Unit 1 Basic Real Estate Concepts

Question 1

Which of the following BEST defines real estate?
A Land and the air above it
B Land and the buildings permanently affixed to it
C Land and all things permanently affixed to it
D Land and the mineral rights in the land

Answer 1

C Land and all things permanently affixed to it

Question 2

Which of the following is NOT a physical characteristic of land?
A Indestructibility
B Scarcity
C Immobility
D Uniqueness

Answer 2

B Scarcity

Question 3

In North Carolina, the term provisional broker refers to
A a REALTOR®.
B a licensee who must operate under the supervision of a broker-in-charge.
C a licensee who must focus on a specialty area of real estate.
D an individual who has invested in real estate.

Answer 3

B a licensee who must operate under the supervision of a broker-in-charge.

Question 4

Situs refers to
A view from the property.
B improvements made to the building site.
C societal factors that are related to the location.
D immobility of real estate.

Answer 4

C societal factors that are related to the location.

Question 5

Which of the following is NOT an economic characteristic of real estate?
A Indestructibility
B Scarcity
C Permanence of improvement
D Location

Answer 5

A Indestructibility

Question 6

Which of the following physical and economic factors would a land developer take into consideration when determining the optimum use of a parcel of land?
A Transportation
B Available natural resources
C Contour and elevation
D All of these

Answer 6

D All of these

Question 7

A theater or hotel would be classified under the real estate category of
A residential.
B commercial.
C agricultural.
D industrial.

Answer 7

B commercial.

Question 8

The demand for real estate is influenced by the
A number of real estate brokers in the area.
B ethnic makeup of neighborhoods.
C wage levels and employment opportunities in the area.
D price of new homes being built in the area versus the price of existing homes.

Answer 8

C wage levels and employment opportunities in the area.

Question 9

The designation REALTOR® refers to
I any licensed real estate broker.
II an active member of the National Association of REALTORS®.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 9

B II only

Question 10

Which of the following statements is/are TRUE of business cycles?
I Business cycles involve periods of expansion, recession, depression, and revival.
II The real estate business cycle is quicker to recover from depressed times than other business sectors.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 10

A I only

Question 11

All of the following factors tend to affect supply EXCEPT
A the labor force.
B construction costs.
C government controls.
D demographics.

Answer 11

D demographics.

Question 12

Real estate can be a poor investment if
A the inflation rate is high.
B the investor plans to hold the investment for a long time.
C the investor needs ready cash.
D land values are appreciating in the area.

Answer 12

C the investor needs ready cash.

Question 13

In general, when the supply of a certain commodity increases, prices
A tend to rise.
B tend to drop.
C tend to stabilize.
D can no longer be established.

Answer 13

B tend to drop.

Question 14

In general terms, a market refers to which of the following?
A Place where goods are standardized for sale
B Amount of goods available at a given price
C Quality of goods available to the public
D Place where the value of goods is established

Answer 14

D Place where the value of goods is established

Question 15

The demand for real estate in a particular community is LEAST affected by
A population.
B wage levels.
C employment.
D international trade.

Answer 15

D international trade.

Question 16

The real estate market is considered local in character for all the following reasons EXCEPT
A land is fixed or immobile.
B consumers generally invest in real estate that is near their home or work.
C local controls can have a significant impact on the market.
D most people eagerly visit and invest in real estate in distant areas.

Answer 16

D most people eagerly visit and invest in real estate in distant areas.

Question 17

Highest and best use of real estate will
A maximize the property’s value.
B stay constant throughout time.
C always be the property’s current use.
D not be affected by local economic trends.

Answer 17

A maximize the property’s value.

Question 18

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 as a result of the announcement.
B Houses will likely become more expensive as a result of the announcement.
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 18

B Houses will likely become more expensive as a result of the announcement.

Question 19

A buyer is interested in a house that fits most of her needs, but it is located in a busy area where she is not sure she wants to live. Her concern about the property’s location is called
A physical deterioration.
B area preference.
C permanence of investment.
D immobility.

Answer 19

B area preference.

Question 20

A professional estimate of a property’s market value, based on established methods and using trained judgment, is performed by a
A real estate appraiser.
B real estate broker.
C real estate counselor.
D home inspector.

Answer 20

A real estate appraiser.