Real Estate Test Unit 1

Question 1

appraiser

Answer 1

an independent person trained to provide an unbiased estimate of value

Question 2

appreciation

Answer 2

an increase in worth or value of a property due to economic or related causes (temporary or permanent)

Question 3

assessment

Answer 3

imposition of a tax, charge, or levy, usually according to established rates

Question 4

associate licensee

Answer 4

licensed real estate salesperson who is employed by or associated with a broker to perform brokerage activities on behalf of or for broker

Question 5

basis

Answer 5

financial interest that the IRS attributes to an owner of an investment property for the purpose of determining annual depreciation and gain or loss on sale of asset

Question 6

broker

Answer 6

acts as an intermediary on behalf of the others for a fee or commission

Question 7

capital gain

Answer 7

profit earned from a sale

Question 8

code of ethics

Answer 8

written system of standards for ethical conduct

Question 9

cost recovery

Answer 9

IRS term for depreciation

Question 10

demand

Answer 10

amount of goods people are willing and able to buy at a given price

Question 11

demographics

Answer 11

study and description of a population

Question 12

development

Answer 12

construction of improvements that benefit land

Question 13

equity buildup

Answer 13

portion of loan payment directed toward the principal rather than the interest, plus any gain in property value due to appreciation

Question 14

ethics

Answer 14

system of moral principles and rules that becomes the standard for professional conduct

Question 15

exchange

Answer 15

transaction in which all or part of the consideration is the transfer of like-kind property

Question 16

home inspection

Answer 16

visual survey of a property’s structure, systems and site conditions done by a professional

Question 17

immobility

Answer 17

property cannot be relocated to satisfy demand where supply is low

Question 18

inflation

Answer 18

gradual reduction of the purchasing power of the dollar

Question 19

installment sale

Answer 19

transaction in which the sales price is paid in 2 or more installments over 2 or more years

Question 20

intrinsic value

Answer 20

an appraisal term referring to the value of a property unaffected by a person’s personal preferences

Question 21

leverage

Answer 21

use of borrowed money to finance an investment

Question 22

liquidity

Answer 22

ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time

Question 23

manufactured home

Answer 23

permanant installation built to federal specifications, providing a principal residence or a vacation home

Question 24

market

Answer 24

place where goods can be bought and sold and a price established

Question 25

master-planned community

Answer 25

a planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision (PUD)

Question 26

mixed-use

Answer 26

property that accommodates more than one use, such as commercial use and residential use

Question 27

modular home

Answer 27

factory-built housing with components that are assembled at a building site on a prepared foundation

Question 28

monetary policy

Answer 28

government regulation of the amount of money in circulation through such institutions as the federal reserve board

Question 29

mortgage

Answer 29

conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien

Question 30

National Association of REALTORS (NAR)

Answer 30

largest real estate organization in the world

Question 31

niche marketing

Answer 31

target marketing of specific demographic populations, within the bounds of fair housing laws

Question 32

proprietary lease

Answer 32

lease given by the corporation that owns a cooperative apartment building to a shareholder who has the right as a tenant to an individual unit

Question 33

planned unit development (PUD)

Answer 33

combination of diverse land uses, such as housing, recreation, and shopping all together

Question 34

real estate broker

Answer 34

person licensed to arrange the buying, selling, leasing, or exchange of real property for a fee

Question 35

real estate investment trust (REIT)

Answer 35

trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax

Question 36

real estate licensee

Answer 36

has the skills and knowledge to be licensed as a broker or a salesperson

Question 37

sales associate

Answer 37

person who performs real estate activities while employed by a licensed real estate broker

Question 38

REALTOR

Answer 38

active member of NAR

Question 39

supply

Answer 39

amount of goods available for sale in the market

Question 40

syndicate

Answer 40

combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources

Question 41

tax basis

Answer 41

points from which gains and losses are figured for tax purposes

Question 42

tax credit

Answer 42

amount by which tax owed is reduced directly