EXAM 3 (CHAPTERS 8-10)
LISTING AGREEMENT: contract between seller & broker
o Lists powers delegated to agent
o Lists terms & conditions under which the seller will sell
o Lists the amount of the brokers commission & when it is earned
(when the sellers age
September 14, 2015
Essentials of a Valid Deed
o Must be in writing
o Parties must be properly described
o Parties must be competent to convey & capable of receiving
o The property must be properly described (legal description)
In a lease, you do not have
Deed: MUST BE IN WRITING.
o Identification of the parties
o Consideration given for the conveyed interest
o Legal description of the property
o Specification of the interests conveyed
o Signatures of the proper parties
Grantor: the seller or giver
REAL ESTATE FUNDAMENTALS
CHAPTERS 16 & 17 (EXAM #6)
The following is a list of key words and concepts from the chapters for studying for the exam.
Study the entire chapters the guide is NOT a total or complete list, only a guide.
Export activities (basic activities) produce goods and services for sale or consumption
outside the areas borders
Population Serving activities (non basic activities) which produce goods and services for
sale or consumption within the community itself.
REA 380 Test 4 Study Guide (Enhanced)
A house separated form any adjoining house with at least some open land on all
Remains the type of dwelling most sought after by American Families
Many will accept a basic house o
Solutions to Questions - Chapter 22
Real Estate Investment Performance and Portfolio Considerations
What are some of the difficulties of obtaining data to measure real estate investment performance?
It is difficult obtaining data to measure
Solutions to Questions - Chapter 21
Real Estate Investment Trusts (REITs)
What are the general requirements regarding income, investments, and dividends with which a REIT must comply
to maintain its tax-exempt status?
In general, at least 95
Solution to Questions - Chapter 20
The Secondary Mortgage Market: CMOs and Derivative Securities
What is a mortgage pay-through bond (MPTB)? How does it resemble a mortgage-backed bond (MBB)? How
does it differ?
MPTBs are issued against mort
Solutions to Questions - Chapter 19
The Secondary Mortgage Market: Pass-Through Securities
What is the secondary mortgage market? List three reasons why it is important.
The secondary mortgage market is the after market in which mortgages ar
Solutions to Questions - Chapter 18
Partnerships, Joint Ventures, and Syndications
What is the difference between an IRR preference and an IRR lookback?
With an IRR preference the investor receives all additional cash flow from sale (after e
Solutions to Questions - Chapter 17
Financing Land Development Projects
How might land development activities be specialized? Why is this activity different from project development
discussed in the preceding chapter?
Firms can specialize in
Solutions to Questions - Chapter 16
Financing Project Development
What are the sources of risk associated with project development?
Sources of risk associated with project development include market risks and project risks. Market risks are
Solutions to Questions - Chapter 15
Financing Corporate Real Estate
What are the main reasons that corporations may choose to own real estate?
There are a number of reasons a corporation may decide to own (rather than lease) real estate. It
Solutions to Questions - Chapter 14
Disposition and Renovation of Income Properties
What factors should an investor consider when trying to decide whether to dispose of a property that he has
owned for several years?
The factors are based on
Solutions to Questions - Chapter 13
What is meant by partitioning the internal rate of return? Why is this procedure meaningful?
To illustrate what is meant by partitioning the IRR, remember that the IRR is made up of two compo
Solutions to Questions - Chapter 12
Financial Leverage and Financing Alternatives
What is financial leverage? Why is a one-year measure of return on investment inadequate in determining
whether positive or negative financial leverage exists?
Solutions to Questions - Chapter 11
Investment Analysis and Taxation of Income Properties
What are the primary benefits of investing in real estate income property?
Net Income: Dollars left over after collecting rent and paying expenses but
Solution to Questions - Chapter 10
Valuation of Income Properties: Appraisal and the Market for Capital
What is the economic rationale for the cost approach? Under what conditions would the cost approach tend to
give the best value estimate?
Solutions to Questions - Chapter 9
Introduction to Income-Producing Properties: Leases and Market for Space
How does the use of leases shift the risk from lessor to the lessee?
Leases determine how much risk will be borne by the lessor versus
Solution to Questions - Chapter 8
Underwriting and Financing Residential Properties
What is the legislative intent of federal truth-in-lending disclosures, and what specific disclosures are required
under the act?
The intent of FTL legislatio
Solutions to Questions - Chapter 7
Single Family Housing: Pricing, Investment and Tax Considerations
Why is the income approach to value often difficult to use on a single family residential appraisal?
Typically, the income approach is diffic
Solutions to Questions - Chapter 6
Residential Financial Analysis
Why do points increase the effective interest rate for a mortgage loan more if the loan is held for a shorter time
period than a longer time period?
Points are a one-time charg
Solutions to Questions - Chapter 5
Adjustable Rate and Variable Payment Mortgages
In the previous chapter, significant problems regarding the ability of borrowers to meet mortgage payments and
the evolution of fixed interest rate mortgages wi
Solutions to Questions - Chapter 4
Fixed Rate Mortgage Loans
What are the major differences between the CAM, and CPM loans? What are the advantages to borrowers and risks to
lenders for each? What elements do each of the loans have in common?
Solutions to Questions - Chapter 3
The Interest Factor in Financing
What is the essential concept in understanding compound interest?
The concept of earning interest on interest is the essential idea that must be understood in the compounding
Solutions to Questions - Chapter 2
Financing: Notes and Mortgages
Distinguish between a mortgage and a note.
A note admits the debt and generally makes the borrower personally liable for the obligation. A mortgage is
usually a separate docume
Solutions to Questions - Chapter 1
An Introduction to Real Estate Investment: Legal Concepts
What is the difference between real estate and real property?
Real estate refers to the physical land and improvements constructed on the land, while