Kap Real Estate Chapter 1: Basic Real Estate Concepts

Question 1

There are two major classifications of property:

Answer 1

Real Property and Personal Property

Question 2

What is Real Property defined as?

Answer 2

is defined as the land, everything that is permanently attached to the land, and everything that is appurtenant to (or goes with) the land

Question 3

What is Personal property defined as?

Answer 3

is considered to be all property that does not fit the definition of real property

Question 4

The primary characteristic of personal property is

Answer 4

movability

Question 5

What is a Chattel?

Answer 5

is an item of movable personal property

include such tangibles as furniture, clothing, money, bonds, and bank accounts.

Question 6

1) Define Land

2) What else is included in the description of land?

Answer 6

is defined as the earth’s surface extending downward to the center of the earth and upward to infinity, including things permanently attached by nature, such as trees and water

includes the minerals and substances below the earth’s surface together with the airspace above the land up to infinity.

Question 7

The surface, subsurface, and airspace can be owned separately as surface rights, subsurface rights, and air rights and can be severed by separate

Answer 7

Conveyance

Question 8

A specific tract of land is commonly referred to as a

Answer 8

parcel

Question 9

Real estate, or realty, is defined as

Answer 9

land at, above, and below the earth’s surface, including all things permanently attached to it, whether natural or artificial

Question 10

The term real estate is therefore somewhat broader than the term land and includes

Answer 10

not only the physical components of the land provided by nature but also all human-made permanent improvements on and to the land.

Question 11

Land is referred to as improved when

Answer 11

streets, utilities, sewers, and other improvements are brought to the land, making the land suitable for building.

Question 12

The broader term real property includes

Answer 12

the physical surface of the land, what lies below it, what lies above it, and what is permanently attached to it, as well as all the rights of ownership that are usually referred to as the bundle of legal rights, including the right to possession and use, the right to exclude others, the right to profit from the land, and the right to dispose of or encumber the land.

Question 13

______________ are any structures attached to the land, and __________ are any interests in real estate capable of being inherited.

Answer 13

Tenements

Hereditaments

Question 14

Seven characteristics define the nature of real property and affect its use. These characteristics fall into two broad categories:

Answer 14

physical characteristics and economic characteristics

Question 15

Physical Characteristics of land are:

Answer 15

Immobility, Indestructibility, Uniqueness

Question 16

Situs is

Answer 16

a related term regarding location that takes into consideration social factors in addition to economic factors.

Question 17

highest and best use is

Answer 17

the use that will give the owners the greatest actual return on their investment

Question 18

Advantages of real estate investment

Answer 18

• good rate of return
• Most real estate values tend to keep pace with the rate of inflation
• real estate entrepreneurs may enjoy various tax advantages

Question 19

Disadvantages of real estate investment

Answer 19

• Unlike stocks and bonds, real estate is not a liquid asset
• it is difficult to invest in real estate without some degree of expert advice.
• Rarely can a real estate investor sit idly by and watch the invested money grow. Management decisions must be made.
• a high degree of risk often is involved in real estate investment.

Question 20

The business of bringing together people interested in completing a real estate transaction is called

Answer 20

brokerage

Question 21

Real estate sales professionals in North Carolina usually begin their career in apprenticeship roles as

Answer 21

provisional brokers

Question 22

real estate can generally be classified into one of the following five categories:

Answer 22

1. Residential—all property used for housing, from acreage to small city lots, both single-family and multifamily, in urban, suburban, and rural areas
2. Commercial—business property, including offices, shopping centers, stores, theaters, hotels, and parking facilities
3. Industrial—warehouses, factories, land in industrial districts, and power plants
4. Agricultural—farms, timberland, ranches, and orchards
5. Special-purpose—churches, schools, cemeteries, and government-held lands

Question 23

A market is

Answer 23

a place where goods are bought and sold, where value for those goods is established, and where it is advantageous for buyers and sellers to trade.

Question 24

The function of the market is to facilitate this exchange by providing a setting in which the _________________ forces of the economy can establish market value

Answer 24

-supply and demand

Question 25

Essentially, when supply increases, prices ______ as more producers compete for buyers; when demand increases, prices _____ as more buyers compete for the product.

Answer 25

• drop

- rise

Question 26

Factors that tend to affect supply in the real estate market include

Answer 26

the labor force, construction costs, government controls, and monetary or financial policies

Question 27

Factors that tend to affect demand in the real estate market include

Answer 27

population, demographics, and employment and wage levels.