Tx Principles of Real Estate Part 2
What is the annual interest on a $200,000 loan with an interest rate of 5%...?
$10,000
If the annual interest paid on a loan is $10,000, with an interest rate of 8%, what is the total amount of the loan...?
$125,000
A property owner wants to build a new fence around his property. The fence will cost $20 per linear foot. If the property measures 175' x 200', how much will the fence cost to build...?
$15,000
What did an owner originally pay for his home if he sold it for $200,000, which yielded a 10% profit...?
$181818.18
If a lender charges an origination fee of 1 point and 3 discount points, what will be the total amount paid in points on a $500,000 loan...?
$20,000
The total commission paid on the sale of a home was $8,000. The commission split between the seller and buyer's broker was 50%. If the commission split between the seller's broker and his salesperson is 50%, how much did the salesperson earn...?
$2000
The annual taxes on a property are $4,800. If the property is sold at the mid-date of the year, how much of the annual property taxes will the seller be responsible for...?
$2400
What did an owner originally pay for his home if he sold it for $360,000, which yielded a 15% profit...?
$313,043.48
A lender is willing to provide a mortgage up to 90% of a property's $360,000 contract price. How much will the borrower have to put up as a down payment...?
$36,000
A house sold for $320,000 with a 6% commission rate. The commission split between the seller and buyer's broker was 50%. The commission split between the seller's broker and his salesperson was 60/40. How much did the salesperson earn as a commission...?
$3840
The total commission on the sale of a home was $9,000. If the seller's broker earned a 60% commission split, and the buyer's broker earned a 40% commission split, how much did the seller's broker earn...?
$5400
The total commission on the sale of a home was $10,000. If the seller's broker earned a 60% commission split, and the buyer's broker earned a 40% commission split, how much did the seller's broker earn...?
$6,000
Improper fractions are always greater than...?
1
If a lender charges a 1 point origination fee, what will be the cost of the origination fee...?
1% of the loan
3 methods of determining Reproduction Cost
1. Square Foot Method 2. Unit in Place Method 3. Quantity Survey Method
8/5 is equal to...?
1.6
12'-5" is equal to...?
12.417'
What is the area of a room that measures 15'-6" x 13'-3"...?
205.375 square feet
Which of the following loan terms will yield the lowest monthly mortgage payment...?
30 years
How many hours of appraisal education is required to become a general certified real estate appraiser...?
300 hours
If a property measures 150' wide by 120' deep, how many linear feet will the perimeter of the property measure...?
540'
A house is appraised at $240,000. If the local property tax rate is $3 per $100 of appraised value, what is the amount paid in annual property taxes...?
7200
How many hours of appraisal education is required to become an appraiser trainee...?
75 hours
Economic Obsolescence
A loss in value due to factors away from the subject property but adversely affecting the value of the subject property.
Functional Obsolescence
A loss of value due to adverse factors from within the structure which affect the utility of the structure, value and marketability.
Gross rent multiplier
A number which, times the gross income of a property, produces an estimate of value of the 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.
Assessed Value
A valuation placed upon a piece of property by a public authority as a basis for levying taxes on the property.
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.
Principle of Anticipation
Affirms that value is created by anticipated benefits to be derived in the future
The liquidation of a financial obligation on an installment basis is referred to as...?
Amortization
Comparative Market Analysis
An analysis of the competition in the marketplace that a property will face upon sale attempts.
Appraisal
An estimate of the value of property resulting from an analysis of facts about the property.
Which of the following is the lowest real estate appraiser classification...?
Appraiser trainee
Which of the following appraisal methods will most likely be used to determine the value of a church...?
Cost approach
When using sales data to compare to the subject property, appraisers should use sales that are...?
Current, Comparable, Close
4 Characteristics of Value
DUST Demand Utility Scarcity Transferability
The most probable use to which a property is suited that results in its highest value or highest returns to the land is known as...?
Highest and best use
Principle of Change
Holds that it is the future, not the past, which is of prime importance in estimating value. Change is largely the result of cause and effect.
Principle 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.
5/4 is an example of a/an...?
Improper fraction
8/7 is an example of a/an...?
Improper fraction
An investor is in the process of purchasing an office building. The bank providing the mortgage for the property requires an appraisal to be done. Which of the following appraisal methods will the appraiser most likely use to determine the value of the office building...?
Income approach
.............. depreciation cannot be fixed at an economically feasible cost?
Incurable
What is the second step in the appraisal process...?
List the data needed and sources of that data
Which of the following is used by lenders to increase the lender's yield on the loan without increasing the annual interest rate...?
Loan discount points
Depreciation
Loss of value of property brought about by age, physical deterioration or functional or economic obsolescence.
Which of the following loan terms will yield the highest monthly mortgage payment...?
Lowest years (10 years)
The price paid regardless of pressures, motives or intelligence is referred to as the...?
Market price
The most common objective of an appraisal is to develop an opinion of...?
Market value
1-1/4 is an example of a...?
Mixed number
The income approach determines value by applying a capitalization rate to the...?
Net operating income
How much experience is needed to become a real estate appraiser trainee...?
No experience is needed
In an improper fraction, the ............... is larger than the denominator?
Numerator
Sales Comparison Approach (Market Data Approach)
One of the three methods in the appraisal process. A means of comparing similar type properties, which have recently sold, to the subject property. Commonly used in comparing residential properties.
Cost Approach
One of the three methods in the appraisal process. An analysis in which a value estimate of a property is derived by estimating the replacement cost of the improvements, deducting therefrom the estimated accrued depreciation, then adding the market value of the land.
Income Approach
One of the three methods of the appraisal process generally applied to income producing property, and involves a three-step process 1) Find net annual income 2) Set an appropriate capitalization rate or "present worth" factor 3) Capitalize the income dividing the net income by the capitalization rate
Appraiser
One qualified by education, training and experience who is hired to estimate the value of real and personal property based on experience, judgment, facts, and use of formal appraisal processes.
The primary function of a .......... is to promote thrift and home ownership?
S&L
David is in the process of buying his first house. David's lender requires an appraisal to be done on the property. Which of the following appraisal methods will most likely be used to determine the value of David's house...?
Sales comparison approach
What is the first step in the appraisal process...?
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.
Replacement Cost
The cost to replace a structure with one having utility equivalent to that being appraised, but constructed with modern materials and according to current standards, design and layout.
All appraisals must contain which of the following...?
The date on which the appraisal value was determined The purpose for which the appraisal was done The opinion of value
Effective Demand
The desire for possession or ownership backed by the financial means to satisfy that need.
Amortization
The liquidation of a financial obligation on an installment basis; also, recovery over a period of cost or value.
Transferability
The relative ease with which ownership rights are transferred from one person to another.
What is the annual interest on a $320,000 loan with an interest rate of 6%...?
$19,200
A house is appraised at $360,000. If the local property tax rate is $2 per $100 of appraised value, what is the amount paid in monthly property taxes...?
$600
A house is appraised at $360,000. If the local property tax rate is $2 per $100 of appraised value, what is the amount paid in annual property taxes...?
$7200
A property sold for $270,000 with a 5% total commission paid to the seller and buyer's broker. If the commission split between the seller and buyer's broker is 60/40, how much did the seller's broker earn...?
$8100
A room measures 12'-0" x 15'-6". What would it cost to lay down new flooring that costs $5 per square foot...?
$930
Three investors purchased a property for $580,000. Investor A contributed $157,000, while investor B contributed $220,000. What percentage of ownership was left for the third investor...?
35%
If the annual interest paid on a loan is $3,000, and the total loan amount is $60,000, what is the annual interest rate...?
5%
Mortgage Broker
A broker who arranges a mortgage loan between a lender and a borrower for a fee.
Principle of Contribution
A component part of a property is valued in proportion to its contribution to the value of the whole. Holds that maximum values are achieved when the improvements on a site produce the highest (net) return, commensurate with the investment.
The bottom number in a written fraction is called the...?
Denominator
After the needed data has been obtained and verified, what is the next step in the appraisal process...?
Determine the highest and best use of the property
What is the first step an appraiser takes when valuing a property using the cost approach...?
Determine the value of the land as if it were vacant
Which of the following is a source of real estate financing...?
Local banks Mortgage banking companies Credit unions
Value
Present worth of future benefits arising out of ownership to typical users/investors.
This principle holds that it is the future, not the past, which is of prime importance in estimating value...
Principle of change
Which of the following externalities can have a negative effect on home values...?
Proximity to a landfill Proximity to a power plant Proximity to a noisy highway All of the above
A single value is derived from the three appraisal methods of determining value during the ............ process?
Reconciliation
Utility
The capacity to satisfy human needs and desires.
Insured Value
The cost of replacing a structure completely destroyed by an insured hazard.
Book Value
The current value for accounting purposes of an asset expressed as original cost plus capital additions minus accumulated depreciation.
Principle of Externalities
The influences outside of a property can have a positive or negative affect on its value.
Market value is equal to...?
The most probable price a property will bring in the market
Market Value
The most probable price in terms of money which a property will bring in a 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.
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.
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.
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.
Scarcity
The supply of property in relation to effective demand.
When appraising a property using the sales comparison approach, which of the following factors is used to adjust comparable properties to the subject property...?
The terms and conditions of the sale The day of the sale The physical features of the house
Real estate appraisers used to appraise a property cannot be selected by the real estate brokers involved in the transaction...?
True
A typical residential appraisal report is issued on a...?
Uniform Residential Appraisal Report