IAAO 102 PROPERTY VALUATION TECHNIQUES COST APPROACH SALES COMPARISON AND INCOME METHOD QUESTION BANK

IAAO 102 PROPERTY VALUATION
TECHNIQUES COST APPROACH SALES
COMPARISON AND INCOME METHOD
QUESTION BANK

●● Substitution
Answer: the prices, rents, and rates of return of property tend to be set
by the current prices, rents and rates of return for equally desire able
substitute properties.


●● Contribution
Answer: the value of a component of real estate can be measured by the
amount it contributes to net operating income because net operating
income can be capitalized into value.


●● Market Value
Answer: means the most probable price which a property should bring in
a competitive and open market under all conditions.


●● 5 Analysis Questions for Investors -
Answer: 1. How much it cost?
2. How much will I get back?
3. When will I get it back?

, 4. What are the risk?
5. What are some comps ROI compared to my interested property?


●● Leverage
Answer: borrowing of funds in hopes of earning a greater return than the
cost of the borrowed funds. This amount can be be negative, positive, or
neutral.


●● Mortgage
Answer: most common type of financing for real estate.


●● Junior Mortgage
Answer: typical a second mortgage


●● Chattel Mortgage
Answer: a mortgage only on personal property.


●● Amortized Mortgage
Answer: Fixed rate mortgage permanent loan in which the sum of the
principal and interest payments remains fixed throughout the term of the
loan.


●● Four factors to capture overall yield rate (Yô) -