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11 Escrows - HOWDOESESCROWWORK 1 CHAPTER10...

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1 HOW  DOES  ESCROW  WORK?
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2 CHAPTER  10 HERE  ARE  THE  ANSWERS
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3 1. An appraisal is defined as: a. market price b. an estimate of value c. loan value d. actual selling price B
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4 2.  For most home buyers, the value they would  like to know is: a. market value b. tax value c. insurance value d. resale value  A
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5 3. The best use of land is that use which  produces the greatest net return to the land.   This is the: a. principle of change b. principle of substitution c. principle of conformity d. principle of highest and best use D
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6 4.  Loss in value in a home because of a poor  floor plan is called: a. physical determination b. functional obsolescence c. economic obsolescence d. book depreciation B
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7 5. The most comprehensive type of appraisal  report is the: a. restricted (letter) b. summary (short form) c. self-contained (narrative) d. negotiated (based on estimated value)  C
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8 6.  For existing residential homes, the best  appraisal approach is usually the: a. market approach b. income approach c. cost approach d. capitalization approach A
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9 7.  Given: land is valued at $35,000; cost new per  square foot: home $80, garage $25; Estimated  life: new 50 years, present effective age, 10  years.  What is the estimated value of the  property? (see figure 9.7) a. $110,400 b. $163,000 c. $173,000 d. $145,400  D
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10 40’ 20’ 40’ 20’ HOUSE GARAGE 40 X 40 x $80 = $128,000 20 X 20 x $25 = $10,000 $138,000 x 0.2 = $27,600 $138,000 - $27,600 = $110,400 $110,400 + $35,000 = $145,400 Fig 9.7
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11 8.  Find the value, by use of the income  approach (round to nearest $100).  Geven:  four-unit apartment rents for $500 per unit  per month; vacancy factor 5%; annual  expenses $8,000; capitalization rate 10  ½ %.  a. $141,000 b. $164,900 c. $250,000 d. $173,500 A
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12 9. Gross monthly multiplier is 125 and fair  market rent of condo is $575 per month.  The  estimate of value is: a. $71,875 b. $70,000 c. $57,500 d. $125,000 A
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13 10.  According to the California Office of Real  Estate Appraisers, the most comprehensive  appraisal skill level is: a. licensed appraiser b. certified residential c. certified general d. broker C
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14 11.  When evaluating a 20-year-old home, the  appraiser assigns it an age of only 10 years  because of the extremely good care taken by  the owner.  This is an example of: a. effective age b. chronological age c. actual age d. physical age A
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15 12.  The rule is: The higher the capitalization  rate, the a. higher the value b. lower the value c. lower the risk d. higher the net income B
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16 13.  Which of the following is false? a. All things equal, the higher the demand the higher  the price b. An example of physical deterioration is a  worn–out roof c. Depreciation for income tax purposes is   different from depreciation for appraisal  purposes d. Price, value, and cost are the same concept D
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17 14.  A change in zoning is what type of force that  influences values?
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