Unit 1

Question 1

A seller’s market can be defined as having a:

surplus supply, high demand, and downward price movement.

surplus supply, low demand, and upward price movement.

short supply, high demand, and upward price movement.

short supply, low demand, and downward price movement.

Answer 1

short supply, high demand, and upward price movement.

Response Feedback:
Correct! A seller’s market can be defined as having a short supply, high demand, and upward price movement.

Question 2

In estimating a market value for a real estate investment, an evaluator would use all of the following appraisal principles EXCEPT:

substitution.

anticipation.

agglomeration.

highest and best use.

Answer 2

agglomeration.

Response Feedback:
Correct! In estimating a market value for a real estate investment, an evaluator would use all of the following appraisal principles EXCEPT agglomeration.

Question 3

Your clients are interested in an investment that may appreciate in value and be a hedge against inflation. Their best alternative is in:

real estate.

the stock market.

antique cars.

municipal bonds.

Answer 3

real estate.

Response Feedback:
Correct! Your clients are interested in an investment that may appreciate in value and be a hedge against inflation. Their best alternative is in real estate.

Question 4

Money accumulated in excess of funds required to secure life’s necessities, which may be used for investment purposes is:

free income.

discretionary funds.

surplus income.

investment funds.

Answer 4

discretionary funds.

Response Feedback:
Correct! Money accumulated in excess of funds required to secure life’s necessities, which may be used for investment purposes is discretionary funds.

Question 5

The real estate market is an imperfect market and

is generally predictable in its cycles.

each property is unique.

perfect knowledge of the investment is readily available.

generally attracts short-term investors.

Answer 5

each property is unique.

Response Feedback:
Correct! The real estate market is an imperfect market and each property is unique.

Question 6

Key term: Bundle of rights

Answer 6

Describes the owner’s rights of control over the property.

Question 7

Key term: Buyer’s Market

Answer 7

When the supply of a commodity exceeds the demand.

Question 8

Key term: Cycle

Answer 8

Events that repeat themselves on a regular basis; may be a business cycle, an economic cycle, or a real estate cycle.

Question 9

Key term: Demand

Answer 9

The desire to acquire properties or services.

Question 10

Key term: Disintegration

Answer 10

A period of decline when the property’s economic usefulness is near an end and constant upkeep is necessary.

Question 11

Key term: Easy Money

Answer 11

When interest rates are low and funds of loans are plentiful.

Question 12

Key term: Equilibrium

Answer 12

A condition of stable value during the holding period.

Question 13

Key term: Fixity

Answer 13

Real estate that is permanently attached to the ground.

Question 14

Key term: Highest and Best Use

Answer 14

That possible use of property that will produce its greatest net income, and thereby develop its highest value.

Question 15

Key term: Integration

Answer 15

A condition of developing value when building new.

Question 16

Key term: Longevity

Answer 16

The concept of real estate that recognizes the long-term nature of most real estate investments.

Question 17

Key term: Market Segmentation

Answer 17

Due to the fractured aspect of the real estate business, the market trends to be local in the nature of its conditions may vary greatly from location to location.

Question 18

Key term: Market Value

Answer 18

The highest price for which a property would sell, assuming a reasonable time for the sale and a knowledgeable buyer and seller acting without duress.

Question 19

Key term: Permanence

Answer 19

An attribute of real estate the recognizes that real estate investment is long term, complex, and often requires large sums of money.

Question 20

Key term: Personal Property

Answer 20

Movable property that does not fit the definition of realty.

Question 21

Key term: Property

Answer 21

Anything capable of being owned.

Question 22

Key term: Real Estate

Answer 22

A portion of the earth’s surface, extending downward to the center of the earth and upward into space, including all things permanently attached thereto by nature or people, and all legal rights therein.

Question 23

Key term: Real Property

Answer 23

The rights of real estate ownership; often called the bundle of legal rights. See also real estate.

Question 24

Key term: Relative Scarcity

Answer 24

A situation in which the consumer perceived a shortage and bids up the value of the commodity accordingly.

Question 25

Key term: Risk

Answer 25

The possibility of loss.

Question 26

Key term: Supply

Answer 26

Products and services available for consumption.

Question 27

Key term: Seller’s Market

Answer 27

When demand exceeds supply.

Question 28

Key term: Tight Money

Answer 28

When interest rates are high and funds for loans are scarce.

Question 29

Key term: Value in Use

Answer 29

A specific use that defines a property’s value