Real estate
Master Your Real Estate Knowledge
Test your understanding of essential real estate concepts and practices with our comprehensive quiz designed for aspiring agents, brokers, and real estate enthusiasts. With 61 thought-provoking questions, you'll cover topics ranging from brokerage fun
Key Areas Covered:
- Real Estate Brokerage Principles
- Market Analysis and Site Selection
- Neighborhood Dynamics
- Types of Shopping Centers
The primary function of the real estate brokerage industry is to
Match properties and customers.
guide buyers and sellers through the complexities of real estate transactions.
provide legal representation to clients
A and b only
The illegal practice of encouraging owners to sell their properties for lower prices when minorities begin moving into a neighborhood is known as
blockbusting
Steering
Prospecting
Qualifying
Which of the following statements describe a multiple-listing service (MLS)?
A service where a broker contracts with an individual seller to sell several properties at one time
An arrangement in which the participating brokers make their listings available to other members
The type of listing from which a broker receives the entire commission
A communications network linking brokers by computer in order to facilitate referrals
Which of the following statements is not true about brokers?
Brokers take ownership of the item being transferred (at least for a brief moment in time).
Brokers serve as an intermediary in a transaction
Brokers often receive compensation in the form of a commission.
Brokers may represent prospective buyers or sellers of real estate.
The listing is the written agreement between
A property owner and a real estate broker.
A property owner and a real estate sales associate.
A property owner and a real estate employee.
A buyer and a real estate broker.
Which of the following statements about an open listing is NOT correct?
The owner reserves the right to authorize other brokers to locate potential buyers.
The seller may sell the property without the aid of any broker.
The listing broker is always entitled to the stated commission.
The seller must pay a commission if any broker sells the property.
In an agency relationship between a seller and a broker, the broker is a(n)________ of the seller and must protect the seller's best interests at all times.
Subagent
Principal
Agency
Fiduciary
The listing agreement will NOT usually contain the
asking price.
Selling price.
location of the property.
Authority granted to the broker
A sales contract specifies a 6 percent commission. 40 percent of this commission goes to the listing agent, 20 percent goes to the selling agent and 40 percent goes to the brokerage firm. How much commission will the seller pay when his or her property sells for $65,000?
$3,120
$1,560
$3,900
$2,340
What is the name of the illegal practice of showing minority buyers only those properties located in areas currently dominated by minorities?
Prospecting
Blockbusting
Steering
Qualifying
Which type of shopping center caters to unusual market segments and offers high quality, high priced merchandise in boutique-type stores?
Specialty
Super store
Neighborhood
Community
The most important consideration in the selection of shopping-center sites is
Size and shape
Utilities
Location and access.
Topography and drainage.
Which of the following is not true with regard to market analysis of a proposed shopping center?
Consumers travel much further for certain types of purchases
60-70% of sales are generated in the secondary trade area
The site must be selected before the primary and secondary trade areas can be identified
Given an adequate market, the location of the proposed site is generally regarded as the most important determinant of success of a proposed shopping center
When a developer is contemplating the construction of a shopping center, a market and feasibility study should ideally be performed
Before applying for a mortgage loan.
After applying for a mortgage loan.
before a potential anchor tenant considers signing a lease
At the same time as applying for a mortgage loan
The typical size for a community shopping center is
About 50,000 square feet of gross leasable area.
Between 100,000 and 300,000 square feet of gross leasable area.
About 750,000 square feet of gross leasable area.
More than 1,000,000 square feet of gross leasable area.
A typical size (Gross Leasable Area) for a regional shopping center is
About 50,000 sq. ft.
More than 1,000,000 sq. ft.
Between 300,000 and 750,000 sq. ft.
About 100,000 sq. ft.
What type of tenants are expected to attract shoppers to the shopping center and benefit other tenants?
Secondary.
Anchor
Boutique
Specialty
What percentage of sales at a typical shopping center is expected from the primary trade area?
30 to 40 percent
50 to 60 percent
40 to 50 percent
60 to 70 percent
Which type of shopping center provides a wide range of merchandise and is usually built around a junior department store or a discount store?
Neighborhood
Community
Convenience
Regional
Which type of shopping center is generally an open or enclosed pedestrian mall with between 300,000 and 750,000 square feet of gross leasable area?
Superregional
Discount
Regional
Community
As a neighborhood declines
Public services increase, as do rents and prices.
Prices and rents increase, but public services decrease.
Population density increases, but public services remain stable.
Public services increase, as the population density decreases.
Which of the following terms refers to public investment in roads, water lines, sewer systems and other public facilities?
Infrastructure
Public provision
Gentrifications
Public policy
As the elderly become an increasingly larger component of the total population in some areas, the demand for all the following will likely increase EXCEPT for
Retirement village housing.
Vacation houses
Condominium housing.
Larger-sized single family detached housing.
Neighborhoods in the gestation stage, the youth stage or the maturity stage in the life cycle of neighborhoods are characterized by
All of the above
High unemployment and high crime rates.
A general rise in residents' income levels and property values.
A large proportion of abandoned or deteriorated structures.
The development of land between existing structures is called
Outward expansion.
Vertical growth
The use of air rights.
In-filling.
It has been emphasized that the process of neighborhood deterioration and decline is not inevitable. The first attempt to renovate deteriorated dwellings is usually made by
older, middle-income individuals
Retired individuals.
Young, middle-income individuals.
High income professionals.
Which of the following is not a part of a city's infrastructure?
Sewerage
Cable television
Public utilities
Donut shops
Although there are exceptions, the primary reason most people live in the communities they do is because of
Political stability.
Employment opportunities.
Cultural activities.
Climate.
Which of the following is typically not a characteristic of a "poor" or declining real estate market?
Decreasing vacancy rates
Falling sales prices
Less new development
Falling rent levels
Which of the following events would most likely cause the largest increase in demand for smaller-sized houses?
Steadily increasing national population
Decrease in family size
Increase in the average household size
Increase in two-earner households
The lender evaluates an applicant's creditworthiness by examining sources of income and credit history.
True
False
FHA insurance protects borrowers from the risk of loss in the event of default on an FHA-insured loan.
True
False
Regulation Z was adopted under the Truth and Lending Act.
True
False
Even if a property is located in a flood zone, borrowers may elect not to purchase flood insurance from FEMA if their lender agrees with their decision.
True
False
Under FHA guidelines, a loan application must meet both the total debt ratio and mortgage debt ratio simultaneously to be qualified for a FHA-insured loan.
True
False
A conventional loan is one insured by a federal agency such as the FHA or the VA.
True
False
The federal government pays a fee, which is usually 0.5 percent of the unpaid loan balance, to lenders for the insurance on FHA mortgages.
True
False
A land contract is used more often to finance vacant lots than improved property.
True
False
If the proceeds from the foreclosure process are insufficient to satisfy the debt, some states allow the mortgagee an equity of redemption against the mortgagor for the balance due.
True
False
The Consumer Credit Protection Act states that lenders have until the day of closing to disclose the details of a loan.
True
False
Which of the following investment analysis measures gives the investor the best measure for overall financial decision making?
Cash on cash return
Income capitalization rate
Net present value
Payback period
According to the net present value decision rule, an investor who is considering a project which has a net present value of $1 would
Reject the investment.
Lose more money on the investment.
Accept the investment.
Be indifferent between accepting or rejecting the investment.
The internal rate of return is that discount rate at which
The future worth of present cash flow is exactly equal to the initial cash investment.
The present value of future cash flows is larger than the initial cash investment.
The future worth of cash flow is larger than the initial cash investment.
The present value of future cash flow is exactly equal to the initial cash investment.
If faced with a choice between two real estate investment opportunities that both offer positive, but not equal, NPV, which one do you take?
The opportunity with the highest NPV
The opportunity with the lowest NPV
Both opportunities are equally desirable.
Such a choice could never occur in competitive real estate markets so the question is moot.
In a cash-flow projection, the net operating income is determined by starting with the gross potential income, calculating the gross effective income, and then
Deducting vacancies and bad debts
Deducting depreciation.
Deducting operating expenses.
Adding depreciation.
Which of the following terms refers to the process of spreading risk exposure across different investment opportunities?
Diversification
Leverage
Depreciation
Appreciation
Which of the following terms refers to the cash flow a real estate investor can put in his or her pocket at the end of the year?
NOI
ATER
BTER
Leverage
Which of the following is not normally included as one of the advantages of real estate as an investment?
Liquidity
Cash flow from operations
Possible appreciation in value
Diversification opportunities
Which of the following terms refers to principal and interest payments for any outstanding mortgage debt?
Debt service
BTER
ATER
NOI
The deduction of tax depreciation from taxable income tends to _____ the capital gains upon sale of the property.
Reduce
Increase
Have no effect upon
Defer
_______ insurance protects the tenant against the loss of personal property.
Renter's
Liability
Lender's
None of these
If the home covered under the insurance policy is damaged and cannot be occupied for two months while repairs are being made, the insurer will pay the necessary increased living expenses under provisions for
Direct losses.
Fire losses.
Indirect losses.
Property damages.
Property insurance protects the policyholder against
All direct and indirect losses.
All direct losses.
Losses from insured risks only.
Living expenses or loss of business income.
The homeowner's policy is designed to provide coverage for losses from fire and other risks, including all the following except
Personal liability.
Theft.
Medical payments.
A third party's vehicle.
An example of a direct loss is
Additional living expenses due to loss
Loss of business income before restoration
Loss of use of the property.
Costs of replacing or repairing damaged property.
Because most homeowner's policies have relatively low limits for items such as rare coins and jewelry, people with significant investments in these items should consider obtaining
Personal liability insurance riders.
Professional liability insurance riders.
Personal articles floater policies.
Umbrella liability policies.
In property insurance terminology, indirect losses are the costs of
Replacing property destroyed.
Repairing property destroyed.
Additional living expenses following a direct loss.
Personal liability coverages.
Homeowner's policies provide coverage of losses from
Fire or other perils
Loss of use.
Personal property.
All of these
Property insurance protects the property holder against
Direct losses and indirect losses.
Nondirect losses and indirect losses.
Direct losses and nondirect losses.
Direct loss.
Which of the following is not a category of property risk?
Loss of property due to fire, wind, water or other hazards
Liability losses resulting from negligent use of property
Loss of value through economic obsolescence
Financial loss resulting from death or disability of the wage earner
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