FL RE License (Chapters 14-19)

Sandra buys a primary residence in 2003 for $250,000. She sells it in 2016 for $425,000. How much money will she be required to pay capital gains tax on? $0 $425,000 $250,000 $175,000

$0

Whenever a deed is conveyed, a tax is paid to the state of Florida. This tax is assessed at a rate of________ ($0.60 in Miami-Dade) for each $100 of the full purchase price.

$0.70

Mohammed just paid a steep property tax bill. He wants to know how much he saved due to his homestead exemptions. If his house assessed at $500,000, and the tax rate for city, county, and school tax districts is 0.008 each, what is his total property tax savings? $800 $2,000 $200 $1,000

$1,000 Total exemptions x Tax rate = Property tax savings. School taxes: $25,000 x 0.008 = $200. City and county taxes: $50,000 x 0.016 = $800. $200 + $800 = $1,000.

A building makes $1.4 million in income. It also pays $230,000 in property taxes, $120,000 in property insurance, and $50,000 in maintenance. What is the NOI of the building? $1,000,000 $1,070,000 $1,230,000 $1,200,000

$1,000,000

A seller prepaid a tax bill for $5,400. The buyer owes the seller for 2 months and 10 days of taxes. Using a 360-day calendar, what will the prorated credit to the seller be? $540 $900 $1,050 $2,100

$1,050 By dividing $5,400 by 12, we get the monthly expense of $450. You can divide that number by 30 to get the daily expense, which in this case is $15. So, 2 months equals $900 and 10 days equals $150. Added together, you get $1,050.

Malik is buying a three-unit complex. The monthly rent for each unit is $750 and rent is collected on the first of each month. Malik and the seller will close on the 15th of June. The seller agrees to pay for closing day. What is the prorated rent cost and how will that cost be debited or credited? $1,125 credit to seller; $1,125 debit to Malik $1,050 credit to seller; $1,050 debit to Malik $1,125 credit to Malik; $1,125 debit to seller $1,050 credit to Malik; $1,050 debit to seller

$1,125 credit to seller; $1,125 debit to Malik

Alen's street is getting paved. His lot is 200 ft by 400 ft. It will cost $20 per linear foot for the city to pave the street, and the city is paying 40% of the total cost. How much is Alen's special assessment? $2,400 $500 $1,200 $4,000

$1,200 [(Front feet x Amount per linear foot) x Owner percentage] ÷ 2 = Street paving assessment. [(200 ft x $20) x 0.6] = $2,400. $2,400 ÷ 2 = $1,200.

Olga buys a commercial building for $600,000. Her closing expenses for the purchase are $12,000. Before she puts it into service, she renovates it for $250,000. She rents it to tenants for ten years and claims $19,000 per year in depreciation. She sells it after those ten years for $2,500,000. Her closing costs are $55,000. What is her capital gain? $1,773,000 $672,000 $2,445,000 $190,000

$1,773,000 Basis + Cost of improvements + Qualified closing costs - Realized depreciation = Adjusted basis (investment property). So, that's $600,000 + $250,000 + $12,000 - ($19,000 x 10) = $672,000. Sales price - Selling costs = Realized gain. So, that's $2,500,000 - $55,000 = $2,445,000. Finally, Realized gain - Adjusted basis = Capital gain. So, that's $2,445,000 - $672,000 = $1,773,000.

You're doing a CMA on a three-bed, two-bath property. Comp A has three beds, one-and-a-half baths, and sold for $225,000. Comp B has three beds, two-and-a-half baths, and sold for $235,000. Given this, what is the value of a full bathroom in this area? $5,000 $10,000 $15,000 $20,000

$10,000

Asmita is selling her property to Lucy. Closing day is February 10. They are figuring out who will be responsible for property taxes and decide Asmita will pay for property taxes on the day of closing. The property taxes for the year will cost $900. It is not a leap year. Calculate the property tax proration using a 365-day year. $800.28 debit to the seller; $800.28 credit to the buyer $800.28 debit to the buyer; $800.28 credit to the seller $101.27 debit to the seller; $101.27 credit to the buyer $101.27 debit to the buyer; $101.27 credit to the seller

$101.27 debit to the seller; $101.27 credit to the buyer

Lucy's home has assessed for $600,000. The millage rate for the school district is 8.1 mills; the millage rate for the city is 7.4 mills; and the millage rate for the county is 7.9 mills. What is Lucy's total property tax bill? $4,657.50 $15,300 $8,415 $13,072.50

$13,072.50 Taxable value x Tax rate = Annual property taxes due. Assessed value - Homestead exemptions = Taxable value. School taxes: $600,000 - $25,000 = $575,000. $575,000 x 0.0081 = $4,657.50 in school property taxes. City and county taxes: $600,000 - $50,000 = $550,000. 7.4 mills + 7. 9 mills = 15.3 mills. $550,000 x 0.0153 = $8,415 in city and country property taxes. $4,657.50 + $8,415 = $13,072.50 in total property taxes.

Christine is selling her home in Broward County to Thomas for $150,000. Thomas gets a mortgage for $50,000. In the contract, they agree that Thomas will pay all mortgage-related transfer taxes and the deed transfer tax. Keep in mind the possible transfer taxes in Florida: State Documentary Stamp Tax on Deeds (.70%) State Documentary Stamp Tax on Promissory Notes (.35%) State Intangible Tax on New Mortgages (.20%) How much will Thomas owe in Florida transfer taxes?

$1325.00 ($150,000 x .007 = $1050) + ($50,000 x .0035 = $175) + ($50,000 x .0020 = $100) = $1325

A seller agrees to pay a 6% commission on the $475,000 sale of their home. The listing broker agrees to split the commission 50/50 with the buyer's broker. How much did the listing broker make in commission? $1,450 $14,250 $28,500 $125,000

$14,250

Using the following information, determine the value of the property using the cost approach. The home has a $60/sq. ft. reproduction cost for livable area and a $20/sq. ft. reproduction cost for the unfinished garage. The home is 2,400 square feet with a 400 square foot garage. The home has an economic life of 40 years and is 10 years old. The land's value is $60,000. $156,000 $160,000 $215,000 $128,000

$156,000 The reproduction cost of the home is $128,000. The depreciation cost is $32,000. So, the equation looks like this: $128,000 - $32,000 + $60,000 = $156,000

Karla bought a residential investment property for $600,000. She calculated that the land was worth $150,000. Her closing costs were $20,000. She did $10,000 in renovations before putting it into service. What is her annual depreciation allowance? $16,153.85 $22,909.09 $17,454.55 $12,307.69

$17,454.55 Purchase price + Acquisition costs + Renovations - Land value = Depreciable basis, which is $600,000 + $20,000 + $10,000 - $150,000 = $480,000. Because it is a residential building, it is depreciated over 27.5 years. Depreciable basis ÷ Useful life = Annual IRS depreciation deduction, which is $480,000 ÷ 27.5 = $17,454.55.

Jan wants $10,000 in profit from the sale of her home. She has to pay off her $150,000 mortgage, as well as $7,000 in closing costs and 6% in commission. How much does she need to sell her home for? $177,660 $217,659 $167,000 $254,242

$177,660

Selah co-owns a property with two other people. She owns 1/4 of the property. The property sells and she receives $45,000 from the sale. What was the total selling price of the property? $180,000 $55,555 $112,500 $11,250

$180,000

The subject property has a pool (valued at $2,000) AND solar panels (valued at $4,500). The first comp property sold for $250,000 and had solar panels only. The second comp property sold for $180,000 and had only the pool. What is a good range to list the subject property at? $184,500 - $230,000 $175,500 - $252,000 $184,500 - $252,000 $175,500 - $230,000

$184,500 - $252,000

Cameron Road Plaza has a monthly NOI of $10,000 and a cap rate of 6%. What is its appraised value using the income capitalization approach? $120,000 $750,000 $2,000,000 $1,600,000

$2,000,000

A property is transferred from a seller to a buyer on April 4th. At the end of the year, the buyer pays the annual tax amount of $11,160. Using the 360-day calendar, how much should be credited to the buyer for prorated property taxes? $3,320 $3,331 $2,883 $2,789

$2,883 To find the monthly rate, divide the annual total by 12, which in this case equals $930. To find the daily rate, divide the taxes total by 360, which gives you 31. Remember, the day of closing is usually billed to the buyer. So, we have 3 months and 3 days to calculate. 930 x 3 + 31 x 3 = $2,883.

Lando buys a primary residence in Cloud City for $500,000. His closing costs (transfer taxes, title insurance, and legal fees) are $10,000. He puts in a new garage, and that costs him $30,000. In a few years, he sells his house for $600,000. It costs him $40,000 to sell the house, including a 6% agent fee. What is his capital gain? $20,000 $560,000 $10,000 $540,000

$20,000 First, find the adjusted basis: $500,000 + $10,000 + 30,000 = $540,000. Next, find the realized gain: $600,000 - $40,000 = $560,000. Finally, find the capital gain: $560,000 - $540,000 = $20,000. He won't pay any capital gains tax, since that is well under $250,000, but keep in mind that the question is asking for the amount of gain, not whether or not he'll pay tax on it.

Mario's home has a just value of $300,000. He has accumulated $50,000 in SOH (save our homes) protections. What is the taxable value for his home for city and county taxes? How about for school taxes? $200,000 for city and county taxes; $225,000 for school taxes $200,000 for city and county taxes; $275,000 for school taxes $250,000 for city and county taxes; $200,000 for school taxes $225,000 for city and county taxes; $225,000 for school taxes

$200,000 for city and county taxes; $225,000 for school taxes

Emanuel owns three properties. He broke even on the first, took a $15,000 loss on the second, and has one property left to resell. He bought the third property for $150,000. He wants to make a 30% profit on his investment and make up for the loss on the second property. For how much will Emanuel need to sell the third property in order to reach his return goals? $255,000 $240,000 $210,000 $225,000

$210,000 ($150,000 x 0.30 = $45,000. Add the desired profit and previous loss together: $45,000 + $15,000 = $60,000. Emanuel wants to make $60,000 off of the sale. If he bought the property for $150,000 he will need to sell it for $210,000 ($150,000 + $60,000 = $210,000).

Awiti is selling her property to June. Closing day is March 20. They are figuring out who will be responsible for property taxes and decide Awiti will pay for property taxes on the day of closing. The property taxes for the year will cost $1,000. It is not a leap year. Calculate the property tax proration using a 365-day year. $216.46 debit to the seller; $216.46 credit to the buyer $783.64 debit to the seller; $783.64 credit to the buyer $783.64 debit to the buyer; $783.64 credit to the seller $216.46 debit to the buyer; $216.46 credit to the seller

$216.46 debit to the seller; $216.46 credit to the buyer $1,000 ÷ 365 days = $2.74/day. Asmita is responsible for 2 months and 20 days' worth of property taxes (79 days). $2.74 x 79 days = $216.46. The prorated tax amount is $216.46, and this is the amount Awiti is responsible for (making it a debit to the buyer and credit to the seller).

What is the value of a property if the net operating income is $45,600 and a cap rate of 20%? $2,280,000 $228,000 $912,000 $9,120

$228,000

Hal buys a commercial building for $1,200,000. He uses his tax assessment to determine the land is valued at $300,000. His acquisition costs are $50,000. What is his annual depreciation allowance, rounded to the nearest dollar? $21,795 $39,744 $24,359 $34,545

$24,359 Purchase price + Acquisition costs + Renovations - Land value = Depreciable basis, which is $1,200,000 + $50,000 - $300,000 = $950,000. Because it is a commercial building, it is depreciated over 39 years. Depreciable basis ÷ Useful life = Annual IRS depreciation deduction, which is $950,000 ÷ 39 = $24,359.

Bobby agreed to pay the full deed transfer tax on the $400,000 sale of his property in Miami-Dade County. How much will Bobby owe for the deed transfer tax? $2,000 $3,200 $2,800 $2,400

$2400

Dierk buys a 5-acre property in Alligator County. It sells for $7,000 per acre. What is the documentary stamp tax on his deed? $245,000 $210 $245 $21,000

$245 ($7,000 x .007 = 49 x 5 acres = 245)

A town has a total assessed valuation of $30,000,000 and exemptions of $5,000,000. What is its tax base? $35,000,000 $5,000,000 $25,000,000 $6,000,000

$25,000,000

An appraiser uses 4 comps. She will use the average to find the subject property's value. The values she gets are $250,000; $249,000; $263,000; $258,000. Which of these is the subject property's appraised value? $255,000 $250,000 $249,000 $260,000

$255,000

An HOA has an annual, prepaid fee of $1,080. A new buyer closes on a home in the neighborhood with exactly 3 months left in the year. How much will the buyer's prorated fee cost? $90 $300 $145 $270

$270

Comp 1 is 2,000 sq. ft. and was sold for $250,000. The subject property is 2,200 sq. ft. Assuming that size is the only difference in the properties, using the sales comparison approach, what would the value of the subject property be? $220,000 $125,000 $275,000 $225,000

$275,000

Harryette owns a property that was recently appraised for $518,000. She owes $223,000 on her mortgage. How much equity does she have in this property? $741,000 $295,000 $223,000 $518,000

$295,000

A building has an annual PGI of $350,000, a vacancy rate of 10%, and operating costs of $15,000. Using a cap rate of 10%, calculate the appraised value of the building using the income approach. $3,500,000 $3,000,000 $2,750,000 $2,500,000

$3,000,000

Kabir has a furniture store. His monthly operating expenses are $4,500, including taxes, rent, and his salary. He sells $8,000 worth of furniture. Calculate his cash flow for the month. $3,500 $12,500 $4,500 $8,000

$3,500

Ginger agreed to pay the full deed transfer tax on the $500,000 sale of her property in Duval County. How much will Ginger owe for the deed transfer tax? $7,000 $3,500 $4,000 $2,800

$3,500 The deed transfer tax rate in Florida is $0.70 per $100 of the full purchase price. So, Ginger's transfer tax payment on her $500,000 purchase is $3,500.

A town has a total assessed value of $40,000,000 and total exemptions of $6,000,000. What is the town's tax base? 6.7% $34,000,000 $240,000,000 0.0072

$34,000,000

A building has a 3% vacancy rate and a PGI of $1,200,000. What is the vacancy cost? $12,000 $26,000 $36,000 $30,000

$36,000

David's house assesses at $61,000. What is his total homestead exemption? $25,000 $50,000 $36,000 $11,000

$36,000

The cost of reproduction of a 20-year-old subject property is $375,000, which has a land value of $140,625. The property has 30 remaining years of economic life. What is the property value using the cost approach? $384,375 $365,625 $571,875 $440,625

$365,625 Calculate depreciation percentage: 20 divided by (20+30) which is 0.4. Calculate the property value: the property cost ($375,000) minus the depreciation amount (375,000 * 0.4) and add land value ($140,625). The math looks like 375,000 - 150,000 + 140,625. The property value is $365,625.

A seller sells their home for $500,000. They didn't use an agent, but they did have to pay $10,000 in closing costs. In addition, they had to pay off their $123,000 mortgage. What is the net to seller? $298,000 $367,000 $196,00 $490,000

$367,000

Developer Justin spent $250,000 building a house: $200,000 in materials and labor, and $50,000 in other fees and financing costs. A real estate appraiser valued the house at $375,000. He then sold it for $400,000. Which number represents the home's PRICE? $250,000 $375,000 $400,000 $150,000

$400,000

A tax bill cost $4,956. For proration purposes, what is the monthly tax expense? $134 $248.75 $413 $495.60

$413

Given that our three comp properties came in with prices at $445,000, $445,000, and $451,000, what is a reasonable price range for our subject property? $400,000 - $415,000 $440,000 - $455,000 $420,000 - $435,000 $460,000 - $475,000

$440,000 - $455,000

A building has an EGI of $900,000 with operating expenses at $450,000. What is the NOI? $755,000 $900,000 $450,000 $1,350,000

$450,000

Sergio, who is blind, is granted a homestead exemption on his $190,000 residence. What is his total homestead exemption? $50,000 He receives no homestead exemption. $500 $50,500

$50,500

Elijah is blind and a widower. His house has assessed at $100,000. What is the total amount of his homestead exemption? $25,000 $51,000 $50,500 $50,000

$51,000

An appraiser is reconciling the three approaches to obtain a final estimate of a subject property's value. Using the valuations and weights below, what will the appraiser's reconciled valuation be? Sales comparison approach: $590,000 (30%) Cost approach: $540,000 (50%) Income approach: $570,000 (20%) $555,000 $572,000 $561,000 $610,000

$561,000

HOA dues for a neighborhood are $2,460. The seller paid for the current year's dues at the beginning of the year. The buyer takes possession of the property with exactly 3 months left in the year. How much will the buyer owe the seller in prorated HOA dues? $615 $300 $1,845 $2,050

$615 You divide the HOA dues by 12 to find the monthly cost ($205). Multiply the monthly cost by 3 to find how much the buyer owes the seller: $615.

A property's property taxes toal $1,000 for the year. Yisel buys the property from Jose. At closing, the property's unpaid property taxes total $738. How will this be listed on the closing disclosure form? $738 debit to buyer; $738 credit to seller $738 debit to buyer; $262 credit to seller $738 credit to buyer; $262 debit to seller $738 credit to buyer; $738 debit to seller

$738 credit to buyer; $738 debit to seller

A married couple originally purchased their home for $200,000. While they owned it, they spent $12,000 on adding a bathroom and a deck. They eventually sell the home for $300,000. Their brokerage fee for the sale is $6,500 and they pay closing costs of $2,145. What is their capital gain from the sale? $63,291 $291,355 $212,000 $79,355

$79,355

Marta's home, which is homesteaded, has an assessed value of $400,000. The millage rate for the school district is 7 mills; the millage rate for the city is 8 mills; and the millage rate for the county is 8.9 mills. What is Marta's total property tax bill? $10,113 $2,625 $5,915 $8,540

$8,540

A building has 30 occupied units, creating an annual income of $600,000. There are 10 unoccupied units, each of which could bring in $20,000 annually if occupied. What is the building's PGI? $750,000 $800,000 $620,000 $1,000,000

$800,000

The city is paving the streets in Tim's neighborhood. The city will pay for 35% of the expense and pave the streets at $25 per linear foot. Tim's lot is 110 feet by 130 feet. How much is Tim's special assessment?

$893.75

Jermaine bought an investment property for $250,000. He put down $50,000 and financed the remaining $200,000. In four years, he paid $15,000 of the mortgage principle and the value of the property increased to $275,000. What is Jermaine's current equity in the property? $110,000 $65,000 $235,000 $90,000

$90,000 Jermaine owed $200,000. He paid off $15,000 of his mortgage, so he then owed $200,000 - $15,000 = $185,000. To find his equity, subtract the debt from the value of the property. $275,000 - $185,000 = $90,000.

How do you determine month's worth of inventory?

(Amount of active homes for sale) / (Amount of homes sold per month) = Months of inventory 0-4 months of inventory = sellers market 4-6 months of inventory = neutral market 6 + months of inventory = buyers market

A ____________________ lets an investor sell a property, reinvest the proceeds in a brand new property, and defer all capital gain taxes. This is a totally-legal-yet-kinda sneaky way to defer paying capital gains taxes when you sell an investment property.

1031 exchange

Muhammad buys a condo for $245,000. It's right by the beach and he loves the location. He loves it so much, in fact, that he lives there for 63 years. When he finally decides to sell, he sells his condo for $525,000. What is Muhammad's percentage of profit or loss? 53% loss 114% loss 53% profit 114% profit

114% profit

Alfie purchases a house for $585,000. A year later, a major tech employer goes out of business. People start leaving town because there are no jobs in the area. After trying to stick it out for a year, Alfie realizes he needs to leave, too. He sells his house for $500,000 (it's a buyer's market because everyone is leaving). What is Alfie's percentage loss? 17% 85% 1.17% 15%

15% ($585,000 - $500,000 = $85,000 (that's the "part"). $85,000 ÷ $585,000 = 0.15, or 15% loss.)

Of the below, the investment property with the least liquidity would be a(n): 172-unit apartment building single-family home small dental office fast food retail building

172-unit apartment building

Let's pretend the residential market in Tampa took a dip in 2010. When might you expect the commercial office space market to dip? 2012 2005 2015 2008

2012

Let's say the appraiser rejects the property owner's request for adjustment. The owner can then file an appeal with the Value Adjustment Board. The owner has_______ days after the TRIM notice is mailed to file this appeal.

25

The recovery period for residential income-producing property is ________ years. Residential investment property includes apartment buildings, vacation rentals rented out more than 14 days a year, rental homes, and any other property people rent to live in.

27.5

Harley owns two investment properties: an apartment building and an office building. What is the straight-line depreciation recovery period for the apartment building? 50 years 39 years 27.5 years 30 years

27.5 years

Mani purchases three oceanfront lots. Each lot has 200 feet of oceanfront land and costs $350 per foot. He subdivides each lot into two lots and sells each lot for $45,000. What is Mani's percentage of profit or loss? 29% profit 22% profit 29% loss 22% loss

29% profit (He makes $270,000 on the lots ($45,000 x 6 = $270,000). He makes $60,000 profit ($270,000 - $210,000 = $60,000). Part ÷ Total = Percentage, so $60,000 ÷ $210,000 = 0.29, or 29% profit.)

The recovery period for commercial investment property is ______ years. Commercial investment property includes things like office buildings, shopping centers, industrial parks, and professional buildings.

39

Sunny Land Development is developing a 100-acre tract of land for residences. A residential zone requires a minimum of 7,000 square feet per lot. If the developer has to reserve 25% of the land for sidewalks, streets, and a community center, how many residential lots are available for development? 3,267 466 326 500

466

If 12 properties have been sold in the last 3 months in an area, and there are 20 houses for sale now, there is a supply of housing for: 5 months 4 months 3 months 6 months

5 months Approximately 4 properties are sold per month, so there is a five-month supply of housing on the market now.

Bellissimo Apartments contains 60 apartment units. Three of the units are vacant. What is the vacancy rate? 95% 0.5% 5.4% 5%

5%

The average number of months it will take to sell a house in a buyer's market is: 0 - 4 months 12 months or more 4 - 6 months 6 months or more

6 months or more

If a building has a NOI of $345,000 and it has a property value of 5 million dollars, what is the cap rate? 5% 23.45% 9.6% 6.9%

6.9%

An building has an NOI of $450,000 and a property value of $6,000,000. What is the cap rate? 4.5% 7.5% 9% 15%

7.5%

A town's total taxable value is $8,000,000, and its budget is $75,000. What is the tax rate, in mills? 0.0011 mills 9.38 mills 10.6 mills 0.0079 mills

9.38 mills

Choose the situation that is the best example of economic scarcity. Most of the coastline has been built up, so it's not easy to find an empty beach lot anymore. A slow market means not a lot of people are putting their homes up for sale. A lot of people want to live downtown, so available apartments are hard to come by. A fire in a neighborhood destroyed a lot of the housing stock.

A lot of people want to live downtown, so available apartments are hard to come by.

The principle of contribution states: The present value of a property is affected by the anticipated income or utility that property will give its property owner. A property's overall value is made up of the combined value of each of its parts. The value of something is determined by adding the assessed and previous market values to find the average of the new value. The value of something is affected by the cost of getting a similar item elsewhere.

A property's overall value is made up of the combined value of each of its parts.

Of the below, whose homestead property is 100% tax exempt? Tony, who is a widower Sally, who is blind Al, a quadriplegic, who is totally and permanently disabled Fernando, a veteran, who suffered about a 15% loss of ability while serving

Al, a quadriplegic, who is totally and permanently disabled

When determining a listing price, you may have to remind your client that: You only get the "new listing" interest factor once. All choices are correct. Their original purchase price has little to do with its present market value. Property improvements made may not result in a corresponding bump in appraised value.

All choices are correct.

Which of the following is an example of default risk? Karen is unable to purchase a prospective real estate investment after the Federal Reserve raised the interest rate. Amber lost her real estate investment after the bank foreclosed on her home. A new apartment building was recently constructed in the same neighborhood as Janae's apartment building. Kristin's apartment building is receiving less-than-expected rental income after a local employer left the city.

Amber lost her real estate investment after the bank foreclosed on her home.

What is one of the most important differences between an appraisal and a CMA? An appraisal must be done by a licensed appraiser. A CMA can be done by anyone. An appraisal affects a seller's title. A CMA does not. An appraisal is used to price a new property. A CMA is used to price a resold property. An appraisal is for commercial property. A CMA is for residential property.

An appraisal must be done by a licensed appraiser. A CMA can be done by anyone.

A new apartment building has been issued a certificate of occupancy. What does that indicate about the property? The owner is in compliance with landlord-tenant law. The apartment units have been rented to tenants. It is allowed to operate outside of its zoned use. An inspector determined that the building is up to code.

An inspector determined that the building is up to code.

Which of these scenarios is an example of utility making a piece of property valuable? Audrey really wants to live downtown, but there aren't many available apartments. Anna found an investment property that she will use to get a great monthly income stream. Nobody wants to build on the empty lot because it used to be a gas station. Cindy inherited property from her grandma, but can't afford the taxes on it.

Anna found an investment property that she will use to get a great monthly income stream.

Taxable value x tax base = _____________

Annual property taxes due

What is the difference between assemblage and plottage? Assemblage is done by a real estate agent. Plottage is done by a developer or subdivider. Assemblage requires the approval of the zoning board. Plottage does not. Assemblage is combining residential lots. Plottage is combining commercial lots. Assemblage is combining lots. Plottage is the resulting increase in value.

Assemblage is combining lots. Plottage is the resulting increase in value.

The buyer and seller closed on a property on June 17th. The year's HOA fees were paid by the seller at the beginning of the year. How might the seller receive credit for the time the buyer occupies the home? The escrow company pays for the prorated expense. At closing, the buyer credits the seller with prorated HOA dues. The seller cannot receive a credit, as the fee has already been paid without the buyer's consent. The HOA reimburses the seller for the fee.

At closing, the buyer credits the seller with prorated HOA dues.

______________________ are areas of land that separate two different land uses (zones) to give each one a little breathing room. Like maybe you don't want your residential zone right up against the edge of your industrial zone, so you slide a buffer zone in there with a nice little park, berm, or other transitional space.

Buffer zones

Property owner John illegally disposes of toxic waste by burying it underneath his property. The chemicals leak into a nearby lake and contaminate the water. The EPA can order John to take responsibility for the cleanup under what law? CERCLA Title X RESPA Clean Air Act

CERCLA

Net operating income divided by property value = _________________

Cap rate

_____________________ appraisers can issue appraisal reports for any kind of real estate.

Certified general

____________________ appraisers can only issue appraisal reports for one to four residential units.

Certified residential

______________________ age is the literal age of the property. If the home was built 30 years ago, its chronological age is 30.

Chronological

The ________________________ is a federal law that aims to protect people and the environment from the harmful effects of air pollution. It does so by establishing comprehensive regulations regarding air emissions from stationary and mobile sources.

Clean Air Act (CAA)

The ________________________ is a federal law that establishes the basic structure for regulating discharges of pollutants into the waters of the United States and for regulating quality standards for surface waters.

Clean Water Act (CWA)

The ______________ is the final itemization of all services and fees charged to the borrower by the lender when applying for a real estate loan.

Closing Disclosure

________________ zoning (also called density zoning) is another way that communities can create more affordable housing options by changing density. The way cluster zoning works is that density is determined for an entire area, instead of on a lot-by-lot basis.

Cluster

Company A is selling a property to Company B. The property was once the site of a chemical manufacturing facility. Which company is responsible for determining whether there are any environmental hazards on the property? the EPA Company B Company A Neither

Company B

In 1980, Congress enacted the __________________________________________________, a federal law that provides broad federal authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment (for example, a hazardous waste spill).

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

Age of property (divided by) total useful life = ______________________

Depreciation

_____________________ refers to changing an area's zoning to restrict the density. In other words, changing the area's zoning laws so that fewer people can live in the same area.

Downzoning

______________________ age is an estimated age that is influenced by the updates and quality of maintenance of the property. A 30-year-old house that has been well cared for might have an effective age of a young and spry 15.

Effective

The ________________________________________ was established in 1970 to consolidate a variety of federal environmental research, monitoring, standard-setting, and enforcement activities into one agency.

Environmental Protection Agency (or EPA)

_________________ properties belong to churches and nonprofits. These properties might be subject to taxes, but the property owner is not obligated to pay them. Lucky ducks.

Exempt

__________________________ obsolescence: loss of property value caused by negative forces outside the property which are beyond the control of the owner (unfavorable changes in the environment or market)

External (economic)

_____________ created the first federal oversight of appraisers and mandates that states regulate and license appraisers. Because of them, no one can just call themselves an appraiser, they actually have to posses a license.

FIRREA

____________________ obsolescence: loss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing or effective version

Functional

__________________________ is the ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc. As long as you know the price of the investment property and the price of rent, you can find the GRM. Remember to multiply the monthly rent by 12 to get the annual rent.

Gross rent multiplier (GRM)

A small town receives the news that a major employer will be opening a regional manufacturing center there soon. What scenario describes the most likely effect? There will be little affect on the supply or price of real estate from just one employer. Because the announcement regards industrial real estate, there will be little effect on residential properties. Growth in population and the local economy will result in less supply and higher prices. The current residents of the town will likely try to move away, increasing supply and lowering prices.

Growth in population and the local economy will result in less supply and higher prices.

_________________________ are regulations that control the sanitation and maintenance of public spaces.

Health ordinances

________________ properties are city, county, state, and federal government properties (such as county courthouses and military facilities) that do not get assessed, and their owners do not have to pay property taxes. They can also be "special properties" that have been made immune by law.

Immune

When supply decreases and demand increases in a market, what happens to price? It goes up. It goes down. It stays the same. Price is not affected by supply and demand.

It goes up.

Consider the Miami-Dade County Courthouse. What is its property tax exemption status? It is a partially exempt property. It is an exempt property. It is an immune property. It is not an exempt property in any way.

It is an immune property.

Which of the following is an example of leveraging? Heather buying gold because she believes the local economy will continue to grow. Jaselle being concerned about her Beanie Babies depreciating in value due to decreased demand. Josh taking out a loan from his local bank in order to purchase a rental property. Michael withdrawing cash form his savings account in order to pay for his dinner later that night.

Josh taking out a loan from his local bank in order to purchase a rental property.

Zoning ordinances deal with WHAT while building code deals with WHAT? HISTORIC PRESERVATION while building code deals with LANDMARKS LAND while building code deals with BUILDINGS MASTER PLANNING while building code deals with COMPREHENSIVE PLANNING TOWNS while building code deals with CITIES

LAND while building code deals with BUILDINGS

Marcella, a Florida homeowner, believes that her house has been unfairly assessed. She contacts her county's property appraiser, who rejects her request for an assessment adjustment. What is the NEXT step Marcella can take to protest the assessment, if any? Marcella can apply for a homestead exemption. Marcella can take no further steps to protest the appraisal. Marcella can file a certiorari proceeding against the county property appraiser and the tax collector. Marcella can file an appeal with the Value Adjustment Board.

Marcella can file an appeal with the Value Adjustment Board.

Mary is interested in buying a property upon which a house has recently been demolished, and the land has been leveled out with a bulldozer. But Mary is afraid that the land plot may have changed due to the leveling. Evaluate Mary's worry. Mary does not need to worry. Though land can be destroyed, merely leveling it won't hurt it. Mary doesn't need to worry. Regardless of leveling, the land plot will not change because land is indestructible. Mary is right to be worried; leveling almost always results in a shift in land square footage. Mary is right to be worried; surface improvements can alter the characteristics of a piece of land.

Mary doesn't need to worry. Regardless of leveling, the land plot will not change because land is indestructible.

Which of the following best demonstrates how a liquid investment can be converted? Mitch taking out a loan from his local bank in order to buy gold. Meena buying real estate because she believes that the local economy will continue to grow. Michelle being concerned about her Beanie Babies depreciating in value due to decreased demand. Michael withdrawing cash from his money market account in order to pay for his dinner later that night.

Michael withdrawing cash from his money market account in order to pay for his dinner later that night.

Which of the descriptions below is MOST LIKELY an industrial property? Brock's rental rates usually follow 2-3 years behind residential market trends. Mitch's tenants are very low-maintenance and their rent is generally high per square foot in comparison to other investment properties. Most of Mo's tenants pay him rent on a percentage lease; he heavily depends on his anchor tenant for traffic. Shane's tenants are high-maintenance and the market for his property is less reliant on the ups-and-downs of the economy.

Mitch's tenants are very low-maintenance and their rent is generally high per square foot in comparison to other investment properties.

This federal law requires federal agencies to assess the environmental effects of their proposed actions prior to making decisions.

National Environmental Policy Act (NEPA)

How did the Tax Cuts and Jobs Act of 2017 affect the property tax deduction? It completely eliminated the property tax deduction. Now, only first-time homebuyers can use a property tax deduction. Now, homeowners can only deduct a total of $10,000 between state, city, and property taxes. The property tax deduction has been replaced by the mortgage interest deduction.

Now, homeowners can only deduct a total of $10,000 between state, city, and property taxes.

_____________________ is a property's loss of value due to economic or functional factors.

Obsolescence

What is the equation for GRM?

Property price / annual rent income = GRM

Tax exemptions x tax rate = _______________

Property tax savings

Reproduction cost - depreciation + land value = ____________________

Property value (Cost Approach)

____________ is a federal law that amended CERCLA, designated more money to the Superfund trust, and established new environmental laws and regulations.

SARA

Carlos and Mandi are looking to purchase their first home. Their desired area is currently experiencing a buyer's market. What should they expect during their home buying process? Sellers will only accept offers at or above the list price. Sales prices will likely be more negotiable. There will be very few homes to choose from, so the couple will likely have to settle for a less desirable home. Sellers probably won't be willing to pay for any closing costs.

Sales prices will likely be more negotiable.

Sarah and Audrey each purchased a property through a combination of down payments and loans. Each then rented her property out. Ultimately, Sarah's net income was $15,000. Audrey, on the other hand, netted a loss of $8,000. What does this tell us about each investor's leverage? Sarah's leverage was low, while Audrey's leverage was high. Sarah's leverage was positive, while Audrey's leverage was negative. Sarah's leverage was no-risk, while Audrey's leverage was risky. Sarah's leverage was liquid, while Audrey's leverage was illiquid.

Sarah's leverage was positive, while Audrey's leverage was negative.

Mariela took out a mortgage and purchased a house located in a V Zone. What does that mean for Mariela? She can't get flood insurance because the flood risk for this property is too high for the house to be insurable. She is required to purchase flood insurance. The National Flood Insurance Program won't cover this property, but she can acquire a flood policy from a private insurance company. She can decide whether or not she wants to buy flood insurance.

She is required to purchase flood insurance.

____________ refers to the economic significance of a property's location.

Situs

Total special assessment cost x homeowners share = _____________________

Special assessment

__________________ is rezoning a small parcel of land for a use classification totally different from that of the surrounding area for the benefit of the owner of that property and to the detriment of other property owners.

Spot zoning

What is the difference between spot zoning and granting a variance? Spot zoning is a change that is to the detriment of the surrounding community while a variance benefits the community. Spot zoning is for zoning exceptions not covered by a variance. Spot zoning is left up to the discretion of the zoning board of appeals; variances are made by the planning committee. Spot zoning is only for upzoning, but variances can upzone or downzone.

Spot zoning is a change that is to the detriment of the surrounding community while a variance benefits the community.

Several investors attend a tax certificate auction. Of the below choices, who wins the auction? Paul, who bids a 20% interest rate Ethel, who bids a 17% interest rate Steff, who bids a 12% interest rate Francesca, who bids a 15% interest rate

Steff, who bids a 12% interest rate

What is the relationship between supply and price? Supply and price usually move in opposite directions. Supply and price always move in the same direction. Supply and price do not have an effect on each other. Supply and price usually move in the same direction.

Supply and price usually move in opposite directions.

Total assessed value - total exemptions = _______________

Tax base

Tax requirement / tax base = _______________

Tax rate

Assessed value - homestead exemptions = ___________________

Taxable value

Enter the ______________________________, which created certain exclusions from capital gains taxes for homeowners. Under the capital gains exemption, single homeowners may exclude up to the first $250,000 on the sale of a primary residence. Married homeowners may exclude up to the first $500,000. This exclusion is reusable every two years.

Taxpayer Relief Act of 1997

Which of the following is an example of capital market risk? The price of building construction has rapidly increased due a shortage of construction workers. The Federal Reserve recently announced a decision to raise interest rates. The local unemployment rate has increased after a large employer declared bankruptcy. A real estate investor lost a lawsuit and was unable to pay his mortgage payments as a result.

The Federal Reserve recently announced a decision to raise interest rates.

What's the difference between the Closing Disclosure and the Loan Estimate? The Loan Estimate is a preliminary estimate of loan costs; the Closing Disclosure is a final itemization of all services and fees. The Loan Estimate is prepared by the seller's broker, while the Closing Disclosure is prepared by the buyer's broker. Borrowers are given the Loan Estimate at closing and the Closing Disclosure 3 days after they apply for the loan. The Closing Disclosure is a abbreviated version of the Loan Estimate.

The Loan Estimate is a preliminary estimate of loan costs; the Closing Disclosure is a final itemization of all services and fees.

You and your clients may choose to have only the buyer or only the seller attend closings. There are many valid reasons for making this decision. Which of the following is NOT a good justification for choosing to do this? The order of buyer and seller closing doesn't matter, so individual schedules can be accommodated. The cooperating brokers do not always cooperate like they should. Individual closings might make for a more pleasant conclusion if earlier negotiations were contentious or strained. The seller doesn't need to sit through the buyer's side of closing, which is usually a much more drawn-out experience than the seller's side.

The cooperating brokers do not always cooperate like they should.

Why might an appraiser specializing in residential real estate not use the income capitalization approach? Residential real estate is only owned by private homeowners. Residential real estate doesn't use appraisers. The income approach doesn't take into account the value of the property. The income approach is used primarily in commercial real estate.

The income approach is used primarily in commercial real estate.

Which of these is an example of government influence on demand for real estate? The Census shows a trend of people preferring to live with fewer people per household. A major employer announced it will be hiring for hundreds of new positions. The unemployment rate has steadily decreased over the course of the year. The interest rate for financing has been lowered.

The interest rate for financing has been lowered.

Which of the following is an example of space risk? Housing prices decrease after the Federal Reserve chairperson announced an increase in interest rates. An investor lost their real estate investment after the mortgage company foreclosed on the property. The local rental rates in the Watermark neighborhood decrease after three new apartment buildings were built. Building construction costs increase as tariffs increase on building materials.

The local rental rates in the Watermark neighborhood decrease after three new apartment buildings were built.

Which of these is an accurate statement about the real estate market cycle? The real estate cycle progresses very slowly, usually taking about 50 years per cycle. The order of the cycle phases can change, but their timing is always the same. The phase that occurs after a recession is called hyper supply. The phases of the cycle always occur in the same order, but their exact timing is hard to predict.

The phases of the cycle always occur in the same order, but their exact timing is hard to predict.

Which of these statements about 1031 exchanges is TRUE? The properties exchanged must be exactly alike in square footage, bedrooms, bathrooms, etc. In a 1031 exchange, the investor permanently avoids paying capital gains tax. The properties must be exchanged within a limited time frame. No non-like-kind property can be included in the exchange.

The properties must be exchanged within a limited time frame.

How does a real estate investment hedge against inflation? The real estate market doesn't experience inflation, only equities markets do. The property appreciates to keep up with the rate of inflation. The owner doesn't pay as much tax on the investment, allowing them to save more money. Inflation rates rise at the same rate as mortgage interest rates, protecting the homebuyer.

The property appreciates to keep up with the rate of inflation.

Clementine owns a house that has high value due to situs. Which of these MOST likely describes Clementine's property? The property will appreciate at a much faster rate than other properties. The property is being sold above market value but offers competitive agricultural opportunities. The property is being sold above market value due to inflation. The property is in a desirable geographic location with appealing amenities and features.

The property is in a desirable geographic location with appealing amenities and features.

Predict what will happen if there is an increase in the number of building permits for apartment complexes issued in your area. Supply will decrease. The vacancy rate will decrease. The vacancy rate will increase. There will be a decrease in demand.

The vacancy rate will increase.

Married couple Marcus and Thomas are buying a house. As first-time homeowners, what is NOT a tax benefit of homeownership? They can deduct mortgage interest. They can deduct special assessments. They can make penalty-free withdrawals of up to $10,000 from their IRAs for the down payment. They can deduct some of their property taxes.

They can deduct special assessments.

Which of the following is true about property tax exemptions? Taxes are never exempt. They decrease the value the owner will be taxed on. Tax exemptions have no effect on taxes. They increase the value the owner will be taxed on.

They decrease the value the owner will be taxed on.

Demand for property in a particular area is low and supply is high. Predict what will happen to property prices. They will rise. They will stay the same. They will fall. Supply and demand have no effect on price.

They will fall

The Scott family owns a small, two-bedroom house. Lately, they feel like their family of three (soon to be four!) has outgrown the house. The current state of the economy is bad, and economic forecasters warn a recession may be possible. Knowing only this information, predict what the Scott family is most likely to do in the immediate future. They will stay put in their current house and wait until the economy gets better to upgrade to a bigger house. They will sell their house at a low price and apply any proceeds toward a bigger house. They will sell their house to liquidate the investment, then reinvest in an area with a stronger economy. They will sell their house and sign a lease on a rental property because leasing is more affordable.

They will stay put in their current house and wait until the economy gets better to upgrade to a bigger house.

Evaluate the following statement: The real estate market is influenced by the national economy, therefor the real estate market is essentially the same across the country at any given time. This statement is accurate, but should also note that various types of real estate will be affected by the economy in the same way. This statement is false because the national economy has no effect on the local real estate market. This statement is accurate. This statement is false. The national economy does have an impact, but the real estate market varies greatly from state to state and city to city.

This statement is false. The national economy does have an impact, but the real estate market varies greatly from state to state and city to city.

Which of these best illustrates purchasing-power risk? Theresa thought an apartment building would be a cash cow, but high maintenance costs have slimmed her profit margins to nothing. Tim bought an industrial warehouse with a 20-year tenant, so he cannot raise the rent to keep up with inflation. Tonée bought an investment property with an ARM, and a recent interest rate adjustment is eating into her profits. Thomas used an investment property as collateral to get a loan to buy another investment property, but an unexpected vacancy has left him unable to satisfy his debt obligations.

Tim bought an industrial warehouse with a 20-year tenant, so he cannot raise the rent to keep up with inflation.

An appraiser doing their job for a federally related real estate transaction must comply to _________________.

USPAP

____________________ means changing an area's zoning to allow for more density. In other words, changing the area's zoning laws to allow more people to live in the same area.

Upzoning

Underground storage tanks pose a hazard primarily because: They can become exposed to radon gas underground, thereby contaminating the tank. Since they are underground, the tanks are rarely cleaned. When they become old and rust, it makes them prone to leakage. They can collapse under the weight of the home.

When they become old and rust, it makes them prone to leakage.

Investor Isabella has a replacement reserve of $150,000 in her operating budget. During one tax year, Isabella spends $14,000 from the reserve fund on repairing roof leaks and fixing some broken washing machines. Can she subtract the $14,000 from her taxable income for the year? No, Isabella cannot subtract the $14,000 from her taxable income for the year. Only like-kind exchanges allow for the deduction of replacement expenses. Yes, Isabella can subtract the $14,000 from her taxable income for the year. While a cash reserve for replacements is not deductible, any replacement expenses actually paid during the tax year can be deducted. Yes, Isabella can subtract the $14,000 from her taxable income for the year. Repairs like the the kind she is making are an example of capital improvements, which depreciate and can be calculated on a one-time basis. No, Isabella cannot subtract the $14,000 from her taxable income for the year. While a cash reserve for replacements is deductible, any replacement expenses actually paid during the tax year cannot be deducted.

Yes, Isabella can subtract the $14,000 from her taxable income for the year. While a cash reserve for replacements is not deductible, any replacement expenses actually paid during the tax year can be deducted.

A buyer is using an FHA loan to buy a property. Does the appraiser of the property need to be state-certified? No, federally related real estate transactions can be performed by any type of licensed real estate professional. Yes, real estate professionals need to be certified as licensed appraisers to legally appraise a property. No, any real estate professional may appraise a property. Yes, all federally related transactions must be appraised by a certified appraiser.

Yes, all federally related transactions must be appraised by a certified appraiser.

Today is June 25, 2019. Homeowner Harry has not yet paid property taxes for the tax year 2018. Is he delinquent on his taxes? Yes, he has been delinquent since January 1, 2019. Yes, he has been delinquent since April 1, 2019. No, he will not be delinquent until November 1, 2019. No, he will not be delinquent until December 31, 2019.

Yes, he has been delinquent since April 1, 2019.

Emilio is going to sell a friend's business for a commission. The business doesn't have any real estate assets or long-term leases. Evaluate whether or not he needs a real estate license to market the business . No, because the business has no real estate holdings, Emilio doesn't need a license. Whether or not he needs a license will depend on the other kinds of assets the business has. It is illegal for real estate license holders to sell businesses in Florida, as that would present a conflict of interest. Yes, in Florida, you need a real estate license to sell a business even if it has no real estate holdings.

Yes, in Florida, you need a real estate license to sell a business even if it has no real estate holdings.

Vacancy rates have sharply decreased in the city of Aceville. The lease for your apartment in Aceville is about to end. If you choose to renew your lease, what can you reasonably expect to happen? Your rent will increase. Your rent will decrease. Your rent will stay the same. Your landlord will only offer a month-to-month lease.

Your rent will increase.

Which of the following BEST describes a mixed-use building? a private home in residential neighborhood an office building with a garage built into the lower levels a building with shops on the ground floor and apartments up above a building complex with both apartments and townhouses

a building with shops on the ground floor and apartments up above

Which of these is an intangible asset? a copyright a delivery truck an apartment building a printer

a copyright

Gary has a home built on a half-acre lot, which was appropriate for his zone when he bought the home. A few years later, zoning regulations changed and now the smallest buildable lot in his neighborhood is one acre. Gary was allowed to keep his home as it is. What is this an example of? a legal nonconforming use an area variance a lot merger a use variance

a legal nonconforming use

Which of the following items should a seller NOT put into escrow by closing? title evidence a survey affidavits of title any payoff letters from lenders

a survey

Which of the following properties cannot depreciate? an urban condominium a residential house a public facility a tract of undeveloped land

a tract of undeveloped land

Which of these is the depreciated value of a property? market value insured value actual cash value mortgage value

actual cash value

Property taxes are ___________________ taxes, which means they are based on the assessed value of a property.

ad valorem

A comp is 1,500 sq. ft. and was sold at $210,000. The subject property is 1,700 sq. ft. Using the sales comparison approach, what would the adjustment be? subtract $28,000 from the comp's sales price add $21,000 to the comp's sales price subtract $21,000 from the comp's sales price add $28,000 to the comp's sales price

add $28,000 to the comp's sales price

To find the ______________________ for a primary residence, you take the property's sale price (or basis) when purchased, add qualified closing costs from that initial purchase, and add the cost of any capital improvements made during ownership.

adjusted basis

The requirement of concurrency means that a new development is only allowed: after a minimum level of public infrastructure is in place around the development site if the development is complementary to existing properties in the area after a use variance is granted to the developer of the site if a majority of the local planning board members vote in favor of the project

after a minimum level of public infrastructure is in place around the development site

Ashley is interested in doing a like-kind exchange of properties. Of the below choices, which can she legally exchange? a motel for a personal residence an apartment complex for a hotel a restaurant for another restaurant, where the parties are related an office building in the U.S. for an office building in Japan

an apartment complex for a hotel

Which of these properties would probably be the most liquid? an inexpensive single-family home a four-family bulding a large retail center a golf course

an inexpensive single-family home

An _____________ tenant is a large, recognizable store that "anchors" the retail space, drawing foot traffic and customers to the other stores in the development.

anchor

An ______________________ is a variance that permits the use of land in a manner which is not allowed by the dimensional or physical requirements of the applicable zoning regulations. It deals with the physical land. For example, a property that wanted to use a smaller-than-zoned-for setback would need an area variance.

area variance

The seller of a home paid the current year's HOA fees at the start of the year. The cost will be prorated at closing. How will the cost be counted at closing? as a credit to the seller as a debit to the seller

as a credit to the seller

Sarah wants to purchase a home only if the property next to it, which is a corner lot, can be included. Which term best describes the combining of properties in this potential purchase? assemblage insured value cost plottage

assemblage

The ________________ value is the value placed on a property by a governmental unit for use in calculating property taxes.

assessed

What are the three main financial documents that describe a business? balance sheet, income statement, and cash flow statement ledger, financial sheet, and cash statement income analysis, cost method, and liquidation value stock certificate, P&L statement, and valuation sheet

balance sheet, income statement, and cash flow statement

Why is debt service important? because the investor will need to calculate the annual or monthly debt service that each loan requires because it accounts for the cash that an investment generates after operating expenses and taxes because it is a tax benefit for homeowners because it is part of the calculations for capital gain

because the investor will need to calculate the annual or monthly debt service that each loan requires

Why does real estate offer investors more leverage than investment vehicles like stocks or bonds? because real estate investors are known to be more responsible because the property serves as collateral because of RESPA and TILA legislation because real estate isn't tied to the Federal Prime Rate

because the property serves as collateral

Why are zoning classifications sometimes different across municipalities? because they are created at the local level because they are assigned by the Department of the Interior because standardizing them would be too costly because they have roots in colonial government types

because they are created at the local level

Jerrit had a dream of opening a florist shop. He did his research and created a business plan. He found the perfect location and opened up shop. Though he got pretty good foot traffic and had great reviews on Yelp, his business never really picked up enough to make a comfortable profit. What kind of risk is this an illustration of? business risk purchasing power risk leverage risk interest rate risk

business risk

Why are residential investment properties considered more stable than commercial ones? businesses go under in a downturn, but people still need homes the residential market is supported by tax benefits commercial real estate doesn't have commercial rent goes up more slowly than residential rent lower maintenance costs allow investors to better predict future income

businesses go under in a downturn, but people still need homes

Realized gain - adjusted basis = ___________________

capital gain

Manuel is engaging in a 1031 exchange of one hotel for another. The seller gives Manuel money to cover repairs on the hotel. What is this called, and will Manuel have to pay capital gains tax on it? personal property boot; yes real property boot; no mortgage boot; no cash boot; yes

cash boot; yes

Ramsey is putting together some documents for the sale of a business. One document he's creating shows the amount of money remaining after all the business's expenses have been paid. What is he calculating? going concern value estimated gross income cash flow equity

cash flow

A ____________________________, or CO, is a legal document from a local authority that authorizes a building to be occupied or sold. In essence, it states a building has been built to code. For renovations, a similar certificate of compliance certifies that the project has been completed up to code.

certificate of occupancy

Freon is the trademarked name of: chlordane polychlorinated byphenols (PCBs) chlorofluorocarbons urea-formaldehyde foam insulation (UFFI)

chlorofluorocarbons

What two types of stock do most corporations have? limited and general common and preferred s corp and c corp tangible and intangible

common and preferred

Anatole is appraising a business. To do so, he looks at the price that similar businesses have recently sold for, then adjusts those prices to find an apples-to-apples comparison to the business he's valuing. What method of valuation is he most likely using? income analysis cost approach liquidation analysis comparable sales analysis

comparable sales analysis

Javier is valuing a business to put it up for sale. To find the right number, he evaluates the sale price of other very similar, recently-sold businesses. What method is he using to put a value on the business? cost approach income approach comparable sales analysis liquidation analysis

comparable sales analysis

A _____________________________ is a report that compares the prices of recently sold or listed homes ("comparables") in order to estimate the market value of a similar property (the "subject property") located in the same area. This is the tool you'll use to guide your client towards a proper price for their property.

comparative market analysis (CMA)

A key takeaway from the Growth Policy Act is the importance of _______________________ , a provision requiring that certain infrastructure be in place before any new development is permitted. Such infrastructure includes sanitary sewers, potable (drinking) water, and waste treatment facilities.

concurrency

Which of these is a service an agricultural real estate specialist is most likely to be called on to provide? guidance on how to get building permits consulting on the best way to utilize the property providing a rent roll report help getting a zoning variance

consulting on the best way to utilize the property

The __________ approach is a great method to use when putting a value on new construction. It is also the method to use for determining the value of unique, highly specialized, or historical buildings, such as museums or public libraries. That's because it's harder to find good comparables for these types of property.

cost

A house contains elevated levels of radon gas. Through which of these areas did the radon enter the home? the top opening of a chimney cracks in the foundation electrical appliances broken weather seals on doors and windows

cracks in the foundation

Which of these activities is a job of the local planning board? approving new historic districts granting variances passing zoning ordinances creating a master plan

creating a master plan

A ____________ is a positive balance or a positive amount. For our purposes, it is a figure entered in a party's favor when determining the overall costs associated with a transaction.

credit

New mortgages from banks or other third party sources and binder deposits are: credits to the seller debits to the seller debits to the buyer credits to the buyer

credits to the buyer

A ____________ is a negative balance or a negative amount. For the purposes of our discussion, a debit is an amount due from or owed by a particular individual when determining the overall costs associated with a transaction. On the Closing Disclosure, debits reflect charges made to the parties involved in the transaction.

debit

As price increases, the amount of real estate that buyers are willing to purchase: increases is unaffected decreases remains stable

decreases

When real estate costs more due to factors such as an increase in construction costs, fewer people are willing to buy. This decrease in willingness to buy is said to be a decrease in: interest rates demand money supply supply

demand

An exciting new development is being created, but the developer is only putting three lots up for sale (and keeping the rest). Many buyers in town want to be the one to own one of these three lots. Which two characteristics of value does this demonstrate? demand and scarcity demand and utility utility and transferability scarcity and transferability

demand and scarcity

The Housing Affordability Index is best used for predicting the: supply of housing amount of building permits issued demand for housing likelihood of recession

demand for housing

Which of these is an advantage to investing in single-family residential properties? produces lots of rent money do not have to pay property taxes is less affected by a single vacancy demand is fairly stable

demand is fairly stable

A city council has decided to create a set of zoning regulations for their city. They create a master plan. What are the next two steps they're likely to take? drawing up a new set of building codes, then making zoning regulations based on those creating a comprehensive zoning plan, then consulting the conservation council creating an environmental impact statement, then convening the zoning board of appeals dividing the city into zones, then creating regulations for each of those zones

dividing the city into zones, then creating regulations for each of those zones

A falling unemployment rate indicates: a failing economy deflation a stagnant economy economic growth

economic growth

But, as you can probably guess, most properties are not running at 100% occupancy at all times. Most buildings have at least some income loss caused by vacancies and unpaid rent. If you subtract the income loss from the PGI, you get the _______________________ (EGI).

effective gross income

Polychlorinated biphenyls (PCBs) could be contained in which of the following? air conditioning units oil furnaces concrete foundation electrical transformers and capacitors

electrical transformers and capacitors

Which of these is required by the National Environmental Policy Act? environmental quality reviews pollution assessment reports hazardous waste removal project plans environmental impact statements

environmental impact statements

Supply and demand intersect at a point known as: stasis the balance point equilibrium the curve

equilibrium

CERCLA was passed in 1980 to: establish a Superfund to clean up uncontrolled hazardous waste sites and to respond to spills allow borrowers to include in the mortgage the cost of energy-efficiency improvements to an existing home provide for the conservation of species that are endangered or threatened throughout all or a significant portion of their range require environmental hazard disclosures in all real estate transactions

establish a Superfund to clean up uncontrolled hazardous waste sites and to respond to spills

What is the primary goal of the Clean Air Act? prevent storage of harmful chemicals in underground tanks create liability for landowners of contaminated land criminalize the dumping of pollutants into navigable waters establish comprehensive regulations regarding air emissions

establish comprehensive regulations regarding air emissions

Which of these is a main provision of CERCLA? establishing national clean water quality standards establishing liability of persons responsible for releases of hazardous waste establishing national clean air quality standards establishing an application process for approval of waste sites

establishing liability of persons responsible for releases of hazardous waste

The amount of a foreign currency a dollar can buy is called the: foreign money value exchange rate trade value currency count

exchange rate

What is reconciliation? another term for the exchange, where the buyer receives the keys to the property the sum of a buyer's closing costs factoring the debits and credits from the purchase price to determine how much money the buyer and seller must bring to closing the process of figuring out proration amounts

factoring the debits and credits from the purchase price to determine how much money the buyer and seller must bring to closing

A property is most likely to sell for close to its market value under what kind of conditions? coercive conditions fair, normal conditions competitive conditions conditions where the buyer or seller feels unusual pressure from external forces

fair, normal conditions

Property Owner Prue asks the county appraiser to reassess her home. He rejects the request. What is Prue's NEXT step? file a claim with the community development district nothing; she has run out of options file an appeal with the Value Adjustment Board file a certiorari proceeding

file an appeal with the Value Adjustment Board

Which of these things is the primary difference between the combined total of a business's tangible assets and its going concern value? personal property real property equipment goodwill

goodwill

Which one of these is most likely to be a retail anchor tenant? wig shop dry cleaner grocery store small boutique

grocery store

A ______________________________ is very similar to a gross rent multiplier, except it takes into account more than just rental income. An owner of a property can make money in more ways than just rent payments. In fact, some commercial leases stipulate that a building's owner receive a portion of the tenant's profits. Other common forms of income come from things like coin laundry, application processing fees, and various other fees.

gross income multiplier (GIM)

Superfund projects clean up: air pollution resulting from the burning of fossil fuels natural disaster sites hazardous waste sites and chemical spills litter along streets and highways

hazardous waste sites and chemical spills

Tina has owned a donut shop for years. The area is re-zoned as residential, making commercial activity illegal. Tina gets special permission from the zoning board to continue to run the business. Months later, she sells the property to Al, who starts a dumpling business. The new business is a(n): moratorium illegal nonconforming use area variance use variance

illegal nonconforming use

The relative difficulty of converting an asset to cash without loss of value is known as: fixity illiquidity situs modification

illiquidity

An Air Force Base receives what kind of property tax classification? partially exempt immune exempt partially immune

immune

When it comes to environmental liability, real estate license holders could be held liable for: hazards that the seller has concealed from them the cleanup costs of hazards improper disclosure of hazards the cost of inspections requested by the buyer

improper disclosure of hazards

Where can asbestos typically be found in a building? in water pipes in heating and cooling vents in insulation in drywall

in insulation

The _________________________ approach determines an investment property's value based on its return. It does this by dividing its net operating income (NOI) by the capitalization rate (cap rate) of the property. Cap rate is the ratio of NOI to property value.

income capitalization

Which of these documents provides a concise summary of all revenue and expenses (profit and loss) of a business for a stated period of time? liquidation analysis income statement balance sheet working capital statement

income statement

Increases in the cost of financing, cost of construction, and land values can cause the price of real estate to: become stagnant deflate decrease increase

increase

An investor is trying to decide what type of property they want to purchase. They are concerned because they don't want to do a lot of maintenance on whatever they buy, and they want a tenant who will be there for the long term. Which property would best fit these criteria? industrial single family medical office large multi family

industrial

A decrease in the dollar's purchasing power is called: wealth reduction above average cost inflation deflation

inflation

All of the following are part of land's unique characteristics EXCEPT: indestructibility immobility non-homogeneity inherent value

inherent value

A buyer pays a seller for a property in pre-determined chunks for a pre-determined length of time, and the seller holds the title until the property has been fully paid for. This is an example of a(n): installment sale capital gain depreciation like-kind exchange

installment sale

What are the two things the zoning board of appeals does? interpret zoning ordinances and grant variances inspect buildings for code violations and assess properties create zoning ordinances and enforce them draft a master plan and create the town map

interpret zoning ordinances and grant variances

Which of these is a tangible business asset? goodwill intellectual property inventory patents

inventory

All real property in Florida must be assessed at ________________, which is the fair and reasonable value according to objective valuation methods.

just value

Which of the following commodities is considered to be indestructible? land cars buildings chattel

land

You are the listing agent for the property at 542 Apple Street, a charming little cottage built in 1962. Title X requires the seller to make what disclosure to the buyer? lead-based paint disclosure radon disclosure mold disclosure asbestos disclosure

lead-based paint disclosure

An investor is evaluating a property. If they purchase the property in cash, their rate of return will be 5%. If they purchase it with a loan, their rate of return will be 15%. What is the investor using to increase their rate of return? basis leverage equity cash flow

leverage

Kramer has $50,000 to invest. He obtains a mortgage that allows him to buy a $300,000 rental property. He sees the benefit of the entire $300,000 property, despite only putting up $50,000. What real estate investment characteristic does this demonstrate? liquidity escrow leverage risk

leverage

Investor Ian sells a property. He then reinvests the proceeds in a brand new property, and defers all capital gain taxes. This is called a(n): immune property installment sale like-kind exchange greenbelt property

like-kind exchange

The State of Florida gives _____________ government the authority to make the majority of growth and planning decisions.

local

You are doing a CMA on a four-bed, two-and-a-half bath property. You find a potential comp: a four-bed, three-bath property that sold six weeks ago in a town 25 miles away. What makes this property not an ideal comp? has already sold not similar enough sold too long ago located too far away

located too far away

Paul has to pay a capital gain tax on his investment property. He owned the property for three years before he sold it. What kind of capital gain tax will he have to pay? short-term 3.8% long-term NIIT

long-term

Which of these could be a factor in creating a seller's market? few qualified buyers low housing supply too much inventory on the market low demand

low housing supply

Which of these could be a factor in creating a seller's market? low demand few qualified buyers low housing supply too much inventory on the market

low housing supply

Which of the following would motivate builders to build new houses right away? expectation of recession high cost of construction low prices of raw land low prices of real estate

low prices of raw land

How many buyers and sellers are in a broad market? many buyers and sellers many sellers and few buyers few buyers or sellers many buyers and few sellers

many buyers and sellers

A ____________ is 1/1000 of a dollar, or $0.001. Florida limits cities, counties, and school boards to 10 mills or less for property taxes (except for special levies). To convert millage to decimals, move the decimal three places to the left. So, 30 mills = 0.03, 26.7 mills = 0.0267, etc.

mill

When Disney World® was built, the farmlands that surrounded the theme park suddenly appreciated in value. This BEST describes an example of the economic power of: modification scarcity fixity illiquidity

modification

The payments on Kelsey's investment property mortgage cost more than the income it produces. What is this an example of? negative leverage positive leverage neutral leverage liquidity

negative leverage

Which of these takes into account a property's operating expenses? net operating income effective gross income potential gross income none of these

net operating income

Rigby owns an investment property. He bought it for $300,000, then five years later, sold it $530,000. Is he eligible for the capital gains tax exemption? Why or why not? yes, because the property was an investment property, not a primary residence no, because the property is not his primary residence no, because the capital gain was over the $200,000 deduction limit yes, because the capital gain was below the $250,000 limit

no, because the property is not his primary residence

A _____________________ is when a property was operating within zoning law, but then the law changed in a way that prohibits the established use.

nonconforming use

Chlordane is a chemical found in: air conditioners pesticides water heaters refrigerators

pesticides

Radon enters the home via: places where moisture collects and can be evaporated into gas any place where air flows into the home, such as open windows and doors places where air is able to penetrate through a home from the ground gas exhaust vents in kitchens and bathrooms

places where air is able to penetrate through a home from the ground

A ______________________ is a subdivision that includes residential dwellings along with nonresidential real estate, departing from normal zoning and subdivision regulations. The defining characteristics are its mixed land use and clustered homes. The mingling of different land uses is intentional and thoughtfully planned.

planned unit development

The most simple calculation is _____________________________. That is because PGI is the amount of income the property would bring in if it was at 100% occupancy (all units rented out).

potential gross income (PGI)

Alejandro buys an investment for a little more than its current market value, because he knows a new corporate headquarters is going in nearby. What principle of value is at work here? the principle of conformity the principle of regression the principle of contribution the principle of anticipation

principle of anticipation

Amelia is getting ready to sell her house. Her agent wants to do a CMA to help her determine the listing price. Amelia says it's not necessary, as she has the appraisal of the home from when she bought it eight years go. Her agent informs her that that valuation is no longer accurate. What principle of value is driving her agent's opinion? principle of change principle of conformity principle of substitution principle of contribution

principle of change

An owner installs an antique fireplace in their living room. The cost is $20,000, but it only adds $7,000 appraised value to the property overall. The homeowner is frustrated; they expected the cost to be at least equal to added value. Which economic principle is demonstrated here? principle of change principle of contribution principle of anticipation principle of substitution

principle of contribution

What is the trade-off a real estate investor must consider when deciding whether to employ a property manager? property managers are hard to find, but they are inexpensive property managers help investors find great deals, but they're illegal property managers make owning a property less work, but they cost money property managers let investors skirt HOA rules, but they only work for equity in the property

property managers make owning a property less work, but they cost money

The purpose of Florida's Greenbelt law is to: exempt environmental organizations from state property taxes give tax benefits to cattle owners protect farmers from excessively high property taxes allow developers to use agricultural land classifications

protect farmers from excessively high property taxes

Which of these investment types has the least liquidity? commodities stocks real estate mutual funds

real estate

Why is the market for any given property relatively small compared to other types of investments? it is illegal for investors to buy property in a state other than the state where they live real estate loses value if it is not hyper-local not many people are interested in investing in real estate real estate investors are looking in specific areas, and real estate is not portable

real estate investors are looking in specific areas, and real estate is not portable

Sales price - selling costs = _____________________

realized gain

During ______________________, the appraiser will compare estimates they made based on the cost approach, sales comparison approach, and/or income capitalization approach.

reconciliation

Which of the following is NOT a major phase of the real estate market cycle? expansion recovery recession reduced supply

reduced supply

The _________________ cost is the cost of giving the new building similar features using comparable modern materials at current prices.

replacement

Rachel is talking to her insurance agent about a property she is going to buy. If she purchases insurance, it will most likely cover the: total value of the structure and the land replacement cost of the structure only replacement cost of the land only market value of the structure and the land

replacement cost of the structure only

The _______________ cost is the cost of procuring exact copies of the building's components, preserving the styles and materials used at the subject property's original construction.

reproduction

What are the three approaches to value? cost approach, substitution approach, and comparison approach sales approach, income capitalization approach, and debt comparison approach income capitalization approach, debt analysis approach, and sales approach sales comparison approach, income capitalization approach, and cost approach

sales comparison approach, income capitalization approach, and cost approach

The cost of real estate in a metropolitan area has gone up dramatically over the past year because an increasing number of people has been moving to that area, and there are only a finite number of parcels of land that are close to the downtown area. This is an example of: scarcity modification illiquidity situs

scarcity

Susannah's house has been assessed at $90,000. What is the taxable value for her house? school taxes: $75,000; city and county taxes: $30,000 school taxes: $65,000; city and county taxes: $40,000 school taxes: $25,000; city and county taxes: $50,000 school taxes: $45,000; city and county taxes: $70,000

school taxes: $65,000; city and county taxes: $40,000 Assessed value - Homestead exemptions = Taxable value. For school taxes, that's $90,000 - $25,000 = $65,000. For city and county taxes, $90,000 - $50,000 = $40,000.

Viola is the listing agent for a house in a popular neighborhood. She believes the home will attract multiple offers above the listing price and her seller won't have to offer any concessions. What type of market is this? hyper supply market buyer's market situs market seller's market

seller's market

What does a comprehensive plan do for a community? creates voting policies and procedures sets tax assessment levels and tax rates creates subdivisions and plats sets out their urban planning goals and priorities

sets out their urban planning goals and priorities

What term identifies an economic preference for a certain location? fixity uniqueness durability situs

situs

You're working with a buyer who makes her living as a web developer. She wants to purchase a condo in the downtown area of the city where tech companies are located. Which characteristic of real estate does this preference refer to? illiquidity scarcity situs immobility

situs

A _______________ assessment is when additional taxes are levied on the homeowners in a neighborhood or area to pay for improvements that benefit the people living there.

special

A __________________________ allows specific kinds of uses in a zone that aren't the main use of that zone, as long as the property owner meets certain requirements. Think of this one as an exception made for the public interest. For example, a church in a residentially zoned area or a restaurant for workers in an industrially zoned area would need a special exception. A public hearing generally takes place before a special exception is granted.

special exception

Harriet is the rabbi at a temple that exists in the heart of an old neighborhood, zoned for residential buildings only. What is the most likely kind of variance the temple has? planning variance area variance special exception zoning appeal

special exception

All of the following are examples of tangible property EXCEPT: stocks tangy chicken restaurant deep fryer

stocks

What does a certificate of occupancy certify? that a building has been built to code that a developer has pulled the proper permits that a development has been approved by the zoning board of appeals that a builder is licensed through the federal government

that a building has been built to code

What are ad valorem taxes based upon? the condition of the property the assessed value of the property the age of the property the area of the property

the assessed value of the property

Which of these would most likely be agreed upon in the sales contract? the closing date the reconciliation amount the loan-to-value ratio the results of the survey

the closing date

Lead poses a hazard in homes in multiple ways. People can be exposed to lead from chipping paint, lead in outdoor soil, and: the breakdown of common insulation materials lead vapors permeating the home's foundation the inhalation of poisonous gas created from lead corrosion the corrosion of lead pipes contaminating the drinking water

the corrosion of lead pipes contaminating the drinking water

Title and inspection fees are examples of non-recurring closing costs that are associated with: Title and inspection fees are NOT examples of non-recurring closing costs. the lender neither the lender nor the home-purchase process the home-purchase process

the home-purchase process

Which party typically requires homeowners insurance in order to complete a real estate transaction? the lender the insurance company the seller the buyer's agent

the lender

An appraiser using the sales comparison approach will be most focused on what? the market demand the property taxes the amount of the loan the equity in the home

the market demand

Tom buys a parcel of land and goes to the local zoning officer before he builds his house to see what restrictions he might have to consider. Which is LEAST LIKELY to be addressed by a zoning ordinance? whether or not Tom can operate a bar from the property the size of the structure the position of the building on the lot the number of outlets required for each room

the number of outlets required for each room

When an appraisal report is not available, which of the following provides the BEST indicator for setting a listing price in a fast-moving seller's market? the average purchase price for all properties in the immediate area the average listing price for similar properties in the area replacement cost of the structure plus current lot value the price willing buyers have recently paid for similar properties in the area

the price willing buyers have recently paid for similar properties in the area

Two super fancy homes have been built on Frank's block recently. Because they sold for so much money, the value of his home has increased as well. Which economic principle does this illustrate? the principle of regression the principle of progression the principle of competition the principle of conformity

the principle of progression

In Florida, to whom does a property owner NOT pay property taxes? school districts the county the city the state

the state

Who uses the sales contract to determine how the expenses in a real estate transaction will be allocated? the listing broker the buyer's attorney the title company the lender

the title company

Hamlet is reviewing his assets. Of the below, what depreciates? the castle where he lives his royal robes the land beneath his castle the village huts that he rents out

the village huts that he rents out

Edna and her engineer read the zoning regulations for her lot one way. When they went to get a building permit, the folks at the department of buildings read the regulation another way. They refused her a permit. Where could she go to get an official interpretation of the zoning regulation? city council her HOA the zoning board of adjustment the planning board

the zoning board of adjustment

The creditor is generally required to ensure that the consumer receives the Closing Disclosure no later than _________________ days before consummation of the loan.

three business

How will closing cost expenses be determined? through an amendment to the sales contract NAR standards state guidelines through the sales contract

through the sales contract

What is the primary purpose of the planning board? to create a master plan to create building code to grant zoning variances to pass zoning laws

to create a master plan

What is the purpose of FIRPTA? to protect homeowners from capital gains taxes to decrease farmers' property taxes to allow first-time homebuyers to withdraw money from their IRA accounts to contribute to down payments to ensure that the IRS get taxes owed by foreign sellers of real property

to ensure that the IRS get taxes owed by foreign sellers of real property

What is the purpose of Florida's Greenbelt Law? to assess agricultural land more strictly (and therefore more fairly) than city and urban land to protect farmers from tax increases, who are particularly vulnerable since agricultural land can be prime real estate for development to provide tax protection to developers to offer environmental protections to agricultural land, including regulations on who can develop property on farmland

to protect farmers from tax increases, who are particularly vulnerable since agricultural land can be prime real estate for development

For years, a city's residential zone required homes to have 15-foot side yards and a building height under 40 feet. It was rezoned to allow attached buildings with heights up to 80 feet. What is this an example of? upzoning incentive zoning downzoning cluster zoning

upzoning

UFFI stands for: urea-formaldehyde freon insulation urea-formaldehyde foam insulation up for fried ice cream urea-formaldehyde fiber insulation

urea-formaldehyde foam insulation

A ____________________ is a variance that permits a use of land which is proscribed by the zoning regulations. It deals with types of use. So, for example, a restaurant that wanted to open up in a residential area would need a use variance.

use variance

A ____________ is permission granted by the government so that property may be used in a manner not allowed by the current zoning.

variance

Which of these types of land does the Clean Water Act have specific protections for? old growth forests wetlands highlands river sources

wetlands