Principles of Real Estate Exam
Questions with Answers
CH1 - Farming - ✔✔Licensees concentrate on one type or style of property or on one particular
neighborhood.
Farm Area or Target Market - ✔✔Finding and specializing in a particular neighborhood or type
of property.
Property Transfer - ✔✔Includes deeds, mortgages, surveys, appraisals, contracts, title
insurance, floodplains, zoning, buildings codes, finance.
Comparative Market Analysis (CMA) - ✔✔A value estimate based on recent sales of similar
properties in the same neighborhood
Broker Price Opinion (BPO) - ✔✔Determine selling price of property. Licensee takes photos and
completes BPO report form provided by the lender comparing local and regional market
information.
Difference between CMA, BPO AND Appraisals - ✔✔- CMA conducted by real estate agent
while Appraisals conducted by licensed appraiser on behalf of banks
- BPOs are less thorough than appraisals but more analysis than a basic CMA.
Multiple Listing Service (MLS) - ✔✔System that provides an extensive marketing tool for real
estate licensees. Local and state level.
Residential Transaction - ✔✔- The sale of improved residential property of four units or fewer
- The sale of unimproved residential property intended for use of four units or fewer
- The sale of agricultural property of 10 acres or fewer.
,Other types of sales - ✔✔- Commercial Sales/Leasing: Analyzing past and future potential
income derived from investment propert, including apartment buildings, office, shopping
centers. Law knowledge for brokers.
- Industrial: warehouses and manufacturing facilities. User owners rather than investors.
Knowledge in gov. regulartions of land, environment, transportation, etc.
- Agricultural: Large tracts of land and money. Study of profitability.
- Business: Listing and sales of businesses, known as business opportunities. Knowledge in
financial and balance statements.
- Property Management: Owners who buy income property as investments and depend on
professionals to manage them, called absentee owners. Compensation based on a percentage
of the rents collected from tenants. Deal w/locating tenants, rents, payment of taxes, insurance
and maintenance.
- Counseling: Analyzing existing or potential projects and providing expert advice to members of
the public based on their personal judgement.
Going Concern Value - ✔✔Value of a business, includes tangible and intangible income/assets,
goodwill.
Appraising - ✔✔Process of developing an opinion of value of real property, where independent,
impartial and objective analysis is made. Fees based on time and effort.
- Needed to determine whether the value of property being used as collateral for a loan is
adequate.
, - Title XI of FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989)
needed rules under USPAP (Uniform Standards of Professional Appraisal Practice).
Financing - ✔✔Mortgage lenders lend money to fund loans that are secured by interests in real
estate. Mortgage originators need separate license provided by Florida Department of Financial
Services (FDFS).
Flood Hazard Areas - ✔✔areas bordering on rivers and streams which are subject to federal
regulations concerning improvements and construction in those areas; required to have flood
insurance if federally related mortgage.
Three general phases of development and construction - ✔✔- Land Acquisition
- Subdividing and Development
- Recording of the subdivision plat map (once approved by the city or county)
Dedication - ✔✔Once subdivision construction is complete, a transfer of ownership of streets
and sidewalks is typically conveyed by a developer to the city or county.
Types of Building - ✔✔- Custom Building: buyer's specifications
- Speculative Building: for the hope for someone liking it
- Tract Building: Model Center
National Association of REALTORS (NAR) - ✔✔Nation's largest trade and professional
association with the goal of preserving the right of individuals to own real property through an
exchange of information.
Government Regulation - ✔✔- Local Level: planning and zoning (possible locations), property
taxation, building and health code regulations. Impose moratoriums or temp delays due to
environmental concerns.
Questions with Answers
CH1 - Farming - ✔✔Licensees concentrate on one type or style of property or on one particular
neighborhood.
Farm Area or Target Market - ✔✔Finding and specializing in a particular neighborhood or type
of property.
Property Transfer - ✔✔Includes deeds, mortgages, surveys, appraisals, contracts, title
insurance, floodplains, zoning, buildings codes, finance.
Comparative Market Analysis (CMA) - ✔✔A value estimate based on recent sales of similar
properties in the same neighborhood
Broker Price Opinion (BPO) - ✔✔Determine selling price of property. Licensee takes photos and
completes BPO report form provided by the lender comparing local and regional market
information.
Difference between CMA, BPO AND Appraisals - ✔✔- CMA conducted by real estate agent
while Appraisals conducted by licensed appraiser on behalf of banks
- BPOs are less thorough than appraisals but more analysis than a basic CMA.
Multiple Listing Service (MLS) - ✔✔System that provides an extensive marketing tool for real
estate licensees. Local and state level.
Residential Transaction - ✔✔- The sale of improved residential property of four units or fewer
- The sale of unimproved residential property intended for use of four units or fewer
- The sale of agricultural property of 10 acres or fewer.
,Other types of sales - ✔✔- Commercial Sales/Leasing: Analyzing past and future potential
income derived from investment propert, including apartment buildings, office, shopping
centers. Law knowledge for brokers.
- Industrial: warehouses and manufacturing facilities. User owners rather than investors.
Knowledge in gov. regulartions of land, environment, transportation, etc.
- Agricultural: Large tracts of land and money. Study of profitability.
- Business: Listing and sales of businesses, known as business opportunities. Knowledge in
financial and balance statements.
- Property Management: Owners who buy income property as investments and depend on
professionals to manage them, called absentee owners. Compensation based on a percentage
of the rents collected from tenants. Deal w/locating tenants, rents, payment of taxes, insurance
and maintenance.
- Counseling: Analyzing existing or potential projects and providing expert advice to members of
the public based on their personal judgement.
Going Concern Value - ✔✔Value of a business, includes tangible and intangible income/assets,
goodwill.
Appraising - ✔✔Process of developing an opinion of value of real property, where independent,
impartial and objective analysis is made. Fees based on time and effort.
- Needed to determine whether the value of property being used as collateral for a loan is
adequate.
, - Title XI of FIRREA (Financial Institutions Reform, Recovery, and Enforcement Act of 1989)
needed rules under USPAP (Uniform Standards of Professional Appraisal Practice).
Financing - ✔✔Mortgage lenders lend money to fund loans that are secured by interests in real
estate. Mortgage originators need separate license provided by Florida Department of Financial
Services (FDFS).
Flood Hazard Areas - ✔✔areas bordering on rivers and streams which are subject to federal
regulations concerning improvements and construction in those areas; required to have flood
insurance if federally related mortgage.
Three general phases of development and construction - ✔✔- Land Acquisition
- Subdividing and Development
- Recording of the subdivision plat map (once approved by the city or county)
Dedication - ✔✔Once subdivision construction is complete, a transfer of ownership of streets
and sidewalks is typically conveyed by a developer to the city or county.
Types of Building - ✔✔- Custom Building: buyer's specifications
- Speculative Building: for the hope for someone liking it
- Tract Building: Model Center
National Association of REALTORS (NAR) - ✔✔Nation's largest trade and professional
association with the goal of preserving the right of individuals to own real property through an
exchange of information.
Government Regulation - ✔✔- Local Level: planning and zoning (possible locations), property
taxation, building and health code regulations. Impose moratoriums or temp delays due to
environmental concerns.
