Review Questions Unit 1

Question 1

A person who advises a real estate client who is making a purchase to use or invest in real estate is called

Answer 1

a counselor

Question 2

Office buildings and retail space are examples of

Answer 2

commercial real estate.

Question 3

All of these factors can affect the supply of real estate EXCEPT

Answer 3

demographics.
Demographics affect the demand for real estate. The labor force, construction costs, and government controls affect the supply of real estate.

Question 4

When the population of a town suddenly increases, which of these is MOSTlikely to occur?

Answer 4

Real estate prices will increase

With a sudden influx of people, rental rates will increase; demand for housing will increase; and more new homes will be started to satisfy demand.

Question 5

Property management, appraisal, financing, and development are all

Answer 5

separate professions within the real estate industry.

Property management, appraisal, financing, and development are not linked to the government; they are all linked to real estate business.

Question 6

The six classes of real estate mentioned in the main textbook are residential, commercial, rental, agricultural, mixed-use, and special purpose.

Answer 6

False. The six classes of real estate mentioned in the text are residential, commercial, mixed-use, industrial, agricultural, and special-purpose. Rental is not a class of real estate.

Question 7

Real estate professionals generally tend to specialize in one activity or class of real estate.

Answer 7

True. The real estate industry is complex, much more than brokers bringing together buyers and sellers, landlords and tenants. Other specialties include appraisal, property management, financing, education, and home inspection.

Question 8

When the supply of a certain commodity decreases while demand remains the same, the price of that commodity will tend to

Answer 8

increase

When consumers continue to demand a product for which there is limited supply, the price generally increases.

Question 9

Finding funds to put together real estate transactions is called appraising.

Answer 9

False. Finding funds involves financing; estimating the value of property is appraising

Question 10

The real estate market is generally slow to adjust to the changing forces of supply and demand.

Answer 10

True. Because of real estate’s uniqueness and immobility, the market generally adjusts slowly to the forces of supply and demand; development and construction are lengthy processes.

Question 11

The supply of labor and the cost of construction generally have a direct effect on the demand for real estate in a market.

Answer 11

False. Supply of labor and the cost of construction generally have a direct effect on the supply of real estate in a market.

Question 12

A property owner who does not want to deal with the everyday tasks of managing a rental property can hire

Answer 12

property manager.

A property manager handles the day-to-day tasks of managing property for an owner. An appraiser estimates value; a home inspector looks for problems with the property; and the developer improves the property.

Question 13

All of these factors will tend to affect demand for real estate EXCEPT

Answer 13

transfer taxes.

Transfer taxes affect the supply; employment levels, wage rates, and demographics affect demand.

Question 14

Members of the National Association of Real Estate Brokers are called REALTORS®.

Answer 14

False

Members of the National Association of Real Estate Brokers are called Realtists. REALTORS® are members of the National Association of REALTORS®.

Question 15

All of these are examples of government policies that can affect the real estate market EXCEPT

Answer 15

a shortage of skilled labor or building materials.

A shortage of skilled labor will affect the supply of real estate, and this labor shortage is not generally associated with governmental policies.

Question 16

In general, the most widely recognized real estate activity is brokerage.

Answer 16

True. Although many people think that real estate is comprised of only brokers and salespeople, many other specialties exist, including financing, appraising, education, and property management.

Question 17

The idea that no two parcels of land are exactly alike is called

Answer 17

uniqueness

No matter how identical they may appear, no two parcels of real estate are ever exactly alike; each occupies its own unique geographic location.

Question 18

Market trends in supply and demand can be overturned by a natural disaster, such as a hurricane or earthquake

Answer 18

True. Even when supply and demand can be forecast with some accuracy, natural disasters, such as hurricanes and earthquakes, can disrupt market trends; the market also can be affected by sudden changes in financial markets or plant relocations.

Question 19

Demand for real estate usually drops when jobs are scarce.

Answer 19

True. When job opportunities are scarce or wage levels are low, demand for real estate usually drops; in fact, the market may be drastically affected by a single major employer moving in or shutting down.

Question 20

Warehouses, factories, and power plants are examples of commercial property.

Answer 20

False. Warehouses, factories, and power plants are examples of industrial property.