1. Explain the concept of `highest and best use` in property appraisal.
A. The most profitable and legally permissible use of a property.
B. The use that requires the least amount of renovation.
C. The current use of the property.
D. The use that is most environmentally friendly.
2. What is `due diligence` in real estate transactions?
A. The final payment made at closing
B. A thorough investigation of a property and transaction
C. The process of advertising a property for sale
D. A legal requirement to disclose property defects
3. Differentiate between `appreciation` and `depreciation` in real estate.
A. Appreciation is increase in value; depreciation is decrease in maintenance.
B. Appreciation is for commercial property; depreciation for residential.
C. Appreciation is increase in value; depreciation is decrease in value over time.
D. Appreciation is for new property; depreciation for old property.
4. Explain the concept of a `1031 exchange` in US real estate.
A. A tax on property sales exceeding $1,031,000.
B. A tax-deferred exchange allowing reinvestment of capital gains from one property to another.
C. A government program providing $1,031 grants for first-time homebuyers.
D. A type of mortgage with a 1.031% interest rate.
5. Differentiate between `gross leasable area` (GLA) and `net leasable area` (NLA) in commercial real estate.
A. GLA includes common areas, NLA does not.
B. NLA includes common areas, GLA does not.
C. GLA refers to retail spaces, NLA to office spaces.
D. GLA is used for residential, NLA for commercial properties.
6. What is the significance of `title insurance` in a property transaction?
A. It covers damages from natural disasters.
B. It protects against defects in the property`s title.
C. It insures the buyer`s personal belongings in the property.
D. It guarantees the property`s future appreciation.
7. What is a `lien` on a property?
A. A type of property insurance.
B. A legal claim against a property.
C. A discount on property taxes.
D. A decorative border around a property.
8. What is `zoning` in the context of real estate and land use?
A. The process of evaluating property value for tax purposes
B. Regulations dividing land into districts based on permitted uses
C. The geographical area surrounding a property
D. A type of homeowner`s insurance policy
9. What is `curb appeal` and why is it important in real estate sales?
A. The total square footage of a property; important for appraisals.
B. The attractiveness of a property from the street; important for first impressions.
C. The property`s location relative to amenities; important for zoning.
D. The history of the property; important for historical designations.
10. Explain the difference between `equity` and `principal` in the context of a home mortgage.
A. Equity is the initial down payment; principal is the loan amount.
B. Principal is the down payment; equity is the property`s market value.
C. Principal is the original loan amount; equity is the value of ownership minus outstanding debt.
D. Equity is the interest paid; principal is the total loan amount.
11. Which of these is considered a `soft cost` in real estate development?
A. Concrete
B. Lumber
C. Architectural fees
D. Plumbing
12. Explain the term `short sale` in real estate.
A. Selling a property quickly for a lower price than market value.
B. Selling a property for less than the outstanding mortgage balance.
C. A sale that must close within a short timeframe.
D. Selling a property without a real estate agent.
13. Which term describes the legal rights to occupy and use a property, but not ownership?
A. Deed
B. Leasehold
C. Title
D. Mortgage
14. What is meant by `brownfield` and `greenfield` land in real estate development?
A. Brownfield is agricultural land; greenfield is industrial land.
B. Brownfield is previously developed land; greenfield is undeveloped land.
C. Brownfield is urban land; greenfield is rural land.
D. Brownfield is land with water access; greenfield is landlocked.
15. What is a `contingency` in a real estate purchase agreement?
A. A penalty for backing out of the deal
B. A condition that must be met for the contract to be binding
C. A discount offered by the seller
D. An additional fee charged at closing
16. Which of the following best describes `escrow` in real estate transactions?
A. A type of property insurance
B. A neutral third party holding funds and documents
C. A government tax on property sales
D. A loan agreement between buyer and seller
17. What does `cap rate` (capitalization rate) primarily measure in commercial real estate?
A. The loan interest rate
B. The annual rate of return on investment
C. The property tax rate
D. The rate of property appreciation
18. What does `MLS` stand for in the context of real estate?
A. Mortgage Lending Service
B. Multiple Listing Service
C. Market Listing Standard
D. Maximum Loan Security
19. What is the term for the estimated value of a property, often determined by a professional?
A. Appraisal
B. Depreciation
C. Amortization
D. Valuation
20. Which of the following is NOT typically considered part of `closing costs` for a home purchase?
A. Appraisal fees
B. Home renovations
C. Title insurance
D. Loan origination fees
21. What are `CC&Rs` in real estate, particularly in planned communities or subdivisions?
A. Construction Codes and Regulations.
B. Covenants, Conditions, and Restrictions.
C. Community Credits and Rebates.
D. Capital Contributions and Reserves.
22. What is the purpose of a `punch list` during the construction phase of a real estate project?
A. To list all subcontractors involved in the project
B. To document remaining tasks and defects to be completed or corrected
C. To outline the project budget
D. To schedule inspections with local authorities
23. In real estate, `amortization` primarily refers to:
A. The decrease in property value over time
B. The process of paying off a loan over time
C. The initial down payment on a property
D. The annual property taxes
24. What is the purpose of an `environmental site assessment` (ESA) in real estate?
A. To assess the property`s aesthetic appeal.
B. To evaluate potential environmental contamination of a property.
C. To determine the property`s market value.
D. To check for structural integrity of buildings.
25. What is `gross rent multiplier` (GRM) and how is it used?
A. A measure of property taxes; used for tax assessment.
B. A ratio of property price to annual rental income; used for investment analysis.
C. A calculation of renovation costs; used for project budgeting.
D. A measure of property appreciation; used for market forecasting.
26. What is the difference between `agent`, `broker`, and `realtor` in real estate?
A. They are all interchangeable terms.
B. Agent works for a broker; broker is more experienced; realtor is a licensed agent.
C. Agent and broker are licensed; realtor is unlicensed.
D. Broker works for an agent; realtor is a type of broker; agent is unlicensed.
27. A `fixture` in real estate refers to:
A. Temporary decorations in a home
B. Items permanently attached to the property
C. Loose furniture in a property listing
D. Financial documents related to the property
28. Explain the concept of `property management` in real estate.
A. Valuing properties for sale
B. Overseeing the operation and maintenance of rental properties
C. Negotiating real estate deals
D. Developing new construction projects
29. In real estate finance, what does `LTV` stand for?
A. Loan-to-Value ratio
B. Long-Term Value
C. Land Transfer Value
D. Listing Time Variance
30. What does `REIT` stand for and what is its primary function?
A. Real Estate Investment Trust; to invest in and manage income-producing real estate
B. Real Estate Inspection Team; to conduct property inspections
C. Registered Energy Improvement Technology; for sustainable building practices
D. Residential Estate Investment Treaty; for international property laws
