California Real Estate Practice Exam

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Prepare for the California Real Estate Exam. Study with flashcards and multiple-choice questions, each question includes hints and explanations. Get ready to ace your exam!

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If a $52,500 loan was made on a property which was equivalent to 70% of the appraised value, what was the amount of the appraised value?

$50,000
$75,000
$80,000
$90,000

The correct answer is: $75,000

To determine the appraised value of the property based on the loan amount and the percentage of the appraised value that the loan represents, you can use the formula: Loan Amount = Percentage × Appraised Value In this case, the loan amount is $52,500 and it represents 70% of the appraised value. We can rearrange the formula to find the appraised value: Appraised Value = Loan Amount / Percentage Substituting the given values: Appraised Value = $52,500 / 0.70 Calculating that gives: Appraised Value = $75,000 Thus, the appraised value of the property is $75,000, which corresponds to the correct answer. The understanding of how loan-to-value ratios work is crucial in real estate, as it informs individuals about the amount they can borrow in relation to the property's value.