Unit 1: Introduction to the Real Estate Business

Question 1

Associate Licensee

Answer 1

An associate licensee is employed by or associated with the broker to perform brokerage activities on behalf of or for the broker, and may also be referred to as a sales associate or salesperson.

Question 2

Appreciation

Answer 2

Real estate is an avenue of investment open to those interested in holding property primarily for increasing value, known as appreciation.

Question 3

Broker

Answer 3

A broker is a person or company licensed to buy, sell, exchange, or lease real property for others and to charge a fee for these services.

Question 4

Capital Gain

Answer 4

Capital gain is the difference between the purchase price of the property and its net selling price.

Question 5

Depreciation

Answer 5

Depreciation, or cost recovery, allows an investor to recover the cost of an income-producing asset through tax deductions over the asset’s useful life.

Question 6

Equity Build-up

Answer 6

The amount invested in the property is the owner’s equity. Appreciation, too, will result in equity buildup as the value o the property increases.

Question 7

Exchanges

Answer 7

A transaction in which all or part of the consideration is the transfer of like-kind property (e.g. real estate for real estate)

Question 8

Fair Housing

Answer 8

The federal law that prohibits discrimination in housing based on race, color, religion, sex, disability, familial status, and national origin.

Question 9

Leverage

Answer 9

Leverage is the use of borrowed money to finance an investment.

Question 10

Liquidity

Answer 10

Liquidity refers to how fast an asset can be converted into cash.

Question 11

Market

Answer 11

A market exists when goods can be bought and sold. The function of a market is to provide a setting in which supply and demand can establish market value, making it advantageous for buyers and sellers to trade.

Question 12

Real Estate Licensee

Answer 12

A real estate licensee is a person who has satisfied the requirements of a licensing agency, as authorized by state legislation.

Question 13

Sales Associate

Answer 13

A sales associate is employed by or associated with the broker to perform brokerage activities on behalf of or for the broker, and may also be referred to as a salesperson or associate licensee.

Question 14

Salesperson

Answer 14

A salesperson is employed by or associated with the broker to perform brokerage activities on behalf of or for the broker, and may also be referred to as a sales associate or associate licensee.

Question 15

Supply and Demand

Answer 15

Prices for goods and services in the market are established by the operation of supply and demand.