Q&A Hero

Q: Professor James Graaskamp often asserted that when one buys real estate, what one is buying is a set of assumptions about the future. Therefore, it is not surprising that the beginning point of the market research process is to: A. collect relevant data to examine the market and test initial definitions B. evaluate the results of market analysis C. construct a market-defining story D. refine market definitions and collect additional data

Q: In constructing a market-defining story, it is helpful to answer a series of fundamental questions around which analysis can be built. Which of the following questions is designed to identify the target market? A. What is the real estate product under consideration? B. Who are the customers? C. What aspects of the product do the customers care about? D. Who are the competitors?

Q: Preferences of households can vary with time, prosperity, and context. The nuances in the preferences or needs of market subgroups are commonly referred to as: A. market segmentation B. market parameters C. market projection D. market cycles

Q: A popular adage in real estate is that property value is all about location, location, location. However, for most property types in nonresidential realms, nonlocational requirements are equally or even more important. All of the following are examples of nonlocational factors EXCEPT: A. Floor plate size B. Amount of parking C. Nature of current tenants D. Proximity to modes of public transportation

Q: Real estate market research is an important process used by analysts to facilitate a better understanding of a propertys future profit potential. All of the following statements regarding market research are true EXCEPT: A. Real estate market research should always be flexible since the research depends directly on the problem at hand. B. Market research consists of a series of facts that fails to consider the role of investor behavior in the decision-making process. C. Most important data for a given market study often is not publicly available. D. Market research should focus specifically on market segments for the property involved, rather than on the aggregate real estate market.

Q: A fishing company was formed in Juneau, Alaska. Over the next decade, a canning plant, a processing plant, and a boat repair facility also opened in Juneau. This is an example of: A. industry economies of scale B. agglomeration economies C. location quotient D. linkages

Q: Most research oriented universities have many different colleges, each with separate administrations, students, curricula, and facilities. However, the university continues to exist as a total unit because of: A. industry economies of scale B. locational monopoly C. economic inefficiencies D. negative externalities

Q: Based on the following information, determine the location quotient for Music City and whether this city has a competitive advantage in the entertainment industry. Employment in Entertainment in Music City: 3,020; Total Employment in Music City: 656,785; Employment in Entertainment (nationally): 2,160,970; Total Employment (nationally): 106,201,232. A. 0.23; No, the city does not have a competitive advantage in this industry. B. 4.43; No, the city does not have a competitive advantage in the industry C. 0.23; Yes, the city has a competitive advantage in this industry D. 4.43; Yes, the city has a competitive advantage in this industry

Q: Providers of convenience activities find it profit-maximizing to disperse over the region of potential customers to the point where each establishment is equidistant from another and is separated by the minimum distance that allows sufficient customers to support each establishment. The resulting pattern of establishment locations is referred to as: A. central place pattern B. clustering C. concentric circle D. multi-nuclei

Q: A recent college graduate has obtained employment at a major financial institution in the big city. Since she just graduated, she has decided to continue to rent her college apartment in the suburbs and make the daily commute to the big city for work. She currently pays $1000 per month to rent an apartment in the suburbs. She works at the bank 5 days a week and it takes her 1 hour to commute from her home to her office. According to the assumptions of the bid-rent model, what should this recent grad be willing to pay in rent per month to live in the big city if her hourly wage rate is $20? (In your calculations, assume there are 4 weeks in a given month.) A. $800 B. $1000 C. $1400 D. $1800

Q: The location of competitors within a particular land use area may be influenced by whether the types of services and products are convenience activities or comparison activities. Which of the following is an example of a comparison activity? A. Supermarket B. Coffee boutique C. Fast-food restaurant D. Apparel store

Q: Which of the following models of urban form is characterized by radial corridors or wedges representing the pattern of residential land use in relation to the location of the central business district (CBD)? A. Bid-rent model B. Concentric circle model C. Sector model D. Multi-nuclei model

Q: Using the following information, determine the location quotient for Springfield. Employment in Aerospace Products within Springfield: 30,044; Total Employment in Springfield: 208,054; Employment in Aerospace Products (nationally): 474,905; Total Employment (nationally): 106,201,232 A. 0.03 B. 12.10 C. 15.70 D. 32.29

Q: Based on the following information, determine the location quotient for Amusement City and whether this city has a competitive advantage in the amusement industry. Employment in Amusements and Recreation in Amusement City: 54,446; Total Employment in Amusement City: 578,477; Employment in Amusements and Recreation (nationally): 1,381,377; Total Employment (nationally): 106,201,232. A. 0.14; No, the city does not have a competitive advantage in this industry. B. 7.24; No, the city does not have a competitive advantage in the industry C. 0.14; Yes, the city has a competitive advantage in this industry D. 7.24; Yes, the city has a competitive advantage in this industry

Q: An early model of land use is the concentric ring model of urban form developed by E.W. Burgess. Of the following land uses, which would be closest to the downtown area of the central business district (CBD) according to Burgess model? A. Blue-collar residential land use B. A zone of transition containing warehousing and other industrial land uses exists between the downtown area and the residential area. C. White-collar clerical residential land use D. Executive residential land use

Q: A new faculty member at the local university pays $1500 per month to rent an apartment in the downtown area. She teaches on campus 3 days a week and works from home the remaining 2 days. On the days in which she must commute, given the heavy traffic congestion, it takes her 2 hours to commute from downtown to campus. According to the assumptions of the bid-rent model, what should this professor be willing to pay in rent per month to live near campus if her hourly wage rate is $25? (In your calculations, assume there are 4 weeks in a given month) A. $1200 B. $1500 C. $2100 D. $2700

Q: Within the framework of the bid-rent model, as rents increase with proximity to the central business district (CBD), the tendency is for development to: A. spread to the outskirts of the city B. build upward on lots within the CBD to allow multiple tenants C. cease completely D. focus on low-income housing projects.

Q: Using the following information, determine the location quotient for Motor City. Employment in Motor Vehicle Manufacturing within Motor City: 12,643; Total Employment in Motor City: 560,379; Employment in Motor Vehicle Manufacturing (nationally): 152,750; Total Employment (nationally): 106,201,232 A. 0.1 B. 12.1 C. 15.7 D. 44.3

Q: According to the bid-rent model, which of the following individuals would be the one most likely to live closest to the central business district (CBD)? (Hint: Assume that work locations are located adjacent to each other at the center of the CBD) A. A barista at the local coffee shop who uses a car to commute. B. A doctor at the city hospital who uses a car to commute. C. A barista at the local coffee shop who must walk to work. D. A doctor at the city hospital who must walk to work.

Q: An individual works downtown and pays $600 per month in rent for an apartment located 10 miles from her office. She has calculated that she spends 30 minutes per day driving each way to the office and it costs her $4 per day in gas and lost productivity. Using the framework of the bid-rent model, how much would she be willing to pay for an apartment downtown, assuming a 20 workday month? A. $80 B. $440 C. $520 D. $680

Q: According to the bid-rent model, which of the following changes in the models underlying assumptions would most likely result in a decrease in rents for properties closest to the central business district (CBD)? A. An increase in an individuals hourly wage B. An increase in the average traveling speed of the individuals commute C. An increase in the number of households attempting to live in the area D. An increase in the number of days an individual must commute to work

Q: Using the following information, determine the location quotient for this industry. Percentage of employment in financial services industry within the local community: 15%, Percentage of employment in financial services industry for the entire U.S.: 4.4%. A. 0.3 B. 3.4 C. 10.6 D. 19.4

Q: Within some types of land use, business location may be determined by the type of service or products that are offered to consumers. Based on your understanding of the differences between comparison and convenience activities, which of the following providers would operate in the convenience activity space? A. Supermarket B. Car dealership C. Large public university D. Apparel store

Q: The growth of the motion picture industry in Los Angeles, the petrochemical industry in Houston, the software industry in Silicon Valley, are all examples of how the growth of an industry within a city can create cost advantages for future growth. Economists refer to this phenomenon as: A. industry economies of scale B. agglomeration economies C. locational monopoly D. economic inefficiencies

Q: Cities such as New York are able to host a variety of complex industries because of the development of specialized resources that support their growth. When specialized resources emerge in response to demand from multiple industries, this is referred to as: A. industry economies of scale B. agglomeration economies C. locational monopoly D. economic inefficiencies

Q: According to the bid-rent model, which of the following individuals would be the one least likely to live closest to the central business district (CBD)? (Hint: Assume that work locations are located adjacent to each other at the center of the CBD) A. A barista at the local coffee shop who uses a car to commute. B. A doctor at the city hospital who uses a car to commute. C. A barista at the local coffee shop who must walk to work. D. A doctor at the city hospital who must walk to work.

Q: Because a citys output capacities change slowly over time, it is important to understand the supply side (long-run) factors affecting urban growth. Which of the following would NOT be considered a supply-side factor that impacts a citys economic growth? A. Nature of the available labor force B. Quality of life within a community C. Cooperation of local leadership and government D. Citys export activity

Q: According to the bid-rent model, which of the following changes in the models underlying assumptions would most likely result in an increase in rents for properties closest to the central business district (CBD)? A. A decrease in an individuals hourly wage B. A decrease in the average traveling speed of the individuals commute C. A decrease in the number of households attempting to live in the area D. A decrease in the number of days an individual must commute to work

Q: In contrast to base activities, local economic activities (or secondary activities) serve the local business and households that are recirculating the income derived through the citys economic base. In other words, we can distinguish local economic activities from export activities by thinking about whether or not the activity brings money into the city from outside sources. Which of the following activities is NOT an example of land use for local economic activity? A. Retail centers B. Restaurants C. Automotive services D. Manufacturing Center

Q: Based on your understanding of the effect of agglomeration economies in real estate, you would expect institutional investors to most favor real estate investments in which of the following areas? A. small urban markets B. large urban markets C. small rural markets D. large rural markets

Q: The magnitude of an economic base multiplier depends upon the amount of money that leaks out through expenditures outside of the city limits. The economic multiplier tends to be higher with each of the following EXCEPT: A. A higher percentage of local household income is respent within the city. B. The larger the city is. C. The less isolated the city is from other cities. D. The more tourism a city brings in.

Q: An important effect of agglomeration economies on real estate is its impact upon market risk. Based on your understanding of this relation, which of the following statements is TRUE? A. Properties located in a city with more advanced development of agglomeration economies will carry more risk and therefore suffer a larger price decline during an economic downturn than comparable properties in a city with less agglomeration. B. Properties located in a city with more advanced development of agglomeration economies will carry less risk and therefore suffer a larger price decline during an economic downturn than comparable properties in a city with less agglomeration. C. Properties located in a city with more advanced development of agglomeration economies will carry more risk and therefore suffer a smaller price decline during an economic downturn than comparable properties in a city with less agglomeration. D. Properties located in a city with more advanced development of agglomeration economies will carry less risk and therefore suffer a smaller price decline during an economic downturn.

Q: A citys economic base can be viewed in terms of a multiplier process, in which the money that is brought in through export activities is then respent within the city. Which of the following economic activities is the least likely to be considered a high-impact or high-multiplier economic base activity? A. Tourism B. Retirement C. Computer assembly D. Specialized medical services

Q: The demand for access between land uses is considered the gravity that holds a city together. These relationships between land uses are commonly referred to as: A. linkages B. economic bases C. local economic activities D. economies of scale

Q: Understanding the revenue generating ability of the core export activities of a local area has important implications on the market value of real estate. When the income that these activities generate is re-spent within the community on other local goods and services, the community is benefiting through a: A. dividend process B. multiplier process C. forced saving process D. diversification process

Q: Six suburban office buildings have been constructed along six consecutive blocks in Roseland, New Jersey. This is an example of: A. central place pattern B. clustering C. concentric circle D. multi-nuclei

Q: A citys potential for growth or its susceptibility to decline is determined by a set of economic activities that the city provides for the world beyond its boundaries. Economists refer to this set of activities as a citys: A. linkages B. economic base C. local economic activities D. economies of scale

Q: Given the following information, compute the property tax rate for the community in mills. Total budget expenditures: $250 million, Total non-property tax income: $150 million, Total assessed value of all properties: $5 billion, Total exemptions: $900 million. A. 2.00 mills B. 2.43 mills C. 20.0 mills D. 24.3 mills

Q: To determine a propertys annual tax liability in dollars, it is useful to first convert the millage rate to an annual percentage. If the millage rate is 25 mills, determine the property tax rate in percentage form. A. 0.025% B. 0.25% C. 2.50% D. 25.00%

Q: Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $537,500, Assessed value of property: 60 % of the market value, Exemptions: $2,500, School District Millage Rate: 29.25 mills, County and Township Millage Rate: 5.75 mills. A. $7,437.50 B. $11,200.00 C. $11,287.50 D. $188,125.00

Q: Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, State Millage Rate: 0.25 mills, County Millage Rate: 13.70 mills. A. $34.50 B. $1,890.60 C. $1,925.10 D. $4,685.10

Q: Given the following information, calculate the effective tax rate expressed in mills. Market value of property: $280,000, Assessed value of property: 50 % of the market value, Exemptions: $2,000, Annual tax liability: $4,685.10. A. 1.69 mills B. 3.35 mills C. 16.73 mills D. 33.95 mills

Q: Given the following information, calculate the total annual tax liability of the homeowner. Market value of property: $350,000, Assessed value of property: 40 % of the market value, Exemptions: $2,000, Millage Rate: 33.95 mills. A. $4,685.10 B. $4,753.00 C. $11, 882.50 D. $46,851.00

Q: Given the following information, compute the taxable value for the particular piece of property in dollar terms. Market value of property: $500,000, Assessed value of property: 85 % of the market value of the property, Exemptions: $50,000, Taxes paid: $8,250. A. $75,000 B. $375,000 C. $416,750 D. $425,000

Q: Tax rates are usually stated in mills. Assuming the tax rate in percentage terms is 6.5%, convert this rate to mills. A. 0.065 mills B. 6.5 mills C. 65 mills D. 650 mills

Q: Given the following information, compute the effective tax rate for the particular piece of property in percentage terms. Market value of property: $325,000, Assessed value of property: $250,000, Exemptions: $50,000, Taxes paid: $5,363. A. 1.50% B. 2.35% C. 1.65% D. 2.68%

Q: Given the following information, compute the property tax rate for the community in percentage terms. Total budget expenditures: $108 million, Total non-property tax income: $50 million, Total assessed value of all properties: $2 billion, Total exemptions: $550 million. A. 2.5% B. 4.0% C. 10.0% D. 12.0%

Q: In considering the acquisition of real property, it is important to remember that certain factors may limit ownership rights. Which of the following is an example of a situation in which ownership rights can be fully removed from the property? A. Land use controls B. Leasehold interests C. Home owner association (HOA) bylaws D. Defaulted lien

Q: Most communities contain a number of tax-exempt properties. All of the following are typically included in the tax-exempt property classification EXCEPT: A. Places of worship B. Universities C. Government owned properties D. Single-family homes

Q: While property tax rates can vary across geographic regions, ad valorem taxes are typically levied at rates between: A. 1.0 to 4.0 percent B. 5.0 to 9.0 percent C. 10.0 to 15.0 percent D. 16.0 to 20.0 percent

Q: The most recent approach to zoning, form-based zoning, creates a map by segregation of: A. Land uses B. Building shapes C. Property taxes D. Performance standards

Q: Nearly half of states in the U.S. use the sale of tax lien certificates to manage defaulted property taxes. The certificates are auctioned to the public at: A. the face value of the property taxes due B. the assessed value of the home C. a discount from the face value of the property taxes due D. a premium of the assessed value of the home

Q: In efficient financial markets, unregulated competitive bidding should bring about the most productive use of an asset and the price paid for that asset should reflect fair value based on its usefulness. In real estate, this is not always the case. For example, there is no substitute for certain pieces of land which gives the owner a bargaining advantage in determining the value of the land. This feature of real estate markets is commonly referred to as: A. incomplete information B. locational monopoly C. positive externality D. negative externality

Q: In the history of eminent domain, the Kelo v. New London, Connecticut decision of the U.S. Supreme Court in 2005 affirmed the possibility of a community being: A. Prohibited from using eminent domain. B. Restricted to use of eminent domain only for actual government (public) land uses. C. Able to use eminent domain to acquire property for private development if it serves public purpose and the current land use is blighted. D. Able to use eminent domain to acquire property for private development if it serves public purpose even if the current land use is not blighted.

Q: Traditional zoning regulations are criticized for often being too rigid in forcing uniform types of development. One proposed solution to this issue allows traditional zoning requirements to vary in exchange for an enhancement to the community, such as the construction of a park. This is more commonly referred to as a: A. Planned unit development B. Performance standard C. Impact fee D. Growth restriction

Q: A public planning movement that explicitly advocates a cul-de-sac hierarchy of development, an automobile oriented society, and separated land use is more commonly referred to as: A. urban sprawl B. urban service area C. traditional residential planning D. new urbanism

Q: Eminent domain is the right of government to acquire private land, without the owners consent, for public use, with due process and just compensation. The legal procedure for exercising the right of eminent domain is referred to as: A. Growth restriction B. Urban sprawl C. Blighted development D. Condemnation

Q: Zoning ordinances that tend to exclude lower income groups by large lot size, or that do not adequately provide low- and moderate-income housing are referred to as: A. special uses B. nonconforming uses C. conforming uses D. exclusionary uses

Q: In the state of Florida, for example, homeowners may qualify for a tax exemption in which up to $50,000 will be deducted from the assessed value of the property before taxes are calculated as long as the property owner occupies a home as the familys principal residence and has claimed residency within the state. This exemption is better known as the: A. ad valorem exemption B. affordable housing exemption C. growth moratorium D. homestead exemption

Q: One of the main criticisms of property taxes is that the property tax of lower income households is higher than that of higher income households, as a percentage of their respective incomes. In other words, taxes are criticized for being: A. regressive B. comprehensive C. concurrent D. extraterritorial

Q: Special assessments are levied to pay for specific improvements that benefit a particular group of properties. All of the following characteristics of special assessments are true EXCEPT: A. They are considered ad valorem taxes. B. They are applied as pro rata charges. C. They are levied directly on the properties benefited. D. They are commonly used to finance streets, storm water systems, sidewalks, and other area improvements.

Q: A developer plans to place a subdivision slightly outside the city limits in an area that is rapidly developing. However, the city claims to have the right to control urban development even in the proposed area. The right the city is attempting to invoke is referred to as: A. extraterritorial jurisdiction. B. urban service area. C. comprehensive plan. D. growth constraint.

Q: Real estate taxes represent the largest single source of revenue for a large portion of local governments. Most property taxes are applied in relation to the value of the property, or in other words, they are: A. effective tax rates B. ad valorem taxes C. tax-exempt D. regressive

Q: All of the following statements are true in describing the determination of just compensation EXCEPT: A. The value of the property is based on its highest and best use at the time. B. The value of the property is determined solely by its current use. C. The value is the amount that restores the property owner to a financial position equivalent to that existing before the property was taken. D. The value is the market value of the property if completely taken, or the total value of all financial loss if partially taken.

Q: The right of government to acquire private property, without the owners consent, for public use in exchange for just compensation is referred to as: A. inverse condemnation B. regulatory taking C. eminent domain D. dedication

Q: Negative externalities can diminish a propertys value by imposing costs on the community at large. In order to offset this detrimental impact, economists advocate internalizing these externalities by implementing: A. performance standards B. impact fees C. growth moratoriums D. planned unit developments

Q: A traditional zoning ordinance includes all of the following EXCEPT: A. Minimum setback requirements B. Minimum lot dimensions C. Provisions for special use districts D. Performance standards

Q: State and federal control of land uses has increased greatly over the past 40 years due in part to an increased awareness of environmental hazards. Which of the following federal environmental control laws was responsible for establishing the Superfund to finance emergency responses and cleanups of abandoned and unregulated waste dumps? A. Clean Water Act B. Resource Conservation and Recovery Act C. Toxic Substances Control Act D. Comprehensive Environmental Response Compensation and Liability Act

Q: In order for the board of adjustment to approve a variance, all of the following conditions must be met EXCEPT: A. The owner must be unable to use the lot as zoned. B. The condition is common to other parcels of land in the vicinity C. The variance must not materially change the character of the neighborhood. D. The condition is unique to the lot.

Q: When land use controls impose exceptional hardship and loss of value, a relief mechanism must be provided. This relief is referred to as a: A. building code B. zoning ordinance C. comprehensive plan D. variance

Q: When a zoning ordinance is revised, some existing land uses then fall outside the new zoning classification. These land uses are referred to as: A. special uses B. nonconforming uses C. conforming uses D. exclusionary uses

Q: Which of the following tools of public land use control represents the earliest method of police power to regulate land use? (Hint: Standards for energy efficiency and sustainability are the most recent trends in the application of this land use control) A. Subdivision regulation B. Zoning C. Building Codes D. Planned Unit Developments

Q: A contemporary planning movement that explicitly advocates a traditional grid pattern of development designed to give pedestrian life priority over motor vehicles (e.g., including narrowed streets with houses close to the street and garage access through side alleys) is commonly referred to as: A. urban sprawl B. urban service area C. traditional residential planning D. new urbanism

Q: Growth management laws at the state level require local jurisdictions to plan for and meet certain requirements. One such requirement prohibits local development unless adequate infrastructure, schools, police/fire protection, and social services have been put in place first. This requirement is referred to as the: A. economic and environmental impact requirement B. concurrency requirement C. affordable housing requirement D. extraterritorial jurisdiction requirement

Q: After a structure is built, it is impractical for even a building expert to fully assess the quality of the construction and the safety hazards it may harbor. This is an example of which of the following problems that plagues private real estate markets? A. Externalities B. Incomplete information C. Locational monopoly D. Holdout

Q: It was not until the late 1960s that land use controls moved to the forefront of public interest, as the belief that the environment was an endless and costless resource was replaced with the notion that the world was a closed system with limited space, air, water, and other resources. Environmentalists coined which of the following terms to refer to this new point of view? A. Smart growth B. The Silent Spring C. Spaceship earth D. Urban sprawl

Q: Development taking place in rural areas well beyond the urban fringe is commonly referred to as: A. urban sprawl B. holdout C. urban service areas D. homestead

Q: While most real property in the United States is privately owned, government regulations limit private property use and therefore play an important role in the determination of property value. Proponents of government intervention argue that regulation is needed to address the unintended and unaccounted for consequences of one land user upon others, more commonly referred to as: A. incomplete information B. locational monopoly C. externalities D. urban sprawl

Q: Externalities can play an important role in determining a propertys price, either by adding value through positive externalities or by diminishing value through negative externalities. Which of the following is most likely to be considered a negative externality? A. Nearby parks and recreation facilities B. Quality neighborhood schools C. Public assistance facilities such as homeless shelters. D. Well-kept landscapes.

Q: In creating evidence of title, a title search attempts to identify the sequence of conveyances passing ownership down through time. This sequence is more commonly referred to as the: A. Title abstract B. Title commitment C. Chain of title D. Root of title