IAAO 102 Income Approach 2026 EXAM Questions And
Correct Answers (Verified Answers)
One of three approaches to value in which the appraiser derived a value indication by converting
anticipated benefits through ownership of income producing property 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 they consider? - CORRECT ANSWER -How much will it cost?
How much will I get back?
When will is get it back?
What are the risks?
What is the return of real estate investment compared to other investments with similar risks?
The economic principle of _____________ states that value is created by 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 profits. However, competition among sellers may lead to
an _____________, which reduces prices and profits. Competition among buyers may lead to
____________, which increases prices and profits to sellers. - CORRECT ANSWER -
oversupply, shortages
The _______________ rate reflects the return of the investment in the wasting asset. -
CORRECT ANSWER -Recapture
, List the nine factors influencing investor decisions. - CORRECT ANSWER -safety of
investment, size, holding period, appreciation, leverage, liquidity, use of 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
four most common methods of financing real estate are: - CORRECT ANSWER -Mortgage,
cash, trust deed, contract for deed (land contract)
A mortgage on personal property is termed a ______________ mortgage - CORRECT ANSWER
-Chattel
A ___________ mortgage is also called a second mortgage - CORRECT ANSWER -Junior
four types of mortgages classified according to repayment provisions - CORRECT ANSWER -
Amortized, straight, reverse, partially amortized
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 is called a ______________ payment - CORRECT ANSWER -Balloon
A ______________ mortgage covers real estate as well as personal property included with the
real estate - CORRECT ANSWER -Package
Four variables in real estate financing that affect the mortgage payment are: - CORRECT
ANSWER -Amount borrowed, term, interest paid, frequency of payment
rate (or discount rate) reflects the return on the investment - CORRECT ANSWER -overall yield
Correct Answers (Verified Answers)
One of three approaches to value in which the appraiser derived a value indication by converting
anticipated benefits through ownership of income producing property 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 they consider? - CORRECT ANSWER -How much will it cost?
How much will I get back?
When will is get it back?
What are the risks?
What is the return of real estate investment compared to other investments with similar risks?
The economic principle of _____________ states that value is created by 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 profits. However, competition among sellers may lead to
an _____________, which reduces prices and profits. Competition among buyers may lead to
____________, which increases prices and profits to sellers. - CORRECT ANSWER -
oversupply, shortages
The _______________ rate reflects the return of the investment in the wasting asset. -
CORRECT ANSWER -Recapture
, List the nine factors influencing investor decisions. - CORRECT ANSWER -safety of
investment, size, holding period, appreciation, leverage, liquidity, use of 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
four most common methods of financing real estate are: - CORRECT ANSWER -Mortgage,
cash, trust deed, contract for deed (land contract)
A mortgage on personal property is termed a ______________ mortgage - CORRECT ANSWER
-Chattel
A ___________ mortgage is also called a second mortgage - CORRECT ANSWER -Junior
four types of mortgages classified according to repayment provisions - CORRECT ANSWER -
Amortized, straight, reverse, partially amortized
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 is called a ______________ payment - CORRECT ANSWER -Balloon
A ______________ mortgage covers real estate as well as personal property included with the
real estate - CORRECT ANSWER -Package
Four variables in real estate financing that affect the mortgage payment are: - CORRECT
ANSWER -Amount borrowed, term, interest paid, frequency of payment
rate (or discount rate) reflects the return on the investment - CORRECT ANSWER -overall yield
