Appraisal - Economic Principle

Question 1

Change

Answer 1

The only constant variable in real estate

Basis of Market Condition Analyst

Question 2

Land - Highest & Best Use

Answer 2

the four CELL in Harmony

Question 3

Production - 4 agents

Answer 3

C - Capital
E - Entrepreneurship
L - Land
L - Labor

Question 4

Principle of Substitution

Answer 4

When markets are in BALANCE, market rent is established by what a typical and prudent tenant would pay for an equally desirable substitute

Question 5

Principle of change

Answer 5

closely related to broad forces of value (P-E-G-S)

Question 6

Progression

Answer 6

• “worst” house of the “best area”
• Value of home helped up by other home in the area
• An increasing return result

Question 7

Regression

Answer 7

“Best”house in a “worst” area

Question 8

Principles - Balance

Answer 8

supply & demand

the 4 agents of production are in optimal balance

Question 9

Principles - Change

Answer 9

constant physical & economic change that influence value

Question 10

Principles -Conformity

Answer 10

property is in harmony with surrounding properties

progress and regression

Question 11

Principles -Contribution

Answer 11

an item is only worth what is contributes in value to the whole

Question 12

Principles - Substitution

Answer 12

Knowledge buyer will pay no more for one item than for a comparatively equivalent substitute

Question 13

Principles - Plottage

Answer 13

Increased value by combining smaller lots in to one large lot for greater money

Question 14

Principles - Assemblage

Answer 14

Combining smaller lots in to one large lot for greater money

Question 15

Loan -Acceleration Clause

Answer 15

if borrower defaults, then entire amount due

Question 16

Loan - Alienation Clause

Answer 16

full mortgage balance due upon the transfer of title (prevent buyer from assuming loan)

Question 17

Loan - Assignment

Answer 17

Changes who owes the debt of mortgage, without changing loan terms

Question 18

Mortgage - ARM

Answer 18

IR is periodically adjusted

Question 19

Mortgage - Graduated PMT

Answer 19

PMT starts low and rises over time

Question 20

Mortgage - Open-End

Answer 20

Mortgagor can re-borrow against principal that has been paid so far

Question 21

Mortgage - Package

Answer 21

includes home, furniture & other personal property

Question 22

Mortgage - Purchase Money

Answer 22

seller/owner financing

Question 23

Mortgage - Reverse Annuity

Answer 23

owner borrows against equity in home & receives monthly tax-free pmt from the lender

Question 24

Principle of Contribution - Decreasing Return

Answer 24

cost > return = forego the conversion or improvement

Question 25

Principle of Competition

Answer 25

Comparing the properties against each other by observing the principle of competition.

Question 26

Mortgage - Blanket

Answer 26

covers more than 1 property, with partial releases issued for the individual parcels as they are sold or paid-off

Question 27

Surplus productivity

Answer 27

Net Income to the land that remains after cost of AGENTS OF PRODUCTION have been satisfied

Question 28

Surplus Productivity | Analysis

Answer 28

Used for highest & best use determies an alternative land use for the highest return

Question 29

Demographic

Answer 29

Income Age Owner vs Tenant Size of household

Question 30

Market Segmentation Analysis

Answer 30

breaking the market down to sub market | i.e. Condo users into 2 apt and 3 apt units