Virginia Real Estate Practice Exam #1 Questions With Verified Answers

The ability to buy and sell is also known as what essential element of value? A. Demand B. Utility C. Scarcity D. Transferability - Answer D (Remember DUST and your essential elements of Value. Demand: This means the desire to buy and an ability to pay. Utility. The item satisfies a human need or desire, such as shelter, income, or recreation. Scarcity: Limited in supply, as supply diminishes, value increases. Transferability: Able to transfer from one owner to another.) The person who hires or appoints an agent is called the: A. deputy B. principal C. fiduciary D. customer - Answer B (The person who hires or appoints an agent is called the principal. In plain terms, the principals in a real estate sales transaction would be the buyer and the seller.) CRV stands for the Certificate for Reasonable Value and is issued by who? A. Fannie Mae B. Federal Mortgage Association C. Federal Housing Administration D. The Department of Veterans Affairs - Answer D (Once the appraisal has been performed on a property being bought with a VA loan, the Department of Veterans Affairs (VA) issues a Certificate of Reasonable Value. A Certificate of Real Estate Value documents the price at which a property was sold as well as any unique terms that were added to the transaction prior to its completion.) An example of economic obsolescence in real estate is A. old kitchen cabinets B. a pool built at your mothers house C. a noisy highway built right next to your home D. Sellers not being able to afford property due to economic factors - Answer C (Economic obsolescence refers to the loss of property value to external factors, meaning things off the property affecting the property's value. A new noisy highway would be considered economic obsolescence because it is an external factor. Usually, in these circumstances homeowners cant do anything to prevent it.) Economic life is the length of time during which a piece of property may be put to profitable use. Economic life is usually: A. neither shorter or longer than physical life B. shorter than physical life the same as physical life longer than physical life - Answer B (When an asset is no longer useful to its owner, than it is said to be past its economic life. The economic life of an asset could be different than its actual physical life. Economic life usually is shorter than physical life, as a structure generally will still physically exist but not be viable in the marketplace.) Which of the following is a physical characteristic of real estate? A. Scarcity B. Improvements C. Indestructibility D. Permanence of Investment - Answer C (Real Estate has three physical characteristics that differentiate it from other assets in the economy: 1, Indestructibility meaning land cannot be destroyed or worn out. Its appearance may be altered but it always continues to exist. 2 Immobility means the geographical location of the property remains the same and can never be changed, it is fixed. 3 Uniqueness or non-homogeneity meaning no parcels of real estate are exactly alike.)