Mock Exam / MLD Compilation

SET B MOCK EXAM REA

101. Two homes in the same addition have the same amenities, size, features, and
location. One is priced at P1,000,000 and the other is priced at P1,100,000.
a. The lower-priced home will sell quickly.
b. The lower-priced home will attract more demand.
c. The lower-priced home will get more showings.
d. The lower-priced home will sell for the full list price.

102. In a high demand market, the cost of building a new property will increase
substantially until
a. It becomes impossible for prices to go higher
b. The supply increases because new builders get into the market
c. The charges from suppliers and subcontractors go down
d. The BSP increases interest rates

103. The four forces that influence real estate values are
a. Social, economic, governmental, and environmental
b. Land, labor, capital, and green space
c. Eminent domain, police power, escheat, and taxation
d. Governmental, social, taxation, and economic conditions 19

104. Synergy or Plottage is

a. The process whereby large parcels of land are divided into lots and recorded in the
register of deeds
b. Is the assemblage of two or more parcels of land
c. Is the name of the discount given when larger parcels sell for more per hectare than
smaller ones
d. An incremental increase of value that results when two or more sites are
combined to produce greater utility

105. The length of a tract of land along a street is called the land’s
a. depth c. frontage
b. width d. abutment

106. Refers to prices or values of land adjacent to or “across the fence” from railroad,
pipeline, highway or other corridor real estate.
a. buyer’s market c. corner influence
b. across the fence value d. property line
c. corner influence

107. A _______ is an article that was once personal property, but that has been
installed in or attached to land or a building so that such article is regarded in law as
part of the real estate.

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

a. Fixture c. domestic trade

b. Trade fixture d. all of the above

108. A trade fixture:

a. Contributes to the value of the property to which it is attached
b. Contributes nothing to the value of real estate
c. Is considered, but given no value by real estate appraisers
d. Both (b) and (c)

109. Which of the following courses would benefit a professional appraiser?

a. real estate finance, land use planning, real estate law
b. urban sociology, demographics, information systems
c. All of the above .
d. One of the above.

110. An appraisal may include a(n)

a. property description c. opinion of value
b. estimate of market value d. all of the above

111. The reliability of an appraisal depends on the

a. knowledge and judgment of the appraiser
b. accuracy of the data used
c. Both a and b.
d. Neither a nor b.

112. An appraisal of current market value is considered to be accurate for

a. 90 days c. one year 20
b. until the property is sold d. date of appraisal

113. Appraisals are always used

a. To make residential mortgages c. to settle lawsuit
b. To settle divorces d. to solve problem that involve real estate
values

114. What term is used to describe a study of the cost -benefit relationship of an
economic endeavor?
a. Investment analysis c. Feasibility analysis
b. Cash flow analysis d. Market analysis

115. The mayor of a small town recently hired you to estimate the value of a new one-
story, three- bay fire station. The fire station was built last year at a cost of P2.5 million
(land and buildings). Similar-size d, one year-old commercial buildings in comparable

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

locations are selling for P2 million. lf you appraise this building for approximately P2.5
million, you probably have conveyed
a. Market value c. actual use
b. Investment value d. value in transition

116. You were recently asked to appraise the Midnight blue hostel. The bank asked you
to value the property for loan purposes. The comparables sales you used in this
analysis were all sales of the entire operation. The income used in your calculation was
based on the rental rate of each sleeping room and the sales at the restaurant and the
bar. You are most likely appraising
a. Market value of the fee simple interest
b. Market value of the leased fee interest
c. Going-concern value
d. Value in use

117. Investment value is best measured by

b. Market price to a specific investor
c. Market value to a specific investor
d. The cost of acquiring a competitive substitute property with the same utility to a
typical purchaser
e. The present worth of anticipated future benefits to a specific investor

118. Estimating market value requires identification of the desires and priorities of
a. Well-informed buyers and sellers c. A typically informed purchaser
b. A fully informed seller d. A typically informed seller

119. Market value is based on

a. insurable value c. cost
b. most probable price d. value in use

120. Which of the following is not a part of the market value definition?
a. Buyer and seller are typically motivated
b. The property sells in 90 to 120 days
c. Payment is made in cash or cash equivalent terms
d. Both parties are well informed

121. Julita Cruz owns a vacation home near a small town almost 1 kilometers from the
city in which she lives and works. She doesn’t use her vacation house more than three
weeks every year. The last time she stayed there, she noticed that a gas station had
been built a few hundred yards down the road. After talking to the owner, she
discovered that a zoning change had been put into effect to allow construction of a new
shopping center on land adjacent to the gas station. While Ms. Cruz’s property was not

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

rezoned, she realizes that it won’t be suitable as a vacation retreat once the shopping
center is built. Which basic value principle(s) does the foregoing case illustrate?
a. Highest and best use (HABU) c. conformity
b. change d. all of the above

122. Two bookstores are located on the same city street, and both have had good
business for ten years. One store is improved with new displays, better lighting,
computerized inventory control, and a snack bar. Because the store is part of a chain,
reSET ing costs are absorbed without general increase in prices. The other bookstore
begins losing customers. Which basic value principle(s) does the foregoing case
illustrate?
a. competition c. Both a and b.
b. contribution d. None of the above.

123. A single-family neighborhood is located adjacent to an airport. Excessive noise

caused by airplanes flying overhead and the potential danger they create have
adversely affected the value of homes in the immediate area. Which basic value
principle(s) does the foregoing case illustrate?
a. internalities c. Both a and b.
b. externalities d. None of the above

124. A church in a residential area is an example of

a. police power c. a nonconforming use
b. forecast absorption d. a private restriction

125. An homeowner purchased two adjacent lots in a tract subdivision 20 years ago and
built a single-unit residence entirely on one lot, utilizing the second lot as a side yard.
The homeowner has decided to build a smaller home on the vacant side lot and retain
the existing home as a rental. What term applies to the second yard?
a. Surplus land
b. Vacant site
c. Excess land
d. Underutilized site

126. The value of improved residential real estate is most influenced by

a. Passage of time
b. Brokers opinions of the value of properties
c. Changes in shopping patterns for consumers of goods and services
d. Cost of` construction increases

127. A buyer invests in a small strip center because she believes the property will net
P350,000 per year. This is an example of
a. Anticipation
b. Change
c. Competition

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

d. Substitution

128. The statement “property values are created and sustained when the characteristics
of a property conform to the demand of its market" refers to
a. Use value
b. Contribution
c. Conformity
d. Supply and demand analysis

129. To be considered the highest and best use, a use must be

a. Physically possible, legally permissible, appropriately justified, financially
feasible, and maximally productive
b. Physically correct and legally possible
c. In existence already and legal
d. Physically possible and appropriate

130. Highest and best use analysis requires an estimate of the use as though vacant
and as improved to
a. Estimate the value of the improvements
b. Ensure that appraisers recognize that the properly could be worth more without the
buildings than with them
c. Estimate functional obsolescence caused by inappropriate improvements
d. All of the above

131. The concept of consistent use requires an improvement to be valued based on a

use that is consistent with the site’s highest and best use. This means
a. The highest and best use of the site as though vacant must always consider the
improvements thereon
b. The highest and best use as improved would always be consistent with the "as
vacant" analysis
c. The improvement value must be adjusted down if the land’s highest and best
use is different than the improved highest and best use
d. The vacant land value can never exceed the improved value

132. When a property’s highest and best use is likely to change in the near future, the
prevailing highest and best use is called a(n)
a. Pending use
b. Temporary use
c. Interim use
d. Alternative use

133. A legally nonconforming use is

a. A use that was legally established and maintained but no longer conforms to
existing zoning
b. A use that was illegally established and maintained

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

c. A use that was not legally established and maintained and still does not conform to
existing zoning
d. A use that was not legally established and maintained but the government is not
enforcing the laws

134. The purpose of regulating the real estate service practitioners practice in the
Philippines is to
a. Protect the public from dishonest realty practitioners.
b. Protect realty practitioners from unfair competition.
c. Upgrade the standards of realty service practice.
d. All of the above.

135. Market area life cycles include

a. Growth, stability, decline, and revitalization
b. Growth, stability, decline, and gentrification
c. Growth, stability, appreciation, and decline
d. Growth, level of appreciation, and decline

136. Neighborhood social influences include all of the following except

a. Population density c. Occupant age levels
b. Occupant skill levels d. Vacancy rates

137. The economic base is

a. The lower line in a graph showing the economy of a community
b. The ratio of basic industries to technical Industries in a community
c. An inexpensive, large string instrument
d. The economic activity that enables it to attract income from outside its borders

138. Economic influences include all of the following except

a. Occupant income levels
b. Crime levels
c. Property rent levels d. Birth rate

139. Governmental influences include all of the following except

a. Tax burdens c. Zoning, building, and housing codes
b. Special assessments d. Changes in property use

140. Gentrification is
a. A class of citizens who live in blighted areas
b. A process in which older homes in a neighborhood are remodeled and different
residents replace the lower-income residents
c. A group of complementary land uses
d. A part of the life cycle of a market area in which property values are stable and the
maintenance levels are adequate

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

141. Linkages are

a. The devices used to change a property from one use to another
b. The relationships between a buyer and seller in a real estate deal
c. Time-distance relationships between a property use and the supporting
facilities
d. The tools necessary to market real estate

142. The scientific study of population statistics is

a. scientography c. egmentation
b. demography d. forecasting

143. What form of diffusion is represented by the spread of Shoe Mart (SM)?
a. cascade. c. relocation.
b. reverse hierarchical d. stimulus.

144. A real estate market is

a. A shopping center office of a realty company
b. A group of individuals or firms that are in contact with one another for the
purpose of conducting real estate transactions
c. A list of potential buyers for the subject
d. A list of potential sellers who have property similar to the one requested by the buyer

145. What will be the best tool for locating the next Jollibee fast food restaurant in a
city?
a. GPS (Global Positioning System).
b. GIS (Geographic Information System).
c. Microsoft Words.
d. Remote Sensing.

146. The industry competition which arises from profits refers to

a. Principle of Change d. Principle of Substitution
b. Principle of Conformity e. Principle of Supply and Demand
c. Principle of Competition

147. The value of a property will reach to its maximum level when the factors of
production such as: land, labor, capital, coordination or entrepreneurship are in balance
refers to
a. Principle of Balance d. Principle of Substitution
b. Principle of Conformity e. Principle of Anticipation
c. HABU

148. The principle of increase and decreasing returns applied to a portion or the whole
of an improvement refers to
a. Principle of Anticipation d. Principle of Contribution

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

b. Principle of Conformity e. Principle of Substitution

c. HABU

149. The net income remaining after the cost of labor, capital and coordination have
been paid refers to a. HABU d. Principle of Substitution
b. Principle of Anticipation e. Principle of Surplus Productivity
c. Principle of Conformity

150. The result of reasonable degree of architectural homogeneity and compatible land
uses brought about by market attitudes, societal trends, economic conditions and public
policy refers to
a. HABU d. Principle of Substitution
b. Principle of Conformity e. Principle of Anticipation
c. Principle of Utility

151. The meeting desires and requirements of human beings. It is not only the capacity
to give satisfaction in use but also the power to excite desire for continued possession
refers to
a. HABU d. Principle of Substitution
d. Principle of Conformity e. Principle of Anticipation
c, Principle of Utility

152. The factor where the value is increased if supply is reduced by effective demand,
resulting in scarcity refers to
a. Principle of Anticipation d. HABU
b. Principle of Supply and Demand e. Principle of Consistent Use
c. Principle of Contribution

153. That factor where the property is cannot be valued on the basis of one use for land
and another use of improvements refers to
a. Principle of Consistent Use d. HABU
b. Principle of Anticipation e. Principle of Substitution
c. Principle of Contribution

154. Refers to the most profitable and likely use of the property at the time of appraisal.
It refers to that which in all probability will yield the maximum return at a given time. It is
the first necessary consideration in studying a tract of land to estimate its value.
a. Principle of Supply and Demand d. Principle of Contribution
b. Principle of Substitution e. Principle of Anticipation
c. Principle of Highest and Best Use

155. Is the amount that maybe recovered when the property will be retired or disposed
at a future time.
a. Salvage Value d. Scrap Value
b. Market Value c. Principle of Substitution
c. Principle of Anticipation

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

156. Is the fair market value of the land in a specific zone or area as established by the
BIR.
a. Salvage Value d. Scrap Value
b. Market Value e. Zonal Value
c. Principle of Contribution

157. One which states that the maximum value of a property tends to be set by the cost
of purchasing an equally desirable and valuable replacement property, as the basic
principle that underlies the Market Data Approach of Sales Comparison,
a. Principle of Anticipation d. Principle of Highest and Best Use
b. Principle of Substitution e. Principle of Supply and Demand
c. Principle of Contribution

158. To be considered comparable to the subject property, a comparable must have

been sold
a. in an arm’s-length transaction
b. with a conventional mortgage
c. without any form of secondary financing d. for all cash

159. One method of compensating for sales that involved different terms of financing is
use of the
a. financing readjustment grid
b. loan-to-value ratio
c. cash equivalency technique
d. operating statement ratio

160. Recent sales of comparable sites competitive with the subject site
a. Are the most reliable guide to the probable current market behavior and
reactions of informed buyers.
b. Do not indicate any probable current market behavior and reaction of informed
buyers.
c. Both a and b.
d. None of the above.
161. Site valuation techniques include
a. Sales comparison method; allocation method; abstraction method
b. Subdivision development method; ground rent capitalization; land residual method
c. both a and b
d. none of the above

162. Another term for developer’s profit is

a. contractor’s profit
b. entrepreneurial profit
c. surplus productivity
d. management profit

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

163. Depending on market practice, entrepreneurial profit can be estimated as

percentage of
a. direct and indirect costs plus land value
b. the value of the completed project
c. both a and b
d. none of the above

164. Barricade around the construction site is a building

a. direct cost
b. indirect cost
c. overhead expense
d. incidental expense

165. The cost of improvements identical in design and material to those of the subject
property is called the subject’s
a. reproduction cost
b. replacement cost
c. sales price
d. market value

166. The cost of improvements identical in utility to those of the subject property is
called the subject’s
a. reproduction cost
b. replacement cost
c. sales price
d. market value

167. In using the cost approach to appraising, the estimated construction cost of
improvements usually will be based on 27
a. their original cost
b. the cost of new improvements at current prices
c. book value
d. the national cost average of all components

168. The index method of estimating construction cost is based on

a. the original cost of improvements
b. the cost of new improvements at current prices
c. book value
d. the national cost average of all components

169. The amount of entrepreneurial profit

a. reflects the success of the project
b. is based on how project expenses are categorized
c. always be the same, provided the project is completed within its estimated budget
d. cannot be estimated accurately

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

170. The predominant depreciation category for a residential location on heavily

traveled national highway is
a. Physical deterioration—curable
b. Physical deterioration—long-lived incurable
c. Functional obsolescence—curable
d. External obsolescence—incurable

171. The predominant depreciation category for severe termite damage throughout a
structure
a. Physical deterioration—curable
b. Physical deterioration—long-lived incurable
c. Functional obsolescence—curable
d. External obsolescence—incurable

172. The ratio of total operating expenses to effective gross income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio

173. The ratio of net operating income to effective gross income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio

174. The ratio of the operating expenses plus annual debt service to potential gross
income is the
a. operating expense ratio
b. net income ratio
c. effective gross income ratio
d. break-even ratio

175. To arrive at net operating income, expenses are deducted from

a. operating profit
b. gross income
c. Effective gross income
d. None of these

176. In the formula for the operating expense ratio

a. operating expenses are divided by effective gross income
b. effective gross income is divided by operating expenses
c. potential gross income is divided by effective gross income
d. effective gross income is divided by potential gross income

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

177. In the formula for the net income ratio

a. effective gross income is divided by potential gross income
b. potential gross income is divided by effective gross income
c. effective gross income is divided by net operating income
d. net operating income is divided by effective gross income

178. The data needed for an appraisal by the income approach using direct
capitalization are
a. the potential gross income from the property, which includes the annual income from
all sources; the amount of the expected annual effective gross income from the
property, estimated by subtracting anticipated vacancy and collection losses from
potential gross income;
b. net operating income, found by deducting normal annual operating and other
expenses from the effective gross income; the capitalization rate for the property; that
is, the rate that can be applied to the property’s net annual income, the result being the
appraiser’s estimate of the property’s value;
c. both a and b
d. none of the above

179. While working on an appraisal of a residential property in a new home subdivision,

the appraiser finds that the builders have a total of 100 home sites currently offered for
sale. In measuring market demand the appraiser notes that all of the builders are
currently averaging 2 new sales contracts per month (combined), and are expecting to
sell 24 homes within the next year. What conclusion could be drawn with regard to the
100 available home sites and a market period of the next 12 months?
a. The market is in a condition of supply and demand.
b. The market is in a condition of balance.
c. The market is in a condition of oversupply.
d. The market is in a condition of undersupply.

180. For land sales to be used as comparables, they must be

a. competitive with the subject
b. relatively recent
c. open market transactions
d. all of the above

181. A bad floor plan would generally be classified as

a. physical depreciation
b. economic obsolescence
c. functional obsolescence
d. economic deterioration

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

182. The valuation technique in which land and building are valued separately is
a. The income capitalization approach
b. The sales comparison approach
c. Linear regression
d. The cost approach

183. Land valuation techniques include

a. Subdivision development, depreciated cost, consensus
b. Sales comparison approach, consensus, extraction
c. Sales comparison approach, allocation, extraction
d. Assessment multipliers, assessor’s opinions, multiple regression multipliers

184. Land value can be estimated using all of the following techniques except
a. The sales comparison method
b. The cost method
c. The income method
d. The allocation method

185. Improvement cost data can be obtained from

a. Builders
b. Cost Manuals
c. Sales of new homes
d. All of the above

186. In economics, the four factors of production are

a. land, labor, capital, and improvements
b. land, labor, capital and entrepreneurship
c. land, labor, capital and money
d. land, improvements, labor and materials
e. land, labor, site, and improvements

187. Which of the is NOT an agent of production?

A. land
B. transportation
C. labor
D. capital
E. entreprenuership

188. Political forces affecting value may include

A. life-styles and living standards
B. topography
C. athletic levels and recreation facilities
D. government spending and taxation policy

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

E. primary registration and turnout

189. What are the two categories of tangible property?

A. real property and personal property
B. intangible property and real property
C. real estate and intangible property
D. legal and illegal investments
E. open and shut transactions

190. Zoning is an exercise of the

A. equity courts
B. police powers
C. Environmental Protection Agency
D. Right of condemnation
E. Right of escheat

191. Is the amount paid by the lessee of a house or flat fee of a commercial bldg.
a. economic rent d. rental
b. interest e. market price
c. lease

192. The revenue derived from the use of land and of the forces inherent to land
a. economic rent d. rental
b. interest e. price
c. lease

193. It is the price of any commodity in its market at a specified time

a. economic rent d. rental
b. interest e. market price
c. lease

194. Functional utility depends on

A. zoning d. age of equipment
B. wear and tear on the structure e. insurance requirements
C. tastes and standards

195. Value in use is

A. subjective
B. objective
C. readily measurable
D. a market phenomenon
E. synonymous with market price

196. The value added to total property value by a particular component is an example of
the principle of
A. substitution

Compiled by Miguelle L. Dela Fuente

 Mock Exam / MLD Compilation

B. anticipation
C. change
D. contribution
E. conformity

197. The concept that the value of a particular components is measure by the amount
that its absence would detract from the value of the whole is
A. opportunity cost
B. substitution
C. competition
D. contribution
E. conformity

198. The market loss cause by depreciation in an older structure may be offset by all of
the following EXCEPT
A. architectural interest
B. historical registration
C. strong demand relative to supply
D. strong supply relative to demand
E. renovation of the structure

199. 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

200. Plant and Equipment are

a. tangible assets, other than realty.
b. tangible assets, other than personality.
c. intangible assets, other than realty.
d. intangible assets, other than personality.

Compiled by Miguelle L. Dela Fuente