Unit 1: Introduction to Modern Real Estate

Question 1

abatement

Answer 1

elimination or reduction of real estate taxes to attract new business to an area (tax incentives)

Question 2

broker

Answer 2

Acts as an agent of the buyer or the seller (or both) in negotiating the sale, purchase, or rental of property.

Question 3

business cycle

Answer 3

upward and downward fluctuations in business activity through the stages of expansion, recession, depression, and revival

Question 4

common law

Answer 4

The body of rules and principles founded on tradition and court decisions.

Question 5

demand

Answer 5

the amount of goods consumers are willing to buy at a given price during a given time period

Question 6

demographics

Answer 6

the study and description of a population, i.e. size, growth, density, distribution, and vital statistics

Question 7

market

Answer 7

a place where goods can be bought and sold

Question 8

NAR

Answer 8

National Association of Realtors

Question 9

sales agent

Answer 9

A license holder employed by or associated with a broker who conducts brokerage activities on behalf of the broker for a fee or commission.

Question 10

seven sources of law

Answer 10

Affect ownership and transfer of real estate. These sources are:
1. Constitution of the United States
2. laws passed by Congress (i.e. federal fair housing laws)
3. federal regulations adopted by the various agencies and commissions created by Congress
4. state constitutions
5. laws passed by state legislatures
6. ordinances passed by cities, towns, and other local governments
7. court decisions (common law)

Question 11

supply

Answer 11

the amount of goods for sale within the market at a given price during a given time period

Question 12

Texas Real Estate Commission

Answer 12

Established in 1949, the commission’s purpose is to protect the public from license holders in real estate services in accord with state and federal laws.

Oversees real estate brokerage, appraisal, inspection, home warranty, and time-share interest providers.

Question 13

TRELA

Answer 13

Texas Real Estate License Act

Question 14

Texas Real Estate License Act

Answer 14

The purpose is to protect the public through regulation of real estate license holders, real estate inspectors, residential service companies, and entities offering time-share interests.

Question 15

TREC

Answer 15

Texas Real Estate Commission

Question 16

residential brokerage

Answer 16

Involves the sale and purchase of a residential property.

Question 17

examples of real estate-related disciplines

Answer 17

appraising, lending and financing, property inspection, property development, real estate counseling, real estate education, title insurance and abstracting, urban planning, time share sales, petroleum landspeople, and easement and right-of-way registrants

Question 18

Uses of Real Property (7)

Answer 18

residential, commercial, industrial, mixed-use, agricultural, special purpose

Question 19

residential property

Answer 19

all property used for housing, from small city lots to acreage, both single-family and multi-family, in urban, suburban, and rural areas.

Question 20

commercial property

Answer 20

business property, including offices, shopping centers, stores, theaters, hotels and parking facilities.

Question 21

industrial property

Answer 21

warehouses, factories, and land in industrial districts.

Question 22

mixed-use property

Answer 22

any lawful combination of the other five basic categories of real property permitted by local zoning.

Question 23

special purpose property

Answer 23

places of worship, schools, cemeteries, and government-held lands.

Question 24

agricultural property

Answer 24

farms, timberland, pastureland, ranches, and orchards

Question 25

ESAC

Answer 25

Educational Standards Advisory Committee

Question 26

Educational Standards Advisory Committee

Answer 26

Main objective is to review and revise curriculum standards, course content requirements, and instructor certification requirements.

ESAC recommends, while TREC adopts and makes rules.

Question 27

precedent

Answer 27

By applying and interpreting laws in relation to a specific event, a court decision expands the meaning of the law, establishing a precedent that may be used in as a standard in subsequent similar cases.

Question 28

Texas Appraiser Licensing and Certification Board (TALCB)

Answer 28

Independent nine-member board housed within TREC that licenses real estate appraisers in Texas under state and federal laws.

Question 29

A real estate license applicant must:

Answer 29

• Be 18 years or older
• Be a citizen of the United States or legal resident of Texas
• Successfully completed 180 hours of required education, including 60 hours of real estate principles, 30 hours of law of agency, 30 hours of law of contracts, 30 hours of promulgated contracts, and 30 hours of real estate finance.
• Pass a license examination to prove adequate knowledge of real estate.

Question 30

seven basic characteristics of real estate

Answer 30

1. relative scarcity (e)
2. improvements (e)
3. permanence of investment (e)
4. area preference (e) - the most important economic characteristic of land
5. immobility (p)
6. indestructibility (p)
7. nonhomogeneity (p)

These characteristics fall into two broad categories: physical and economic

Question 31

Economic characteristics of real estate

Answer 31

relative scarcity, improvements, permanence of investment, and area preference

Question 32

Physical characteristics of real estate

Answer 32

immobility, indestructibility, nonhomogeneity

Question 33

relative scarcity

Answer 33

refers to the total supply of land as fixed (I.e. NYC) or the use of land is limited (I.e. flood plain)

Question 34

improvements

Answer 34

influences the value of land as well as other parcels of land in a positive or negative way

Question 35

permanence of investment

Answer 35

considers the usefulness of improvements now and 20–30 years in the future

Question 36

area preference

Answer 36

also known as situs, refers to a person’s choice or preference for a given area, factors include school districts, walkability, etc.

Question 37

immobility

Answer 37

Land, which is the Earth’s surface, is immobile. The geographic location of any given parcel of land can never be changed.

Question 38

indestructibility

Answer 38

Due to the permanence of land, it cannot be depreciated, and therefore is not insurable.

Question 39

non homogeneity

Answer 39

No two parcels of land are ever exactly the same.

Question 40

value

Answer 40

the amount of goods or services considered to be a fair and suitable equivalent for something else

Question 41

subjective value

Answer 41

value affected by the perception of the individual. for example, an updated kitchen has no value to someone who dislikes cooking

Question 42

price

Answer 42

the amount of money ultimately paid for a property

Question 43

cost

Answer 43

the capital outlay for land, labor, materials, and profits necessary to bring a property into existence

Question 44

objective value

Answer 44

value based on facts. for example, updated kitchen vs. outdated kitchen, upgraded features

Question 45

factors affecting supply

Answer 45

labor supply, construction costs, government controls and policies

Question 46

factors affecting demand

Answer 46

population, demographics, employment/wage levels

Question 47

secular trend

Answer 47

a long-term trend that tends to be smooth and continuous, most affected by population growth, technological advances, capital accumulation, etc.