Commercial Real Estate Exam 1
UPDATED Study QUESTIONS AND
CORRECT ANSWERS
Why is Real Estate important - CORRECT ANSWER it is the single largest component
of wealth
Space Markets (use & rents) - CORRECT ANSWER the right to use real property.
landlords & tenants exchange money. determines the price and that varies due to segmented
market and immobility.
Property & Capital Market (ownership, risk returns, and value) - CORRECT
ANSWER the ownership of real property. determine the value which should be the
same everywhere. this is because capital is mobile and fungible.
3 uses of the term real estate - CORRECT ANSWER 1. real property
2. bundle of rights
3. industry and profession
Cap rates - CORRECT ANSWER higher = cheaper
lower = expensive
driven by risk and growth expectations
Rights - CORRECT ANSWER claims the gov't is obligated to enforce, non-revocable,
enduring
Property Rights - CORRECT ANSWER exclusive possession,
enjoyment of use (use, collect rent, harvest)
Freedom to dispose and alter (sell, convert, rebuild)
includes rights to ground and air
, Real Prperty - CORRECT ANSWER land and its permanent structures
Fixtures - CORRECT ANSWER personal property that has been converted into real
property. manner of attachment or damage done if removed
ex: custom cabinets
Estates - CORRECT ANSWER real property interest with exclusive possession
ex: leasehold & freehold
Estates-Leasehold - CORRECT ANSWER tenancy for years ( specific time period w/
written lease)
Periodic tenancy (no definite time period, oral agreement usually)
Estates-Freehold - CORRECT ANSWER free simple absolute has all rights- most
complete bundle
free simple conditional has all rights, but revocable on specific conditions
Non-possessory interests - CORRECT ANSWER easements, restrictive covenants, &
liens
Non-possessory interests: Easements - CORRECT ANSWER right to use land for a
specific and limited purpose
more permanent
dominant parcel is who the easement is benefiting
servient parcel is who has the easement running through their property
gross is the right to use the land for a specific, limited purpose unrelated to any adjacent
parcel
commercial- gas lines, railroads
non-commercial- access to recreation purposes (boating)
UPDATED Study QUESTIONS AND
CORRECT ANSWERS
Why is Real Estate important - CORRECT ANSWER it is the single largest component
of wealth
Space Markets (use & rents) - CORRECT ANSWER the right to use real property.
landlords & tenants exchange money. determines the price and that varies due to segmented
market and immobility.
Property & Capital Market (ownership, risk returns, and value) - CORRECT
ANSWER the ownership of real property. determine the value which should be the
same everywhere. this is because capital is mobile and fungible.
3 uses of the term real estate - CORRECT ANSWER 1. real property
2. bundle of rights
3. industry and profession
Cap rates - CORRECT ANSWER higher = cheaper
lower = expensive
driven by risk and growth expectations
Rights - CORRECT ANSWER claims the gov't is obligated to enforce, non-revocable,
enduring
Property Rights - CORRECT ANSWER exclusive possession,
enjoyment of use (use, collect rent, harvest)
Freedom to dispose and alter (sell, convert, rebuild)
includes rights to ground and air
, Real Prperty - CORRECT ANSWER land and its permanent structures
Fixtures - CORRECT ANSWER personal property that has been converted into real
property. manner of attachment or damage done if removed
ex: custom cabinets
Estates - CORRECT ANSWER real property interest with exclusive possession
ex: leasehold & freehold
Estates-Leasehold - CORRECT ANSWER tenancy for years ( specific time period w/
written lease)
Periodic tenancy (no definite time period, oral agreement usually)
Estates-Freehold - CORRECT ANSWER free simple absolute has all rights- most
complete bundle
free simple conditional has all rights, but revocable on specific conditions
Non-possessory interests - CORRECT ANSWER easements, restrictive covenants, &
liens
Non-possessory interests: Easements - CORRECT ANSWER right to use land for a
specific and limited purpose
more permanent
dominant parcel is who the easement is benefiting
servient parcel is who has the easement running through their property
gross is the right to use the land for a specific, limited purpose unrelated to any adjacent
parcel
commercial- gas lines, railroads
non-commercial- access to recreation purposes (boating)
