Final Exam

Question 1

Net Operating Income / Current Market Value =

Answer 1

Capitalization Rate

Question 2

Value of real estate can be determined by analyzing

the sale prices of similar properties.

Answer 2

Sales Comparison Approach

Question 3

The price a buyer should pay for a piece of property should equal the cost to build an equivalent building.

Answer 3

Cost Approach

Question 4

Estimates the value of a property by taking the net operating income of the rent collected and dividing it by the capitalization rate.

Answer 4

Income Approach

Question 5

(True or False) Homeowners might be interested in a home equity loan rather than a consumer loan because of the tax deductible principle payments.

Answer 5

False

Question 6

(True or False) Homeowners might be interested in a home equity loan rather than a consumer loan because there is a longer term of repayment.

Answer 6

True

Question 7

(True or False) Homeowners might be interested in a home equity loan rather than a consumer loan because interest rates are typically lower

Answer 7

True

Question 8

(True or False) Homeowners might be interested in a home equity loan rather than a consumer loan because of easy availability

Answer 8

True

Question 9

(True or False) A listing contract includes the duration of the listing.

Answer 9

True

Question 10

(True or False) A listing contract includes the price of the listing.

Answer 10

True

Question 11

(True or False) A listing contract includes the fee owed to the brokers.

Answer 11

True

Question 12

(True or False) A listing contract includes a buyer agency agreement.

Answer 12

False

Question 13

All real estate contracts must be ____ because of the Statute of Frauds.

Answer 13

written

Question 14

(True or False) A listing contract will not terminate if the sellers move out of the state.

Answer 14

True

Question 15

(True or False) A REIT must be publicly marketed

Answer 15

False

Question 16

A real estate brokerage firm’s practice of market segmentation will help to identify the ______ in which the firm can concentrate and specialize.

Answer 16

Submarkets

Question 17

When the purchase contract is signed by the buyer and seller, the buyer immediately receives the:

Answer 17

equitable title

Question 18

A broker who receives an earnest money deposit from a buyer in connection with purchase contract should immediately do what with the money?

Answer 18

Turn over the money to a title company for deposit into their account.

Question 19

Rate of return on a real estate investment property based on the income that the property is expected to generate.

Answer 19

Capitalization Rate

Question 20

Where loans originate and borrowers/mortgage originators come together to negotiate terms.

Answer 20

Primary Mortgage Market

Question 21

Mortgage bankers, mortgage brokers, banks and thrifts are all part of the:

Answer 21

Primary Mortgage Market

Question 22

Wholesale market among lenders where existing home loans are resold.

Answer 22

Secondary Mortgage Market

Question 23

Conflict of interest inherent in any relationship where one party is expected to act in another’s best interests:

Answer 23

Agency Problem

Question 24

(True or False) REITs seek to purchase properties that have positive net present values (NPVs) and internal rates of return (IRRs) in excess of the REIT’s opportunity cost of capital

Answer 24

True

Question 25

Income capitalization and discounted cash flow techniques to make individual property acquisition and disposition decisions.

Answer 25

REIT Valuation

Question 26

Obligation of a party to perform depends on one or more conditions being met.

Answer 26

Contingency Clause

Question 27

Act designed to protect potential homeowners and enable them to become more intelligent consumers. Requires that lenders provide greater amounts of information to prospective borrowers at certain points in the loan settlement process.

Answer 27

RESPA

Question 28

Adjustment that is important to economic characteristics of income producing properties such as operating expenses, lease terms, tenant mix.

Answer 28

Property Adjustment

Question 29

Adjustment that is concerned with the nature and terms of the deal.

Answer 29

Transaction Adjustment

Question 30

(True or False) Real Estate can either be tangible or intangible.

Answer 30

True

Question 31

(True or False) Real Estate generates half of the world's wealth and over 28% of the U.S GDP.

Answer 31

True

Question 32

(True or False) Property tax generates nearly 70% of all government revenue.

Answer 32

False. | Generates nearly 70% of local government revenue.