Texas real estate part 2 2021
income approach
1-find net annual income 2-Set an appropriate cap rate or present worth factor 3- capitalize the income dividing the net income by the cap rate
1 hectare
10,000 sq meters or 2.47 meters
How many hours of appraisal education is required to become a general certified real estate appraiser...?
300 hours
square mile
640 acres
How many hours of appraisal education is required to become an appraiser trainee...?
75 hours
If an owner obtained an $80,000 loan on a $100,000 property, what LTV was provided by the lender...?
80%
Sales and leaseback
A financial arrangement where at the time of sale the seller retains occupancy by concurrently agreeing to lease the property from the purchase. The seller receives cash while the buyer is assured a tenant and a fixed return on buyers investment
Wrap Around Mortage
A financing device where by a lender assumes payments on existing trust deeds of a borrower and takes from the borrower a junior trust deed with a face value in an amount equal to the amount outstanding on the old trust deed and the additional amount of money borrowed.
Periodic Tenancy
A lease that automatically renews for successive periods unless terminated by either party. Also called estate from year to year
Home equity loan
A loan against the equity in a home
Functional obsolescence
A loss of value due to adverse factors from within the structure which affect the utility of the structure value and marketability
Adjustable Rate Mortage
A mortgage loan which bears interest at a rate subject to change during the term of the loan predetermined or otherwise.
Term mortgage
A mortgage that requires the mortgagor to pay interest only during the mortgage term with the principal due at the end of the term.
Gross rent multiplier
A number which times the gross income of a property produces an estimate of value of the property
PUD
A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning.
Urea-Formaldehyde Foam Insulation (UFFI)
A type of foam containing formaldehyde a gaseous compound used for home insulating until the early 1980
Assessed Value
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
Zoning
Act of city or country authorities specifying type of use to which property may be put in specific areas
Principle of Substitution
Affirms that the maximum value of a property tends to be set by the cost of acquiring an equally desirable and value substitute property, assuming no costly delay is encountered in making the substitution.
The control and regulation of land use is accomplished through which of the following means
All of the above= Public ownership of land Public land use controls Deed restrictions
Comparative Market Analysis
An analysis of the competition in the marketplace that a property will face upon sale attempts
Estate for years
An interest in land by virtue of a contract for the possession of them for a definite and limited period of time may be for a year or less. A lease may be said to be an estate for years.
Lessor
An owner who enters into a lease agreement with a tenant a landlord
Calculate closing costs
Closing Costs = Loan Amount x points %
Market data approach
Comparing similar type properties which have recently sold to the subject property. Common for residential property
Which of the following purchases newly originated and seasoned agricultural loans from lenders...?
Farmer mac
The U.S Central bank is known as the...?
Federal Reserve
Asbestos
Fibrous mineral found in many building materials that when improperly distrubed can cause serious lung diseases.
Negative amortization may occur in which of the following types of loans...?
Flexible payment loan
Subsidy buydown
Fund provided usually by the builder or seller to temporarily reduce the borrowers monthly principal and interest payment
Deed restriction
Limitations in the deed to a property that dictate certain uses that may or may not be made of the property
Private Mortgage Insurance PMI
Mortgage guaranty insurance available to conventional lenders on the first high risk portion of the loan
Lessee
One who contracts to rent occupy and use property under a lease agreement a tenant
What do lenders require from all borrowers prior to issuing a loan...?
Pre-approval
Value
Present worth of future benefits arising out of ownership to typical users/ investors
A term loan is typically used for which of the following...?
Second mortgages home improvement loans Investor loans
Once a bank make a loan to a borrower, the bank may sell that loan in which of the following markets...?
Secondary Market
Local governments use which of the of the following to help attract new businesses to an area...?
Tax increment reinvestment zones
Utility
The capacity to satisfy human needs and desires.
Book Value
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
Effective Demand
The desire for possession or ownership backed by the financial means to satisfy that need.
Loan Origination fee
The financing charge that a lender requires.
Yield
The interest earned by a bank on the money it has loaned
principle of change
This principle holds that it is the future not the past which is of prime importance in estimating value
The relative ease with which ownership rights are transferred from one person to another is known as...?
Transferability
A typical residential appraisal report is issued on a...?
Uniform Residential Appraisal Report
cost approach
Value estimate is derived by estimating the replacement cost of the improvements deduction therefrom the estimated accrued depreciation then adding the market value of the land
Mortgage broker
a broker who arranges a mortgage loan between a lender and a borrower for a fee
improper fractions
a fraction with its numerator equal to or greater than its denominator
economic obsolescence
a loss in value due to factors away from the subject property but adversely affecting the value of the subject property
Mortgage banker
a person whose principal business in the originating financing closing selling and servicing of loans secured by the real property for institutional lenders on a contractual basis
principle of anticpation
affirms that value is created by anticipated benefits to be derived in the future.
bottom number in a fraction
denominator
Principles of competition
holds that profits tend to breed competition and excess profits tend to breed ruinous completion
Principle of conformity
holds that the maximum value is realized when a reasonable degree of homogeneity of improvements is present
Physical deterioration
impairment of condition loss in value brought about by wear and tear disintegration use and actions of the elements termed curable and incurable
What is the second step in the appraisal process...?
list the data needed
How much experience is needed to become a real estate appraiser trainee...?
none
top number in fraction
numerator
Negative Amortization
occurs when monthly installment payments are insufficient to pay the interest accruing on the principal balance so that the unpaid interest must be added to the principal due.
Appraiser
one qualified by education training and experience who is hired to estimate the value of real and personal property based on experience judgment and facts
Fractions
part of a whole
First step in appraisal proccess
state the problem
Reproduction cost
the cost of replacing the subject improvement with one that is the exact replica having the same quality of workmanship design and layout or cost to duplicate an asset
principle of externalities
the influences outside of a property can have a positive or negative affect on its value
acre
43560 feet
Radon
A colorless, odorless, radioactive gas present in the soil that enters a home through small spaces and openings, foundation walls
Lease
A contract between owner and tenant, setting forth conditions upon which tenant may occupy and use the property and the term of the occupancy. Sometimes used as an alternative to purchasing property outright, as a method of financing right to occupy and use real property.
Certificate of occupancy
A document issued by a local government agency after satisfactory inspection of a structure authorizing that the structure can be occupied
Construction Loan
A loan made to finance the actual construction or improvement on land. Funds are usually dispersed in increments as the construction progresses
Conventional Loan
A mortage securing a loan made by investors without governmental underwriting which is not FHA insured or VA guaranteed. The type customarily made by a bank or savings and loan association
Balloon Mortgage
A mortgage in which the scheduled payment will not amortize the loan over the mortgage term. A final payment is a balloon payment larger than the uniform payments is required
Variance
A permitted deviation from specific requirements of a zoning ordinance because of the special hardship to a property owner
Non-Conforming Use
A property use that doesn't' conform to current zoning requirements, but is allowed because the property was being used in that way before the present zoning ordinance was enacted.
Friable
A quality of some asbestos that cuases it to crumble allowing toxic particles to escape into the air and lodge in peoples lungs
Building code
A systematic regulation of construction of buildings within a municipality established by ordinance or law.
Leasehold Estate
A tenants right to occupy real estate during the term of the lease this is a personal property interest
Laches
Delay or negligence is asserting ones legal rights
3rd step in the appraisal process
Determine the highest and best use
First step of appraisal of a property
Determine the value of the land as if it were vacant
Depreciation
Loss of value of property brought about by age physical deterioration or functional or economic obsolescense
PITI
Principal interest taxes and insurance
Calculation appreciation
Property Value = Property Value x % increase each year FORMULA: FV = PV x (1+a) n * FV - Future Value | PV - Present Value | a - appreciation rate | n - number of years
A single value is derived from the three appraisal methods of determining value during the ............ process?
Reconciliation
Discount points
The amount of money the borrower or seller may pay the lender to get a mortgage at a stated interest rate. A point equal one percent of the loan
Insured Value
The cost of replacing a structure completely destroyed by an insured hazard.
Market Value
The highest price in terms of money which a property will bring in competitive and open market and under all conditions required for a fair sale, i.e., the buyer and seller acting prudently, knowledgeably and neither affected by undue pressures.
Market value
The highest price in terms of money which a property will bring in the competitive and open market and under all conditions required for a fair sell
Spot zoning
The illegal rezoning of a certain property in a zoned area to permit a different type of use than that authorized for the rest of the area.
Highest and Best Use
The most probable use to which a property is suited that results in its highest value or highest returns to the land.
Market Price
The price paid regardless of pressures, motives or intelligence.
Supply and Demand
The principle that states the value of a property will increase if the supply decreases and the demand will either increase or remains constant, and visa versa.
Transferability
The relative ease with which ownership rights are transferred from one person to another.
Police power
The right of the state to enact laws and enforce them for the order safety health morals and general welfare of the public.
Scarcity
The supply of property in relation to effective demand.
Replacement cost
the cost to replace a structure with one having utility equivalent to that being appraised but constructed with modern material and according to current standards design and layout.
Amortization
the liquidation of financial obligation on an installment basis also recovery over a period of coast of value
economic life
the period over which a property will yield a return on the investment over and above the economic or ground rent due to land
Loan to Value Ration LTV
the relationship between the amount of a mortage loan and the lenders opinion of the value of property pledged to secure payment of the loan
BPO
written estimate of value by a real estate licensee