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REAL ESTATE
NATIONAL PRACTICE EXAM 1
| Question | Answer |
|---|---|
| A salesperson who has a seller complete a property disclosure form and who provides the form to a buyer in a timely manner is protecting the liability of | the brokerage. |
| To find the value of a property, if the net operating income and the capitalization rate are known, an appraiser using the income approach to value would | divide the net operating income by the capitalization rate. |
| A property manager is typically | a general agent. |
| The prices of homes currently on the market included in a competitive market analysis assist a seller's agent in | setting a listing price with the seller in competition with similar properties currently on the market. |
| How many acres are in a parcel described as the NW¼ of the SE¼ and the S½ of the SW¼ of the NE¼ of Section 4? | 60 ACRES |
| A buyer purchased two parcels of land. One parcel was two miles square and the other contained 30 acres. If the land cost $2,000 an acre, what was the cost of the land? | One square mile is 640 acres, so two square miles is 1,280 acres. The two parcels together contain 1,310 acres (1,280 + 30 = 1,310). To find the cost, multiply the cost per acre by the total acres: 1,310 × $2,000 = $2,620,000. |
| The value of vacant land is MOST typically determined by what approach to value? | Market data |
| In a joint tenancy, all of the following are true EXCEPT | each partner has a divided share of the property. |
| Which of the following is a voluntary, specific lien? | MORTGAGE LIEN |
| A woman has permission from her friend to hike on his property during the autumn months. Her friend has granted her | A LICENSE |
| Carbon monoxide (CO) is NOT | easy to detect by smell. |
| A real estate broker acting as the agent of the seller | must promote and safeguard the seller's best interest. |
| In an executory contract, | the buyer receives equitable title to the property. |
| To protect the buyer, many states require | a seller’s property condition disclosure. |
| The purpose of a building code is to | make sure buildings are structurally safe |
| Upon notice that an offer has been accepted, what should the listing broker do with the earnest money deposit? | Deposit the earnest money into the brokerage or title company’s trust account |
| A deed that contains no express warranties is | a quitclaim deed. |
| A real estate agent may be guilty of negligent nondisclosure by failing to exercise adequate care to discover | a material defect and disclose it to the buyer. |
| The four unities of possession, interest, time, and title are associated with which of the following? | Joint tenancy |
| A borrower wants to secure a loan with a very low down payment. Paying a low down payment provides | a higher loan-to-value ratio. |
| The BEST way to ensure that there are no encroachments to a property and to properly verify the boundaries of a parcel of land is to | get a survey |
| A seller has told the listing agent that the agent must only represent the seller in the sale of the property. In this case, the first guide for the agent is to obey | all lawful instructions of the owner. |
| It is necessary to calculate a dollar value for depreciation when using which of the following? | The cost approach to value |
| Charging more interest than is legally allowed is | usury. |
| homeowner sold his property for $99,500. He paid a real estate commission of 6%, PAID an attorney $250, PAID a transfer tax of $99.50, pD his existing mortgage of $50,140, and agreed to a purch MORTGAGE of $10,000. What were net proceeds at the closing? | $33,040.50 |
| The broker suspects there is no city h2o to the home, but she relies on the seller's statement and says nothing concerning the sys. buyer discovers after the purchase that the home has no city water service. In this case, the broker | may be liable for misrepresentation since she should have known about the lack of city water services. |
| A contract that secures the employment of a brokerage firm to find a ready, willing, and able buyer for a seller is | a listing contract. |
| A woman has a nine-year-old grandson living with her, and her application for an apartment has been rejected, as the community does not allow anyone under the age of 18. Is this permissible? | Yes, if the housing complies with regulations for senior housing. |
| All of the following are true about errors and omissions (E&O) insurance EXCEPT | E&O policies vary little from provider to provider. |
| In the valuation of a large apartment complex, the MOST weight would be given to which approach to value? | Income approach |
| A purchase contract contains several personal property items and fixtures that will be transferred upon sale of the property. Which of the following is TRUE? | All personal property must be listed in the bill of sale to convey to the buyer. |
| All of the following are grounds for constructive eviction EXCEPT | the nonpayment of rent by the tenant. |
| A broker, upon reconciling, realized his office manager had deposited operation funds into the earnest money account. This could be considered | commingling. |
| The appraised value of a property is $52,350. It is assessed at 38% of the appraised value, and the tax rate is 95 mills. What are the quarterly property taxes? | The answer is $472.45. Tax Rate = 95 ÷ 1,000 = .095 Assessed value = $52,350 × 38% (.38) = $19,893 $19,893 × .095 = $1,889.83 Annual taxes $1,889.83 ÷ 4 = $472.45 Quarterly taxes |
| An individual who is authorized and who consents to represent the interests of another person above their own interests is | an agent |
| A deed of trust differs from a mortgage in | the number of parties involved in the loan. |
| A contract in which one party purchases the right to buy at a fixed price within a specified period is | an option contract. |
| A listing broker discovers a latent defect in the home, which the seller has not disclosed on the seller's property disclosure form. The broker | must disclose the defect to the buyer or the buyer’s representative. |
| A seller has sold property to a neighbor without the services of a real estate broker. However, the seller still owes the broker a commission because the seller signed | an exclusive right-to-sell listing. |
| A property owner deeds a parcel of his property to a town "for recreational purposes only." The deed conveys to the town | a fee simple defeasible estate. |
| A homeowner recently fenced his property. By mistake, the fence extends one foot over his own lot line onto a neighbor's property. The fence has created | an encroachment |
| A married couple owns a farm together with the right of survivorship. Their ownership is MOST likely | a tenancy by the entirety. |
| The type of listing contract that provides for payment of a commission to the broker even though the owner makes the sale without the broker's aid is called | an exclusive right-to-sell listing. |
| In regulations regarding lead-based paints for houses built before 1978, HUD requires that | the seller is required to give all buyers a lead-based paint disclosure. |
| Good faith as applied to agency is BEST defined as | using honest and sincere intentions. |
| The following ad appeared in the newspaper: "For sale: 4 BR brick home; Redwood School District; excellent Elm Street location; short walk to St. John's Church and right on the bus line. Move-in condition; priced to sell." Which statement is TRUE? | The ad should not mention St. John's Church |
| A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements as a tenant in common owns | a condominium |
| Offer allows the seller 24 hours to accept. Broker recommends the seller counter the offer. Seller emails the broker in the am saying that based on the wishes of children, who are not on the title, she has accepted the offer. It this case, the offer | may be a voidable contract due to duress. |
| A wooded area with biking and hiking trails is situated between old cotton mills and a housing development. This area is considered | a buffer zone |
| In the purchase agreement, the buyer and seller agreed to liquidated damages as a remedy for default. If the buyer defaults, this means the seller | keeps only the buyer’s earnest money. |
| In computing the square footage of a single-family home, an appraiser measures the external dimensions of the gross living area, which includes all of the following EXCEPT | a patio. |
| A woman applies to the municipality for permission to open an adult daycare facility in her neighborhood. Many elderly persons live in the neighborhood. The municipality may grant her | a special-use permit. |
| A lender offers to take over the title of a property that is in foreclosure without going through the foreclosure process. This is called | a deed in lieu of foreclosure. |
| A listing agreement states that the broker will receive a 6% commission. The broker produces a buyer who purchases the home for $210,000. What is the net amount that the seller will receive from the sale? | The answer is $197,400. First, calculate the amount of the commission: 6% (.06) × $210,000 (selling price) = $12,600. $210,000 – $12,600 = $197,400. Or take $210,000 × .94 = $197,400. |
| The federal Fair Housing Amendments Act of 1988 added additional protected classes. Landlords under this law must rent to those who are protected under the law. As of 1988, all of the following are protected EXCEPT | a woman convicted of sexual molestation. |
| Which appraisal method uses a rate of investment return in estimating a property's value? | Income approach |
| All of the following are true of the government's police power EXCEPT | that it sets private controls in certain subdivisions on the types of floor plans, fencing, and house colors. |
| A single-family residence notes the subject home doesn't have an attached garage. 3 of the the appraiser chooses attached, finished garages. To account for the garage that is present in each comparable, but not in the subject property, the appraiser will | subtract the value of an attached garage from the sales price for each comparable. |
| Last month's loan payment included $412.50 interest on a $60,000 loan balance. What is the annual rate of interest? | 8.25% |
| Homeowners may deduct all of the following expenses when preparing their income tax return EXCEPT | homeowners' association dues. |
| A broker was accused of violating antitrust laws. Of the following, he was MOST likely accused of | price-fixing. |
| The buyers secured an $82,000 loan at 9.25% interest for 30 years. Their monthly payment is $674.59. How much of their first payment will be applied to the principal balance? | $82,000 × 9.25% (.0925) = $7,585 Annual interest $7,585 ÷ 12 = $632.08 Monthly interest $674.59 – $632.08 = $42.51 |
| A developer experiences success and good profits in a recent real estate project. What principle of value indicates that her experience will attract others to engage in similar projects in the same area? | Competition |
| A buyer and seller are both represented by the same real estate brokerage firm acting as an agent in the same transaction. In this transaction, the firm is practicing | dual agency. |
| A listing broker knows that a known sex offender lives within a block of a home she has listed. The prospective buyers are a family with three small children. The broker | may have a responsibility under state law to inform the buyers of the offender’s presence in the neighborhood. |
| Discrimination based on familial status was prohibited with the passage of | the Fair Housing Amendments Act of 1988 |
| The type of agency that exists when a broker represents the seller or buyer in a transaction, but not both, is | single agency. |
| The terms of settlement and closing are determined by | the purchase contract. |
| The income approach to value would be MOST important in the appraisal of | a shopping center. |
| A real estate broker hired by an owner to sell a parcel of real estate must comply with | all lawful instructions of the owner. |
| In a preprinted sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to | have both parties initial or sign in the margin near each change. |
| contract that has been fully performed is | executed. |
| The amount of time transaction files must be kept is | based on state real estate law. |
| An example of involuntary alienation of property is | condemnation. |
| The principle of appraising, which states that the maximum value is achieved when the property is in harmony with its surroundings, is the principle of | conformity. |
| When a salesperson tells homeowners that minorities are moving into the area in order to get those homeowners to sell their properties, this activity is | called blockbusting. |
| A purchaser cannot qualify for conventional financing and negotiates a contract for deed with a seller. The buyer in this arrangement | has possession and pays the property expenses and taxes. |
| Wear and tear on a property is best defined as | physical deterioration. |
| The Americans with Disabilities Act (ADA) requires | that reasonable accommodations be provided for people with disabilities. |
| Broker lists her neighbor's home for $212K. same day, a buyer comes into her office and asks for info on houses. The broker offers to rep the buyer as a buyer's agent, but newcomer refuses rep by her co. Which of the following statements is TRUE? | The neighbor is the broker’s client, and the buyer is the broker’s customer. |
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