Unit 1: The Real Estate Business

Question 1

An individual who, for a fee, finds tenants for available properties in a community is called

A) a property manager.
B) a rental agent.
C) a landlord.
D) an absentee owner.

Answer 1

B) a rental agent

A rental agent typically finds tenants for properties and collects a fee.

Question 2

Which statement concerning broker’s price opinions (BPOs) is TRUE?

A) A broker’s license is required to conduct a BPO.

B) A BPO is also called an appraisal of real property.

C) All BPOs must conform to Uniform Standards of Professional Appraisal Practice (USPAP).

D) The payment for a BPO must be paid to the broker and not directly to the sales associate who prepared the BPO.

Answer 2

D) The payment for a BPO must be paid to the broker and not directly to the sales associate who prepared the BPO.

If a sales associate or broker associate performs a BPO, the compensation must be paid to the broker and not directly to the associate who prepared the BPO.

Question 3

The sales associate who worked with the buyers in the transaction sets up an appointment with the buyers to visit them six weeks after the sale. The sales associate routinely makes a visit after the title closing to thank the buyers for choosing her real estate company and to extend an offer to help with the buyers’ future real estate needs. What type of service is the sales associate providing?

A) Delayed customer contact
B) Door-to-door sales
C) Follow-up
D) Final walk-through and property inspection

Answer 3

C) Follow-up

Follow-up is what a sales associate does for buyers and sellers after the sale and can result in future referrals and word-of-mouth advertising.

Question 4

The five major sales specialties do NOT include

A) businesses.
B) residential.
C) mixed-use property.
D) industrial.

Answer 4

C) mixed-use property

The five major sales specialties include residential, commercial, industrial, agricultural, and businesses.

Question 5

An individual who takes residential mortgage loan applications or offers to negotiate the terms of residential mortgage loan applications for compensation must hold which license?

A) Business broker
B) Financial counselor
C) Mortgage counselor
D) Mortgage loan originator

Answer 5

D) Mortgage loan originator

Anyone who takes residential mortgage loan applications or offers to negotiate the terms of residential mortgage loan applications for compensation must be licensed as a mortgage loan originator (MLO).

Question 6

Which term best describes a property owner who is NOT a resident of the property?

A) Rental agent
B) Property manager
C) Tenant
D) Absentee owner

Answer 6

D) Absentee owner

An absentee owner is a property owner who does not reside on the property and who often relies on a professional property manager to manage the investment.

Question 7

Which term may only be used by members affiliated with the NAR?

A) Real estate broker
B) Licensed real estate sales associate
C) REALTOR®
D) Real estate sales associate

Answer 7

C) REALTOR®

A REALTOR® is a real estate licensee who belongs to the National Association of REALTORS®.

Question 8

A couple tours several model homes in a new subdivision. The couple decides to purchase one of the available lots and have the builder construct one of the model floor plans on the lot. Which type of construction is this?

A) Modular home
B) Contract home
C) Custom home
D) Tract home

Answer 8

D) Tract home

Tract homes are a type of speculative building. A new subdivision will typically feature several model homes. Buyers select a floor plan from the models and a lot on which to have a home constructed in the new subdivision.

Question 9

A map that indicates the size and location of individual lots, streets, and public utilities within a new development is called

A) an elevation.
B) a topography map.
C) an architectural drawing.
D) a subdivision plat map.

Answer 9

D) a subdivision plat map

A subdivision plat map indicates the size and location of individual lots, streets, and public utilities, including water and sewer lines.

Question 10

A marketing tool used by real estate licensees in the process of soliciting for listings that is intended to help sellers determine an asking price is called

A) an appraisal report.
B) an appraisal.
C) a comparative market analysis.
D) a federally related transaction.

Answer 10

C) a comparative market analysis

Real estate licensees may help potential sellers determine an asking price by preparing a comparative market analysis (CMA). A CMA is a marketing tool and may not be called or represented as an appraisal.

Question 11

A developer transfers privately owned streets in a subdivision to the city with the agreement that the city will maintain the streets in the future. This process is called

A) dedication.
B) land acquisition.
C) eminent domain.
D) entrepreneurship.

Answer 11

A) dedication

Dedication is the gift of land by an owner, in this case a developer, to a government body for a public use.

Question 12

What type of license or other credential is required for an individual to engage in the sale, purchase, or lease of businesses for others?

A) Member of national association of business brokers
B) Business broker license
C) Commercial business license
D) Real estate license

Answer 12

D) Real estate license

Individuals and business entities engaged in the sale, purchase, or lease of businesses must qualify and be licensed as active real estate licensees.

Question 13

The product that real estate licensees market is expert information.

True

False

Answer 13

True

The product that real estate licensees market is expert information.

Question 14

Real estate professionals provide knowledge of market conditions.

True

False

Answer 14

True

Real estate professionals provide expert information in three areas: knowledge of property transfer, knowledge of market conditions, and knowledge of how to market real estate and businesses.

Question 15

Follow-up refers to returning phone calls to prospective buyers in a timely manner.

True

False

Answer 15

False

Follow-up is what a sales associate does for buyers and sellers after the sale (closing) to promote customer loyalty.

Question 16

Real estate professionals who specialize in the sale, purchase, and lease of businesses must hold a commercial license.

True

False

Answer 16

False

In Florida, an active real estate sales associate or broker license is required to market business opportunities. No license distinction is made regarding the type of real estate.

Question 17

A property manager is responsible for protecting the owner’s investment.

True

False

Answer 17

True

The property manager’s primary charge is to protect the owner’s investment and to maximize the owner’s return on the investment.

Question 18

Rental agents manage the property once a tenant is secured.

True

False

Answer 18

False

Rental agents typically find a tenant for property and collect a fee. Property managers continue to manage the property once a tenant is secured.

Question 19

The Uniform Standards of Professional Appraisal Practice are standards of practice when conducting appraisals of real property that must be followed by appraisers but not real estate licensees.

True

False

Answer 19

False

Florida law requires appraisers, real estate brokers, broker associates, and sales associates to abide by the Uniform Standards of Professional Appraisal Practice when conducting appraisals of real property.

Question 20

Real estate licensees must abide by USPAP when preparing CMAs and BPOs.

True

False

Answer 20

False

The USPAP standards do not apply to real estate licensees who, in the ordinary course of business, perform CMAs and BPOs.

Question 21

An individual who offers to negotiate the terms of residential mortgage loan applications for compensation must be licensed as a real estate broker.

True

False

Answer 21

False

Individuals who negotiate the terms of residential mortgage loan applications for compensation must be licensed as mortgage loan originators.

Question 22

Sources of real estate financing include commercial banks, savings associations, credit unions, and mortgage companies

True

False

Answer 22

True

Sources of financing include commercial banks, savings associations, credit unions, and mortgage brokerage companies.

Question 23

A subdivision plat map usually must be submitted to the local government planning board.

True

False

Answer 23

True

Before work can begin, most local governments require that developers submit a subdivision plat map of a new development for review by the applicable government planning board.

Question 24

A gift of land by a developer to a local government to be used for streets and sidewalks is called dedication.

True

False

Answer 24

True

Dedication is the gift of land by an owner, in this case a developer, to a government body for a public use.

Question 25

Purchasing one or more residential lots and constructing homes on the lots without first finding a buyer for the new construction is called building on speculation.

True

False

Answer 25

True

Building “on speculation” involves purchasing one or more lots and constructing a home (or homes) without a buyer in advance of construction.

Question 26

The three categories of residential construction are spec homes, custom homes, and tract homes.

True

False

Answer 26

True

Building “on speculation” involves purchasing one or more lots and constructing a home (or homes) without a buyer in advance of construction. A custom builder constructs homes under contract with a buyer, often using building plans provided by architects or buyers. Tract homes are a type of speculative building. A new subdivision will typically feature several model homes. Buyers select a floor plan from the models and a lot on which to build in the new subdivision.

Question 27

A person who is licensed by the Florida Department of Business and Professional Regulation (DBPR) is called a REALTOR®.

True

False

Answer 27

False

A REALTOR® is a real estate licensee who belongs to the National Association of REALTORS®. Not all real estate licensees are REALTORS®.

Question 28

The multiple listing service is a database that allows real estate licensees to share information about properties with other real estate licensees.

True

False

Answer 28

True

The MLS is a database that allows real estate brokers representing sellers under a listing contract to share information about properties with real estate brokers who may represent potential buyers.