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Real Estate - Test 1
Terms in this set (70)
A market where tenants negotiate rent and other terms with property owners or their managers is referred to as a:
The market in which required rates of return on available investment opportunities are determined is referred to as the:
The actions of local, state and federal governments affect real estate values
Through - user markets, capital market and taxation policies
What portion of households owns their house?
Of the following asset categories, which class has the greatest aggregate market value
Nongovernment real estate
Storm water drainage systems are best described as:
Improvements to the land
Which is the single largest asset category in the portfolio of a typical US household?
Real estate markets differ from other asset classes by having all of the following characteristics except:
Which of the following is not important to the location of commercial properties?
Access to schools
Which of the following attributes of a home are the most difficult to observe and value?
Which of the following is not a form of property right?
Which of these easements is most likely to be an easement in gross?
Power line easement
Rules used by courts to determine whether something is a fixture include all except:
Law of Capture
Which of the following is a titled estate?
Fee Simple Absolute
Fee Simple Conditional
Conventional Life Estate
and Legal Life Estate
Which of these forms of co-ownership could best be described as normal ownership except that multiple owners share identically in one bundle of rights?
Tenancy in common
Which of these marriage-related forms of co-ownership gives each spouse a one-half interest in any property that is "fruits of the marriage"?
Which of these liens has the highest priority?
property tax lien
Restrictive covenants for a subdivision usually can be enforced by
Subdivision residents and lenders with mortgage loans in the subdivision
Timeshare programs can involve which of the following claims or interests?
Fee simple, leasehold, license and condo
Every condominium buyer needs to know the details of which document(s):
Condo declarations and by-laws
Which of these is not a requirement of a valid deed?
The interest being conveyed by a deed is specified in the:
The highest quality form of deed is the
General warranty deed
A deed used mainly to clear up possible "clouds" or encumbrances to title (conflicting interests) is the:
If a landowner sells the front part of a parcel of land, retaining the back portion as a "land-locked" parcel, and if there is an existing informal path across the front parcel to the back one, the seller is likely to retain the path as a (an):
Implied easement by prior use
If a neighboring land owner drives across a person's land openly and consistently for a number of years the neighbor may acquire an easement by:
If documents conveying interests in real property are properly recorded in the public records, then they are binding or enforceable on all persons, regardless of whether those persons are aware of the documents, by the:
doctrine of constructive notice
Which of these is a widely used form of evidence of title?
title insurance commitment
The most common form of legal description for urban residential property is the
Plat lot and block
Factors that make it uniquely difficult to establish clear title in real estate as compared to most personal property items include
Length of ownership history in real estate
Zoning is an exercise of which type of general limitation on property rights?
A comprehensive plan usually deals with which of the following elements?
Land uses, population, public service and natural resources
Property taxes are a main source of revenue for
Both local governments and school districts.
The authority for approving site plans for large projects ultimately rests with the:
the elected governing commission or council
The most accurate conclusion about the regessivity of the property tax is that it is:
Regressive but when benefits are considered, the net result may not be regressive
Traditional land use controls (pre-1970s) include
zoning, building codes, subdivision regulations
A new form of land use control that replaces zoning by land uses with separation of building/development types is:
form based zoning
"New urbanism" is a term used to describe:
The theory that residential and commercial uses should be integrated, streets and
parking should discourage through traffic, and neighborhoods should be pedestrian oriented..
Elements of traditional zoning include all except:
Externalities in land use include all except:
Inability to judge the quality of a structure, once built.
The gravity that draws economic activity into clusters is
demand for access or proximity
Spatial or distance relationships that are important to a land use are called its:
Cities have tended to grow where:
Transportation modes intersect or change
The economic base multiplier of a city tends to be greater if the city is:
The best example of a base economic activity would be a
regional sales office
Important supply factors affecting a city's growth or growth potential include all except the:
Which of these is true about agglomeration economies?
Result from demand created by multiple industries, create a readily available supply of highly specialized goods and labor, tend to reduce risk in real estate and occur in larger cities
Which of these influences will decrease the level of a bid-rent curve at the center of the city?
faster travel time
In a system of bid-rent curves, assuming that households are identical except for the feature noted, which of these prospective bidders will bid successfully for the sites nearest to the CBD?
Households with the greatest number of commuting workers
A large university is an example of what kind of economic phenomenon
Industry economies of scale
The final price for each comparable property reached after all adjustments have been made is termed the:
final adjusted sales price
Which of the following is not included in accrued depreciation when applying the cost approach to valuation?
In the sales comparison approach, the value obtained after reconciliation of the final adjusted sales prices from the comparable sales is termed the
indicated opinion of value
A new house in good condition that has a poor floor plan would suffer from which type of accrued depreciation?
incurable functional obsolecence
To reflect a change in market conditions between the date on which a comparable property sold and the date of appraisal of a subject property, which type of adjustment is made?
Under the Cost Approach to appraisal, the estimated expenditure required to construct a building with equal utility as the one being appraised is termed the ________.
You find two properties that have sold twice within the last two years. Property A sold 22 months ago for $98,500; it sold last week for $108,000. Property B sold 20 months ago for $105,000; it sold two weeks ago for $113,500. Assuming no compounding, what is the average monthly rate of change in sale prices?
A comparable property sold 10 months ago for $98,500. If the appropriate adjustment for market conditions is .30% per month (with compounding) what would the adjusted price of the comparable property?
A comparable property sold six months ago for $150,000. The adjustments for the various elements of comparison have been calculated as follows:
Location: -5 percent
Market conditions: +8 percent
Physical characteristics: +$12,500
Financing terms: -$2,600
Conditions of sale: 0
Property rights conveyed: 0
Non-realty items: -$3,000
Making the adjustments in the order suggested in Exhibit 7-6, what is the comparable's final adjusted sale price?
A property comparable to the single-family home you are appraising sold three months ago for $450,700. You have determined that the adjustments required for differences in the comparable and subject property are as follows:
What is the final adjusted sale price of the comparable? Make the adjustments in the order suggested by Exhibit 7-6.
Which of the following expenses is not an operating expense?
An overall capitalization rate (Ro) is divided into which type of income or cash flow to obtain an indicated market value?
Net operating income
Which of the following types of properties probably would not be appropriate for income capitalization?
Estimated capital expenditures
are subtracted from NOI in a below-line treatment
An appraiser estimates that a property will produce NOI of $25,000 in perpetuity, yo is 11 percent, and the constant annual growth rate in NOI is 2.0 percent. What is the estimated property value?
If a comparable property sells for $1,200,000 and the effective gross income of the property is $12,000 per month, the effective gross income multiplier (EGIM) is
Which of the following statements regarding capitalization rates on commercial real estate investments is the most correct?
Cap rates vary positively with the perceived risk of the investment.
The methodology of appraisal differs from that of investment analysis primarily regarding
Point of view
Use the following information to answer questions 9-10.You have just completed the appraisal of an office building and have concluded that the market value of the property is $2,500,000. You expect Potential Gross Income (PGI) in the first year of operations to be $450,000; vacancy and collection losses to be 9 percent of PGI; operating expenses to be 38 percent of Effective Gross Income (EGI), and capital expenditures to be 4 percent of EGI.What is the implied going-in capitalization rate?
What is the effective gross income multiplier? (from above?)
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