Real Estate 306 Exam 2 Questions With
Correct Answers
Police Power - answer✔✔right of government to enact laws to protect the general health,
welfare, and safety of public
Federal Reserve - answer✔✔sets a target range to keep healthy level of unemployment and
inflation to avoid swings in the economy
Federal Funds Rate (FFR) - answer✔✔- The average rate that banks pay when borrowing from
each other overnight.
- influences interest rates that banks charge including debt on real estate
Impact Fees - answer✔✔- one time fee charged to new developer by municipality to offset cost
of increased city resources needed as result of additional developments (in theory)
- can be used for pet projects, policy priorities, or knowingly/unknowingly to restrict growth.
eminent domain - answer✔✔Power of a government to take private property for public use with
compensation (amendment 5)
Regional Plans - answer✔✔- created by the state, county, or regional authority
- Include major transit and natural resources
- Do not usually impact individual buildings
Comprehensive Plans - answer✔✔- Created by a municipality and enforced by municipal
ordinances
- Produced through public meetings, data analysis, and politics
- Include growth priority areas, future use plan, types of uses, transportation goals
Neighborhood plans - answer✔✔- Must comply or be incorporated into the municipality's comp
plan
zoning - answer✔✔- specific rules for each. land parcel as described in the Zoning Code or
Municipal Ordinance
- reflects priorities identified in the Comp Plan
- allowable uses and site requirements
building codes - answer✔✔- regulate a building's physical structure
- address issues of health and safety
Floor Area Ratio (FAR) - answer✔✔The density of nonresidential land use, exclusive of
structured parking, measured as the total nonresidential building floor area divided by the total
buildable land area available for nonresidential structures.
entitlements - answer✔✔A set of approvals needed for the right to develop a piece of land.
Role of Government - answer✔✔1. to pay for/provide all things we can't do individually
(military, roads, schools, utilities)
2. Manage economy (jobs & inflation, Fed Reserve)
3. Policies (balance & economic growth, revitalization efforts, affordability, sustainability)
4. Property Taxes
5. Impact Fees
6. Eminent Domain
7. Inspections (building inspection + review services for all construction)
Planning - answer✔✔process of developing plans and programs for use of land within a
community
Types of Real Estate Risk - answer✔✔- Political (NIMBY)
- Process (approvals)
- Legislative (laws)
- General market (macroeconomy)
- Financial (changes or expected changes in int. rate)
- credit (credit worthiness)
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