Intro to Real Estate Business (Ch. 1)

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brahyam
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238960
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Intro to Real Estate Business (Ch. 1)
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2013-10-06 00:10:58
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Chapter01
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Chapter 1 Review/Material
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  1. Define: Broker
    - A person or company licensed to buy, sell, exchange, or lease real property for others and to charge a fee for these services. 

    - A real estate broker acts as a point of contact between two or more people in negotiating the sale, purchase, or rental of property.
  2. Define: Salesperson
    - A real estate salesperson is a licensee employed by or associated with the broker. The real estate salesperson conducts brokerage activities on behalf of or for the broker.
  3. Define: Licensee
    - A person who has satisfied the requirements set forth by a licensing agency or state legislation.

    - Requirements include course hours or work experience and passing a state-mandated real estate exam.
  4. Define: Market
    - A place where goods can be bought and sold and a price established.
  5. Define: Supply and Demand
    - The appraisal principle that follows the interrelationship of the supply of and demand for real estate. Because appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace as with any other commodity.
  6. Define: Appraisal/Appraiser
    - Appraisal is the process of estimating a property's market value based on established methods and the appraiser's professional judgement. 

    - Appraisers must have detailed knowledge of the methods of valuation. In many states, appraisers must be licensed or certified to carry out local transactions. They must also be licensed or certified for many federally related transactions.
  7. Define: Property Management
    - A property manager is a person or company hired to maintain and manage property on behalf of its owner. By hiring a property manager, the owner is relived of such day-to-day management tasks such as finding new tenants, collecting rents, altering or constructing new space for tenants, ordering repairs, and generally maintaining the property.

    - The scope of the manager's work depends on the terms of the invididual employment contract, known as a management agreement. Their basic responsibility is to protect the owner's investment and maximize the return on that investment.
  8. Define: Financing
    - Financing is the business of providing the funds that make real estate transactions possible. 

    - Most transactions are financed by means of mortgage loans or trust deed loans secured by the property. Individuals involved in financing real estate may work in commercial banks, savings associations, and mortgage banking and mortgage brokerage companies.
  9. What are the six categories of "Real Property"?
    • - Residential
    • - Commercial
    • - Mixed-use
    • - Industrial
    • - Agricultural
    • - Special-purpose
  10. "Uniqueness" and "Immobility" are the two characteristics of land that have the most impact on market value. Explain what we mean by "uniqueness" and "immobility" and why this is.
    - Uniqueness means that, no matter how identical they may appear, no two parcels of real estate are ever exactly alike; each occupies its own unique geographic location.

    - Immobility refers to the fact that property cannot be relocated to satisfy demand where supply is low. Nor can buyers always relocate to areas with greater supply. For these reasons, real estate markets are local markets. 

    - Each geographic area has different types of real estate and different conditions that drive prices.
  11. What does FHA stand for?
    - Federal Housing Administration
  12. Who does "Ginnie Mae" refer to?
    - Government National Mortgage Association
  13. Who does "Fannie Mae" refer to?
    - Federal National Mortgage Association
  14. Who does "Freddie Mac" refer to?
    - The Federal Home Loan Mortgage Corporation
  15. What are some of the factors that affect real estate supply?
    • - Labor force availability
    • - Construction and material costs
    • - Government controls
    • - Financial policies
  16. What are some of the factors that affect real estate demand?
    • - Population
    • - Demographics
    • - Employment and wage levels
  17. A professional estimate of a property's market value, based on established methods and using trained judgment, is performed by a:

    a. real estate broker
    b. real estate appraiser
    c. real estate counselor
    d. home inspector
    b. real estate appraiser
  18. In general, when the supply of a certain commodity increases,

    a. price tends to rise
    b. price tends to drop
    c. demand for it tends to rise
    d. demand for it tends to drop
    b. price tends to drop
  19. Which factor primarily affects supply in the real estate market?

    a. Population
    b. Demographics
    c. Employment
    d. Governmental financial policies
    d. Governmental financial policies
  20. Which factor is MOST likely to influence demand for real estate?

    a. Number of real estate brokers in the area.
    b. Number of full-time real estate salespeople in the are.
    c. Wage levels and employment opportunities.
    d. Price of new homes being built in the area.
    c. Wage levels and employment opportunities.
  21. Property management, appraisal, financing, and development are all examples of:

    a. factors affecting demand.
    b. specializations within the real estate industry.
    c. non-real estate professions.
    d. activities requiring broker management and supervision.
    b. specializations within the real estate industry.
  22. A Realtor is BEST described as an individual who is:

    a. a specially licensed real estate professional who acts as a point of contact between two or more people in negotiating the sale, purchase, or rental of property.
    b. any real estate broker or salesperson who assists buyers, sellers, landlords, or tenants in any real estate transaction.
    c. a member of the National Association of Real Estate Brokers who speciliazes in residential properties. 
    d. a member of the National Association of Realtors.
    d. a member of the National Association of Realtors
  23. A major manufacturer of automobiles announces that it will relocate one of its factories, along with 2,000 employees, to a small town. What effect will this announcement MOST likely have on the small town's housing market?

    a. Houses will likely become less expensive as a result of the announcement.
    b. Houses will likely become more expensive as a result of the announcement.
    c. Because the announcement involves an issue of demographics, not of supply and demand, housing prices will stay the same.
    d. The announcement involves an industrial property; residential housing will not be affected.
    b. Houses will likely become more expensive as a result of the announcement.
  24. A licensee who has several years of experience in the industry decided to retire from actively marketing properties. Now this license helps clients choose among the various alternatives involved in purchasing, using, or investing in property. What is this licensee's profession?

    a. Real estate counselor
    b. Real estate appraiser
    c. Real estate educator
    d. Realtor
    a. Real estate counselor
  25. The words broker and Realtor are:

    a. interchangeable 
    b. different categories of membership in the National Association of Realtors.
    c. different titles offered by separate professional organizations.
    d. unrelated; a broker is a real estate licensee, and a Realtor is a member of the National Association of Realtors.
    d. unrelated; a broker is a real estate licensee, and a Realtor is a member of the National Association of Realtors.
  26. Schools would be considered part of which real estate classification?

    a. Special-purpose
    b. Industrial
    c. Commercial
    d. Government-held
    a. Special-purpose
  27. When demand for a commodity decreases and supply remains the same:

    a. price tends to rise.
    b. price tends to fall.
    c. price is not affected.
    d. the market becomes stagnant.
    b. price tends to fall.
  28. A licensed real estate professional acting as a point of contact between two or more people in negotiating the sale, rental, or purchase of a property is known as a(n):

    a. sales affiliate
    b. broker
    c. property manager
    d. appraiser
    b. broker
  29. All of the following would affect supply EXCEPT:

    a. population
    b. construction costs
    c. governmental controls
    d. the labor force
    a. population
  30. All of the following are categories of the uses of real property EXCEPT:

    a. residential
    b. developmental
    c. agricultural
    d. industrial
    b. developmental
  31. All of the following would affect demand EXCEPT:

    a. population
    b. demographics
    c. wage levels
    d. fiscal policy
    d. fiscal policy
  32. All of the following affect how quickly the forces of supply and demand work EXCEPT:

    a. degree of standardization of the product
    b. mobility of the product
    c. degree of standardization of the product's price.
    d. mobility of the parties to the transactions.
    c. degree of standardization of the product's price.
  33. A real estate professional who performs a visual survey of a property's structure and systems and prepares an analytical report for a purchaser or an owner is acting as a(n):

    a. educator
    b. appraiser
    c. property manager
    d. home inspector
    d. home inspector
  34. When the supply of a commodity decreases while demand remains the same:

    a. price tends to rise.
    b. price tends to drop.
    c. price tends to not be affected.
    d. price tends to go in the direction of supply.
    a. price tends to rise.
  35. When responsible for maintaining a client's property and maximizing the return on the client's investment, a broker is serving as a(n): 

    a. rental agent
    b. building maintenance specialist
    c. property manager
    d. investment counselor
    c. property manager
  36. Detailed information about the age, education, behavior, and other characteristics of members of a population group is called:

    a. population analysis
    b. demographics
    c. family lifestyles
    d. household data
    b. demographics

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