Texas Principles of Real Estate II Test Questions and
Answers Rated A+
Mixed Numbers - -A number containing x time
both a whole number and a fraction (examples:
1⅓; 9⅞)
Add-on interest - -loan amount x contracted
interest rate x number of payments
Improper Fractions - -a fraction with its
numerator equal to or greater than its
denominator Add-on interest APR - -APR = 2 x number
of payment periods in one year x total financing
charges ÷ (principal, or amount borrowed x
Commission Calculation - -Sales price X (number of scheduled payments +1)
rate of commission = total commission
Compound interest - -interest which is
Solving for the Commission Rate - - computed on the principal amount plus the
Commission Rate = Commission ÷ Price accrued interest.
Solving for the Property's Price - -Price = Compound Interest Formula - -Compound
Commission ÷ Commission Rate amount = Initial deposit (1 + Interest rate)n
Profit - -Profit (or Loss) = Selling price - Points - -a one-time service charge to the
Original cost borrower for making the loan
Profit Percentage - -Percentage of profit = Two types of points - -origination fee and
Profit ÷ Original cost discount points
Profit Margin - -Profit margin = Profit ÷ Loan-to-Value Ratio (LTV) - -expresses the
Selling price relationship between a property's purchase price
and its loan amount.
Interest - -the price paid for the use of
borrowed money Loan-to-Value formula - -LTV ratio = (Loan
amount ÷ Value)
3 types of interest calculations - -Simple
interest, add-on interest, and compound interest Area of a rectangle - -Area = length x width
Simple interest - -Interest = principal x rate Area of a square - -Area = side x side
,Texas Principles of Real Estate II Test Questions and
Answers Rated A+
3. Determine the property's highest and best use
4. Estimate the land value
Area of a triangle - -Area = ½ base x 5. Use ALL THREE approaches to estimate value
height 6. Reconcile the estimated values to determine
the final value estimate
7. Communicate the final value estimate
Perimeter - -a lot or other shape is the sum
of the length of all its sides.
Highest and Best Use - -Legally
permissible
Acre - -A measure of land equal to 43,560 Physically possible
square feet. Financially feasible
Maximally productive
Hectare - -is equal to 10,000 square
Describe the difference between specific and
meters or approximately 2.47 acres.
general data - -Specific data is information
and details about the subject property and the
comparables.
To convert acres to hectares - -divide the
General data is information about the property's
total acres by 2.47
location - its country, region, city, and
neighborhood.
Appraisal - -is an unbiased estimate of the
nature, quality, value or utility of an interest in or
Direct sales comparison - -sales of
aspect of identified real estate and related
comparable vacant parcels are analyzed and
personalty as of a certain date.
adjusted to indicate a value for the subject land
Specific data - -This is information and
Allocation - -a typical ratio of land value to
details about the subject property, as well as
total value is derived from comparable properties
data (used for comparison) about comparable
and applied to the subject
properties' costs, income and expenses, sales
and other relevant information
Extraction - -land value is estimated by
deducting the depreciated cost of improvements
General data - -This is information about
on a property from the total sale price of the
the property's location - its country, region, city,
property.
and, most importantly, its neighborhood
Subdivision development analysis - -costs
Steps in Appraisal Process - -1. Define
and profit are deducted from estimated gross
problem and scope of work
sale prices of subdivided and finished lots, and
2. Collect, record, and verify the required data
net sales proceeds are discounted to present
, Texas Principles of Real Estate II Test Questions and
Answers Rated A+
value the value of an identified interest in specific
property as of a given date
Land residual - -net operating income
attributable to the land is capitalized at market Types of Value - -Investment Value
rates to obtain land value Insured Value
Use Value
Ground rent capitalization - -ground rent of
subject is capitalized at market rates Investment value - -is the amount of the
return on an investment that an income-
producing property will produce
In the cost approach to value - -the
appraiser estimates a property's value by adding
the land value to the depreciated value of any Insured value - -is the face amount a
improvements to the property casualty or hazard insurance policy will pay in
case a property is deemed unusable
The income approach - -(sometimes called
the "income capitalization approach") is used by Use value - -(also known as value-in-use)
appraisers who need to value commercial and of a property is the value the property holds for
investment properties the owner. Several factors contribute to this value
In the sales comparison approach - -an Mortgage value - -is the value the lender
appraiser examines the price (or price per unit places on a property as collateral for the loan,
area) of similar properties recently sold or especially in the event of a foreclosure when the
currently being sold in the marketplace to come lender must recover the debt through the sale of
up with comparable value assessments the property
In the reconciliation step - -the appraiser Market value - -The amount you could
looks at each approach to value and all the data realistically sell an asset for today
used to determine
Explain the difference between market value and
Communicating the Appraisal - -1. Short- market price - -Market value is an opinion
or Long-Form Narrative Reports of the value of a property based on analyzing
2. Reports data collected about the property. The market
3. Letter or Oral Reports price of a property is the actual sales price and
can in some circumstances be greater or lesser
than market value
Valuation - -is the process of estimating
Answers Rated A+
Mixed Numbers - -A number containing x time
both a whole number and a fraction (examples:
1⅓; 9⅞)
Add-on interest - -loan amount x contracted
interest rate x number of payments
Improper Fractions - -a fraction with its
numerator equal to or greater than its
denominator Add-on interest APR - -APR = 2 x number
of payment periods in one year x total financing
charges ÷ (principal, or amount borrowed x
Commission Calculation - -Sales price X (number of scheduled payments +1)
rate of commission = total commission
Compound interest - -interest which is
Solving for the Commission Rate - - computed on the principal amount plus the
Commission Rate = Commission ÷ Price accrued interest.
Solving for the Property's Price - -Price = Compound Interest Formula - -Compound
Commission ÷ Commission Rate amount = Initial deposit (1 + Interest rate)n
Profit - -Profit (or Loss) = Selling price - Points - -a one-time service charge to the
Original cost borrower for making the loan
Profit Percentage - -Percentage of profit = Two types of points - -origination fee and
Profit ÷ Original cost discount points
Profit Margin - -Profit margin = Profit ÷ Loan-to-Value Ratio (LTV) - -expresses the
Selling price relationship between a property's purchase price
and its loan amount.
Interest - -the price paid for the use of
borrowed money Loan-to-Value formula - -LTV ratio = (Loan
amount ÷ Value)
3 types of interest calculations - -Simple
interest, add-on interest, and compound interest Area of a rectangle - -Area = length x width
Simple interest - -Interest = principal x rate Area of a square - -Area = side x side
,Texas Principles of Real Estate II Test Questions and
Answers Rated A+
3. Determine the property's highest and best use
4. Estimate the land value
Area of a triangle - -Area = ½ base x 5. Use ALL THREE approaches to estimate value
height 6. Reconcile the estimated values to determine
the final value estimate
7. Communicate the final value estimate
Perimeter - -a lot or other shape is the sum
of the length of all its sides.
Highest and Best Use - -Legally
permissible
Acre - -A measure of land equal to 43,560 Physically possible
square feet. Financially feasible
Maximally productive
Hectare - -is equal to 10,000 square
Describe the difference between specific and
meters or approximately 2.47 acres.
general data - -Specific data is information
and details about the subject property and the
comparables.
To convert acres to hectares - -divide the
General data is information about the property's
total acres by 2.47
location - its country, region, city, and
neighborhood.
Appraisal - -is an unbiased estimate of the
nature, quality, value or utility of an interest in or
Direct sales comparison - -sales of
aspect of identified real estate and related
comparable vacant parcels are analyzed and
personalty as of a certain date.
adjusted to indicate a value for the subject land
Specific data - -This is information and
Allocation - -a typical ratio of land value to
details about the subject property, as well as
total value is derived from comparable properties
data (used for comparison) about comparable
and applied to the subject
properties' costs, income and expenses, sales
and other relevant information
Extraction - -land value is estimated by
deducting the depreciated cost of improvements
General data - -This is information about
on a property from the total sale price of the
the property's location - its country, region, city,
property.
and, most importantly, its neighborhood
Subdivision development analysis - -costs
Steps in Appraisal Process - -1. Define
and profit are deducted from estimated gross
problem and scope of work
sale prices of subdivided and finished lots, and
2. Collect, record, and verify the required data
net sales proceeds are discounted to present
, Texas Principles of Real Estate II Test Questions and
Answers Rated A+
value the value of an identified interest in specific
property as of a given date
Land residual - -net operating income
attributable to the land is capitalized at market Types of Value - -Investment Value
rates to obtain land value Insured Value
Use Value
Ground rent capitalization - -ground rent of
subject is capitalized at market rates Investment value - -is the amount of the
return on an investment that an income-
producing property will produce
In the cost approach to value - -the
appraiser estimates a property's value by adding
the land value to the depreciated value of any Insured value - -is the face amount a
improvements to the property casualty or hazard insurance policy will pay in
case a property is deemed unusable
The income approach - -(sometimes called
the "income capitalization approach") is used by Use value - -(also known as value-in-use)
appraisers who need to value commercial and of a property is the value the property holds for
investment properties the owner. Several factors contribute to this value
In the sales comparison approach - -an Mortgage value - -is the value the lender
appraiser examines the price (or price per unit places on a property as collateral for the loan,
area) of similar properties recently sold or especially in the event of a foreclosure when the
currently being sold in the marketplace to come lender must recover the debt through the sale of
up with comparable value assessments the property
In the reconciliation step - -the appraiser Market value - -The amount you could
looks at each approach to value and all the data realistically sell an asset for today
used to determine
Explain the difference between market value and
Communicating the Appraisal - -1. Short- market price - -Market value is an opinion
or Long-Form Narrative Reports of the value of a property based on analyzing
2. Reports data collected about the property. The market
3. Letter or Oral Reports price of a property is the actual sales price and
can in some circumstances be greater or lesser
than market value
Valuation - -is the process of estimating
