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Texas Principles of Real Estate 2 – Champions quizzes & answers.
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Texas Principles of Real Estate 2 –Champions quizzes & answers.
appraisal ANS -defined as an appraiser's opinion of value.
Loan-to-Value Ratio (LTV) ANS -is the percentage of value or sales price that a lender is willing to
finance.
Principle of Substitution ANS -According to this principle, a commodity's value is influenced by the cost
of acquiring a substitute or comparable item.
Principle of Regression ANS -The presence of lower-priced properties in the area will cause a decline in
the value of the subject property.
Principle of Progression ANS -States that the value of a subject property is increased by the value of
surrounding properties.
Principle of Competition ANS -States that the absence of competition will cause prices to increase in the
marketplace.
For a property to have value, it must have four characteristics: ANS -DUST- demand, utility, scarcity,
transferability.
Market Value ANS -is the most probable price a property should bring in a competitive and open market
under all conditions requisite to a fair sale, under guidelines published by federal lending institutions
(Fannie Mae, Freddie Mac).
Ad valorem ANS --according to value
-taxes are assessed based upon the assessed value of the property and the current tax rate.
, appraisal process ANS -The value of a property may be affected by social, economic, governmental, and
environmental influences
Three approaches to value ANS -1) Sales Comparison Approach.
2) Income Approach.
3) Cost Approach.
Sales Comparison Approach ANS --Also known as the market data approach, the appraiser focuses on
recent sales in determining the value of the subject.
-is used as the best indicator of value for existing properties.
Cost Approach ANS -the market value of the property considers how much a new structure of this size
and type would currently cost to build.
Depreciation ANS -- A reduction in the value of a property due to deterioration or obsolescence.
-Types of depreciation include physical deterioration, functional obsolescence, and external
obsolescence.
Functional Obsolescence ANS -is the loss in the desirability of the style, layout, or function of an
element of a property over time.
External Obsolescence ANS -refers to the loss in value of a property caused by factors outside of the
property itself.
Primary Mortgage Market ANS -The primary mortgage market is made up of the businesses that lend to
borrowers for the purchase of real estate.
Mortgage Brokers ANS -provide consumers with assistance securing hard to place or niche sources of
mortgage money.
Origination ANS -The process of creating a new mortgage loan, including all steps taken by a lender to
attract and qualify a borrower.
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