Unit 1: The Real Estate Business

Question 1

True/False The product that real estate licensees market is expert information.

Answer 1

True

Question 2

True/False Real estate professionals provide knowledge of market conditions.

Answer 2

True

Question 3

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

Answer 3

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

Question 4

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

Answer 4

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 5

True/False Rental agents manage the property once a tenant is secured.

Answer 5

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 6

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

Answer 6

True.

Question 7

True/False The Uniform Standards of Professional Appraisal Practice are standards of practice that must be followed by appraisers but not real estate licensees.

Answer 7

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 8

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

Answer 8

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

Question 9

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

Answer 9

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

Question 10

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

Answer 10

True.

Question 11

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

Answer 11

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 12

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

Answer 12

True.

Question 13

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

Answer 13

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 14

True/False 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.

Answer 14

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

Question 15

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

Answer 15

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.

Question 16

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

Answer 16

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

Question 17

specialized service for others in return for compensation in the form of a commission, fee, or other valuable consideration.

Answer 17

Real estate brokers provide:

Question 18

expert knowledge of property transfer, market conditions, and how to market real estate and businesses.

Answer 18

Real estate professionals provide:

Question 19

(1) residential, (2) commercial, (3) industrial, (4) agricultural, and (5) businesses.

Answer 19

The five major sales specialties

Question 20

a selected and limited geographic area to which a sales associate devotes special attention and study. Target marketing involves expertise in locating prospects.

Answer 20

Farm area

Question 21

Business opportunity brokerage involves:

Answer 21

the sale or lease of an existing business. A real estate license is required to sell and lease business opportunities for others.

Question 22

is a professional service conducted by a person or company hired to maintain and manage property on behalf of property owners.

Answer 22

Property management

Question 23

property owners who do not reside on the property and who often rely on a professional property manager to manage the investment.

Answer 23

Absentee owners

Question 24

Federal and state laws require appraisals that involve a federally related transaction to be prepared by:

Answer 24

a state-certified or licensed appraiser.

Question 25

When preparing appraisals, Florida law requires appraisers and real estate licensees to abide by:

Answer 25

the Uniform Standards of Professional Appraisal Practice(USPAP). The USPAP is a set of guidelines (standards of practice) to follow when conducting appraisal services. Real estate licensees may not represent themselves as state-certified, registered, or licensed appraisers unless they also hold those licenses.

Question 26

a marketing tool that is prepared for a potential buyer or seller based on recent sales of similar properties, properties currently on the market, and recent expired listings. A CMA may not be referred to or represented as an appraisal.

Answer 26

A comparative market analysis

Question 27

a broker's written opinion of the value of real property. A broker may charge a separate fee for a BPO, provided it is not used in connection with originating a federally related loan and it is not labeled as an appraisal.

Answer 27

A broker's price opinion (BPO)

Question 28

A mortgage loan originator (MLO) must:

Answer 28

be licensed to receive compensation for taking a residential mortgage application or negotiating the terms of a residential mortgage loan. A real estate licensee may not accept a referral fee from a lender unless the real estate licensee is also licensed as a mortgage loan originator.

Question 29

the gift of land by an owner to a government body for public use. The developer installs the improvements and the local municipality agrees to maintain the improvements as part of the subdivision plat approval process.

Answer 29

Dedication

Question 30

The three categories of residential construction are:

Answer 30

(1) speculative (spec) homes, (2) custom homes, and (3) tract homes.

Question 31

a real estate licensee who is a member of the National Association of REALTORS® (NAR).

Answer 31

A REALTOR®

Question 32

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) Final walk-through and property inspection D) Follow-up

Answer 32

D) Follow-up

Question 33

Which statement concerning broker's price opinions (BPOs) is TRUE? A) The payment for a BPO must be paid to the broker and not directly to the sales associate who prepared the BPO. B) All BPOs must conform to Uniform Standards of Professional Appraisal Practice (USPAP). C) A BPO is also called an appraisal of real property. D) A broker's license is required to conduct a BPO.

Answer 33

A) The answer is 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 34

Which term may only be used by members affiliated with the NAR? A) Licensed real estate sales associate B) REALTOR® C) Real estate sales associate D) Real estate broker

Answer 34

B) REALTOR®

Question 35

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

Answer 35

C) Mortgage loan originator

Question 36

The five major sales specialties do NOT include A) businesses. B) industrial. C) residential. D) mixed-use property.

Answer 36

D) mixed-use property.

Question 37

A map that indicates the size and location of individual lots, streets, and public utilities within a new development is called A) an architectural drawing. B) a subdivision plat map. C) an elevation. D) a topography map.

Answer 37

B) 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 38

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

Answer 38

B) Real estate license

Question 39

An individual who, for a fee, finds tenants for available properties in a community is called A) a landlord. B) an absentee owner. C) a rental agent. D) a property manager.

Answer 39

C) a rental agent.

Question 40

Which term best describes a property owner who is NOT a resident of the property? A) Property manager B) Tenant C) Absentee owner D) Rental agent

Answer 40

C) 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 41

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

Answer 41

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

Question 42

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

Answer 42

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 43

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

Answer 43

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 44

A part of the real estate business that is concerned with bringing together buyers and sellers and owners and renters and completing a real estate transaction.

Answer 44

Real Estate Brokerage

Question 45

Real estate licensees who engage in the sale, purchase, or lease of businesses.

Answer 45

Business Broker

Question 46

The real estate activity dealing in the sale, purchase, or lease of businesses.

Answer 46

Business Opportunity