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REAL ESTATE TERMINOLOGY MOCK EXAM: EXPERT-WRITTEN SOLUTIONS 2025/2026 $9.54
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REAL ESTATE TERMINOLOGY MOCK EXAM: EXPERT-WRITTEN SOLUTIONS 2025/2026
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REAL ESTATE TERMINOLOGY MOCK EXAM: EXPERT-WRITTEN SOLUTIONS 2025/2026 What is the definition of "equity" in real estate, and how is it calculated? Equity refers to the difference between the market value of a property and the outstanding balance of any liens or mortgages on it. It is ca...

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  • December 8, 2024
  • 14
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • real estate terminology mock exam expert written

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  • Real Estate
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REAL ESTATE TERMINOLOGY MOCK
EXAM: EXPERT-WRITTEN SOLUTIONS
2025/2026
What is the definition of "equity" in real estate, and how is it calculated?

Equity refers to the difference between the market value of a property and the outstanding
balance of any liens or mortgages on it. It is calculated by subtracting the total liabilities from the
property's current market value.



Explain the concept of "amortization" in real estate financing.

Amortization is the process of gradually repaying a loan through scheduled, periodic payments
that cover both principal and interest over time.



What is a "title search," and why is it important in a real estate transaction?

A title search is a detailed examination of public records to verify the legal ownership of a
property and to check for any claims, liens, or encumbrances against it. It ensures the buyer receives a
clear title.



Define "encumbrance" in real estate and provide an example.

An encumbrance is any claim, lien, or restriction that limits the use or transfer of a property. An
example is a mortgage lien placed by a lender.



What does "escrow" mean in the context of real estate?

Escrow refers to a neutral third party holding funds, documents, or assets during a transaction
until all conditions of the agreement are met.



What distinguishes a "quitclaim deed" from a "warranty deed"?

A quitclaim deed transfers ownership without guarantees or warranties about title defects, while
a warranty deed assures the buyer that the title is clear of any issues.




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, Describe the purpose of an "appraisal" in the home-buying process.

An appraisal provides an unbiased estimate of a property's market value, often required by
lenders to ensure the loan amount does not exceed the property value.



What is the difference between "market value" and "market price" in real estate?

Market value is the estimated price a property should sell for under normal conditions, while
market price is the actual amount it sells for in a specific transaction.



Explain what "easements" are and how they affect property ownership.

Easements grant a non-owner the right to use or access a part of a property for specific purposes,
such as utilities or road access, and can restrict the owner’s full use of their property.



What does "due diligence" mean in a real estate purchase?

Due diligence is the buyer's responsibility to investigate a property’s condition, title, zoning, and
any other factors that could impact its value or usability before finalizing the purchase.



Explain "loan-to-value ratio" (LTV) and why it is significant to lenders.

Loan-to-value ratio is the percentage of a property's value that a lender is willing to finance,
calculated by dividing the loan amount by the property’s appraised value. It helps assess lending risk.



What is the purpose of a "home inspection" before closing a real estate deal?

A home inspection identifies potential issues or defects in a property's structure, systems, and
safety, helping buyers make informed decisions or negotiate repairs.



Define "zoning laws" and their impact on property use.

Zoning laws are local regulations that dictate how land and properties can be used, such as for
residential, commercial, or industrial purposes, and can limit certain developments.



What is a "short sale" in real estate?

A short sale occurs when a property is sold for less than the outstanding mortgage balance with
the lender’s approval, typically to avoid foreclosure.


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