Principles of Real Estate 2 Champion Questions and Correct Solutions 2024/2025

Principles of Real Estate 2 Champion Questions and Correct Solutions 2024 An opinion of value - Answer -The appraised value of a property is: assessed value - Answer -the amount that your local government determines your property to be worth for tax purposes subject property - Answer -The property that is being appraised. ad valorem - Answer -according to value Principle of Conformity - Answer -Maximum value is found when there is a reasonable degree of similarity or homogeneity USPAP (Uniform Standards of Professional Appraisal Practice) - Answer -Standards that have been established by the Appraisal Standards Board of the Appraisal Foundation. appraisal - Answer -An appraiser's opinion of value. URAR (Uniform Residential Appraisal Report) - Answer -Fannie Mae Form 1004/Freddie Mac 70 Principle of Progression - Answer -The value of a subject property is increased by the value of surrounding properties Market Value - Answer -The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale. value - Answer -Does not always equal price. Scarcity - Answer -if a type of property in a market area is too abundant, it has reduced value. Highest and Best Use - Answer -The legal use of property giving the greatest return in money or amenities Principal of Substitution - Answer -the value of a commodity is influenced by the cost of acquiring a substitute or comparable item. Field Review - Answer -Many lenders, especially when dealing with high-LTV loans, will order this type of appraisal Principle of Anticipation - Answer -States that the purchase price is affected by the expectation of future appeal and benefitsFunctional Obsolescence - Answer -The loss in desirability of the style, layout, or function of an element of a property over time. Sales Comparison - Answer -The approach that estimates value by comparing the subject property with recently sold similar properties External Obsolescence - Answer -loss of value due to factors beyond the property boundaries Forclosure - Answer -when a bank takes back a property and auctions it off to recover the unpaid loan amount loan pools - Answer -investors assign large blocks of loans as collateral to back mortgage backed securities. Primary Mortgage Market - Answer -the loan origination market where borrowers and lenders negotiate mortgage terms Redlining - Answer -a practice in which banks refuse to make loans to people living in certain geographic locations Underwriting - Answer -the process of making a lending decision. Origination - Answer -The process of making or initiating a new mortgage loan. PMI (Private Mortgage Insurance) - Answer -Insurance that protects the lender in case the borrower defaults and is unable to repay the loan. Generally a borrower must pay PMI if their equity is less than 20% of the home's value. Back Ratio - Answer -Sum of regular debt plus house payment USDA - Answer -Government rural loan. VLB - Answer -Housing Assistance Program Front Ratio - Answer -House payment as % of income LTV - Answer -% of value/sales price lender will lend VA loan - Answer -Government guaranteed loan buffer zone - Answer -An area of land separating one land use from another incompatible use such as residential from commercial Downzoning - Answer -A change in zoning of a property to a lower value. ad valorem tax - Answer -a tax levied on the assessed value of real and personal property Police power - Answer -Right of the government to regulate and control the way land is use