Unit 11 Quiz - Real Estate Principles Flashcards

Unit 11 Quiz - Real Estate Principles Flashcards What is the commonality of demand, utility, scarcity, and transferability?A. They are the four forces influencing value.B. They are the types of value.C. They are the four elements that create market value.D. They are the principles of valuation.

• They are the four elements that create market value.

The actual sales price of the property is called the:A.

market value.B. cost.C. market price.D. objective value.

• market price.

Which of the following causes real estate prices to go up?A. Supply and demand are the same.B. Supply is greater than demand.C. Demand is greater than supply.D.Demand is not an issue.

• Demand is greater than supply.

Under normal market conditions, if an apartment were vacant and available for rent, the amount for which it would

be expected to rent is called:A. appraised rent.B. express

rent.C. contract rent.D. economic rent.

• economic rent.

Which of the below is not one of the four levels of real estate appraiser licensing in California?A. Trainee licenseB. Residential LicenseC. Certified General LicenseD. Certified General License

• Certified General LicenseHint = There are four levels of

real estate appraiser licensing in California: Trainee

License, Residential License, Certified Residential License, and Certified General License. LO = 9D11 specify the appraisal licensing standards and professional appraisal organizations.Which is not one of the steps in the appraisal process?A.Reconciling the valuesB. Determining the stage of the neighborhood life cycleC. Preparing the appraisal reportD.Gathering the data from various sources

• Determining the stage of the neighborhood life cycleHint

= The steps in the appraisal process-state the problem, gather the data, use the appraisal approaches to estimate value, reconcile the values, and prepare the appraisal report. LO = 9C11 identify steps in the appraisal process.When using the cost approach, improvements and land are

valued:A. separately, by more than one approach.B.

separately, using the principle of substitution.C. together, using the principle of highest and best use.D. together, using the market value approach.

• separately, by more than one approach.

An appraisal is usually prepared for:A. the present value of

an individual's assets.B. the worth of property at a previous time in history.C. the replacement cost of damaged real property.D. a specific property's value on a given date.

• a specific property's value on a given date.

One of the methods NOT used to estimate the cost of a

building is the:A. square-foot method.B. cubic-foot

method.C. fractal geometry method.D. unit-in-place method.

• fractal geometry method.

A higher value house among less expensive homes will

lose value. This illustrates the principle of:A. progression.B.

contribution.C. regression.D. substitution.

• regression.

Demand must be coupled with _____ to be effective.A.ability to purchaseB. scarcityC. supplyD. usefulness

• ability to purchaseHint = Demand is the desire to buy or

obtain a commodity. Effective demand is desire coupled with purchasing power. Demand and purchasing power available will affect the value of a property. LO = 9A11 recall terms used to define appraisal and value.

The actual sales price of the property is called the:A.

market value.B. cost.C. market price.D. objective value.

• market price.

The sales comparison approach is one of the most

commonly used appraisal approaches and is best for:A.

income-producing properties.B. single-family homes.C.special-purpose buildings.D. unique properties.

• single-family homes.

The effective age of a property is determined by the:A.

actual age in years.B. condition and usefulness of the property.C. age of the neighborhood.D. income potential.

• condition and usefulness of the property.

Carter is using a gross rent multiplier to get a rough estimate of the value of a duplex he wants to buy. If the gross annual income is $36,000, expenses are $12,000, and the gross rent multiplier is 8, what is the estimated value of the duplex?A. $192,000B. $288,000C. $300,000D.

$450,000

B. $288,000

The principle of _____ may be illustrated by a higher value house among less expensive homes losing its value.A.regressionB. contributionC. progressionD. substitution

• regressionHint = The opposite of progression, the

principle of regression states that the value of a superior property will be worth less because of the presence of lower-valued properties nearby. LO = 9B11 name the principles of valuation.Which type of property uses a depth table to estimate property value?A. Commercial buildingB. Apartment buildingC. Single family residenceD. Government building

• Commercial building

The income approach bases a property's value on its ability

to:A. conform to its neighborhood.B. attract buyers.C.

produce income.D. withstand market downturns.

• produce income.

Which of the following is not one of the four changes in the neighborhood life cycle?A. GrowthB. MaturityC.StagnationD. Revitalization Stagnation

Appreciation means:A. maintaining value.B. a buyer's

reaction.C. an increase in value.D. a decrease in value.

• an increase in value.

In using the cost approach, an appraiser uses all of the

following information except the:A. capitalization rate.B.

accrued depreciation.C. value of the lot.D. cost to reproduce.

• capitalization rate.

When using the cost approach, improvements and land are

valued:A. separately, by more than one approach.B.

separately, using the principle of substitution.C. together, using the principle of highest and best use.D. together, using the market value approach.

• separately, by more than one approach.Hint = The cost

approach looks at the value of the appraised parcel as the

combination of two elements. These elements are: (1) the

value of the land as if vacant, and (2) the cost to rebuild the appraised building as new on the date of valuation, less the

accrued depreciation. LO = 9C11 identify steps in the appraisal process.