Real Estate Principles A Value Approach 4th Edition by Ling and Archer - Test Bank

Real Estate Principles A Value Approach 4th
Edition By Ling And Archer – Test Bank
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Sample Questions

4
Student:
___________________________________________________________________________
1.
While most real property in the United States is privately owned, government regulations limit private
property use and therefore play an important role in the determination of property value. Proponents
of
government intervention argue that regulation is needed to address the unintended and
unaccounted for
consequences of one land user upon others, more commonly referred to as:
A. incomplete information
B. locational monopoly
C. externalities
D. urban sprawl
2.
Externalities can play an important role in determining a property’s price, either by adding value
through
positive externalities or by diminishing value through negative externalities. Which of the following is
most likely to be considered a negative externality?
A. Nearby parks and recreation facilities
B. Quality neighborhood schools
C. Public assistance facilities such as homeless shelters.
D. Well-kept landscapes.
3.
Development taking place in rural areas well beyond the urban fringe is commonly referred to as:
A. urban sprawl
B. holdout
C. urban service areas
D. homestead
4.
It was not until the late 1960’s that land use controls moved to the forefront of public interest, as the
belief
that the environment was an endless and costless resource was replaced with the notion that the
world
was a closed system with limited space, air, water, and other resources. Environmentalists coined
which
of the following terms to refer to this new point of view?
A. Smart growth
B. The Silent Spring
C. Spaceship earth
D. Urban sprawl
5.
After a structure is built, it is impractical for even a building expert to fully assess the quality of the
construction and the safety hazards it may harbor. This is an example of which of the following
problems
that plagues private real estate markets?
A. Externalities
B. Incomplete information
C. Locational monopoly
D. Holdout
6.
Growth management laws at the state level require local jurisdictions to plan for and meet certain
requirements. One such requirement prohibits local development unless adequate infrastructure,
schools,
police/fire protection, and social services have been put in place first. This requirement is referred to
as
the:
A. economic and environmental impact requirement
B. concurrency requirement
C. affordable housing requirement
D. extraterritorial jurisdiction requirement
7.
A contemporary planning movement that explicitly advocates a traditional grid pattern of

development
designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with
houses
close to the street and garage access through side alleys) is commonly referred to as:
A. urban sprawl
B. urban service area
C. traditional residential planning
D. new urbanism
8.
Which of the following tools of public land use control represents the earliest method of police power
to
regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent
trends in
the application of this land use control)
A. Subdivision regulation
B. Zoning
C. Building Codes
D. Planned Unit Developments
9.
When a zoning ordinance is revised, some existing land uses then fall outside the new zoning
classification. These land uses are referred to as:
A. special uses
B. nonconforming uses
C. conforming uses
D. exclusionary uses
10. When land use controls impose exceptional hardship and loss of value, a relief mechanism must
be
provided. This relief is referred to as a:
A. building code
B. zoning ordinance
C. comprehensive plan
D. variance
11. In order for the board of adjustment to approve a variance, all of the following conditions must be
met
EXCEPT:
A. The owner must be unable to use the lot as zoned.
B. The condition is common to other parcels of land in the vicinity.
C. The variance must not materially change the character of the neighborhood.
D. The condition is unique to the lot.
12. A traditional zoning ordinance includes all of the following EXCEPT:
A. Minimum setback requirements
B. Minimum lot dimensions
C. Provisions for special use districts
D. Performance standards
13. State and federal control of land uses has increased greatly over the past 40 years due in part to
an
increased awareness of environmental hazards. Which of the following federal environmental control
laws was responsible for establishing the “Superfund” to finance emergency responses and
cleanups of
abandoned and unregulated waste dumps?
A. Clean Water Act
B. Resource Conservation and Recovery Act
C. Toxic Substances Control Act
D. Comprehensive Environmental Response Compensation and Liability Act
14. Negative externalities can diminish a property’s value by imposing costs on the community at
large.
In order to offset this detrimental impact, economists advocate “internalizing” these externalities by
implementing:
A. performance standards
B. impact fees
C. growth moratoriums
D. planned unit developments
15. A major problem in buildings constructed prior to the early 1970’s, which of the following
environmental
hazards commonly associated with insulation has been the focus of costly cleanups at many public
buildings, especially schools?
A. Asbestos
B. Radon
C. PCBs (Polychlorinated biphenyls)
D. LUSTs (leaking underground storage tanks)
16. The right of government to acquire private property, without the owner’s consent, for public use
in
exchange for just compensation is referred to as:
A. inverse condemnation
B. regulatory taking
C. eminent domain
D. dedication
17. All of the following statements are true in describing the determination of just compensation
EXCEPT:
A. The value of the property is based on its highest and best use at the time.
B. The value of the property is determined solely by its current use.
C The value is the amount that restores the property owner to a financial position equivalent to that
. existing before the property was taken.
D. The value is the market value of the property if completely taken, or the total value of all financial
loss
if partially taken.
18. Real estate taxes represent the largest single source of revenue for a large portion of local
governments.
Most property taxes are applied in relation to the value of the property, or in other words, they are:
A. effective tax rates
B. ad valorem taxes
C. tax-exempt
D. regressive
19. A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly
developing. However, the city claims to have the right to control urban development even in the
proposed
area. The right the city is attempting to invoke is referred to as:
A. extraterritorial jurisdiction.
B. urban service area.
C. comprehensive plan.
D. growth constraint.
20. Special assessments are levied to pay for specific improvements that benefit a particular group
of
properties. All of the following characteristics of special assessments are true EXCEPT:
A. They are considered ad valorem taxes.
B. They are applied as pro rata charges.
C. They are levied directly on the properties benefited.
D. They are commonly used to finance streets, storm water systems, sidewalks, and other area
improvements.
21. One of the main criticisms of property taxes is that the property tax of lower income households
is higher
than that of higher income households, as a percentage of their respective incomes. In other words,
taxes
are criticized for being:
A. regressive
B. comprehensive
C. concurrent
D. extraterritorial
22. In the state of Florida, for example, homeowners may qualify for a tax exemption in which up to
$50,000
will be deducted from the assessed value of the property before taxes are calculated as long as the
property owner occupies a home as the family’s principal residence and has claimed residency
within the
state. This exemption is better known as the:
A. ad valorem exemption
B. affordable housing exemption
C. growth moratorium
D. homestead exemption
23. Zoning ordinances that tend to exclude lower income groups by large lot size, or that do not
adequately
provide low- and moderate-income housing are referred to as:
A. special uses
C. conforming uses
24. A public planning movement that explicitly advocates a cul-de-sac hierarchy of development, an
automobile oriented society, and separated land use is more commonly referred to as:
A. urban sprawl
D. new urbanism
25. Eminent domain is the right of government to acquire private land, without the owner’s consent,
for
public use, with due process and just compensation. The legal procedure for exercising the right of
eminent domain is referred to as:
A. Growth restriction
B. Urban sprawl
C. Blighted development
D. Condemnation
26. Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of
development. One proposed solution to this issue allows traditional zoning requirements to vary in
exchange for an enhancement to the community, such as the construction of a park. This is more
commonly referred to as a:
A. Planned unit development
B. Performance standard
C. Impact fee
D. Growth restriction
27. In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S.
Supreme
Court in 2005 affirmed the possibility of a community being:
A. Prohibited from using eminent domain.
B. Restricted to use of eminent domain only for actual government (public) land uses.
C Able to use eminent domain to acquire property for private development if it serves public purpose
and
. the current land use is blighted.
D Able to use eminent domain to acquire property for private development if is serves public purpose
. even if the current land use is not blighted.
28. In efficient financial markets, unregulated competitive bidding should bring about the most
productive
use of an asset and the price paid for that asset should reflect fair value based on its usefulness. In
real
estate, this is not always the case. For example, there is no substitute for certain pieces of land
which
gives the owner a bargaining advantage in determining the value of the land. This feature of real
estate
markets is commonly referred to as:
C. positive externality
D. negative externality
29. Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property
taxes.
The certificates are auctioned to the public at:
A. the face value of the property taxes due
B. the assessed value of the home
C. a discount from the face value of the property taxes due
D. a premium of the assessed value of the home
30. Given the following information, compute the property tax rate for the community in percentage
terms.
Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total assessed
value of all properties: $2 billion, Total exemptions: $550 million.
A. 2.5%
B. 4.0%
C. 10.0%
D. 12.0%
31. Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 6.5%, convert
this rate
to mills.
A. 0.065 mills
B. 6.5 mills
C. 65 mills
D. 650 mills
32. Given the following information, compute the effective tax rate for the particular piece of property
in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000,
Exemptions: $50,000, Taxes paid: $5,363.
A. 1.50%
B. 2.35%
C. 1.65%
D. 2.68%
33. Given the following information, compute the taxable value for the particular piece of property in
dollar
terms. Market value of property: $500,000, Assessed value of property: 85 % of the market value of
the
property, Exemptions: $50,000, Taxes paid: $8,250.
A. $75,000
B. $375,000
C. $416,750
D. $425,000
34. Given the following information, calculate the total annual tax liability of the homeowner. Market
value
of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000,
Millage Rate: 33.95 mills.
A. $4,685.10
B. $4,753.00
C. $11, 882.50
D. $46,851.00
35. Given the following information, calculate the effective tax rate expressed in mills. Market value
of
property: $280,000, Assessed value of property: 50 % of the market value, Exemptions: $2,000,
Annual
tax liability: $4,685.10.
A. 1.69 mills
B. 3.35 mills
C. 16.73 mills
D. 33.95 mills
36. Given the following information, calculate the total annual tax liability of the homeowner. Market
value
State
Millage Rate: 0.25 mills, County Millage Rate: 13.70 mills.
A. $34.50
B. $1,890.60
C. $1,925.10
D. $4,685.10
4 Key
1.
While most real property in the United States is privately owned, government regulations limit private
property use and therefore play an important role in the determination of property value. Proponents
of government intervention argue that regulation is needed to address the unintended and
unaccounted
for consequences of one land user upon others, more commonly referred to as:
C. externalities
D. urban sprawl
Difficulty: Basic
Learning Objective: 04-01 Cite three reasons why the market system may not operate to maximize
the net social benefits of land use.
Ling – Chapter 04 #1
2.
Externalities can play an important role in determining a property’s price, either by adding value
through positive externalities or by diminishing value through negative externalities. Which of the
following is most likely to be considered a negative externality?
A. Nearby parks and recreation facilities
B. Quality neighborhood schools
C. Public assistance facilities such as homeless shelters.
D. Well-kept landscapes.
Difficulty: Intermediate
3.
Development taking place in rural areas well beyond the urban fringe is commonly referred to as:
A. urban sprawl
B. holdout
C. urban service areas
D. homestead
Difficulty: Basic
4.
It was not until the late 1960’s that land use controls moved to the forefront of public interest, as the
belief that the environment was an endless and costless resource was replaced with the notion that
the world was a closed system with limited space, air, water, and other resources. Environmentalists
coined which of the following terms to refer to this new point of view?
A. Smart growth
B. The Silent Spring
C. Spaceship earth
D. Urban sprawl
Difficulty: Basic
Learning Objective: 04-05 Explain the “revolution” in scope; focus; and extent of land use controls
that occurred during the 1970s.
5.
After a structure is built, it is impractical for even a building expert to fully assess the quality of
the construction and the safety hazards it may harbor. This is an example of which of the following
problems that plagues private real estate markets?
A. Externalities
B. Incomplete information
C. Locational monopoly
D. Holdout
Difficulty: Basic
6.
Growth management laws at the state level require local jurisdictions to plan for and meet certain
requirements. One such requirement prohibits local development unless adequate infrastructure,
schools, police/fire protection, and social services have been put in place first. This requirement is
referred to as the:
A. economic and environmental impact requirement
B. concurrency requirement
C. affordable housing requirement
D. extraterritorial jurisdiction requirement
Difficulty: Basic
Learning Objective: 04-02 Identify the principal provisions typically contained in state planning and
growth management legislation.
7.
A contemporary planning movement that explicitly advocates a traditional grid pattern of

development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed
streets with houses close to the street and garage access through side alleys) is commonly referred
to
as:
A. urban sprawl
D. new urbanism
Difficulty: Basic
Learning Objective: 04-06 Identify four tools of land use control widely adopted since 1970; and
contrast new urbanism with traditional land use.
8.
Which of the following tools of public land use control represents the earliest method of police power
to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent
trends in the application of this land use control)
A. Subdivision regulation
B. Zoning
C. Building Codes
D. Planned Unit Developments
9.
When a zoning ordinance is revised, some existing land uses then fall outside the new zoning
classification. These land uses are referred to as:
A. special uses
C. conforming uses
Difficulty: Basic
Learning Objective: 04-03 Describe eight elements of traditional zoning and identify other traditional
local land use controls.
10.
When land use controls impose exceptional hardship and loss of value, a relief mechanism must be
provided. This relief is referred to as a:
A. building code
B. zoning ordinance
C. comprehensive plan
D. variance
Difficulty: Basic
11.
In order for the board of adjustment to approve a variance, all of the following conditions must be
met
EXCEPT:
A. The owner must be unable to use the lot as zoned.
B. The condition is common to other parcels of land in the vicinity.
C. The variance must not materially change the character of the neighborhood.
D. The condition is unique to the lot.
12.
A traditional zoning ordinance includes all of the following EXCEPT:

A. Minimum setback requirements
B. Minimum lot dimensions
C. Provisions for special use districts
D. Performance standards
13.
State and federal control of land uses has increased greatly over the past 40 years due in part to an
increased awareness of environmental hazards. Which of the following federal environmental control
laws was responsible for establishing the “Superfund” to finance emergency responses and
cleanups of
abandoned and unregulated waste dumps?
A. Clean Water Act
B. Resource Conservation and Recovery Act
C. Toxic Substances Control Act
D. Comprehensive Environmental Response Compensation and Liability Act
Difficulty: Basic
Learning Objective: 04-07 Identify the major types of environmental hazards and the steps real
estate investors should take to protect against them.
14.
Negative externalities can diminish a property’s value by imposing costs on the community at large.
In order to offset this detrimental impact, economists advocate “internalizing” these externalities by
implementing:
A. performance standards
B. impact fees
C. growth moratoriums
D. planned unit developments
Difficulty: Basic
15.
A major problem in buildings constructed prior to the early 1970’s, which of the following
environmental hazards commonly associated with insulation has been the focus of costly cleanups
at
many public buildings, especially schools?
A. Asbestos
B. Radon
C. PCBs (Polychlorinated biphenyls)
D. LUSTs (leaking underground storage tanks)
16.
The right of government to acquire private property, without the owner’s consent, for public use in
exchange for just compensation is referred to as:
A. inverse condemnation
B. regulatory taking
C. eminent domain
D. dedication
Difficulty: Basic
Learning Objective: 04-08 Describe eminent domain and explain the current concern with its use for
public purpose.
17.
All of the following statements are true in describing the determination of just compensation
EXCEPT:
A. The value of the property is based on its highest and best use at the time.
B. The value of the property is determined solely by its current use.
C. The value is the amount that restores the property owner to a financial position equivalent to that
existing before the property was taken.
D. The value is the market value of the property if completely taken, or the total value of all financial
loss if partially taken.
public purpose.
18.
Real estate taxes represent the largest single source of revenue for a large portion of local
governments. Most property taxes are applied in relation to the value of the property, or in other
words, they are:
A. effective tax rates
B. ad valorem taxes
C. tax-exempt
D. regressive
Difficulty: Basic
Learning Objective: 04-09 Explain how property tax is computed. Discuss three possible deficiencies
with the property tax system.
19.
A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly
developing. However, the city claims to have the right to control urban development even in the
proposed area. The right the city is attempting to invoke is referred to as:
A. extraterritorial jurisdiction.
B. urban service area.
C. comprehensive plan.
D. growth constraint.
Difficulty: Advanced
20.
Special assessments are levied to pay for specific improvements that benefit a particular group of
properties. All of the following characteristics of special assessments are true EXCEPT:
A. They are considered ad valorem taxes.
B. They are applied as pro rata charges.
C. They are levied directly on the properties benefited.
D. They are commonly used to finance streets, storm water systems, sidewalks, and other area
improvements.
21.
One of the main criticisms of property taxes is that the property tax of lower income households is
higher than that of higher income households, as a percentage of their respective incomes. In other
words, taxes are criticized for being:
A. regressive
B. comprehensive
C. concurrent
D. extraterritorial
Difficulty: Basic
22.
In the state of Florida, for example, homeowners may qualify for a tax exemption in which up to
$50,000 will be deducted from the assessed value of the property before taxes are calculated as
long
as the property owner occupies a home as the family’s principal residence and has claimed
residency
within the state. This exemption is better known as the:
A. ad valorem exemption
B. affordable housing exemption
C. growth moratorium
D. homestead exemption
Difficulty: Basic
23.
Zoning ordinances that tend to exclude lower income groups by large lot size, or that do not
adequately provide low- and moderate-income housing are referred to as:
A. special uses
C. conforming uses
Difficulty: Basic
Learning Objective: 04-04 Identify three possible adverse effects of traditional zoning.
24.
A public planning movement that explicitly advocates a cul-de-sac hierarchy of development, an
automobile oriented society, and separated land use is more commonly referred to as:
A. urban sprawl
D. new urbanism
Difficulty: Basic
25.
Eminent domain is the right of government to acquire private land, without the owner’s consent, for
public use, with due process and just compensation. The legal procedure for exercising the right of
eminent domain is referred to as:
A. Growth restriction
B. Urban sprawl
C. Blighted development
D. Condemnation
Difficulty: Basic
public purpose.
26.
Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of
development. One proposed solution to this issue allows traditional zoning requirements to vary in
exchange for an enhancement to the community, such as the construction of a park. This is more
commonly referred to as a:
A. Planned unit development
B. Performance standard
C. Impact fee
D. Growth restriction
27.
In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S. Supreme
Court in 2005 affirmed the possibility of a community being:
A. Prohibited from using eminent domain.
B. Restricted to use of eminent domain only for actual government (public) land uses.
C. Able to use eminent domain to acquire property for private development if it serves public
purpose
and the current land use is blighted.
D Able to use eminent domain to acquire property for private development if is serves public purpose
. even if the current land use is not blighted.
public purpose.
28.
In efficient financial markets, unregulated competitive bidding should bring about the most productive
use of an asset and the price paid for that asset should reflect fair value based on its usefulness. In
real
estate, this is not always the case. For example, there is no substitute for certain pieces of land
which
gives the owner a bargaining advantage in determining the value of the land. This feature of real
estate
markets is commonly referred to as:
C. positive externality
D. negative externality
Difficulty: Basic
29.
Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property
taxes.
The certificates are auctioned to the public at:
A. the face value of the property taxes due
B. the assessed value of the home
C. a discount from the face value of the property taxes due
D. a premium of the assessed value of the home
30.
Given the following information, compute the property tax rate for the community in percentage
terms. Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total
assessed value of all properties: $2 billion, Total exemptions: $550 million.
A. 2.5%
B. 4.0%
C. 10.0%
D. 12.0%
Difficulty: Basic
31.
Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 6.5%, convert this
rate to mills.
A. 0.065 mills
B. 6.5 mills
C. 65 mills
D. 650 mills
32.
Given the following information, compute the effective tax rate for the particular piece of property
in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000,
Exemptions: $50,000, Taxes paid: $5,363.
A. 1.50%
B. 2.35%
C. 1.65%
D. 2.68%
Difficulty: Basic
33.
Given the following information, compute the taxable value for the particular piece of property in
dollar terms. Market value of property: $500,000, Assessed value of property: 85 % of the market
value of the property, Exemptions: $50,000, Taxes paid: $8,250.
A. $75,000
B. $375,000
C. $416,750
D. $425,000
Difficulty: Basic
34.
Given the following information, calculate the total annual tax liability of the homeowner. Market
value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions:
$2,000, Millage Rate: 33.95 mills.
A. $4,685.10
B. $4,753.00
C. $11, 882.50
D. $46,851.00
35.
Given the following information, calculate the effective tax rate expressed in mills. Market value
Annual tax liability: $4,685.10.
A. 1.69 mills
B. 3.35 mills
C. 16.73 mills
D. 33.95 mills
36.
Given the following information, calculate the total annual tax liability of the homeowner. Market
value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions:
$2,000, State Millage Rate: 0.25 mills, County Millage Rate: 13.70 mills.
A. $34.50
B. $1,890.60
C. $1,925.10
D. $4,685.10
4 Summary
Category
# of Questions
3
Difficulty: Basic
21
12
Learning Objective: 045
01 Cite three reasons why the market system may not operate to maximize the net social benefits of
land use.
02 Identify the principal provisions typically contained in state planning and growth management
legislation.
5
2
Learning Objective: 04-05 Explain the “revolution” in scope; focus; and extent of land use controls
that occurred during the 1970s.
1
06 Identify four tools of land use control widely adopted since 1970; and contrast new urbanism with
traditional land use.
07 Identify the major types of environmental hazards and the steps real estate investors should take
to protect against them.
public purpose.
4
12
Ling – Chapter 04
36
7
Student:
___________________________________________________________________________
1.
Estimating the market value of real estate is complicated by the unique characteristics of real estate
markets. In contrast to stock markets, real estate markets are characterized by all of the following
EXCEPT:
A. No two assets are considered perfect substitutes for one another.
B. Market prices are revealed almost instantaneously to prospective buyers.
C. Transactions occur infrequently.
D. The physical location of the asset being sold plays an important role in the pricing process.
2.
Real estate appraisers generally distinguish among the concepts of market value, investment value,
and
transaction value. Which of the following statements best describes the concept of market value?
A. It is an estimate of the most probable selling price of a property in a competitive market.
B. It is the value a particular investor places on a property.
C. It is the price we observe when a property is sold.
D. It is the maximum amount that a seller would be willing to accept.
3.
In real estate markets, a transaction occurs only when the investment value of the buyer exceeds
the
investment value of the seller. The buyer’s investment value is the ________ that he or she would
be
willing to pay for a particular property, while the seller’s investment value is the _______ that he or
she
would be willing to accept.
A. minimum; minimum
B. minimum; maximum
C. maximum; minimum
D. maximum; maximum

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Edition By Ling And Archer – Test Bank

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A contemporary planning movement that explicitly advocates a traditional grid pattern of

A contemporary planning movement that explicitly advocates a traditional grid pattern of

A traditional zoning ordinance includes all of the following EXCEPT:

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