Champions Principles of Real Estate 2 (Texas) Study Guide Exam Containing 91 Questions wit, Exams of Real Estate Management

Download Champions Principles of Real Estate 2 (Texas) Study Guide Exam Containing 91 Questions wit and more Exams Real Estate Management in PDF only on Docsity!

Champions Principles of Real Estate 2

(Texas) Study Guide Exam Containing 91

Questions with Definitive Solutions

Newly Updated.

appraisal - Answer: value of a property maybe affected by social, economic, govt and environmental influences

Loan-to-Value Ratio (LTV) - Answer: The percentage of value or sales price that a lender is willing to finance. limited appraisal report - Answer: exterior only/drive by inspection. deemed as low risk loan highest and best use of property - Answer: legal use that gives the greatest return Principal of Contribution - Answer: cost does not equal value Residential Mortgage Loan Originators (RMLO) - Answer: Must be certified license holders and is mandated by the SAFE ACT (TX dept of savings and mortgage lending) Principle of Anticipation - Answer: purchase price is affected by the expectation of future appeal and benefits Principal of Substitution - Answer: value of a commodity is influenced by the cost of acquiring substitute or comparable item Principal of progression - Answer: value of properties around yours goes up; so does yours Principal of Regression - Answer: The Value of more expensive home placed in a neighborhood of less expensive homes will drop in value

Market Value - Answer: the most probable price a property should bring in a competitive and open market under fair conditions requisite to a fair sale. appraisal process - Answer: The value of a property may be affected by social, economic, governmental and environmental influences. An appraiser must always be aware of these influences and possible changes in them that could affect market value. Three approaches to value - Answer: (1) The Sales Comparison Approach (2) The Cost Approach, (3) The Income Approach. Sales Comparison Approach - Answer: A value for existing properties method for comparing similar properties to the subject property. this is the best indicator. Market Data Approach - Answer: aka: sales comparison approach Physical Deterioration - Answer: Loss of value of a building from its reproduction cost, resulting from wear and tear over time. Functional Obsolescence - Answer: loss of desirability of the style, layout or function of an element of property over time

External Obsolescence - Answer: Losses of property value caused by forces or conditions beyond the borders of the property. ie. zoning, highways promissary note - Answer: evidence of a lean. simply a note Foreclosure - Answer: secured property may be sold ti satisfy the unpaid promissory note. Primary Mortgage Market - Answer: the loan origination market where borrowers and lenders negotiate mortgage terms funding - Answer: transferring funds to a title co for disbursement when loan is approved. Servicing - Answer: The process of collecting loan monthly payments, keeping records and balances, collecting and paying taxes and insurance Equal Credit Opportunity Act - Answer: federal law passed in 1974. doesn't include: gender or immigration status. consumers are given equal chance to obtain credit.

• Answer: secondary market - Answer: exists for the purchase and sale of existing mortgages to investors

Liquidity - Answer: provides a steady supply of funds to keep making loans yield - Answer: represents money earned on an investment Fannie Mae - Answer: began in 1938. largest investors in home mortgages in the secondary market Freddy Mac - Answer: began in 1970. purchases mortgages in the secondary market pre approval - Answer: buyers set more realistic pricing goals, better understanding of ability to pay, avoid showing property buyers cant afford, seller reassured buyer has sufficient income and credit to close the deal (is the best) loan to value ratio - Answer: % of the lesser appraised value or sale that the lender will lend Private Mortgage Insurance (PMI) - Answer: Found in conventional loans. type of insurance required when the LTV exceeds 80%. insures the difference government rights In land - Answer: Police Power Eminent Domain Taxation Escheat

police power - Answer: right of government to regulate and control land. most common example is zoning buffer zone - Answer: area of land separating one land use from another (single family, apartments and retail) eminent domain - Answer: right of govt to take private land for public use. inverse condemnation - Answer: land owner sues govt to buy his land taxation - Answer: govt right to tax real estate ad valorem - Answer: according to value escheat - Answer: transferring real estate to the state cuz the owner died without a will and without heirs interstate land sales full disclosure act - Answer: passed by congress in 1968 to protect consumers from fraud in the sale or lease of land Comprehensive Environmental Response Compensation & liability ACT (CERLA) - Answer: .Clean up federal, state and native american. authority to clean up sites contaminated with hazardous substances, pollutants or contaminants

Constructive Notice - Answer: record the deed (sign it), then moving in. it gives notice of moving in appreciation - Answer: the passive increase of the value of a parcel due to market forces. almost all parcels of land have the potential to appreciate in a rising market personal advantages of owning real estate - Answer: hedge against inflation, higher than avg rate of return, leverage - use of borrowed money to make money investing in real-estate (personal advantages) - Answer: tax shelter, favorable capital gains, and tax shelter and deferred taxation disadvantages of real estate investment - Answer: lack of liquidity, risk, expense and need for management lease - Answer: doesn't have to be recorded. just sign main reason for incentive to investment in real estate - Answer: tax advantage real estate syndicate - Answer: 100% partnerships organized, limited & general partnership, or corporation raising funds for the purchase of real estate investment - under state and federal security laws

3 types of real estate investment syndications - Answer: limited, general partnership or corporation under jurisdiction of state and federal security laws real estate mortgage investment conduits (remic) - Answer: purchase pools of mortgages 2 Trec promulgated lease forms - Answer: seller/buyer residential temp lease. up to 90 days property manager should always have - Answer: errors and omissions insurance. property manager - Answer: main job is to protect and preserve the value of an investment property while generating income for the owner. they are bonded cash flow - Answer: much like a bank statement and it shows all cash received, expenses during a reporting period Statue of Frauds - Answer: state law requires law, real estate contracts and leases over a year to be in writing. Management Agreement - Answer: employment written agreement contract management fees - Answer: negotiated between landlord and manager. generally 5-10% range with fees. higher for smaller properites

deed - Answer: first sign then pass to the new owner conveys an interest in real estate from one party to another. doesn't indicate that they are legal owner - Answer: conveys an interest in real estate from one party to another. doesn't indicate that they are legal owner Sovereignty of the soil - Answer: The government is the original owner of all land Abstract of Title - Answer: complete history of title including deeds, easements, liens, foreclosures, wills, marriages, death... everything about the property that was recorded. Chain of titles - Answer: history or list of all owners back to the sovereignty of the soil you want this one. purchase title insurance either by grantor or grantee. insured against loss resulting from defects of the title - Answer: you want this one. purchase title insurance either by grantor or grantee. insured against loss resulting from defects of the title types of changes in the ownership of the property - Answer: changes in property may be: involuntary or voluntary Voluntary Alienation - Answer: transfer of title with the grantor's consent

the absence of force - Answer: proves the conveyance is voluntary Interstate Succession - Answer: dying without a valid will given by the grantor or grantee. something of value given in exchange for a conveyance. it can be money, personal property, ie $10 - Answer: given by the grantor or grantee. something of value given in exchange for a conveyance. it can be money, personal property, ie $ Covenant of Quiet Enjoyment - Answer: grantor promises the grantee interrupted use of the property Quitclaim Deed - Answer: A deed with no guarantees or warranties - it offers the buyer the least protection - can be used to correct or cure a defect or cloud on title Lispendens - Answer: pending lawsuits affecting the property final rule mandates the use of 2 disclosures that help the consumer in understanding the key features, costs and risk: 3 pages loan estimate & closing disclosure forms. - Answer: final rule mandates the use of 2 disclosures that help the consumer in understanding the key features, costs and risk: 3 pages loan estimate & closing disclosure forms. Closure Disclosure (CD) - Answer: is always compared to the loan estimate

RESPA (Real Estate Settlement Procedures Act) - Answer: implements Consumer Federal Protection Bureau interstate Land Sale Full disclosure Act - Answer: 1968 Passed by congress to protect consumers from fraud in the sale or lease of land Consideration - Answer: something of value. grantee gives to the grantor reservation in a deed - Answer: sell one part but retain a piece title commitment - Answer: statement of title at a moment of time general warrantee deed - Answer: most common, best type of deed to have. insures most protection Alienation - Answer: any changes to the ownership of real property 4 government rights in land - Answer: (PETE) police power, escheat, taxation, eminent domanin. These are the 4 rights of land. 4 lease hold estates - Answer: estate for years tenancy of sufferance tenancy of will periodic tenancy

passive - Answer: you've done nothing and the appreciation of the land value assists in the increase 2 Types of REITS (real estate investment trust) - Answer: Equity and Mortgage. small investors to invest in larger commercial properties. minimum 100 investors Investors - Answer: funds the secondary market. buying the market pools. REO (Real estate owned) - Answer: lender acquires property under foreclosure. Bank owns it now. Blanket Mortgage - Answer: covering more than one parcel of real estate

• Answer: