Real Estate Investment Analysis
- Explain how a purchase money mortgage is sometimes used by a builder so that he may reduce the amount of cash necessary.
- How and when is an estoppels certificate used?
- Discuss the actions available to the Central Bank to raise or lower interest rate.
- Explain the impact of interest rate on secondary mortgage market.
- How is the real estate market different from commodity market?.
- Economists often refer to credit situations as being "easy," "taut," or "tight." The term "taut" seems to be used to indicate an area between easy and tight and moving in the direction of tight.
Assume you are a mortgage banker with an opportunity of placing $300,000 worth of mortgages. You have a large life insurance company to whom you can look as a permanent investor for this money.
Indicate the probable flow of funds in each of the above three situations suggesting the various type commitments, warehousing, etc., that would logically be necessary. You might also assume that you can deliver your "package" (the entire lot of mortgages) in about 18 months.
- The following excerpt is from a recent issue of Realtor´s Headlines:
"Secondary market purchase prices for government-backed 4½ per cent mortgages were cut, and advance commitments to buy them were discontinued last week by the Federal National Mortgage Association.( FNMA). FNMA, which buys Federation of Housing Association (FHA) -insured and government-guaranteed mortgages from lenders thus renewing their cash resources, said that its prices for FHA and government insured 4½ per cent mortgages would range from 90 to 92, depending upon the area and amount of mortgagor´s equity. The previous price range was 92 to 94.
. . . Unaffected by the order were FHA mortgages bearing interest rates of 5 and 5¼ per cent. Their price schedules have not been changed, and they will continue to be eligible for stand-by commitments."
1.Explain the terms "advance commitments" and "standby commitments" as used above.
2.Why should the price of mortgages vary with the "area" or geographical location of the mortgage?
3. Can any conclusion be drawn from this with regard to the direction in which the interest rate is moving? Solve by www.solvezone.in
MULTIPLE CHOICE QUESTIONS
Question No. 1 Marks - 10
Real estate refers to
- land and structures attached to it. ANS
- legal benefits, interests or rights inherent in the ownership of real estate.
- movable property.
- land, but not structures attached to it.
Question No. 2 Marks - 10
The primary difference between freehold and leasehold estates is that
- the number of rights is greater with leasehold estates
- leasehold estates involve property which have no liens.
- a freehold interest is an ownership interest. ANS
- a freehold estate can only be possessory.
Question No. 3 Marks - 10
How many feet are there in a yard?
Question No. 4 Marks - 10
A broker legitimately may pay all or part of Real estate commission to a
- friend who provides a listing lead
Question No. 5 Marks - 10
The major government-sponsored agencies involved in securitization of home mortgage loans are:
- All of the above ANS
Question No. 6 Marks - 10
A claim on property as security for a debt or other obligation is known as a(n)
Question No. 7 Marks - 10
The most important skill for a real estate agent is
- Selling ANS
Question No. 8 Marks - 10
Direct real estate investments include
- limited partnerships.
- single family dwellings. ANS
Question No. 9 Marks - 10
Which type of REIT invests in properties?
- Equity ANS
Question No. 10 Marks - 10
If you want a risk-proof real estate investment, invest in
- a vacation home.
- your own home.
- a participation certificate. ANS
- commercial property.
Question No. 11 Marks - 10
Which one of the following is a disadvantage of investing in real estate?
- Illiquidity ANS
- A hedge against inflation
- Financial leverage
- Short depreciation period
Question No. 12 Marks - 10
Real property can be most completely defined as:
- land, buildings
- land, fixtures, minerals
- land, items affixed to land, immovable by law
- land, affixed to land, appurtenances, immovable by law ANS
Question No. 13 Marks - 10
An investor leases a building to a tenant who then opens a retail store. The tenant installs a cash register. The cash register is best described as:
- personal property
- trade fixture ANS
- real property
- leased property
Question No. 14 Marks - 10
A person who makes a will is the:
- testator ANS
Question No. 15 Marks - 10
Interest in real property held by a tenant:
- freehold estate
- fee estate
- rental estate
- less-than-freehold estate ANS
Question No. 16 Marks - 10
Per the Real Estate Commissioner´s regulations, a broker must:
- keep a formal cash receipts/cash disbursement journal ANS
- maintain a trust fund account in a bank
- maintain a minimum balance in the trust fund
- all of the above
Question No. 17 Marks – 10
Which of the following items would not be considered a fixture?
- A built-in fireplace
- A grandfather clock
- A chandelier
- Wall-to-wall carpeting ANS
Question No. 18 Marks - 10
Which of the following would be a less than freehold estate?
- Life estate
- Leasehold estate ANS
- Fee simple estate
- Fee simple determinable estate
Question No. 19 Marks - 10
Ad valorem taxes are:
- levied equally against all property owners
- based on the value of property ANS
- determined by the benefit of services received
- paid only upon property transfer
Question No. 20 Marks - 10
A special assessment is:
- re-evaluation of a property´s value made upon request from an arbitration board
- a tax based upon benefit received ANS
- a tax levied equally against each property owner in the city or county
- a tax levied only if ad valorem tax is insufficient to fund the proposed budget.
Question No. 21 Marks - 10
The term fiduciary best describes:
- the principal
- an agent ANS
- both an agent and principal
- neither an agent nor a principal
Question No. 22 Marks - 10
Courts frequently have to make a decision as to whether some item does or does not go with the real property when it is sold. In making their decision, they use the "Five tests of a fixture." These include of the following except:
- method by which property is attached
- whether the property is considered adaptable
- whether the property is being taxed
- relationship of parties involved
Question No. 23 Marks - 10
_______ estates refer to ownership rights, while the term _______ refers to rights to use or possess (but not own) property for a period of time.
- Grantor, grantee
- Grantee, grantor
- Freehold, leasehold ANS
- Leasehold, freehold
Question No. 24 Marks - 10
The seller of a property is typically known as the
Question No. 25 Marks - 10
Unauthorized intrusion of a building, improvement, or other attachment onto a neighboring land is:
- An easement
- An encroachment ANS
- A lien
- An estate
Question No. 26 Marks - 10
Telephone lines are examples of:
- An easement in gross
- A legally valid encroachment
- An easement appurtenant
- A non-revocable license
Question No. 27 Marks - 10
A permanent addition to a building is:
- Real property
- Personal property
- A chattel real
- An encumbrance
Question No. 28 Marks - 10
All of the following would be considered real estate EXCEPT:
- growing trees
- farm equipment
Question No. 29 Marks - 10
Which of the following is an estate in land?
Question No. 30 Marks - 10
If a real estate broker earned a commission of $5,600 at a commission rate of 7%, at what price was the property sold?
Question No. 31 Marks - 10
REITs offer all of these, except:
- an income stream.
- price appreciation/depreciation.
- professional management.
Question No. 32 Marks - 10
The primary difference between a secured and unsecured loan is
- whether or not the lender charges interest on the debt.
- whether or not the lender has a claim on specific assets of the borrower in the event of default.
- whether the borrower can simply surrender the pledged asset to the lender instead of repaying the debt.
- All of the above
Question No. 33 Marks - 10
The actual act of transferring ownership of land is known as a
Question No. 34 Marks - 10
A court order to force the sale of real estate to pay a judgment is called:
- an attachment
- a writ of execution
- a deficiency judgment
- a foreclosure
Question No. 35 Marks - 10
Which of the following is not an example of a business process?
- designing a new product
- hiring an employee
- purchasing services
- testing software
Question No. 36 Marks - 10
Which of the following is not a principle that should guide business process reengineering?
- capture data at each source
- fully re-document legacy processes
- organize around outcomes
- put decision point where work is performed
Question No. 37 Marks - 10
If a person dies intestate and has no heirs, the state receives title to his or her property through the power of
Question No. 38 Marks - 10
Although ownership and possession of real estate are not synonymous, through_______ one might gain ownership by possession.
- adverse possession
Question No. 39 Marks - 10
A fiduciary relationship is primarily based on
- the amount of money involved.
- personal relationship with the agent.
- trust and confidence in the integrity of the agent. ANS
- type of organization involved
Question No. 40 Marks - 10
The primary obligation of all financial fiduciaries is to their
- government regulators.
- state administrators