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KRI > Unit 1 - Intro To Real Estate Business > Flashcards

Unit 1 - Intro To Real Estate Business Flashcards

1
Q

Associate licensee

A

A licensed real estate salesperson who is employed by or associated with the broker to perform brokerage activities.

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2
Q

Appreciation

A

An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.

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3
Q

Broker

A

One who acts as an intermediary on behalf of others for a fee or commission.

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4
Q

Capital gain

A

Profit earned from the sale of an asset.

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5
Q

Depreciation

A

In real estate investment, a deduction for tax purposes taken over the period of ownership of income property, based on the property’s acquisition cost.

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6
Q

Equity buildup

A

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

Pg. 11

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7
Q

Exchange

A

A transaction in which all or part of the consideration is the transfer of like-kind property (e.g., real estate for real estate).

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8
Q

Fair housing

A

Federal law prohibits determination in the provision of housing and housing-related services (including lending) based on an individual’s race, color, national origin, religion, sex, familial status, or disability.

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9
Q

Leverage

A

The use of borrowed money to finance an investment.

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10
Q

Liquidity

A

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

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11
Q

Market

A

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

Pg. 6

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12
Q

Real estate licensee

A

A person who has the skills and knowledge to be licensed as a real estate broker or salesperson.

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13
Q

Sales associate

A

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

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14
Q

Salesperson

A

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

Same as sales associate.

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15
Q

Supply and demand

A

The appraisal principle that follows the interrelationship of the supply of and demand for real estate. Because appraising is based on economic concepts, this principle recognizes that real property is subject to the influences of the marketplace as with any other commodity.

Pg. 7

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16
Q

Appraisal

A

The process of developing an opinion of a property’s market value, based on established methods and the appraiser’s professional judgement.

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17
Q

Property manager

A

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

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18
Q

Brokerage

A

The business of bringing people together in a real estate transaction.

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19
Q

Financing

A

The business of providing funds that make real estate sales transactions possible.

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20
Q

Subdivision

A

Dividing a single property into smaller parcels.

Pg. 3

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21
Q

Development

A

Involves preparation of a site and construction of structures or other improvements.

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22
Q

Home inspection

A

A profession that combines a practitioner’s interest in real estate with skills and training in the construction trades.

Pg: 3

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23
Q

Six types of real property

A
  1. Residential - single family or multi-family housing
  2. Commercial - business property including offices, shopping centers, theaters, hotels, parking facilities
  3. Mixed-use - allows for two or more commercial and residential use in same building
  4. Industrial - warehouse, factories, power plants
  5. Agricultural - farms, timberland, ranches, orchards
  6. Special purpose - privately owned such as places of worship, schools, cemeteries, and parks.
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24
Q

Types of housing

A
  1. Single-family detached house
  2. Apartment building - many units in one building. Apt complex - many apt buildings.
  3. Condominium - conventional ownership; deed. Owner owns individual unit with shared common facilities/elements (elevators, halls, gym, pool, etc.)
  4. Cooperative - Owners own shares in a corporation that holds title to the real estate. Shareholders receive a proprietary lease to a specified unit in the building
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25
Q

Other types of housing

A
  • Planned unit developments (PUDs); master planned communities - planned combination of diverse land uses, such as housing, recreation, and shopping, in one contained development or subdivision.
  • Highrise developments; mixed-use developments (MUDs) - combine office space, stores, and apts into a single vertical community.
  • Converted-use properties - factories, warehouses, office buildings, hotels, schools, churches, etc. that have been converted to residential use.
  • Factory- built housing; manufactures homes (mobile home) - residence or vacation home.
  • Modular home - factory built assembled at a building site on prepared foundation.

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26
Q

When supply increases and demand remains stable, prices go ____.

When demand increases and supply remains stable, prices go ____.

A
  1. Down

2. Up

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27
Q

Uniqueness

A

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

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28
Q

Immobility

A

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

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29
Q

Factors affecting real estate supply

A
  1. Labor force, construction, and material costs
  2. Government controls and monetary policy
  3. Local government factors
30
Q

Factors affecting real estate demand

A
  1. Population
  2. Demographics
  3. Employment and wage levels
31
Q

The difference between the market value of the property and the amount still owed on it is the homeowner’s ____ in the property.

A

Equity

32
Q

For mortgages taken out after December 14, 2018, an individual may deduct interest off of debt up to $____.

A

$750,000

Pg. 10

33
Q

State and local real estate taxes can be used as an itemized deduction up to a limit of $____.

A

$10,000

Pg. 10

34
Q

True or false

A first time homebuyer may make a penalty-free withdrawal from a tax-deferred individual retirement account (IRA) for the down payment on a home.

If true, what is the withdrawal limit and how long does the homeowner have to spend the money?

A

A. True - the withdrawal is still subject to income tax in that year.

B. $10,000 spent entirely in 120 days on a down payment to avoid a penalty.

35
Q

Advantages of real estate investment

A
  1. Rate of return - investor can use borrowed money to finance a real estate purchase and feel relatively sure that the asset, if held long enough, will return a profit.
  2. Control - more control over investments than other options such as stocks, bonds, and other securities.
  3. Appreciation - increase in value of the property
  4. Equity buildup - portion of the loan payment directed toward the principle rather than the interest, plus gain in property value due to appreciation.
  5. Leverage - benefits from potential increased income
  6. Tax benefits:
    a. Depreciation - recovery cost
    b. Capital gain - the difference between the purchase price of a property and its net selling price.
36
Q

Disadvantages of real estate investment

A
  1. Liquidity - how quickly an asset may be converted into cash.
  2. Active management - either by self or by property manager.
  3. Risk - high degree of risk; does not guarantee profit.
37
Q

____ and ____ involve splitting a single property into smaller parcels and constructing improvements in the land.

A

Subdivision and development

38
Q

____ in the provision of housing and related services is prohibited by federal law.

A

Discrimination

39
Q

The factors affecting a the ____ for real estate include population, demographics, and employment and wage levels.

A

Demand

40
Q

True or false

Real estate counseling involves independent advice based on sound professional judgement regarding how to buy, sell, or invest in property.

A

True

41
Q

The buyer of a home can benefit from ____ deductions, exclusion of ____ on the sale of a home, and tax ____, when available.

A
  1. Tax deductions
  2. Exclusion of gain
  3. Tax credits
42
Q

True or false

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

A

False : answer is a real estate broker.

The real estate salesperson/sales associate conducts brokerage activities on behalf of the broker.

43
Q

When demand for a commodity decreases and supply remains the same, price tends to ____.

A. Rise
B. Fall
C. Remain the same
D. Increase and decrease

A

B. Fall

44
Q

A professional opinion of a property’s market value based on established methods and using trained judgement, is performed by ____.

A. Real estate attorney
B. Real estate appraiser
C. Real estate counselor
D. Home inspector

A

B. Real estate appraiser

45
Q

A person who performs a visual survey of a property structure and writes a report for a buyer is ____.

A. An educator
B. A home inspector
C. An appraiser
D. A property manager

A

B. A home inspector

46
Q

In general, when the supply of a certain commodity increases, ____.

A. Price tends to rise
B. Price tends to decrease
C. Demand for it tends to rise
D. Demand for it tends to drop.

A

B. Price tends to drop

47
Q

Which factor primarily affects supply in the real estate market?

A. Population
B. Demographics
C. Employment
D. Governmental monetary policy

A

D. Governmental monetary policy

48
Q

Which factor is most likely to influence demand for real estate?

A. Number of real estate professionals in the area
B. Number of full-time real estate professionals in the area
C. Wage levels and employment opportunities
D. Price of new homes being built in the area

A

C. Wage levels and employment opportunities

49
Q

Nationwide Multistate Licensing System and Registry was created to register ____.

A. Appraisers
B. Property managers
C. Home inspectors
D. Mortgage loan originators

A

D. Mortgage loan originators

50
Q

Another name for depreciation is ____.

A. Cost recovery
B. Leverage
C. Capital gain
D. Inflation

A

A. Cost recovery

51
Q

The use of borrowed money to finance an investment is called ____.

A. Appreciation
B. Leverage
C. Depreciation
D. Capital gain

A

B. Leverage

52
Q

The difference between the cost basis of property and its net selling price is ____.

A. Cost recovery
B. Capital gain
C. Leverage
D. Appreciation

A

B. Capital gain

53
Q

All of the following are categories of the uses of real property except

A. Residential
B. Developmental
C. Agricultural
D. Industrial

A

B. Developmental

54
Q

All of the following would affect demand except

A. Population
B. Demographics
C. Wage levels
D. Monetary policy

A

D. Monetary policy

55
Q

All of the following affect how quickly the forces of supply and demand work except

A. A property’s specific geographic location
B. Immobility of a property
C. Degree of standardization of the property’s price
D. Uniqueness of a property

A

C. Degree of standardization of the property’s price

56
Q

Detailed information about the age, education, behavior, and other characteristics of members of a population group is called

A. Population analysis
B. Demographics
C. Family lifestyles
D. Household data

A

B. Demographics

57
Q

True or false

Property management, appraisal, financing, and development are all examples of non-real estate professions.

A

False. These are all specializations within the real estate industry.

58
Q

True or false

Federal law does not prohibit discrimination in the provision of housing and housing-related services based on an individual’s familial status.

A

False. Fair law prohibits discrimination against race, color, national origin, religion, sex, familial status, or disability.

59
Q

True or false

The six categories of real property include:

Residential
Commercial 
Mixed-use
Industrial
Agricultural
Federal
A

False. Special purpose, not federal

60
Q

True or false

A condominium owner receives a proprietary lease to a specified unit in the building and owns a share in a corporation that holds title to real estate.

A

False

61
Q

True or false

A market exists when goods can be bought and sold.

A

True

62
Q

True or false

When supply increases and demand remains stable, prices go up.

A

False - prices will go down

63
Q

True or false

When demand increases and supply remains stable, prices go up.

A

True

64
Q

True or false

Population does not affect real estate demand.

A

False - affects population, demographics, & employment and wage levels

65
Q

True or false

Appreciation will result in equity buildup as the value of the property increases.

A

True

66
Q

True or false

The amount invested in a property is the owner’s capital gain.

A

False - it is the owner’s equity

67
Q

____ is the business of providing the funds that make real estate transactions possible through secured loans 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.

A

Financing

68
Q

____ is the process of developing an opinion of a property’s value based on established methods and a professional judgement.

A

Appraisal

69
Q

____ is of interest to both purchasers and homeowners, and an inspection report will show results of a thorough survey of observable property conditions.

A

Home inspection

70
Q

A ____ is a person who has satisfied the requirements of a licensing agency, as authorized by state legislation.

A

Real estate licensed

KRI (6 decks)

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