Unit 1

Question 1

Market

Answer 1

Place where goods or services are bought and sold

Question 2

Purpose of Market

Answer 2

Allow exchange of goods or services at a FAIR PRICE

Question 3

What determines Price

Answer 3

Largely dictated by Supply and Demand

Question 4

*Brokerage

Answer 4

Business of bringing together a buyer and seller

Question 5

How does licensee/broker become a Realtor?

Answer 5

Joining National Association of Realtors

Question 6

Sponsoring Broker

Answer 6

Ultimately responsibly for the actions of all licensees at their firm

Question 7

*Appraisal

Answer 7

Licensed professional uses established methods and professional judgement to estimate a property’s market value. Not tied to what it was bought for. Typically ordered by lenders to make sure they aren’t lending too much money

Question 8

True or False: Appraisers must be licensed or certified for federally related loan transactions

Answer 8

TRUE

Question 9

*Property Manager

Answer 9

Person or company employed by the property owner to manage the property.

Question 10

*Property Management Agreement

Answer 10

Agreement that lays out the employment relationship and responsibilities of the property manager

Question 11

*Financing

Answer 11

Lender provides money or funds to borrower/buyer so they can purchase the real estate.

Question 12

Loan

Answer 12

Called the Mortgage. Mortgage is secured by a NOTE.

Question 13

Note

Answer 13

Details buyers responsibilities to repay the mortgage

Question 14

True or False: Mortgage brokers and loan officers must be licensed and registered in Illinois

Answer 14

TRUE

Question 15

*Subdivision

Answer 15

Process of splitting single property into smaller parcels

Question 16

*Development

Answer 16

Construction of improvements on load.
On-site - houses; increases value
Off-site - sewer & water; required for safety and sanitary purposes

Question 17

*Home Inspection

Answer 17

Visual evaluation of the property and completes a report. Illinois home inspectors must be licensed

Question 18

*Counseling

Answer 18

Furnish consumers or clients w/ the information needed to make informed decisions. ie Foreclosure

Question 19

*Auction

Answer 19

Competitive bidding process used to transfer property. Auctioneers in IL must be licensed

Question 20

Wholesaling

Answer 20

One property enters into contract to purchase property and quickly assigns the contract to another end purchaser who buys the property. Wholesaler earns profit as the “middleman”

Question 21

*Types of Property

Answer 21

Residential, commercial, industrial, agricultural (farm) or special purpose (religious institution)

Question 22

*Supply & Demand

Answer 22

Supply increases, demand stable, prices down
Supply low, all else the same, prices up
Demand increases, supply stable, prices up
Demand low, all else the same, prices down

Question 23

Two Characteristics that govern how the real estate market reacts to Supply and Demand

Answer 23

Uniqueness and immobility. Because of these characteristics, the market generally adjusts slowly to forces of supply and demand

Question 24

Uniqueness

Answer 24

Every piece of real estate is unique

Question 25

Immobility

Answer 25

Fact that property cannot be moved or relocated

Question 26

*Factors that affect Supply

Answer 26

Labor force and construction costs, less houses, higher prices
Government controls and Financial policies, ie interest rates; zoning
Changes in taxation

Question 27

*Factors that affect Demand

Answer 27

Population - amount of people
Demographics - age, gender, income
Employment and wages