brand new concrete patio valued at $3,500. The comparable property sold at $273,000. What is the adjusted value of the comparable property?

275,000 The comparable property of $273,000 would lose its deck of $1,500 and gain a patio of $3,500, thus adding a net value of $2,000 resulting in an adjusted value of $275,000 for the comparable property.

The owner of a duplex has a scheduled gross income of $3,000 per month. The vacancy rate is 5% and expenses average $19,300 per year. If a buyer purchases the property for $241,500, and the income and expenses stay the same, what will the buyer's rate of return be? 6% First determine the net income of the duplex on an annual basis. To do this first calculate the amount of the gross annual rents. ($3,000 x 12 = $36,000) Since the vacancy rate is 5%, subtract 5% vacancy from the gross rents. This can be accomplished in one of two ways. First method: Multiply the gross rents times the vacancy rate and subtract this number from the annual gross rents to arrive at the gross rents less vacancy number. ( $36,000 x .05 = $1,800) ( $36,000 - $1,800 = $34,200) Second method: The remaining balance of gross rents after subtracting the vacancy rate would be 95% of gross rents. Therefore multiply the gross rent figure times 95% to arrive at the gross rents less vacancy rate figure. ( $36,000 x .95 = $34,200) Next determine the net operating income. To do this take the gross rent figure less the vacancy factor and subtract from this number the annual expenses of $19,300. ($34,200 - $19,300 = $14,900) Divide the net income by the purchase price of the duplex to determine the rate of return. ($14,900 / $241,500 = .06) Then convert the decimal to a percentage by moving the decimal two places to the right. (6.0%)

6 %

Which BEST describes a Comparative Market Analysis (CMA)?

A CMA is an assessment of a property's market value given by a real estate agent. A CMA is an informal assessment of a property's market value made by a licensed real estate agent. It is a written analysis, opinion, or conclusion by a buyer's agent or a seller's agent.

What license must a licensee hold to represent others in business opportunity transactions?

A Florida real estate license Individuals that desire to engage in business brokerage, also frequently referred to as business opportunity sales, must have a Florida real estate license under Chapter 475, F.S. Part I.

Crumbling Foundations Old foundations were often made with impure sand containing a great deal of organic material. This is especially true for foundations along ocean coastlines and those using river sand. As the organic material in the sand breaks down, so does the integrity of the foundation itself. It is not unusual for sellers to try and mask this condition, or at least try to make the crumbling foundation look better by applying a skim coat of concrete or plaster. If tapping on a foundation wall results in a "hollow" sound or if visible crumbling is evident, a foundation expert should be consulted for further evaluation.

A good home inspection should detect any existing structural damage. If detected, the buyer will need to decide whether to accept the damage as is, ask the seller to make repairs, or terminate the real estate transaction.

Liquidity risk is of particular concern to real estate investors because it is the risk that what?

An asset will take time to sell Liquidity risk is the risk that an illiquid investment cannot be bought or sold quickly enough to prevent or diminish a loss.

In investment terms, what is a hedge

An investment made to reduce risks of other investments When inflation is an issue in the broader economy, real estate investments act as a hedge, an investment made to reduce the risk of other investments or certain market conditions.

Toxic Waste in Soil Toxic soil is unsafe for the families who live on the property. Toxic soil is often the result of manufacturing factories or landfills that used to exist at the site, but have been long shut down or dismantled, leaving their byproducts buried in the ground. Later, residential subdivisions are constructed on top of the old site. If a soil test determines that the soil contains high levels of metals and chemical contaminants, the soil may need to be disposed of and replaced with fresh soil. This can be an expensive task for the buyer or seller.

Any soil pollutants known by the seller must be disclosed to the buyer, even if the toxic soil was caused by factors outside of the seller's influence.

Any products or materials in the following list which are found in a house built prior to 1978 should be viewed as suspect.

Appliances (used as insulation blankets in stoves and oven doors and walls and in cover gaskets.) Asbestos containing parts have been found in toasters, popcorn makers, broilers, slow cookers, dishwashers, refrigerators, ranges, ovens, clothes dryers, electric blankets, and hair dryers. Ceiling material (textured acoustical popcorn-style ceilings and some ceiling tiles and lay-in panels). Acoustical and decorative plasters Textured paint coatings Wallboard patching, taping, and spackling compounds. Caulking/putties Vinyl floor tiles, vinyl sheet flooring, and under sheeting/tile mastics. Asphalt floor tile Flooring backing Construction mastic (used for carpet and ceiling tile, etc.) Furnace/HVAC systems (used as an insulator and as duct insulation and tape at duct connections.) Ductwork flexible fabric connections Pipes (use insulator blankets or foam wrapping on hot water and steam pipes). Roofing felt Roofing shingles Cement siding Insulation in houses built between 1930 and 1950 Oil and coal furnaces and door gaskets Electrical wiring insulation (on very early electrical wires used in knob and tube applications) Cement sheets on walls and floors around wood burning stoves and fireplaces Cement pipe Driveways and sidewalks made from serpentine crushed rock or gravel that is made from serpentine rock. (Serpentine rock is usually glassy in texture and ranges in color from pale green to bluish-black but is most commonly dark or dull green).

When Asbestos is Discovered in a House or Building

Asbestos, if undisturbed, is usually not considered a health risk since the fibers are not released into the air. Asbestos in any product or material can become a health hazard if the asbestos containing material is damaged, disturbed or deteriorated. Products containing asbestos that can be easily crumbled or pulverized by little pressure and become airborne are considered dangerous by their very nature. These are known as friable asbestos-containing products. Examples of friable asbestos-containing products are "popcorn type" ceiling materials, wallboard (drywall), and a variety of caulks, putties, and plasters. Nonfriable asbestos-containing products are considered less of a problem since they are not as easily damaged. These types of products generally have to be damaged by sanding, cutting, grinding or scraping. An example of a nonfriable asbestos-containing product is vinyl floor tiles.

Tim inherited a building from his uncle eight years ago. What is the term for the value of the building when Tim acquired it?

Basis Basis is the calculation of the value of an asset at the time of an investor's acquisition of the asset.

When should a prospective buyer be screened

Before the buyer has been provided certain details of the sale Once the prospective buyer has been screened the buyer is often required to enter into confidentiality and non-disclosure agreements. Once the screening process has been completed, the buyer will be introduced to the business offered for sale.

Laws that set standards for construction methods and materials are known as building codes

Building codes mandate construction standards.

American Bungalow

Bungalow (1905-1930) - The typical bungalows were a one or one-and-a-half story house with an open floor plan and front porch incorporated under a wide, overhanging roof. Bungalows had a long, low profile and simple interior with lots of built-in cupboards and nooks. There were usually two bedrooms, one bath (no shower), a small kitchen and maybe an unfinished basement or upper expansion space. Emphasis was on a low profile, with most living spaces on the first floor, exposed structural members, and wood joinery. Bungalows were affordable homes built in large quantities. Besides providing first-time home ownership to many people, the bungalow, with its open front porches and small yards, fostered community relations. A bungalow's distinction is its low profile, so a true bungalow is less than two stories.

The federal tax code has three classifications of real estate. Which of the following is NOT a category of real estate recognized by the federal tax code?

Capital use property Under the federal tax code, there are three categories of real property: personal use property, trade or business property (also known as investment property), and dealer property.

What kind of valuation is based on a property's income generation?

Cash flow A cash flow valuation evaluates a potential purchase based on the income the investment property would likely generate.

Which principle would be applied to a 70-year-old house with a leaking roof and outdated plumbing and electrical?

Change The appraiser will evaluate the change occurring in relation to the property and how this will affect its current value.

Identify this architectural style:

Colonial Revival

Identify this architectural style

Colonial Revival Colonial revival styled homes are identified by the symmetrical windows and doors. Windows are typically double-hung, arranged in even rows around a distinctive central doorway. The door is often surrounded by ornate pediment, pilasters or small columns.

Identify this architectural style:

Identify this architectural style

Colonial revival Colonial revival styled homes are identified by the symmetrical windows and doors. Windows are typically double-hung, arranged in even rows around a distinctive central doorway. The door is often surrounded by ornate pediment, pilasters or small columns.

1. In a neighborhood where all the houses reflect the same standard of quality and upkeep, a property will likely be appraised at a higher value because of what principle?

ConformityConformity refers to the principle that for optimum value, a property must conform to the demands of the marketplace. The marketplace will usually demand that properties be similar in quality, upkeep, age, and design.

Availability of which of the following would be most pertinent to a developer's decision to build an apartment building instead of a condominium building?

Consumer tastes and preferences

8. A property being appraised has added solar panels to the roof to boost the property's energy efficiency. The appraiser values these solar panels at approximately $20,000, which he adds to the appraised value of the property. What principle is being used here?

Contribution The principle of contribution involves the value of a particular component part of the property, and whether that part adds to or detracts from overall value.

In order to grow and survive, all molds require moisture. Hydrophilic types of fungi need conditions close to saturation, or at least very damp conditions. The Xerophilic types of fungi will grow in drier conditions, requiring only minimal moisture. The most common indoor sources of moisture for molds to grow are:

Damp basements Damp crawlspaces (usually due to inadequate moisture barriers) Improperly installed or maintained rain drain systems Flooding Backed-up sewers Failed sump pumps Leaky roofs Humidifiers Mud or ice dams Constant plumbing leaks House plants (if watered too frequently) Cooking steam Shower/bath steam and leaks Indoor clothes drying lines Clothes dryers that are improperly vented

Of the following, which is accomplished with an IRC Section 1031 Exchange?

Deferral of capital gains or losses Under Section 1031 of the Internal Revenue Code, property held for productive use in a trade or business or for investment may be exchanged between owners. If the 1031 exchange requirements are met, the transaction will qualify for deferral of capital gain taxation.

What factor would cause the property values in a retirement community to rise when a majority of an area's population is aging?

Demographic factors If the demographic trend in a given area is towards an aging population, the demand for retirement housing will increase and the demand for large family homes will decrease.

Tim inherited a building from his uncle eight years ago. What is the term for the measure of the building's diminishing value, due to everyday use and the facility's age, since Tim acquired it?

Depreciation Depreciation is a measure of diminishing worth due to everyday wear and tear.

Tim inherited a building from his uncle eight years ago. What is the term for the measure of the building's diminishing value, due to everyday use and the facility's age, since Tim acquired it?

Depreciation Depreciation is a measure of diminishing worth due to everyday wear and tear.

Growth patterns in an area or a region will affect property values. Properties in the path of growth will experience value increase. Conversely, those located in areas of decline will experience declining values. When an area is in the direction of this type of growth decline it will benefit or suffer from which of these factors?

Directional growth Directional Growth - Growth patterns in an area or a region will affect property values. Properties in the path of growth will experience value increase. Conversely, those located in areas of decline will experience declining values.

$250,000 is 109% of what number? $229,357.79

Divide the known number of $250,000 by 1.09. To do this, the 109% must first be converted to a decimal. ($250,000 / 1.09 = $229,357.79).

A 5,000 square foot lot sold for $128,000. What was the cost per square foot? $25.60

Divide the total sale price by the square footage of the lot. The result is the amount per square foot. ($128,000 / 5,000 sq. ft. = $25.60)

What kind of agency relationship does a closing agent have with the parties to a transaction?

Dual agency The relationship is one of dual agency. A closing agent must support both the buyer and the seller, but cannot give a preference to one or the other.

Most of the oil tanks installed on residential properties were underground. A few were above ground or in basements. By the 1970s and 1980s, the popularity of oil was on the wane. New construction rarely, if ever, used oil as the heat source. The net result is that today, many of the oil tanks are still in use while others have been abandoned. Most of the above ground tanks were scrapped when the oil systems were replaced with an alternative energy source. However, most of the unused underground tanks were left in the ground to rot. Unfortunately, the greatest number of these abandoned tanks still contain oil. The immediate problem is contamination of the soil in the area of the tank. If the tank is located in an area where it is near surface water or where the water table is high, the oil can also contaminate ground water.

During the 1980s and 1990s, the problems created by the large number of rotting underground tanks became a major issue in the United States. It is difficult to determine the extent of the problem due to lack of standardized regulations.

A neighborhood with highly rated schools and a public library would see properties with higher values for which reason?

Education standards Most parents desire that their children receive the best education possible. Therefore, neighborhoods represented by excellent schools and other developmental opportunities afforded by libraries and recreation facilities will positively affect the value of property.

A large corporation is building a new manufacturing plant in the center of town. A property located nearby will see increased value because of what economic factor?

Employment The level of employment and the health of the employment market in a given area will affect rents and property values. If a major new employer is moving to an area and will be requiring a large number of new employees, property values will increase as will demand for housing.

Tim inherited a building from his uncle eight years ago. He has since taken out a mortgage on it. What is the term for the value of the building minus the mortgage?

Equity Equity is the amount of the asset the investor owns free and clear - the value of the asset minus the liens against it.

A house 32 feet wide by 63 feet long has walls 9 inches thick. What is the square footage of the floor area inside the house? (round to the nearest whole number) 1,876 sq. ft.

First calculate the amount of square footage of the walls. Since each side of the structure has a 9" wall, the total amount of wall must be subtracted from the perimeter of the structure. Therefore, the 9" wall must be doubled for each side and must be converted to feet. ( 9" + 9" = 18" or 1.5 feet) For the perimeter dimension of 32 feet, 1.5 feet will be subtracted ( 32' - 1.5' = 30.5 feet). For the perimeter dimension of 63 feet, 1.5 will be subtracted. (63' - 1.5' = 61.5 feet) This will give the net perimeter dimensions. The net perimeter dimensions will then be multiplied to calculate the interior square footage. (30.5' x 61.5' = 1,875.75 sq. ft., or 1,876 rounded up)

How many square yards of carpeting would be needed for a room measuring 24 feet by 30 feet? 80 sq. yd.

First calculate the square footage of the room. (24 ft. x 30 ft. = 720 sq. ft) Then divide the amount of total square feet by the amount of square feet in a square yard. (a square yard contains 9 square feet because 3 feet times 3 feet equals 9 square feet). (720 sq. ft. / 9 = 80 sq. yd.)

An investment property is offered for sale at $400,000. An investor purchasing the property at that price would receive a 12.5% return on their investment from the net income earned by the property. If the investor wanted to realize a 14% return, what would they have to purchase the property for? (Round your answer to the nearest whole dollar.) $357,143

First, the net income of the property must be calculated. It is known that the building at $400,000 will realize a 12.5% return. Therefore, to find the net income at the $400,000 figure, multiply the purchase price times the 12.5% return. ($400,000 × .125 = $50,000) Once the net income amount is known, then the purchase price at a 14% return can be calculated. To determine the purchase price, divide the rate of return into the net income. ( $50,000 ÷ .14 = $357,142.85). This figure may be rounded up to $357,143.

In using this approach to value, the appraiser will collect data from the real estate marketplace and use this data to determine the value of the property as of the date of the appraisal. The basic steps involved in this approach are:

Gather Data on the Subject Property Gather Data on Properties Similar to Subject Property Adjustment to Comparable Properties and Market Data Reconciliation Final Market Data Determination of Value

What kind of agency relationship usually exists between a property manager and a property owner?

General agent The agency relationship formed by the property management agreement is a form of general agency, in that the authority given to the agent is generally broad in scope and continues for a specified period

Identify this architectural style

Georgian A typical Georgian house will have a decorated cornice and little overhang. Windows will be double hung with 12-over-12 or 9-over-9 window. The front will often have a triangular pediment supported by columns to form a front entrance.

Identify this architectural style:

The comprehensive plan will include both a proposal for planned development and a means of implementing that plan. Usually, background information on the economy of the area, its development, population growth, and existing land uses will be included along with the goals and policies determining future development. The local planning agency will draft the plan and make recommendations to the local governing body as to the adoption of the plan. At a minimum, a plan must consist of:

Goals, objectives, and policies Requirements for capital improvements implementation Procedures for monitoring and evaluation of the local plan The countrywide marina siting plan for participating local governments in the coastal area Required maps showing future conditions, including the future land use map or map series A copy of the local comprehensive plan adoption ordinance at such time as the plan is adopted Intergovernmental coordination processes

Chris has decided to sell her business, a gas station located on a well-trafficked state highway. To get an idea of the selling price, an appraisal should determine what about the business?

Going concern value Going Concern Value: An estimation of the value of a business that is expected to remain in business.

What is the term for the desire to use a property in the most profitable way?

Highest and best use When an appraiser attempts to establish a value for a property, of primary concern to the appraiser is what is the most profitable way to use the property that is legally and physically possible. This concept is commonly referred to as the highest and best use.

What is the term for the desire to use a property in the most profitable way?

A neighborhood that includes both expensive and inexpensive homes, commercial shops and an industrial plant all mashed together would have lower property values for what reason?

Homogeneity Homogeneity describes a neighborhood or area in which there is a high degree of similarity. A property in a mixed-use neighborhood will generally have less market value.

In a city with a large population of young, single professionals, more large houses are being converted to one- and two-bedroom apartments. This is an example of demand responding to a change in what?

Household composition

Household composition The picture is further complicated by the variable of household composition. This refers to the number of people in a household and, by some measures, how many of the household members bring in an income.

Property values typically increase in population centers because of which one of these social factors?

Human gregariousness People tend to cluster into population centers and, as people demand living space, they go into competition to possess it and property values will rise.

If a house sold for $290,000, which was 19% more than it originally cost, what was the original cost? (in whole dollars) -$243,697

If the house sold for 19% more than the original cost, it sold for the full amount of the original cost plus 19% of that price. Expressed as a percentage this would be 119% of the original price. Convert the percentage to a decimal by moving the decimal two places to the left. Then divide the converted percentage into the sale price of the property. ($290,000 / 1.19 = $243,697.47).

Sub-Membrane Depressurization - This type of depressurization requires the earth floor of the crawlspace to be covered with a heavy plastic sheet with a vent pipe and fan installed to draw the radon from under the sheet and release it to the outdoors. This method will reduce radon levels by 80-99%. In colder climates, this method generates less heat loss than natural ventilation

In houses that are part basement and part crawlspace, a combination of reduction methods might be necessary.

Real estate value is durable because land is what?

Which of the following would likely be considered a capital improvement?

Installing new carpet Adding a whole new carpet would be considered a capital improvement, because it is a large expense and has a long economic life. However, replacing an individual portion of a damaged carpet, foundation, roof or flooring would be considered maintenance.

5. Which of the following would likely be considered a capital improvement?

Which of these increases is the most dependable indicator of a rising market?

Issuances of residential building permits Building permits: Increased applications for residential building permits are a hint that demand for new housing is sufficient to spur new construction. Issued building permits are more solid evidence.

When a property is converted to cash through an involuntary conversion, what happens to the taxpayer's tax liability on the property?

It can be deferred until a replacement property is found The IRS, in recognition of a gain on an involuntary conversion, allows the taxpayer to defer tax liability, for a period set by the IRS, to reinvest the monies in a replacement property. Generally, personal use property must be replaced within two years and business, trade or investment property within three. Any part of a gain received but not used for replacement property will be taxed as income.

Exercise of police power has constitutional limitations that must be adhered to in order to avoid the possibility of violating the constitutional rights of a private landowner. Generally, a land use law or regulation will be deemed constitutional if it meets the following four elements:

It is reasonably related to the protection of the public health, safety, moral, or general welfare. It applies in the same manner to all property owners similarly situated (i.e., it is not discriminatory). It does not reduce a property's value so much that the regulation amounts to a confiscation. It benefits the public by preventing harm that would be caused by the prohibited use of the property.

Lead and Lead-Based Paint Lead is a heavy, soft, blue-gray metal that is found either as a natural ore or a by-product of smelting silver. Lead in its natural state is not a hazard. Once mined, processed, and introduced into the environment it becomes an environmental hazard and remains in the environment forever. Lead cannot be disposed of. There is simply no way to convert lead to a harmless material.

Lead use increased dramatically beginning with the industrial revolution. It has been used in the manufacture of common products such as paint, gasoline, batteries, solder in electrical conduits and potable water and sewer pipes, glass, crystal glassware and decanters, and painted toys and furniture.

A property bordered by the ocean or a river might have an increased value because of this.

Location Being located at a beach. Location, location, location!

Looking for a vent pipe. A vent pipe is usually attached to the side of the house, garage or sometimes a fence. The vent pipe is one and a quarter inches in diameter. The vent pipe has an elbow or an over sized cap on the top to allow air to flow out of the tank.

Looking for oil lines or signs of oil lines. The oil lines are usually copper and may be under the house or penetrate the foundation walls. In addition, the agent should look for patches in the walls of the foundation or in the floor of the basement. If an oil tank had been present at one time and later abandoned, the original oil lines would have entered the structure in one of these two areas. If they were cut loose, either evidence of the actual line or patches in the wall or floor should be evident.

Which valuation method adds the estimated value of the business' tangible assets to the estimated value of its intangible assets?

MPSP The MPSP Value is established by placing a market value on the hard or tangible assets of the business such as equipment, fixtures, and inventory. An amount attributable to good will is an intangible asset of the business.

Flood Zones and Flood Insurance

Many areas of Florida are prone to flooding. Flood insurance is available under a federal program that is meant to encourage at-risk homeowners to obtain coverage and to ensure that at-risk areas are developed safely. Flood insurance is sold separately from homeowners insurance and is purchased to protect against losses to buildings and their contents, but not the land surrounding them. Coverage applies whether flooding results from heavy or prolonged rains, coastal storm surge, blocked storm drainage systems, levee dam failure, as well as other causes. It is important to remember that most homeowners' insurance policies do not cover flood damage, and separate policies must be purchased to insure the building and to insure the building's contents.

The Business Information Profile is used to do what

Market the business opportunity for sale The Business Information Profile is a marketing piece that describes the business for potential buyers.

Supply and demand operate differently in the real estate market compared to other market types for all of the following reasons EXCEPT which one?

More signals

Supply and demand operate differently in the real estate market compared to other market types for all of the following reasons EXCEPT which one?

More signals Unlike markets for consumer goods, the real estate market does not have the ability to respond rapidly to changes in supply and demand. Permanence of investment refers to the fact that improvements are intended to be long-lived. Except for the financing factors, which tend to be similar nationwide, these are all characteristics of the local area and economy

For most homeowners, underground tanks become an issue when the homeowner becomes aware of an obvious problem, such as water entering the tank and mixing with the oil, thereby causing oil burner or system firing problems or because of the frequency the oil in the tank needs to be refilled, thereby indicating a leak. Still others, not knowing that an old tank even exists on the property, may discover the presence of the tank when corrosion of the tank eventually leads to a cave-in of the ground above the tank. Although this is not a common occurrence, it does happen periodically.

Most issues relating to underground storage tanks arise at the time a property is marketed. This is because buyers are now aware that the presence of an underground tank can be an economic liability either now or in the future. In addition, lenders generally require a clean soil report if an underground oil tank is on the property due to the impact a contamination problem would have on the security of their collateral.

Which environmental law requires federal agencies and private developers to prepare an environmental impact statement for actions with a significant environmental impact?

National Environmental Policy Act The National Environmental Policy Act is a federally-enacted law that requires federal agencies and private developers throughout the United States to prepare an environmental impact statement (EIS) for any action that would significantly affect the environment.

Insofar as the IRS is concerned, if less than 100% of the sales price is received in the year the property is sold, which BEST describes the transaction?

No encontre

Similarly-sized properties in the same neighborhood can sell for very different prices because real estate is what?

Nonhomogeneous Real estate is also unusual among products for sale in that it is nonstandardized, or nonhomogeneous. [...] For these reasons, even homes that look similar to one another on paper, with comparable square footage and features, can command very different selling prices.

For example, the book value of a property originally valued at $500,000 after five years would have a book value of $409,100, which is calculated as follows:

Original cost $500,000 Less five years' depreciation (-$90,900) Present book value $409,100

To be eligible, the insured building must have two or more outside rigid walls and a fully secured roof that is affixed to a permanent site. Buildings must resist flotation, collapse, and lateral movement. At least 51% of the actual cash value of the building must be above ground level unless the lowest level is at or above the base flood elevation and is below ground by reason of having earth used as insulation material in conjunction with energy-efficient building techniques. Mobile homes and travel trailers (without wheels) are eligible for coverage if affixed to a permanent foundation.

Over 40% of the purchasers of National Flood Insurance are in Florida.

Under the cost-to-cure method, factors that will lessen the value of the structure will be classified in one or more of the following three types of depreciation:

Physical Obsolescence (Deterioration) Functional Obsolescence, or Economic Obsolescence

When zoning for a specific type of property is rare in a region, the value of that property increases. Which of these is related to zoning?

Police power The government exercises its police power through land use planning laws, zoning ordinances, and building codes. For example, land use laws that restrict the use of property may make the availability of certain property uses, such as land available for industrial development, very scarce. As a result, this land use policy will tend to increase the value of any available industrial development property.

When zoning for a specific type of property is rare in a region, the value of that property increases. Which of these is related to zoning?

Which law requires obtaining permits any time contaminants or pollutants will be released into the air or water? Pollution Control Laws

Pollution control laws require separate permits any time a land use will involve the release of contaminants or pollutants into the air or water.

When a smaller house exists in a neighborhood of larger houses, the appraiser will give a higher value to the smaller house that it would likely get in an area of smaller homes. What is this principle called?

Progression

Progression The principle of progression states that a commodity increases in value by association with items of greater value.

Which of these is NOT a responsibility of the seller in a real estate transaction?

Provide hazard insurance for the property being conveyed The buyer is required to obtain hazard insurance for the property, not the seller.

Any structure can have radon problems - new or old, well-sealed or drafty, with or without a basement. The amount of radon entering a structure is determined by: The strength of the radon source The underlying soil type Water content of the soil Empty spaces in the soil

Radon concentrated in a structure can cause long term exposure.

Sources of Radon in a Building Radon is more likely to be near subterranean rock formations, especially granite. Radon is a greater threat in structures with poor ventilation. Radon is heavier than air, so it will accumulate in the lowest levels of a structure unless moved by ventilation. Radon enters through cracks, vents, pipe holes, plumbing, ducts, and unsealed soil. Negative pressure from warm air rising can pull radon inside.

Radon gas can also enter through well water. Radon is trapped in the water and released when water vaporizes, such as in a hot shower, laundry, or cooking.

Identify this architectural style

Ranch Ranch-style houses are usually single story with wood or masonry exteriors. They were among the first styles to integrate the garage right into the home.

Removal

Removal of the material should be considered as the last alternative. It presents the greatest risk for fiber release and is very expensive. If this option is selected, the United States Department of Environmental Quality asbestos removal and disposal protocols and procedures should be followed during the abatement process. Trained, insured, and certified asbestos abatement professional contractors should only perform asbestos removal. The removal process will require that the entire work area be contained by a plastic barrier that is put under negative pressure created by a negative air machine. These machines, which also utilize high efficiency particulate air filters to prevent the introduction of fibers into other parts of the structure, are very costly to operate. In order to verify the structure is free from traces of friable asbestos after the abatement work has been completed, it should be tested by an independent professional. This testing procedure can also be very expensive.

Which of these would be done by the buyer?

Review the preliminary title report The buyer should review the preliminary title report.

Which of the following services is a closing agent NOT able to provide?

Settling disputes between parties A closing agent cannot settle disputes between parties to a transaction.

Testing for Radon The radon testing method selected for use will depend upon the reason for performing the test. Although longer testing periods give more accurate results, they are usually not used for real estate sales transactions because the longer testing period usually exceeds the inspection contingency period. The EPA has developed a 48-hour test that will predict with about 94% accuracy whether the annual radon level will be at or exceed 4 pCi/L. This 48-hour test should meet most inspection contingency periods.

Short-term testing. Short-term testing, or more properly called screening, does not definitively identify long-term exposure. Short-term testing determines the presence of radon, but not levels of radon concentration. Screening is the method most often used when testing is the result of a contingency in a real estate transaction.

In a region where all of the wealthy and influential residents live on "Richmond Hill", the value of properties on the hill are likely to increase for what reason?

Social strata Social strata refers to the desire individuals have to live in neighborhoods compatible with their perceived social status or their aspired social status. The value of property responds to the social strata of a neighborhood.

A house sold for $314,500. After closing costs of $1,400 and a broker's commission of 6%, the owner earned a profit of 9%. What was the original cost of the house? (Round your answer to the nearest whole dollar) 269,936

The first step is to solve the unknown dollar amount of the commission. To do this, multiply the commission rate times the sale price of the property. ($314,500 x .06 = $18,870). Next, the total costs of sale must be calculated. Therefore, add the commission and closing cost figures together. ($18,870 + $1,400 = $20,270). The total costs of sale must next be subtracted from the gross sales price of the property. The result will be how much the homeowner actually realized on the sale. ($314,500 - $20,270 = $294,230). Once the amount of net sale proceeds is determined, then the final calculation to determine the original purchase price of the property can be made. This calculation is made by dividing the net sale proceeds by the profit percentage earned. First the 9% profit percentage must be converted to a decimal. A 9% profit means that the property sold for the full amount paid for the property plus 9% of that price. In other words, it sold for 109% of its original purchase price. As a decimal 109% is expressed as 1.09. The final calculation would then be $294,230 / 1.09 = $269,935.77. Therefore, the house originally cost $269,936.

Market Value: The usual purpose of an appraisal is to estimate the market value of a specific property. Market value is defined by the Appraisal Institute as:

The highest price in terms of money which a property will bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus.

Malia was thinking overnight about making an offer on a house listed for $520,000. The next morning a house with the same floorplan on a similar lot and in the same neighborhood came on the market for just $475,000. Malia made an offer on the $475,000 house. Which principle did Malia use to help make her decision? Substitution

The principle of substitution states that a buyer will not purchase an over-priced property if a similar substitute property can be purchased for a lower price at the same time.

Which of the following triggers a capital gains tax?

The property is sold A gain is taxable when realized (when the property is sold).

Due to serious health effects of lead, all states have created tough lead laws for: controlling exposure to lead-based paints, testing and remediation, and mandatory disclosure requirements

The residential use of lead-based paint was banned in 1978.

Cost-to-Cure Observed Condition Method

The second method an appraiser may use to determine the depreciation of a structure is known as the Cost-to-Cure Observed Condition method. Under this method, the appraiser will calculate the actual cost of repairing or modernizing the structure to bring it up to new condition

A property is located in an unincorporated area of Smith County, and the owner pays property taxes to the county. Smith County is what?

The situs of the property Situs: The place to which a property belongs, for jurisdiction and tax purposes.

Split-Level

The split-level first appeared during the post-war building boom of the 1950s and 60s. With a single story at one end (usually the living room and kitchen), and two on the other (sunken garage and family room below and bedrooms above), the split level was soon a familiar sight throughout the country as family cars opened up what was once farmland to residential development. They were attractively designed to make use of multi-level terrain. A variation on the traditional split level was the side-split or tri-level design. This style featured three levels, two stacked on the side with the third level (intermediate level) accessible to the side of the stacked levels. Usually, the tri-level had a built-in garage adjoining the intermediate level.

A Broker Price Option is similar to a Comparative Market Analysis, but the client is a lender or other financial institution instead of an individual buyer or seller. BPOs will help the lender determine an estimate of a property's value without ordering an extensive appraisal. The lender may need an estimation of value to proceed with a foreclosure or short sale, for approving an applicant's home equity line of credit (HELOC), or for other reasons when the formal appraisal is not cost effective.

There are two types of BPOs: a Drive-by BPO and an Interior BPO. A Drive-by BPO is when a licensee only has exterior access to the property. The licensee is "driving by" to take a quick peek at the structure and its grounds. If the building is empty, the licensee might be able to look through the windows to learn additional information. The licensee can then use observations and neighborhood statistics to determine a general estimate of valuation.

What does it mean when a party to an exchange receives "boot"?

They will have tax liability from the exchange When a party to an exchange receives boot, that party will have tax liability on the gain derived from it.

The Ranch

This style made its debut in the 1920s, taking its inspiration from the Southwest's one-story Spanish ranchos. It evolved into the Craftsman movement. However, during the 1940s and the post-war building boom of the '50s, the ranch-style soared in popularity. With its open kitchen and living areas and easy access to a private backyard (often via sliding glass doors and patios), it tapped into the new casual entertaining and suburban life trends. Ranches, like split levels, were often built in new suburbs only accessible by car, so they were among the first styles to integrate the garage into the home, giving the car entry as much visual weight as the front door. These houses are usually one story and have a wood or masonry exterior built on a concrete slab or with shallow crawlspaces.

Office space is renting for $19.00 a square foot annually. If the total square footage is 12,000 square feet, what is the amount of the monthly rent? $19,000

To calculate annual rent, multiply $19.00 per square foot times the amount of square footage rented. ($19 x 12,000' = $228,000). To find the monthly rental amount, divide the annual rental amount by 12. ($228,000 / 12 months = $19,000).

A seller wants to sell her existing house and owes $290,000 on mortgage. At closing of the sale she will pay $1,400 in closing costs, plus a 6% brokerage fee. She wants to realize at least $55,000 for a down payment for the purchase price of a new house. What is the minimum amount she must sell her house for to net $55,000? $368,510

To solve this problem, first determine the total amount which must be paid at closing. These items include the existing mortgage of $290,000, closing costs of $1,400, plus the amount of $55,000 that the seller wants to net on the sale. ($290,000 + $1,400 + $55,000 = $346,400). This is the total of the known items which must be realized or paid at closing. Once this number is known, the house will have to sell for a price which includes a 6% brokerage fee. This means that the $346,400 must equal 94% of the sale price of the property. The other 6% of the sale price is represented by the brokerage fee. Therefore, convert 94% to a decimal (.94) and divide into the $346,400. ($346,400 / .94 = $368,510.64). The house would have to sell for $368,510 in order for the owner to realize her objectives.

Property located on a steep hill may suffer lower value than a similar property on flat land because of this reason.

Topography Topography refers to the contour of the land. Land that is extremely steep may be very difficult to develop and would be less in value than a parcel of similar size that is relatively flat.

A property that exists in a densely populated urban neighborhood downtown where the roads are typically very congested would suffer value loss from what physical factor?

Traffic patterns The condition of roads and streets along with traffic patterns generally has impact on property values. If traffic is extremely congested, if surface streets cannot handle the traffic demand, and the design of roads impedes access to necessary services, properties will usually decrease in value

The CMA is limited in scope to determining a listing or offering price on a specific property for a specific customer or client. Any attempt to value a property outside of this limited scope would not fall under the definition of a CMA and would require a licensed, certified appraiser.

True The answer is True. Any attempt to value a property outside of this limited scope would not fall under the definition of a CMA and would require a licensed, certified appraiser.

Identify this architectural style:

A residential property re-zoned as commercial outside the control of the property owner might experience an increase in value because of which factor?

Unearned increment Property values will sometimes increase due to factors outside of the control of the property owner. Zoning changes, inflation, or sharp increases in population growth can positively affect an owner's property value. Any increase in value due to circumstances such as these is referred to as an unearned increment.

Using the cost-depreciation approach to value, what method of determining a replacement cost is calculated on a component-by-component basis?

Unit-in-place method The unit-in-place method calculates the cost to replace the improvement on a component-by-component basis.

Once all construction has been completed, a final inspection will be done, and if there are no defects or corrections to be made, a certificate of occupancy (COE) will be issued.

Update the house to meet newer building codes A structure built prior to a new, stricter standard being enacted may have to be updated to meet the new standard as a condition to transfer title.

A large corporation is developing its world headquarters in the center of your suburban town and has begun hiring employees. Many of these employees are already moving into the area so that they can be close to work. What physical factor in this area is affecting property values?

Urban development patterns Urban Development Patterns - Any desirable development plan affecting an area will tend to increase values, and any undesirable development plan will tend to decrease values. For example, building a new community college would tend to increase values in a community. In contrast, the placement of a maximum-security prison in a particular area could decrease values around the facility.

In the absence of complicating factors such as a tight mortgage market, an area's low vacancy rate can indicate what? Low housing supply and/or high demand High housing supply and/or low demand A local preference for buying over renting A buyer's market

Vacancy rates: Low vacancy rates indicate tight housing supply, which may spur new construction. In the meantime, the market should swing in favor of sellers.

Special Exceptions

Various special uses, such as hospitals, churches, schools, etc., do not fit into any particular zone classification. All of these land uses are essential to the community, yet may have adverse effects on neighboring properties. To accommodate these use needs, the zoning authority issues conditional use permits allowing a limited number of these uses to operate in compliance with specified conditions. For example, a property owner might be given a conditional permit to build a private school in a residential zone, subject to certain conditions such as adequate parking, security, etc.

Identify this architectural style

Victorian Victorian styles may include fancy "gingerbread" trim, dormers, rounded porches, asymmetrical floor plans, turrets, towers, large windows and intricate woodwork such as tracery.

Identify this architectural style:

Victorian Victorian styles may include fancy "gingerbread" trim, dormers, rounded porches, asymmetrical floor plans, turrets, towers, large windows and intricate woodwork such as tracery.

Identify this architectural style:

Victorian Victorian styles may include fancy "gingerbread" trim, dormers, rounded porches, asymmetrical floor plans, turrets, towers, large windows and intricate woodwork such as tracery.

An resort town that is a popular location for second homes among the rich and famous will see increased property values because of what economic factor?

Wage structure As the average wages increase, so will the average purchasing power. As a result, rents and land values will also tend to rise in value.

Previously established uses that are allowed to continue after a zoning change prohibits the use is a nonconforming use.

Molds and Fungi Typically, most home buyers probably never considered molds or fungi as a potential problem in the house they were considering for purchase. In arid parts of the country, molds were not usually even recognized as a problem. In parts of the country which experience damp environmental conditions, molds were considered "normal." However, in recent years growing scientific evidence has linked toxic and allergenic fungi and molds with ill health in office buildings and houses.

With the right conditions, molds can exist anywhere. Molds and fungi can become a very serious matter in the aftermath of floods. Structures even in arid regions can be the source of mold and fungi health related problems if there is water damage to a structure

Whenever a business or a substantial portion of its assets are sold, the only way for a creditor to protect its interest is: by filing a UCC Financing Statement - The security agreement used to protect the lender's interest in personal property is known as a UCC Financing Statement. The UCC Financing Statement is filed with the Florida Secretary of State through the Florida Secured Transaction Registry. Whenever a buyer is purchasing a business opportunity, a UCC Financing Statement search and a title search should be performed to discover the existence of any claim against the assets of the business.

by recording a fixture filing - When the collateral involves fixtures, the security agreement is known as a fixture filing. The fixture filing must be recorded in the county where the fixtures are located. Alternatively, a mortgage or trust deed can be filed that specifically list the goods as fixtures and reference that the fixtures are located in or on the property.

Before the property can be purchased, lenders (or buyers) will request a Wood-destroying Organism Inspection Report. An inspector will investigate the property for evidence of WDOs and complete an inspection form developed by the Florida Department of Agriculture and Consumer Services. The report will list any live infestations or visible existing damage that can be detected by the inspector.

http://forms.freshfromflorida.com/13645.pdf

Inspectors are there to ensure construction complies with Florida Building Code (FBC), which is developed and maintained by the Florida Building Commission. The building code is based on national standards and modified to better meet the needs of our state's environment. The Florida Building Code is updated every three years and may be amended annually to incorporate interpretations and clarifications. Local governments can enforce rules that are more stringent than the statewide Florida Building Code.

https://floridabuilding.org/c/default.aspx

You can read the EIS for the AAF passenger train service on the FRA website:

https://railroads.dot.gov/environmental-reviews/all-aboard-florida/all-aboard-florida-miami-orlando-passenger-rail-service-0

To view a copy of the booklet "Protect Your Family From Lead in Your Home," visit the Environmental Protection Agency website:

https://www.epa.gov/lead/protect-your-family-lead-your-home-real-estate-disclosure

Some of the things NOT covered by flood insurance include: Temporary housing living expenses Damage caused by mold, moisture, and mildew that could have been prevented by the homeowner Motor vehicles, except when used for handicap mobility Papers such as stock certificates and currency Property that was outside the building at the time of flooding such as trees, fences, decks, and hot tubs

https://www.fema.gov/flood-insurance

In October 2021, FEMA will start to price new and renewing flood insurance policies based on the policyholder's flood risk rather than as a blanket rate charged to all homeowners located in the same flood zone. This allows NFIP policies to take into account any flood mitigation steps the homeowner makes to their property. This new Risk Reduction 2.0 rating system may qualify a proactive homeowner or community with flood insurance policy discounts.

https://www.fema.gov/sites/default/files/documents/fema_rr-2.0-equity-action_0.pdf

The appraisal report represents a/an _____________ of value.

opinion An appraiser, in the appraisal report, gives an opinion as to value. The appraiser does not set value, nor does the appraiser determine or create value.

The mere presence of lead contaminated paint, regardless of the age of the house, in-and-of-itself does not necessarily present a health hazard. Only when there is the possibility of exposure to the lead in the paint should there be concern. Significant exposure can occur when:

paint is peeling, chipping or deteriorating in some fashion a child chews on lead painted surfaces lead painted surfaces are disturbed through remodeling or repairs lead-painted surfaces are exposed to heavy use that will release lead chips or dust into the atmosphere. These potential problem areas are window sashes, doors and door frames, painted drawer guides, stairs, railings and banisters, porches, and fences, etc.

Identify this architectural style:

Spanish Spanish inspired houses usually have the following features: low-pitched roof with red roof tiles; little or no overhanging eaves; and Stucco siding. Arches, especially above doors, porch entries and main windows are also common. Carved doors and spiral columns and pilasters are also common in this architectural style. Courtyards, carved stonework or cast ornaments, along with patterned tile roofs and wall surfaces are distinguishing traits.

Identify this architectural style

Identify this architectural style:

Identify this architectural styl

Spanish Spanish inspired houses usually have the following features: low-pitched roof with red roof tiles; little or no overhanging eaves; and Stucco siding. Arches, especially above doors, porch entries and main windows are also common. Courtyards, carved stonework or cast ornaments, along with patterned tile roofs and wall surfaces are distinguishing traits.

Identify this architectural style:

Spanish Inspired Houses

Spanish-inspired houses usually have the following features: low-pitched roof with red roof tiles, little or no overhanging eaves, and stucco siding. Arches, especially above doors, porch entries, and main windows, are also common. Some Spanish-inspired houses have asymmetrical shapes with cross-gables and side wings. Some also have flat roofs and parapets or a hipped roof. Carved doors and spiral columns, and pilasters are also common in this architectural style. Courtyards, carved stonework, or cast ornaments, along with patterned tile roofs and wall surfaces, are distinguishing traits.

Substitution The principle of substitution states that a buyer will not purchase an over-priced property if a similar substitute property can be purchased for a lower price at the same time.

In a market where the average home for sale is expected to be on the market for no more than three months, an appraiser would likely raised the value of properties in that area due to what principle?

Supply and demand The appraiser will evaluate the current state of the market in relation to supply and demand as well as how the current supply and demand will affect the value of the property being appraised

In a market where the average home for sale is expected to be on the market for no more than three months, an appraiser would likely raised the value of properties in that area due to what principle?

Craftsman (1890-1930)

The Arts and Crafts style is also referred to as the Craftsman style and sometimes interchanged with the Bungalow. It incorporated Colonial Revival elements but made use of historical forms for contemporary ends. Inspired by the English Arts and Crafts movement and promoted by the furniture maker and designer Gustav Stickley in his Craftsman magazine, Craftsman houses made extensive use of rustic, natural materials like stone and wood. They were marked by broad overhanging eaves with exposed rafter ends, deep porches often sheltered by pergolas or trellises, shingled exterior walls ending in sloping stone foundations, and natural, earthy colors. The most famous examples are in California, but the style was widely copied and spread throughout the country, gaining popularity throughout the 1920s. Ornamentation was modernized. Large or small, these houses were informal, generally asymmetrical, and functional. Craftsman (Artisan) houses are generally small, one-story houses befitting the newly urbanized industrial workforce's status. One-and-a-half and two-story Craftsman houses were built less frequently. Most are plain in design and function.

Cape Cod

The Cape Cod-style was originally represented by a single-story early New England house with a center chimney and pitched roof coming down to the first-floor ceiling level. As the name suggests, the Cape Cod cottage originated with the 17th century English settlers of Cape Cod. The basic shape was low, broad, and boxy to withstand seaside winds, with a pitched roof that sloped down almost to the windows' tops. New Cape Cods are one or one and a half story buildings with a steep, gabled roof and double-hung windows with shutters.

Colonial Revival Styles (1880-1955)

The Colonial Revival reflected the growing nostalgia for American's colonial history and marked the end of the Victorian era. Mimicking the rough-hewn, handmade moldings and decorations of the Colonial homes fulfilled the need to stay connected to the past with a return to the balanced, symmetrical form (windows and doors). Built on a larger scale than the original colonials, four square rooms can usually be identified above three square rooms. The cubical shape often has arts and crafts detailing. There are usually are double-hung windows arranged in even rows flanking a distinctive central doorway. The door is often surrounded by ornate pediments and pilasters or a small porch supported by small columns usually topped by a fanlight. Sidelights are also common. The roofline is usually hipped, and there is often a front porch. This style is the style most people think of as the "All-American family home." Some of the revival styles currently popular include Dutch Colonial, Garrison Colonial, and Cape Cod.

Georgian (1714-1776)

The Georgian style features formal, classical architecture based on formal rules of symmetry with classical details. The cornice was usually decorated with dentil molding, and there was little overhang. Double-hung windows with 12 over 12 panes or 9 over 9 are also features of this style. The front door often has a triangular pediment supported by columns to form a front entrance. "Georgian" refers to the earliest period of American formal architecture, from about 1700 until the American Revolution when a succession of "Georges" as kings of England

Lead-Based Paint Disclosure

The Lead-Based Paint Disclosure is a federal law that requires a seller or landlord to make the buyer or tenant aware that residential property built prior to 1978 may present exposure to a lead hazard. The seller or landlord is required to deliver to the purchaser or tenant an EPA booklet entitled "Protect Your Family From Lead in Your Home," along with a disclosure statement indicating whether or not the seller/landlord has any knowledge of lead presence on the property. If the seller or landlord has knowledge of the presence of lead, they must deliver to the buyer/tenant any records and reports relating to the lead. The disclosure is required and must be made a condition of the sale before conveyance of the property or turning over possession of the property to the tenant.

Environmental Impact Statement

The National Environmental Policy Act (NEPA) is a federally-enacted law that requires federal agencies and private developers throughout the United States to prepare an environmental impact statement (EIS) for any action requiring federal agency approval that would significantly affect the environment. An EIS will evaluate how the construction project will affect local environmental conditions of the area. The environment includes the natural landscape, the wildlife that lives within the project zone, the air and water quality, the social and economical aspects of the improvement, and any other change that has an impact on the local area.

Which environmental law requires federal agencies and private developers to prepare an environmental impact statement for actions with a significant environmental impact? National Environmental Policy Act

The National Environmental Policy Act is a federally-enacted law that requires federal agencies and private developers throughout the United States to prepare an environmental impact statement (EIS) for any action that would significantly affect the environment.

Tudor (1890-1930)

The Tudor Revival brought back architectural elements featured in medieval Tudor English buildings. This style's hallmarks include decorative half-timbering, steep roof pitches; massive ornate chimneys, often topped with decorative chimney pots; prominent cross-gable on the façade; and tall, narrow windows with multiple small panes, often casement or fixed. These slate-roofed, half-timbered houses were inspired by the English Renaissance buildings of the 16th and 17th centuries, which featured steeply pitched rooflines and rows of casement windows.

Victorian (1830-1900)

The Victorian-style stemmed from Queen Victoria's ethics and personal tastes, which generally reflected those of the middle class. This was the beginning of the use of balloon framing versus the earlier post and beam. This allowed taller and more complex constructions. The term "Victorian" covers a wide range of architectural styles. Details include elaborate cut shingles, fancy "gingerbread" trim, dormers, rounded porches, asymmetrical floor plans, turrets, and towers. Inside, high ceilings, large windows, and intricate woodwork such as tracery offer a sense of graciousness and space.

Although an investor may claim cost recovery due to depreciation every year, what happens when the investor sells the property?

The capital gain will be higher The result is that every year the investor claims cost recovery (depreciation), the investor's original basis in the property is reduced by the amount of depreciation claimed. The net result is that when the investor sells the property, the capital gain will be higher.

When adjusting for different amentities to make properties more equal to each other, which property will an appraiser make adjustments to?

The comparable properties are adjusted to match the subject property Adjustments are only made to the comparable properties and not to the subject property. As the appraiser analyzes the comparable property, they are attempting to figure out what it would have sold for if it were exactly like the subject property.

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