Assessment Flashcards
(19 cards)
The most basic way to estimate building construction costs
Square foot method
When appraising income-producing property, the value is estimated by using the ___ and the ____ or ____
Annual net operating income (NOI) and the current market rate of return or capitalization rate
If the savings and loan gives you a 90% loan on a house valued at $88,500, how much additional cash must you produce as a down payment if you already paid $4,500 in earnest money?
$4350
100% value - 90% LTV = 10% down payment
88,500 x 0.10 (10%) = 8850 down payment
8850 - 4500 (earnest money) = 4350 due at closing
A man earns $20,000 per year and can qualify for a monthly PITI payment equal to 25% of his monthly salary. If the annual tax and insurance is $678.24, what loan amount will he qualify for if the monthly PI payment factor is $10.29 per $1,000 of loan amount?
$35,000
20,000 (salary) divided by 12 months = 1,666.67 monthly salary
1666.67 x 0.25 (25%) = 416.67 monthly PITI payment
$678.24 annual taxes / insurance divided by 12 months = 56.52
416.67 (monthly PITI) - 56.52 (monthly TI) = $360.15 monthly PI payment
360.15 (monthly PI) divided by 10.29 = 35
35 x 1000 = 35000 loan
The buyer has agreed to pay $175,000 in sales price, 2.5 loan discount points, and a 1% origination fee. If the buyer receives a 90% loan-to-value ratio, how much will the buyer owe at closing for points and the origination fee?
$5,512.50
2.5 points (loan discount) + 1 point origination fee = 3.5 points
175,000 (loan) x 0.90 (90%) = 157,500 sales price
157,500 (loan) x 0.035 (3.5%) = 5,512.50 for points and origination fee
A woman earns an annual income of 60,000 and her husband earns 2400 per month. How much can the couple pay monthly for their total housing payment if the lender uses a 28% qualifying ratio?
$2,072
60,000 divided by 12 months = 5000 (wifes monthly salary)
5000 + 2400 (husbands monthly salary) = 7,400 total monthly salary
7400 x 0.28 (28%) = $2,072 monthly payment
A buyer is granted a 90% loan of $340,500. How much will her monthly principal and interest payment be, using a loan payment factor of $7.16 per $1,000 of loan?
$2,437.98
340,500 (loan) divided by $1,000 = 340.50
340.50 x 7.16 = 2437.98 monthly principal & interest
A 100 ft by 125 ft lot sold for $125,000. What was the price per front foot?
$1250
125,000 (sales price) divided by 100 front ft = 1250 per front foot
Your monthly rent is $525. What is your rent as a percentage of an annual income of $21,000?
30%
525 x 12 = 6,300 annual
6300 divided by 21,000 (anual income) = 0.30 (30%)
An office building produces $68,580 annual net operating income. What price would you pay for this property to show a minimum return of 12% on your investment?
$571,500
68,580 (annual net operating income) divided by 0..12 (12%) = 571,500 price
What percentage of profit would you make if you had $10,500 for a lot, built a home on the lot that cost $93,000 and then sold the lot and house together for $134,550?
30%
10500 (cost of lot) + 93000 (cost of home) = 103500 (total cost)
134,550 (sales price) - 103,500 (total cost) = 31,050 (profit
31,050 divided by 103,500 = 0.3 (30%)
Find the number of square feet in a lot with a frontage of 75 feet 6 in, and a depth of 140 ft 9 in
10,626.63 sq ft
6 inches = 0.5 ft
0.5+75 ft = 75.5 ft (frontage)
9 inches = 0.75 ft
0.75+130 = 140.75 (depth)
75.5 x 140.75 = 10,626.63 sq ft
Calculate 8 months interest on a 5,000 interest-only loan at 9.5%
$316.67
5,000 (loan) x 0.095 (9.5%) = 475 annual interest
475 divided by 12 months = 39.58 monthly
39.58 x 8 months = $316.67 interest
You attempt to appraise a 28 unit apartment house, employing the income approach. Each unit rents for $775 per month, an amount that seems consistent with similar rental units in the vicinity. For the past 5 years, the annual expenses of operation have averaged $82,460. The complex has maintained a consistent vacancy rate of 5%. A potential investor is only interested if the return is 9.5%. What value would you arrive at using these variables?
$1,736,000
775 (monthly rent) x 28 units = 21,700 (monthly rent for all units)
21,700 x 12 months = 260,400 annual scheduled gross income
260,400 x 0.05 (5% vacancy rate) = 13,020
260,400 - 13,020 = 247,380 (annual effective gross income)
247,380 - 82,460 (annual expenses) = 164,920 (annual net operating income)
164,920 divided by 0.095 (9.5%) = 1,736,000 value
2 sponsoring brokers evenly split the 6% commission on a $73,000 home. The selling broker was paid 70% of his sponsoring broker’s share. The listing broker was paid 30% of her sponsoring broker’s share. How much was the split between brokers?
$2,190
73,000 x 0.06 (6%) = 4380
4380 divided by 2 = 2190
2 sponsoring brokers evenly split the 6% commission on a $73,000 home. The selling broker was paid 70% of his sponsoring broker’s share. The listing broker was paid 30% of her sponsoring broker’s share. How much did the listing broker receive?
$657
73,000 x 0.06 (6%) = 4380
4380 divided by 2 = 2190
2190 x 0.3 (30%) = 657
2 sponsoring brokers evenly split the 6% commission on a $73,000 home. The selling broker was paid 70% of his sponsoring broker’s share. The listing broker was paid 30% of her sponsoring broker’s share. How much did the selling broker receive?
$1533
73,000 x 0.06 (6%) = 4380
4380 divided by 2 = 2190
2190 x 0.70 (70%) = 1533
What would you pay for a building producing $11,250 annual net income and showing a minimum return rate of 9%?
$125,000
11,250 divided by 0.09 (9%) = 125,000
A buyer pays $2500 each for 4 parcels of land. He subdivides them into 6 parcels and sells them for $1950 each. What was the buyer’s percentage of profit?
17%
2500 x 4 parcels = 10,000 total cost
1950 x 6 parcels = 11700 sales price
11,700 -sales price 10,000 cost = 1,700 profit
1,700 profit divided by 10,000 cost = 0.17 (17%)
