California Real Estate Practice Exam

During a tight money market, a real estate broker would maximize return by directing efforts into:

1. Property exchanging

2. Sale of recreational properties

3. Sale of single dwellings, with assumption of existing loans

4. Sale or leasing of income property

The correct answer is: Property exchanging

The best approach during a tight money market for a real estate broker is often to focus on the sale or leasing of income properties. In these conditions, potential buyers may find it harder to secure financing for new home purchases due to higher interest rates or stricter lending standards. This leads to a greater opportunity in the income property sector, where investors may still seek to acquire properties that generate cash flow. Income properties are typically seen as less risky investments during tight credit times since they can provide an immediate return through rent, making them attractive to buyers who may be cautious about other real estate investments. The financial stability that comes from leasing properties can be appealing, and there may be opportunities for negotiation with motivated sellers. As for the other options, property exchanging can be complex and may not appeal as much to buyers in a tight market. The sale of recreational properties often depends on discretionary spending, which may decline when financing options are limited. Though assuming existing loans can be an attractive strategy, it is more specific than just focusing on income-producing properties, which have a broader market appeal when financing is less accessible.