Unit 1: Intro to Real Estate Business

Question 1

Broker

Answer 1

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

Question 2

Salesperson (Sales Assoc. Assoc. Licensee)

Answer 2

employed by or associated with the broker to perform brokerage activities on behalf of or for the broker

Question 3

Real Estate Licensee

Answer 3

A person who has satisfied the requirements of a licensing agency, as authorized by state legislation

Question 4

The basic responsibility of the property manager is to protect the owner’s investment and maximize the return on that investment.

Answer 4

True

Question 5

Most sales are financed by a loan that is secured by a mortgage or deed of trust on the property purchased.

Answer 5

True

Question 6

Subdivision

Answer 6

The dividing of a single property into smaller parcels

Question 7

Development

Answer 7

Preparation of site and construction of structures or other improvements

Question 8

Off-site improvements in development

Answer 8

water lines and storm sewers

Question 9

On-site improvements in development

Answer 9

New homes or recreational amenities

Question 10

Residential

Answer 10

all property used for single-family or multifamily housing, whether in urban, suburban, or rural areas

Question 11

Commercial

Answer 11

business property, including office space, shopping centers, stores, theaters, hotels, and parking facilities

Question 12

Mixed-use

Answer 12

Property that allows for two or more commercial and residential uses in the same building

Question 13

Industrial

Answer 13

Warehouses, factories, land in industrial districts, and power plants

Question 14

Agricultural

Answer 14

Farms, timberland, ranches, and orchards

Question 15

Special Purpose

Answer 15

Privately-owned properties, such as places of worship, schools, and cemeteries, as well as publicly held properties, such as schools, municipal service buildings, and parks

Question 16

Apartment Building was the response….

Answer 16

to housing demand in crowded urban areas

Question 17

Apartment complex

Answer 17

a group of apartment buildings with a varying number of units in each building

Question 18

Condominium

Answer 18

popular form of residential ownership, offering the security of owning property without the care and maintenance responsibilities

Question 19

A condominium owner owns an individual unit and also…

Answer 19

shares ownership with other unit owners of common facilities such as halls, elevators, reception area, laundry room, exercise room, main entrance security system, and surrounding grounds, which may include a swimming pool, clubhouse, tennis court, or other amenities

Question 20

A Cooperative

Answer 20

Units that are not owned but instead, each owner shares in a corporation that holds title to the real estate

Question 21

Planned unit developments (PUDs/Master Planned Communities)

Answer 21

consist entirely of residences, but can also serve to merge such diverse land uses as housing, recreation, and commercial units into one self-contained development.

Question 22

Highrise developments (Mixed-use)

Answer 22

combine office space, stores, theaters, and apartment units into a single vertical community. MUDs are self-contained and may offer restaurants, grocery stores, beauty parlors, barbershops, etc.

Question 23

Converted-use properties

Answer 23

factories, warehouses, office buildings, hotels, schools, churches, and other structures that have been converted to residential use

Question 24

Factory-built housing

Answer 24

permanent installations built to federal specifications, providing principal residences or vacation homes

Question 25

Modular home

Answer 25

components are assembled at a building site on a prepared foundation

Question 26

Fair Housing

Answer 26

The decision to purchase or lease housing, where to do it, should be based on an individual's prefenences and finances. Federal Law PROHIBITS discrimination in the provision of housing and housing-related services (inluding lending) based on an individual's race, color, national origin, religion, sex, familial status, or disability

Question 27

Market

Answer 27

where goods can be bought or sold

Question 28

Supply in real estate

Answer 28

residential and commercial land and structures

Question 29

Demand in real estate

Answer 29

the number of homebuyers and businesses seeking to buy property can vary greatly depending on general economic conditions

Question 30

Greater supply means producers need to attract more buyers, so they can lower prices Greater Demand means producers can raise their prices because buyers compete for the product

Answer 30

True

Question 31

Twho characteristics that govern supply and demand in real estate:

Answer 31

Uniqueness and Immobility

Question 32

Uniqueness

Answer 32

no matter how identical they may appear, no two parcels of real etstae are exactly alike; each occupies its own unique geographic location

Question 33

Immobility

Answer 33

the property cannot be relocated to satisfy demand where supply is low, nor can buyers always relocate to areas with greater supply.

Question 34

Real estate markets are local.

Answer 34

True

Question 35

What are factors that affect RE supply and demand?

Answer 35

Labor force availability, construction and material costs, and governmental controls and financial policies

Question 36

Shortages of skilled labor, building materials, or an increase in cost of materials and transfer costs (taxes and fees) can discourage development construction

Answer 36

True

Question 37

The disocunt rate has a direct impact on the interest rates the banks charge to borrowers, which in turn plays significant part ini people's ability to buy homes

Answer 37

True

Question 38

What two other organizations can affect the amount of money available to lenders for mortgage loans?

Answer 38

The Federal Housing Administration (FHA) and Government National Mortgage Association (Ginnie Mae)

Question 39

While high taxes may deter investors, tax incentives may attract new businesses and industries and bring increased employment and expanded residential real estate markets

Answer 39

True

Question 40

Factors that can affect demand in Real Estate

Answer 40

population, demographics, and employment and wage levels

Question 41

The demand of housing grows with the population

Answer 41

True

Question 42

If growth in locations cease it may be due to

Answer 42

economic changes, social concerns, or population changes

Question 43

Demographics

Answer 43

the study and description of a population

Question 44

Niche Marketing

Answer 44

targeted marketing of specific demographic population

Question 45

How people use their income depends on consumer confidence, which is based not only on perceived job security but also on the avilable of credit and the impact of inflation

Answer 45

True

Question 46

Homeowner's Equity

Answer 46

The difference between the market value of the property and the amount still owed on it

Question 47

Financial considerations for homeowners

Answer 47

1. Property value increases 2. mortgage debt reduced through monthly payments and the ownership interest increases 3. Tax deductions available to homeowners for interest and property tax 4. Profit made on the sale of a principal residence is not taxed

Question 48

For mortgages taken out after Dec. 14th 2018, an individual may deduct interest off of debt up to $750,000

Answer 48

True

Question 49

Between Jan. 1st, 2018, and Dec. 31st, 2025, the interest on a second mortgage is no longer tax deductible

Answer 49

True

Question 50

Exclusions

Answer 50

items that are never subject to tax bc they are outside the intended scope and authority of Missouri's sales and use tax laws

Question 51

A taxpayer who files singly is entitled to a $250,00 exclusion

Answer 51

True

Question 52

The exclusion may be used repeatedly, as long as the homeowner has both owned and occupied the property as the primary residence for at least....

Answer 52

2 of the 5 years.

Question 53

Over time-say 10 - 20+ years or more- a real estate investment typically shows an.....

Answer 53

above-avg Rate of Return

Question 54

Adv of REI

Answer 54

1. Rate of Return 2. Control 3. Appreciation 4. Equity Buildup 5. Leverage 6. Tax Benefits

Question 55

As the owner pays down the amount owed by reg payments, however, and if the payments include payment of part of the principal owed on the loan, that principal increases the owner's equity

Answer 55

Equity Buildup

Question 56

the use of borrowed money to finance an investment

Answer 56

Leverage

Question 57

As a rule, an investor can receive a max return from an initial investment by making a small down payment, paying a low interest rate, and spreading mortgage payments over a long period of time

Answer 57

True

Question 58

When a property value drops, for wahtever reason, the highly leveraged investor may be unable to pay financing

Answer 58

True

Question 59

Federal Tax Benefits

Answer 59

Depreciation: recover the cost of an income-producing asset through tax deductions over the asset's useful life Capital gain: difference between the purchase price of the property and its net selling price

Question 60

What is one way to avoid a federal taxation on a capital gain?

Answer 60

exchange the investment property for one of the same value.

Question 61

Disadvantages of REI

Answer 61

1. Liquidity 2. Active management 3. Risk

Question 62

Liquidity

Answer 62

how quickly an asset may be converted into cash