A Real Estate Business MCQ Quiz

1. Real estate brokerage can be best defined as the business process of bringing together the parties who are interested in completing a real estate transaction.

True

False

Real estate brokerage involves the facilitation of real estate transactions by bringing together interested parties. This includes connecting buyers with sellers, landlords with tenants, and facilitating the necessary paperwork and negotiations for a successful transaction. Therefore, the statement that real estate brokerage can be best defined as the business process of bringing together interested parties in a real estate transaction is true.

Explanation

Real estate brokerage involves the facilitation of real estate transactions by bringing together interested parties. This includes connecting buyers with sellers, landlords with tenants, and facilitating the necessary paperwork and negotiations for a successful transaction. Therefore, the statement that real estate brokerage can be best defined as the business process of bringing together interested parties in a real estate transaction is true.

2. Supply and demand are two initial economic factors that affect real estate transactions.

True

False

Supply and demand are indeed two initial economic factors that have a significant impact on real estate transactions. The supply of available properties and the demand from buyers determine the prices and market conditions in the real estate industry. When there is high demand and limited supply, prices tend to rise, while low demand and excess supply can lead to price decreases. Therefore, understanding and analyzing supply and demand dynamics is crucial for real estate professionals and investors to make informed decisions.

Explanation

Supply and demand are indeed two initial economic factors that have a significant impact on real estate transactions. The supply of available properties and the demand from buyers determine the prices and market conditions in the real estate industry. When there is high demand and limited supply, prices tend to rise, while low demand and excess supply can lead to price decreases. Therefore, understanding and analyzing supply and demand dynamics is crucial for real estate professionals and investors to make informed decisions.

3. Independent contractor is a term used by the United States Internal Revenue Service to refer to those persons in the business world who operate autonomously from a traditional employer. Most real estate agents are classified as independent contractors.

True

False

The explanation for the correct answer, True, is that the term "independent contractor" is used by the United States Internal Revenue Service to describe individuals who work independently and are not considered employees of a traditional employer. Since most real estate agents operate autonomously and are not directly employed by a real estate company, they are typically classified as independent contractors. Therefore, the statement is true.

Explanation

The explanation for the correct answer, True, is that the term "independent contractor" is used by the United States Internal Revenue Service to describe individuals who work independently and are not considered employees of a traditional employer. Since most real estate agents operate autonomously and are not directly employed by a real estate company, they are typically classified as independent contractors. Therefore, the statement is true.

4. In the situation when the supply of available real estate is high and the demand of buyers is average to weak, the price of real estate will drop and the market will be referred to as a "buyer's market".

True

False

When there is a high supply of real estate and a weak demand from buyers, it creates a situation where sellers have to compete for buyers. In order to attract buyers, sellers may lower their prices, leading to a drop in the price of real estate. This type of market is referred to as a "buyer's market" because buyers have more negotiating power and options to choose from. Therefore, the statement is true.

Explanation

When there is a high supply of real estate and a weak demand from buyers, it creates a situation where sellers have to compete for buyers. In order to attract buyers, sellers may lower their prices, leading to a drop in the price of real estate. This type of market is referred to as a "buyer's market" because buyers have more negotiating power and options to choose from. Therefore, the statement is true.

5. In an arrangement between the office broker and salespersons in that office, the office broker would not receive a percentage of the commission on a sales transaction, but would instead receive a flat fee per sales agent for any given month, may be best described as a 100% Commission Plan. Under this plan, the sales agent would be responsible for such expenses as advertising, yard signs, and most other expenses.

True

False

This statement is true because in a 100% Commission Plan, the office broker does not receive a percentage of the commission on sales transactions. Instead, they receive a flat fee per sales agent for any given month. This means that the sales agent is responsible for covering expenses such as advertising, yard signs, and most other expenses.

Explanation

This statement is true because in a 100% Commission Plan, the office broker does not receive a percentage of the commission on sales transactions. Instead, they receive a flat fee per sales agent for any given month. This means that the sales agent is responsible for covering expenses such as advertising, yard signs, and most other expenses.

6. According to Pennsylvania law, commission fees for brokers and salespersons are set by the Pennsylvania Real Estate Commission at 6% of the selling price of the property.

True

False

The fee is negotiable between the broker and the client or consumer.

Explanation

The fee is negotiable between the broker and the client or consumer.

7. In the situation when the demand of buyers is high and there are a greater number of buyers than available homes for sale, it is called a "broker's market".

True

False

This situation would be a called a "seller's market".

Explanation

This situation would be a called a "seller's market".

8. Currently all real estate licenses in Pennsylvania are issued by the National Association of Realtors.

True

False

All real estate licenses in Pennsylvania are issued by the Pennsylvania State Real Estate Commission.

Explanation

All real estate licenses in Pennsylvania are issued by the Pennsylvania State Real Estate Commission.

9. After a Pennsylvania Real Estate Salesperson license is issued the salesperson is then officially known as a REALTOR.

True

False

A salesperson becomes a REALTOR by obtaining membership in the National Assocation of REALTORS, which asks that its members subscribe to a code of ethical standards. NAR also promotes courses, information and services to maximize the professionalism of its members.

Explanation

A salesperson becomes a REALTOR by obtaining membership in the National Assocation of REALTORS, which asks that its members subscribe to a code of ethical standards. NAR also promotes courses, information and services to maximize the professionalism of its members.

10. The McCain-Weldon Antitrust Act of 1990 required that real estate offices act independently in establishing its own office fees and commissions. This could also include collusion or conspiracy among real estate businesses to control the duration of any real estate contract or the type of compensation to agents.

True

False

It was the Sherman Antitrust Act of 1890.

Explanation

It was the Sherman Antitrust Act of 1890.

11. An example of "Special Use" category of real estate would be shore and mountain vacation property, resort time-share ownership, condos, etc.

True

False

The "Special Use" category would include government owned land and property, churches, synagogues, schools, cemeteries, and libraries.

Shore and mountain vacation property, time-share, etc. would be included in the Vacation/Recreation category.

Explanation

The "Special Use" category would include government owned land and property, churches, synagogues, schools, cemeteries, and libraries.

Shore and mountain vacation property, time-share, etc. would be included in the Vacation/Recreation category.

12. Between 1998 and including 2005, there was a substantial recession in the United States resulting in a sluggish housing market. The supply of available real estate was high and there was little demand from the buyer, thus, there was a "buyer's market" during these years.

True

False

During 1998-2005, there was a substantial DEMAND by BUYERS for housing with a subsequent increase in prices that signaled a SELLER'S MARKET. Some quality properties sold in just days and buyers were making offers at prices above the listing prices of homes to beat out the competition.

Explanation

During 1998-2005, there was a substantial DEMAND by BUYERS for housing with a subsequent increase in prices that signaled a SELLER'S MARKET. Some quality properties sold in just days and buyers were making offers at prices above the listing prices of homes to beat out the competition.