Chapter 1 - Basic Real Estate Concepts

Question 1

Appurtenance

Answer 1

Runs with the Land

Question 2

Bill of Sale

Answer 2

How title is conveyed for personal property (Chattel)

Question 3

Chattel

Answer 3

Personal Property

Question 4

Deed

Answer 4

How title or ownership is transferred for real property

Question 5

Hereditaments

Answer 5

Anything capable of being inherited. Includes everything that defines Land, and everything in the term tenements that is capable of being inherited.

Question 6

Highest and Best Use

Answer 6

The highest possible ‘present value’ of land resulting from the intelligent use of capital, labor, and other resources to improve the land and it’s productivity.

Question 7

Immobility

Answer 7

A physical characteristic of land, it cannot be relocated. The primary distinguishing feature between land and personal property. Reason why real estate market is a local market.

Question 8

Indestructibility

Answer 8

A physical characteristic of land. It is a pemement commodity and cannot be destroyed. It can be altered.

Question 9

Land Use Controls

Answer 9

Public (city planning and zoning, state and regional planning, building codes, suitability for occupancy requirements and environmental control laws.
Private (Protective or restrictive covenants, restrictions in deeds)

Question 10

Land

Answer 10

Three components:

• Surface
• Subsurface
• Air space

Question 11

Nonhomogeneity

Answer 11

Uniqueness (No two parcels are identical)

Question 12

Specific Performance

Answer 12

Arises from nonhomogeneity, if a seller contracts to sell real property, they cannot offer money as a substitute for this duty to sell.

Question 13

Personal Property (Chattel)

Answer 13

Anything that is not Real Property

Question 14

Real Estate

Answer 14

The combination of land, improvements and right and privileges, ownership conveyed by deed.

Question 15

Scarcity

Answer 15

An economic characteristic of land. Availability, fixed supply base, no additional supply being created.

Question 16

Situs

Answer 16

Location, Location, Location

Question 17

Tenements

Answer 17

Ownership interest in anything immobile and considered part of real property. “Structures attached to the land”

Question 18

Physical Characteristics of Real Estate

Answer 18

Immobility
Indestructibility
Nonhomogenity

Question 19

Economic Characteristics of Real Estate

Answer 19

Scarcity
Permanence of investment
Situs (location, socio-economic)

Question 20

Real Estate Investment Objectives

Answer 20

Make a profit using the following three things:

• appreciation
• positive cash flow
• tax advantages

Question 21

Realtor

Answer 21

Registered trademark of the National Association of Realtors. a Licensee who is also a member fo the national, state and local associations.

Question 22

Code of Ethics

Answer 22

NAR created this is 1913 before there was licensing law. Parallels exist between the two.

Question 23

Brokerage

Answer 23

Bringing together buyers and sellers/landlords and tenants for the temporary or permanent transfer of an interest in real property

Question 24

Free Market

Answer 24

Governed by the law of supply and demand.

Question 25

Supply and demand

Answer 25

Supply is the amount of something available for purchase, demand is the amount of something people are willing to purchase.

Question 26

Special Characteristics of the Real Estate Marker

Answer 26

Must be local because of physical characteristics of

• immobility
• nonhomogeneity

Question 27

Real Estate Cycle

Answer 27

Absorption of Excess Supply
Low Vacancies
Increased rent & Prices
Acceleration of New Construction
Oversupply
High vacancies
Declining Prices, Rent and Construction.

Question 28

Broker

Answer 28

North Carolina is an All Broker state:

• Provision Broker (passed exam)
• Broker (requires 90 hours post-licensing)
• Broker in charge (2 years full time Broker experience)

Question 29

Ad Valorem

Answer 29

Real Property Taxes “According to Value”

Question 30

Machinery Act

Answer 30

in North Carolina, the assessed value of the property must be set at 100% of the market value. Reappraisal to happen every 8 years (octennial), horizontal adjustment can happen every 4 years.

Question 31

Horizontal Adjustment

Answer 31

Reappraisal that can happen between octennial assessment every 4 years.

Question 32

North Carolina Tax Rate

Answer 32

Per $100 of assessed value. (Move the decimal 2 spots to the left)

Question 33

Mill Rate or Mileage

Answer 33

Tax rate based on 1/10th of $0.01. (Move the decimal 3 spots to the left)

Question 34

Appraisal

Answer 34

Process of determining market value

Question 35

Assessment

Answer 35

Determination of taxable value. (Machinery Act = reappraised every 8 years or horizontal adjustment every 4)

Question 36

Timetable for Listing and Tax Collection

Answer 36

January 1 - Tax lien attaches to property
January 31 - taxable property listed
July 1 - annual tax rate set
September 1 - tax bill due and payable
January 5th (following year) - last day to pay w/o penalties

Question 37

Property Tax Lien

Answer 37

Ad valorem. Lien takes first priority, exception to the pure race system, collector has already won the race to the courthouse/tax lien doesn’t need to be recorded.

Question 38

Special Assessment Liens

Answer 38

Tax levied against properties for County, City or Town special projects such as street paving, sidewalks or sewer etc. “Front Foot” is the way to determine how much tax is to be paid, how many feet that border the improvement