Unit 1

Question 1

Real Estate Brokerage

Answer 1

The business of bring people together in a real estate transaction conducted by a real estate broker.

Question 2

Real Estate Broker

Answer 2

A person or company licensed to buy, sell exchange or lease real property for others compensation.

Question 3

Real Estate Licensee

Answer 3

A person who has satisficed the requirements of the WA Real Estate Commission.

Question 4

Appraisal

Answer 4

The process of developing an opinion of a property’s market value.

Question 5

Property Management

Property Manager

Answer 5

A person or company hired yo maintain and manage property on behalf of the property owner.

Question 6

Management Agreement

Answer 6

The basic responsibility of the property manager is to protect the owner’s investment while maximizing the owner’s financial return.

Question 7

Financing

Answer 7

The business of providing the funds that make real estate transactions possible through loans secured by a mortgage or deed of trust on the property with funding provided by commercial banks, thrifts, credit unions, mortgage bankers, and mortgage brokerage companies.

Question 8

Subdivision & Development

Answer 8

Involve splitting a single property into smaller parcels (subdivision) and constructing improvements on the land (development).

Question 9

On-site & Off-site

Answer 9

One-site: New homes or recreational amenities made on individual parcels.

Off-site: Water lines and storm sewers.

Question 10

Home Inspection

Answer 10

An inspection report will show results of a thorough survey of observable property conditions.

(Good for both parties)

Question 11

Real Estate Counseling

Answer 11

Involves independent advice based on sound professional judgement regarding how to buy, sell or invest in property.

Question 12

Property Types

6

Answer 12

Residential: Property used for single or multi family.

Commercial: Business property. Office space, shopping center, stores, theater, hotel and parking.

Mixed Use: Property that allows 2 or more commercial and residential uses in the same building.

Industrial: Warehouses, factories, land in industrial districts and power plants.

Agricultural: Farm, timber, ranches and orchards.

Special Purpose: Privately owned property. Place of worship, schools, municipal service building and parks.

Question 13

Discrimination

Answer 13

The provision of housing and related services is prohibited by federal law.

Question 14

Real estate Market

Answer 14

Reflects the principle of supply and demand.

Question 15

Supply & Demand

Answer 15

When the supply increases relative to demand- the prices go down.
When the demand increases relative to supply- the prices go up.

Question 16

Uniqueness

Answer 16

The fact that no two properties are the same.

Question 17

Immobility

Answer 17

Refers to the fact that property cannot be relocated to fit demand where supply is low, nor can buyers relocate to areas with greater supply.

Question 18

Government Control and Monetary Policies

Answer 18

The Federal Reserve Board (FED) establishes discount rate of interest for the money it lends to commercial banks.
The Federal Housing Administration (FHA) and the Government National Mortgage Association can also affect the amount of money available to lenders for mortgage loans.

Question 19

Tax Deductions

Answer 19

Home owners may deduct from their gross income some or all of the mortgage interest paid up to certain point. Home owners may also deduct certain loan originations fee and loan discount points.

Question 20

Home buyer can benefit from..

Answer 20

Tax deductions, exclusion of gain on a sale of the home, and tax credits when available.

Question 21

Advantages of real estate investing

Answer 21

1. Rate of return
2. Greater Control
3. Appreciation
4. Equity build up
5. Leveraging funds
6. Tax benefits of depreciation
7. Deductions
8. Capital gain

Question 22

Disadvantages of real estate investment

Answer 22

1. Liquidity
2. Active Management
3. Risk