Investment CE
Which of the following is a characteristic of subprime loans prior to the Great Recession?
- approved for people with low incomes and poor credit histories -often included adjustable rate mortgages with low initial interest rates - loan defaults
Which factors contributed to the economic crisis that we experienced 07-09?
-easier credit increased the number of subprime mortgages -fannie mae's made an effort to increase homeownership rates - the belief that housing prices would continue to rise - the massive jump in foreclosures depressed the housing market
Henry dies, and his property is not held in a trust. Thus, his estate will go through probate to ensure his property is distributed to his heirs in accordance with his will. The probate process often takes ____ before the property is distributed to the heirs of the deceased
A year or more
In this section, the seller either accepts the offer or comes back with a counter-offer
Acceptance of offer by seller
Prices decrease. Is it a buyers market or a seller's market?
Buyer's market
Supply is greater than demand. Is it a buyers market or a seller's market?
Buyer's market
This section in a contract outlines the requirements for the seller to provide proofthat the property is habitable
Certificate of occupancy
According to the National Association of REALTORS, the majority of foreign investment in US real estate has so far come from
Chinese
In a contract, this section documents where the closing will place and what day
Closing Date and Place
This section of a contract identifies the circumstances and conditions under which the transaction might need to be terminated
Contingencies
This section of a contract identifies the amount of earnest money the buyer has put down to show good faith and interest in the property
Deposit to Listing broker
This trust may be altered or discontinued by any of the parties to the trust
Discretionary
Which of the following is a requirement for a trust to qualify as a real estate investment trust?
During the last half of any year, no more than 50% of shares were owned by five or fewer people
This section puts the parties on notice that verbal assurances will not be enforceable
Entire contract
Your client is a large developer who wants to build new retail space. She's considered zoning, construction codes, and development regulations. What other governmental influence will she also need to consider?
Environmental codes
When property values remain at the same level and are at their highest monetary value, the neighborhood is in what stage of the neighborhood life cycle?
Equilibrium
True or False. A GRIT (grantor retained income trust) must be established for at least a 10 year period
False
True or False. Both living and testamentary trusts avoid probate
False
True or False. For married couples filing seperately, the maximum amount of debt that can be treated as acquisition debt for tax purposes on a main home plus a second home is $1 million
False
True or False. Land trust must be created at the time the real estate is purchased, not after it's been acquired.
False
True or False. The role of the trustor and trustee can't be performed by the same person.
False
True or False. There are no costs associated with maintaining a trust.
False
True or False. With a land trust, the person who establishes the trust (the trustor) can't also be the beneficiary
False
According to the NAR information regarding foreign investments in the US real estate market from april 2017-march 2018: True or False. Foreign buyers purchased 153 billion in property in the US.
False (121 billion)
True or False. Although investors rely on licensees for contractual needs and services, they don't tend to depend on licensees for market trend information.
False.
True or False. Appraisers aren't a good source of information for investors because appraisers generally work for lenders.
False.
True or False. Investors don't rely on their personal obervations; they prefer data
False.
Daisy has a knack for maintaining positive relationships and wants an investment where she's in control. Is she a good fit for real estate investment?
Good fit.
In this section of a contract, sellers disclose whether they are behind on payments, and buyers indicate whether they intend to occupy the property
Home equity theft protection
You can't move land, and location plays a huge role in the value of real estate. This refers to the ____________ of the real estate market.
Immobility
The Stewarts have lived in their home along the Eastern Seaboard for 30 years and don't have any intention of selling. They're responsible homeowners, so every now and then they make sure to determine the ___ of their home in case it's destroyed and must be replaced.
Insured value
Once established, this trust can't be altered until the goals of the trust have been met
Irrevocable
What happens at the end of the term established for a granter retained income trust (GRIT)?
It vests to the beneficiary
this section of a contract specifies the deadline for the seller's response to the buyer's offer
Life of offer
A lender requests an appraisal of a property under foreclosure. What type of value is the lender most likely to be interested in?
Liquidation value
What kind of trust is created during a personʼs lifetime, and is established to convey property and avoids probate?
Living trust
in the early 2000 before the 2007 financial crisis, how would you characterize the real estate market?
Low interest rates and high property values
What are the two primary types of deductions a taxpayer may take on a primary residence?
Mortgage interest Property taxes
Ivor is looking for a safe investment that offers high yields. Is he a good fit for real estate investment?
Not a good fit
This section of a contract describes how notices to the parties may be delivered and deemed received
Notices
This section of a contract defines the items that the sellers want to leave behind and those they want to remove (exlude)
Other Items Included
The section of a contract identifies the seller and buyer who are entering into the contract
Parties to the Contract
In a contract, this section lets sellers know when they need to clear out so that the buyer can move in
Possession of property
This section of a contract defines the purchase price, whether there are any seller-paid closing costs and how the buyer intends to pay for the property
Price and Payment
In this section of a contract, the seller notifies the buyer whether disclosures are being provided or not
Property Condition Disclosure
This section of the contract provides a legal description of the property being offered for purchase
Property description
Ishmael is an investor client who tells you he wants to invest in a hotel for crews of whaling ships. It needs to be near the waterfront and definitely near a whaling port. He knows he'll be able to manage the hotel in a way that his target audience will appreciate. Which segments has he defined in his request?
Property type location investment strategy
this section of a contract identifies the broker ho is responsible for ringing about the purchase and sale of the property
Real estate broker clause
What does a mortgage real estate investment trust invest in?
Real estate debt
What is the investment vehicle type for a Mortgage REIT?
Real estate debt
What is the investment vehicle type for an Equity REIT?
Real estate property
The houses in one neighborhood are all of similar sizes and style. When the Smiths' house goes into foreclosure, what principle will affect the value of the next-door neighbors' house if they sell at the same time?
Regression
This section of a contract specifies that the seller is responsible for any risk of loss or damage to the property until the title transfers.
Risk of loss
Demand is greater than supply. Is it a buyers market or a seller's market?
Seller's market
Prices increase. Is it a buyers market or a seller's market?
Seller's market
in this section of a contract, the seller identifies the types and services utilities available on the property
Services
Tim's condo is identical to one in the same complex that's also for sale, so the purchase price will probably be very similar. What is this value principle?
Subsitution
When prices go down because there are too many homes on the market and to few buyers, this is an example of ____
Supply ad demand
What kind of trust is created according to terms of a deceased person's will and does not avoid probate?
Testamentary trust
In this section of a contract, the seller affirms that a good and marketable title will be conveyed to the buyer at closing
Title and related documents
According to the NAR information regarding foreign investments in the US real estate market from april 2017-march 2018: True or False. Chinese investors were the largest investors in US real estate
True
True or Debt that doesn't qualify as home acquisition debt may qualify as home eqity debt.
True
True or False. A land trust is formed specifically to hold real estate- real property is the only asset within the trust.
True
True or False. A living trust is created during a person's lifetime and is established to convey property
True
True or False. A testamentary trust is one created according to the terms of the will of a deceased person
True
True or False. A testamentary trust is one created according to the terms of the will of a deceased person.
True
True or False. Only the grantor/trustor of the GRIT trust may receive any income from the property while its in trust.
True
True or False. Spouses may transfer real and personal property into trust and then name themselves as joint trustees with rights of survivorship
True
True or False. Subsequent financing, such as a refinance, on a property that already has a home acquisition loan opened against it may also qualify as home acquisition debt.
True
True or False. Successful investors learn to recognize burgeoning trends and distinguish market cycles so they can plan ahead.
True
True or False. The debt used for acquisition financing (for tax purposes) must only be used for the purchase or improvement of the property; anything beyond these expenses isn't considered part of the acquisition financing for tax purposes.
True
True or False. When a person dies, estate assets outside of a trust must go through probate. Probate can take up to a year or more before the property is disbursed to the heirs.
True
True or False. When a person dies, estate assets outside of a trust must go through the probate. Probate can take up to a year or more before the property is disbursed to the heirs.
True
Janice and Steve's oceanfront house is worth significantly more than an identical house up the coast a few miles. Which characteristic of the real estate market do they have to thank for this?
Uniqueness
What are the six characteristics of real estate?
Uniqueness Immobility Permanence Longevity Influenced by government policy Slow to respond
Your real estate investor client, Annalise, has an investment plan that includes purchasing several acres of property downtown. When the deal falls through, you know Annalise, an experienced, smart investor, will make the right decision, which is to:
Walk away from the property and move onto another one.
FIRPTA (Foreign Investment in Real Property Tax Act)
When a non-resident sells real property owned in the US, the IRS wants to make sure it receives any capital gains taxes owed, so they require the buyer to withhold 15% of the gross purchase price of the property when disposing of the property.
Which of the following government influences can affect value by restricting use of a property, perhaps even preventing the highest and best use of a property?
Zoning
In this section of a contract, the seller verifies that the property is zoned for a specific use and complies with building codes and ordinances
Zoning/bldg Code compliance
This section of a contract identifies any items that are being made part of the contract agreement
addenda
Is Potential for high yields an advantage or disadvantage of realestate investing?
advantage
Fatima purchases an apartment building near the site of a new industrial park
anticipation
The seller can use this section of a contract to indicate whether or not an attorney needs to approve the agreement
attorney approval waiver
When it comes to real estate investments, "commercial' is _____
both an investment strategy and a property type
Resources for investors
cbre.com globest.com marcusmillichap.com loopnet.com costar.com nar.realtor irem.org
Investors who maintain strong relationships with local ________ will have a source of information about trends in commercial property values and net operating incomes.
commercial real estate lenders
The principles of value that tell you why a property value goes up or down.
competition anticipation conformity regression progression contribution highest and best use substitution Change: integration, equilibrium, disintegration, and rejuvenation
This section of a contract specifies that the buyer agress to recieve the property in its current state
condition of property
Is high capital requirements an advantage or disadvantage of realestate investing?
disadvantage
Now let's tlak about the value principle of change, and the cycle that's part of the principle. Which part of the cycle is in effect when a condominium complex has all its units occupied by owners whose HOA des pay to maintain the grounds in immaculate conditions?
equilibrium
Taxes, construction codes, and development regulations are all ways that ___________ can influence a real estate investment and potentially increase or decrease the investment's value.
federal and local government
The cliffs where Janice and Steve's oceanfront house is perched and eroded. Their home is suddenly a lot closer to the ocean, uncomfortably close. In fact, now their property is worht a whole lot less. What characteristic of the real estate market is affecting the value of their home?
immobility
Which of the following resources would you utilize to find property listings to use for comparable values and rental surveys
loopnet
Types of property value
market value investment value going-concern value insured value salvage value liquidation value assessed value value in use
This section of a contract makes it clear that the parties who sign are responsible for complying with the terms of the contract
responsibilities of persons
The chance that an investor might lose money is known as ______
risk
These sections of a contract verify that the buyer and seller agree to the terms of the contract and the dates on which the verification was made.
signatures of buyer/seller
Governmental policies important to consider when investors are looking at properties
taxes federal control of money zoning environmental controls construction codes development regulations
This section of a contract notifies both the buyer and the seller about how closing adjustments will be handled.
transfer tax, recording costs
