IAAO 102 EXAM 2023-2024 ACTUAL EXAM 200 QUESTIONS AND CORRECT DETAILED ANSWERS|AGRADE

IAAO 102 EXAM 2023-2024 ACTUAL EXAM 200

QUESTIONS AND CORRECT DETAILED

ANSWERS|AGRADE

A contract which calls for a fixed minimum base rent and a variable rent

(overage rent) which is based on volume of business, sales, productivity,

or use of the property, or use of the property by the tenant. - ANSWERPercentage lease

Leases may or may not be in written form. This provides no security for

the tenant or landlord. - ANSWER- Month to month - Short term

The tenant is required to pay all or part of the operating expenses

associated with the real estate. - ANSWER- Net lease

The tenant pays some or all of the property expenses. - ANSWERSingle, double or triple net lease.

Degrees between the the gross lease - ANSWER- Single and double net

leases

May require specific expenses to be paid by either tenant or landlord. -

ANSWER- Triple lease

The landlord is required to pay all operating expenses associated with

the real estate. - ANSWER- Gross lease

When this section appears in a lease, it will usually explain the extent of

the work that the landlord is willing to do in the form of a building or

improvement allowance. - ANSWER- Tenant improvements

The amount of rent that a property should command in the open market.

Also known as economic rent. - ANSWER- Market rent

Is the rent the tenant is paying according to the lease in affect at the time

of appraisal or analysis. - ANSWER- Contract rent

The amount which contract rent exceeds market rent. - ANSWERExcess rent

The amount of rent received in accordance with the terms of a

percentage clause in a percentage lease contract. - ANSWERPercentage rent

Occurs when market rent is greater than contract rent. - ANSWERDeficit rent (leasehold rent or leasehold income)

The lease base rent less rent concessions. Used as a common

denominator to compare leases with different provisions. - ANSWEREffective rent

Includes the entire area of the building. - ANSWER- Gross leasable area

(GLA)

Includes only the floor area occupied by the tenant. - ANSWER- Net

leasable area (NLA)

What is the difference between gross leasable area and net leasable area?

- ANSWER- Common area

One of the three approaches to value in which the appraiser derives a

value indication by converting benefits through ownership of income

producing property is the _________ approach? - ANSWER- Income

The economic principle of __________ states that value is created by the

expectation of benefits to be derived in the future. - ANSWERAnticipation

The economic principle of _________ states that property's maximum

value tends to be set by the lowest cost or price at which another

property of equivalent utility can be acquired. - ANSWER- Substitution

Competition among sellers may lead to an __________, which reduces

prices and profits. - ANSWER- Oversupply

Competition among buyers may lead to a _________, which increases

prices and profits to sellers. - ANSWER- Shortage

What rate reflects the return of the investment in the wasting asset? -

ANSWER- Recapture

What leverage is achieved when funds are vested in property, which has

a higher rate of return than the cost of borrowed funds? - ANSWERPositive

Four most common methods of financing real estate are? - ANSWER- 1.

Mortgage

2. Trust deed

3. Cash

4. Land contract (contract for deed)

What is a junior mortgage? - ANSWER- Second mortgage

What are the four types of mortgages classified according to repayment

provisions? - ANSWER- 1. Amortized

2. Straight

3. Reverse

4. Partially amortized