REM 700- Valuation exam 2024/2025 with 100% correct answers
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Course
REM 700- Valuation
Institution
REM 700- Valuation
Macroeconomic Effects on Real Estate correct answers- Income levels and distribution amongst households
-Property ownership
-Rental trends and vacancy rates
-New development/redevelopment
-Vacant land
-Past and future trends in these areas
-Inflation and Interest rate
-Foreign investment
-U...
Macroeconomic Effects on Real Estate correct answers- Income levels and distribution amongst
households
-Property ownership
-Rental trends and vacancy rates
-New development/redevelopment
-Vacant land
-Past and future trends in these areas
-Inflation and Interest rate
-Foreign investment
-Unemployment and foreclosures
impact of High Unemployment on Real Estate correct answers-Demand for office space may decrease as
companies
downsize
-Consumer spending decreases, which may impact retailers
-Foreclosure increase
~Affects both the demand for renting, and the supply, as some foreclosed homes may be introduced into
the
market as rental property
rate of inflation correct answersincrease in the average level of prices or the
decrease in the value of the money
Consumer Price Index (CPI) correct answers- traces the change in prices for a selected group of
commodities over a specified period
- The two most commonly used indices are:
•CPI for Commercial Rents Services
,•CPI for Wholesale Services
New Rental Rate correct answersNew Rental Rate = (Old Rental Rate ÷ Old CPI) × New CPI
Other Influences on Real Estate Value correct answers- Social Forces
- Governmental Controls and Regulations
- Environmental Conditions
- Technology
Principles of Land Economics correct answersThe study of geographic, environmental, legal, economics
and social aspects of land, which is the primary units of productions
Agents of Production correct answers-Land
-Labor
-Capital
-Entrepreneurship
Factors of value correct answers-Utility (Desirability): the ability to satisfy human wants, needs or desires
-Scarcity: the perceived supply relative to the demand for the item. Scarcity coupled with utility yields
value
-Transferability (Effective Purchasing Power): ability to freely buy, sell, encumber, or dispose of property
in anyway that the owner sees fit
- Anticipation: perception of future benefit
- Demand and Supply: interaction
of forces that creates value is reflected
in the principal of supply and demand
, 18
Physical Characteristics of Real Estate correct answers- Uniqueness: Each piece of land, each
building is a different piece of real estate
- Immobility: It cant be moved from one
place to another
- Indestructibility: It cant be destroyed
Valuation correct answers- Estimation or calculation of a property's worth. It is often the result of the
process of appraisal.
In the context of income producing real estate, there are three types of value correct answers1.Market
value: price the asset would obtain in the
open, combative market
2.Investment value: value of the property according to the specific requirements of the investor
3.Replacement value: eflects the cost at current prices to replace or restore a building to its pre-existing
condition and appearance
What can lead to increased market value? correct answers•Improved market condition
•Short supply
•Inflation
•Change in tax law
•Increased NOI through cost control and rent
increase
What influences investment value? correct answers•Owner's financial strength
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