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
- Trust deed
- Cash
- 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 - Straight
- Reverse
- Partially amortized