1. Choose the term that refers to the legal document that transfers ownership of real property from a seller to a buyer.
A. Lease agreement
B. Mortgage
C. Deed
D. Promissory note
2. What does `amortization` mean in the context of a mortgage?
A. The total cost of the loan including interest.
B. The process of gradually paying off a loan over time through regular payments.
C. The initial deposit required for a mortgage.
D. The penalty for paying off a mortgage early.
3. What is the term for a professional who is licensed to help people buy, sell, or rent real estate?
A. Real estate agent
B. Property manager
C. Mortgage broker
D. Appraiser
4. Which term describes a situation where a property is taken by the government for public use, even if the owner doesn`t want to sell?
A. Foreclosure
B. Eminent domain
C. Lien
D. Reverse mortgage
5. What is the purpose of a `property survey` in a real estate transaction?
A. To assess the structural integrity of a building.
B. To determine the market value of the property.
C. To establish the legal boundaries of a property and identify any encroachments.
D. To evaluate the energy efficiency of a building.
6. What does `vacancy rate` measure in the context of rental properties?
A. The percentage of rent collected on time.
B. The percentage of units in a property that are unoccupied.
C. The rate at which property values are increasing.
D. The cost of property maintenance per unit.
7. Which phrase best describes `capital gains` in real estate?
A. The ongoing rental income from a property.
B. The profit from selling an asset for more than its purchase price.
C. The total cost of property maintenance and repairs.
D. The amount of money borrowed to purchase a property.
8. Which of the following is NOT a typical component of a `property management agreement`?
A. Rent collection procedures.
B. Maintenance and repair responsibilities.
C. Property appraisal value.
D. Lease enforcement policies.
9. What is a `leasehold` estate in real estate?
A. Ownership of the property and the land it sits on.
B. The right to use and occupy property for a specified period, without owning it.
C. Partial ownership of a property shared with others.
D. Ownership that lasts for the lifetime of the owner only.
10. What is the difference between a `fixed-rate mortgage` and an `adjustable-rate mortgage` (ARM)?
A. Fixed-rate mortgages are only for commercial properties; ARMs are for residential.
B. Fixed-rate mortgages have an interest rate that stays the same for the loan term; ARMs have interest rates that can change periodically.
C. Fixed-rate mortgages are shorter term loans; ARMs are longer term loans.
D. Fixed-rate mortgages are government-backed; ARMs are private loans.
11. Which of the following best describes `zoning` in real estate?
A. The process of property valuation for tax purposes.
B. Local regulations that dictate how property in specific geographic zones can be used.
C. The agreement between a landlord and tenant.
D. The insurance coverage for natural disasters.
12. What does `ROI` stand for in real estate investment?
A. Rate of Interest
B. Return on Investment
C. Real Opportunity Index
D. Rental Occupancy Income
13. What does `HOA fees` stand for and what do they typically cover?
A. Home Owners Association fees, covering individual homeowner`s insurance.
B. Home Occupancy Agreement fees, covering utility bills.
C. Homeowners Obligation Assessment fees, covering property taxes.
D. Homeowners Association fees, covering common area maintenance and amenities.
14. What is the primary purpose of an `escrow account` in a real estate transaction?
A. To provide insurance for the property.
B. To hold funds securely until all conditions of the sale are met.
C. To calculate property taxes.
D. To manage rental income.
15. What is the difference between `gross income` and `net operating income` (NOI) in real estate investment?
A. They are the same thing.
B. Gross income is income before expenses; NOI is income after operating expenses but before debt service and taxes.
C. Gross income is income after all expenses; NOI is income before any expenses.
D. Gross income is for residential properties; NOI is for commercial properties.
16. Which phrase accurately describes `due diligence` in real estate transactions?
A. The final offer price on a property.
B. The process of thoroughly investigating a property and transaction before finalizing it.
C. The initial deposit made by a buyer.
D. The insurance policy on a property.
17. In real estate, `cap rate` (capitalization rate) is primarily used to:
A. Calculate the annual property taxes.
B. Estimate the potential rate of return on a real estate investment.
C. Determine the mortgage interest rate.
D. Assess the property`s depreciation value.
18. What is the meaning of `curb appeal` in real estate marketing?
A. The total square footage of the property.
B. The attractiveness of a property from the street.
C. The interior design and decoration of a home.
D. The proximity of a property to public transportation.
19. Which of the following is NOT typically considered a `closing cost` for a home buyer?
A. Appraisal fee
B. Home inspection fee
C. Property taxes for the following year
D. Title insurance
20. Which of the following best describes `appraisal` in real estate?
A. The legal transfer of property ownership.
B. An estimate of a property`s market value.
C. The process of securing a loan for property purchase.
D. Managing tenants and property maintenance.
21. Which of the following is an example of `real property`?
A. A refrigerator in a house.
B. A detached garage on a piece of land.
C. Furniture inside an apartment.
D. A car parked in the driveway.
22. What is a `contingency` in a real estate purchase agreement?
A. A mandatory home repair before closing.
B. A condition that must be met for the contract to be binding.
C. An extra fee charged by the real estate agent.
D. A type of mortgage insurance.
23. What is the role of a `property inspector` in a real estate transaction?
A. To determine the market value of the property.
B. To underwrite the mortgage loan.
C. To assess the physical condition of the property and identify potential issues.
D. To manage the property after purchase.
24. What does `FSBO` stand for in real estate listings?
A. For Sale By Owner
B. For Sale Below Original price
C. Financing Secured By Owner
D. Foreclosure Sale By Order
25. What is `leverage` in real estate investing, and why is it considered both beneficial and risky?
A. Leverage is the use of personal savings to buy property; it`s low risk and low reward.
B. Leverage is the use of borrowed capital (debt) to increase the potential return of an investment; it can amplify both profits and losses.
C. Leverage is a type of property insurance; it`s beneficial because it reduces risk.
D. Leverage is the negotiation of a lower property price; it is always beneficial and never risky.
26. Identify the term that refers to the rights someone has to use the land of another for a specific purpose.
A. Encroachment
B. Easement
C. Eminent domain
D. Equity
27. What is a `fixture` in real estate terms?
A. Temporary decorations in a home.
B. Personal property easily removable from a property.
C. An item of personal property attached to real property, which becomes part of the real property.
D. A type of loan used for property renovation.
28. What is `underwriting` in the mortgage process?
A. The process of appraising the property value.
B. The process of evaluating a borrower`s creditworthiness and risk for a loan.
C. The legal transfer of property ownership.
D. The initial application for a mortgage loan.
29. What is meant by `market analysis` in real estate?
A. Inspecting the physical condition of a property.
B. Evaluating current and future market conditions to make informed real estate decisions.
C. Negotiating the price of a property.
D. Securing financing for a property purchase.
30. In a `1031 exchange`, what is being exchanged?
A. Personal property for real property.
B. Like-kind real estate properties to defer capital gains taxes.
C. Stocks and bonds for real estate.
D. Rental income for property maintenance services.
