FINC 3250 Final Exam Questions and Answers 2023

15. the owner can sell the property and not owe any commission. 16. Net Listing: - owner states how much he wants to receive for the property and agrees to pay the broker any amount above that figure as commission. 17. Advance fee listing: - broker is paid an hourly rate for amount of time he/she works on the listing 18. broker gets an advance deposit from seller to cover its state hourly fee plus out of pocket expenses. 19. uses deposit to pay himself 20. Advance Cost Listing: - similar to advance fee listing, except, only out of pocket expenses are charged against the up front deposit. - used in conjunction with a sales commission - use that deposit to pay any costs. 21. Appraisal: an independently and impartially prepared written statement expressing an opinion of a defined value of an adequately described property as of a specific date 22. Appraisal Purpose: used as the basis for loan decisions and insurance reimbursements 23. Income Approach: the appraiser forecasts net operating income and then capitalizes that figure to arrive at an estimate of value 24. Cost Approach: - obtain a value of all the parts of the property and then add those together for its total value 25. estimate the cost of the improvements, add in the value of the land, subtract out any depreciation that has accrued, and you've got an estimate of the value. 16. cales comparison approach: - would like to use this one more than the other - locates 3-5 properties that are very similar to the subject property and then makes adjustments to these properties, called comparables, until they are exactly like the subject property 26. the average value of the comparables should estimate the value of the subject property 27. 17. Property Manager: a person who works for a property owner in order to manage, operate, and handle most aspects of a property that is rented to someone else 18. Why have a property manager?: - investor owns a large # of properties or if they own a property type with which they are not very familiar with, the property manager finds tenants, negotiates leases, provides assistance 28. Management Agreement: - contract between the owner and the property manager that outlines the duties of the property manager and how the property manager gets paid 29. Duties of the Property Manager: -Administration 30. Marketing/Advertising 31. -Tenant Selection 32. -Lease Negotiation 33. -Move-in/ Move-out inspections 34. -property maintenance 35. -rent collection 36. -security deposits 37. administration: pay bills, generate reports, keep records 38. Property Maintenance: - regular maintenance (clogged toilets, defaced walls) - extensive maintenance (renovations, building improvements, parking lot improvements, landscaping) 39. Property Damage: Damage to or destruction of property, including loss of use of the property 40. Public Liability: anything that I may do that damages someone else's property 25. HO-1: - basic form a. typically insures against fire or lightning, losses sustained while removing property from an endangered premises, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism, theft, and breakage of glass that is part of the building. The last coverage is excluded in renter's policies. 41. 26. HO-2: - broad form a. everything in HO-1 + falling objects, weight of ice, snow, or sleet, collapse of building 42. 27. HO-5: - comprehensive form a. covers everything unless it is specifically excluded in the policy 43. HO-5 Example: - covers everything except for falling objects 44. HO-4: - Tenant's Form (Renter's Insurance) a. Still considered Homeowner's Insurance 45. 30. HO-8: - For older homes a. provides coverage for actual cash value rather than replacement value 46. 31. Exclusions: - none of the 7 types of homeowner's policies provide coverage for flood, landslide, mud flow, tidal wave, earthquake, underground water, settling, cracking, war, or nuclear accidents a. must purchase these coverages separately 47. total loss: - maximum amount that the insurer will pay in the event of the total destruction 48. Endorsement: - riders can be added to provide coverage for almost anything excluded by the main policy - jewels, furs, art, coins, stamps 49. Flood Insurance: - if a property is located in a flood zone, that property must have flood insurance coverage when you purchase it 50. old-for-old: - actual cash value coverage a. the payout is the replacement cost - any accumulated depreciation on the old property