REAA - CPPREP4101 and CPPREP4504 - Written Questions v1.2

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Academy of Real Estate *

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CPPREP4101

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Economics

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Feb 20, 2024

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docx

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Written Questions What you need to do: For this assessment task you will undertake research and report on various aspects of working in the real estate industry. A template has been provided to you to use to structure your report to cover all the required information. You are required to answer all questions correctly. If correct, you will see ‘Satisfactory’ or if incorrect you will see ‘Not Satisfactory’ in your grades section of your learner portal next to the assessment name. The assessor will provide feedback and a Record of Results in the assessment task once graded. You will be required to resubmit your work for any ‘Not Satisfactory’ assessment tasks. What you will need: You will need to research information about real estate agencies to assist with your responses for this task. Use the learner material provided in your online student portal as well as research materials such as books, internet, magazines, workplace documentation etc. to assist you in gaining the knowledge required to answer the questions. Remember that the assessment is completely self-paced and open book, so you are able to use whatever resources you have to answer the questions. What you need to submit: The answers to these questions. How to Submit your Assessment: Upload your completed document into your learner portal following the instruction s within the assessment task. You can drag and drop the file into the window or use the add file icon in the top left of the submission window and select the file you wish to upload by using the browse/choose file option. Click on “finish attempt ” to submit it for grading.

Question 1 List sections of the legislation that apply to conducting a property appraisal. -Estate Brokers -Land Selling Act of 1962 -Residence Tenancies Act of 1997 -The Australian Consumer Law and Fair Trading Act was passed in 2012, -The Retail Leases Act of 2003. Question 2 A client has phoned in a complaint about a recent property appraisal that was conducted at their home. They have indicated that the agent was talking on his phone at the time of arriving at the property after being 10 minutes late and the client felt dismissed by the agent and was no longer wanting to work with the agent to sell her property. In 100 – 150 words explain the communication strategies (what you would do or say) you would use to respond to client’s complaints. I want to start by apologising for any inconvenience. It makes sense that the customer should be treated with the utmost respect and care when performing his task. Our agents have a lot of expertise and are qualified to offer top-notch service. Sometimes, clearing up doubts and responding quickly to emergencies cause agents to get obsessed. We appreciate each person equally, just like you, our valued consumer, and we must help them. Thus, we'll make sure our representative shows up on time and isn't distracted by other tasks the following time. I am always pleased to serve you. Question 3 What is the difference between a property appraisal and a property valuation? A simple estimate or judgement of a property's current market value, taking into account how the market is reacting and other considerations, constitutes an appraisal. Real estate firms frequently provide this as a free service. A fee is levied for the valuation service, which entails the preparation of a written report on the property Questions 4 Complete the table below in reference to how each of the listed property attributes impact on the agent’s appraisal of the property. Property Attribute Explain the Positive/Negative Impact of your example • Building construction - Asbestos Positive - Asbestos has no positives. Negatives - Until removal property will lose value. • Building construction – steel frame Positive - A strong sturdy foundation and house will increase the value of the property.

Negative - Corrosion is a possability with steel. • Aesthetic and design features – e.g. Neutral colour palette Positive - Modern architure. Negative - Lacks vibrance in the absence of furniture. • Faults and hazards - Positive - Problems can be found and fixed. Negative - If the upgrades do not match the rest of the facade, the value may decline. • Building improvements and modifications Positive - Can raise the home's value Negative - If the upgrades do not match the rest of the facad, the value may decilne • Property condition and presentation Positive - If the condition and presentation are maintained, value may increase. Negative - If the condition and presentation are poor, the value may decline. • Heating, cooling and ventilation systems Positive - Ducted heating and cooling systems add value. Negative - If systematic problems continue, property values may decrease. • Energy efficiency and sustainability ratings Positive - Value rises if energy rating is greater Negative - Value may decline if maintainence is required. Question 5 List and explain (3) reasons that an owner may contact an agent for an appraisal on their property? Three reasons that an owner may contact an agent for an appraisal on their property are: i.)Appeals against tax assessments, In many places, the fair market value of your home is used to determine how much property taxes you owe. If your home's worth looks to be higher than what is indicated on your property tax bill, perhaps because housing prices in your city or area have dropped, you might be entitled to contest the assessment. A stronger argument supported by an objective assessment can lead to a decrease in your yearly property tax bill. Check to see if your state or municipality allows homeowners to submit their own appraisals when disputing property tax assessments because the process varies by state and municipality. ii.)A home equity loan is a second loan on top of an existing mortgage, as opposed to refinancing. The amount you are eligible to borrow with a home equity loan mostly depends on how much equity you have left over after deducting the balance of your mortgage from the house's current value. If your house's value has decreased, you might not be eligible for a home equity loan. iii.)No matter if you're beginning a family, expanding your family, or dealing with an empty nest, your demands change as your lifestyle and family do. A valuation will guarantee that you are aware of your property's current value if you need more

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room and are searching for the next step, or if you want to downsize since you no longer require the family home. This implies that you aren't basing your estimate of the property's value on an outdated appraisal or the price at which the house next door sold. Question 6 What source documents need to be obtained and analysed for property appraisals? 1. Past sales 2. Present sales 3. Land, title, and lot plans 4. School districts 4. Market prices Question 7 What are (4) examples of indicators that can be used to measure the sales market? 1. Qualified leads from marketing A lead that is prepared to be forwarded to your sales team for follow-up. By defining what a qualified lead looks like for your company—whether through form submissions, website usage patterns, or some other action—you can track the steps that lead to a contact's readiness for sales. 2. Cost per Customer Acquisition The price of each step taken to persuade a potential client to buy is taken into account when calculating the cost per customer acquisition. 3. ROI in marketing The phrase "return on investment" (ROI) refers to a statistic used to assess how much revenue a marketing campaign earns in relation to its execution costs. The return on investment is the most important statistic to monitor and assess. 4. Sales Qualified Leads (SQLs) The sales qualified leads metric is a representation of the number of prospective customers who turn into sales prospects. By knowing how many leads your team turns to sales, you can evaluate the strengths and weaknesses of your lead generation and sales pipeline processes Question 8 What are (3) physical indicators/signs of wear and tear and defects that may affect your property appraisal? 1. Mold on walls or wood 2. Damp or wet spots that suggest water leaks 3. Structural harm

Question 9 What is the role of the agent and real estate personnel in providing property appraisal, price range and rental value recommendation? Clients should receive property appraisals from an agent and real estate professionals. An assessment of the value of the client's property in the present market is referred to as a property appraisal. Real estate agents must specialise in determining the value of customers' property by conducting a comparative market analysis. The comparative market study should be used by real estate professionals to establish a price range. It can be challenging to find many options that are exactly the same when dealing with established houses. Also, real estate brokers must be prepared to make suggestions regarding rental value. Typically, they have access to a wide range of resources. They have thorough knowledge of the zoning regulations, the specialists required to finish the sales, and the housing codes. Question 10 Explain in 100 – 200 words professional and ethical practices associated with conducting property appraisals and delivering presentations to clients in real estate. An appraisal is carried out to achieve one or more of the following goals: to form

an opinion of a property's value; to calculate the cost of creating, acquiring, modifying, or finishing a property; to calculate the monetary amount of damages to a property; and to predict the financial earning potential of a property. In other circumstances, the work may have additional goals, such as formulating conclusions and suggestions or outlining potential alternatives together with their implications for the client's course of action. The main goal of a financial evaluation is to arrive at a numerical conclusion, either as a range or the most likely point magnitude: the dollar amounts of a value, an expected cost, and an anticipated earning potential. The development of this numerical result must be done impartially and objectively. It has nothing to do with the needs, wants, or desires of the client who hired the appraiser to do the service. Regardless of whether a written or oral report is provided as part of the assignment, the appraiser must document and substantiate all conclusions reached when accepting a job to perform an appraisal or to testify as to the value of property before a court of law, regulatory agency, or any other judicial or quasi- judicial forum. Question 11 List and explain in 20 – 50 words each, (3) different methods that can be used to appraise property Sales comparison: Using this approach, appraisers estimate a property's value by comparing it to nearby comparable homes' most recent sales prices. In a free and competitive market, at least three separate similar properties must have been revealed over the past year in order to do this. Cost approach: This approach is based on the notion that the value of a property should be equal to the price of erecting an equivalent structure, after subtracting housing and land costs but before subtracting depreciation. Therefore, it wouldn't make sense for a home buyer to pay more for a property than it would take to build a building with a comparable design from scratch.

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Income approach: This tactic, also known as the "income capitalisation approach," determines a property's value by accounting for the income it generates over time. In this instance, the capitalisation rate, which stands for the anticipated rate of return on the investment, is divided by the nett operational income, which is calculated as revenue generated by the property less operating expenses. Question 12 When appraising a shopping centre, which of the following appraisal methods would be best suited to conduct the appraisal? (Click the box to select your answer) ☐ (a) Direct market analysis ☐ (b) Summation ☐ (c) Hypothetical ☐ (d) Capitalisation Question 13 Explain the process in 50 – 150 words that you would undertake to maintain documented evidence from appraisal activities to ensure confidentiality of information. A representative who understands the importance of protecting personal information and takes privacy requirements extremely seriously must protect any confidential information in an evaluation that is subject to the Privacy Act. How personal information is handled, used, and managed is governed by the Privacy Act. If the information does not actually relate to a recognised or generally identifiable individual, it is not considered personal information. The state and territorial valuer generals are one source of the price information. The valuer general for each state and territory maintains a searchable online database of private ownership information that includes information on the owner(s), the type of financing used to purchase the property, and the purchase price. To make estate information open and accountable, their extensive database was established more than a century ago Question 14 What timeframe must the licensee keep records associated with transactions for?

(Click the box to select your answer) ☐ (a) At least 3 years after a record is made ☐ (b) At least 7 years after a record is made ☐ (c) At least 5 years after a record is made ☐ (d) At least 6 years after a record is made ☐ ( e) Until the transaction is concluded Question 15 List (3) sources of specialist advice you may need to use to assist you in preparing a property appraisal report and explain the purpose of this advice? 1. Real estate purchased via PriceFinder 2. Landata of the QLD Government 3. The QLD government provided statistical information and reports. Question 16 Property market conditions can be influenced by social, economic, political and physical factors. Provide (2) real estate relevant examples for each category and explain how these impact on market conditions. Social Factors

These two elements—population growth and an increase in crime in a particular area—are factors that affect how society's members live their daily lives. A surge in crime in a particular area may cause people to move away, reducing the demand and, as a result, the price of property there. Conversely, an increase in population will result in an increase in housing demand, which would raise housing Economic Factors These two factors—an increase in household income and a decline in mortgage loan interest rates—have to do with the socioeconomic standing of individuals in society. Households may choose to relocate to more expensive areas as their income rises. Due to the relocations and decreased housing demand, this has a negative influence on the less affluent neighbourhoods, while having a beneficial impact on regions with higher housing demand. With mortgage interest rates falling, more individuals will buy homes, increasing demand and, ultimately, boosting the housing sector. Political Factors Government measures like tax credits and home subsidies have an impact on the real estate market. By offering tax credits, the government encourages home ownership by lowering housing taxes, which raises demand. The same is true of mortgage subsidies. Government-sponsored housing subsidies make homes more affordable and accessible to more people, increasing demand. Physical Factors The environment is primarily to blame for this. Here, the topography of a region and its susceptibility to earthquakes are important considerations. People will leave a location where there are frequent earthquakes or earth tremors, which will reduce the demand for houses. The topography of a place describes its landscape as well as the water and air quality in that region. People will purchase homes in that area if the air and water are pure and there is little pollution. Question 17 What are (2) Sources of information that an agent can access and use in order to assist with providing a client with a property appraisal. 1. Market comparisons 2. Reports from local governments Question 18 What sources can you access to obtain the following information relevant to completing

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a property appraisal? Scenario Source Advice on remedies for building defects. Inspector of buildings and pest Building/planning approvals Local government Certificate of title Titles office or RP data/price finder Market conditions Price finder and RP data Local and state regulations QLD Government website Question 19 When recommending property improvements to a client, what are some of the key factors that an agent should take into consideration? Among the crucial elements are: 1. Customer budget; 2. Client chosen style 3. The potential value of the enhancement to the property; 4. The length of time required to complete improvements Question 20 List the name of 1 property portal or real estate specific database that agents can use to assist in the preparation of a property appraisal. Price finder - owed by domain Question 21 What property attributes would be considered “comparable” and therefore relied upon in a direct market comparison? The following qualities would be taken into account: 1. Current market value 2. Recent sale price 3. Rental CPI

4. School districts 5. Capitalization graph Question 22 What is an “out of line” sale and the forces that impact on property value? When a property sells against the grain of the facts, it's an out-of-line transaction. Its pricing, whether low or high, is inconsistent with the market value that all readily accessible comparables and other market criteria fairly suggest. Question 23 Complete the table below to identify (3) risks associated with completing a property appraisal and risk management strategies you could implement to mitigate the risk. Risk Treatment Market Risk Risks linked with this include rising interest rates, a slowing economy, an increase in the supply of comparable homes due to nearby development, as well as the possibility of falling demand for those properties. Location Risk There are environmentsl risks, strict orders for the protection or alteration of cultural heritage, landslides or miing subsidence, and main road construction. Improvement risks In addition, the building has concealed flaws, unapproved additions, higher- than-expected repair costs, degredation in the state of he upgrades, pest

infestation, and access restrictions. Click or tap here to enter text. Click or tap here to enter text. Question 24 List (2) Agency forms and documentation associated with property appraisal and reasons for maintaining documentation. 1.Form of introduction: This explains what the appraisal entails and introduces the agent to the customer. 2.Appraisal form: The appraisal form contains all the data regarding the property, market development, school catchments, etc Question 25 An investor purchases a property for $400,000.00. He receives $450.00 per week in rent. Calculate the rental yield for the investment and comment on the financial viability of this investment. Rental yield on the property =5.40% The amount of rent you might anticipate earning from your home each year is known as the rental yield. By dividing the annual rental income by the initial investment, rental yield is computed as a percentage. A good return on investment will be between 5 and 8% on the rental yield, which is 5.40% in this situation. as a result, it is a wise investment. Rental yield: [(450 x 4 x 12)/400,000] x 100 = 5.4%) Question 26 The term - “Average days on the market” is (Click the box to select your answer) ☐ (a) The percentage of rental properties which are available/unoccupied at a given time ☐ (b) The average time that it takes for a property to be “ on the market ” for sale/rent

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☐ (c) Used to determine “ supply and demand ” in the property market. ☐ (d) Both c and b ☐ (e) The percentage of properties which are selling under the hammer at auctions

REAA - CPPREP4101 and CPPREP4504 - Written Questions v1.2

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