Chapter 1

Question 1

Real estate (real property or realty) consists of

Answer 1

Land and everything that is permanently attached to the land

Question 2

Title to real property is evidenced by

Answer 2

A deed

Question 3

Personal property (chattel or personalty)

Answer 3

Is everything that is not land or that is not permanently attached to the land. Personal property is readily moveable

Question 4

Bill of sale

Answer 4

An instrument that may be used to transfer ownership of personal property.

Question 5

Physical characteristics of land include

Answer 5

Immobility
Permanence (indestructibility)
Uniqueness (NonHomogeneity)

Question 6

Immobility

Answer 6

Land can NOT be relocated from one place to another. Makes the market for land a strictly local market.

Question 7

Permanence (indestructibility)

Answer 7

Land is a permanent commodity and it cannot be destroyed because its geographic coordinates remain the same.

Question 8

Uniqueness (Nonhomogeneity)

Answer 8

No two parcels are identical in either physical or a legal sense. Parcels differ in aspects such as soil, drainage, view and vegetation. Gives rise to the concept of Specific performance.

Question 9

Economic obsolescence

Answer 9

Land values can change positively or negatively as a result of changing conditions in the surrounding area are said to suffer from __________ when such changes adversely affect the value of land. An investor should be alert to changing conditions that can affect the value of the investment

Question 10

Economic characteristics of land are

Answer 10

Location (situs)
Improvements
Permanence of investment
Scarcity

Question 11

Scarcity

Answer 11

Is its availability. It has a fixed supply base. No additional physical supply of land is being produced to keep pace with the every increasing population.

Question 12

Modification by improvement

Answer 12

Increases the economic supply of land due to the construction of highways, bridges, water reservoirs, purification plants and public utilities.

Question 13

Location or (situs)

Answer 13

The characteristic that has the greatest effect on property value. The value of the location can be increased by improvements.

Question 14

The highest and best use concept

Answer 14

Considers all the physical and economic factors affecting the land.
That use which will provide the peroperty owner the best possible return on an investment over a specified time period. Resulting in the highest possible present value of land.

Question 15

Present value

Answer 15

The value at the time of appraisal. Highest and best use can and does change with time.

Question 16

T/F an over improvement or an under improvement does not provide the optimum income to the land and as a result the land is not put to it’s highest and best possible use.

Answer 16

True

Question 17

Public land use controls

Answer 17

Exists in the form of city planning and zoning, state and regional planning, building codes, suitability for occupancy requirements and environmental control laws. Examples include public buildings, public parks, watersheds,streets and highways.

Question 18

Regulation of land use in the private sector exists but the form of

Answer 18

Protective of restrictive covenants established by developers, restrictions in individual deals or prohibiting a specified land use.

Question 19

Real estate investment offers the opportunity to make profit in three ways

Answer 19

Appreciation, positive cash flow and tax advantage.

Question 20

Appreciation

Answer 20

Increase in market value during the time the investors holds the property.

Question 21

Positive cash flow

Answer 21

The gross effective income produced by the property exceeds the total of operating expenses.

Question 22

Tax advantages

Answer 22

Result from appreciation or gains being taxed at a capital gain rate lower than the investors marginal tax rate when the property is sold from deductions of property taxes, insurance and other expenses during the time the investor owns the property.

Question 23

Real estate transactions can be traced from biblical times between seller and buyer

Answer 23

The business of real estate brokerage is a product of the 20th century. North Carolina adopted its real estate license law statue in 1957

Question 24

NAR is a

Answer 24

Trade group

Question 25

The term realtor

Answer 25

Is a registered trademark of NAR and it identifies licensees who are also members of the local, the state and the national association. All licensees are not realtors

Question 26

Free market

Answer 26

The buyer and seller negotiate a purchase and sale without undue pressure, urgency or outside influence other than the principle of supply and demand. Supply and demand determines real estate prices. Market value depends on the free market concept.

Question 27

Immobility, non homogeneity and uniqueness requires the market to be local.

Answer 27

real estate causes the market to be local in character requiring local specialists who are familiar with market conditions , property values and availability.

Question 28

What are some factors affecting supply and demand?

Answer 28

Interest rates, availability of financing for purchase and construction, population migrations, variations in population trends, family formations, government regulations, local and national economic conditions and the availability and cost of building sites, construction materials and labor.

Question 29

Success in real estate business is built on

Answer 29

Knowledge, service to others, and ethical conduct in all dealings.