Chapter 21 Random Flashcards
Real property is said to be more subject to the effects of externalities than most assets. This vulnerability is principally due to:
(1) the relatively high cost of real property.
(2) the fact that land is fixed in supply.
(3) the immobility of land.
(4) the lack of effective government regulations.
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When a bidder’s ceiling price for a lot is $30,500 and the owner’s floor price is $32,500:
(1) the parties could negotiate and produce a sale.
(2) a sale can not take place.
(3) the sale price of the lot will be $31,500.
(4) neither party is behaving reasonably.
2
Which one of the following does NOT result from the immobility of land?
(1) the need for debt financing
(2) a vulnerability to outside environmental factors
(3) an inability to move a listed property to a better resale market
(4) the necessity for owners to travel in order to take advantage of services provided by different parcels of land
1
Two identical houses located next to one another in the same neighbourhood sell within one week of each other. Ms. Brown sells hers for $112,000, while Mr. Fisher is only able to sell his for $100,000. Which of the following could account for the difference in selling price?
(1) The listing brokerage representing Ms. Brown spent an extraordinary amount of money on advertising her property.
(2) Mr. Fisher supplied a vendor take-back mortgage at 9% while the current market rates were 12%.
(3) Ms. Brown was promoted to a new position in Edmonton and her expertise was required immediately.
(4) All of the above factors could account for the difference in selling price.
1
Why is the sub-market for single-family residences considered to be more perfect than other real estate sub- markets?
(1) Buyers and sellers do not necessarily attempt to achieve the greatest profit.
(2) Each property is unique.
(3) There is a more abundant flow of market information relating to current prices.
(4) There are a small number of buyers and sellers relative to the total number of properties
3
The income approach is generally NOT used for the valuation of:
(1) warehouses.
(2) single-family residences.
(3) leasehold interests.
(4) any of the above.
2
Short term national general economic factors include some of the following:
A. Interest rates on treasury bills
B. Consumer expectations
C. Shifts in population
D. Number of public housing projects Which of the following are included?
(1) Only A and C are included.
(2) Only A, B and D are included.
(3) Only A and D are included.
(4) Only A and B are included.
4
The significant characteristics of improved land are:
A. its immobility.
B. the durability of its improvements.
C. the indivisibility of ownership.
D. the divisibility of services it provides.
Which of the following statements is TRUE?
(1) Only A, B and D are true.
(2) Only A and C are true.
(3) Only A and B are true.
(4) Only A, B and C are true.
3
Of the following externalities, which would represent the BEST example of an externality which is both positive and negative?
(1) Parks
(2) Pollution
(3) Proximity to a transportation facility
(4) Golf course
3
Two neighbours, Ms. Finch and Mr. Falcon, each sold their homes last week. Ms. Finch sold her house for $150,000, while Mr. Falcon’s house only sold for $132,000. Mr. Falcon can’t understand why his house sold for less since both homes are identical in all respects. Which of the following could account for the difference in selling price?
(1) Ms. Finch had already purchased another home and needed to sell this home immediately.
(2) Mr. Falcon had already purchased another home and needed to sell this home immediately.
(3) Mr. Falcon supplied a vendor take-back mortgage of 13% while the current market rate was 16%.
(4) All of the above factors could account for the difference in selling price.
2
Real estate is affected by a wider and more serious range of externalities than any other commodity. What characteristic of real estate causes this?
(1) the supply of urban land is not fixed
(2) the immobility of real property
(3) ownership of real property may be divided both physically and legally
(4) the durability of real property
2
the flow of information concerning real property is limited and difficult to collect because
- the turnover rate for real property is high
- every parcel of real property is homogeneous
- real property is short lived and quick to respond to market pressures
- real property markets are local, with real estate fixed in location
4
which of the following is an example of short-term national general economic factor
- population shifts
- number of public housing projects
- expected change in tax laws
- interest rates on treasury bills
4
which of the following is NOT a signifigant charactereristic of improved land
A. its immobility.
B. the durability of its improvements.
C. the indivisibility of ownership.
D. the divisibility of services it provides.
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