RECREview

  1. A real estate practitioner who is duly registered and licensed natural person who, for a 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.
    Licensed Real Estate Consultant
  2. The taking of public property for public use with fair compensation to the owner. An exercise of the Right of Eminent Domain.
    Condemnation
  3. Refers to the land and all those items which are attached to the land. It is the physical, tangible entity which can be seen and touched, together with all the addition on, above or below the ground.
    Real Estate
  4. It is one way of how an agency relationship is created. It means that if the principal makes third persons to believe that someone is his agent and that third party deals with the agent, then the principal cannot deny the agency relationship even though it did not exist in fact.
    Estoppel
  5. A group of investors who have combined their financial resources with the expertise of a real estate professionals for the common purpose of acquiring, developing, managing, operating or marketing real estate.
    Syndication
  6. Community Environment and Natural Resources Officer of the DENR
    CENRO
  7. An agreement whereby the seller promises to sell a thing in consideration of the buyer’s compliance to the terms and conditions of the contract and that only after the buyer’s compliance. Will the seller be obligated to transfers or convey the ownership of the thing subject of the contract.
    Contract to sell
  8. Environmental Management Plan is a section of the EIS that details the prevention, mitigation, contingency and monitoring measures to enhance positive impacts and minimize negative impact of a proposed project or undertaking.
    EMP
  9. A statement or declaration reduced in writing sworn to or affirmed before some officer who has authority to administer an oath or affirmation.
    Affidavit
  10. Usually refer to real estate properties that were previously mortgaged to the bank, by which because the owner failed to pay the
    Acquired Asset
  11. The right of the property owner to use, control or occupy the air space over his property, subject to the requirements of air navigation and government regulation.
    Air right
  12. The act or process by which a person procures property.
    Acquisition
  13. It is the reservation or automatic conveyance of real property to the State upon the owner’s death due to the absence of Will heirs or other legal claimants, to the title, or when the owner fails to pay the real estate taxes.
    Escheat
  14. A mutual effort by a property owner and lender to avoid foreclosure or bankruptcy following a default; generally involves substantial reduction in the debt service burden during an economic depression.
    Work Out
  15. The breaking of a Law, or failure to perform a duty or obligation specified in a contract or agreement, or revelation of secret, either by omission or commission.
    Breach of Contract
  16. Individuals actively engaged in real estate transactions. Primary market participants are those who invest in real property or who use real estate, e.g., buyers, sellers, owners,lenders, tenants. Secondary market participants include those who advise or assist primary participants, e.g., advisors, brokers, consultants, underwriters, appraisers.
    Market participants
  17. Land that has not been improved with buildings. Such lands is often left by a developer in a subdivision for recreational use and enjoyment by all the property owners.
    Open space
  18. The rights of ownership whereby the owner has the right to enjoy, dispose, and exclude others and to recover.
    Bundle of Rights
  19. The transferring of property to another; the transfer of property and possession of lands, or other things, from one person to another.
    Alienation
  20. The periodic payment specified in a loan contract that covers the repayment needed to amortize the outstanding debt.
    Debt service
  21. An analysis of the potential uses of a parcel of land and a determination of the highest and best use of parcel; a complete inventory of the parcels in a given community or other area classified by type of use, plus ( in some cases ) an analysis of the special patterns of use revealed by this inventory.
    Land utilization studies
  22. A situation in which the rate paid on a mortgage is greater than the rate generated by an investment on an unlevered basis.
    Negative leverage
  23. An analysis of the availability and desire for a specific type of property.
    Supply and demand study
  24. Means “ Let the buyer beware “ ( The buyer duty-bound to examine the property, he is purchasing and he assumes conditions which are readily ascertainable on the face of the title ).
    Caveat Emptor
  25. Similar or like property types or neighborhood in which inhabitants have similar, cultural, social and economic backgrounds.
    Homogenous
  26. A rise in value or price due to such factors as inflation or market conditions.
    Appreciation
  27. The liquidation of a financial obligation on installment basis. ( A periodic payment which includes interest and principal necessary to liquidate a financial obligation ).
    Amortization
  28. A procedure where by property pledged as security for a debt is sold to pay the debt in the event of default payments or terms. It is a process instituted by a mortgagee by which the mortgaged property was sold at public auction to satisfy the principal obligation which the debtor failed to fulfill.
    Foreclosure
  29. The transfer of property or rights and obligations over it in favor of another. (The one who assigns or transfer a property is called ASSIGNOR while those to whom property is assigned are called ASSIGNS or ASSIGNEES).
    Assignment
  30. The ratio of the total employment to basic employment in an economic area; used to protect increases in total employment when basic employment is expected to.
    Economic base multiplier
  31. A mortgage that has two or more properties pledged as security for a debt.
    Blanket mortgage
  32. Where the final installment payment on a note is greater than the preceding installment payments and the payer pays the note in full ( Payment in lump sum although not yet due).
    Balloon payment
  33. The right, advantage or privilege which an individual has in land of another, such as right of way.
    Easement
  34. A mortgage which can be paid off on its maturity.
    Closed mortgage
  35. The income received from rented units in a property divided by the income that could be received if all the units were occupied.
    Occupancy rate
  36. One qualified to render expert testimony.
    Expert witness
  37. A written instrument which, when properly executed and delivered, conveys title.
    Deed
  38. Any conditions revealed by a title search which affect the title to property; usually relatively unimportant items but which cannot be removed without a quit claim deed or court action.
    Cloud on the Title
  39. Largest estate of ownership in real property in which the owner holds all rights not reserved by society.
    Fee simple
  40. A building, part of building, or obstruction which intrudes upon or invades a highway or sidewalk or trespasses upon property of another.
    Encroachment
  41. Environmental impact statement refers to the documents or studies on the environmental impacts of a project including the discussions on direct and indirect consequences upon human welfare and ecological and environmental integrity.
    EIS
  42. Property owned in common by the husband and wife.
    Conjugal property
  43. It is the document issued by the DENR Secretary or the Regional Executive Director certifying that based on the representation of the proponent and the preparers, as reviewed and validate by the EIARC, the proposed project or undertaking will not cause a significant negative environmental impact; that the proponent has complied with all the requirements of the EIS System, and that the proponent is committed to implement its approved EMP in the EIS or mitigation measures in IEE.
    ECC
  44. A person appointed by the probate court to administer the estate of a deceased person.
    Administrator
  45. It is a judgment for the mortgagor to pay the balance of the obligation if the proceeds of the foreclosure sale are not sufficient to cover the principal obligation.
    Deficiency judgment
  46. A provision in a contract providing for periodic proportional upward or downward adjustment of price or consideration.
    Escalation clause
  47. An agreement between a buyer and a seller whereby there is transmission of ownership on the object of the contract.
    Contract of Sale
  48. Property sales that was made with the primary intentions of selling in a short amount of time.
    Quick sale
  49. A general term used to describe financing techniques a typical of the majority of transactions. Financing may differ by amount of principal, interest rate, or payment terms.
    Creative financing
  50. A loan in which payments start low and increase over the term of the loan. The graduated payment mortgage is designed to help borrowers match payments with projected increases in income.
    Graduated payment mortgage ( GPM )
  51. The addition of improvements to land ( utilities, roads, grading and services ) that makes the land suitable for resale as developable sites for housing or other purposes.
    Land development
  52. Environmentally critical project is a project that has a high potential for significant negative environmental impact.
    ECP
  53. A stipulation in a mortgage of several properties providing that when a buyer of one or more lots pays in full the purchase price, a portion of the payments shall be applied to the mortgage obligation and the mortgagee shall correspondingly release said lot or lots from the mortgage.
    Automatic redemption clause
  54. The right of the government to acquire property for necessary public or quasi-public use.
    Eminent domain
  55. An agreement entrusted to a third person to be held by him until the performance or fulfillment of some act or conditions ETHICS – That branch of moral science, idealism, justness, and fairness, which treats of the duties that a member of a profession or craft owes to the public, to his clients or patron, and to his professional brethren or members.
    Escrow
  56. The loss of money or anything of value, due to failure to perform, such as under an agreement to purchase.
    Forfeiture
  57. Payment in kind. Payment of the debt or obligation with a property.
    Dacion en pago
  58. Right of the original owner to reclaim property sold through judicial foreclosure proceedings by payment of debt, interests, and cost.
    Equity of redemption
  59. A claim of a person on property owned by another.
    Adverse claim
  60. A hold or claim which one person has upon a property of another as security for a debt or charges, judgments, mortgages.
    Lis Pendens
  61. The interest or value which an owner has in real estate over and above the mortgage against it.
    Equity
  62. The price which is willing seller will sell and a willing buyer will buy, neither being under abnormal pressure.
    Market value
  63. The periodic addition to equity caused by the gradual reduction in the mortgage balances as a result of periodic principal repayment provided for in a loan repayment contract.
    Equity build-up
  64. A document executed by a property owner which creates or converts his property into a condominium pursuant to Rep.Act.4726.
    Master Deed
  65. An annotation in the Title which serves as notice that the property is subject to a pending litigation.
    Lis pendens
  66. A contract of sale with the stipulation that the vendor shall have the right to buy back the property within the agreed period.
    Pacto de retro sale
  67. Means the development of land for residential, commercial, industrial, agricultural, institutional and recreational purposes, or any combination of such including, but not limited to, tourist, resorts, reclamation projects, building or housing projects, whether for individual or condominium ownership, memorial parks and others of similar nature.
    Real Estate Development Project
  68. A person in a position of trust and confidence, as between a principal and a broker; the broker as fiduciary owes certain loyalty which cannot be breached under rules of agency.
    Fiduciary
  69. Measurement and boundaries. A term used in describing the boundary lines of land, setting forth all the boundary lines, together with their terminal points and angles.
    Metes and bounds
  70. The improvement which does not produce an adequate return for the amount invested on a building or property. An improvement which is not suitable to the site on which it is placed due to excessive size or cost.
    Over – improvement
  71. A lien created by law which exists in favor of persons who have performed or furnished materials in the erection or repair of a building.
    Mechanic lien
  72. Provincial Environment and Natural Resources Officer of the DENR.
    PENRO
  73. The right of the state to enact laws and enforce them for the order, safety, health, morals and general welfare of the public.
    Police power
  74. A deed of release or renunciation of a legal right. A deed to relinquish any interest in property which the grantor may have had a protest or adverse claim.
    Quitclaim
  75. A deed used to convey real property which contains warranties of the tilte and quiet possessions. In a warranty deed, the grantor is to defend the premises against the lawful claims of the third person.
    Warranty deed
  76. A lease of a property in which the rental is based upon the volume of sales made upon the leased property.
    Percentage lease
  77. Real Estate Service Act of the Philippines ( R.A. No. 9646 )
    RESA
  78. Subjective Value. The property’s value to its occupants or users.
    Value in use
  79. A principal is commonly known as the person who engages the agent for representation.
    Principal
  80. The proof or act of proving at a court that a last will and testament is actually that of the deceased person.
    Probate
  81. Shall refer to and shall consist of Real Estate Salesperson, Real Estate Broker, Real Estate Appraiser, and Real Estate Consultant.
    Real Estate service practitioners
  82. All or part of a standard rule of USPRCP from which departures is not permitted.
    Binding requirements
  83. Considered judgment arrived at after careful investigation and analysis, discussion and deliberation with the client in a consulting engagement.
    Advice
  84. The exercise of police power by the municipality or city and regulating and controlling the character and use of property.
    Zoning ordinance
  85. Includes all the rights and benefits related to the ownership of real estate.
    Real property
  86. A writ authorizes and direct the proper officer of the court, usually the sheriff to carry into effect a judgment or decree of the court.
    Writ of execution
  87. A study of the anticipated movement of cash into or out of an investment.
    Cash flow analysis
  88. The provision of competent, disinterested an unbiased advice, professional guidance, and sound judgment on diversified problems in the broad field of real estate, on a fee basis, by qualified professionals who subscribe to a suitable standards of practice and code of professional ethics.
    Consultancy
  89. Regional Executive Director of DENR
    RED
  90. Objective Value. Property’s value to an impartial buyer who represent the market.
    Value in Exchange
  91. A mortgage containing a clause which permits the mortgagor to borrow additional money after the loan has been reduced, without re-writing the mortgage.
    Open-end mortgage
  92. Environmentally critical Area is an area that is environmentally sensitive.
    ECA
  93. The estate benefits drives from the servient estate in an easement.
    Dominant estate
  94. It means that if at the end of the period of lease, the lessee continues to enjoy the thing leased with the acquiescence of the lessor, it is understood that there is an implied new lease.
    Tacita Reconducta
  95. A mortgage which can be paid off at any time even before its maturity.
    Open mortgage
  96. A stipulation which prohibits the mortgagor from alienating the property within the period of the mortgage.
    Pactum de non aliendo
  97. It is one way of how an agency relationship is created. It means that if a person having no authority whatsoever purports to act as an agent and the purported principal later adopts the acts of that agent, an agency relationship has retroactively been created.
    Ratification
  98. Any question or doubt arising from historical or prospective realty investment desire dealing with difficult decision on available alternative courses of action, project, or situation. This calls for the Consultan’t decision-making service.
    Client’s objective
  99. As defined under RESA “ a natural or juridical person who, for in expectation of a fee, compensation or other valuable consideration offers or render professional advice and judgment or: ( 1 ) The acquisition, preservation, utilization, or disposition of land or improvements thereon, or valuable rights existing or to be created thereon. ( 2 ) The conception, planning and development of realty projects, which may or otherwise encumber units like subdivision lots, condominium units, market stalls, memorial parks, and like “
    Real Estate Consultant
  100. The information pertinent to a specific assignment. Such data may be divided into four different classes: General ( relating to the economic and demographic background, the region, the city and the neighborhood ), Specific ( relating to the subject property and comparable properties in the market ), Primary ( information gathered by the Consultant that is not available in a published source, such as property dimensions and characteristics ), and Secondary ( published information such as census data ).
    Data
  101. An analysis of the amount of space ( usually expressed in square meter ) or the number of units ( absorption rate ) that can be sold, leased, put into use of traded on the market during a predetermined or estimated period of time ( absorption period ), and at prevailing prices or rentals.
    Absorption analysis
  102. The date of the transmittal letter of a written report or the date a written report lacking a transmittal letter is prepared by the Consultant. The date of an oral report is the date it is communicated to or for the client. The date of the report may or may not be the same as the effective date at which the anlyses, opinion, and advice in a consulting service apply.
    Date of the report
  103. Refers to a real estate project that is able to meet defined financial investment objectives, the ability of a project to produce sufficient cash flows to repay all the expenses involved in creating and marketing the project plus provide a competitive return to the owner/developer. A criterion of highest and the best use analysis.
    Economically feasible
  104. Any question, doubt, uncertainty, or difficulty arising from a historical realty situation in which something has gone wrong from a normal situation without yet available explanation. This calls from the Consultans.
    Clients problem
  105. The reasonable and probable use that result in the highest present value of the land after considering all legally permissible, physically possible and economically feasible uses. Capitalization rates or discounts rates for each feasible use should reflect typical returns expected in the market. Highest and the best use is usually determined under two diffirent premises; as if the site was vacant and could be improved in the optimal manner or as the site is currently improved.
    Highest and best use ( HBU )
  106. A letter accompanying a consulting report that formally presents the report to the person who requested it and may include information such as; address and description of the property problem, or property interest subject of consulting engagement, statement that property inspection and all necessary analyses were completed by the Consultant, date of consulting report, summary conclusion and recommendations any extraordinary assumptions or limiting conditions, consultants signature and reference to accompanying consulting report.
    Letter of transmittal
  107. Right of an occupant of land to acquire Title against the real estate owner, where possession has been actual, continuous, hostile, visible, and distinct and in the concept of owner for the statutory period.
    Adverse possession
  108. A shortened consulting report that states the conclusions and recommendations of the Consultants study and analysis. This report typically contains a statement of the problem or issues of the subject of consulting engagement, purpose of the consulting engagement, a description Letter report
  109. Specifications in a consulting report that restricts the assumptions in the report to certain situations, for example, date and use of the consulting service, definition of value, identification of real estate and property rights being valued, definition of surveys used or not used.
    Limiting condition
  110. A study of a proposed economic activities capability of being accomplished under certain conditions and assumptions of marketing, technical, or financial aspects. Also, a study of the cost-benefit relationship of an economic activity.
    Feasibility analysis
  111. The identification and analysis of submarkets within a larger market, resulting in the classification of consumers or buyers into relatively homogeneous groups based on their economic, demographic and/or psychographic characteristics ( such as attitudes, habits, and lifestyle ). This processes the potential users of the subject property from the general population, according to defined consumer characteristics.
    Market segmentation
  112. A technique used to determine just compensation for land that has been partially taken through condemnation. In this method, the value of the property before condemnation and after condemnation is determined. The value of the remaining property not taken through the condemnation is the difference between the value before and after condemnation.
    Before and after method
  113. A series of cash flows in which payments occur at regular intervals. The payments could be equal or could represent mathematically related or non-mathematically related patterns.
    Annuity
  114. The act or process of providing information, analysis of real estate data, and recommendations of conclusions on diversified problems in real estate, other than estimating value in a disinterested manner.
    Consulting
  115. The desire to buy to satisfy need coupled with the ability to pay. When the word demand is used in economic writings, this demand is usually assumed.
    Effective demand
  116. Information that is not specific to a certain property, e.g., interest rates, employment rates and census information.
    General data
  117. The process of forecasting future trends based on current and past data patterns and relationships. Extrapolation assumes that the same economic factors that affected past trends are likely to continue over the forecasting period.
    Extrapolation
  118. The date at which the analyses, opinions, and advice in an appraisal, review or consulting service apply.
    Effective date
  119. The use for a property which will bring the optimum or highest returns or advantage as of a certain time.
    Highest and best use principle
  120. A stipulation which authorizes the mortgagee to appropriate the property as his own upon failure of the debtor to fulfill the principal obligation.
    Pactum commissorium
  121. Delay or negligence in asserting one’s legal right.
    Latches
  122. Anything which affects or limits the fee simple title to property, such as mortgages, easements, or restrictions of any kind. Liens are money encumbrances which make the property security for the payment of a debt or obligations, such as mortgages and taxes.
    Encumbrances
  123. The clause in a mortgage that gives the mortgagor the right to redeem his property upon the payments of his obligations to the mortgagee.
    Defeasance clause
  124. Property exclusively owned by the wife.
    Paraphernal lease
  125. Real Estate Investment Trust.
    REIT
  126. The use or uses of a consultants reported consulting engagement, opinions and conclusions, as identified by the consultant based on communication with the client at the time of the engagement.
    Intended use
  127. Information gathered by the Consultant that is not available in a published source.
    Primary data
  128. A real estate analysis of a specific property that addresses the ability of the property to be absorbed, sold or leased under current and anticipated market conditions.
    Marketability study
  129. The time period during which an income property is expected to this lease up to a level stabilized occupancy. Stabilized occupancy assumes rental achievement at market levels as well as physical occupancy at stabilized levels.
    Rent-up period
  130. Any written communication of a consulting service that is transmittal to the client upon completion of an engagement.
    Report
  131. A method of estimating property value by discounting on expected future cash flows to a present value by a rate typical for investors in the marketplace for the interest being valued. The approach may or may not explicitly include financing.
    Yield capitalization
  132. The authoritative rule which serves as guide to achieve competent and ethical practice in developing and reporting the consulting service.
    Standard
  133. Personalized evidence indicating authentication of the work performed by the consultant and the acceptance of the responsibility for content, analyses, and the conclusion in the report.
    Signature
  134. The client and any other party as identified, by name or type, as users of the consulting report, by the consultant based on communication with the client at the time of the engagement.
    Intend user
  135. Refers to both real estate and real property. ( In some jurisdiction or usage, the terms real estate and real property may have the same meaning. The separate definition recognizes the tradition as two concepts in appraisal and consulting theory ).
    Realty
  136. Data obtained from published sources that have been collected by the consultant, e.g., census information, demographic information and published interest rates. See also data, primary data.
    Secondary data
  137. The relative ease with which a person can enter or exit a site or building. Accessibility is important when determining the suitability of a site or a building for a particular use.
    Accessibility
  138. All or part of a standard rule of USPRCP from which departure is permitted under certain conditions.
    Specific guidelines
  139. An appraisal or consulting that estimates the market value of a property to be acquired for a public use by a government so that just compensation can be offered to the property owner.
    Acquisition appraisal/consulting
  140. Income that remains from net operating income ( NOI ) after debt service is paid but before ordinary income tax on operations is deducted. Also called equity dividend or per tax cash flow.
    Before-tax cash flow ( BTCF)
  141. The risk associated with the uncertainty of future income flows caused by the nature of a business. In real estate, business risk includes future variability in rents, vacancies, and operating expenses.
    Business risk
  142. The process of converting future income top a present value by mathematically reducing future cash flow by the implied interest that would have been earned assuming an initial investment, an interest rate and a specified period (possibly divided into shorter equal periodic increments ).
    Discounting
  143. The main tenant in a shopping center that attracts shoppers or traffic. Anchors are strategically placed to maximize sales for all tenants. The type of anchor depends on the type of shopping center e.g.,supermarket is a typical anchor for a neighborhood shopping center, whereas a major chain or department store is a typical anchor for a regional shopping mall.
    Anchor tenant
  144. The ratio of the total amount of the loan divided by the invested capital ( equity ) of the owner(s).
    Debt-equity ratio
  145. A ratio that represents the relationship between a particular year’s cash flow and the present value or the interest applicable to the cash flow.
    Capitalization rate
  146. The act of combining two or more parcels of land into 1 large tract; usually done to allow the construction of a larger building in the hope that it will produce more income than several smaller buildings. An additional value ( plottage value ) may be created above and beyond the sum of values of the separate parcels when the land is joined together.
    Assemblage
  147. An ownership concept that describes real property by the legal rights associated with owning the property. It specifies rights such as the rights to sell, lease, use, occupy, mortgage, and trade the property, among others. These rights are typically purchased by the buyer in a sales transaction unless specifically noted or limited in the site.
    Bundle of rights
  148. The process of valuing the property for tax purpose. The assessed value may or may not equal the market value.
    Assesses valuation
  149. In condominium developments, the percentage of ownership held by one owner as compared to the whole property; may be measured on a square meter or price basis, e.g., the ratio of the square meter of one condominium as compared to the total square meter of all condominiums.
    Common Interest
  150. 150. An analysis of the impact of proposed land use on its environment. Including the direct and indirect effects of the project during all phases of use.
    Environmental impact study ( EIS )
  151. The price or outlay of funds required to obtain rights in a property. Its cost includes expenses such as closing costs, mortgage loan origination fees, legal and consulting fees.
    Acquisition cost
  152. A loan that is secured by more than one property or lot. It is commonly used in construction financing for subdivision or condominium development.
    Blanket mortgage
  153. A selection of a city in which a majority of the structures are dilapidated.
    Blighted area
  154. In surveying, a horizontal angle from 0 to 90 that specify the direction of a course or angle in relation to true north or south.
    Bearing
  155. A public record of the assessed value of property in a taxing jurisdiction.
    Assessment roll
  156. In an eminent domain proceeding, benefits are the betterment gained from a public improvement for which private property was taken in the condemnation.
    Benefits
  157. An estimate of the total time period over which a property can be successfully sold, leased, put into
    • use or traded in its market area at prevailing prices or rentals.
    • Absorption period
  158. The party who engages a consultant by contract in a specific engagement.
    Client
  159. The product of disaggregation, defines a relatively homogenous supply of housing units that tend to be occupied by a relatively homogenous group of households. For example, the sub-market of 2bedroom one-level houses selling for P180,000 to P200,000 tends to be occupied by households with similar economic, social and demographic characteristics.
    Housing sub-market
  160. The act or process of evaluating ad giving advice on a property or a development projects for its viability in terms of ROI, pertains to consulting and related functions, e.g., HABU analysis, location/site analyisi, market study services.
    Consultancy
  161. Reversion of property to the state owing to lack of any heirs capable of inheriting; or due to other causes provided by law.
    Escheat
  162. The work or service performed by real estate consultants, as defined by USPRCP terms in these standards; evaluation, review, and consulting.
    Consulting practice
  163. An addition to land from natural causes as, for example, from gradual action of the ocean or the river waters.
    Accretion
  164. A study that reflects the relationship between acquisition price and anticipated stream of future benefits of a real estate investment.
    Investment analysis
  165. The sudden removal of land from one parcel to another, when a body of water, such as a river, abruptly changes its channel.
    Avulsion
  166. An identified parcel or tract of land including improvements, if any.
    Real Estate
  167. The interest, benefits, and rights inherent in the ownership of real estate.
    Real property
  168. An estimate of the number of units or square meter per time period of a particular property type that can be successfully sold, leased, put into use or traded in its market area at prevailing price or rentals.
    Absorption rate
  169. The value resulting from business organization including such things as management skills, assembled work force, working capital, trade names, franchises, patents, trademarks, contracts, leases, and operating agreements.
    Business value
  170. Any process of converting income into an estimate of value.
    Capitalization
  171. The use of borrowed funds to acquire a capital investment, as opposed to investing one’s own funds. In real estate, the property itself usually serves as the security for the debt.
    Debt financing
  172. The quantity of real property desired at a certain price at a specific time in a market area and/or market segment.
    Demand
  173. The market in which long-term or intermediate-term money instruments are traded by buyers
    • and sellers.
    • Capital market
  174. The surface space defined by two-dimensional boundaries of a building, lot, market, city or other such space, measured in square units. For example, a rectangular building that measures 30 meters has an area of 3,000 square meters.
    Area
  175. Dispersion from a central point. (1) The movement of people, industry, and business from the city to the suburbs, rural urban fringe, and/or smaller cities (2) The breakdown of an existing business into smaller units or expansion through the establishment of separate units.
    Decentralization
  176. A price expressed in terms of cash as distinquished from a price that is expressed all or partly in terms of the face or nominal amount of notes or other debt securities that cannot be sold on the market at their face amount.
    Cash equivalent
  177. The exercise of the power of eminent domain by the government, i.e., the right of the government to take private property for public use.
    Condemnation
  178. The periodic income or loss arising from the operation and ultimate resale of an income producing property. The cash flow could further be classified as either before-tax or after-tax cash flow and could also reflect the impact of financing. See also before-tax cash flow ( BTF ), after-tax cah flow ( ACTF ).
    Cash flow
  179. Debt instruments that are issued using a pool of mortgages for collateral. The issuer retains the ownership of the mortgage pool and issues bonds as debts against the mortgage pool. However, all amortization and prepayments flow through to investors.
    Collateralized mortgage obligation (CMO)
  180. The total change in property value over a holding period.
    Change in property value
  181. A clause in the Deed of a property that limits its type of use or intensity of use; usually passes with the land regardless of the owner.
    Deed of restriction
  182. The nature in which a city grows outward from its point of origin ( siting factor ). City growth can be affected by availability of developable land, technology, transportation modes and the willingness and ability of the local government to provide needed services. For example, cities such as Manila and Makati, which have relatively scarce land, grow with an increasing density of land use.
    City growth
  183. The industry in a geographic area that provides employment opportunities and allows it to attract income from outside its boundaries.
    Economic base
  184. In a condemnation proceeding, damages that are legally required to be paid to the owner or tenant of a property that is being wholly or partially condemned. Damages are usually limited to the loss of value in the property. Sentimental value, inconvenience, and loss of business not related to the real estate are not typically compensable. Physical invasion of the property by a condemning authority or the taking of some property right must usually occur before damages are considered compensable.
    Compensable damages
  185. An annual financial report that shows income, expenses, and profits and is often used to evaluate the return on the investment in the property.
    Cash flow statement
  186. A study of the fundamental determinants of the demand and supply for all real estate in a local economy. Population, households, employment and income are the principal variables on the demand side of local economic analysis. Past trends and forecast of these basic demand determinants are made for a defined geographic area. Factors on the supply side of the local economy such as the amount of land available for specific land uses, construction costs, local infrastructure, etc. are also considered. Economic base analysis and input-output analysis are two techniques to describe the local economy.
    Local economic analysis
  187. A person who charges a fee for rendering consulting service involving real estate problem or issues.
    Fee consultant
  188. The cost to build a structure including direct cost of labor and materials, contractor’s overhead and profit plus indirect cost such as taxes and construction loan interest. Distinguished from original cost, which is the cost to the present owner who may have paid more or less than the cost of construction.
    Construction cost
  189. A legal instrument, similar to a mortgage that conveys title to property to a third-party trustee and secures an obligation owned by the borrower to the lender.
    Deed of trust
  190. Something of value offered as a guarantee or security for the fulfillment of a financial obligation.
    Collateral
  191. Items that are in need of repair because upkeep and repairs have been delayed, the result of which is physical depreciation or loss in value of a building; a type of physical deterioration that is usually curable.
    Deferred maintenance
  192. Identification of the properties in a market or trade area that have similar characteristics and attract the same potential buyers or space users.
    Competitive analysis or survey of competition
  193. Costs that are readily identified in the construction of real estate, such as labor, materials, and contractor’s overhead and profit.
    Direct costs
  194. A systematic analysis based on specific methodology that seeks to identify and measure any effect on economic activity or market indicators resulting from the location, introduction or change of a major land-used activity within the market area. Examples are proposed overhead high-voltage electric transmission line traversing the area or the sudden availability of unexpected information about a major employer or land user in the area.
    Economic impact study
  195. The group of properties that are in the same classification and complete directly with the subject property in the immediate market area.
    Competitive market segment
  196. A structure designed for occupancy as living quarters by one or more households. A dwelling is usually equipped with cooking, bathing and heating facilities. It does not include atructures used on a transient basis, such as hotels or motels.
    Dwelling
  197. In economics, refers to the ability of a product to maintain a quantity level of supply or demand as the price of that product changes. It measured as the percent change in quantity supplied or demanded divided by the associated percent change in price.
    Elasticity
  198. In accounting, a method of recognizing and recording items of income and expense to the period in which each is earned or incurred, respectively, regardless of the date of actual payment or collection.
    Accrual system
  199. A financing technique in which the seller finances part of the purchase through a note secured by a junior mortgage or contract for deed.
    Carryback financing
  200. One who transforms rawland to improved property by use of labor, materials, capitals and entrepreneur efforts in an attempt to put land to its most profitable use.
    Developer
  201. A study that analyze the economic activity of a community, used to predict population, income and other variables that affect real estate values or land utilization based on the relationship between basic and non- basic employment.
    Economic base analysis
  202. A peso figure that represents only real growth and does not include inflation.
    Constant peso
  203. The ability to formulate an opinion, estimate or conclusion about an issue or problem, given that data or evidence available.
    Judgment
  204. The area a housing consumer occupies ( sleeping, eating, bathing, etc.). The term housing unit generally implies exclusive control by the occupant over the sleeping quarters but does not necessarily imply exclusive occupancy of kitchen, bathroom and living areas. Technically, the term dwelling unit refers to a housing unit that contains private kitchen and bathroom facilities, as well as private sleeping and living areas that are exclusively occupied by the household.
    Housing unit
  205. Peso projections that account for only real growth and not for inflation.
    Constant peso projections
  206. A multi-unit structures or property in which persons hold fee simple title to individual units and an individual interest in common areas.
    Condominium
  207. The study of the characteristics of the population in an area, especially in reference to size, density, distribution, charactereistics and changes in those variables. Used particularly in the valuation of commercial properties.
    Demography
  208. A form of ownership in which each resident of a cooperative apartment building as purchased shares in a corporation that holds title to the building. The individual pays a proportionate share of operating expenses and debt service on the building owned by the corporation, based on the amount of stock held in the corporation. In return for stock in the corporation, the individual receives a lease granting occupancy of a specific unit in the building.
    Cooperative ownership
  209. A decision-making process, often used in public finance, that forces the decision maker to compare all direct and indirect positive and negative effects of the proposed decision on an objective basis, usually in pesos. Benefits must exceed cost to justify his projection or adopt the policy.
    Cost-benefit analysis
  210. The sum of money an entrepreneur expects to receive in addition to costs for the time and effort, coordination and risk bearing necessary to create project. The portion associated with creation of the real estate by a developer is referred to as developer’s profit. Properties that also include additional entrepreneurial profit that is reflected in the going-concern value of the property.
    Entrepreneurial profit
  211. Any method whereby the analyst prepares a cash flow forecast ( including income from operations and resale), selects a discount rate that reflects the return expected for the interest and uses the rate to calculate the present value of each of the cash flows. The total present value of the cash becomes the value estimate for that interest. Sometimes the cash flow forecast is based on an assumed pattern of change, e.g., compound growth.
    Discounted cash flow analysis
  212. The sum of money a developer expects to receive in addition to costd for the time and effort, coordination and risk-bearing necessary to develop real estate.
    Developer’s profit
  213. An agreement by which a lender receives some share of the income and/ or cash flow of a property. The participation might be based on a percentage of the net operating income, cash flow from operations and/or the gain from sale of the property.
    Equity participation
  214. The value of a property which includes the value due to successful operating business enterprise which is expected to continue. Going-concern value results from the process of assembling the land, building, labor, equipment, and marketing operation and includes consideration of the efficiency of plant, the know-how of management, and the sufficient of capital.
    Going-concern value
  215. Any of 3 different types of space in a house, characterized by the type of use for that area. For example, the private sleeping zone includes the bedrooms, bathrooms, and dressing rooms: the living social zone includes the living room, dining room, family or recreation room, den and any enclosed porches: the working service zone includes the kitchen, laundry, pantry and other work areas, Halls, stairways and entrances are considered circulation areas.
    House zone
  216. The use of borrowed funds in the purchase of an investment. If the addition of the mortgage increases the return to the equity ( equity dividend rate or equity yield rate ), the addition of the mortgage has resulted in positive leverage. If the addition of the mortgage decreases the return to the equity, the addition of the mortgage has resulted in negative leverage.
    Leverage
  217. A charge levied against developers of new residential, industrial or commercial properties by a municipal government to help pay for the added costs of public services generated by the new constructions, for example, charges for hook-up costs for water and sewer lines, road improvements, and extra needs for school, fire and police service.
    Impact fees
  218. The estimate time period during which an improvement yields a return over the economic rent attribute to the land itself; the estimated time period over which an improved property has value in excess of its salvage value.
    Economic life
  219. A map showing and identifying the location of land that has been subdivided into individual lots. Locations are identified by lots,blocks and sections. Also given may be details such as streets, public easements, monuments, floodplains and elevations. When subdividing land, the developer generally presents a preliminary plat to the appropriate officials for consideration, and then files a final plat after improvements are made and approved.
    Plat
  220. The process of calculating investment returns for multiple sets of assumptions in order to assess the impact that changing the inputs has on the measures of return.
    Sensitivity analysis
  221. All tangible fixed assets ( tools, tooling, conveyor and other personal property) other than real estate used in any way to facilitate any manufacturing, assembly or warehousing activity. Distinguished from fixed building equipment.
    Machinery and equipment
  222. A rate of return that discounts all expected future cash flows to a present value that is equal to the original investment. An IRR can be calculated for any defined cash flows, for example, for the whole property or for just equity position. Also called yield rate.
    Internal rate of return ( IRR )
  223. Real estate that is under FORECLOSURE or impending foreclosure because of insufficient income production. Any property that fails to continuously generate enough income to support the funds to develop it.
    Distressed Property
  224. Housing units that are actually under construction. The actual number of housing starts may differ from the number of building permits issued. The number of housing starts is often used as an economic measure.
    Housing starts
  225. Testimony of persons who are skilled in some art, science, profession, or business, that skill or knowledge is not common to others, and that has come to such experts by reason of special study and experience in such art, science, profession, or business.
    Expert testimony
  226. A sale that occurs because the mortgagor is unable or unwilling to make payments on the loan
    • A forced sale may occur under bankruptcy proceedings or to satisfy other outstanding liens.
    • Forced sale
  227. A type of zoning that excludes racial minorities and low-income people from an area. This zoning may be intentional or unintentional, e.g., specification of a minimum structure size.
    Exclusionary zoning
  228. An updating technique that used population and household size figures from the previous census, local area data on building permits, demolition, conversions and vacancies since the last census to estimate the current number of households.
    Housing inventory method
  229. Vacant sites or land improved with buildings devoted to or available for use for human habitation, e.g., single-family houses, rental apartments, residential condominium units, rooming houses. Hotel or Motels are not considered this kind of property.
    Residential property
  230. Money or capital used to purchase an interest in a property, usually with the intention of receiving some sort of cash flow or profit from the property plus a recovery of the initial outlay of funds. Is usually considered a more long-term use, as distinguished from speculation.
    Investment
  231. Local zoning codes designed to regulate the density of development on land, including restrictions on the minimum and maximum of the floor area per land area, and living space and recreation space requirements. Important in the development of planned unit developments.
    Land-use intensity
  232. A land use that is incompatible or that interferes with the surrounding lands uses, for example, activities that produce excessive noise or pollution in a residential area, a junkyard in a residential or other highly visible area or activities that area or activities that are not socially acceptable.
    Nuisance
  233. (1) The ability and willingness to pay for an economic good. (2) The appropriate multiplication of an income level by the number of customers. If household are the consuming unit, then mean household income should be use in conjunction with number of households to form the purchasing power variable.
    Purchasing power
  234. Total horizontal surface of a specific floor, or the total area of all floors in a multistory building, computed from the outside building dimension of each floor. Balcony and mezzanine areas are computed separately and added to the total floor area.
    Floor area
  235. A comparison of demand and supply to determine the existence of present and future demand or excess supply in a market. Another way of expressing the same thing is through the use of phrase “unmet demand or supply shortages”.
    Gap analysis
  236. The earth’s surface including the solid surface of the earth, water and anything attached to it; natural resources in their original site, e.g., mineral deposits, timber soil. In law, land is considered to be the solid surface of the earth and does not include water.
    Land
  237. Property rights that might be purchased with real estate, land building and fixtures that are either tangible or intangible personal property such as furniture in a hotel or the franchise ( business) value of the hotel.
    Non-realty interest
  238. The number of years required for cumulative income from an investment to equal the amount initially invested. The payback period does not consider the time value of money and therefore, is not discounted cash flow analysis technique. See also discounted cash flow analysis ( DCF )
    Future value
  239. A method of valuing residential, industrial or recreational land to be used for subdivision development. The analysis is typically used in feasibility studies and when comparable sales are scarce.
    Subdivision analysis
  240. A specific provision in a construction budget for unforeseeable elements of cost that may be encountered within a construction project. Contingencies are different from escalation costs which account for price-level changes overtime.
    Contingency allowance
  241. The total floor area of a building measured in square meter from the external walls, excluding unenclosed areas. Unlike gross living area measurements.
    Gross building area ( GBA )
  242. The process of investigating the subgroups of the population who express demand for real estate by analyzing their economic, demographic and psychographic characteristics ( such as attitudes, habits and lifestyles.).
    Consumer research
  243. The cost to create a project including direct costs of labor and materials, contractor’s overhead and profit plus indirect costs such as taxes and development loan interest.
    Development cost
  244. A measurement of land that above the street line or other landmark such as a river or lake. A front meter measurement is typ[ically used for lots in urban areas of near-uniform depth.
    Front meter
  245. The ratio of benefits generated by an improvement divided by the cost of that improvement. The ratio must exceed 1.00 for the improvement to be considered desirable. The alternative term, benefit-cost ratio, is actually more descriptive.
    Cost-benefit ratio
  246. The ease with which building permits for a project may be obtained, as well as the proposed project’s ability to meet other regulatory requirements.
    Development feasibility
  247. The climate, topography, natural barriers, transportation systems and other factors of location that affect the value of the property.
    Environment
  248. A misconception occurring when an analyst become overly optimistic about a project. Occurs when the analyst is swayed by the client’s enthusiasm for the product and begins to believe that the project is unjustified unique in character.
    Volitional fallacy
  249. A mortgage that is not insured or guaranteed by a government agency but may be privately insured.
    Conventional mortgage
  250. The number of people in a community who are gainfully employed.
    Employment base
  251. In economics, the four factors of production are
    Land, labor, capital, and entrepreneurship
  252. The law of supply and demand is
    A basic economic principle
  253. 253. Which of the following is NOT an agent of production?
    Transportation
  254. Political forces affecting value may include
    Government spending and taxation policy
  255. What are the 2 categories of tangible property?
    real property and personal property
  256. Zoning is an exercise of the
    Police powers
  257. Which of the following types of property is subject to ad valorem taxation?
    Commercial buildings leased in part by nonprofit foundation
  258. A person owning less than the entire bundle of rights has
    A partial interest
  259. A metes and bounds description begins and ends with the
    Point of beginning
  260. A ____identifies a property in such a way that it CANNOT be confused with any other property.
    Legal description
  261. All of the following statements are true EXCEPT
    Real property is a type of service
  262. All of the following will affect the market value of a property EXCEPT
    Acquisition cost to present owner
  263. 263. Market value is ____the same as selling price.
    Sometimes
  264. 264. Price is
    A historical fact
  265. 265. Functional utility depends on
    Tastes and standards
  266. 266. Value in use is
    subjective
  267. The value added to total property value by a particular component is an example of the principle of
    contribution
  268. The concept that the value of a particular component is measured by the amount that its absence would detract from the value of the whole is
    contribution
  269. The market loss caused by depreciation in an older structure may be offset by all the following EXCEPT ;
    renovation of the structure
  270. Studying appraisal helps a person
    (a)To improve value estimation skills,(b) To pass the real estate broker’s license examination,(c) To understand other real estate courses,(d)To communicate with appraisers,(e) All of the above
  271. A dramatic change in short-term demand for real estate in the local market is likely to immediately precipitate
    Price changes
  272. The area and community analysis section of an appraisal report
    should describe the community objectively
  273. In analyzing the economic environment and market area, it is best to
    start at the general level and work down to the specific
  274. Which of the following reports is usually NOT prepared by a real estate appraiser?
    Transportation network study
  275. An appraisal of a specific-purpose property for insurance purposes would depend most heavily on;
    Cost estimate
  276. The first step in the appraisal process is to
    Define the problem to be solved
  277. An appraisal is
    a defensible estimate of market value
  278. The “as of ” date in an appraisal report is
    often the date of the last inspection
  279. Sales data descriptions of an appraisal report contain
    details about each comparable sale
  280. All of the following are ways to delineate a neighborhood EXCEPT
    utility service
  281. All of the following are sources of comparable sales EXCEPT
    mortgage services
  282. Which of the following criteria most completely define “highest and best use”?
    Physically possible, legally permissible, financially feasible, and generating a higher present land value than any other use.
  283. The 3 basic approaches used to estimate value are
    Cost, sales comparison, and income capitalization
  284. Units of comparison are used in
    (a) only the sales comparison approach,(b) only the cost approach,(c) only the income capitalization approach
  285. Final value estimates should be rounded to reflect the
    Lack of precision associated with an opinion
  286. When reconciling the adjusted sales prices of comparables, the greatest emphasis should
    • be given to;
    • (a) The average,(b) The medium, (c) The mode, (d) The mean of A,B, and C,(e) None of the above
  287. Which of the following forms of appraisal reports is NOT recommended?
    Telephone conversation
  288. Which of the following approaches would probably be given the most weight in
    • appraising a large office building ?
    • income capitalization
  289. The form in which a formal appraisal is presented is called
    a value certification
  290. The form of an appraisal report
    has no influence on the appraisal process
  291. The effective age and the useful life of a building represent judgments made by the
    appraiser
  292. The period over which existing improvements are expected to continue to contribute to
    • property value is their
    • remaining economic life
  293. For the building, effective age is best defined as
    the age of other property in equivalent condition and utility
  294. The utility of real estate is its
    capacity to satisfy human needs and desires
  295. In appraising a residence, adjustments are NOT made to the comparable property for;
    assessed valuation
  296. When a site has improvements on it, the highest and best use
    may be different from its existing use
  297. To be considered as a comparable, a property
    (b) must be competitive with the subject,(c) must have been sold by an open-market transaction,(e) both B and C
  298. The direct sales comparison approach is better than the income or cost approach Because;
    (a) fewer comparable properties are required, 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 is true
  299. The appraisal of an established 20-year-old motel on a road with numerous competitive motels would most likely be based on the;
    number of units
  300. In applying gross rent multiplier analysis to the subject property, the appraiser would use the;
    market rental
  301. In estimating the market value of a comparable sale, an appraiser must consider all of
    • the following EXCEPT
    • Whether the replacement cost of the property corresponds to its market value
  302. The terms of financing, whether good or bad,
    Have no effect on the market value
  303. Adjustments for the property rights conveyed, financing, conditions of sale, date of sale, and location are often made to the ___of the comparable property.
    Actual sales price
  304. Cumulative percentage adjustments may be used
    when the characteristics are interdependent
  305. The best unit of comparison for vacant land is;
    the unit considered important by the market
  306. 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 65 ft. wide; the lot under appraisal is 60 ft.
    • comparable sales indicate that lots are selling at P120 to P150 per front foot. What is a
    • good estimate of the price range for this lot?
    • P7,200 – P9,000
  307. In appraising a residential property by the cost approach, the appraiser considers the;
    depreciation of improvements
  308. In the cost approach___ is deducted after estimating the cost to reproduce an existing structure.
    depreciation
  309. External or economic obsolescence can be caused by all of the following EXCEPT
    factors within the property
  310. Economic obsolescence in a residence does NOT result from
    an outdated kitchen
  311. Reproduction or replacement cost includes all of the following EXCEPT
    fixed and variable expenses of operations
  312. In analyzing obsolescence, the test of curability of a component in a building is whether the cost to cure is no greater than the;
    expected increase in value
  313. Which of the following is NOT a type of depreciation?
    Entrepreneurial loss
  314. Estimation of accrued depreciation and obsolescence does NOT involve
    Financial structure
  315. In appraisal, accrued depreciation is really an estimate of
    Diminished utility
  316. The cost approach is NOT useful for
    Appraising older homes in an active market
  317. An appraisal of a freestanding store and the land it occupies is an unbiased estimate of the value of an interest in;
    Real estate
  318. The term vertical interests does NOT refer to rights to
    Subdivision and development
  319. Inflation tends to increase the value of
    tangible long-lived investments
  320. With an amortized mortgage loan,
    some principal is repaid with each payment
  321. 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.
    Net operating income
  322. Land purchased for P50,000 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.
    • P100,000
  323. A land speculator expects that a certain 100-acre tract can be sold to a subdivider 4 years from now for P10,000 per acre. If holding and selling costs are disregarded, what cash price today (rounded to the nearest P1,000)would allow the speculator to realize a 15% compounded annual rate of return on the entire tract?
    P572,000
  324. Gross income multipliers are generally considered part of
    the direct sales comparison approach
  325. Use of a gross rent multiplier is valid when the subject and comparable properties have similar.
    operating expense ratios
  326. Time-distance relationships between a site and all relevant origins and destinations are called;
    linkages
  327. 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?
    P101,600
  328. An allowance for vacancy and collection loss is estimated as a percentage of
    potential gross income
  329. Effective gross income is income after an allowance for
    (a) depreciation,(b) operating expenses,(c) cash expenditures, (E) none of the above
  330. In discounted cash flow analysis, the reversion to be received at the end of the holding period is;
    a separate cash flow
  331. To earn 12% annual cash return on a cash investment, what should you pay for a property that earns P4,000 per month and has operating expenses of P1,250 per month?
    P275,000
  332. In selecting an overall capitalization rate for an income-producing property, the appraiser will consider all of the following EXCEPT
    the interest rate on the existing loan, which was arranged last year
  333. To obtain the present value of a series of income, a(n)___rate is applied.
    discount
  334. A fast food chain could buy the building and land necessary for a new outlet for P200,000. Instead, an investor bought the property for this amount and leased it For P2,000 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 yrs, the property is still worth about P200,000?
    12%
  335. When market rent is less than contract rent, the difference is known as
    Excess rent
  336. If a particular buyer requires a recapture of the building portion of the purchase price in 25 Yrs., what is the indicated recapture rate for the building, assuming straight-line recapture?
    4%
  337. In a high-rise,100-unit apartment building there is a basement laundry area that brings in P100 monthly from the concessionaire. The laundry income is ;
    included, as other income, in effective gross income
Author
rceerealty
ID
354259
Card Set
RECREview
Description
Consultant's Pre-Board Examination
Updated