Real Estate Sales Exam Real Estate Sales Financing and Valuation Questions and Answers 3

Question 1

An appraiser determines a building's replacement cost is $500,000, with accrued depreciation of $125,000 and a land value of $150,000. What is the property's estimated value using the cost approach?

Accepted Answer

$525,000

Answer

Cost approach formula: Replacement Cost - Depreciation + Land Value = $500,000 - $125,000 + $150,000 = $525,000.

Question 2

A borrower's monthly gross income is $8,000. If the lender uses a 28% front-end ratio, what is the maximum allowable monthly housing expense?

Accepted Answer

$2,240

Answer

The front-end ratio limits housing costs to 28% of gross monthly income: $8,000 x 0.28 = $2,240.

Question 3

Which type of mortgage loan features payments that increase over time according to a predetermined schedule?

Accepted Answer

Graduated payment mortgage

Answer

A graduated payment mortgage starts with lower payments that increase at set intervals, designed for borrowers who expect rising income.

Question 4

In reconciliation during the appraisal process, the appraiser gives most weight to which factor?

Accepted Answer

The approach most appropriate for the property type and purpose of the appraisal

Answer

During reconciliation, the appraiser assigns greatest weight to the approach most relevant to the property type and the purpose of the appraisal.

Question 5

What is the primary difference between a purchase money mortgage and a conventional mortgage?

Accepted Answer

A purchase money mortgage is financing provided directly by the seller

Answer

A purchase money mortgage is seller financing where the seller acts as the lender and carries back a note from the buyer.

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Practice Test

Real Estate Sales Exam Real Estate Sales Financing and Valuation Questions and Answers 3