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