Hegger exam 1

A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a:

user market

The market in which required rates of return on available investment opportunities are determined is referred to as the:

Capital Market

The actions of local, state, and federal governments affect real estate values

-Primarily through user markets
-Primarily through capital markets
-Primarily through their taxation policies
*Through All Listed

What portion of households owns their house?

Approximately two-thirds

Of the following asset categories, which class has the greatest aggregate market value?

Stocks and equities

Storm water drainage systems are best described as:

improvements to the land

What is the single largest asset category in the portfolio of a typical U.S. household?

Housing

Real estate markets differ from other asset classes by having all of the following characteristics except:

Homogeneous product

Which of the following is not important to the location of commercial properties?

Access to schools

Which of the following attributes of a home are the most difficult to observe and value?

Location attributes

Which of the following is not a form of property right?

License

Which of these easements is most likely to be an easement in gross?

Power line easement

Rules used by courts to determine whether something is a fixture include all except:

Law of capture

Which of the following is a titled estate?

Fee simple absolute
Legal life estate
Conventional life estate
Fee simple conditional

• All Listed

Which of these forms of co-ownership could best be described as "normal ownership," except that multiple owners share identically in one bundle of rights?

Tenancy in common

Which of these marriage-related forms of co-ownership gives each spouse a one-half interest in any property that is "fruits of the marriage"?

Community property

Which of these liens has the highest priority?

Property tax lien

restrictive covenants for a subdivision usually can be enforced by:

only subdivision residents and Local government

Timeshare programs can involve which of the following claims or interests?

License
Condominium
Leasehold interest
Fee simple ownership

• All are possible

Every condominium buyer needs to know the details of which document(s):

Only Condominium declaration and Bylaws

Which of these is not a requirement of a valid deed?

Competent grantee

The interest being conveyed by a deed is specified in the:

Habendum clause

The "highest quality" form of deed is the:

General warrantee deed

A deed used mainly to clear up possible "clouds" or encumbrances to title (conflicting interests) is the:

Quitclaim deed

If a landowner sells the front part of a parcel of land, retaining the back portion as a "land-locked" parcel, and if there is an existing informal path across the front parcel to the back one, the seller is likely to retain the path as a (an):

Implied easement by prior use

If a neighboring land owner drives across a person's land openly and consistently for a number of years the neighbor may acquire an easement by:

Prescription

If documents conveying interests in real property are properly recorded in the public records, then they are binding or enforceable on all persons, regardless of whether those persons are aware of the documents, by the:

Doctrine of constructive notice

Which of these is a widely used form of "evidence of title":

Title insurance commitment

The most common form of legal description for urban residential property is the:

Plat lot and block number

Factors that make it uniquely difficult to establish clear title in real estate as compared to most personal property items include:

Length of the ownership history in real estate

The "gravity" that draws economic activity into clusters is:

Demand for access or proximity

Spatial or distance relationships that are important to a land use are called its:

Linkages

Cities have tended to grow where:

Transportation modes intersect or change

The economic base multiplier of a city tends to be greater if the city is:

Larger

The best example of a base economic activity would be a:

Regional sales office

Important supply factors affecting a city's growth or growth potential include all except the:

Unemployment rate

Which of these are true about agglomeration economies?

-They result from demand created by multiple industries
-They tend to reduce risks in real estate
-They occur in larger cities
-They create a readily available supply of highly specialized goods and labor

*All Items Listed

Which of these influences will decrease the level of a bid-rent curve at the center of the city?

Faster travel time

In a system of bid-rent curves, assuming that households are identical except for the feature noted, which of these prospective bidders will bid successfully for the sites nearest to the CBD?

Households with the greatest number of commuting workers

A large university is an example of what kind of economic phenomenon?

Industry economies of scale

The final price for each comparable property reached after all adjustments have been made is termed the:

Final adjusted sale price

Which of the following is not included in accrued depreciation when applying the cost approach to valuation?

Tax depreciation

In the sales comparison approach, the value obtained after reconciliation of the final adjusted sales prices from the comparable sales is termed the:

Indicated opinion of value

A new house in good condition that has a poor floor plan would suffer from which type of accrued depreciation?

Incurable functional obsolescence

To reflect a change in market conditions between the date on which a comparable property sold and the date of appraisal of a subject property, an adjustment must be made for which of the following?

Market conditions

Under the Cost Approach to appraisal, the estimated expenditure required to construct a building with equal utility as the one being appraised is termed the .

Replacement cost

Which of the following expenses is not an operating expense?

Mortgage payment

An overall capitalization rate (Ro) is divided into which type of income or cash flow to obtain an indicated market value?

Net operating income (NOI)

Which of the following types of properties probably would not be appropriate for income capitalization?

Public school

Estimated capital expenditures

are subtracted from NOI in a below-line treatment

An appraiser estimates that a property will produce NOI of $25,000 in perpetuity, yo is 11 percent, and the constant annual growth rate in NOI is 2.0 percent. What is the estimated property value?

$277,778

If a comparable property sells for $1,200,000 and the effective gross income of the property is $12,000 per month, the effective gross income multiplier (EGIM) is

8.33

Which of the following statements regarding capitalization rates on commercial real estate investments is the most correct?

Cap rates vary positively with the perceived risk of the investment

The methodology of appraisal differs from that of investment analysis primarily regarding:

Point of view

You have just completed the appraisal of an office building and have concluded that the market value of the property is $2,500,000. You expect Potential Gross Income (PGI) in the first year of operations to be $450,000; vacancy and collection losses to be 9 percent of PGI; operating expenses to be 38 percent of Effective Gross Income (EGI), and capital expenditures to be 4 percent of EGI.

What is the implied going-in capitalization rate?

9.5%

You find two properties that have sold twice within the last two years. Property A sold 22 months ago for $98,500; it sold last week for $108,000. Property B sold 20 months ago for $105,000; it sold two weeks ago for $113,500. Assuming no compounding, what is the average monthly rate of change in sale prices?

0.42%

A comparable property sold 10 months ago for $98,500. If the appropriate adjustment for market conditions is 0.30% per month (with compounding), what would be the adjusted price of the comparable property?

$101,495

A comparable property sold six months ago for $150,000. The adjustments for the various elements of comparison have been calculated as follows:

Location: -5 percent

Market conditions: +8 percent

Physical characteristics: +$12,500

Financing terms: -$2,600

Conditions of sale: 0

Property rights conveyed: 0

Use: None

Nonrealty items: -$3,000

Making the adjustments in the order suggested in Exhibit 7-6, what is the comparable's final adjusted sale price?

$160,732

The element of an adjustable interest rate that is the "moving part" is the:

Index

Which of these aspects of a mortgage loan will be addressed in the note rather than in the mortgage?

Prepayment penalty

A lender may reserve the right to require prepayment of a loan at any time they see fit through a(n):

Demand clause

When a buyer of a property with an existing mortgage loan acquires the property without signing the note for the existing loan, the buyer is acquiring the property:

Subject to the mortgage

Which of these points in a mortgage loan would be addressed in the mortgage (possibly in the note as well)?

Escrows

To finance property where either the borrower, the property, or both fail to qualify for standard mortgage financing, a common nonmortgage solution is through the:

Contract for deed

Ways that a lender may respond to a defaulted loan without resorting to foreclosure include all of the following except:

Accelerate the debt

If the lender in a standard first mortgage wishes to foreclose cost effectively, it is crucial to have which clause in the mortgage?

Acceleration Clause

A common risk that frequently interferes with a lender's efforts to work out a defaulted loan through either nonfore-closure means or foreclosure is:

Bankruptcy

The characteristics of a borrower that can be considered by a lender in a mortgage loan application are limited by the:

Equal Credit Opportunity Act

The Real Estate Settlement Procedures Act does which of these:

-Requires the use of a standard settlement statement for a mortgage loan closing
-Requires that the borrower be able to inspect the closing statement a day before the actual closing
-Prohibits kickbacks between vendors of closing-related services and lenders
-Requires that a borrower receive a good-faith estimate of closing costs shortly after a loan application
Correct!
*All of the above

Foreclosure tends to be quickest in states that:

Have Power of Sale

Mortgage banking companies:

Collect monthly payments and forward them to the mortgage investor.

In recent years, the mortgage banking industry has experienced:

Rapid consolidation

Currently, which type of financial institution in the primary mortgage market provides the most funds for the residential (owner-occupied) housing market?

Commercial banks

For conforming conventional home loans, the standard payment ratios for underwriting are:

28 percent and 36 percent

The numerator of the standard housing expense (front-end) ratio in home loan underwriting includes:

Monthly principal, interest, property taxes, and hazard insurance

The most profitable activity of residential mortgage bankers is typically:

Loan servicing

Potential justifiable subprime borrowers include persons who:

-Are creditworthy but want a 100 percent or higher LTV loan
-Are credit-impaired
-Persons with no documentation of their income

*All of these

The normal securitization channel for jumbo conventional loans is:

Private conduits

The reduced importance of certain institutions in the primary mortgage market has been largely offset by an expanded role for others. Which has diminished, and which has expanded?

Thrifts; mortgage bankers

Warehousing in home mortgage lending refers to:

a. Short-term loans made by mortgage bankers to commercial banks.

b. Short-term loans made by commercial banks to mortgage bankers.

c. Long-term loans made by commercial banks to mortgage bankers.

d. Short-term loans to finance the construction of builder warehouses.

Short-term loans made by commercial banks to mortgage bankers