COLIBRI REAL ESTATE UPDATED EXAM SCRIPT QUESTIONS
AND ANSWERS GUARANTEE A+
✔✔A characteristic of real property; each piece of land, each building, and each house
is a unique piece of real estate. Also called Uniqueness or Heterogeneity. - ✔✔Non-
Homogeneity
✔✔General swings in real estate activity, resulting in increasing or decreasing activity
and property values, during different phases of the cycle. - ✔✔Real Estate Cycles
✔✔A physical characteristic of real property that says there is a limited supply of real
estate; the perceived supply of a good or service relative to the demand for the item. -
✔✔Scarcity
✔✔A situation in the housing market when a large number of buyers are looking for
houses in an area of limited availability. - ✔✔Seller's Market
✔✔An economic principle that says that for all products, goods, and services when
supply exceeds demand, prices will fall and when demand exceeds supply, prices will
rise. - ✔✔Supply and Demand
✔✔These associates take and approve loan applications, appraise properties, assess
risk. They can find jobs with savings and loan associations, mutual savings banks,
commercial banks, mortgage companies, endowments, and government agencies. -
✔✔Real Estate Finance
✔✔People in this field use rigorous appraisal methods to evaluate property for financial
institutions, developers, property managers, or government agencies. - ✔✔Real Estate
Appraisal
✔✔These professionals purchase large tracts of land at a low cost per acre, then
subdivide and improve it with streets, sewers, and utilities so it can be resold at a higher
cost per front foot (for lots) or per square foot (for buildings). - ✔✔Real Estate
Development
✔✔People in this area of real estate build homes on contract or speculation. They might
choose to sell, appraise, manage, or help buyers finance the property. - ✔✔Real Estate
Property Construction
✔✔This is a growing field. More and more brokers, banks, and lawyers are getting into
this service area as profit margins are shrinking elsewhere. Jobs can include title
researcher, escrow agent, and title insurance overseer. - ✔✔Real Estate Title Work
,✔✔There are numerous national, state, and local trade associations that work to
educate, lobby, support members, and manage public relations. - ✔✔Real Estate Trade
Association Work
✔✔Continuing education is part of maintaining a real estate license. Educators have
ample opportunities to teach these courses. - ✔✔Real Estate Education.
✔✔This work can be for the FHA, VA, Fannie Mae, Ginnie Mae, Freddie Mac, and HUD
and for state and county work, such as urban planning. - ✔✔Real Estate Government
Work
✔✔include single-family residential properties, multi-family properties (from a double to
a large apartment building), condominiums, or cooperatives. Specialized residential
properties can include converted-use property, manufactured housing, and timeshares.
- ✔✔Residential properties
✔✔include offices, stores, hotels, and other buildings. Those dealing in commercial
properties are usually involved not only in sales and other aspects of brokerage, but
also in leasing and leasebacks, property management, and even construction or
financing. - ✔✔Commercial properties
✔✔include land and structures involved in the production, distribution, and storage of
tangible economic goods. - ✔✔Industrial properties
✔✔include selling farms or selling large areas to subdivide and develop. - ✔✔Farm and
vacant land
✔✔This varies by agency and can include filling out forms and contracts, closing a sale,
selling your services, and attracting new listings. - ✔✔Training
✔✔These are the tools (websites, email, online forms), advertising, and staff support
that help you do your job. Many brokerages supply these things as part of your
agreement with them; some charge a nominal fee; others require you to provide them
yourself. - ✔✔Brokerage Services
✔✔Payment comes from the broker, not from the buyer or seller. You may split the
compensation (50%-50% or some other percentage) or get 100%. The amount you pay
for brokerage services is often impacted by how much commission you receive. (More
commission, the more you will have to pay for services.) - ✔✔Compensation
✔✔You can be an independent contractor (which the IRS calls a statutory
nonemployee) or an employee. Independent contractors have to do more administrative
tasks, such as pay quarterly taxes. - ✔✔Relationship
,✔✔For contractors, the specifics of the broker-agent relationship should be spelled out
in an _____________ that is signed by both parties. - ✔✔Independent Contractor
Agreement (ICA)
✔✔Most ICAs will address - ✔✔expenses, commission, and brokerage representation.
✔✔Factors that affect the real estate market - ✔✔PEGS
Physical
Economic
Governmental
Social
✔✔influence real estate markets include location, immobility (land cannot be moved),
uniqueness (land cannot be duplicated, and no two parcels are the same) and scarcity
(land cannot be created). - ✔✔Physical Factors
✔✔influence real estate markets include business cycles, housing cycles, supply and
demand, inflation, cost of money (interest rates), and the economic base of an area -
✔✔Economic Factors
✔✔general swings of increasing or decreasing activity and property values; they
depend on business cycles. - ✔✔Housing Cycles
✔✔impacts buyer's markets and seller's markets. - ✔✔Supply and Demand
✔✔Supply and demand impacts - ✔✔Buyer's markets and seller's markets
✔✔increase in cost of goods or services. - ✔✔Inflation
✔✔the interest rate one must pay to use another's money - ✔✔Cost of money
✔✔the main business or industry by which a community supports and is critical to
maintaining home values and is a primary factor in determining the supply of real estate.
- ✔✔Economic Base
✔✔influence real estate markets on state and local levels include revenue generating
laws (taxation and specific tax policies) - ✔✔Governmental Factors
✔✔influence real estate include demographics, population growth, population age, the
family size, and population migration. - ✔✔Social Factors
, ✔✔What can be considered is the most important factor in determining supply in the
real estate market? - ✔✔Economic Base of an Area
✔✔What would more MOST LIKELY to contribute to a seller's market? - ✔✔High
Construction Costs
✔✔BigTime Manufacturers are getting ready to build a new factory in Smithton that
should attract hundreds of new workers to the small town. What would you expect the
immediate effect on home prices in the area to be? - ✔✔Home prices should rise
initially.
✔✔What acronym can you use to remember the broad forces that can impact the real
estate market? - ✔✔PEGS
✔✔Which situation would NOT likely result in a seller's market? - ✔✔migration out of an
area
✔✔Who sets the interest rates that banks charge for mortgages? - ✔✔individual banks
and other lenders
✔✔Brian attends his real estate company's party and, after having a few too many
cocktails, drives home. He is pulled over and arrested for driving under the influence.
Two months later Brian is convicted and serves a year of probation and pays a fine.
Brian does not notify the regulatory agency of this conviction. Which best describes this
situation? - ✔✔Brian may be punished for not disclosing the conviction
Failing to notify a regulatory agency of the conviction is a violation.
✔✔A rental property has a return rate of 8%. The monthly net rental is $600. What is
the market value of the property? - ✔✔$90,000
Rate of return is computed by dividing the annual net income by the rate of return. In
this case, multiply the monthly $600 income by 12 to get the annual income. The gross
annual income, $7,200, divided by 8%, is $90,000.
✔✔In most states, the listing broker has a fiduciary duty to the - ✔✔client
A broker has a fiduciary duty to the client, while the broker's salespeople have a duty to
the broker.
✔✔While determining the net operating income of an investment property, an appraiser
will not take into account - ✔✔interest expense
AND ANSWERS GUARANTEE A+
✔✔A characteristic of real property; each piece of land, each building, and each house
is a unique piece of real estate. Also called Uniqueness or Heterogeneity. - ✔✔Non-
Homogeneity
✔✔General swings in real estate activity, resulting in increasing or decreasing activity
and property values, during different phases of the cycle. - ✔✔Real Estate Cycles
✔✔A physical characteristic of real property that says there is a limited supply of real
estate; the perceived supply of a good or service relative to the demand for the item. -
✔✔Scarcity
✔✔A situation in the housing market when a large number of buyers are looking for
houses in an area of limited availability. - ✔✔Seller's Market
✔✔An economic principle that says that for all products, goods, and services when
supply exceeds demand, prices will fall and when demand exceeds supply, prices will
rise. - ✔✔Supply and Demand
✔✔These associates take and approve loan applications, appraise properties, assess
risk. They can find jobs with savings and loan associations, mutual savings banks,
commercial banks, mortgage companies, endowments, and government agencies. -
✔✔Real Estate Finance
✔✔People in this field use rigorous appraisal methods to evaluate property for financial
institutions, developers, property managers, or government agencies. - ✔✔Real Estate
Appraisal
✔✔These professionals purchase large tracts of land at a low cost per acre, then
subdivide and improve it with streets, sewers, and utilities so it can be resold at a higher
cost per front foot (for lots) or per square foot (for buildings). - ✔✔Real Estate
Development
✔✔People in this area of real estate build homes on contract or speculation. They might
choose to sell, appraise, manage, or help buyers finance the property. - ✔✔Real Estate
Property Construction
✔✔This is a growing field. More and more brokers, banks, and lawyers are getting into
this service area as profit margins are shrinking elsewhere. Jobs can include title
researcher, escrow agent, and title insurance overseer. - ✔✔Real Estate Title Work
,✔✔There are numerous national, state, and local trade associations that work to
educate, lobby, support members, and manage public relations. - ✔✔Real Estate Trade
Association Work
✔✔Continuing education is part of maintaining a real estate license. Educators have
ample opportunities to teach these courses. - ✔✔Real Estate Education.
✔✔This work can be for the FHA, VA, Fannie Mae, Ginnie Mae, Freddie Mac, and HUD
and for state and county work, such as urban planning. - ✔✔Real Estate Government
Work
✔✔include single-family residential properties, multi-family properties (from a double to
a large apartment building), condominiums, or cooperatives. Specialized residential
properties can include converted-use property, manufactured housing, and timeshares.
- ✔✔Residential properties
✔✔include offices, stores, hotels, and other buildings. Those dealing in commercial
properties are usually involved not only in sales and other aspects of brokerage, but
also in leasing and leasebacks, property management, and even construction or
financing. - ✔✔Commercial properties
✔✔include land and structures involved in the production, distribution, and storage of
tangible economic goods. - ✔✔Industrial properties
✔✔include selling farms or selling large areas to subdivide and develop. - ✔✔Farm and
vacant land
✔✔This varies by agency and can include filling out forms and contracts, closing a sale,
selling your services, and attracting new listings. - ✔✔Training
✔✔These are the tools (websites, email, online forms), advertising, and staff support
that help you do your job. Many brokerages supply these things as part of your
agreement with them; some charge a nominal fee; others require you to provide them
yourself. - ✔✔Brokerage Services
✔✔Payment comes from the broker, not from the buyer or seller. You may split the
compensation (50%-50% or some other percentage) or get 100%. The amount you pay
for brokerage services is often impacted by how much commission you receive. (More
commission, the more you will have to pay for services.) - ✔✔Compensation
✔✔You can be an independent contractor (which the IRS calls a statutory
nonemployee) or an employee. Independent contractors have to do more administrative
tasks, such as pay quarterly taxes. - ✔✔Relationship
,✔✔For contractors, the specifics of the broker-agent relationship should be spelled out
in an _____________ that is signed by both parties. - ✔✔Independent Contractor
Agreement (ICA)
✔✔Most ICAs will address - ✔✔expenses, commission, and brokerage representation.
✔✔Factors that affect the real estate market - ✔✔PEGS
Physical
Economic
Governmental
Social
✔✔influence real estate markets include location, immobility (land cannot be moved),
uniqueness (land cannot be duplicated, and no two parcels are the same) and scarcity
(land cannot be created). - ✔✔Physical Factors
✔✔influence real estate markets include business cycles, housing cycles, supply and
demand, inflation, cost of money (interest rates), and the economic base of an area -
✔✔Economic Factors
✔✔general swings of increasing or decreasing activity and property values; they
depend on business cycles. - ✔✔Housing Cycles
✔✔impacts buyer's markets and seller's markets. - ✔✔Supply and Demand
✔✔Supply and demand impacts - ✔✔Buyer's markets and seller's markets
✔✔increase in cost of goods or services. - ✔✔Inflation
✔✔the interest rate one must pay to use another's money - ✔✔Cost of money
✔✔the main business or industry by which a community supports and is critical to
maintaining home values and is a primary factor in determining the supply of real estate.
- ✔✔Economic Base
✔✔influence real estate markets on state and local levels include revenue generating
laws (taxation and specific tax policies) - ✔✔Governmental Factors
✔✔influence real estate include demographics, population growth, population age, the
family size, and population migration. - ✔✔Social Factors
, ✔✔What can be considered is the most important factor in determining supply in the
real estate market? - ✔✔Economic Base of an Area
✔✔What would more MOST LIKELY to contribute to a seller's market? - ✔✔High
Construction Costs
✔✔BigTime Manufacturers are getting ready to build a new factory in Smithton that
should attract hundreds of new workers to the small town. What would you expect the
immediate effect on home prices in the area to be? - ✔✔Home prices should rise
initially.
✔✔What acronym can you use to remember the broad forces that can impact the real
estate market? - ✔✔PEGS
✔✔Which situation would NOT likely result in a seller's market? - ✔✔migration out of an
area
✔✔Who sets the interest rates that banks charge for mortgages? - ✔✔individual banks
and other lenders
✔✔Brian attends his real estate company's party and, after having a few too many
cocktails, drives home. He is pulled over and arrested for driving under the influence.
Two months later Brian is convicted and serves a year of probation and pays a fine.
Brian does not notify the regulatory agency of this conviction. Which best describes this
situation? - ✔✔Brian may be punished for not disclosing the conviction
Failing to notify a regulatory agency of the conviction is a violation.
✔✔A rental property has a return rate of 8%. The monthly net rental is $600. What is
the market value of the property? - ✔✔$90,000
Rate of return is computed by dividing the annual net income by the rate of return. In
this case, multiply the monthly $600 income by 12 to get the annual income. The gross
annual income, $7,200, divided by 8%, is $90,000.
✔✔In most states, the listing broker has a fiduciary duty to the - ✔✔client
A broker has a fiduciary duty to the client, while the broker's salespeople have a duty to
the broker.
✔✔While determining the net operating income of an investment property, an appraiser
will not take into account - ✔✔interest expense
