How will rising inflation affect the real estate market?
Lowers demand
Lowers supply
Raises demand
Raises supply
Tom owns a construction company in a small southern town. Although national housing statistics have changed dramatically, his business hasn’t increased or decreased at all. Which characteristic of the real estate market is described here?
Highly influenced by governmental policy
Indestructible
Slow to respond
Unique
Sally and Jake haven’t found any homes they can afford in their desired neighborhood. In fact, there are hardly any available at all. Houses that go on the market usually end up in bidding wars and sell for about twice the price of similar homes in neighborhoods 15 minutes away. What is the state of the market in Sally and Jake’s desired neighborhood?
Demand and supply are about the same.
Demand exceeds supply.
Price has exceeded demand.
Supply exceeds demand.
Which organization controls the amount of money available to loan for real estate transactions?
The Department of the Interior
The Federal Reserve System
The International Monetary Fund
The World Bank
Which of the following is NOT recommended during a downcycle?
Increase your advertising.
Spend your commission checks.
Use money that you’ve set aside.
Work on other projects.
Changes in the national market may have little (or significantly delayed) impact on local markets. This is because the real estate market is ______.
Immobile
Indestructible
Slow to respond
Unique
When there are more buyers in area than there are homes available to purchase, what does it mean?
Demand and supply are about the same.
Demand exceeds supply.
Price has exceeded demand.
Supply exceeds demand.
A situation in which there are not enough buyers to meet the supply is a ______ market.
Buyer’s
Seller’s
Thin
Wide
Who or what is a licensee’s sphere of influence?
A list of contacts, both personal and professional, who already know and trust the licensee
Co-workers who work for the same brokerage as the licensee
Family and friends to whom a licensee listens regarding business matters
The code of ethics published by the National Association of REALTORS®
Which of the following is not one of the guidelines for marketing to your sphere?
Be consistent.
Be patient.
Don’t advertise anywhere else.
Stay in touch.
Applying a capitalization rate to the net operating income is one way to determine a property’s ______ value.
Assessed
Depreciated
Investment
Market
What is the value a buyer and a seller agree upon?
Assessed value
Investment value
List price
Market value
Ken understands the importance of interpreting market conditions. He has found that keeping track of how many new homes are being built in his area is a valuable indicator of demand. Which market indicator provides this information?
Inventory rates
New building permits
Price levels
Sales volume
Which type of valuation is used by government tax assessment offices?
Assessed value
Investment value
List price
Market value
Which type of value is found on the MLS?
Assessed value
Investment value
List price
Market value
In a seller’s market, what causes prices to go up?
Demand exceeds supply.
Supply and demand are equal.
Supply exceeds demand.
Supply quality improves.
A situation in which there are not enough sellers to meet the demand represents a _____ market.
buyer’s
seller’s
thin
wide
The list price is the price for which the _____ has agreed to sell a property.
Broker
Buyer
Owner
Property manager
Acme Corp has decided to move its corporate headquarters to Anytown. What is the likely effect on the Anytown real estate market
Demand will be higher
Demand will be lower
Supply will be higher
Supply will be lower
As demand decreases, what happens to the price?
It decreases.
It exceeds demand.
It increases.
It stays the same.
The number of houses sold over a period of time is reflected in what?
Inventory rates
New building permits
Price levels
Sales volume
When both supply and demand increase, what does price do?
Decreases
Exceeds demand
Increases
Stays the same
Which market indicator can tell you the number of houses sold over a period of time?
Inventory rates
New building permits
Price levels
Sales volume
You can’t move land, and location plays a huge role in the value of real estate. To which characteristic does this refer?
Immobility
Indestructibility
Slowness of response
Uniqueness
Brandon wants to find out how many rental units are unoccupied in his area. Which market indicator provides this information?
Inventory rates
Price levels
Sales volume
Vacancy rates
What market indicator is expressed as the number of months it takes to sell homes at the current rate of sales?
Inventory rates
Price levels
Sales volume
Vacancy rates
When does a buyer’s market occur?
When both supply and demand are high
When both supply and demand are low
When supply is high and demand is low
When supply is low and demand is high
Sally and Jake are ready to give up apartment living and buy a home. Which of the following is a true statement about their situation?
If demand is up, the price of the house will be lower.
If there are fewer homes for sale in a particular area, prices will be lower.
If there are more homes for sale in their area, prices will be higher.
The price of homes in their area will depend on the market.
In the real estate market, when demand exceeds supply, what does it mean?
There are an equal amount of homes for sale, and buyers to purchase them.
There are more buyers than available homes, and prices will be higher.
There are more homes than buyers, and prices will be higher.
There are more homes than buyers, and prices will be lower.
During what time of year are people least likely to want to move?
In the early spring
Mid-summer
Over the winter holidays
When school starts
______ describes a unique characteristic of real property (differentiating it from other asset classes). Because of it, location plays a key role in value.
Immobility
Indestructibility
Slowness of response to market conditions
Uniqueness
The two best places for licensees to spend their marketing dollars are in their sphere of influence and in ______.
Downcycle survival kits
High-end advertising
Leads services
Their farm area
On the surface, to homes might appear to be identical, but each is different in its own way. Which characteristic of the real estate market does this refer to?
Immobility
Indestructibility
Slow to respond
Uniqueness
In most markets, in which month would a real estate downcycle typically start?
December
February
January
November
Janice bought a home in the suburbs. Although the cost of living in the U.S. has risen sharply, her home value has appreciated only modestly. This is because the real estate market is ______.
A contrarian investment
Highly influenced by government policy
Indestructible
Slow to respond to market conditions
Charlie is monitoring market indicators in a particular area for her client, who wants to buy an oceanfront home. Which market indicator will tell her how much prices have fluctuated in the area over the past two years?
Inventory rates
New building permits
Price levels
Sales volume
As supply decreases, what happens to price?
Decreases
Exceeds demand
Increases
Stays the same
Darrell lives in a very rural area where price levels have remained low for several years. What does this indicate about demand for housing in the area?
Demand is high.
Demand is low.
Supply is low.
The market is booming.
In a buyer’s market, what causes prices to go down?
Demand exceeds supply.
Supply and demand are equal.
Supply exceeds demand.
Supply quality improves.
The city of River Heights is experiencing a shortage of skilled workers in the construction trades. Is this likely to affect the real estate market, and if so, how?
No, this situation would have no effect on the real estate market.
Yes, this would decrease demand for homes because there are fewer workers in the construction industry, potentially creating a buyer’s market.
Yes, this would impact the supply of homes on the market, potentially creating a seller’s market.
Yes, this would reduce the number of real estate licensees selling property, potentially creating a stagnant market.
The fact that someone desires a property and has the purchasing power to buy it is the basis for the element of value called _____.
demand
scarcity
transferability
utility
When does a seller’s market occur?
When both supply and demand are high
When both supply and demand are low
When supply is high and demand is low
When supply is low and demand is high
Price levels are an indicator of _______.
Demand
Inventory rates
New building permits
Supply
The _______ value affects a property’s income tax basis.
Assessed
Depreciated
Investment
Market
When does a stagnant real estate market occur?
When both supply and demand are high
When both supply and demand are low
When supply is high and demand is low
When supply is low and demand is high
The fact that the value of property is affected by the availability of property for sale, and the desire and ability of buyers to purchase the property, is known as the principle of ______.
Competition
Conformity
Substitution
Supply and demand
In the real estate market, when supply exceeds demand, what does it mean?
There are an equal amount of homes for sale, and buyers to purchase them.
There are more buyers than available homes, and prices will be higher.
There are more homes than buyers, and prices will be higher.
There are more homes than buyers, and prices will be lower.
A new business moves into town, significantly increasing the availability of high-paying jobs. How is this likely to affect the town’s housing market?
Both demand and supply will go down, creating a stagnant market.
Demand will go up, creating a buyer’s market.
Demand will go up, creating a seller’s market.
Supply will go down, driving home prices down with it.
The ______ of real estate markets and individual properties shows that even properties located next door to each other with identical floorplans are different because no two properties are the same.
Immobility
Indestructibility
Slowness of response
Uniqueness
Which type of value is used to calculate property taxes?
Assessed value
Depreciated value
List price
Market value
When both supply and demand increase, what tends to happen to prices?
Become volatile
Decrease
Increase
Stay the same
Land doesn’t cease to exist, and it’s not depreciated or covered by property insurance because of its ______.
Immobility
Indestructibility
Slowness of response
Uniqueness
The _______ is the price at which an owner has offered to sell the property, and is the amount that’s found on the MLS when a property is listed for sale.
Assessed value
Depreciated value
List price
Market value
As demand decreases, what happens to the price?
It decreases.
It exceeds demand.
It increases.
It stays the same.
Amanda wants to know how long, on average, homes are staying on the market before they sell. What market indicator can give her this information?
Inventory rates
Price levels
Sales volume
Vacancy rates
The market for real estate in Chad’s area has experienced a sudden increase in demand, and there aren’t enough homes to go around. It seems like a bidding war ensues for every available property. What’s the condition of the real estate market in Chad’s area?
Buyer’s market
Imbalanced market
Seller’s market
Stagnant market
The number of houses for sale have declined and, as a result, the prices of houses have gone up. This represents the principle of _____.
competition
diminishing marginal returns
substitution
supply and demand
When there are more homes for sale in an area than there are buyers, it means what?
Demand and supply are about the same.
Demand exceeds supply.
Price has exceeded demand.
Supply exceeds demand.
16sect.unit1.CeSh.PreLic.Qonly.txt
What acronym can be used to remember factors that influence real property value?
CRUD
DUST
GIVEN
OLD CAR
What is being determined when appraiser looks past how a property is being used to determine a more optimal function?
Cost to replace
Highest and best use
Market value
Value in use
What guidelines must an appraiser follow?
NAR Code of Ethics
National Association of Appraisers (NAA) bylaws
Real estate license law
Uniform Standards of Professional Appraisal Practice (USPAP)
What standards do appraisers follow?
Appraisal bylaws
License law
NAR Rules of Ethics
Uniform Standards of Professional Appraisal Practice
Which of the following is one of the steps in the appraisal process?
Determine original cost to build.
Look at chain of title.
Reconcile data.
Track percentage of use.
A property’s value is dropping because the neighboring property’s yard is filled with trash. What’s this an example of?
Depreciation
Progression
Regression
Substitution
The Richards family farm is located on a 10-acre parcel of land, which is very rare in their area. However, the house is rundown and in need of many repairs. Most buyers in the area are looking for a move-in-ready home, which means they would need to either look elsewhere or wait several months for the home to be renovated. Which factor is most negatively impacting the value of the Richards’ property?
Demand
Scarcity
Transferability
Utility
Which economic principle is at work when a property’s value increases because a neighboring property has increased in value?
Conditional value
Price bump
Progression
Regression
Which of the following is the price a lender believes the property will bring at a foreclosure sale?
Insured value
Investment value
Mortgage value
Value in use
What economic principle says that a property’s value is determined by what it would cost to purchase a similar property?
Conforming value
Regression
Similar cost principle
Substitution
What’s the first step an appraiser will perform when conducting an appraisal?
Estimate the value of the land.
Gather and analyze data.
Identify the data that’s needed.
State the problem.
Which economic principle is in play when the smallest property’s value increases because it’s surrounded by higher-value properties?
Anticipation
Contribution
Progression
Regression
What is the last step in the appraisal process?
Determine the property’s highest and best use
Estimate the value of the land
Report the appraised value
State the problem
The economic principle that tells us that when supply goes up, price goes down is also called ______.
Conformity
Price dropping
Regression
Supply and demand
What is being determined when an appraiser is determining the optimal use of a property?
Cost to replace
Highest and best use
Mortgage value
Value in use
What is the most profitable use of a property?
Anticipation
Contribution
Highest and best use
Progression
What is the term for an increase in property value caused by the joining of two neighboring parcels of land?
Anticipation
Contribution
Plottage
Progression
Which of the following terms refers to the value a property holds for its owner based on how they currently use and enjoy it?
Appraisal
Insured value
Investment value
Value in use
Which of the following terms is a term used to describe the value of a property as it is currently being used by the owner?
Appraisal
Insured value
Investment value
Value in use
Which economic principle states that the value of property today is impacted by the current value of the total expected future benefits?
Anticipation
Conformity
Highest and best use
Progression
What has occurred when the increased value of homes in an area result in increased value for all homes in that area?
Competition
Progression
Regression
Substitution
What is the amount a buyer paid for a property, and that the seller accepted?
Cost
Insurance
Price
Value
Which of these is what a property is worth?
Appraisal
Cost
Price
Value
Which of these is one of the seven steps in the appraisal process?
Look at the chain of title
State the problem
Trace the property’s history
Track property liens
Which economic principle pertains to how a change in a property affects its value as a whole?
Anticipation
Conformity
Contribution
Substitution
If there is some kind of defect on a property’s title, what effect does this level of transferability have on the property’s value?
The value falls.
The value remains unchanged.
The value rises.
Transferability has no effect on value.
Which of the following is the cost of replacing a building in the case of total loss?
Insured value
Investment value
Market value
Value in use
There are a lot more sellers than buyers in the current market. How does this demand influence value?
Demand doesn’t influence value.
Value is pushed downward.
Value is pushed upward.
Value remains the same.
Which economic principle is related to supply and demand?
Competition
Conformity
Contribution
Substitution
Which economic principle says that a property’s value is determined by what it would cost to purchase a similar property?
Anticipation
Competition
Contribution
Substitution
When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?
Competition
Conformity
Progression
Regression
What is the next step in the appraisal process after identifying the purpose of the appraisal?
Determine the highest and best use.
Estimate the value of the land.
Identify the data that is needed.
Use three approaches to estimate the value.
Which economic principle says that value is created and maintained when the characteristics of a property fit in with its surroundings?
Anticipation
Conformity
Contribution
Substitution
Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole?
Contribution
Impact on value
Plottage
Progression
When appraisers look past how a property is being used to determine a more optimal function, what are they determining?
Cost to replace
Highest and best use
Market value
Value in use
An appraiser is performing a valuation on a property. What’s another term for what the appraiser is doing?
Analytical exercise
CMA
Formal appraisal
Price opinion
What is an appraiser determining when looking at the most beneficial use of a property?
Cost to replace
Highest and best use
Loan value
Value in use
What’s the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?
Insured value
Market value
Valuation
Value in use
What type of value is sought if an investor wants to know the estimated rate of return for a property?
Assessed value
Insured value
Investment value
Value in use
What type of value is of interest to taxing authorities?
Assessed value
Insured value
Investment value
Value in use
Who typically performs an appraisal?
Certified appraiser
Inspector
Real estate licensee
Tax assessor
What type of value may consumers be interested in if they are looking for the potential rate of return?
Assessed value
Insured value
Investment value
Value in use
What two types of data does an appraiser gather?
Computer and hand-written
General and specific
Old and new
Related and non-related
______ is the principle that the more similar properties are on the market, the lower the price.
Competition
Conformity
Contribution
Plottage
Which factor influences property value and addresses questions such as, “What’s the market like?” and “Are there more buyers than sellers, or vice versa?”
Demand
Scarcity
Transferability
Utility
What has occurred when two adjacent properties are worth more when they’re combined into one property?
Contribution
Eminent domain
Plottage
Zoning
A rundown home is driving down property values on the block. What economic principle is at work here?
Anticipation
Contribution
Progression
Regression
The fewer properties on the market, the greater the scarcity. What’s the effect on prices?
Prices are pushed downward.
Prices are pushed upward.
Prices remain the same.
There’s no correlation between scarcity and price.
Margot has fallen in love with a three-bedroom, 2,500-square-foot property in her friend’s neighborhood. It’s listed for $400,000. However, just down the street, another three-bedroom, 2,400-square-foot home very similar to the one Margot loves was just listed for $350,000. Margot and her agent immediately make an offer on the second property. Which economic principle is at work here?
Anticipation
Conformity
Progression
Substitution
What type of assessment provides an unbiased opinion of value?
A BPO
A CMA
A formal appraisal
An inspection
What’s another term for a valuation that’s an unbiased opinion of value?
Assessment
Comparative market analysis
Evaluation
Formal appraisal
How are the probable use of a property and its highest and best use related?
Highest and best use is always different than probable
Highest and best use is always the same as probable
Probable and highest and best use may be different
Probable is equal to highest and best use
What’s one purpose of a BPO?
To assist buyers in determining an offer amount or sellers in determining a listing price
To assist insurers in determining the amount of liability insurance to place on a property
To assist lenders in determining the marketability and potential sales price for distressed properties
To ensure that the value of a property is sufficient as collateral for a mortgage loan
Which of these is what a buyer has paid for a property and what the seller has accepted?
Appraisal
Cost
Price
Value
In a high-competition market with similarly priced homes, how will the competition affect sales prices?
Prices are likely to rise.
Prices will be driven down.
Prices will not change.
Some property’s prices will increase while others decrease.
For most residential properties, the highest and best use of the property is relatively obvious. What is it?
The current use
The estimated use
The former use
The potential use
Which factor that influences value considers the property’s function?
Demand
Scarcity
Transferability
Utility
Parcels of land are valued at $50,000 each. However, when two of the parcels are joined, they are valued at $120,000. What economic principle is at work here?
Anticipation
Contribution
Plottage
Progression
What action will an appraiser need to take when identifying the purpose of the appraisal?
Determine highest and best use.
Estimate value of land.
Identify data needed.
Use three approaches to estimate value.