IAAO COURSE 102 EXAM Questions And Correct
Answers (Verified Answers) 2026
The Economic Principle of Anticipation - CORRECT ANSWER -states that value is created by
the expectation of benefits to be derived in the future.
Chattel - CORRECT ANSWER -A mortgage on personal property.
Balloon payment - CORRECT ANSWER -A payment on the balance due of a note at the end of
the loan term that is in excess of the regular payment amounts. Usually found in a partially
amoritized mortgage.
Conventional mortgage - CORRECT ANSWER -A loan that is neither insured nor guaranteed by
the federal government.
Contract rent - CORRECT ANSWER -The actual rent paid in accordance with terms of a lease.
Minimum base rent - CORRECT ANSWER -The fixed portion of rent under the terms of a
percentage lease.
Excess rent - CORRECT ANSWER -The amount which contract rent exceeds market/economic
rent. Bad for tenant but good for landlord.....look at this in terms of the landlord!
Overage rent - CORRECT ANSWER -The variable portion of the rent under the terms of a
percentage lease. This is the rent over and above the minimum base rent. Typically based on a
percentage of sales or revenue.
Percentage lease - CORRECT ANSWER -A contract that requires a fixed minimum base rent
and a variable rent (overage rent) based on volume of business, sales, productivity, or use of the
property by the tenant.
, Gross lease - CORRECT ANSWER -A lease in which the landlord is required to pay all
operating expenses associated with the real estate.
Net lease - CORRECT ANSWER -A lease in which the tenant is required to pay all operating
expenses associated with the real estate.
Gross leasable area (GLA) - CORRECT ANSWER -The total leasable area, including common
areas.
Net operating income - CORRECT ANSWER -The income remaining after developing effective
gross income and allowing for operating expenses and reserves for replacement.
Mortgage interest rate - CORRECT ANSWER -The lender's yield on a mortgage.
Effective tax rate - CORRECT ANSWER -(ETR) Is the percentage that annual real estate taxes
are in relation to total property value.
Overall capitalization rate - CORRECT ANSWER -the weighted average of the land
capitalization rate and the building capitalization rate.
Capitalization - CORRECT ANSWER -The process used to convert income into an estimate of
value.
Fixed-rate mortgage - CORRECT ANSWER -A loan secured by real property featuring an
interest rate that is constant for the term of the loan.
Anticipation - CORRECT ANSWER -The underlying principle providing the basis of the income
capitalization approach.
Answers (Verified Answers) 2026
The Economic Principle of Anticipation - CORRECT ANSWER -states that value is created by
the expectation of benefits to be derived in the future.
Chattel - CORRECT ANSWER -A mortgage on personal property.
Balloon payment - CORRECT ANSWER -A payment on the balance due of a note at the end of
the loan term that is in excess of the regular payment amounts. Usually found in a partially
amoritized mortgage.
Conventional mortgage - CORRECT ANSWER -A loan that is neither insured nor guaranteed by
the federal government.
Contract rent - CORRECT ANSWER -The actual rent paid in accordance with terms of a lease.
Minimum base rent - CORRECT ANSWER -The fixed portion of rent under the terms of a
percentage lease.
Excess rent - CORRECT ANSWER -The amount which contract rent exceeds market/economic
rent. Bad for tenant but good for landlord.....look at this in terms of the landlord!
Overage rent - CORRECT ANSWER -The variable portion of the rent under the terms of a
percentage lease. This is the rent over and above the minimum base rent. Typically based on a
percentage of sales or revenue.
Percentage lease - CORRECT ANSWER -A contract that requires a fixed minimum base rent
and a variable rent (overage rent) based on volume of business, sales, productivity, or use of the
property by the tenant.
, Gross lease - CORRECT ANSWER -A lease in which the landlord is required to pay all
operating expenses associated with the real estate.
Net lease - CORRECT ANSWER -A lease in which the tenant is required to pay all operating
expenses associated with the real estate.
Gross leasable area (GLA) - CORRECT ANSWER -The total leasable area, including common
areas.
Net operating income - CORRECT ANSWER -The income remaining after developing effective
gross income and allowing for operating expenses and reserves for replacement.
Mortgage interest rate - CORRECT ANSWER -The lender's yield on a mortgage.
Effective tax rate - CORRECT ANSWER -(ETR) Is the percentage that annual real estate taxes
are in relation to total property value.
Overall capitalization rate - CORRECT ANSWER -the weighted average of the land
capitalization rate and the building capitalization rate.
Capitalization - CORRECT ANSWER -The process used to convert income into an estimate of
value.
Fixed-rate mortgage - CORRECT ANSWER -A loan secured by real property featuring an
interest rate that is constant for the term of the loan.
Anticipation - CORRECT ANSWER -The underlying principle providing the basis of the income
capitalization approach.
