IAAO102 - Review Questions And Correct
Answers (Verified Answers) 2026
One of the three approaches to value in which the appraiser derives a value indication by
converting anticipated benefits through ownership of income-producing properties is the -
CORRECT ANSWER -income approach
Real estate competes with other investments for the investor's dollar. As an investor analyzes
various opportunities what will he or she consider? - CORRECT ANSWER -How much will it
cost?
How much will I get back?
When will I get it back?
What are the risks?
What is the return of a real estate investment compared to other investments of similar risks?
The economic principle of _____________ states that value is created by the expectation of
benefits to be derived in the future. - CORRECT ANSWER -anticipation
The economic principle of _______________states that a property's maximum value tends to be
set by the lowest cost or price at which another property of equivalent utility can be acquired. -
CORRECT ANSWER -substitution
Competition is created by the potential for profits. However, competition among sellers may lead
to a/an _______________, which reduces prices and profits. Competition among buyers may
lead to a ____________, which increases prices and profits to sellers. - CORRECT ANSWER -
oversupply
shortage
, The ________________ rate reflects the return of the investment in the wasting asset. -
CORRECT ANSWER -recapture
The nine factors influencing the behavior of investors. - CORRECT ANSWER -Safety of the
investment
Size of the investment
Time
Appreciation
Leverage
Liquidity of the investment
Use as collateral
Management
Income tax advantages
______________________ leverage is achieved when funds are invested in property, which has
a higher rate of return than the cost of borrowed funds. - CORRECT ANSWER -Positive
The four most common methods of financing real estate are: - CORRECT ANSWER -Mortgage
Trust deed
Cash
Land contract (contract for sale)
A mortgage on personal property is termed a ___________ mortgage. - CORRECT ANSWER -
chattel
A ___________________ is also called a second mortgage. - CORRECT ANSWER -junior
mortgage
Answers (Verified Answers) 2026
One of the three approaches to value in which the appraiser derives a value indication by
converting anticipated benefits through ownership of income-producing properties is the -
CORRECT ANSWER -income approach
Real estate competes with other investments for the investor's dollar. As an investor analyzes
various opportunities what will he or she consider? - CORRECT ANSWER -How much will it
cost?
How much will I get back?
When will I get it back?
What are the risks?
What is the return of a real estate investment compared to other investments of similar risks?
The economic principle of _____________ states that value is created by the expectation of
benefits to be derived in the future. - CORRECT ANSWER -anticipation
The economic principle of _______________states that a property's maximum value tends to be
set by the lowest cost or price at which another property of equivalent utility can be acquired. -
CORRECT ANSWER -substitution
Competition is created by the potential for profits. However, competition among sellers may lead
to a/an _______________, which reduces prices and profits. Competition among buyers may
lead to a ____________, which increases prices and profits to sellers. - CORRECT ANSWER -
oversupply
shortage
, The ________________ rate reflects the return of the investment in the wasting asset. -
CORRECT ANSWER -recapture
The nine factors influencing the behavior of investors. - CORRECT ANSWER -Safety of the
investment
Size of the investment
Time
Appreciation
Leverage
Liquidity of the investment
Use as collateral
Management
Income tax advantages
______________________ leverage is achieved when funds are invested in property, which has
a higher rate of return than the cost of borrowed funds. - CORRECT ANSWER -Positive
The four most common methods of financing real estate are: - CORRECT ANSWER -Mortgage
Trust deed
Cash
Land contract (contract for sale)
A mortgage on personal property is termed a ___________ mortgage. - CORRECT ANSWER -
chattel
A ___________________ is also called a second mortgage. - CORRECT ANSWER -junior
mortgage
