Unit 1 Quiz Questions

Question 1

Office buildings and retail space are examples of

a. commercial real estate.
b. special use real estate.
c. residential property.
d. industrial property.

Answer 1

Commercial Real Estate

Office buildings and retail space are examples of commercial real estate. Special use property includes churches and dormitories; industrial property includes warehouses and factories.

Question 2

The market value of a property less the amount still owed on it is the owner’s

a. purchase price.
b. equity.
c. depreciation.
d. tax deduction.

Answer 2

Equity

A property owner’s equity is the amount remaining after subtracting any outstanding loans
against the property from its original purchase price.

Question 3

All of these factors will tend to affect demand for real estate EXCEPT

a. transfer taxes.
b. employment levels.
c. wage rates.
d. demographics.

Answer 3

Transfer Taxes

Transfer taxes affect the SUPPLY of real estate; employment levels, wage rates, and demographics affect DEMAND for real estate

Question 4

When the population of a town suddenly increases, which of these is MOST likely to occur?

a. Rental rates will fall due to increased competition
b. Demand for housing will decrease
c. New housing starts will decrease
d. Real estate prices will increase

Answer 4

Real Estate prices will increase

With a sudden influx of people, rental rates will increase; demand for housing will increase;
and more new homes will be started to satisfy demand.

Question 5

Property management, appraisal, financing, and development are all

a. specializations directly linked to state and federal government financial policies.
b. separate professions within the real estate industry.
c. real estate brokerage professions.
d. demographic factors that affect demand for real property in a commercial market.

Answer 5

Separate professions within the real estate industry.

Property management, appraisal, financing, and development are not linked to the
government; they are all linked to real estate business.

Question 6

The idea that no two parcels of land are exactly alike is called

a. immobility.
b. subdivision.
c. uniqueness.
d. location.

Answer 6

Uniqueness

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

Question 7

All of these factors can affect the supply of real estate EXCEPT

a. demographics.
b. labor force.
c. construction costs.
d. government controls.

Answer 7

Demographics

Demographics affect the demand for real estate. The labor force, construction costs, and
government controls affect the supply of real estate.

Question 8

A property owner who does not want to deal with the everyday tasks of managing a rental
property can hire

a. a property manager.
b. an appraiser.
c. a home inspector.
d. a developer.

Answer 8

Property Manager

A property manager handles the day-to-day tasks of managing property for an owner. An
appraiser provides an opinion of value; a home inspector looks for problems with the property; and the developer improves the property.

Question 9

When the supply of a certain commodity decreases while demand remains the same, the price
of that commodity will tend to

a. remain the same.
b. increase.
c. decrease by 10%.
d. decrease by 20%.

Answer 9

Increase

When consumers continue to demand a product for which there is limited supply, the price
generally increases.

Question 10

A factor affecting the real estate market that usually is not the result of government controls is

a. the Federal Reserve Board’s discount rate.
b. a shortage of skilled labor or building materials.
c. land-use controls, such as zoning.
d. federal environmental regulations.

Answer 10

A shortage of skilled labor or building materials

A shortage of skilled labor will affect the supply of real estate, and this labor shortage is not
generally associated with governmental policies.

Question 11

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

A. a real estate attorney.
B. a real estate appraiser.
C. a real estate counselor.
D. a home inspector

Answer 11

A Real Estate Appraiser

The answer is a real estate appraiser. Although real estate professionals, counselors, and inspectors also look closely at a specific property, only an appraiser is qualified to produce a formal opinion of value—an appraisal.

Question 12

In general, when the supply of a certain commodity increases

A. price tends to rise.
B. price tends to drop.
C. demand for it tends to rise.
D. demand for it tends to drop.

Answer 12

Price tends to drop

The answer is price tends to drop. If demand is constant and supply increases, sellers compete with each other by lowering prices.

Question 13

Which factor primarily affects supply in the real estate market?

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

Answer 13

Governmental Monetary Policy

The answer is governmental monetary policy. Population, demographics, and employment impact demand for a commodity, but governmental monetary policy strongly influences the supply and value of property in a local market

Question 14

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

Answer 14

Wage levels and employment opportunities

The answer is wage levels and employment opportunities. When wage levels and job expansion are increasing, workers are more likely to buy real estate; when job opportunities are scarce or wage levels low, demand for real estate usually drops.

Question 15

Property management, appraisal, financing, and development are all examples of

A. factors affecting demand.
B. specializations within the real estate industry.
C. non–real estate professions.
D. activities requiring broker management and supervision.

Answer 15

Specializations within the real estate industry

The answer is specializations within the real estate industry. All are specializations in the field of real estate, and every real estate professional must have a basic knowledge of these specialties.

Question 16

What type of federal law prohibits discrimination 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?

A. Licensing
B. Lot size
C. Home ownership
D. Fair housing

Answer 16

Fair Housing

The answer is fair housing. Fair housing laws prohibit discriminatory practices against protected classes of individuals.

Question 17

A major manufacturer of automobiles announces that it will relocate one of its factories, along with 2,000 employees, to a small town. What effect will this announcement MOST likely have on the small town’s housing market?

A. Houses will likely become less expensive.
B. Houses will likely become more expensive.
C. Because the announcement involves an issue of demographics, not of supply and demand, housing prices will stay the same.
D. The announcement involves an industrial property; residential housing will not be affected.

Answer 17

Houses will likely become more expensive.

The answer is houses will likely become more expensive. The expected arrival of 2,000 employees and their families in a small town will cause sellers to raise their prices in expectation of the greatly increased demand and the long time it takes to build new housing. It becomes a sellers’ market, and the many buyers will have to compete for the few houses available.

Question 18

A real estate professional who has several years of experience in the industry decided to retire from actively marketing properties. Now this person helps clients choose among the various alternatives involved in purchasing, using, or investing in property. What is this person’s profession?

A. Real estate counselor
B. Real estate appraiser
C. Real estate educator
D. Building inspector

Answer 18

Real Estate Counselor

The answer is real estate counselor. Advising and guiding investors and other buyers is counseling them. Many states require a person to have a real estate license to serve as a real estate advisor/counselor for a fee because it involves skills and duties closely related to real estate brokerage.

Question 19

Nationwide Multistate Licensing System and Registry was created to register

A. appraisers.
B. property managers.
C. home inspectors.
D. mortgage loan originators

Answer 19

Mortgage Loan Originators

The answer is mortgage loan originators. Federal law requires mortgage loan originators to qualify for the Nationwide Multistate Licensing System and Registry.

Question 20

Schools would be considered part of which real estate classification?

A. Special purpose
B. Industrial
C. Commercial
D. Residential

Answer 20

Special Purpose

The answer is special purpose. Special-purpose properties include schools, churches, cemeteries, and municipal service buildings.

Question 21

When demand for a commodity decreases and supply remains the same,

A. price tends to rise.
B. price tends to fall.
C. price is not affected.
D. the market becomes stagnant.

Answer 21

Price tends to fall.

The answer is price tends to fall. Under the concept of supply and demand, if demand decreases and supply remains the same, producers need to attract more customers, and so prices fall.

Question 22

Federal law specifically prohibits discrimination in the sale or rental of

A. all forms of real estate.
B. housing
C. commercial property.
D. industrial property.

Answer 22

Housing

The answer is housing. The Fair Housing Act prohibits discrimination in the sale or rental of housing and in providing housing-related services.

Question 23

The federal Fair Housing Act covers discrimination in

A. restaurants.
B. mortgage financing.
C. theaters.
D. automobile dealerships.

Answer 23

Mortgage Financing

The answer is mortgage financing. The Fair Housing Act covers discrimination in the sale or rental of housing and the provision of housing-related services, such as mortgage financing

Question 24

The splitting of a single property into smaller parcels is called

A. brokerage.
B. subdivision.
C. development.
D. management.

Answer 24

Subdivision

The answer is subdivision. Development is the preparation of a site and addition of structures and other improvements.

Question 25

The supply of land is affected by

A. population.
B. demographics.
C. wage levels.
D. monetary policy.

Answer 25

Monetary Policy

The answer is monetary policy. Government monetary policies affect the supply of land available for development. Population, demographics, and wage levels affect demand for real estate.

Question 26

The most important factor in determining how quickly the forces of supply and demand work is

A. a property’s specific geographic location.
B. immobility of a property.
C. the property’s price.
D. uniqueness of a property.

Answer 26

A property’s specific geographic location.

The answer is a property’s specific geographic location. Uniqueness and immobility of a property and the property’s price will also govern.

Question 27

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.

Answer 27

Home Inspector

The answer is a home inspector. The home inspector, who prepares an analytical report of a visual inspection of the property’s structure and systems, is becoming more important in the real estate transaction as more consumers rely on these reports when buying property.

Question 28

When it is sold in good condition, a school, church, or hotel may have value as

A. a converted-use property.
B.a burden on the local community.
C. farmland.
D. vacant land.

Answer 28

A converted-use property

The answer is a converted-use property. A structurally sound building may find new life when adapted to a new purpose.

Question 29

A person or company responsible for maintaining a client’s property and maximizing the return on the client’s investment is serving as

A. a rental agent.
B. a building maintenance specialist.
C. a property manager.
D. an investment counselor.

Answer 29

A Property Manager

The answer is a property manager. The basic responsibility of the property manager is to protect the owner’s investment and maximize the return on investment.

Question 30

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.

Answer 30

Demographics

The answer is demographics. Information about members of a population group is called demographics. These factors are important because they contribute to the amount and type of housing needed.