Unit 1: introduction to Real Estate

Question 1

Real Estate

Answer 1

Refers to land and fixed improvements to the land

Question 2

Personal Property

Answer 2

Items not securely affixed to the land or buildings (moveable)

Question 3

Industry Member

Answer 3

Any one who is authorized by RECA ( Realtors, mortgage broker, appraiser)

Question 4

Real Estate Professional

Answer 4

Anyone authorized by RECA in the various classes of Real Estate

Question 5

Classes of Real Estate

Answer 5

• Associate
• Associate Broker
• Broker

Question 6

Areas of Real Estate Practice

Answer 6

• Residential
• Commercial
• Rural
• Property management

Question 7

Economics

Answer 7

Analyzes how individuals, businesses and governments make choices on allocating limited resources such as land, labour, and capital in order to satisfy apparently unlimited wants

Question 8

Macroeconomics

Answer 8

Analyzes how economy-wide phenomena such as inflation and unemployment affect society. It examines the factors that determine the production, employment and price level’s in a country

Question 9

Microeconomics

Answer 9

Studies how individuals, households, and firms make decisions to allocate scarce or limited resources where goods or services are being bought and sol examines how these decisions affect supply and demand for goods and services, which determines prices, and prices determine the supply and demand.

Question 10

Economic Growth

Answer 10

The long term expansion of the productive potential of an economy and is often measured as the percentage change in the gross domestic Product (GDP)

Question 11

Economic Growth Formula

Answer 11

Accumulating human Capital (Knowledge + skills)

Question 11

Economic Growth Formula

Answer 11

Accumulating human Capital (Knowledge + skills)

                                                                                                     \+

                                                   Investing in physical capital (factories, machinery & equipment)

                                                                                                     \+

                                                                            New technologies for production

Question 12

Factors of Production

Answer 12

The factors of production are resources required to produce and distribute goods and services in an economy.
Resource markets facilitate the exchange of the 4 factors of production -
land
labour
capital
entrepreneurship.

Question 13

Supply

Answer 13

Supply is the amount of good or service the market is willing to provide or can offer at a certain price. The higher the price something can be sold at, the higher the quantity that will be supplied.

Question 14

*key non-price determinants of supply

Answer 14

• Production costs
• Technology
• Producer expectations
• Number of suppliers in the market
• Government taxes and subsidies

Question 15

Demand

Answer 15

Demand is the amount of a good or service that consumers are willing to purchase at a certain price over a period of time.

Question 16

The key non-price determinants of demand

Answer 16

• Market Size
• Consumers’ expectations
• Availability of credit
• Consumers’ disposable income
• Consumers’ tastes and preferences
• Price of substitute or complementary products

Question 17

Market Equilibrium

Answer 17

Equilibrium is the situation when demand and supply are in balance (demand = supply).

Question 18

Market Surplus

Answer 18

A Market Surplus occurs when there is excess supply. In other words, the quantity supplied is greater than quantity demanded(supply > demand).

Question 19

Market Shortage

Answer 19

A Market Shortage occurs when there is excess demand. In other words, the quantity demanded is greater than quantity supplied(demand > supply).

Question 20

Gross Domestic Product (GDP)

Answer 20

GDP measure the output of the economy. GDP is the monetary value of all finished goods and services produced within the country in a given period.

GDP = Consumer spending + Government spending +Business spending + Exports –Imports

Question 21

Gross National Product (GNP)

Answer 21

GNP is another method to measure the output of the economy. It is the monetary values of all finished goods produced by a countries citizens and enterprises whether physically located inits borders or abroad.

GNP = GDP + Net Income from abroad –Net income from foreign residents

Question 22

Changes in Economic Activity

Answer 22

• Seasonal changes:
• Business cycle:
• Secular trends:

Question 23

Business Cycles

Answer 23

Expansion
Prosperity:
Peak:
Contraction
Recession
Trough
Recovery

Question 24

Market Bubble

Answer 24

Market bubble is a temporary situation in the business cycle where prices for a product become grossly over inflated beyond its realistic value primarily due to excessive consumer confidence.Consumers believe that prices will keep going up and they will be able to sell at higher prices.

Question 25

3 types of real estate markets

Answer 25

1. Balanced market
2. Buyers’ market
3. Sellers’ market

Question 26

Real Estate Assurance Fund

Answer 26

Real Estate Assurance Fund compensates consumers who suffer financial loss as a result of fraud, breach of trust or a failure to disburse or account for money held in trust by an industry professional.

Question 27

Real Estate Insurance Exchange

Answer 27

In Alberta, all real estate professionals must obtain professional liability insurance which covers claims arising from errors, omissions and negligent acts causing damage or loss as a result of a real estate professional performing services while trading in real estate.