Real Estate Brokerage Laws and Contracts, Exams of Real Estate Management

Download Real Estate Brokerage Laws and Contracts and more Exams Real Estate Management in PDF only on Docsity! REAL ESTATE 30 HOUR FINAL EXAM QUESTIONS WITH VERIFIED ANSWERS. Pete is a sole proprietor broker and has six salespeople who he employs. On June 9th, Pete is killed in a car accident. Tom is one of the salespeople and his listing is set to close on June 20th. What will happen to the proposed closing? A). Nothing will happen. Business will go on as usual with the salespeople in charge until a new broker is found. B). the estate will notify the Commission within 15 days of death and tell the Commission that a new termination broker has been found. The closing will continue. C). the seller will have to cancel the listing and lose the sale since the broker died. D). The buyer will have to wait for closing until a new listing of the property happens when a new broker is found and the seller signs a new listing with the new broker. - Correct answer B What type of discipline can the Commission use for an unlicensed person acting as a real estate licensee? A). A suspension from real estate of six months. B). Fines up to $2,000 to $5,000. C). Revocation of the transaction D). Nothing, the Complaint's office must handle these individuals - Correct answer B The bank where Broker Bill has his escrow account calls for Bill to be the trustee and sends him monthly reports so that he can reconcile the books. The bank requires a 48 hour notice for withdrawal of funds and no service charge. Is this bank acceptable to the Commission? A). Yes, because there is no service charge, the broker will not have to worry about commingling of funds. B). Yes, Bill is the trustee which is a requirement of the Commission for bank depositories. C). No, the Commission requires that Bill reconcile his books more often than once a month. D). No, the broker must have a bank which allows for withdrawal of funds without previous notice. - Correct answer D Jack has committed several violations of the Act and has been found guilty. His license has been suspended. What must Jack do? A). Jack must pay a fine to the Real Estate Recovery Fund. B). Jack must tell his salespeople of his actions. C). Jack must return his license to the SREC. D). Jack must wait 6 months before he can practice real estate again. - Correct answer C The purpose of a comparative market analysis is? A). to provide the bank a value on which to give a loan. B). to provide the insurance company a value for a homeowner's policy C). to provide the probable range of price to list the house D). to provide the tax assessor with sale information - Correct answer C Internet advertisement is an important part of the real estate business in the 21st century. The broker must do all of the following to do internet advertising EXCEPT: A). the advertisement must contain the name of the firm. B). the advertisement must contain the city, state and country where the firm's main office is located. C). the advertisement must state the jurisdiction where the licensee is located. D). the advertisement must contain the phone number including area code. - Correct answer D How long must a broker retain the acknowledgement portion of the consumer disclosure if the transaction is not completed? A). Six months B). One year C). Three years D). Five years - Correct answer A When a financing contingency clause is included in a sales contract all of the following are included except: A). the buyer's credit rating B). the mortgage principal C). the type of mortgage D). the interest rate of the mortgage - Correct answer A When a sole proprietor broker dies, his estate must notify the Commission within 15 days of the death to tell the Commission of another licensed broker who will serve as a termination broker. Which of the following statements is NOT true? A). No new listings are permitted. B). All unexpired listings will automatically expire after 90 days unless cancelled sooner by the seller. C). New licensees may be hired to help with the transition. D). All pending agreements of sale are permitted to close. - Correct answer C Justin is an unlicensed person and he has been appointed a trustee of a special needs trust for his nephew. The trust will be funded by the sale of the property of his brother. Justin lists and sells the property then puts the money into the trust. What best describes the situation? A). Justin is acting as a trustee and as such, does not need a real estate license B). Justin needs a license since he is representing another in selling property. C). Justin must register with the Commission and the court before selling his brother's property. D). Justin cannot sell his brother's property because they are related. - Correct answer A A dual agency agreement most nearly means: A). the broker and salesperson have a listing contract B). the seller and the broker have an agreement. C). the buyer and the salesperson have a written agreement. D). the seller and buyer have both signed a written disclosure for equal representation. - Correct answer D When handling money as a cemetery broker, when is a transaction considered closed on cemetery property? A). When the buyer receives a copy of the agreement of sale. B). When the buyer receives the consumer notice. A). A property management broker must have an operating account. B). A property management broker must have a rental management account where rent is deposited. C). A property management broker must have an escrow account, two operating accounts and a security deposit account. D). A property management broker must have a security deposit account and an operating account. - Correct answer B A salesperson does all of the following EXCEPT: A). Sells or offers to sell real estate B). Signs listings and places the property data in the multiple service C). Performs a comparative market analysis D). Retains records of transactions for three years - Correct answer D The seller was very happy with his salesperson that after the sale was completed, the seller sent the salesperson a check which was not part of the commission check. His broker did not know anything about it. Which of the following is true? A). the salesperson can accept the bonus check since it was after closing and had nothing to do with the Broker/broker. B). the salesperson should give the check to his broker since all business is done in the name of the broker. C). the salesperson can only receive a commission check from his broker so the salesperson should consult with the broker to see what can be done. D). A salesperson can never receive money after closing. - Correct answer C The Seller Disclosure Act requires a seller give disclosure to a buyer in all the following except: A). If the buyer is a tenant of the seller. B). If the seller has not lived in the property the last year. C). If the seller was not assisted by a broker. D). If the property was commercial property. - Correct answer D The broker, the seller and the buyer all agree that the broker does not need to hold escrow money for the buyer in his escrow account. The money instead is given to the seller who is supposed to credit the money to the buyer's account. All parties to the contract agree to this arrangement. When the transaction closes, the seller will not give credit to the buyer and the buyer files a complaint against the broker with the Commission. Why does the buyer think he can do this? A). the buyer can claim that the broker did not handle the transaction carefully. B). the buyer can charge the seller based on the standard that no broker can relieve himself of escrow responsibility whether the buyer and seller sign or not. C). the seller is the one the buyer should be suing, not complaining about the broker. D). the buyer has no legal recourse since he was in agreement to waive the escrow requirement - Correct answer B What does a salesperson do if she wishes to change employment brokers? A). the salesperson sends her license back and waits for the new license to be issued. B). She gives her license to the new broker and he sends it in for her with the fee. C). She notifies the Commission in writing no later than ten days after the intended date of change and returns her license. D). She does nothing- the new broker does it all. - Correct answer C The agency relationship which calls for limited confidentiality is which type of relationship? A). A seller's agent B). A transaction licensee C). A buyer's agent D). A designated agent - Correct answer B A broker wants to sell his own home. What must he do in order to go about this? A). Put his license on inactive status until the property is sold. B). Appoint one of his salespersons to handle the sale. C). Sell the property through another brokerage to avoid a conflict of interest. D). Disclose he is a real estate license holder to potential buyers. - Correct answer D Which of the following does not need to be disclosed to a prospective buyer at the initial interview? A). A statement of the type of relationships which the broker may engage with the consumer. B). A statement of the choices that the buyer has in agency relationships with the broker. C). A statement that the broker may assign one or more licensees to represent the separate interests of the parties. D). A statement of the flat fee that the broker charges for a commission. - Correct answer D When a transaction is co-brokered, who assumes the duty and responsibility for the escrow? A). the listing salesperson B). the selling salesperson C). the listing broker D). the selling broker - Correct answer C The buyer, seller and broker all agree that the buyer's money will be placed in an interest- bearing account because the buyer is buying a commercial property that is scheduled to be rezoned in six months. The purchase price of the commercial property is $1.5 million so the interest for six months will be important at 8% interest. The parties agree that the broker is to receive the interest on the interest-bearing escrow account because he will be handling all the paperwork. Is this acceptable? A). this amount of money requires that the buyer and seller should split the interest evenly. B). The Commission forbids the broker from taking the interest on an interest-bearing account unless the broker is a lessor. C). the buyer is entitled to that money, he deposited it. D). The seller should be entitled to the interest since he will have to wait 6 months to close the transaction and this is an earnest money deposit. - Correct answer B The broker of MNO Realty also owns General Title Company. He would like all of his transactions to close at his title company, but does not require this of all of his clients. Is this acceptable under Pennsylvania law? A). Yes, it is a service provided for the buyers and sellers, especially the ones who do not know any title companies. B). Yes, as long as the broker discloses to all parties that he owns the title company, and advises buyers that there are other options, in writing before closing. C). No, a broker may never own either a title company or a mortgage company. D). No, a broker should never tell either a buyer or seller what title company to use. - Correct answer B XYZ wishes to advertise a property that has been listed by John Smith, a salesperson who goes by the name of Jake. The salesperson wants his name to be included in the ads so the public can call him. What must be included in the ad? A). the price of the property being advertised. B). the address of the property being advertised so the prospective buyer can drive by the home. C). the nick name of the salesperson if it is listed on his license as well as the brokerage name as it is listed on the license. D). the name and cell phone of the salesperson so he can be reached. - Correct answer C Katherine is a salesperson with ABC Realty. She is selling her own home but she is listing it with the broker so it can be sold with the MLS. Is this acceptable? A). Yes, Katherine can list and sell her own home through the broker. B). Yes, but Katherine will need to disclose in the broker advertisement that she is a salesperson-owner. C). No, a salesperson can never sell her own property by listing with the broker, only by- sale-by-owner. D). No, the Commission does not allow the salespeople to sell their homes through their brokers. - Correct answer A The broker has a seller's agency relationship. Who is the principal in this transaction? A). the broker B). the buyer C). the seller D). both the buyer and seller - Correct answer C The Commission has the responsibility to regulate and discipline the activity of real estate licensees. Who of the following is subject to regulation by the SREC? A). Employees of Union electric who are buying property for the utility company. B). A time share salesperson. C). an administrator of a will who selling an estate property. D). an employee of a trust division of a bank who handles trusts and wills for its customers - Correct answer B When a broker is designated as a seller's agent, all of the following are true ACCEPT: A). the broker represents the seller in a transaction. B). the broker remains a seller's agent unless all parties agree to the broker becoming a designated agent. C). the broker must make a continuous and good faith effort to find a buyer for the property. D). the broker must not reveal any material defects about the property. - Correct answer D A sales contract is an important legal document between the seller and the buyer. According to Pennsylvania Real Estate Law, what does NOT need to be included in the sales contract? A). $7,592,000 B). $9,350,000 C). $8,684,000 D). $6,767,000 - Correct answer C If the roof a property cost $14,000 and its economic life is 18 years, what would its value be after four years using a straight-line method of depreciation? A). $13,222 B). $9,240 C). $10,889 D). $12,666 - Correct answer C Assuming that the listing broker and the seller broker in a transaction split their commission equally, what was the sales price of the property if the commission rate was 6 ½ percent the listing broker received $5,187? A). $159,600 B). $79,800 C). $119,700 D). $179,800 - Correct answer A Amy agreed to a contract price of $100,000 for a home and secured a mortgage loan for $80,000. If the appraised value is $110,000, what is the loan to value ratio? A). 100% B). 82% C). 80% D). 125% - Correct answer C How many acres are there in the N ½ of the NE ¼ and the NE ¼ of the SE ¼ of a section? A). 20 acres B). 40 acres C). 80 acres D). 120 acres - Correct answer D A house is sold for $105,500 and the commission rate is 6 percent. If the commission is split 60/40 between the selling broker and the listing broker, respectively, and each broker splits his share of the commission evenly with his salesperson, how much will the listing salesperson receive from this sale? A). $1,266 B). $2,532 C). $3,165 D). $1,899 - Correct answer A If a borrower's monthly interest payment on an interest-only loan at an annual interest rate of 7.3% is $877, how much was the loan amount (rounded to the nearest hundred)? A). $120,100 B). $100,300 C). $144,200 D). $134,200 - Correct answer C Shelly bought a house five years ago for $150,000 and obtained an 80% loan. Now the home is worth $140,000 and her loan balance has been reduced by $12,000. What is Shelly's current equity? A). $32,000 B). $42,000 C). $44,000 D). $2,000 - Correct answer A Land sells for $9,000 an acre. What will 750,000 SF of land sell for? Round to the nearest thousand. A). $105,000 B). $16,000 C). $129,000 D). $155,000 - Correct answer D If a square-shaped lot measures 125' on one side, what is the square footage of the lot? A). 250' B). 15,625 square feet C). 500' D). 1,855 square feet - Correct answer B Violet has a FHA loan for $90,000. The lender is requiring a 1% discount point to the lower the interest rate. What amount is the lender charging for the discount point? A). $600.00 B). $90.00 C). $900.00 D). $1,000.00 - Correct answer C A home seller wants to net $15,000. If he has agreed to pay a 5% commission, the loan payoff is $94,000 and closing costs are $16,000, what must the minimum listing price be? Round to the nearest $100. A). $125,000 B). $130,700 C). $136,300 D). $131,600 - Correct answer D A building generates $103,000 in effective rental income and $900 in vending machine income. The same complex has $40,700 in operating expenses and $36,000 in debt service payments. What is the pre-tax cash flow of the complex? A). $26,300 B). $67,900 C). $27,200 D). $62,300 - Correct answer C Assuming the FHA qualifies borrowers based on a 31% debt ratio, if a borrower's monthly gross income is $4,400, what monthly payment for housing expenses can this person afford based on this ratio? A). $3,036 B). $4,400 C). $1,364 D). $1,244 - Correct answer C A lender determines that a homebuyer can afford to borrow $220,000 on a mortgage loan. The lender requires an 85% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount (to the nearest $1,000)? A). $187,000 B). $243,000 C). $254,000 D). $259,000 - Correct answer D A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $48,000, vacancy and credit losses of $3,600, and operating expenses of $15,000. Using a capitalization rate of 8%, what is the property's value (rounded up to the nearest $1,000)? A). $413,000 B). $368,000 C). $340,000 D). $600,000 - Correct answer B Stacey owns a lot that has 180 feet of front footage and contains 36,000 square feet. He purchases two identically-sized lots adjacent to each side of his lot. These side lots are each 200 feet deep and each side lot contains 19,000 square feet. What is the total front footage of all three lots? A). 190 B). 200 C). 275 D). 370 - Correct answer D A fine jewelry store leased a space at the mall with a base rent of $1,800 a month, plus 4% of all sales over $200,000. If the gross sales were $325,000, what was the total amount of rent paid by Heinz Fine Jewelry at the end of the year? A). $26,600 B). $21,600 C). $125,000 D). $5,000 - Correct answer A Agent Daisy agrees to a 5% commission to list a home at $330,000. The property is sold through another cooperating brokerage with that firm to receive 50% of the total commission on the $330,000 sale. If Daisy receives 55% of her broker's commission and does not bring the buyer, how much does Daisy's broker receive from the sale? A). $16,500 B). $8,250 C). $4,537.50 D). $3,712.50 - Correct answer D A buyer secured a $125, 000 loan at 4.5% interest rate. To receive a lower interest rate, the buyer was required to buy down three discount points. How much were the discount points? D). $149.10 - Correct answer D An FHA-insured loan in the amount of $57,500 at a 6 ½% interest rate for 30 years was closed on March 17. The first monthly payment is not due until May 1. If the interest is paid monthly in arrears, how much pre-paid interest does the buyer owe at closing? (Use a 360- day year) A). $145.32 B). $311.52 C). $551.20 D). $3,737.50 - Correct answer A The annual property taxes of $1,700 were paid in arrears by the buyer. If the closing took place on June 4th and the seller paid through the day of closing, how did this appear on the settlement sheet if the 360-day method is used? A). $727 DS, CB B). $727 DB, CS C). $973 DS, CB D). $973 DB, CS - Correct answer A Six years ago a commercial property owner paid $490,000 for her complex which included 10 acres of land valued at $100,000. Using a 40-year straight-line depreciation method, what would be the current value of the apartment complex? A). $330,000 B). $390,000 C). $400,000 D). $431,500 - Correct answer D A home sells for $150,000 and has a mortgage loan balance of $100,000 at closing. If the commission is 5% and other closing costs are $6,000, what is the seller's net? A). $44,000 B). $40,000 C). $32,250 D). $36,500 - Correct answer D What is the volume of a 90' x 20' x 12' house? A). 21,600 cubic feet B). 1,800 cubic feet C). 3,750 cubic feet D). 36,000 cubic feet - Correct answer A A strip mall generates $215,000 in effective rental income and $3,000 in other income. The same mall has $102,000 in operating expenses and $15,000 as reserves. What is the net operating income of the strip mall? A). $113,000 B). $99,000 C). $101,000 D). $116,000 - Correct answer C If a lot contains 48,000 square feet and is 240' wide, how deep is the lot? A). 480' B). 240' C). 200' D). 720' - Correct answer C A five-sided lot has the following dimensions: side A = 44', side B = 67', side C = 91', side D = 18', and side E = 55'. What is the perimeter of the lot? A). 257 feet B). 220 feet C). 320 feet D). 275 feet - Correct answer D A sale transaction closes on April 15th. The day of closing belongs to the seller. Real estate taxes for the year, not yet billed, are expected to be $2,110. According to the 365-day method, what is the seller's share of the tax bill? A). $626 B). $675 C). $607 D). $721 - Correct answer C If a buyer purchases 25% of a lot in the spring and then purchases 50% more lately in the fall, what percentage of the lot is still available for purchase? A). 20% B). 25% C). 50% D). 75% - Correct answer B Sean, age 37, sold the home he purchased three years ago and now rents an apartment. He had originally purchased his home for $86,500 and sold it for $115,300. What is Sean's capital gain? A). $11,320 B). $16,980 C). $28,800 D). $0 - Correct answer C An apartment building that sold for $780,000 had a monthly gross income of $8,000. What is its monthly gross rent multiplier? A). 97.5 B). 62.4 C). 103 D). 158 - Correct answer A A seller wants to net $55,614 from the sale of her house after paying a 7% commission. Her minimum sales price will have to be? A). $55,341 B). $59,506 C). $59,800 D). $63,000 - Correct answer C If a house sold for $40,000 and the buyer obtained an FHA-insured mortgage loan for $38,600, how much money would be paid in discount points if the lender charged four points? A). $1,600 B). $1,544 C). $1,500 D). $385 - Correct answer B Ralph is buying Terry's house. The buyer's loan amount is $105,580. If the buyer has agreed to pay 3 points at closing, how much will he pay for the points? A). $4,223 B). $1,584 C). $396 D). $3,167 - Correct answer D A seller of a property, listed at $200,000, accepted a 90% offer. The home appraised at $185,000 and the buyers obtained a loan for 85% for 30 years at 5% interest. What is the first month's interest? A). $637.50 B). $7,650 C). $737.50 D). $6,750 - Correct answer A If a corporate building has nine office suites that rents for $14,800 per month each, but suffers from a 14% vacancy rate and annual expenses of $21,100, what is the NOI of the building (round to the nearest $100)? A). $93,500 B). $1,353,500 C). $133,200 D). $84,600 - Correct answer B A court orders Jerry to allow neighbor Loretta to drive across his property because it is the only way Loretta can reach her property from a public road. The easement created is an A). easement in gross. B). easement by prescription. C). easement by personal license. D). easement by necessity. - Correct answer D What kind of clause in a mortgage or trust deed enables a non-judicial foreclosure to occur? A). Power of attorney B). Power of sale C). Due on sale D). Damages - Correct answer B What is the basis for determining the amount of a condominium owner's monthly assessment for operations and maintenance? A). the unit's appraised value D). are subject to what the law allows. - Correct answer D What does an owner own if the duration of his or her rights in an estate cannot be determined? A). A permanent life estate B). A freehold estate C). A leasehold estate D). A durable leased fee estate - Correct answer B When a contract is revoked, A). the non-revoking party has no legal recourse but to accept the revocation. B). both parties must agree for the revocation to take effect. C). neither party has any further obligations. D). the revoking party may still have obligations to the other party. - Correct answer D A metes and bounds description must A). describe the parcel's boundaries as a complete, closed perimeter. B). conform to the standards set for the plat of survey. C). use rods and acres to quantify linear and area measurements. D). contain a distinct point of beginning and point of ending. - Correct answer A The primary agents of private land use control are A). courts by means of police power. B). property owners by means of zoning ordinances. C). property owners by means of deed restrictions. D). grantees by means of restrictive covenants. - Correct answer C When a joint tenant dies, that tenant's interest A). passes to the surviving joint tenants. B). passes to the decedent's heirs as a tenancy in common. C). passes to the decedent's heirs and the surviving tenants as a divided tenancy in common. D). passes to the decedent's heirs as a joint tenancy. - Correct answer A Except in a title-theory state, a mortgage lien or has a (an) _________ in the likened property. A). security interest B). an equitable interest C). a pro rata share of a legal interest D). a dominant interest - Correct answer A One of the unique features of the Torrens System of recording is that A). conveyance occurs when it is registered on the certificate. B). it requires a complete title search to discover title status. C). title insurance is mandatory. D). encumbrances are recorded in order of priority. - Correct answer A A seller accepts an offer without realizing that the buyer has died since making the offer. Which of the following best describes the status of the contract? A). the contract requires the buyer's estate to complete the purchase before the estate is probated. B). the contract requires the buyer's heirs to complete the purchase after the estate is settled. C). the offer was terminated by the buyer's death; there is no contract. D). the seller must convey the property to the buyer's heirs under the terms of the contract as originally accepted. - Correct answer C A court orders transfer of a mortgaged property to the lender in a ___________ foreclosure. A). possessory B). judicial C). no-fault D). strict - Correct answer D Eminent domain A). is applicable only when the owner agrees with the government's superior claim. B). may be exercised with no obligation to compensate the owner. C). may be applied to any privately-owned property and for any purpose whatever, including reselling for a profit. D). can take a property from an unwilling property owner by a process of condemnation. - Correct answer D Stan's home undergoes foreclosure. The property has the following liens recorded against it: an unpaid real estate tax bill for the current year; a first mortgage dated ten years earlier; a second mortgage dated three years earlier; and a mechanic's lien entered for work beginning six months earlier. When the property is sold, the LAST lien to be paid off is the A). property tax lien. B). first mortgage. C). mechanic's lien. D). second mortgage. - Correct answer C In a foundation, the load is transmitted to the soil by the A). load exchanger. B). footings. C). platforms. D). lintels. - Correct answer B A person who owns all ownership interests in real property is said to own A). statutory title. B). juridical title. C). equitable title. D). legal title. - Correct answer D Restrictive covenants A). can never be changed or removed. B). are never used for residential properties. C). take priority over less restrictive zoning ordinances. D). may be discriminatory if established before ownership transfers. - Correct answer C Bob signs a six-month apartment lease agreement with John. What kind of lease is this? A). Tenancy at sufferance B). Estate from period to period C). Estate at will D). Estate for years - Correct answer D What purpose is served by recording a deed? A). It clears all encumbrances. B). It validates the deed. C). It transfers title. D). It gives constructive notice of ownership. - Correct answer D How is the tax base of an area calculated? A). Exemptions are added to the sum of assessed values. B). the tax levy is subtracted from the budget shortfall. C). the millage rate is divided by the tax levy. D). Exemptions are subtracted from the sum of assessed values. - Correct answer D A valid contract that conveys an interest in real estate must contain A). a novation clause. B). a title certificate. C). a legal description of the property. D). the signature of a member of the state bar association. - Correct answer C One day, a nosy visitor finds a deed in the attic of a house. The deed is signed by the grantor, who is deceased, but the grantee is not named. The visitor writes in his own name and attempts to record the deed. However, the deed will probably not hold up because A). there was no consideration and no intent to deliver. B). the grantor did not sign a transfer certificate and attach it to the deed. C). the grantee did not sign the deed in the presence of the grantor. D). the grantor was deceased at the time of delivery. - Correct answer A A deed in lieu of foreclosure A). changes the loan terms. B). wipes out all liens. C). increases the costs of foreclosure. D). avoids public notice of a foreclosure. - Correct answer D To be valid and enforceable, a contract must A). include earnest money. B). be notarized. C). convey legal title. D). include valuable consideration. - Correct answer D Conditions and covenants differ in that A). holding draft. B). check. C). letter of credit. D). cash deposit. - Correct answer B Which type of contract can have tax benefits for a seller? A). Option to buy B). Purchase and sale C). Contract for deed D). Lease - Correct answer C An agent owes all but which of these to his or her customer? A). Disclosure B). Funds accounting C). Advertising D). Skill - Correct answer C Which document is the most important at closing? A). Settlement statement B). Deed C). Inspection reports D). Listing contract - Correct answer B What kind of lease conveys a leasehold interest to an owner of a cooperative? A). Net-net B). Proprietary C). Percentage D). Index - Correct answer B How should a seller deal with an interested party that shows up at their front door unannounced and wants to see the house? A). the seller should conduct a tour. B). Take the person's name and then call the office immediately so an agent can come to do the showing. C). Give the visitor a flyer and the agent's business card. D). Tell the visitor when the next open house is scheduled. - Correct answer B AIDA stands for A). Allowance, Involvement, Develop, and Action B). Attention, Interest, Desire, and Action C). Action, Involvement, Detail, and Allowance D). Advanced, Intake, Design, and Action - Correct answer B Which of the following is considered a variable expense? A). Real estate taxes B). Insurance C). Advertising D). Utilities - Correct answer D Which of the following referral fees are NOT prohibited by RESPA? A). Title search referral fees B). Fees among cooperating brokers C). Title insurance referral fees D). Inspection referral fees - Correct answer B A licensee tells a neighborhood watch group that Vietnamese are moving into the neighborhood. What is this broker guilty of? A). Redlining B). Typecasting C). Steering D). Panic selling - Correct answer D A utility right-of-way is an example of A). an encroachment. B). a lien. C). an encumbrance. D). a permit. - Correct answer C What is the typical time period required to maintain escrow records? A). 3-5 days B). 3-5 weeks C). 3-5 months D). 3-5 years - Correct answer D When agency relationship is terminated, which of the following responsibilities still remains in force? A). Skill B). Confidentiality C). Obedience D). Care - Correct answer B An agreement in which a seller hires a broker to market a property creates an agency relationship between A). the listing agent, buyer, and seller. B). buyer and broker. C). broker, buyer, and seller. D). broker and seller. - Correct answer D After a listing agreement is signed, and if the agent is a member of a marketing service called a Multiple Listing Service (MLS). What specific form must be completed before the agent can post and market the property to other licensees who are members of MLS? A). MLS Form BB-1 B). A copy of the original listing agreement C). the original listing agreement D). An MLS form - Correct answer D What is the best approach to establishing a buyer's possession? A). Buyers take possession 2 days after the transaction close. B). Buyers take possession on the day of the close. C). Sellers should remain on the property at least 3 days after the closing date. D). Sellers should move from the property at least 5 days before the close date. - Correct answer B What type of budget is used to forecast income and expense over some period of years? A). Operating B). Variable C). Capital Reserve D). Stabilized - Correct answer D Which of the following is NOT a resource for information regarding professional ethics? A). Federal laws B). Licensing regulations C). Real estate marketing copy D). Real estate associations - Correct answer C If a buyer asks about homes in the "Muslim" area, what should you do? A). Explain to the buyer that you, ethically and legally, cannot recommend housing based on religion. B). Refer them to another licensee. C). Answer the buyer's question to the best of your abilities. D). Report the buyer to the Fair Housing Board. - Correct answer A A broker can enter into a single agency agreement with A). seller and secondary principal. B). a renter and landlord. C). a buyer. D). a seller and buyer. - Correct answer C Which type of agreement assures that a broker will receive compensation regardless of who procures the buyer? A). Gross listing B). Net listing C). Exclusive right to sell D). Exclusive agency - Correct answer C What is the purpose of the Statute of Frauds? A). It invalidates certain oral contracts. B). It requires certain conveyance-related contracts to be in writing. C). It nullifies oral leases and listing agreements. D). It eliminates fraud in real estate contracts. - Correct answer B Which party holds the escrow money when a dispute occurs? A). property notes. B). cheat sheets. C). property flyers. D). house information pads. - Correct answer C Agent Sally has been with Black Realty for over three years and has worked up to the top agent in the firm. Her commission percentage rate is double that of a starting agent. Based on this information, what type of compensation plan does the Black agency have in place? A). Graduated B). Level Grade C). Ramped D). Step - Correct answer A Which form of agency is illegal in most states? A). Single agency B). Buyer's agency C). Undisclosed dual agency D). Sub agency - Correct answer C Which statement about property management is FALSE? A). Property management is a specialized field in real estate. B). A property manager is a fiduciary. C). Asset manager and resident manager mean the same thing. D). A management agreement is an employment contract between the owner and the manager. - Correct answer C The Brooks' paid-off property sold for $247,600. What will they net after paying a 7.5% commission to their broker? A). $215,830 B). $219,700 C). $227,792 D). $229,030 - Correct answer D What is the definition of a principal? A). A broker who owns a real estate firm B). A person who delegates another to act on his or her behalf through an agency relationship C). someone who buys a property directly from an owner with no representation D). A person who expects loyalty and accounting from the person who purchases the property - Correct answer B A building with integrated office and retail space would be considered A). a Class A building. B). a mixed-use property. C). institutional real estate. D). a flex-space development. - Correct answer B What does risk management mean as it applies to property management? A). Controlling and limiting risk through proper insurance B). Limiting financial risk through the operating budget C). Overseeing preventive maintenance D). Keeping the grounds cleared to eliminate accident risk - Correct answer A What can you do to increase your chances of extending a listing that is about to expire? A). Call some friends and ask them to tour the property. B). Meet with your sellers a few weeks before the listing expiration and review with them your marketing efforts. C). Draw up an extension contract and mail it to the seller's two weeks before the listing expires. D). Meet with the sellers after the listing expires and write a new listing. - Correct answer B Agent Sam gets about 6 hours of floor time each week. What is a major duty for Agent Sam during this time? A). File office documents from previous transactions. B). Assist other agents. C). Prepare mailings. D). Respond to incoming sales calls. - Correct answer D A house sold for $42,000. The buyer made a 20% down payment. Monthly interest on the loan was $252. What was the interest rate on the loan? A). 5% B). 7% C). 9% D). 11% - Correct answer C On an 8% straight term loan of $6,071 the borrower paid total interest of $1,700. What is the term of the loan? A). 30 months B). 36 months C). 42 months D). 48 months - Correct answer C The finance charges recorded on the Truth in Lending statements would include all of the following EXCEPT: A). Loan fees charged by the lender B). Insurance premiums for mortgage insurance payment C). Discount points and service fees D). Recording fees and title insurance premiums - Correct answer D An impound or reserve account MOST benefits whom? A). the borrower B). the lender C). the trustee D). the trust or - Correct answer B Why would a mortgagee (beneficiary) have an appraisal on the property? A). to make sure the buyer did not pay too much B). to determine the property's potential for appreciation C). to protect the buyer from fraud D). to assure the property value is sufficient to cover the loan - Correct answer D A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he do this? A). Yes, the buyer can do as he wishes since he is making the contract. B). Yes, this is acceptable as long as the seller agrees. C). No, only money can be used for consideration. D). No, only the seller can write a promissory note. - Correct answer B Under an FHA graduated payment mortgage, which of the following fluctuates over the term of the loan? A). Interest rate B). Monthly payments C). Finance charge D). Annual rate - Correct answer B Which of the following describes a mortgage that requires principal and interest payments at regular intervals and calls for the liquidation of the debt by periodic installments until the debt is satisfied? A). Amortized loan B). Annuity loan C). Acceleration loan D). Assemblage loan - Correct answer A The discount points charged by a lender on a federal VA or FHA loan are a percentage of the ________________ A). sale price. B). appraised price. C). loan amount. D). down payment. - Correct answer C The Smiths' purchased a residence for $75,000. They made a down payment of $15,000 and agreed to assume the seller's existing mortgage, which had a current balance of $23,000. The Smiths' financed the remaining $37,000 of the purchase price by executing a second mortgage whereby the seller became a mortgagee. This type of loan is called a A). Wraparound mortgage B). Package mortgage C). Balloon note D). Purchase money mortgage - Correct answer D The Pickets are purchasing a home for $78,000 and the lender is giving them a 90% loan at 10% interest, plus a 2% loan origination fee. How much is the loan origination fee? A). $1,404 B). $1,560 C). $1,650 D). $7,020 - Correct answer A A). FHA insured B). VA guaranteed C). Commercial bank ARM loan D). FNMA mortgages - Correct answer C Which of the following is true of a second mortgage? A). It has priority over a first mortgage. B). It cannot be used as a security instrument. C). It is not negotiable. D). It is usually issued at a higher rate of interest. - Correct answer D Who is NOT an originator of primary loans? A). Savings and loans B). Credit unions C). Mortgage brokers D). FHA - Correct answer D The seller under a land contract is called ____________ A). the grantor. B). the grantee. C). the vendor. D). the vendee. - Correct answer C In which of the following markets may a lender sell a loan that a mortgage banker has previously originated? A). Primary market B). Secondary market C). Mortgage market D). Consumer market - Correct answer B A buyer assumes the mortgage. How is the owner relieved of the liability? A). Subject to mortgage B). Novation C). Substitution D). Graduation - Correct answer B A home improvement company was negotiating with a home owner to add two rooms onto a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what time could the homeowner rescind the loan? A). Tuesday, midnight B). Thursday, midnight C). Friday, midnight D). There is no rescission on a house. - Correct answer C Effective October 1, 2015, the real estate industry has new requirements as specified in the A). HUD-1A Rules. B). TILT/RESPA Loan Disclosure (TRLD) Rule. C). Consumer Protection Rules (CPR). D). TILA/RESPA Integrated Disclosure (TRID) Rule. - Correct answer D Who is the largest purchaser in the secondary market? A). Ginny Mae B). Fannie Mae C). FHA D). Freddie Mac - Correct answer B The clause in a trust deed or mortgage which permits the mortgagee to declare the entire unpaid sum due upon a default by a mortgagor is called a (n) ______________ A). judgment clause. B). acceleration clause. C). escalator clause. D). forfeiture clause. - Correct answer B If advertised alone, which would be in violation of TRUTH IN LENDING? A). "FHA financing available" B). "Assumable loan" C). "No down payment required" D). "Easy financing terms" - Correct answer C An owner advertised "beautiful acreage only $5,000 down, owner will personally finance down payment." Would this be in violation of the Truth in Lending Act? A). Yes, acreage is not exempt from Rag Z. B). Yes, since a down payment was stated. C). No, owners are not covered by Reg. Z. D). No, brokers can advertise the down payment. - Correct answer C A standardized yardstick expressing the true annual cost of borrowing is expressed as a/an A). ECOA B). Regulation Z C). APR D). RESPA - Correct answer C A buyer wants to take out an FHA loan. The broker should refer the buyer directly to ______________ A). any approved lending institution such as a bank or savings and loan association. B). an FHA appraiser in the area. C). the Federal Housing Administration office. D). the Federal National Mortgage Association. - Correct answer A Usury MOST nearly means ______________ A). making loans without the benefit of co-signors. B). lending money at fluctuating interest rates. C). being capable of multiple usage. D). illegal interest. - Correct answer D An increase in the availability of money would lead to which effect? A). Interest rates would go up. B). Interest rates would go down. C). Interest rates would NOT be affected due to RESPA guidelines. D). Interest rates would NOT be affected due to TRUTH IN LENDING. - Correct answer B ______ is the cost per thousand that is required to create the principal and interest payment necessary to pay off a loan. A). A rate B). A point C). A factor D). A power - Correct answer C An owner was selling his own home. Can he advertise the down payment? A). No, because it violates RESPA B). No, because it violates Regulation Z C). Yes, as long as it was listed with a broker D). Yes, because it was his own home - Correct answer D Discrimination is prohibited in lending practices under _____________ A). ECOA. B). RESPA. C). Truth in Lending Act. D). FNMA. - Correct answer A Which transaction requires a securities' license? A). Leasing a commercial building B). Selling a commercial warehouse C). Selling shares in Fannie Mae D). Arranging a sale-leaseback on a commercial property - Correct answer C In an installment land contract, what type of title did the seller retain? A). Joint B). Legal C). Equitable D). Record - Correct answer B A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company and is called: A). Blanket financing B). Packing financing C). Warehousing D). Discounting - Correct answer C A). Township line. B). Base line. C). Range line. D). Principal meridian. ` - Correct answer B What is the fundamental purpose of a building permit? A). to restrict the number of new development projects B). to establish the basis for an inspection C). to ensure that improvements comply with codes D). to promote certificates of occupancy - Correct answer C Which principle of value holds that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from the whole? A). Substitution B). Conformity C). Contribution D). Progression - Correct answer C Which principle of value holds that a property can increase or decrease in value in expectation of something in the future? A). Conformity B). Highest and best use C). Anticipation D). Contribution - Correct answer C One way for an appraiser to account for a property's deterioration is to A). Increase the chronological age of the property. B). Decrease the chronological age of the property. C). Raise the effective age of the property. D). Decrease the effective age of the property. - Correct answer C Which of the following is an example of economic obsolescence? A). Four bedrooms and one bath in a house. B). Lack of insulation in an apartment building. C). A house abutting a closed factory. D). Lack of paint on a barn. - Correct answer C The primary intent of zoning ordinances is to: A). Assure the health, safety and welfare of the community. B). Demonstrate the police power of the state. C). Limit the amount and types of business in a given area. D). Protect residential neighborhoods from commercial encroachment. - Correct answer A Which of these controls would be used to prevent a neighboring lot owner from violating the recorded deed restrictions in a subdivision? A). Zoning. B). Injunction. C). Police power. D). Condemnation - Correct answer B What are ad valorem taxes based on? A). the replacement value of property B). the assessed value of property C). the millage value of property D). the broker's estimate of value - Correct answer B Which aspect of depreciation is almost always incurable? A). Economic obsolescence B). Physical deterioration C). Internal obsolescence D). Functional obsolescence - Correct answer A Which of the following approaches to value figures the land separately from the value of the improvements? A). Market Data. B). Cost Approach. C). Income Approach. D). Functional obsolescence. - Correct answer B An office building has a Potential Gross Income of $12,600 per year. The vacancy rate is 5% and the annual expenses are $3,600. What is the market value if the capitalization rate is 12%? A). $15,120.00 B). $69,750.00 C). $99,750.00 D). $105,000.00 - Correct answer B What is the principal mechanism for implementing a master plan? A). Zoning B). Referendum C). Public election D). Property management - Correct answer A An acre contains: A). 3840 square feet. B). 6490 square feet. C). 34,875 square feet. D). 43,560 square feet. - Correct answer D The depreciation most difficult to remedy would be: A). Physical. B). Economic. C). Functional. D). Premise. - Correct answer B A CMA is performed when: A). Accessing property. B). Pricing property. C). Taxing property. D). Condemning property. - Correct answer B What is a unique characteristic of a special assessment tax? A). More valuable properties which stand to benefit will pay proportionately more taxes. B). It applies only to properties which will benefit from the public improvement. C). the equalization board discounts levies for properties not affected by the public improvement. D). It creates an involuntary junior lien on the property. - Correct answer B A development company owned property that the city wanted so it could extend the runways at the municipal airport. If the company refuses to negotiate with the city, then the city may acquire the property by: A). Escheat. B). Accretion. C). Confiscation. D). Eminent domain. - Correct answer D To find the value of a property using the Income Approach to value, if the Net Operating Income and capitalization rate were known, the appraiser would: A). multiply the Net Operating Income by the capitalization rate. B). multiply the Effective Gross Income by the capitalization rate. C). Divide the Net Operating Income by the capitalization rate. D). Divide the capitalization rate by the Net Operating Income. - Correct answer C A new home sold for $350,000. The tax rate is $.825 per hundred or fraction thereof. How much will the annual taxes be on this property? A). $287.00 B). $287.50 C). $2,887.00 D). $2,887.50 - Correct answer D The best definition of an appraisal is: A). A means of determining depreciation. B). A method to keep values current with reproduction cost. C). A statement of facts that may not be necessarily true. D). an estimate of value. - Correct answer D A 20-unit apartment building rented for $750 per unit, per month. The annual Gross Income Multiplier was 9. What is the value of the property? A). $135,000 B). $1,350,000 C). $1,800,000 D). $1,620,000 - Correct answer D Functional and economic obsolescence are aspects of