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Real Estate > Chapter 14 - The Real Estate Business > Flashcards

Chapter 14 - The Real Estate Business Flashcards

1
Q

Commercial real estate includes all of the following EXCEPT

  • a retail space for lease
  • apartments for rent
  • fast-food restaurants
  • an office building for sale
A

-Apartments for rent

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2
Q

Who in the real estate transaction is most likely to prepare an analytical report about the condition of the property?

A

-Home Inspector

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3
Q

All of the following factors tend to affect supply EXCEPT

  • employment and wage level
  • construction costs
  • government controls
  • the labor force
A

-employment and wage level

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4
Q

Which of the following BEST expresses the concept of equity?

  • Current market value minus property debt
  • Replace cost minus depreciation
  • Current market value minus capital gain
  • Current market value minus cost of land
A

Current market value minus property debt

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5
Q

The real cost of owning home includes certain costs or expenses that many people tend to overlook. Which of the following is NOT a cost or expense of owning a home?

  • Interest paid on borrowed capital
  • Taxes on personal property
  • Maintenance and repairs
  • Homeowners Insurance
A

-Taxes on personal property

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6
Q

When a person buys a house using a mortgage loan, the difference between the amount owed on the property and what it is worth represents the homeowner’s …

A

-equity

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7
Q

A building that is remodeled into residential units and no longer used for the purpose for which it was originally built is …

A

-a converted-use property

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8
Q

The two characteristics that have the MOST influence on the market value of land are …

A

-uniqueness and immobility

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9
Q

A couple bought their house in 1968 for $25,000. Today, the neighborhood has become very fashionable, and they plan to sell the house for $450,000. How much of the gain is taxable on the couple’s joint return this year?

A

-None

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10
Q

For which risk would a homeowner have to purchase special policy in addition to a typical basic or broad-form homeowners insurance policy?

  • Flood Damage
  • Theft
  • The cost of medical expenses for a person injured in the policyholder’s home
  • Vandalism
A

-Flood Damage

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11
Q

In general, when the supply of a certain commodity increases, …

A

-prices tend to drop

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12
Q

A home inspector discovered some small problems in the bathroom of the home he inspected for the buyers. He offers to make these repairs. In Pennsylvania, when can he make these repairs?

A

-After 12 months

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13
Q

A high rise development that includes office space, stores, theaters, and apartment units is an example of a

A

-Mixed-use development

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14
Q

Each room of a house was preassembled at a factory, driven to the building site on a truck, and then lowered onto its foundation by a crane. Later, workers finished the structure and connected plumbing and wiring before the owners moved in. Which term BEST describes this type of home?

  • Manufactured
  • Mobile
  • Converted
  • Modular
A

-Modular

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15
Q

A man wants to buy his first home but doesn’t know how much he can afford to pay. He has a gross monthly income of $3,000. According to the traditional lender’s rule-of-thumb formula, what is the total housing expense (principal, interest, taxes and insurance) he can bear?

A

-$840

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16
Q

That portion of the value of an owner’s property that exceeds the amount of their mortgage debt is called ?

A

-equity

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17
Q

Real estate markets are local due to the physical characteristics of

A

-immobility and uniqueness

18
Q

Which of the following affects supply?

  • Population
  • Fiscal policies
  • Demographics
  • Wage levels
A

-Fiscal Policies

19
Q

The object of planned unit developments is to …

A

merge diverse land uses in one self-contained development.

20
Q

In the event that a homeowner’s insurance policy provides coverage for at least 80% of the full replacement cost of the dwelling, the loss of the residence will be settled for …

A

-the total replacement cost

21
Q

Which of the following affects demand?

  • Population
  • Construction Costs
  • Government Controls
  • The Labor force
A

-Population

22
Q

All of the following are categories of the uses of real property EXCEPT

  • residential
  • developmental
  • agricultural
  • industrial
A

-developmental

23
Q

Which of the following affects supply?

  • population
  • demographics
  • wage levels
  • Fiscal policies
A

-Fiscal Policies

24
Q

All of the following affect how quickly the forces of supply and demand work EXCEPT

  • degree of standardization of the product
  • mobility of the product
  • degree of standardization of the products price
  • mobility of the parties to the transaction
A

degree of standardization of the products price

25
Q

The point at which supply and demand are equal is known as …

A

-Balance

26
Q

When the supply of a commodity decreases, …

A

-prices tend to rise

27
Q

In addition to the affordability of a home, what is a primary consideration in the selection of a property?

A

-Location of the property

28
Q

The real cost of owning a home includes certain costs or expenses that many people overlook. All of the following are such costs or expenses EXCEPT

  • the income lost on cash invested in the home
  • the interest paid on borrowed capital
  • maintenance and repairs expenses
  • personal property taxes
A

-personal property taxes

29
Q

A property was listed for sale at $100,000. If the original cost was 80 percent of the list price, what will the profit be if it sells for $100,000?

A

-20 Percent

30
Q

Most homeowners insurance policies contain which of the following clauses?

  • Property improvement clause
  • Coinsurance clause
  • Co-ownership clause
  • property devaluation clause
A

-Coinsurance clause

31
Q

When preparing his annual income tax return, the homeowner may be able to deduct all of the following EXCEPT

  • real estate taxes
  • mortgage interest on a first home
  • mortgage interest on a second home
  • mortgage interest on a third home
A

-mortgage interest on a third home

32
Q

In the event that a homeowners insuarnce policy provides coverage for less than 80 percent of the full replacement cost of the dwelling, then the loss of the residence will be settled for …

A

-the total replacement cost

33
Q

A building lot was sold for $88,000. If the seller made a profit of 10 percent, what was the original cost of the property?

A

$80,000

34
Q

The desirability of the location of a residence is influenced by all of the following EXCEPT

  • retirement prospects
  • employment opportunities
  • social services
  • cultural advantages
A

-Social Services

35
Q

A basic homeowners insurance policy would protect against all of the following EXCEPT

  • fire and lightening
  • flooding
  • windstorm and hail
  • water damage
A

-Flooding

36
Q

Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for

  • repairs and maintenance
  • hazard insurance premiums
  • real estate taxes
  • principal and interest
A

-real estate taxes

37
Q

A longer mortgage loan term will

  • decrease the number of loans being made
  • result in lower monthly mortgage payments
  • prevent many individuals from owning homes
  • cause interest rates to increase
A

-result in lower monthly mortgage payments

38
Q

What type of insurance policy must always be purchased separately and not as part of the homeowners policy?

  • earthquake
  • liability
  • flood
  • falling objects
A

-flood

39
Q

For the past two years, a couple has been renting the house they purchased 25 years ago to a tenant. They are now ready to sell that home. When they sell their house, how much of the capital gain will be taxable?

A
  • 0 Percent
40
Q

The value that an owner has in the property that exceeds the amount of the mortgage debt is called?

A

-Equity

Real Estate (22 decks)

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