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Fundamentals of Real Estate > Unit 1: Overview > Flashcards

Unit 1: Overview Flashcards

1
Q

Real Estate is…

A

the land and any fixed improvements to that land

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2
Q

Personal Property is…

A

an items that can be removed without causing damage to the property (aka chattels)

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3
Q

What are the 7 building classifications?

A

Residential, recreational, commercial, industrial, retail, institutional, agricultural

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4
Q

Residential Building Classification refers to…

A

buildings used as dwellings by one or more occupants. (e.g. house, condo, etc.)

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5
Q

Recreational Building Classification refers to…

A

buildings meant for leisure or as a second residence. (e.g. cottage)

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6
Q

Commercial Building Classification refers to…

A

buildings intended for business use, and generally only used during business hours. (e.g. skyscrapers)

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7
Q

Industrial Building Classification refers to…

A

buildings used for processing raw materials and manufacturing/storing goods. (e.g. factories)

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8
Q

Retail Building Classification refers to…

A

buildings that promote commerce with consumers in exchange for goods and/or services. (e.g. strip malls)

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9
Q

Institutional Building Classification refers to…

A

buildings with specialized uses aimed at serving the public or private clientele. (e.g. schools, hospitals, labs)

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10
Q

Agricultural Building Classification refers to…

A

buildings used in the production of food or other goods such as farming, ranching, or forestry. (e.g. barns, greenhouses, silos)

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11
Q

What are the 2 types of real estate sectors?

A

Residential and Commercial

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12
Q

Residential Real Estate includes…

A

the listing and selling of new and resale properties. (e.g. homes, townhouses, condos, country residences, recreational properties, mobile homes)

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13
Q

Commercial Real Estate includes…

A

activities involved with the sale / leasing of office, retail or industrial spaces, and any business operations where real estate property is involved.

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14
Q

What is the maximum number of units that can be sold by a residential real estate agent?

A

4 units

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15
Q

How many properties can be sold in a single residential real estate transaction?

A

1 property, which can include a maximum of 4 units if it’s a shared living complex

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16
Q

What are the 4 types of Commercial Real Estate?

A

Retail, Office, Industrial, Investment

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17
Q

Definition of Economics

A

The study of analyzing how individuals, businesses, and governments make choices on allocating limited resources such as land, labour, and capital to satisfy unlimited wants.

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18
Q

Macroeconomics looks at…

A

how economy-wide phenomena such as inflation and unemployment affect society (e.g. production, employment, price levels)

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19
Q

Microeconomics looks at…

A

how individuals, households and firms make decisions to allocate limited resources, typically in markets where goods / services are being bought and sold. (e.g. supply and demand and their affect on prices)

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20
Q

What are 4 key variables of Economic growth?

A

Natural resources
Capital,
Rate of savings,
Technological progress

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21
Q

Investment is…

A

the process of acquiring capital

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22
Q

Costs of economic development include:

A
  • Depletion of natural resources
  • Raising inflation rates
  • Increasing environmental impacts
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23
Q

Indicators of economic growth as they relate to real estate:

A
  • Number of housing starts (residential units under construction)
  • Real estate sales
  • Building permits issued
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24
Q

Vacancy Rates compare the…

A

number of available unoccupied units to total number of units available (can be measured in sq footage)
(e.g. commercial building with 4,400 sq m available space with 1,200 sq m vacant is 1,200 / 4,400 = .2727 or 27.27% vacancy rate

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25
Q

Occupancy Rates compare the…

A

number of occupied units to total number of units available (can be measured in sq footage)
(e.g. apartment building with 100 units where 85 of the units are rented. 85/100 = .85 or 85% occupancy rate

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26
Q

Factors of production are…

A

resources required to produce and distribute goods and services in the economy.
(e.g. land, labour, capital, entrepreneurship)

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27
Q

The Canadian economy is called a…

A

Mixed Economy (private and public ownership)

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28
Q

Supply is…

A

the amount of goods or services available at a certain price

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29
Q

Non-price determinants of supply are:

A
  • Production costs
  • Technology
  • Producer expectations
  • # of suppliers
  • Government taxes and subsidies
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30
Q

Movements along the supply line occur when -

A

a change in quantity supplied is caused only by change in price

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31
Q

Shifts along the supply line occur when -

A

something other than price causes supply to change

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32
Q

Demand is…

A

quantity of goods or services that consumers are willing to purchase at a certain price at a certain time

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33
Q

Non-price determinants of demand are:

A
  • Market size
  • Consumer expectations
  • Availability of credit
  • Consumers’ disposable income
  • Consumers’ tastes and preferences
  • Price of similar products
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34
Q

Movements along the demand line occur when -

A

there’s a change in the price of products / services which changes the quantity demanded

35
Q

Shifts in the demand line are caused by -

A

a change in a factor other than price

36
Q

When demand = supply, it’s called

A

Market Equilibrium

37
Q

Supply > Demand is called

A

Market Surplus

38
Q

Demand > Supply is called

A

Market Shortage

39
Q

Gross Domestic Product is…

A

the monetary value of all finished goods / services produced within a country over a given period
GDP = Consumer spending + government spending + business spending + exports - imports

40
Q

Gross National Product is…

A

the monetary value of all finished goods produced by a country’s citizens / enterprises both within its borders and abroad
GNP = GDP + Net income from abroad - Net income from foreign residents

41
Q

Changes in economic activity are generally caused by:

A
  • seasonal changes
  • business cycle
  • secular trends
42
Q

Indicators of Balanced Market (for Real Estate)

A
  • Supply = Demand
  • Property prices are stable
  • Interest rates are affordable
  • Decent number of properties on market
  • Properties sold in reasonable timeframe
43
Q

Indicators of Buyers’ Market (for Real Estate)

A
  • Supply > Demand
  • Local economy is declining
  • Property prices go down
  • Property on market for longer
  • More properties to choose from
44
Q

Indicator of Sellers’ Market (for Real Estate)

A
  • Supply < Demand
  • Local economy is thriving
  • Property prices increase
  • Fewer properties for sale
  • Rush sales and limited decision making abilities
45
Q

Characteristics of Real Estate Market

A
  • Local,
  • Slow to respond to supply and demand,
  • Non-standardized,
  • Transactions are private
46
Q

Physical Characteristics of Real Estate

A
  • Unique
  • Durable
  • Fixed
  • Scarce
47
Q

Recession is marked by how many consecutive quarters of negative GDP?

A

2 quarters, so 6 months

48
Q

The lowest point in the business cycle is called the?

49
Q

What is a Market Bubble?

A

Where prices for a product become grossly overinflated beyond its realistic value due to excessive consumer confidence.

50
Q

The Minister of ____ is responsible for enabling the Real Estate Act

A

Service Alberta

51
Q

Real Estate Council of Alberta (RECA) is the independent governing body that…

A

sets, regulates and enforces standards for real estate professionals in the province.

52
Q

RECA’s Board of Directors is composed of -

A

7 members total : 3 members of the public appointed by the Minister of Service Alberta and 4 licensees (one from each Industry Council)

53
Q

RECA board members are appointed for _ year terms and can serve _ terms consecutively

A

3 year terms and 2 terms consecutively

54
Q

What are the 4 Industry Councils that RECA draws board members from?

A

1) Residential
2) Commercial
3) Residential Property Management
4) Mortgage Brokerage

55
Q

RECA’s Office of the Registrar is responsible for

A

licensing, discipline, trust assurance, and practice review

56
Q

RECA’s audit program is referred to as:

A

trust assurance and practice review

57
Q

Professional Conduct Reviews investigate…

A

complaints related to alleged failures by industry professionals to follow standards of practice

58
Q

Professional Conduct Proceedings aim to…

A

protect the public while upholding the principles of natural justice and fairness for industry professionals

59
Q

The Real Estate Act defines trade as the following activities:

A
  • Disposal or acquisition of real estate by purchase or sale
  • An offer to purchase or sell real estate
  • An offering, ad, listing, or showing of real estate for purchase or sale
60
Q

The Real Estate Act defines property management as the following activities:

A
  • Leasing, negotiating, or approving a lease or rental (or offering to do so)
  • Holding money in connection with above activities
  • Advertising, negotiating or carrying out activities as mentioned
  • Engaging in condo management services
  • Offering to or collecting money on behalf of a person in charge of real estate either rent or contributions to manage or administer it
61
Q

Condo Management professionals…

A

exercise the power of duty of a condo corporation on their behalf

62
Q

Mortgage Brokerage Professionals…

A

solicit a person to borrow / lend money for a mortgage, negotiates the transaction, collects the payments, and / or buys, sells, or exchanges offers to do so

63
Q

A Property Inspector…

A

provides independent and objective analysis of a property’s systems and components. MUST BE LICENSED

64
Q

A Mortgage Lender…

A

can be any person, group, or institution participating as a lender that’s secured by a mortgage.

65
Q

Who is responsible for producing a Real Property Report?

A

Land Surveyor

66
Q

__________ is a non-profit, member-based association, representing the interests and concerns of 10 regional real estate boards in Alberta.

A

Alberta Real Estate Association (AREA)

67
Q

___________ is a national organization for members of each local board and provincial association

A

Canadian Real Estate Association (CREA)

68
Q

_________ is funded by interest earned on money deposited in real estate and mortgage brokers’ pooled trust accounts

A

Alberta Real Estate Foundation (AREF)

69
Q

The Real Estate Assurance Fund compensates consumers who have suffered financial loss due to -

A

fraud, breach of trust, or failure to disburse money from a trust account.

70
Q

The Real Estate Insurance Exchange (REIX) covers claims arising from -

A

errors, omissions, and negligent acts by real estate professionals that cause damage or loss to consumers.

71
Q

___________ administers the Land Titles Offices and the online land titles database (SPIN 2)

A

Service Alberta

72
Q

In a ________ there is no common property, the owner owns the entire structure plus the land it sits on.

A

Single-Family Home

73
Q

An owner of a _________ doesn’t own the land or the structure of their home

A

Traditional condominium

74
Q

An owner of a __________ owns the structure of the home but not the land it sits on

A

Bare-land Condo

75
Q

If your mortgage is ___% of the purchase price (or more) you don’t require mortgage insurance

76
Q

___________ properties have unfavourable qualities that make it less attractive to some buyers

A

Stigmatized
e.g. death or suicide took place there, scene of a crime, address has wrong numerals, reportedly haunted

77
Q

For Transaction Brokerage, parties must sign an _____________ form

A

Agreement to Represent Both Buyer and Seller

78
Q

Deposits are usually held by the __________ brokerage

A

seller’s

79
Q

A _______ is a detail in the purchase contract that the buyer and seller agree to.

80
Q

Terms include:

A
  • Possession date
  • Inclusions / exclusions
  • Timing for acceptance of offer
  • Pre-possession inspection
81
Q

A __________ is a requirement placed in an offer to protect a party’s interest. Each must have an expiry date

82
Q

A _________ is when a buyer keeps some of the money for the purchase on closing until the seller completes certain tasks. It is a formal agreement between both parties.

A

Holdback
e.g. incomplete reno, roof replacement, etc.
*Must be signed off in the contract

83
Q

RPRs are available for 2 property types

A

Single-family homes and bare-land condos

84
Q

Home Inspectors in Alberta need a license through _______

A

Service Alberta

Fundamentals of Real Estate (19 decks)

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