Day 1 Fundamentals of REA Exam

DAY 1 FUNDAMENTALS of REAL ESTATE APPRAISAL
1. As defined in RA 7160, what are lands in which minerals, metallic or non-metallic, exist in
sufficient quantity or grade to justify the necessary expenditures to extract and utilize such
materials?
A. Commercial Lands
B. Mineral Lands
C. Industrial zone
D. Rocky Mountains
2. Which of the following is NOT considered a test of a fixture?

A. Relationship of the parties
B. Method of attachment
C. Intention of the parties
D. Method of financing
3. Which refers to an allocated lot in industrial subdivision?

A. Industrial lot
B. Manufacturing lot
C. Factory plot
D. Subdivision lot
4. Identify the increase in the value of interest by the property owner that can be attributed to
the new use which his former property Tori 11 be added to by the expropriating authority.
A. Market approach theory
B. Bundle of rights
C. Consequential benefits
D. Cost approach theory
5. What is the minimum level of completion for a socialized housing projects?

A. shell house with doors and windows to enclose the unit and a toilet
B. complete house based on the desire of the buyer
C. shell house with doors and windows to enclose the unit
D. complete house based on the Submitted specifications
6. Real estate service practitioners refer to the following EXCEPT ________.

A. real estate salesperson
B. real estate appraiser
C. real estate consultant
D. real estate agent
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7. Bingbong deeds a title to Lenlen, but keeps a life estate for the rest of his life. Upon
Bingbong’s death, possession and use passes to Lenlen. This is an example of _______.
A. Estate in reversion
B. Estate in remainder
C.Estate at will
D. Estate in reservation
8. Which refers to the present cost of replacing or constructing a new improvement which will
represent an exact replica of the existing one?
A. Reproduction Value
B. Replacement Cost
C. Reproduction Cost
D. Replacement Value
9. In appraisal, effective age means _______.

A. Original age
B. Relative age
C. Average age
D. Young age
10. What is the latest version of the International Valuation Standards?

A. IVS 2015
B. IVS 2017
C. IVS 2018
D. IVS 2020
11. Ownership and other real rights over immovables also prescribed through uninterrupted
adverse possession thereof for _______ years without need of title or of good faith.
A. 10
B. 20
C. 30
D. 15
12. Which of the following company is a real estate development company that is not listed in
the Philippine stock exchange?
A. Vista Land
B. Filinvest Land
C. San Jose Builders
D. 8990 Holdings
13. Chel deeded to Mark, who did not register the deed nor took physical possession of the
property. Then, Chel deeded to Loren, who was not aware of the prior deed to Mark. Loren
registered the deed. In the subsequent dispute over title between Mark and Loren, which rule
would be important?
A. The date of the deed determines who is first in right.
B. The person who registered first is the first in right.
C. All deeds must be acknowledged to be valid.
D. All deeds must be registered to be valid.
14. What refers to the result of a reasonable degree of architectural homogeneity and
compatible land uses brought about by market attitudes, societal brands, economic conditions
and public policy?
A. Principle of Conformity
B. Increasing and Diminishing Return
C. Surplus Productivity
D. Highest and Best Use
15. Which refers to the Cost to Create a virtual replica of a property using identical or if
identical materials are not available, similar materials?
A. Depreciation
B. Reproduction
C. Appreciation
D. Replacement
16. Doc William owned a life estate in a property. Doc William leased the property to Binay for
five years. Two years later, Doc William died. The lease is ______.
A. Cancelled and invalid upon Doc William’s death.
B. Valid for a two—year period after the death of Doc William.
C. Valid and in force for the rest of the term.
D. Invalid ab initio because a life estate owner cannot sign a lease.
17. Which part. of the Philippine Valuation Standards provides additional information for the
application of the valuation standards?
A. Guidance notes
B. Glossary of terms
C. Introduction
D. Table of Contents
18. Which of the following is NOT an area of discipline of physical geography?

A. Coastal geography
B. Geomorphology
C. Cultural geography
D. Hydrology
19. What conceptual framework in identifying market value is applied? It establishes that each
party is motivated to undertake the transaction, but neither forced to complete it.
A. “after proper marketing”
B. “on the valuation date”
C. "in an arm’s length transaction”
D. “and without compulsion”
20. What law provides designating HLURB as sole regulatory power in house and lot
development, mandated to encourage greater participation of the private sector for the Low-
cost housing liberalization of development standards, simplification of regulations and
decentralization of licenses and permits?
A. PD 457
B. PD 1216
C. EO 70
D. EO 90
21. What refers to the VALUE that may be recovered when the property will be retired or
disposed at a future time?
A. Appraised
B. Assessed
C. Salvaged
D. Zonal
22. The legal term escheat means _________.

A. Title has reverted to the state.
B. Mortgaged property can be conveyed.
C. An agent’s license has been revoked.
D. Fraud has been committed.
23. What refers to the Span of Time that appears to be as a new item or structure, regardless of
its actual age which is either shortened or lengthened because of its characteristics, condition
or efficiency, it also refers to the number of years of age indicated by the condition of the
building in any improvement?
A. Effective age
B. Influential time
C. Economic life
D. Productive life
24. Derivatives are _________.
A. assets obtained from sale of shares of stock to the public
B. a form of financial asset which derives its return from other underlying assets
C. a new company formed by merger of two companies
D. a new business after diversification
25. The following are the methods of estimating reproduction cost, EXCEPT ______.
A. it establishes cost per square meter for the subject building and multiplies that cost by the
square meter of the subject building to arrive at the reproductive cost
B. it is based on the used of installed price for various building materials, employing units
convenient to use such as square meters
C. it comprises the detailed inventory of all materials, labor and other costs that will be needed
for the reproduction, used by Architects, Engineers, Builders and Contractors.
D. it has certain useful life expectancy and that it has the capacity to produce a certain number
of units of income
26. What refers to the period over which existing improvements are expected to continue to
contribute to the value of the property?
A. Remaining physical life
B. Chronological age
C. Remaining economic life
D. Period of diminishing returns
27. Which area in the condominium project, like parking space, is allocated to the exclusive use
of condominium unit owner?
A. Assigned common area
B. Exclusive common area
C. Common area
D. Limited common area
28. Which of the following is NOT an example of a life estate?

A. Estate in reservation
B. Estate at will
C. Estate in reversion
D. Estate in remainder
29. Jean leased her commercial stall to Kian for a restaurant business wherein he installed his
ovens, counters, booths and other equipment. Choose the event when will the equipment
installed by Kian becomes real property?
A. When Kian defaults on his rental payment
B. When Kian does not remove the equipment after the lease expiration
C. In the effectivity of the lease agreement
D. After the first renewal of the lease contract
30. What Principle states that influence outside a property may have a positive or negative
impact on its value like: low interest encourage hours of production due to enhanced demand,
low crime rates, population density and income level may influence value of properties?
A. Substitution
B. Utility
C. Externalities
D. Conformity
31. Appraisal reports guided by PVS should be clear and not misleading and will __________
essential to the proper understanding of the valuation.
A. Bear what is
B. Declare only what is
C. Disclose all matter
D. Give what is
32. The following are causes of depreciation, EXCEPT _______.

A. economic Life
B. economic obsolescence
C. functional obsolescence
D. physical deterioration
33. Pursuant to the RESA, what course is required to be implemented by the Commission on
higher Education in order for the PRBRES to make it a requirement for taking the licensure
examination?
A. Bachelor' s Degree in Real Estate Service
B. Bachelor of Science in Real Estate Management
C. Bachelor' s Degree in Real Property
D. Bachelor of Science in Real Estate Service
34. How many guidance notes are included in the first edition of the Philippine Valuation
Standard?
A. 18
B. 15
C. 16
D. 17
35. What is the distribution of the collected real property tax proceeds in case of Metro Manila?
A. MMDA — 35%; City/ Municipality - 25%; Barangay – 40%
B. MMDA — 0%; City/ Municipality - 70%; Barangay – 30%
C. MMDA — 30%; City/ Municipality - 35%; Barangay – 35%
D. MMDA — 0%; City/ Municipality - 65%; Barangay – 35%
36. Which refers to the environment wherein goods/ property or services are traded between
buyers and sellers thru a price mechanism?
A. Value
B. Market
C. Price
D. Profit
37. What is the indicative price of a property appraised at Php2, 000, 000. 00 when the value to
price ratio (VPR) is 80%?
A. Php 1, 600, 000. 00
B. Php 2, 400, 000. 00
C. Php 2, 600, 000. 00
D. Php 2, 500, 000. 00
38. Identify the MOST appropriate law that covers condominium ownership and rights?
A. Subdivision and Condominium Buyer' s Protective Decree
B. Property Registration Decree
C. Condominium Act
D. Realty Installment Buyer's Protective Act
39. Choose from these Elements of Cost what is directly related to the acquisition and
installation of the unit, such as the basic cost, freight charges, insurance, bank charges and
commission, duties and taxes, other landing charges, and handling and cost of transportation to
site.
A. Market approach
B. Indirect cost
C. Income approach
D. Direct cost
40. Choose the number of major dialects in the Philippines.

A. 8
B. 9
C. 7
D. 6
41. What is the process of land acquisition by exchanging land for another piece of land or for
shares of stocks in government corporation of equal value for the purpose of planned and
rational development and provision of socialized housing?
A. Land swapping
B. Land segregation
C. Land banking
D. Land consolidation
42. The Land Management Bureau is under the jurisdiction of the

A. Department of Public Works and Highways
B. Dept. of Environment & Natural Resources
C. Dept. of Agrarian Reform
D. Department of Justice
43. From world bank statistics, the sector which employs majority of Filipinos is ________.
A. Services
B. Industry
C. Mining
D. Agriculture
44. What is the other term used to refer to the constant growth model which assumes that
asset grows or declines at a constant rate into perpetuity?
A. Talbot Change Model
B. Talbot Growth Model
C. Gordon Change Model
D. Gordon Growth Model
45. The following are some requirements in the Repricing Technique, EXCEPT ______.
A. establish an inventory of the property as of acquisition date
B. gather technical specifications of the property items to be repriced to an extent adequate for
complete identification
C. compile basic price information for each property item from manufacturers, suppliers or
dealers.
D. develop unit prices covering all elements of cost
46. What special levy on the special education fund tax is being imposed on real property?
A. Not exceeding 1% of the fair market value
B. 1% of the assessed value
C. 1% of the fair market value
D. Not exceeding 1% of the assessed value
47. An estimate or opinion of value known as _____________.
A. Appraisal
B. Analysis
C. Conclusion
D. Computation
48. The principle of substitution relating to market value shows that a buyer of property will
pay no more than the ________.
A. cost of acquiring an equally desirable substitute
B. purchasing limit
C. price of property with greater utility
D. price paid by the previous owner
49. What code became the basis of the Real Property Tax Administration System in the
Philippines in 1974?
A. Tax Code
B. Real Property Tax Code
C. Real Property Code
D. Valuers Code
50. The following are the necessary qualifications of an Appraiser to estimate property value for
diversified purposes such as:
I. Transactions involving transfer of property ownership
II. Pending settlement of taxes and establishment on the basis of taxes
III. Property treated as fixed asset in financial reporting
IV. Establishment of rental rates
V. Establish payment of just compensation in condemnation proceedings
A. I.II.III.IV.V
B. I.III.IV.V
C. I.II.III.V
D. I.II.III.IV
51. Which is the MINIMUM lot frontage in meters for a single detached irregular lot in an
economic housing project?
A. 5 m
B. 4 m
C. 3.5 m
D. 3 m
52. Common items such as materials and labor are included in Direct cost. What others are
included?
I. transport, installation costs
II. professional, and other fees (commissions, etc.)
III. overheads, taxes
IV. finance cost (interest on debt financing)
V. profit margin/ return to investors
A. I, II, III, IV
B. II, III, IV, V
C. I, III, IV, V
D. I, II, III, IV, V
53. Pursuant to Republic Act Number 7160, which refers to the matrix of values of real
properties prepared by local assessors?
A. Schedule of market values
B. Table of market values
C. Schedule of fair market values
D. Table of fair market values
54. Determine the disposition of title upon the death of any of the co—owners in a joint
tenancy.
A. Convey title without the permission of co—owners; probate Is usually required.
B. Convey title without the permission of co-owners; no probate nor will required due to the
right of survivorship.
C. Convey title with the permission of co-owners; probate is usually required.
D. Convey title with the permission of co-owners; no probate not will required due to the right
of survivorship.
55. What is a duly registered association of persons with a common bond of interest, who have
voluntarily joined together to achieve a lawful common or social economic end, making
equitable contributions to the capital required and accepting a fair share of the risks and
benefits of the undertaking in accordance with universally accepted principles?
A. Association
B. Cooperative
C. Organization
D. Community
56. Which economic characteristic of land shows that land and building are relatively long
lasting assets?
A. Divisibility
B. Immobility
C. Valuable
D. Durability
57. "Let the seller beware" is caveat venditor; while " let the buyer beware" is caveat _______.
A. Subscriptor
B. Vendor
C. Emptor
D. Sequitur
58. What refers to the legislative act of imposing tax?

A. Congress
B. Tax
C. Inherent Power
D. Levy
59. The loss in value of a building because of a poor floor plan is called _________.
A. Functional obsolescence
B. Book depreciation
C. Economic obsolescence
D. Physical deterioration
60. The fraction of a property's total market value which can be borrowed, subject to policies of
the lender's ________.
A. Collateral
B. Mortgaged property
C. Equity
D. Loan-to-Value ratio
61. What refers to a Mineral or Petroleum real property interest that is being actively explored
for Mineral deposits or Petroleum accumulations, but for which economic viability has not been
demonstrated?
A. Exploration area or property
B. Extractive industries
C. Mineral reserve
D. Mineral industry
62. Which of the following is NOT considered a cost approach method?

A. Comparison
B. Reproduction
C. Summation
D. Replacement
63. What is a non—monetary Asset that manifests itself by its economic properties, with no
physical substance but grants rights and/or economic benefits to its owner?
A. Intangible
B. Financial
C. Tangible
D. Market
64. Which of the following is NOT an example of a freehold estate?

A. Estate at will
B. Estate in reversion
C. Estate in remainder
D. Estate in fee
65. Legally permissible, physically possible, financially feasible and maximally productive is
known as ________.
A. Competition
B. Supply and demand
C. Principle of change
D. Highest and best use
66. The descendants of the original inhabitants of the Philippines are ________.
A. Tribal communities
B. Natives
C. Aeta
D. Indigenous peoples
67. A clause where the holder of the first loan agrees to become a second in favor of a new
construction loan is called __________.
A. Acceleration clause
B. Subordination clause
C. Prepayment penalty
D. Alienation clause
68. What is fundamentally concerned with the ways in which patterns on earth's surface reflect
End influence the physical and human processes?
A. Physiology
B. Geography
C. History
D. Geology
69. What are the four elements of value in real estate?

A. Utility, scarcity, uniqueness, demand
B. Scarcity, demand, transferability, immobility
C. Demand, utility, scarcity and transferability
D. Demand, utility, immobility, scarcity
70. The process of bringing together the three indications of value derived through the market,
cost and income approaches is the final step in the appraisal process where the appraiser
arrives at one final value estimate. Identify this step.
A. Reconciliation
B. Recommendation
C. Appreciation
D. Averaging
71. Determine what refers to the percentage applied to the market value in order to determine
the taxable value of the property.
A. Assessment level
B. Cost approach
C. Basis of value
D. Capitalization rate
Day 1 Multiple Choice Answers
1. B
2. D
3. A
4. C
5. C
6. D
7. C
8. B
9. B
10. D
11. C
12. C
13. B
14. A
15. B
16. C
17. B
18. C
19. C
20. D
21. C
22. A
23. C
24. B
25. D
26. C
27. B
28. C
29. B
30. C
31. C
32. A
33. B
34. B
35. A
36. B
37. A
38. C
39. D
40. A
Eight (8) major dialects spoken by majority of the Filipinos: Tagalog, Cebuano, Ilocano,
Hiligaynon or Ilonggo, Bicolano, Waray, Pampango, and Pangasinense. Filipino is that
native language which is used nationally as the language of communication among
ethnic groups.
41. A
42. B
43. D
The statistic shows the distribution of employment in the Philippines by economic
sector from 2009 to 2019. In 2019, 22.86 percent of the employees in the Philippines
were active in the agricultural sector, 19.12 percent in industry and 58.03 percent in the
services sector.
44. D
The Gordon growth model (GGM) assumes that a company exists forever and that there
is a constant growth in dividends when valuing a company's stock. The GGM works by
taking an infinite series of dividends per share and discounting them back into the
present using the required rate of return.
45. A
46. B
The Special Education Fund arises from the additional one percent (1 %) tax on real
property and is allotted by the Local Government Code to the local school boards.
47. A
48. A
49. B
50. A
51. B
52 C
53 A
54 B
55 B
56 D
57 C
58 C
59 A
60 D
61 A
62 A
63 A
64 B
65 D
66 B
67 B
68 B
69 C
70 A
71 A

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DAY 1 FUNDAMENTALS of REAL ESTATE APPRAISAL

2. Which of the following is NOT considered a test of a fixture?

3. Which refers to an allocated lot in industrial subdivision?

5. What is the minimum level of completion for a socialized housing projects?

6. Real estate service practitioners refer to the following EXCEPT ________.

9. In appraisal, effective age means _______.

10. What is the latest version of the International Valuation Standards?

18. Which of the following is NOT an area of discipline of physical geography?

22. The legal term escheat means _________.

28. Which of the following is NOT an example of a life estate?

32. The following are causes of depreciation, EXCEPT _______.

40. Choose the number of major dialects in the Philippines.

42. The Land Management Bureau is under the jurisdiction of the

58. What refers to the legislative act of imposing tax?

62. Which of the following is NOT considered a cost approach method?

64. Which of the following is NOT an example of a freehold estate?

69. What are the four elements of value in real estate?

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