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Ch. 18 - Office Property Development Exam
Questions And Answers
What does an exclusive authorization of lease state? - correct answer ✅That a real estate agent and his or her company have the exclusive right to lease a specific property or space within a property. If the taxable income from an office property is $120,000 and the owner's tax rate is 28%, what would the owner's tax liability be? - correct answer ✅$120,000 x 0.28 = $33,600 tax liability. Which of the following is NOT a typical concession negotiated between a property's owner and a prospective tenant? - correct answer ✅Lower price of rent. If a property is valued at $600,000 and the cap rate is 10%, what will be the property's NOI? - correct answer ✅$60,000 NOI. Why should a licensee never reveal the identities of potential buyers to the seller of a property before the licensee has a contract with the seller? -
Ch. 18 - Office Property Development Exam
Questions And Answers
correct answer ✅Because the seller may then approach the buyers directly to avoid paying the licensee a commission. When negotiating a sublease agreement between an existing tenant and a new tenant, who is responsible for paying the real estate agent's commission fee? - correct answer ✅The existing tenant. What is the standard method for measuring the floor space of office buildings, as approved by the ANSI? - correct answer ✅The BOMA International standard. If a business has 300 employees and requires 200 square feet of office space per employee, how many square feet of office space will the business require in total? - correct answer ✅60,000 square feet. Complete the following statement: "Cash on cash return is the ratio of _________ compared to the total _________." - correct answer ✅"Cash on cash return is the ratio of pre-tax cash flow compared to the total sum of cash invested."
Ch. 18 - Office Property Development Exam
Questions And Answers
correct answer ✅Each floor can adjust the air conditioning to its own precise needs. How is the investment value of an office property determined by using the cap rate? - correct answer ✅Divide the property's NOI by the cap rate. What does the tenant of an office building pay under a gross lease?
correct answer ✅Only the base rent, and the owner pays all the bills and expenses. What are the three stages of the listing process? - correct answer ✅Obtaining the listing, servicing the listing, and keeping the listing. A real estate agent presents a qualified client to the owner of an open listing with whom he has a commission agreement. Although the client and owner agree terms in principle, negotiations are slow and will take several weeks. Why would an offer to lease contract benefit the real estate agent in this scenario? -
Ch. 18 - Office Property Development Exam
Questions And Answers
correct answer ✅Because it prevents the owner from negotiating and leasing to another agent/client before negotiations with the real estate agent's client are completed. Generally speaking, how does office property differ from retail property? - correct answer ✅Retail property is used by businesses to sell manufactured goods, office property is used by businesses to provide services. How is the net operating income (NOI) of a building calculated? - correct answer ✅Subtract any operating expenses and reserves from the gross operating income (GOI). An office property has 30,000 square feet at $95 per square foot, the cap rate is 10% and the owner paid $10,000,000 for the property. If a prospective tenant proposes paying $91 per square foot, how much will this lower the value of the property by? - correct answer ✅$4 x 30,000 = $120,000, $120,000 x 10 = $1,200,000 reduction in value.
