Two real estate quiz questions: physical deterioration is curable when repair costs are less than the value gain (like a $2.2 million fix that raises the sale price to $4 million), and a contingency clause makes a contract conditional on something happening, like getting financing.
Question of the day. Question number 1: Physical deterioration is considered curable whenever: A. It does not result in loss of economic utility. B. It is caused by lack of maintenance. C. It can be repaired regardless of the cost. D. The cost to correct the issue is less than the resulting value increase. The answer is D. The cost to correct the issue is less than the resulting value increase. Physical deterioration is deemed curable when it's financially viable to address it. For instance, if an old office building requires $2.2 million in updates but can sell for $4 million, fixing it makes sense. Conversely, if the costs were higher than the potential sale price, demolishing the building and developing a new structure would be smarter. Question number 2: A provision in an offer to purchase, which requires the completion of a certain act before the contract becomes binding, is known as: A. Mandamus. B. Covenant. C. Contingency. D. Restriction. The answer is C. Contingency. Sometimes a contingency clause is attached to an offer to purchase real estate and included in the real estate contract. Essentially, a contingency clause gives parties the right to back out of the contract under certain circumstances that must be negotiated between the buyer and seller. A common contingency clause might pledge to purchase the house contingent on obtaining a financing. Thank you for watching!
