MA Real Estate Exam Study Guide COMPLETE
QUESTIONS & SOLUTIONS(RATED A)
Appraisal - ANSWER An estimation of a property's value, usually prepared by a professional who is
licensed in this field.
Brokerage - ANSWER The business of bringing people together in a real estate transaction.
Commerical - ANSWER The types of properties that include office spaces, shopping centers, stores,
theaters, hotels, parking facilities, etc.
Development - ANSWER The term for the construction of improvements upon the land.
Elevation Certificate - ANSWER Insurance agents are required to obtain one of these on any property
before issuing quotes for flood insurance.
Financing - ANSWER The pledging of real property and collateral for the repayment of a loan through a
mortgage or deed of trust.
Federal Deposit Insurance Corporation - ANSWER This agency can fine and withdraw its insurance from
lenders that do not carry flood insurance on required mortgages.
Flood Insurance - ANSWER This type of homeowner's insurance policy covers "rising water" problems
such as a burst water main, overloaded drains, and melting snow. It is usually an optional add-on policy
that becomes effective 30 days after purchase, unless the property is in a specific area and is collateral
for a federal loan, in which case it is a mandatory policy and effective immediately.
HO1 - ANSWER This is the basic form of a homeowner's hazard insurance policy, and the default policy
when a property has been empty for any length of time. It covers fire, lightning, hail, and other perils.
, HO2 - ANSWER This form of a homeowner's hazard insurance policy covers more than the basic form,
but not as much as the special form. It is often available for second homes.
HO3 - ANSWER This special form homeowner's hazard insurance policy offers the most coverage for the
most reasonable price, and is the preferred policy on primary residences. It covers both real and
personal property.
HO6 - ANSWER This form of a hazard insurance policy is designed for condominiums and can be
customized to comply with the condo association's bylaws.
HO4 - ANSWER This renter's insurance policy is similar to the homeowner's insurance policy carried on
primary residences, but doesn't include coverage on real property owned by someone else.
Improvements - ANSWER Additions to property that increase its value or enhance its appearance. It can
include buildings, fixtures, and landscaping.
Landlord's policy - ANSWER This insurance policy is the reverse of a renter's policy and covers only the
real property.
Property Management - ANSWER A broad term for a person or company hired to maintain and manage a
property on behalf of its owners, and who are to maximize the owner's returns.
Real Estate Counsellors - ANSWER These people provide clients with competent, independent real estate
advice without representing them as an agent.
Special Flood Hazard Area - ANSWER Properties in this area are required by federal law to have special
insurance as part of any federally-backed mortgages.
Subdivision - ANSWER The process of splitting a single property into smaller parcels.
Residential - ANSWER The type of properties that include single and multi-family homes.
,Industrial - ANSWER The types of properties that include warehouses, factories, power plants, and other
manufacturing areas, even if the property has a storefront attached.
Agricultural - ANSWER The types of properties that include farmlands, timberlands, orchards, and
ranches.
Special Purpose - ANSWER The types of properties that include churches, schools, cemeteries, and
government-held lands.
Real Estate Market - ANSWER The setting where real property is bought and sold and prices are
established.
Submarket - ANSWER A real estate market defined by property type and/or geographic location.
National Association of Realtors - ANSWER A professional real estate organization that requires members
to uphold a specific set of ethics and pay dues. In turn, the members can call themselves Realtors.
Seller's Market - ANSWER The situation where demand for real property is greater than the supply,
which causes sale prices to rise and builders to become more motivated to build.
Location - ANSWER This characteristic of real property is important because a parcel's value is impacted
by surrounding land uses.
Demographics - ANSWER This factor determines the quantity and type of housing in demand in a
particular area. It evaluates family sizes, ratio of adults to children, number of senior citizens, family
incomes, lifestyles, etc.
Property - ANSWER This term refers to both a physical article and the rights and interests involved in its
use of ownership.
Rights of Ownership - ANSWER A "bundle" of legal rights associated with owned property. These rights
include possession, control of the property (within legal bounds), enjoyment of the property, exclusion,
and disposition.
, Appurtenance - ANSWER Anything that is used with land for its benefits. Examples include subsurface,
air, and water rights, as well as gardens and certain easements.
Exclusion - ANSWER The right to legally ban other people from entering your property without your
consent.
Air Rights - ANSWER These rights are for the use of space above a piece of real property. They can be
transferred and subdivided.
Subsurface Rights - ANSWER These rights are for the use of anything found beneath a piece of real
property, such as oil, coal, or gas. These rights can be transferred separately from the property itself, and
include an implied easement that allows the owner access to the property so that they can exercise their
rights.
Land - ANSWER The earth's surface down to the center of the earth and upwards to infinity ("heaven to
hell"), including all things attached by nature. Also known by the term real estate.
Littoral Rights - ANSWER The rights granted to owners of land that are adjacent to large, navigable, non-
flowing lakes and oceans. These rights state the owner may make use of the water for legal purposes,
but they only own the land down to the average high water mark.
Percolating Water - ANSWER Another name for subsurface water.
Prior Appropriation - ANSWER A law used in states where water is scarce. This law limits homeowners'
use of any domestic water found on or abutting their property.
Riparian Rights - ANSWER The rights granted to owners of land that are adjacent to flowing waters
and/or land that has subsurface water. These rights state the owner can use the water in any legal way as
long as it doesn't interfere with the same rights of owners downstream.
Water Table - ANSWER The name for the level at which subsurface water is located below ground.
