Chapter 01: Basic Real Estate Concepts

Question 1

All of the following factors would affect supply, EXCEPT
A. population
B. construction costs
C. government controls
D. the labor force

Answer 1

A. population

Question 2

When the supply of a commodity decreases:
A. prices tend to rise
B. prices tend to drop
C. demand tends to rise
D. demand tends to drop

Answer 2

A. prices tend to rise

Question 3

All of the following are physical characteristics of land, EXCEPT:
A. indestructibility
B. uniqueness
C. immobility
D. scarcity

Answer 3

D. scarcity

Question 4

All of the following are required of a candidate to obtain a NC Real Estate Brokers License, EXCEPT:
A. minimum age of 18
B. high school diploma
C. good character
D. formal background check

Answer 4

B. high school diploma

Question 5

Which of the following is correct regarding the educational requirements of a provisional broker?
A. must complete 90 hours of CE in the first 3 years
B. must complete 90 hours of post-licensing in the first 3 year, completing at least 30 hours every year by June 10
C. must complete 90 hours of post-licensing in the first 18 months of being licensed and complete 8 hours of CE every year prior to the second renewal of their real estate license
D. the renewal date for post-licensing and CE is June 10

Answer 5

C. must complete 90 hours of post-licensing in the first 18 months of being licensed and complete 8 hours of CE every year prior to the second renewal of their real estate license

Question 6

How are the members of the NC Real Estate Commission chosen?
A. they are elected by the public at large
B. they are appointed by the governor
C. seven are appointed by the governor and 2 are appointed by the legislature
D. four are appointed by the legislature and 3 are appointed by the governor

Answer 6

C. seven are appointed by the governor and 2 are appointed by the legislature

Question 7

It is the job of the NC Real Estate Commission to perform all of the following, EXCEPT:
A. fine licensees who violate the rules or statutes
B. provide information to licensees and the public
C. regulate and educate licensees
D. protect the public and consumer

Answer 7

A. fine licensees who violate the rules or statutes

Question 8

All of the following are economic characteristics of real property, EXCEPT:
A. scarcity
B. immobility
C. location
D. permanence

Answer 8

B. immobility
(Immobility is a physical characteristic of land, not an economic one)

Question 9

The fact that real estate licensees must be licensed in the state where the real estate is located and not where the client is located occurs:
A. because individual state regulatory agencies create rules that govern their licensees
B. because they are subject to requirements in the national and state constitutions
C. only in NC
D. because of the concept of highest and best use

Answer 9

A. because individual state regulatory agencies create rules that govern their licensees
(Each state has different laws and rules regarding licensure. You must be licensed in the state where the property is located that is being transferred)

Question 10

Highest and best use would best be defined as:
A. the use that produces the highest sales price for the property
B. the one use that provides the greatest return and maximizes the value of the real estate
C. the categorization of the multiple ways in which a property may be utilized
D. the existing and current use of the property

Answer 10

B. the one use that provides the greatest return and maximizes the value of the real estate
(At any given time there is only one highest and best use and it is the use which provides the greatest return and maximizes the value of the real estate)

Question 11

In regard to real estate’s role in economic cycles, which of the following statements is correct?
A. real estate is a stable market that does not fluctuate
B. real estate is a lagging indicator and contains periods of expansion, recession, depression, and revival
C. real estate is a leading indicator of economic cycles
D. real estate cycles are easily predictable

Answer 11

B. real estate is a lagging indicator and contains periods of expansion, recession, depression, and revival
(Real estate cycles tend to follow economic developments and the market is constantly going through periods of change)

Question 12

In regard to the composition of the NC Real Estate Commission, which of the following statements is correct?
A. it must be composed of at least 5 people who are real estate licensees
B. three of the people on the commission must be laypeople
C. at least 3 of the members must be licensees and 2 must be laypeople
D. at least 3 of the members must be laypeople and 2 must be licensees

Answer 12

C. at least 3 of the members must be licensees and 2 must be laypeople
(Three members must have licenses, 2 people must be laypeople and the remaining 4 can be in either category, but are typically real estate professionals)

Question 13

The NCREC has the authority to:
A. regulate the commissions and fees charged by licensees
B. discipline a REALTOR for breach of Code of Ethics
C. fine a licensee for violations of license law
D. require licensees to obtain education

Answer 13

D. require licensees to obtain education
(NCREC imposes initial course requirements, post-licensing course requirements and CE requirements on licensees, all relating to their education)

Question 14

Under the doctrine of specific performance, the party harmed by breach of a real estate contract can ask a judge to force the breaching party to carry out the terms of the contract rather than order the breaching party to pay monetary damages. Which physical characteristic of land is the basis for the doctrine of specific performance?
A. indestructibility
B. uniqueness
C. immobility
D. permanence of investment

Answer 14

B. uniqueness
(Because properties are unique, when a contract is breached a party may be required to complete the transfer as this may be the only equitable remedy for the non-breaching party)

Question 15

Which of the following is considered to have the greatest impact on the value of a property?
A. area preference
B. permanence of investment
C. scarcity
D. uniqueness

Answer 15

A. area preference
(The value of real estate is primarily dictated by location)

Question 16

In determining the value of a property the location is important. Factors in the community which cause businesses to relocate there and the ability to attract new businesses is known as the:
A. the zoning overlays
B. the area’s market value
C. life cycle of the community
D. the economic base

Answer 16

D. the economic base

Question 17

What is the length of the NC real estate licensing examination eligibility period?
A. 75 hours
B. 30 days
C. 90 days
D. 180 days

Answer 17

D. 180 days

Question 18

All of the following will result in a forfeiture of license application and examinations fees, EXCEPT:
A. failing to take the examination within 90 days of license application
B. failing to appear for an examination appointment
C. appearing more than 15 minutes late for an examination appointment
D. failing to produce a proper ID at the time of examination

Answer 18

A. failing to take the examination within 90 days of license application
(Licensees have 180 days within which to take the examination following application)

Question 19

What is the name of the publication that contains information for candidates taking the North Carolina real estate licensing examination?
A. NC Real Estate Commission Bulletin
B. RELINC - Real Estate Licensing in North Carolina
C. North Carolina Administrative Rules
D. North Carolina General Statutes

Answer 19

B. RELINC - Real Estate Licensing in North Carolina

Question 20

If a candidate is denied a license due to information obtained in the mandatory criminal background check, how long do they have to request a hearing with NCREC?
A. 30 days
B. 60 days
C. 90 days
D. 180 days

Answer 20

B. 60 days