Professional Documents
Culture Documents
3.04 REA Mock Exam With Answer Key
3.04 REA Mock Exam With Answer Key
REA Fundamentals
1. A duly registered and licensed natural person who works in a local government unit
and performs appraisal and assessment of real estate properties, including plants,
equipment, and machineries, essentially for taxation purposes.
2. A duly registered and licensed natural person who, for a professional fee,
compensation or other valuable consideration, offers or renders professional advice and
judgment on: (i) the acquisition, enhancement, preservation, utilization or disposition of
lands or improvements thereon; and (ii) the conception, planning, management and
development of real estate projects.
3. A duly accredited natural person who performs service for, and in behalf of a real
estate broker who is registered and licensed by the Professional Regulatory Board of
Real Estate Service for or in expectation of a share in the commission, professional fee,
compensation or other valuable consideration.
4. A duly registered and licensed natural person who, for a professional fee,
commission or other valuable consideration, acts as an agent in a real estate
transaction to offer, advertise, solicit, list, promote, mediate, negotiate or effect the
meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture,
or other similar transactions on real estate or any interest therein.
5. A duly registered and licensed natural person who, for a professional fee,
compensation or other valuable consideration, performs or renders, or offers to perform
services in estimating and arriving at an opinion of or acts as an expert on real estate
values, such services of which shall be finally rendered by the preparation of the report
in acceptable written form.
6. In corporate practice of real estate service, there shall be at one license real estate
broker for every
7. what is PRBRES
10. Refers to any natural or juridical person engaged in the business of developing real
estate development project for his/her own account and offering them for sale
11. Refers to an official in the local government unit, who performs appraisal and
assessment of real properties, including plants, equipment and machineries for taxation
purposes.
13. For Real estate salesperson to be accredited by the board must at least meet the ff.
requirements of (2021_
a. at least high school graduate and 80 credit units of seminar and training
b. at least 1 year of college and 12 credit units of seminar and training
c. at least high school graduate and 12 credit units of seminar and training
d. at least 2 years of college and 8 credit units of CPD seminar
14. Any violation of RA 9464, including violation of IRR shall meted the penalty of a fine
of not less than______ or imprisonment of not less than______ upon discretion of the
court
15. In relation to question number 633. In case the violation is committed by an license
real estate service practitioner, the penalty shall be_______the aforesaid fine and
imprisonment
a. Tripled d. doubled
b. fivefold e. reclusion perpetua
c. one half
16.
17.
18.
19.
20. The realty service practice can be performed by juridical persons, except: 8
a. Real estate salesperson d. Real estate consultant
b. Real estate broker e. All of the above
c. Real estate appraiser
21. The national integrated organization of natural persons duly registered and licensed
as real estate service practitioners
a. Accredited and Integrated Professional Organization
b. Professional Regulatory Board of Real Estate Service
c. Professional Regulation Commission
d. Philippine Association of Real Estate Practitioners
e. None of the above
22. Conducts licensure examinations for the practice of the real estate service
procession
a. Accredited and Integrated Professional Organization
b. Professional Regulatory Board of Real Estate Service
c. Professional Regulation Commission
d. Philippine Association of Real Estate Practitioners
e. None of the above
23. The minimum educational requirement for an applicant for a real estate broker’s
license is: (2021)
a. Holder of BSREM degree d. 108 units in college
b. 72 units in college e. 144 units in college
c. 82 units in college
26. To constitute negligence or failure to disclose or ascertain to any person with whom
a broker is dealing relative to the property and within his knowledge at the time of the
transaction, what matters must the broker fail to disclose?
a. Previous owner of property or history of title
b. Fair market value of the property
c. Location, topography, and shape of property
d. Material fact, data or information
28. Any of these acts shall be grounds for revocation of license except:
a. Procurement of Certificate of Registration of real estate service practitioner by fraud
or deceit
b. Unprofessional or unethical conduct
c. Allowing an unqualified person to practice the profession by using one’s certificate of
registration
d. Non-payment of dues
e. Misleading ads
30. The national integrated organization of natural person duly registered and license as
real estate service practitioner
A. Philippine association of real estate practitioner
B. Philippine realtors board
C. Philippine regulation commission
D. Accredited and integrated professional organization
E. All of the above
30. Any of these acts shall be ground for revocation of license except.
A. non payment of dues
B. engaging in the practice of the profession during the period of ones suspension
C. unprofessional or unethical
D. allowing an unqualified person to practice the profession by using ones certificate of
registrations
32. What should be indicated by the broker in his letterhead, dry seal, sigh board,
advertisement or other announcement in relation to real service practice
a. price of the property
b. address of the owner
c. ptr number
d. license number
e. house number
33. Real estate broker must not encourage the following act when with a sale
transaction to help the client reduce cost
a. undervalue the amount in the deed of sale
b. pay to BIR where the property is located
c. pay the proper taxes on time
d. register immediately the sale with the ROD
e. pay the taxes on sale on time
36. Minimum requirement for applicant for real estate broker exam is
a. 80 units in college
b. 60 units in college
c. Holder of vocational
d. BS REM degree
e. High school graduate
37. Real estate broker is usually authorized to the following acts except
a. advertise the listing
b. look for the property
c. bind the principal in the contract
d. place for sale sign in the property
e. cooperate with other broker
38. Real estate practitioner to be appointed as member of the PRBRES provided that
the prior his appointment he has been active for at least
A. 5 years
B. 20 years
C. 15 years
D. 10 years
E. 25 years
40.
41. The following subject in the real estate broker exam licensure exam except
a. property management
b. subdivision development
c. real estate laws and taxation
d. fundamentals of property ownership
e. code of ethics and responsibilities
42. Act as agent of a party in a real estate transaction to offer, solicit, list, promotes.
Mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange,
mortgage, lease or joint venture or other similar transactions in real estate or any
interest therein
A. real estate consultant
B. real estate appraiser
C. real estate assessor
D. real estate broker
E. real estate sales person
46. Refers to the compulsory successional rights granted by the law and the same
cannot be taken by anybody except when alienated during the lifetime of the testator
with consideration
A. Legitime d. intestate
B. Succession e. hier
C. testate
49. Buyers who paid installment of less than 2 years are also protected by the Maceda
law and entitled to a grace period of___days from the added their installment become
due and demandable
A. 30 days d. 15 days
B. 20 days e. 25 days
C. 60 days
50. Maceda , how many times the can the buyers exercise his rights
A. once every 10 years d. once every 3 years
B. once every 2 years e. none of the above
C. once every 5 years
52. Real properties used for family homes or house and lot where the family resides 13
53. Doctrine which reserve to the state the full ownership of all natural resources or
natural wealth that may be found in the bowels of the earth.
A. public domain d. regalian doctrine
B. res allicujos e. stewardship principle
C. res alienate
54. Right to the state to en act laws and enforce them for the safety, order, health,
morals and general welfare of the public
A. Escheat d. eminent domain
B. police power e. taxation
C. zoning
55. Power of the state to imposed and collect takes and other charges on real estate
A. Escheat d. eminent domain
B. police power e. taxation
C. zoning
56. Reversion of privately owned properties in favor of the state upon the death of the
owner who is not survived with any heir
A. escheat
B. police power
C. zoning
D. eminent domain
E. taxation
57. Power of the state to take private property for public use upon payment of just
compensation
A. Escheat d. eminent domain
B. police power e. taxation
C. zoning
C. zoning
59. Under the phil constitution that every property owners are bound to used or utilized
their lands in a manner that will promote welfare and benefits not only for themselves
but also for the state
A. public domain d. regalian doctrine
B. res allicujos e. stewardship principle
C. res alienate
61. Property owned by the state in its proprietary or private capacity which is not
devoted to public used or public service and the development of national wealth
A. public domain d. regalian doctrine
B. res allicujos e. stewardship principle
C. patrimonial property
62.. Any and unknown deposit of money, precious object or jewelry and the lawful
ownership thereof is unknown. Its ownership belongs to the land
A. yamasita treasure d. alluvium
B. hidden treasure e. minerals
C. accession
63. System of land registration by which the title is recorded becomes indefeasible,
absolute and imprescriptible
A. Torres system d. Tax declaration
B. Allen system e. Bonds
C. Torrens system
64. The absence of marriage settlements, or when the regime is void what system shall
govern
A. co ownership d. extra judicial
B. judicial settlement e. capital property
C. absolute community of property
65. Exclusive property brought by the husband to the marriage as his own.
A. co ownership d. extra judicial
B. judicial settlement e. capital property
C. absolute community of property
66. Exclusive property brought by the wife to the marriage as his own.
A. co ownership d. extra judicial
B. Paraphernal property e. capital property
67. Right of common dominion which two or more persons have in spiritual part of the
property or thing which is not physically divided
A. co ownership d. extra judicial
B. Paraphernal property e. capital property
C. absolute community of property
68. Increase in value of real estate without any effort or expense of the owner
A. avulsion
B. accession
C. adhesion
D. erosion
69. Acquisition of alienable land of the public domain by homestead patent, free patent,
sales patent, government awards
A. private grant
B. inheritance
C. involuntary grant
D. public grant
70. The process by which the current of the river, creek or torrens segregated from the
estate a known portion and transfer it to another estate
A. reclamation
B. accretion
C. avulsion
D. alluvium
71. The right of an owner-lessor to receive the contract rent and reversion of the
property at the end of the lease is called:
a. Fee simple c. Leasehold
b. Lease fee estate d. Net lease e. None of the above
72. A legal provision which requires agreement for the sale of real estate to be in writing
and subscribed to by the parties to be enforceable by action
a. Defeasance clause d. Parole clause
b. Statute of Fraud e. Enforceability clause
c. Evidentiary clause
75. What are the considerations in determining whether something attached to real
property is a fixture?
a. method by which the item is attached; adaptability of the item for the land’s ordinary
use
b. relationship of the parties; intention of the person in placing the item in the land
agreement of the parties
c. both a and b
d. none of the above
79. The addition to the land through processes of nature, such as deposits of soil
carried by streams.
a. avulsion c. alluvium
b. accretion d. usufruct
80. The sudden removal of land from one parcel to another when a body of water, such
as a river, abruptly changes.
a. Avulsion c. alluvium
b. Accretion d. usufruct
81. The soil gradually deposited by the process of accretion, usually considered to
belong to the owner of he land to which it is added.
a. avulsion c. alluvium
b. accretion d. usufruct
85. Knowledge of land value is required for all of the following except
A. property taxation c. fire insurance
B. a ground lease d. a grazing lease
87. Items that are built to be permanent and intended to be included with real property
are
A. Trade fixtures c. Personal property
B. Real estate d. Chattel fixtures
93. When real property is sold by one person to another, the amount of money used to
compensate the seller is called
a. The cost of the real property c. The price of the real property
b. The value of the real property d. The income of the real property
94. A single- family home owner who builds a new and unique structure will commonly
find that
a. The uniqueness will cause the market to like it and pay more for it
b. Properties that do not conform to the popular designs will sell for more
c. By definition, uniqueness means that fewer people will want to bu y it
d. The market will pay as much for this property as any other because of its unique
nature
97. The city planning department indicated a vacant residential lot located in the flood
zone cannot be given a building permit. This site
a. Has lost nearly all utility c. Has lost all desirability
b. Has become scarce d. Has lost any effective purchasing power
99. A less expensive house tends to gain in value because of more expensive
neighborhood houses because of
a. Progression Principle c. Both of the above.
b. Regression Principle d. None of the above.
101. Two homes in the same addition have the same amenities, size, features, and
location. One is priced at P1,000,000 and the other is priced at P1,100,000.
a. The lower-priced home will sell quickly.
b. The lower-priced home will attract more demand.
c. The lower-priced home will get more showings.
d. The lower-priced home will sell for the full list price.
102. In a high demand market, the cost of building a new property will increase
substantially until
a. It becomes impossible for prices to go higher
b. The supply increases because new builders get into the market
c. The charges from suppliers and subcontractors go down
d. The BSP increases interest rates
103. The four forces that influence real estate values are
a. Social, economic, governmental, and environmental
b. Land, labor, capital, and green space
c. Eminent domain, police power, escheat, and taxation
d. Governmental, social, taxation, and economic conditions 19
105. The length of a tract of land along a street is called the land’s
a. depth c. frontage
b. width d. abutment
106. Refers to prices or values of land adjacent to or “across the fence” from railroad,
pipeline, highway or other corridor real estate.
a. buyer’s market c. corner influence
b. across the fence value d. property line
c. corner influence
107. A _______ is an article that was once personal property, but that has been
installed in or attached to land or a building so that such article is regarded in law as
part of the real estate.
a. Fixture c. domestic trade
b. Trade fixture d. all of the above
114. What term is used to describe a study of the cost -benefit relationship of an
economic endeavor?
a. Investment analysis c. Feasibility analysis
b. Cash flow analysis d. Market analysis
115. The mayor of a small town recently hired you to estimate the value of a new one-
story, three- bay fire station. The fire station was built last year at a cost of P2.5 million
(land and buildings). Similar-size d, one year-old commercial buildings in comparable
locations are selling for P2 million. lf you appraise this building for approximately P2.5
million, you probably have conveyed
a. Market value c. actual use
b. Investment value d. value in transition
116. You were recently asked to appraise the Midnight blue hostel. The bank asked you
to value the property for loan purposes. The comparables sales you used in this
analysis were all sales of the entire operation. The income used in your calculation was
based on the rental rate of each sleeping room and the sales at the restaurant and the
bar. You are most likely appraising
a. Market value of the fee simple interest
b. Market value of the leased fee interest
c. Going-concern value
d. Value in use
118. Estimating market value requires identification of the desires and priorities of
a. Well-informed buyers and sellers c. A typically informed purchaser
b. A fully informed seller d. A typically informed seller
120. Which of the following is not a part of the market value definition?
a. Buyer and seller are typically motivated
b. The property sells in 90 to 120 days
c. Payment is made in cash or cash equivalent terms
d. Both parties are well informed
121. Julita Cruz owns a vacation home near a small town almost 1 kilometers from the
city in which she lives and works. She doesn’t use her vacation house more than three
weeks every year. The last time she stayed there, she noticed that a gas station had
been built a few hundred yards down the road. After talking to the owner, she
discovered that a zoning change had been put into effect to allow construction of a new
shopping center on land adjacent to the gas station. While Ms. Cruz’s property was not
rezoned, she realizes that it won’t be suitable as a vacation retreat once the shopping
center is built. Which basic value principle(s) does the foregoing case illustrate?
a. Highest and best use (HABU) c. conformity
b. change d. all of the above
122. Two bookstores are located on the same city street, and both have had good
business for ten years. One store is improved with new displays, better lighting,
computerized inventory control, and a snack bar. Because the store is part of a chain,
reSET ing costs are absorbed without general increase in prices. The other bookstore
begins losing customers. Which basic value principle(s) does the foregoing case
illustrate?
a. competition c. Both a and b.
b. contribution d. None of the above.
125. An homeowner purchased two adjacent lots in a tract subdivision 20 years ago and
built a single-unit residence entirely on one lot, utilizing the second lot as a side yard.
The homeowner has decided to build a smaller home on the vacant side lot and retain
the existing home as a rental. What term applies to the second yard?
a. Surplus land
b. Vacant site
c. Excess land
d. Underutilized site
127. A buyer invests in a small strip center because she believes the property will net
P350,000 per year. This is an example of
a. Anticipation
b. Change
c. Competition
d. Substitution
128. The statement “property values are created and sustained when the characteristics
of a property conform to the demand of its market" refers to
a. Use value
b. Contribution
c. Conformity
d. Supply and demand analysis
130. Highest and best use analysis requires an estimate of the use as though vacant
and as improved to
a. Estimate the value of the improvements
b. Ensure that appraisers recognize that the properly could be worth more without the
buildings than with them
c. Estimate functional obsolescence caused by inappropriate improvements
d. All of the above
132. When a property’s highest and best use is likely to change in the near future, the
prevailing highest and best use is called a(n)
a. Pending use
b. Temporary use
c. Interim use
d. Alternative use
134. The purpose of regulating the real estate service practitioners practice in the
Philippines is to
a. Protect the public from dishonest realty practitioners.
b. Protect realty practitioners from unfair competition.
c. Upgrade the standards of realty service practice.
d. All of the above.
140. Gentrification is
a. A class of citizens who live in blighted areas
b. A process in which older homes in a neighborhood are remodeled and different
residents replace the lower-income residents
c. A group of complementary land uses
d. A part of the life cycle of a market area in which property values are stable and the
maintenance levels are adequate
143. What form of diffusion is represented by the spread of Shoe Mart (SM)?
a. cascade. c. relocation.
b. reverse hierarchical d. stimulus.
145. What will be the best tool for locating the next Jollibee fast food restaurant in a
city?
a. GPS (Global Positioning System).
b. GIS (Geographic Information System).
c. Microsoft Words.
d. Remote Sensing.
147. The value of a property will reach to its maximum level when the factors of
production such as: land, labor, capital, coordination or entrepreneurship are in balance
refers to
a. Principle of Balance d. Principle of Substitution
b. Principle of Conformity e. Principle of Anticipation
c. HABU
148. The principle of increase and decreasing returns applied to a portion or the whole
of an improvement refers to
a. Principle of Anticipation d. Principle of Contribution
b. Principle of Conformity e. Principle of Substitution
c. HABU
149. The net income remaining after the cost of labor, capital and coordination have
been paid refers to a. HABU d. Principle of Substitution
b. Principle of Anticipation e. Principle of Surplus Productivity
c. Principle of Conformity
150. The result of reasonable degree of architectural homogeneity and compatible land
uses brought about by market attitudes, societal trends, economic conditions and public
policy refers to
a. HABU d. Principle of Substitution
b. Principle of Conformity e. Principle of Anticipation
c. Principle of Utility
151. The meeting desires and requirements of human beings. It is not only the capacity
to give satisfaction in use but also the power to excite desire for continued possession
refers to
a. HABU d. Principle of Substitution
d. Principle of Conformity e. Principle of Anticipation
c, Principle of Utility
152. The factor where the value is increased if supply is reduced by effective demand,
resulting in scarcity refers to
a. Principle of Anticipation d. HABU
b. Principle of Supply and Demand e. Principle of Consistent Use
c. Principle of Contribution
153. That factor where the property is cannot be valued on the basis of one use for land
and another use of improvements refers to
a. Principle of Consistent Use d. HABU
b. Principle of Anticipation e. Principle of Substitution
c. Principle of Contribution
154. Refers to the most profitable and likely use of the property at the time of appraisal.
It refers to that which in all probability will yield the maximum return at a given time. It is
the first necessary consideration in studying a tract of land to estimate its value.
a. Principle of Supply and Demand d. Principle of Contribution
b. Principle of Substitution e. Principle of Anticipation
c. Principle of Highest and Best Use
155. Is the amount that maybe recovered when the property will be retired or disposed
at a future time.
a. Salvage Value d. Scrap Value
b. Market Value c. Principle of Substitution
c. Principle of Anticipation
156. Is the fair market value of the land in a specific zone or area as established by the
BIR.
a. Salvage Value d. Scrap Value
b. Market Value e. Zonal Value
c. Principle of Contribution
157. One which states that the maximum value of a property tends to be set by the cost
of purchasing an equally desirable and valuable replacement property, as the basic
principle that underlies the Market Data Approach of Sales Comparison,
a. Principle of Anticipation d. Principle of Highest and Best Use
b. Principle of Substitution e. Principle of Supply and Demand
c. Principle of Contribution
159. One method of compensating for sales that involved different terms of financing is
use of the
a. financing readjustment grid
b. loan-to-value ratio
c. cash equivalency technique
d. operating statement ratio
160. Recent sales of comparable sites competitive with the subject site
a. Are the most reliable guide to the probable current market behavior and
reactions of informed buyers.
b. Do not indicate any probable current market behavior and reaction of informed
buyers.
c. Both a and b.
d. None of the above.
165. The cost of improvements identical in design and material to those of the subject
property is called the subject’s
a. reproduction cost
b. replacement cost
c. sales price
d. market value
166. The cost of improvements identical in utility to those of the subject property is
called the subject’s
a. reproduction cost
b. replacement cost
c. sales price
d. market value
167. In using the cost approach to appraising, the estimated construction cost of
improvements usually will be based on 27
a. their original cost
b. the cost of new improvements at current prices
c. book value
d. the national cost average of all components
171. The predominant depreciation category for severe termite damage throughout a
structure
a. Physical deterioration—curable
b. Physical deterioration—long-lived incurable
c. Functional obsolescence—curable
d. External obsolescence—incurable
172. The ratio of total operating expenses to effective gross income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio
173. The ratio of net operating income to effective gross income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio
174. The ratio of the operating expenses plus annual debt service to potential gross
income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio
178. The data needed for an appraisal by the income approach using direct
capitalization are
a. the potential gross income from the property, which includes the annual income from
all sources; the amount of the expected annual effective gross income from the
property, estimated by subtracting anticipated vacancy and collection losses from
potential gross income;
b. net operating income, found by deducting normal annual operating and other
expenses from the effective gross income; the capitalization rate for the property; that
is, the rate that can be applied to the property’s net annual income, the result being the
appraiser’s estimate of the property’s value;
c. both a and b
d. none of the above
182. The valuation technique in which land and building are valued separately is
a. The income capitalization approach
b. The sales comparison approach
c. Linear regression
d. The cost approach
184. Land value can be estimated using all of the following techniques except
a. The sales comparison method
b. The cost method
c. The income method
d. The allocation method
191. Is the amount paid by the lessee of a house or flat fee of a commercial bldg.
a. economic rent d. rental
b. interest e. market price
c. lease
192. The revenue derived from the use of land and of the forces inherent to land
a. economic rent d. rental
b. interest e. price
c. lease
196. The value added to total property value by a particular component is an example of
the principle of
A. substitution
B. anticipation
C. change
D. contribution
E. conformity
197. The concept that the value of a particular components is measure by the amount
that its absence would detract from the value of the whole is
A. opportunity cost
B. substitution
C. competition
D. contribution
E. conformity
198. The market loss cause by depreciation in an older structure may be offset by all of
the following EXCEPT
A. architectural interest
B. historical registration
C. strong demand relative to supply
D. strong supply relative to demand
E. renovation of the structure
201. Assets that are inextricably combined with others and that may include specialised
buildings, machinery, and equipment.
a. Plant
b. Machinery
c. equipment
d. Business asset
203. For assets in the public sector, the assumption equivalent to a business continuing
as a going concern is that the public sector assets
a. Will continue to be used for the provision of the relevant public good or
service.
b. Will cease to be used for the provision of the relevant public good or service.
c. Both of the above.
d. None of the above.
204. Plant for the supply of electricity, gas, heating, cooling or ventilation and equipment
such as elevators
a. Should be reflected in the value of the real estate interest
b. Would not normally be reflected in the value of the real estate interest
c. Both of the above.
d. None of the above.
206. Intangible assets that can have an impact on the value of plant and equipment
include
a. production records
b. patents
c. operating software
d. All of the above.
209. Valuations of plant and equipment can be carried out using any of the following
approaches:
a. the sales comparison approach.
b. the cost approach (depreciated replacement cost)
c. the income capitalization approach
d. All of the above.
211. A person owning less than the entire bundle of rights has
A. escheat
B. a fee simple title
C. a partial interest
D. personal property
E. a fee tail
213. All of the following will affect the market value of a property EXCEPT
A. political factors d. economic factors
B. legal use restriction e. social concerns
C. acquisition cost to present owner
215. Amount may be recovered when the property will be retired or disposed at a future
time
A. scrap value
B. book value
C. zonal value
D. salvage value
E. market value
216. Fair market value of the land in a specific zone or areas as established by the BIR
A. scrap value
B. book value
C. zonal value
D. salvage value
E. market value
217. Impairment of the desirability and usefulness of a real property brought by the
physical, economic, and other changes
A. depreciation
B. externalities
C. obsolescence
D. damages
E. loss
220. Appraisal under the unified housing loan program shall be undertaken by
A. NHA
B. HLURB
C. HDMF
D. HIGC
E. HUDCC
221. Loss in value of property because of the buyers desire or because of the presence
of fixtures which are not desirable
A. external loss
B. external obsolescence
C. economic obsolescence
D. functional obsolescence
E. external forces
223. The average selling price of homes in a district can best be determined by:
a. Comparative Analysis d. Any of the above
b Assessed Value e. None of the above
c. An appraisal
227. The application of more factors of production will tend to increase net income up to
certain point beyond which the introduction of more factors of production will tend to
decrease net income
A. principle of conformity
B. principle of substitution
C. principle of progression
229. The principle of value which states that value of a property tends to be enhanced
when there is reasonable homogeneity in use:
a. Principle of conformity d. Principle of progression
b. Principle of highest and best use e. None of the above
c. Principle of increasing and diminishing return
230. The increase in value of real estate without any effort or expense of the owner is:
a. Unearned increment c. Accretion
b. Unearned income d. Accession e. Adhesion
231. The study of current supply and demand conditions in a particular area for
particular type of property is:
a. Market analysis d. Absorption method
b. Real Estate appraisal e. Income projection
c. Cash flow analysis
233. The process of making installment payments consisting of principal and interest
that reduces the loan balance:
a. Amortization c. Liquidation
b. Acceleration d. Hypothecation e. None of the above
236. In the computation of depreciation of properties, the method widely used by the
practitioner is the:
a. Straight line method d. Declining balance method
b. Diminishing return method e. None of the above
c. Cost benefits method
237. An appraisal principle which holds that the value of property tends to be enhanced
by association with superior properties is:
a. Principle of Progression d. Principle of Attrition
b. Principle of Regression e. None of the above
c. Principle of Infiltration
238. Is a factor derived from comparable properties and applied to expected rental
income in order to estimate a value. It may be used in finding the value of a property. It
is the ratio that expresses the relation between gross income and sales prices of a
property.
a. Gross Income Multiplier d. Multiplier Effect Factor
b. Zonal Value e. Market Value
c. Scrap Value
239. Method of identifying the boundaries of a parcel of land by placing pins or stakes
on the ground
A. subdivision survey d. relocation survey
B. topographic survey e. schematic survey
C. geodetic survey
240. Survey of land to determine the elevation or undulation of the terrain at various
section
A. subdivision survey d. relocation survey
B. topographic survey e. rectangular survey
C. geodetic survey
241. Grid of north and south meridians and east and west lines surveyed by the
government in identifying Philippines boundaries
A. subdivision survey d. relocation survey
B. topographic survey e. rectangular survey
C. geodetic survey
243. Imaginary lines connection to point 1 of a lot with a reference point such as BLBM
A. contour line d. Bearings
B. tie back e. Metes and bounds
C. Tie line
244. lines in topographic map which indicate the elevation of the terrain at various
sections of the land
A. contour line
B. tie back
C. Tie line
D. Bearings
E. Metes and bounds
246. Refers to subd scheme wher the resulting blocks rectangular in shape
A. Gridiron d. cul de sac
B. tie line e. square planning
C. chaplan
248. Prepared out of a cadastral survey of extensive area consisting of several lots for
cadastral registration proceedings
A. Phil map d. Cadastral map
B. Vicinity map e. Territorial map
C. Tax map
249. Land located in the fringes of built up communities which has the provincial
characteristics but is favored with city utilities, amenities and facilities
A. city land c. urbanized land
B. metropolis land d. idle land
250. Lands in metro manila or NCR are covered by the Urban Land Reform Law when
they located within _______areas for priority development sites
A. 214
B. 234
C. 224
d. 244
251. Wrote eight volume guide to geography; forerunner of the present geography
A. Hipparchus
B. Aristotle
C. Ptolemy
D. Erastosthenes
E. Humbult and ritter
253. Drew imaginary lines on the surface of the earth in order to describe the location of
places
A. Hipparchus
B. Aristotle
C. Ptolemy
D. Erastosthenes
E. Humbult and ritter
255. Used the word geography and calculated the circumference of the earth within 0.5
percent accuracy
A. Hipparchus
B. Aristotle
C. Ptolemy
D. Erastosthenes
E. Humbult and ritter
258. Relative location of place compared with other places, identification of streets,
buildings and landmarks to direct people to a desired location
A. land
B. lot site
C. toponym
D. situation
E. mathematical location
267. Difference between the number of immigrants and the number of imegrants
A. emigration
B. migration
C. immigration
D. net migration
E. exodus
268. A kind of survey where the shape of the earth is taken into account in computing
results is known as:
a. Plane survey d. Geodetic survey
b. Topographic survey e. Cadastral survey
c. Hydrographic survey
269. A metes and bounds description begins and ends with the
A. street and house number
B. block number
C. point of beginning
D. grid coordinates
E. iron pin
270. A (n) ____ identifies a property in such a way that it CANNOT be confused with
any other property.
A. coded map book d. full city survey
B. legal description e. engineering report
C. narrative appraisal
271. Factors that will influence value related to population growth, birth control
measures and migration
a. Physical d. Cultural
b. Economic e. Political
c. Social
272. Factors that will influence value which are governmental based. It is the degree of
efficiency in the maintenance of peace and order and the effort of providing the
essential services like: utilities, zoning and land use ordinance, anti-squatting law, rental
control law and etc.
a. Physical d. Cultural
b. Economic e. Political
c. Social
273. Factors what will influence value which forces include the nature or basic industry
and business activity in the neighborhood, trend of employment, and expansion of
housing programs;
a. Physical d. Cultural
b. Economic e. Political
c. Social
274. Factors that will influence value which refer to the location and age of the
neighborhood (size, area, shape and land topography), type of improvements and
architectural trends, street pattern, sidewalks and underground drainage.
a. Physical d. Cultural
b. Economic e. Political
c. Social
275. Former natural born Filipino citizen who acquired foreign citizenship and has not
applied and been granted dual citizenship, can purchase for his use as residence
A. 1,000 sq.m. of urban land and 1 has of rural land
B. 1,000 sq.m. of urban land and 2 has of rural land
C. 1,000 sq.m. of urban land and 5 has of rural land
D. 1,000 sq.m. of urban land and 3 has of rural land
276. Buyers of real property covered by RA 6552 do not include installment buyers of
A. industrial lots
B. house and lot packages
C. residential subd lots
D. residential condominiums
277. Retention limits under carp for foreign individuals on lease, management grower or
service contract
A. not more than 100 has
B. not more than 500 has
C. not more than 10 has
D. not more than 1,000 has
280. Process of bartering land for another piece of land and or shares of stock of equal
value in the government or quasi government corporation
A. land assembly
B. land reform
C. land banking
D. land exchange
282. In the absence of pre nuptial agreement all properties of the husband and wife
shall only have a total retention of
A. 1 has
B. 5 has
C. 10 has
D. 3 has
283. Refers to the commitment for more than a limited duration of funds, land
resources, facilities and service by the two or more legally separate interest, to an
enterprise for their mutual benefit
A. corporation
B. land assembly
C. cooperative
D. joint venture
284. Acquisition of land in advance of actual need for the purpose of acquiring lands at
existing use value and disposing of them in a manner which would influence land price
formation and promote planned development
A. land reform c. land exchange
B. land assembly d. land banking
285. States that a specified party must be given an opportunity before any others to
either accept or reject an offer
A. right to redeem c. right of first refusal
B. right to recover d. right to reject
287. As a mode of acquiring title to real property, prescription in good faith is:
a. 5 years c. 15 years
b. 30 year d. 50 years
e. 10 years
288. The bundle of rights inherent in ownership without any limitations other than those
imposed by law or contract is:
a. Fee Estate c. Lease fee estate
b. Fee simple d. Tenancy in common e. None of the above
289. The following liens can be found at the back of the title except:
a. Real estate tax liens c. Mechanic’s liens
b. Mortgage lien d. Judgment liens e. None of the above
290. Seizure of a property by court order, usually done to have it available in the event
of adverse judgment in a pending suit, is:
a. Escheat c. Forfeiture
b. Foreclosure d. Attachments e. Conveyance
291. A buyer of real estate has already paid in 8 years of installment a total amount of
P520,000.00 inclusive of P20,000.00 penalty interest. The cash surrender value of the
property based on Maceda Law is:
a. P200,000.00 c. P250,000.00
b. P325,000.00 d. P350,000.00 e. None of the above
293. A contract where the property is hypothecated to secure an obligation where the
creditor is given the right to possess the property and collect the fruits thereof is:
a. Real estate mortgage c. Blanket mortgage
b. Equitable mortgage d. Antichresis e. None of the above
296. A provision in the blanket mortgage that property whose loan value has been fully
paid shall be released from the mortgage
a. Defeasance clause d. Acceleration clause
b. Termination clause e. None of the above
c. Automatic redemption clause
297. X, owner of a 10- door apartment rented a unit to Y for a period of one year. Under
the law on lease, Y, without the consent of X, may perform any of the following acts,
except:
a. Sublease the unit
b. Assign his rights
c. Suspend payment if X fails to make the necessary repairs.
d. Demand payment reimbursement constituting one half of the value of the usual
improvements introduced in good faith
e. All of the above
298. A special power of attorney to sell a real estate carries with it all the following
except:
a. Power to find a purchaser d. Power to fix the term of sale
b. Power to sell directly e. None of the above
c. Power to sell only for cash
300. In the absence of any stipulation on the period, the vendor in a pacto de retro sale
may repurchase the property within:
a. 4 years c. 6 years
b. 8 years d. 10 years E. None of the above
301. Husband and wife can sell property to each other in the following circumstances:
a. Separation of property was agreed upon in the pre-nuptial agreement
b. There has been a judicial separation of property
c. There has been a legal separation
d. Any of the above
305. In the absence of any provision in the master deed of a condominium project, the
interest of the unit owner in the common areas shall be;
A. equal
B. based on value
C. decided by the condominium corporation
D. proportionate
E. NOTA
308. A buyer of a subdivision lot on installment after sufficient notice to the developer
discontinued paying amortization because the developer failed to develop the subd as
certified by the HLURB in such a situation and under PD 957, the buyer is entitled to a
refund which would be
A. Total payment made less penalty charges
B. Total payment made less penalty plus interest charges
C. Total payment made less penalty charges and interest on total payment
D. Total payment plus penalty charges
E. NOTA
E. NOTA
314. The performance bond for a subd project may be in the form of a surety bond
equivalent to
A. 30% of the development cost
B. 40% of the development cost
C. 20% of the development cost
D. 10% of the development cost
E. 25% of the development cost
315. The areas reserve for parks, playground and recreational areas of a subd project
are
A. saleable lots
B. non alienable public land
C. Exclusively owned by the owner developer
D. Co owned by the developer and lot owner
316. The area reserved for roads, alleys and open spaces in a subd. Project with an
area of one hectare or more is
A. 10% of the gross area
B. 30% of the gross area
C. 35% of the gross area
D. 25% of the gross area
317. In mixed use condominium project, the master deed may be amended by the
simple majority of unit owners. Majority is based on.
A. floor area of ownership
B. number condominium units
C. total area of condominium units
D. all of the above
321. Some old Spanish title , the unit of measure one 1 “are” is equal to
A. 10 sq.m. d. 1,000 sq.m.
B. 100 sq.m. e. 10,000 sq.m
C. 1 sq.m.
322. Jose owns a house on a parcel that includes an easement over the adjoining
property of Tom Yan. The Jose property is the
a. Servient tenement c. For sale property
b. Dominant tenement d. None of the above
323. Co-owners who have an equal right of possession coupled with a right of
survivorship have
a. Tenancy in common c. Tenancy in partnership
b. Joint tenancy d. Marital property
325. The property of a person who dies leaving no heirs passes to the state by the right
of
a. acquisition c. escheat
b. condemnation d. eminent domain
326. Condemnation of private property for public use is called the right of
a. Seizure c. Eminent Domain
b. Escheat d. Acquisition
329. The form of deed used to return title to real estate to its owner when the debt
secured by a deed of trust is paid in full is the
a. warranty deed c. quitclaim deed
b. reconveyance deed d. tax deed
333. During the research of a subject property an appraiser learns the occupants
(parents) have been granted a life estate by their children. What interest do the children
hold in the property?
A. Remainder man C. Trustee
B. Life tenant D. Trustor
336. Based on net gift the maximum rate of donor tax is (2021)
A. 6% c. 15%
B. 10% d. 30%
337. The rate of real estate tax in municipalities within metro manila is not more than
A. 5% c. 10%
B. 2% d. 20%
338. Under the local government code, agricultural lands of more than one hectare are
subject to additional tax of no more than 5% of assessed value when at lest
A. entire area is uncultivated
B. 50% of the area is uncultivated
C. 30% of the area is uncultivated
D. 20% of the area is uncultivated
339. Annual levy on real estate equivalent to 1% of the assessed value which shall be in
addition to the basic real estate tax
A. ad valorem tax c. special education fund tax
B. excise tax d. vat
340.. Capital gains on the sale of real estate classified as capital asset is
A. prepaid income tax c. expanded withholding tax
B. creditable tax on sale d. creditable tax on sale
341. BIR revenue regulation no 17-2003, the seller of a family home who failed to
utilized the proceeds to acquire a new residence within 18 months from the sale shall be
assessed additional deficiency capital gains tax inclusive of penalties and
A. 5% p.a. c. 20% p.a.
B. 25% p.a. d. 10% p.a.
342. Ground floor of a condominium project per BIR 28-29 shall be considered as
commercial and a additional rate shall be added on established residential zonal value
of
A. 20% c. 15%
B. 10% d. 25%
343. The estate tax return shall be filed with the BIR within
A. 90 days from the death of the decedent
B. 120 days from the death of the decedent
C. 60 days from the death of the decedent
D. 180 days from the death of the decedent
344. Taxpayer has__ to redeem his real property which was levied and subsequently
forfeited and acquired by the local government for tax delinquency
A. 3 years c. 1 year
B. 5 years d. 2 years
345. The following composed the board of assessment of Makati city, except 50
A. city assessor c. register of deed
B. city treasurer d. city engineer
347. Value placed on taxable property by the assessor for ad valorem tax purpose
A. economic value c. assessed value
B. appraised value d. market value
348. The property sold is an ordinary asset, what is the applicable tax
A. estate tax c. capital gains tax
B. percentage tax d. creditable withholding tax
350. Banks acquired assets which form part of its real estate inventories at the close of
its accounting period shall be classified
A. ordinary asset c. fixed asset
B. capital asset d. tangible asset
351. Sale of a dealer of a residential dwelling is not subject to VAT when the price does
not exceed (2021)
A. 1,500,000.00 c. 1,000,000.00
B. 2,500,000.00 d. 3,199,200.00
355. The right of an owner lessor to receive the contract rent and reversion of property
at the end of the lease is
A. fee simple c. lease fee estate
B. net lease d. freehold
356. An authority given by the developer to a broker to look for a supplier of backfilling
materials who shall be paid with developed lots is:
a. Procurement agency d. Sales agency
b. General Brokerage e. None of the above
c. Exchange agency
357. An agreement between an owner and a broker to sell a real estate property:
a. Listing d. Power of Attorney
b. Authority to sell e. None of the Above
c. Joint venture
358. In the real estate business, another term for the owner is:
a. Customer c. Principal e. None of the above
b. Prospect d. Alter Ego
359. The documentary stamp on lease of real estate is P6.00 for the first P2,000.00 or
fraction thereof and additional (2021)
a. P0.50 for every P1,000 in excess of the first P2,000
b. P1.00 for every P1,000 in excess of the first P2,000
c. P1.50 for every P1,000 in excess of the first P2,000
d. P2.00 for every P1,000 in excess of the first P2,000
e. P3.00 for every P1,000 in excess of the first P2,000
360. Under BIR Revenue Regulation No. 17-2003, the seller of a family home who
failed to utilize the proceeds to acquire a new residence within 18 months from the sale
shall be assessed additional deficiency capital gains tax inclusive of penalties and:
a. 5% interest per annum d. 10% interest per annum
b. 15% interest per annum e. 20% interest per annum
c. 25% interest per annum
361. The rate of real estate tax in municipalities within Metro Manila is not more than
a. One-half percent of assessed value d. Three percent of assessed value
b. One percent of assessed value e. None of the above
c. Two percent of assessed value
362. Based on net gifts, the maximum rate of donor’s tax is:
a. Ten Percent c. Fifteen percent e. Thirty percent
b. Twenty percent d. Twenty-five percent
363. The value placed on taxable property by the assessor for ad valorem tax purpose
is:
a. Market Value d. Appraised Value
b. Assessment Value e. Assessed Value
c. Economic Value
364. The estate tax return shall be filed with the BIR within :
a. 60 days from death of decedent d. 180 days from death of decedent
b. 90 days from death of decedent e. 240 days from death of decedent
c. 120 days from death of decedent
365. Under the Local Government Code, the next period for the property owner to file a
sworn declaration of ownership and value with the assessor is:
a. Year 2018 c. Year 2019 e. None of the above
b. Year 2020 d. Year 2021
366. The documentary stamp tax on the sale of property must be paid
a. Within thirty (30) days from the date of notarization
b. Within five (5) days after the close of the month of the date of sale
c. Within ten (10) days after the close of the month of the date of sale
d. At the time of payment of capital gains tax
e. At any time
367. The ground floor of a condominium project, per BIR 28-98, shall be considered as
commercial and an additional rate shall be added on established residential zonal value
of:
a. 10% d. 25%
b. 15% e. 30%
c. 20%
368. The schedule of fair market value in municipalities in Metro Manila is prepared by:
a. MMDA d. Bureau of Internal Revenue
b. Concerned Municipal Assessor e. Sangguniang Bayan by ordinance
c. None of the above
369. The amount of family home equivalent to the fair market value considered as
allowable deductions from the estate of the decedent
a. P 500,000.00 c. P 1,000,000.00 e. P1,500,000.00
b. P 2,000,000.00 d. P 750,000.00
370. A taxpayer has ____ to redeem his real property which was levied and
subsequently forfeited and acquired by the local government for tax delinquency.
a. 1 year c. 60 days e. 2 years
b. 4 years d. 3 years
371. In case of foreclosure sale where right of redemption is not exercised by the
mortgagor, who pays the capital gains tax?
a. Owner-mortgagor c. Buyer of the property e. None of the above
b. Creditor-bank d. Any of the above
372. The documentary stamp on every mortgage or pledge of real estate is: (2021)
a. P40.00 for the 1st P5,000.00 plus P20.00 for every P5,000.00 thereafter
b. P10.00 for every P5,000.00 or fraction thereof
c. P15.00 for every P5,000.00 or fraction thereof
d. P2.00 on each P200.00 or fraction thereof
e. None of the above
373. In case of sale of agricultural lands not exceeding five (5) hectares, aside from
clearance from DAR, buyer must also submit what document?
a. Undertaking to surrender land in excess of retention limits
b. Affidavit of compliance with CARL
c. Affidavit of total or aggregate landholding
d. Certification from DAR
e. Affidavit of waiver
375. A buyer of a subdivision lot on installment after sufficient notice to the developer
discontinued paying amortization because the developer failed to develop the
subdivision as certified by the HLURB in such a situation and under P.D. 957, the buyer
is entitled to a refund which would be:
a. Total payment made less penalty charges.
b. Total payments made less penalty and interest charges.
c. Total payments made less penalty charges plus interest on total payment.
d. Total payments including penalty charges
e. None of the above.
376. Unless extended for justifiable cause, the period of completion of development of a
subdivision project, counted from issuance of license to sell, is:
a. Six months d. Eighteen months
b. Twelve months e. Twenty four months
c. None of the above
378. In the absence of any provision in the master deed of a condominium project, the
interest of the unit o owners in the common areas shall be:
a. Proportionate d. Decided by the condominium corporation
b. Based on Value e. None of the above
c. Equal
384. The area reserved for roads, alleys and open spaces in a subdivision project with
an area of one hectare or more is:
a. 20% of gross area d. 25% of gross area
b. 30% of gross area e. 35% of gross area
c. None of the above
386. In mixed use condominium project, the master deed may be amended by simple
majority of unit owners. Majority is based on:
a. Number of condominium units d. Floor area of ownership
b. Total area of condominium units e. Any of the above
c. None of the above
388. Under the local government code, the appraisal of the fair market value of real
property shall be based on
a. actual use
b. independent appraisal value
c. declaration of lot owner
d. assessed value
390. When to pay Estate tax if the case is settled extra judicially
a. Not exceeding 2 years d. not exceeding 10 years
b. Not exceeding 3 years e. Not exceeding 5 years
c. Not exceeding 4 years
393. It is a certification issued by the EMB certifying that based on the submitted project
description, the project is not covered by the EIS system and is not required to secure
an ECC
a. Environmental compliance certificate d. Feasibilty study
b. Project impact study e. Environmental impact study
c. certificate of non coverage
396. Under HDMF circular 189-C, a qualified Pagibig member can purchase residential
lot not exceeding
a. 500 sq.m. d. 1,000 sq.m.
b. 750 sq.m. e. 1,500 sq.m.
c. 250 sq.m.
397. Maximum amount of loan available under Unified Home Lending Program 56
a. 250,000.00 d. 375,000.00
b. 200,000.00 e. 500,000.00
c. 300,000.00
398. Zero Assessment level refers to an assessment of all building whose market value
does not exceed-_______ which are exempted from payment of real property taxes
a. 75,000.00 d. 175,000.00
b. 125,000.00 e. 275,000.00
c. 150,000.00
399. How often does the real property assessment be revised by the City/ Municipal
assessor
a. every year d. 7 years
b. 3 years e. 10 years
c. 5 years
400. A tax imposed on the sale, donation, barter or any other mode of transferring real
property ownership or title
a. simple fee/tax d. registration fee
b. filing fee/tax e. excise tax
c. transfer fee/tax
403. All real estate broker and private appraiser shall be required to post a professional
indemnity insurance/cash or surety bond, in an amount with no less than_____, without
prejudice to additional requirement of the client. It will be renewable every 3 years.
a. 2,000 pesos d. 15,000 pesos
b. 5,000 pesos e. 20,000 pesos
c. 10,000 pesos
404. a stock corporation established principally for the purpose of owning income
generating real estate assets
A. real estate trust
B. real estate company
C. real estate investment trust
D. real estate investment corporation
E. Philippine stock exchange
407. Real estate investment trust must distribute annually at least ______ of its
distributable income as dividends to its shareholder
A. 50%
B. 20%
C. 75%
D. 90%
E. 40%
408. The price or value of property agreed upon the seller who is not is compelled to
sell and a buyer who is not compelled to buy, both knowing all material facts relative to
the property and the transaction
A. appraised value
B. assessed value
C. economic value
D. fair market value
E. zonal value
409. The sale of or transfer of real property to real estate investment trust, which
includes the sale or transfer of any and all security interest thereto, shall be subject to.
A. 25% of the applicable DST
B. 10% of the applicable DST
C. 75% of the applicable DST
D. 50% of the applicable DST
410. Income payment to real estate investment trust shall be subject to a lower
creditable withholding tax of
A. 5% c. 1% e. 10%
B. 7.5% d. 2%
413. PD 1517 or Urban Land Reform Law an area considered urban when it has a
population density of at least an area of.
A. 1,000 resident per sq.km. and at least 25% of active resident engage in non
agricultural activities
B. 2,000 resident per sq.km. and at least 50% of active resident engage in non
agricultural activities
C. 1,500 resident per sq.km. and at least 50% of active resident engage in non
agricultural activities
D. 2,000 resident per sq.km. and at least 70% of active resident engage in non
agricultural activities
E. 1,000 resident per sq.m. and at least 25% of active resident engage in non
agricultural activities
SET Exam 1
1.) The present and future demand for a property and its absorption rate is considered
in a
a.) letter in appraisal
b.) market feasibility study
c.) market segmentation
d.) highest and best used analysis
e.) transmittal letter
4.) the criteria for determining the highest and best used include all of the following
EXCEPT
a.) physical possibility d.) probable use
b.) financial feasibility e.) effect on community welfare
c.) legal permissibility
6.) the certification of value section of an appraisal report states everything EXCEPT
that
a.) the appraiser has no interest in the property
b.) the fee is not contingent upon any aspect of the report
c.) the facts are correct to the best of the appraiser knowledge
d.) last year the property was appraised by the another person
e.) the property was personally inspected by the appraiser
11.) the fact that rents for equally desirable space tend to be set by the market reflects
the principle of
a.) balance
b.) substitution
c.) externalities
d.) consistent used
e.) conformity
16.) the highest and best used of land as if vacant forms part of the basis for
a.) mortgage-equity analysis
b.) property rights adjustment
c.) an operating expense estimate
d.) the cost approach
e.) the square footage practice
d.) clarity
e.) all of the above
21.) in estimating the market value of comparable sale, an appraiser must consider all
of the following EXCEPT
a.) whether the transaction was made in cash, terms equivalent to cash, or other
precisely revealed terms.
b.) Whether the property had reasonable exposure in a competitive market
c.) Whether a fair sale was transacted, with neither the seller nor the buyer acting under
duress
d.) Whether the replacement cost of the property corresponds to its market value
e.) Whether the seller was related to the buyer
22.) in preparing the appraisal report, your analysis concludes that one of the
approaches to value is not applicable to this particular case. You should
a.) omit the approach all together
b.) base the approach on hypothetical data
c.) state that the approach is not relevant
d.) state that the approach is not applicable, explain the reason for this contention
e.) find another approach so as to include three approaches
28.) the principle of ______states that buyer will not pay more for the a site than for
another equally desirable one
a.) anticipation
b.) imbalance
c.) substitution
d.) balance
e.) conformity
30.) the principle of_______states that the value levels are sustained when the various
elements in an economic or environmental mix are in equilibrium
a.) anticipation
b.) equivalence
c.) substitution
d.) balance
e.) highest and best used
33.) a use must be_____ to be considered as a possible alternative for highest and best
used
a.) physically and legally possible and financially feasible
b.) physically and legally possible
c.) Already in existence and legal
d.) Physically possible and appropriate
e.) Legal and profitable
34.) an appraiser
a.) determines the price
b.) defends value
c.) estimates price
d.) estimates value
e.) determines value
38.) environment hazards that an appraiser must be conscious of include all of the
following except
a.) asbestos
b.) radon
c.) drano
d.) urea formaldehyde
e.) PVC
41.) combining to or more sites in order to develop one site with a greater value than the
individual sites have separately called
a.) synergy
b.) plottage
c.) surplus land
d.) excess land
e.) highest and best use of land
42.) assemblage is
a.) always reflect in the market value
b.) the act of bringing to or more smaller lots into common ownership for use
c.) inappropriate for parcels two or more hectares
d.) uneconomical
e.) illegal
48.) it is_________to provide a value range to a client who request it and understand its
meaning and use.
a.) foolish
b.) appropriate
c.) un ethical
d.) approximate
e.) difficult
52.) the most detailed, complex, costly and time consuming method of cost estimation is
the
a.) quantity survey
b.) trade breakdown
c.) comparative unit
d.) unit in place
e.) comparable unit
54.) the cost approach most applicable when the property being appraise
a.) has old improvement
b.) has relative new improvements that represent the highest and best use of the
land
c.) suffers substantial functional obsolescence
d.) is more costly than the surroundings
e.) has many older features that make interesting reading in a report
61.) The subject property has 85% occupancy. What conclusion would you most likely
draw if the typical occup0nacy rate in the area was 95%?
a.) Advertising is average.
b.) The rents are high.
c.) The rents are low.
d.) Management is good.
e.) New construction will occur soon.
62.) The fact that the value of a property tends to equal the cost of an equally desirable
substitute is an example of the principle of
a.) balance
b.) substitution
c.) contribution
d.) diminishing returns
e.) supply and demand
63.) Population flow to different regions of the United States will change primarily
because of
a.) changing economic opportunities
b.) environmental control legislation
c.) rezoning legislation
d.) state tax policies
e.) air conditioning in the Sunbelt
64.) When each alternative use requires the same capital investment, the use that
maximizes the investment’s______ on a long-term basis is the highest and best use.
a.) diversified portfolio
b.) operating expenses
c.) net operating income
d.) potential gross income
e.) occupancy rate
65.) What would be the indicated value of a property that rented for 750 per month,
using a monthly gross rent multiplier of 100, if the expenses attribute to the property
were 115 per month?
a.) 75,670
b.) 75,000
c.) 68,750
d.) 61,125
e.) 13,750
66.) Which of the following criteria most completely defines “highest and best use”?
a.) physically possible, legally acceptable, and generating a higher present land
value than any other use
b.) legally authorized, politically viable, and socially acceptable
c.) physically possible, comparable to other uses in the neighborhood, and legally
authorized
d.) comparable to other local uses, physically possible, and generating a higher present
land value that any other use
e.) the tallest and most beautiful structure that can be placed on the land
67.) The total income anticipated from income property operations after vacancy and
collection allowances and operating expenses are deducted is
a.) net operating income
b.) before-tax cash flow
c.) effective gross income
d.) potential gross income
e.) property residual income
68.) Which principle of value best affirms that value is the present worth of expected
future benefits?
a.) supply and demand
b.) balance
c.) substitution
d.) anticipation
e.) conformity
69.) Which principle of value best affirms that the maximum value of property generally
cannot exceed the cost of its replacement?
a.) increasing and decreasing returns
b.) supply and demand
c.) substitution
d.) balance
e.) anticipation
70.) Which of the following would be classified as a tangible rather than an intangible
amenity?
a.) pride of ownership
b.) a sense of security
c.) a free dishwasher
d.) work satisfaction
e.) clean air
75.) The annual net operating income from an apartment house is 11,000. If a
capitalization rate of 11% is used, the indicated market value is
a.) 126,000
b.) 176,000
c.) 100,000
d.) 242,000
e.) 2,420
78.) in discounted cash flow analysis, the reversion to be received at the end of the
holding period is
a.) a separate cash flow
b.) an annuity in arrears
c.) an ordinary annuity
d.) percentage of annual income
e.) amount to be capitalized in perpetuity
79.) a 1,000,000.00 property will have a 70% loan at an 8% annual mortgage constant.
what must the NOI be to produce 12% cash on cash return
a.) 120,000.00
b.) 56,000.00
c.) 92,000.00
d.) 84,000.00
e.) 700,000.00
80.) Income capitalization is the term used to describe the process of estimating the
value of income property by studying expected future income. This process
a.) converts the net income of a property into its equivalent capital value
b.) reflects the time value of money by reducing or discounting future income into its
present worth
c.) focuses on the present worth of future benefits
d.) uses markets interest rates
e.) all of the above
81.) to earn 12% on your investment, what should you pay for a property earns 6,000.00
per month and has operating expenses of 1,250.00 per month
a.) 475,000.00
b.) 150,000.00
c.) 229,166.00
d.) 333,333.00
e.) 400,000.00
82.) the land development method is used to estimate the value of vacant acreage that
is ready to be subdivided. This method requires
a.) study of current sales of subdivided lots
b.) the projection of land of subdivided lots
c.) RTC approval
d.) Both A and B
83.) a technique in income capitalization in which the analyst need not distinguish
interest rates from capital recovery rates, but that is most useful for comparable income
a.) direct capitalization
b.) building residual
c.) land residual
d.) bank of investment
e.) internal rate of return
You are appraising a 40-acre tract of unimproved by a real land. The size is zoned for
single-family residential use. All utilities are available along the street on which the land
fronts. The engineers who will plat the proposed subdivision told you that 20% of the
land area will be used for streets and sidewalks. Zoning will permit four lots per acre of
net developable land after deducting streets. Research indicates that lots similar to
those that will be available on the subject land will sell for 18,000 each and that the
entire tract can be developed and sold in 1 year. You find that 40% of the sale price of
each lot must be allocated to selling cost, overhead, contingencies, carrying cost, and
developer’s profit, and that 2,000 feet of streets (including water, storm sewer, and
sanitary sewer lines) must be installed at a cost of 80 per foot.
87.) What is the gross amount that will be realized from the sale of all the lots?
a.) 720,000
b.) 2,304,000
c.) 1,440,000
d.) 1,584,000
e.) 576,000
88.) What is the cost of installing streets, water, and sewer lines?
a.) 16,000
b.) 32,000
c.) 64,000
d.) 160,000
e.) None of the above
89.) What is the amount of selling cost, overhead, contingencies, carrying cost, and
developer’s profit?
a.) 921,6000
b.) 576,000
c.) 288,000
d.) 633,600
e.) None of the above
98.) in one step of the land value residual technique, the building capitalization rate is
applied to the known building value to estimate the
a.) highest and best use of the site
b.) cost of the building
c.) income needed to support the land
d.) net operating income needed to support the building
e.) land value
100.) all of the following lease provisions are advantageous to the lessee EXCEPT
A.) an escape clause
B.) a renewal option
C.) a purchase option
D.) an escalation clause
E.) none of the above
SET Exam 2
10. A (n) ____ identifies a property in such a way that it CANNOT be confused with any
other property.
(A) coded map book (D) full city survey
(B) legal description (E) engineering report
(C) narrative appraisal
12. All of the following will affect the market value of a property EXCEPT
(A) political factors
(B) legal use restriction
(C) acquisition cost to present owner
(D) economic factors
(E) social concerns
14. Price is
(A) market value (D) a historical fact
(B) most probable sales price (E) all of the above
(C) investment value
17. The value added to total property value by a particular component is an example of
the principle of
(A) substitution (D) contribution
(B) anticipation (E) conformity
(C) change
18. The concept that the value of a particular components is measure by the amount
that its absence would detract from the value of the whole is
(A) opportunity cost (D) contribution
(B) substitution (E) conformity
(C) competition
19. The market loss cause by depreciation in an older structure may be offset by all of
the following EXCEPT
(A) architectural interest
(B) historical registration
(C) strong demand relative to supply
(D) strong supply relative to demand
(E) renovation of the structure
21. A dramatic change in short-term demand for real estate in the local market is likely
to immediately precipitate
(A) construction (D) activity
(B) price changes (E) no change in supply
(C) conversions
24. Which of the following reports is usually NOT prepared by a real estate appraiser?
(A) marketability study
(B) economic study
(C) feasibility study
(D) transportation network study
(E) valuation study
27. An appraisal is
(A) an estimate of net realizable value
(B) always concerned with the market value
(C) an appraiser’s opinion of market value
(D) a precise statement of value
(E) a broker’s comparative sales analysis with further detail
32. Which of the following criteria most completely define “highest and best use”?
(A) legally authorized, politically viable, and socially acceptable
(B) physically possible, comparable to other uses in the neighborhood, and legally
authorized
(C) physically possible, legally permissible, financially feasible, and generating a
higher present land value than any other use
(D) comparable to other uses in the neighborhood, physically possible, and generating a
higher present land value than any other use
(E) the tallest and most beautiful structure that can be placed on land
36. When reconciling the adjusted sales prices of comparables, the greatest emphasis
should be given to
(A) the average
(B) the median
(C) the mode
(D) the mean of A, B, and C
(E) none of the above
38. Which of the following approaches would probably be given the most weight in
appraising a large office building?
(A) reproduction cost (D) income capitalization
(B) subdivision development (E) market absorption
(C) replacement cost
41. The effective age and the useful life of a building represent judgments made by the
(A) appraiser (D) buyer
(B) property owner (E) insurer
(C) tax assessor
42. The period over which existing improvements are expected to continue to contribute
to property value is their
(A) effective age (D) period of diminishing returns
(B) remaining economic life (E) chronological age
(C) remaining physical life
45. In appraising a residence, adjustments are NOT made to the comparable property
for
(A) age (D) terms of sale
(B) lot value (E) size
(C) assessed valuation
46. When a site has improvements on it, the highest and best use
(A) is not definable
(B) is its existing use
(C) is its potential use
(D) depends on whether or not the existing use is changeable
(E) may be different from its existing use
48. The direct sales comparison approach is better than the income or cost approach
because
(A) fewer comparable properties are require, so it is easier to outline the results to
clients
(B) there are fewer mathematical calculations, so there is less chance of mathematical
errors
(C) the market for real estate is slow to change
(D) it is always easier to obtain data for the direct sales comparison approach
(E) none of the above true
49. The appraisal of an established 20-year old motel on a road with numerous
competitive motels would most likely be based on the
(A) square foot are of improvements
(B) number of units
(C) reproduction cost
(D) gross rent multiplier
(E) occupancy rate
50. In applying gross rent multiplier analysis to the subject property, the appraiser would
use the
(A) market rental
(B) actual rent being paid
(C) rent currently asked by the owner
(D) rent offered by a potential tenant
Other Adjustments: Each square foot of livable area is judged to be worth 30; condition
grades are fair, good, and excellent , with each difference in condition grade worth 5%;
a two-care garage is judged to be worth 1,500 more than a one-car garage.
57. In estimating the market value of a comparable sale, an appraiser must consider all
of the following EXCEPT
(A) whether the transaction was made in cash, terms equivalent to cash, or other
precisely revealed terms
(B) whether the property had reasonable exposure in a competitive market
(C) whether a fair sale was transacted, with neither the seller nor the buyer acting under
duress
(D) whether the replacement cost of the property corresponds to its market value
(E) whether the seller was related to the buyer
59. Adjustments to the property rights conveyed, financing, conditions of sale, date of
sale, and location are often made to the ____ of the comparable property.
(A) unit price
(B) actual sales price
(C) price per square foot
(D) gross income multiplier
(E) cash equivalent value
62. You are asked to appraise a vacant building lot. The neighborhood is about 75%
built-up. Most lots in the area are from 55 ft. to 85 ft. to 65 ft. wide; the lot under
appraisal is 60 ft. Comparable sales indicate that lots are selling at 120 to 150 per front
foot. What is a good estimate of the price range for this lot?
(A) 9,000-11,000
(B) 7,200-9,000
(C) 5,400-6,750
(D) 6,600-7,600
(E) 6,600-11,250
64. In the cost approach, ____ is deducted after estimating the cost to reproduce an
existing structure.
(A) land cost (D) cash equivalence
(B) cost to maturity (E) legal factors
(C) depreciation
80. When each alternative use requires the same capital investment, the use that
maximizes the investment’s ____ on a long-term basis is highest and best use.
(A) diversified portfolio (D) potential gross income
(B) operating expenses (E) occupancy rate
(C) net operating income
81. Land purchased for 50,000 cash appreciates at the rate of 15% compounded
annually. About how much is the land worth after 5 years? Disregard taxes, insurance,
and selling expenses.
(A) 100,000 (D) 37,500
(B) 87,500 (E) 7,500
(C) 57,500
82. A land speculator expects that a certain 100-acre tract can be sold to a subdivider 4
years from now for 10,000 per acre. If holding and selling costs are disregarded, what
cash price today (rounded to the nearest 1,000) would allow the speculator to realize a
15% compounded annual rate of return on the entire tract?
(A) 572,000 (D) 6,000
(B) 5,000 (E) none of the above
(C) 600,000
84. Use of a gross rent multiplier is valid when the subject and comparable properties
have similar
(A) potential gross incomes (D) operating expense ratios
(B) effective gross incomes (E) cash flows
85. Time-distance relationship between a site and all relevant origins and destinations
are called
(A) access roads (D) linkages
(B) transit facilities (E) synergies
(C) ingress and egress
86. The land on which a 10-year-old house is located is valued at P28,000, and the
reproduction cost of the dwelling is P92,000. Straight-line depreciation is 2% per year,
applied to the building only. If there is no other obsolescence, what is the indicated
value of the property?
(A) P96,000 (D) P117,700
(B) P101,600 (E) P120,000
(C) P117,000
87.
89. In discounted cash flow analysis, the reversion to be received at the end of the
holding period is
(A) a separate cash flow
(B) an annuity in arrears
(C) an ordinary annuity
(D) a percentage of annual income
(E) an amount to be capitalized in perpetuity
90. To earn 12% annual cash return on a cash investment, what should you pay for a
property that earns 4,000 per month and has operating expenses of 1,250 per month?
(A) 150,000 (D) 333,333
(B) 275,000 (E) 400,000
(C) 229,166
A 200-unit apartment complex includes 80 one-bedroom units that rent for 475 and 120
two-bedroom units that rent for 575 monthly. The vacancy rate is 5%; miscellaneous
income is 5,000 annually. Operating expenses amount to 400,000. The mortgage loan
requires annual payments of 630,000.
96. To obtain the present value of a series of incomes, a (n) ____ rate is applied.
(A) discount (D) equity capitalization
(B) income (E) stated
(C) overall capitalization
97. A fast-food chain could buy the building and land necessary for a new outlet for
200,000. Instead, an investor bought the property for this amount and lease it for 2,000
per month over a 20-year term. Rent is payable at the end of each month. What yield to
maturity is implied by the lease, assuming that, at the end of 20 years, the property is
still worth about P200,000?
(A) 8% (D) 14%
(B) 10% (E) 15%
(C) 12%
98. When market rent is less than contract rent, the difference is known as
(A) overage rent (D) gross rent
(B) excess rent (E) slippage rent
(C) percentage rent
99. If a particular buyer requires as recapture of the building portion of the purchase
price in 25 years, what is the indicated recapture rate for the building, assuming
straight-line recapture?
(A) 0.25% (D) 20%
(B) 2% (E) 25%
(C) 4%
100. In a high-rise, 100-unit apartment building there is a basement laundry area that
brings in 100 monthly from the concessionaire. The laundry income is
(A) included, as miscellaneous income, in potential gross income
(B) included, as other income, in effective gross income
(C) deducted from effective gross income
(D) added to before-tax cash flow
(E) distributed to the maintenance workers
SET EXAM 3
2. A residential land is located at Orange City with an area of 2,200 square meters and
cost per sq.m. is P3,500. It has a corner influence of 25% because of its location,
topography advantage of 20% because it is plain and a plottage of 10% because of its
shape. Compute the value of the property.
3. Using the 4-3-2-1 depth rule, if a 10-hectare belonging to different owners namely;
Mamita, Tiyo, Alan and L.A was sold for P10,0M, what is the share of each owner?
4. Rebisco bought 50 hectares of land at P700 per sq.m. If the medium subd.
development costs of P1,000/sq.m. is based on the saleable area which is 60% of the
gross area, compute the following:
(a) Total land acquisition cost;
(b) Total Development cost;
(c) Total unit costs per sq.m. of the saleable lots;
(d) If the projected gross mark up is 100% of the total unit costs/sq.m. of the saleable
lots, what will be the selling price per square meter?
(c) Lot Unit Cost = (Land Acquisition Cost + Developmental Cost) / Saleable area =
P(350.0M + P500.0M) / 300,000 sq.m. = 2,8533/sq.m.
(d) Selling Price/sq.m.= Unit Cost + Desired Profit
= 2,8533+2,8533 =5,766/sq.m.
For Question Nos. 5-7 A Real Estate Property was valued and assessed by Mun.
Assessor in the following amount and rate:
6. Total Special Education Fund Tax for one year before discount?
8. A commercial property producing an annual gross income of P390,000 was sold two
months ago for P3,412,500. What is the property's gross income multiplier?
V=I/R
Where: V= Value
I= income
Rate= interest rate
To find the Building value, the Rate should be interest rate plus recapture rate; formula
property, assuming a
Rate= interest rate + Recapture rate
Recapture rate= 1/Economic life of the building
10: You can afford to put 10,000 in a savings account today that pays 6% interest
compounded annually. How much will you have 5 years from now if you make no
withdrawals?
PV = 10,000 i = .06 n = 5
FV = 10,000 (1 + .06)5 = 10,000 (1.3382255776)
ANSWER = 13,382.26
11. Another financial institution offers to pay 6% compounded semiannually. How much
will your 10,000 grow to in five years at this rate?
ANSWER= 13,439.16
12. What amount will accumulate if we deposit 5,000 at the end of each year for the
next 5 years? Assume an interest of 6% compounded annually. FV = PMT ([(1 + i )n –
1]/i )
13. What amount will accumulate if we deposit 5,000 at the beginning of each year for
the next 5 years? Assume an interest of 6% compounded annually. . FV = PMT ([(1 +
i )n + 1]/i )
14. You want to buy a house 5 years from now for 150,000. Assuming a 6% interest
rate compounded annually, how much should you invest today to yield 150,000 in 5
years?
PV=FV(1+i)^-n pv=150000(1.06)^-5
PV = FV [( 1 ) /(1 + i)n
FV = 150,000
i =.06
n=5
PV = 150,000 [( 1 ) / (1 + .06)5]
= 150,000 [( 1 ) / 1.3382255776 ]
ANSWER = 112,088.73
15. What amount must you invest today at 6% compounded annually so that you can
withdraw 5,000 at the end of each year for the next 5?
PV = PMT [( 1-(1 + i)-n ] / i
5000((1-(1+.06)^-5))/.06
PMT = 5,000
i = .06
n=5
PVoa = 5,000 [(1 - (1/(1 + .06)5)) / .06] = 5,000 (4.212364)
Answer= 21,061.82