RE Practice Test 1

Which of the following is an example of puffery?

"This condo has the best view this side of the river!"

You're working as a buyer's agent for Neil and Sharon, who just found the home of their dreams. When they ask you about adding contingencies to their offer, what do you tell them?

"You definitely want to protect your interests, but let's make it as easy as possible for the seller to choose your offer."

Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?

$387,000 *property tax is based on assessed value*

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

(300,000) x (.05) = 15,000 300,000 + 15,000 = $315,000

You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?

(80,000) x (.9) = $72,000 (72,000) x (.1) = $720

The manufacturer of soundproofing, decorative material, shingles, and siding with asbestos was outlawed in which decade?

1970s

Karen meets the experience requirements related to credit analysis and underwriting to qualify as a mortgage broker. At a minimum, how many years' experience does she have?

2

According to the EPA, at what level does radon become a health concern requiring mitigation?

4.0 picocuries per liter of air

In rent-controlled apartments, landlords may not raise rents more than ______%, and then only if the new rate does not exceed the Maximum Base Rent allowed.

7.5

For which of the following properties would you use a standard residential contract of sale?

A duplex in the suburbs

What do you get when you add the purchase price to closing expenses and the cost of any improvements during the time of ownership, then subtract any depreciation taken?

Adjusted Basis

When a stimulus is linked to, and triggers, the nervous system, bringing to mind an experience or feeling from the past, it's known as what?

An anchor

Total assessed value divided by total market value = equalization rate. Therefore, which of the following is correct?

An equalization rate that is higher than 100 demonstrates that the total assessed value for that jurisdiction is greater than its total market value.

Rick wants to remodel his home located in the New York town of Greenville. He'll need approval for his plans from the ______, which is responsible for ensuring that any building work meets the standards for design and maintains the beauty of the neighborhood.

Architectural Review Board

When must all New York real property transfers taxes be paid?

At the time the deed is recorded

New York's equalization program _______.

Attempts to measure locally assessed values against the real estate market

Any home improvement contractor who's charging more than $5,000 for the work has to deposit the payments received before completion into an escrow account. Why?

Because of article 36-A of the New York General Business Law

Which of the following is true regarding agencies and brokerages?

Brokerage and agency mean the same thing.

Which of the following would property managers be expected to personally do as part of their assigned duties?

Budget preparation and oversight

What is another name for a blueprint?

Building plan

You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who's your client?

Buyer

If you're staying at a motel, what's one advantage you have over your friend, who's staying at a hotel?

Closer to parking

A licensee has several tasks to perform for seller clients. What's one of those tasks?

Communicate all offers and counter-offers to the sellers.

Which of the following provides an opinion of list price range by looking at recently sold properties, comparing current competing properties and properties that didn't sell, and estimating buyer appeal regarding the style, location, and size?

Comparative market analysis

A cross between a condominium and a cooperative where, typically, the residential portion is separate from the commercial component (condo). This arrangement allows the developer or sponsor to retain ownership of the non-residential space in a building.

Condo-op

For condominium properties, the owner's rights are detailed in which document?

Condominium Bylaws

Binders create the framework for a contract but may lack specifics, such as ______.

Contingencies

Ariana's seller clients have photos of the entire family on display in the grand stairway of their home. Ariana advises her clients to remove the photos. Which step in the preparation phase is Ariana addressing?

De-personalization

Your buyer client, Ben Dalton, tells you two weeks before closing that he's lost his job. He doesn't have any other income at the moment, and may not be able to follow through on his purchase of the house you're helping him buy. However, he doesn't want to miss out on his dream home and is optimistic that he'll find something soon, so he asks you to keep it confidential. What should you do?

Disclose this fact to all parties to the transaction if Ben refuses to do so.

Economic, tax, and market changes are types of _______ risk.

Dynamic

What's the best way for a licensee to prevent the potential issue with sellers of believing that a property has sold too quickly or took too long to sell?

Educate sellers about why a list price has been recommended, and the effect of current market conditions on the length of time a property takes to sell.

Which act provides consumers with remedies if they become victims of discrimination in the sale, rental, or financing of housing?

Fair Housing Amendments Act of 1988

Cooperative shareholders under a condop structure have ______.

Flexibility in selling and subletting, similar to that of condominium owners

Which type of heating system takes cool air and passes it through the heat source using a fan or blower?

Forced air

Which of the following might involve old wiring or plumbing?

Functional Obsolescence

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property.

Broker Tom receives a $10,000 commission from the sale of one of his listings. He's permitted to share proceeds from the commission with ________.

His affiliated licensees involved with the transaction and the broker of other licensees involved in the transaction

A borrower is using a gift to fund part of his home purchase. What criteria for the gift holds the most weight in the lender's eyes?

How long ago the gift was given

A home enters the market priced above fair market value. Within the same time frame, three additional homes enter the market listed between 5% and 10% less than the first home, at a fair market price. What is likely to happen with the first home?

If a property is overpriced from the beginning, buyers will move on and likely make a purchasing decision before the price is corrected on the overpriced home.

When working with potential buyers who say they just want a little information but won't sign a buyer representation agreement, why should you recommend they become clients?

If they won't sign an agency agreement, there's a higher chance they won't be loyal to you.

When Joan met Carl, a prospective buyer, she felt uncomfortable. Because he was a well-dressed lawyer with a family, she eventually convinced herself her unexplained fear was silly and continued to meet with him to help him find a home. This is an example of ______.

Ignoring intuition

Which of the following is a contract that exists based on an understanding or assumption, rather than on specifically defined terms?

Implied contract

Improving credit scores can also

Increase how much house the borrower can afford

Which is the best way to protect yourself against a fair housing violation?

Inform clients who believe they have been discriminated against how to report discrimination.

One of the most dependable tools in your self defense toolbox is something that is always with you and can detect a dangerous situation before it happens. What is it?

Intutition

Which one of the following is a true statement about asbestos?

It is not safe at any level

When lead is present, what rule covers remodeling of the property?

Lead Renovation, Repair, and Painting (RRP) Rule

Paint, soil, pipes, dust, and drinking water are all potential sources of what hazard?

Lead contamination

What type of insurance will cover damage to someone else's property?

Liability

A landlord leases Unit B. As long as the tenant who signed the lease (or that tenant's lawful spouse) lives there, who else must the landlord allow to occupy Unit B?

Members of the tenant's immediate family, one additional occupant, and the occupant's dependent children

A legal description can contain ______.

Metes and bounds

Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don't have the best credit score. They've decided to buy the home using an FHA loan. Which of these is a true statement?

Minimum downpayment of 3.5% is required

Becky is speaking to a group of licensees about the importance of listening skills. Which of the following is a true statement?

Most of our communication consists of body language and voice quality.

Consumers may use Roth IRA funds to obtain the down payment for their home purchase. Which of the following scenarios is allowed?

Nevil, who has held his Roth IRA for five years, withdraws $8,000 to go toward a down payment on his first home.

Kerry is the Limitless Realty broker. She has a meeting with her licensees and states, "From now on, we will not charge less than a 5% listing fee." Is this an antitrust violation?

No

Which type of financing do active investors generally seek?

Non-conventional

Your seller client is going back and forth with a buyer on an offer. The discussions have become heated and personal. What should you do?

Open communication and identify what each side shares. Try to make the situation about the transaction, and not personal.

Under which types of agency agreement may a buyer and agent operate?

Open, exclusive right to represent, and exclusive agency

Licensee Dionne pointed out to her buyer client the items that would be considered real property. What is one of the key characteristics of an item that is real property (also known as a fixture)?

Permanently affixed to the property

Which type of framing is most commonly used in housing?

Platform

In which type of framing are the framing members much larger and spaced much farther apart?

Post and Beam

Which term means an increase in land by the permanent and gradual withdrawal of water?

Reliction

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration?

Rent

Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______.

Restrictive covenants

Which person in the following scenarios holds a real estate license?

Richard works for more than one owner for a fee.

Jane is selling her condo. What allows her condo association to purchase her unit before she puts it on the market?

Right of first refusal

Which of the following market trends would favor licensees remaining as independent contractors?

Rising property values increase commissions for brokers and their licensees

What type of investment strategy is most similar to a 1031 tax-deferred exchange?

Rolling over funds from one IRA into another

Lewis and Elliot started a real estate investment business together. After much discussion with their attorney, they decided to incorporate, but in such a way that they are treated like a partnership and don't have to pay corporate taxes. What form of business do they have?

S-corp

Homeowners who wish to protest their assessments can do so using which of the following?

SCAR, BAR, and RAR

When the taxpayer files a grievance with the local board of assessment review (BAR), which of the following steps are included?

Sending a copy of the RP-524 to the tax assessor

Which of the following is a good way to build trust and rapport with the other party in a negotiation?

Set a cooperative tone in negotiations

Bridget is a licensed massage therapist with a strong financial record who works out of her home. She's trying to purchase an apartment in a local cooperative. What's one likely reason her package may be rejected by the board?

She works out of her home, which may not be permitted.

Which of the following is the definition of a client?

Someone who has agency representation with the real estate salesperson or broker.

As a New York resident, a seller, will be responsible for certain expenses. These include which of the following?

State and local transfer taxes

Which type of pest may make mud tubes—tunnels that run along the walls—or shed tiny wings?

Termites

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law.

Buyers who intend to finance should understand that the higher their credit score, _______________.

The better interest rates they will qualify for

Who or what entity has legal title to a financed property in a lien theory state?

The borrower

If a licensee has been misclassified as an independent contractor, which of the following is a consequence for the licensee?

The licensee can no longer file Schedule C to deduct business expenses

When does an agent's fiduciary duty of loyalty to the client begin?

The moment both parties agree to an agency relationship

If you've shown Suzie three properties, and she decides to put an offer in on one of them but hasn't signed an agency agreement with you, who do you represent?

The seller

Who does the agent assisting the buyer in a transaction represent if there's no buyer agency agreement?

The seller

Seller Jamison is closing on his property with buyer Conrad. Jamison paid the current year's property taxes already. Is this a prepaid or accrued expense, and how will it be represented on the settlement statement?

The taxes are a prepaid expense, and will appear as a buyer debit and a seller credit.

In the New York town of Greenville, a citizen has requested a zoning variance in order to run a business out of her home, an activity that isn't currently allowed in the neighborhood where she lives. Before it makes a decision, the zoning board of appeals may seek input from ______.

The town's planning board

When a buyer purchases a condominium unit, the buyer will receive a deed to what?

The unit and an undivided interest in the common areas

If there is some kind of defect on a property's title, what effect does this level of transferability have on the property's value?

The value falls

A landlord with a strict "no pets" policy won't rent to a woman who uses a service animal to assist with her epilepsy. Which of the following is a true statement about this situation?

This is discrimination based on disability.

How does discrimination testing work?

Two different applicants whose only difference is protected class apply for the same property.

At what point do most lending issues arise?

Underwriting

You receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?

Unilateral Contract *sweepstakes = unilateral, recipient is not bound to the contest but the administrator is*

By researching comparable properties that have sold recently and using them for comparison purposes, making adjustments for differences in age, amenities, lot size, location, square footage and the like, you are ________?

Using market value approach to valuation

Which system uses a central exhaust fan and ducts to move stale air out of the building?

Ventilation

You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this?

Void

Which of the following portrays advance consent to dual agency?

You sign a listing agreement with a seller and obtain written permission to represent any unrepresented buyers.

When a buyer signs a purchase offer, the buyer also makes a deposit to show good faith to the seller. In this case, "good faith" means _______.

that the buyer intends to complete the transaction.