Real Estate Exam prep

A vacant lot measures 176' x 290'. What is the area of the lot? a. 51,040 sq ft b. 61,920 sq ft c. 5,104 sq ft d. 6,192 sq ft

A

Kim has a listing agreement with Agent Garcia. Agent Garcia and Kim draft the listing on Thursday and, in accordance with Kim's wishes, they plan to publicly advertise the listing on Monday after Kim returns from an out of town trip. Agent Garcia knows the weekend is the best for selling Real Estate and decides to add Kim's listing to the MLS on Saturday morning. Is Agent Garcia ok to do so? a. Agent Garcia has violated license law b. Agent Garcia showed great business acumen c. Agent Garcia is the professional and therefore is ok to list at the best time d. Both B and C

A

In what scenario might a human appraiser be needed alongside AVMs in the real estate industry? a. When an AVM result is disputed or insufficient b. When using AVMs for insurance premium assessments c. When conducted by a salesperson licensee vs. a broker d. When dealing with rapidly changing market conditions

A (AVMs do not replace the role of a licensed real estate appraiser and may require their involvement in disputed or insufficient cases to provide a more accurate valuation)

A real estate licensee is required in order to: a. Offer to sell, purchase, or exchange real estate on behalf of another for a fee b. Sell or rent property through a foreclosure process c. Sell or rent investment property for profit d. All of the above

A (Buying, selling, or leasing on your own behalf does not require licensure. Usually, the court appoints a person to handle the sale of property in foreclosure and no license is required. However, when you act for another person and for a fee, a license is required.)

Which of the following situations is a dual agency? a. a broker acting for both the buyer and the seller in the same transaction b. a broker listing and selling the same property c. a broker representing different principals d. both A and B

A (Dual Agency exists when the same agent (broker or firm) represents multiple parties (buyer and seller) with competing interests in the same transaction. Most of the states that permit dual agency require an agent to obtain proper client consent before entering into the relationship. Proper consent usually includes various disclosures about the nature and risks of the dual agency relationship. Dual agents owe agency duties to both parties.)

What should a salesperson do with the earnest money deposit she receives from a buyer? a. Give it to her broker b. Give it to the seller c. Deposit it in her escrow account d. Attach the check to the contract and file it

A (Earnest money deposits (which are usually tendered by check) should be given to the broker as soon as the buyer's offer is accepted by the seller. Remember that it is the broker, not the salesperson, that must have an escrow account and the salesperson must give any earnest money deposit to her broker)

Bill is very excited for selling his house at 23% more than what he paid 2 years ago. If Bill paid $52,500 for his home, what did he sell it for? a. $64,575 b. $62,525 c. $12,075 d. $1,207,500

A (In this scenario simply take $52,500 x 23% (.23) = $12,075 this gives you the 23% above the amount paid for the home. Now, add the $12,075 to the $52,500 for the total sale price. Bill sold his house for $64,575.)

The clause in a lease that allows rent to increase is a(n): a. Escalator clause b. Acceleration clause c. Contingency clause d. Percentage clause

A (Of the choices given, only an escalator clause specifies that rent will increase at periodic times by pre-determined amounts. An Acceleration clause would when borrower violated terms of a mortgage or deed of trust and the entire loan balance becomes due. A percentage "clause" would actually be a percentage "lease" and is when a business tenant pays the owner a percentage of the gross income.)

What would NOT be legally sufficient for use as consideration in a sales contract? a. Love and affection b. Money c. Property d. Service

A (One-sided promises, like love and affection, are insufficient to constitute consideration--there must be an exchange of promises (as illustrated by the other answer choices).)

Every real estate office in Virginia is required to: a. Keep records for a period of three years b. Have one telephone for every five agents c. Keep records for a period of ten years d. Have a desk for every five agents

A (Records of all transactions, including receipts and disbursements of funds belonging to others (escrow account records), must be kept for three years from the date of ratification or consummation, whichever is later)

The principle of substitution states that: a. An informed buyer will pay no more for property than the cost of acquiring an equally desirable piece of real estate b. Merging separately owned pieces of property into one large single lot will increase the value of the separate pieces c. A property will attain its highest value if its use conforms to its surrounding neighborhood d. A person will buy a property based on the expectations or anticipation of a future benefit

A (Substitution is a statement that an informed buyer will pay no more for property than the cost to acquire equally desirable real estate. In other words, value is influenced by the cost to acquire an equal substitute.)

The Virginia Property Disclosure Act applies to all of the following transactions, except: a. New home construction b. Installment sales c. Property options d. Property sales

A (The VA Property Disclosure Act does not apply to new home construction (a first sale), but it does apply to the other items specified.)

Tommy the Tenant takes over a tattoo parlor from an existing tenant. The parlor came with a comfortable dentist chair, which was perfect for people to sit on while getting their tattoo. One day, the chair breaks. Tommy installs a new dentist chair that he picked up at a flea market. The new chair is: a. Real property, regardless of when it is removed b. Personal property, regardless of when it is removed c. Real property, if not timely removed d. Personal property, so long as it is timely removed

A (The issue here is whether the chair is a trade fixture or a replacement fixture. Replacement fixtures are improvements that are installed by a tenant to replace worn out items that were already in place before the start of their lease. Replacement fixtures are classified as real property and belong to the owner. Because Tommy is merely replacing the chair, it is not a trade fixture, but merely a replacement fixture. Therefore, the chair is real property regardless of when or if it is removed (and Tommy cannot remove it without the owner's permission).)

Which of the following is not required to be specified in a buyer-broker agreement? a. Buyer's budget/price range b. Broker's compensation c. Services to be offered d. Responsibility of the parties

A (The nature of the relationship between buyer and broker should be established through a written agreement (although it can be oral). There are different buyer-broker agreements, but each should clearly specify: the services to be offered; the responsibilities of the parties; and how, when, and by whom the broker is to be compensated. The buyer's budget/price range does not have to be part of the buyer broker agency agreement.)

Helen listed her property for $145,000. Jim made an offer to purchase for $135,000. Helen made a counteroffer for $140,000. Which of the following statements is correct? a. In the original offer, Helen is the offeree b. Helen is the offeree in her original offer c. Helen's counteroffer is a partial acceptance of Jim's original offer d. Jim is the offeree in his original offer

A (There is no such thing as a partial acceptance--an offer is either accepted, rejected, or it expires. Helen's listing is NOT an offer; it is only an invitation to others to make offers (with some indication of what Helen wants). Therefore, the original offer was made by Jim (offeror) and the only true statement is that Helen is the offeree in the original offer)

The final step in appraising an apartment building is: a. Re-capitalization b. Reconciliation c. Adjustments d. Capitalization

B

A seller is willing to pay a 6% commission if the broker can sell the house at a high enough price to pay off the existing $75,300 loan and allow the seller to clear $10,000 cash on the deal. To the nearest dollar, how much must the property sell for to reach these goals? a. $80,106 b. $90,745 c. $85,300 d. $90,418

B (Amount needed to pay off loan = $75,300 Amount to give seller in cash = $10,000 Total amount needed (before commission) = $75,300 + $10,000 = $85,300 The seller is going to give the broker a 6% commission. From here, we can assume that the amount needed is 94% of the Sales Price. 100% - 6% = 94% Now, we know that "something" times 94% is equal to $85,300. 0.94X = $85,300 Therefore, dividing $85,300 by 94% will let us know what that "something" is. X = $84,300 / 0.94 X = $90,744.68 Rounded to the nearest dollar, the seller needs to sell the property for $90,745.)

A real estate salesperson's license may be revoked if the licensee: a. Gives a reduced commission rate to a family member b. Advertises a listing at lower than listed price c. Charges more than the legal maximum commission rate d. Sells insurance from the real estate office where she is employed

B (A licensee can only advertise property at the price that was agreed upon by the seller of the property. Doing otherwise might be classified as misrepresentation, and a failure of the licensee's fiduciary duties towards her client. Also note that there is no such thing as a maximum commission rate.)

Tom makes a full price offer to purchase property from Jerry, while Jerry considers the offer it is revealed that Tom was deemed legally insane last year. What are Jerry's options, can he accept the offer? a. Yes, Jerry has a right to accept any offers that are presented b. No, insanity terminates all unaccepted offers c. Yes, Jerry can still accept the offer and then Tom will have to follow through with the purchase d. Yes, Jerry can accept as long as there is a meeting of the minds

B (Acceptance of an offer and the subsequent formation of a contract require a "meeting of the minds". A "meeting of the minds" occurs when both parties understand exactly what they have promised to do or not to do. Both death and insanity prevent a meeting of the minds from occurring. Therefore, the death or insanity of either party terminates an offer that has not been accepted.)

Acting for more than one client in a transaction without first obtaining the written consent of all clients is: a. Not a violation so long as there is no harm b. A conflict of interest in violation of the law and rules c. An example of unworthiness and incompetence d. A designated agency in violation of the law and rules

B (All licensees (salesperson or broker, active or inactive) must avoid conflicts of interest. Conflicts of interest include undisclosed dual or designated agency, working for another firm without written permission, and performing real estate services outside of the brokerage firm.)

Under what conditions can borrowers potentially cancel Private Mortgage Insurance (PMI) under federal law? a. When their mortgage balance is reduced to 70% of the original purchase price b. When their mortgage balance is reduced to 80% of the original purchase price or the initial appraised value (whichever is less) c. When they request PMI cancellation at any time during the loan term d. When the property's value appreciates by 10% or more

B (Borrowers may cancel PMI under federal law when their mortgage balance is reduced to 80% of the original purchase price or the initial appraised value, whichever is less. This provision is available to borrowers with good payment histories)

A broker is a member of the local MLS service. Commission rates charged by members of the MLS are established by: a. The local association of REALTORS b. The broker and the seller c. The MLS service d. The Virginia Real Estate Board

B (Commission rates are only negotiable between the broker and the seller of the property.)

Emily, a builder, is working on constructing a new residential development. She needs short-term financing to cover the construction costs. Which type of loan would be most suitable for Emily's needs? :a. Fixed rate mortgage b. Blanket mortgage c. Reverse mortgage d. Buydown mortgage

B (Emily should consider a Blanket Mortgage, as it allows her to pledge multiple parcels of real estate as collateral for the debt. This is common for builders and developers working on large projects.)

What is one of the advantages of holding real estate within a business entity regarding liability protection? a. It eliminates the need for property insurance b. It shields personal assets from business-related claims and debts c. It is less costly to operate d. It eases property management

B (Holding real estate within a business entity can shield personal assets from business-related claims and debts, providing liability protection)

According to RESPA, which disclosure documents must be provided within 3 days of the loan application? a. Special Information Booklet, Good Faith Estimate, and Escrow Account Statement b. Special Information Booklet, Loan Estimate, and Mortgage Servicing Statement c. Closing Disclosure, Good Faith Estimate, and Escrow Account Statement d. Mortgage Servicing Statement, Good Faith Estimate, and Escrow Account Statement

B (In most cases, lenders must provide the Special Information Booklet, Loan Estimate, and Mortgage Servicing Statement within 3 business days of receiving a loan application. However, if applicable, a Good Faith Estimate (GFE) must be provided in place of the Loan Estimate form.)

When a real estate license has expired, when can a person reinstate his license without monetary penalty? :a. Within 15 days b. Within 30 days c. The licensee cannot be reinstated after expiration d. Within 1 year

B (Licensees must renew their license BEFORE it expires. Licensees may reinstate their license within 30 days by paying the regular renewal fee (no additional penalty). Afterwards, licensees must pay a reinstatement fee (Day 31 to 1 yr) or re-apply for initial license if not reinstated in a timely manner (more than 1 yr).)

Which of the following is a listing agents's responsibility regarding non-client inquiries? a. Listing agents must interpret the property condition for the buyer/customer b. Listing agents must answer all buyer/customer questions factually c. Listing agents should never provide their opinion to answer buyer/customer questions d. All of the above

B (Listing agents must respond truthfully to any question asked by the buyer/customer and must treat the buyer/customer fairly. Agents should be sure of their facts before responding to an inquiry. The agent should state the facts, but not interpret or evaluate the property condition. If the agent expresses an opinion, it should be clear that it is an opinion and not a fact.)

In addition to the three essential contract elements (offer/acceptance, consideration, no defenses), purchase agreements also commonly contain all of the following provisions except: a. Earnest money deposit b. Acceleration clause c. Property description d. Specified times (for closing)

B (Purchase agreements must contain either a legal (metes and bounds, etc.) or a non-legal (address) description of the subject property. Secondly, if a purchase agreement states that "time is of the essence," then specified times are strictly enforced (closing). Finally, purchase agreements may, but need not, include a pledge or deposit of earnest money.An acceleration clause would be found in a mortgage or loan document, it states the entire balance becomes due if the borrower defaults)

A broker has been approached by a minority buyer, who requests to see properties in a specific section of a city. The broker refuses to show these properties. Instead, the broker indicates that he would be better off in a location with a greater concentration of his particular minority group. The broker's illegal conduct is known as: a. Blockbusting b. Steering c. Panic selling d. Redlining

B (Steering is the act of directing buyers into or away from specific property based on their minority status.)

Taxes are $2,100 per year. The tax rate is $3.00 per $100. The assessed value of the property is 40% of the estimated market value. What is the market value of the property? a. $90,000 b. $175,000 c. $70,000 d. $157,000

B (Tax rate = $3.00 / $100 = 0.03 Assessed Value = Property Tax / Tax rate Assessed Value = $2,100 / 0.03 = $70,000 assessed value Using this information, we can now determine the market value of the property. 40% x Market Value = Assessed Value 40% x Market Value = $70,000 0.40X = $70,000 X = $70,000 / 0.40 = $175,000 market value.)

The Virginia Real Estate Board is empowered to do all of the following actions, EXCEPT: a. Administer the Fair Housing Act b. Establish standardized listing and sales contract agreements c. Administer the Residential Property Disclosure Act d. Administer the Transaction Recovery Act

B (The Real Estate Board does NOT get involved with standardization of forms used in the industry, but they are involved in administrating the other listed laws.)

Which of the following items would NOT be a latent defect that the seller must disclose to the buyer? A. Termite damage B. Non-functioning furnace C. Seasonal flooding D. Cracked foundation

B (The broker must disclose all adverse material facts that she knows about the physical condition of the property. All of the listed items are latent defects (hidden or not readily discoverable by inspection), except the broken furnace. The broken furnace isn't a latent defect because it is more easily discoverable.)

A listing broker receives a low offer from one of his prospects. He also receives a full price offer from a cooperating broker. He may: a. Present only his prospect's offer b. Present both offers c. Present only the full priced offer d. Present his offer first, then the full price offer if not accepted

B (The broker must present and receive all offers in a timely manner. It would be a breach of fiduciary duty to postpone deliverance of the full price offer (and not in the seller's best interests). Once presented, only the seller can decide whether to accept or reject an offer)

Barry makes a $150,000 offer on Pam's home, subject to financing at 4%. Pam accepts Barry's offer, but only agrees to 6% financing. Which of the following statements is INCORRECT concerning Pam's acceptance? a. Barry is now the offeree b. It is a partial acceptance of the original offer c. Pam rejected Barry's offer d. Pam may withdraw her offer at any time, prior to acceptance by Barry

B (The choice that is NOT true is the best answer for this question. An offer is either accepted or rejected; there is no such thing as partial acceptance. Therefore, partial acceptance is the BEST answer because it is incorrect. Counteroffers are NEW offers which reject (kill) the preceding offer. As such, it is true that Barry is now the offeree to Pam's counteroffer. Like any offer, a counteroffer may be withdrawn at any time prior to acceptance.)

Which of the following names MUST appear in any advertisement for real estate? a. Selling salesperson b. Listing broker c. Seller d. Listing salesperson

B (The name of the seller and the name of the listing salesperson MAY appear in the ad, but the listing broker's name MUST appear in all forms of advertisement (conventional and electronic media).)

What is the primary purpose of a market analysis conducted by real estate agents for rental properties? a. To evaluate the current condition of the property b. To identify the ideal tenants for the property c. To project annual property taxes d. To identify the ideal tenants for the property

B (The primary purpose of a market analysis is to determine the most appropriate and competitive rental rates for a property)

A prospective buyer enters a broker's office and is escorted into the conference room. After the broker has financially qualified the buyer, they begin to review available properties that meet the buyer's wants, needs, and financial limitations. When is the broker required to disclose the agency relationship? a. Before the broker and buyer begin to discuss any specific property b. When the buyer expresses an interest in a particular piece of property c. When determining the financial qualifications of the buyer d. When the buyer has identified a property that is acceptable

B (The regulation states that disclosure is required before you have "substantive" discussions about a specific property. If the buyer is expressing interest in a specific conversation, the conversation will soon progress into providing specific real estate assistance)

McKay Realty just placed a billboard advertisement near the entrance to the town which happens to be near an Army base. The billboard ad is for new single family homes showing a price range of $130,000 to $160,000 and pictures of several people in Army uniforms standing in the doorways of a new homes. Is this a legal advertisement? a. Yes, the ad is legal based on the town being an Army community b. No, the ad is not legal because it indicates a preference for Army buyers c. Yes, the ad is legal because it doesn't state a written preference for anyone in a protected class d. No, the ad is not legal because military uniforms are not allowed in advertising

B (This is a violation of Virginia Fair Housing laws. It is illegal to make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling thatindicates anypreference, limitation, or discrimination or an intention to make any such preference, limitation, or discrimination on the basis of race, color, religion, national origin, sex, elderliness, familial status, source of funds, sexual orientation, gender identity,military status, or disability.)

In order to be legally binding on all parties, a contract for sale of real estate MUST include: a. A method to calculate the licensee's commission b. Legally competent parties c. The signature of the spouse, if the seller is married d. An earnest money deposit

B (offers/purchase agreements) Of the listed choices, only competent parties are required for a binding sales contract. Attorneys usually require the spouse's signature if the seller is married, but it is not a necessary element. Neither is an earnest money deposit required, although it is frequently included as a condition.)

A broker advertises property listed with her firm in a newspaper. What must be included in this property advertisement? a. Price that is shown in the listing agreement b. Location of property c. Name of the broker's firm d. Name of the listing salesperson

C (All ads must include the name of the brokerage firm, as it is known to the public. Listing the salesperson's name is fine, but the firm's licensed name MUST also be listed.)

Which of the following BEST defines a valid contract? A. A mutual agreement between two or more parties B. A written agreement between competent parties to abstain from doing a specific act C. An offer and acceptance, between competent parties who, for consideration, agree to do or not to do, a specific legal act D. An offer and acceptance, between competent parties to do a specific legal act

C (All of the following must exist to create a contract: offer/acceptance, consideration, and a lack of any defenses that would otherwise cancel a contract or prevent it from being formed.)

A broker would be in violation of the Fair Housing Act for doing which of the following acts? a. Refusing to show high priced property to persons that could not qualify for financing b. Refusing to list a piece of commercial property owned by a person of a particular minority group c. Inducing the sale of property by overtly creating the impression that the neighbor hood is about to undergo undesirable change d. Advertising in a publication whose subscribers are all members of one particular minority

C (Blockbusting is the Illegal act under the Fair Housing Act where a person induces the sale of property or properties by overtly creating the impression that a neighborhood is about to undergo an undesirable change. Fair housing laws cover residential property and vacant lots intended for residential building. There would be no fair housing violation to advertise in the magazine-a violation would occur if a broker chose not to advertise in the magazine because of the members race or National origin. Denials based on the inability to meet qualifications is not a fair housing violation)

Zoning ordinances are established by: a. The federal government b. Individual state governments c. Counties, towns, and municipalities d. All of the above

C (Counties and towns establish zoning ordinances. In come cases, these decisions may be directed by either State or Federal regulations.)

Sara is purchasing a home. How much is Sara's down payment if she agrees to pay $80,000 for a house and wants to make a mortgage downpayment of 25%? a. $15,000 b. $30,000 c. $20,000 d. $25,000

C (Determine Sara's down payment as follows: House cost x Percentage = Downpayment; $80,000 x 0.25 (25%) = $20,000.)

Disparate treatment in real estate can be based on both intent and impact. Which of the following is true about intent in such cases? A. Intent is never considered in cases of disparate treatment B. Intent is always necessary for a finding of discrimination C. Intent is not always necessary for a finding of discrimination D. Intent is only considered when the impact is significant

C (Disparate treatment can be based on intentional discrimination or the unintended impact of a seemingly neutral policy or practice. Intent is not always necessary for a finding of discrimination.)

What is the primary concern regarding encroachments in real estate? a. They improve property access and value. b. They have no effect on property titles or values. c. They can lead to property disputes and cloud property titles. d. They are costly

C (Encroachments occur when a part of one property extends onto another property without permission. While encroachments do not directly affect property titles, they can lead to property disputes if not addressed, potentially clouding the title in the future.)

Seller Pruitt signed an exclusive right-to-sell listing with Broker Cook. The listing includes a 7% commission and a clause which states that this agreement is in effect until the house is sold. Is this legal? a. Yes, assuming all other elements are satisfied b. No, because the commission was over 6% c. No, because the term is potentially indefinite d. Yes, if it is a multiple listing

C (Exclusive listings must have a definite termination date. If the house does not sell, the agreement could exist forever.)

At closing Seller Sally gets chatty and reveals the property has a roof leak, this material defect was not disclosed in the sales contract. What option does the Buyer Bob have? a. None, buyer should have verified there were no defects before closing b. None, now that the defect has been revealed at closing c. Back out of the sale, contract rescission d. None, roof leak is usually covered by warranty

C (Failing to make mandatory disclosures could result in liability for fraud or misrepresentation as a result of the broker's concealment. Fraud or misrepresentation could be grounds for the buyer to rescind the sales contract, as fraud or misrepresentation can render a contract void or voidable.)

A broker can do which of the following actions? A. Accept, of behalf of the seller, a promissory note as an earnest money deposit B. Accept, of behalf of the seller, an offer OVER the listed price of the property C. Buy and sell property in his own name D. Represent both buyer and seller, with the permission of the buyer

C (First, note that the term "accept" in this context means "agree to." A broker may NOT accept (agree to) any terms or conditions contained in an offer. The broker's job is to find a ready, willing, and able buyer. Any and all terms of the offer MUST be accepted (agreed to) by the seller. If a broker is going to represent both buyer and seller, he would need the approval of BOTH parties. However, a broker can sell property in his own name)

Which theory of mortgage arrangement is followed by the majority of states, where the borrower (mortgagor) maintains title to the property during and after repayment? a. Title theory b. Intermediate theory c. Lien theory d. Trustee theory

C (In the lien theory of mortgage arrangement, which is followed by the majority of states, the borrower (mortgagor) maintains full legal title to the property even after securing the loan. The lender holds a lien on the property as collateral for the debt.)

A term loan is 75% of the property appraisal. The annual interest rate on the loan is 8% and the interest for the first year is $3,870. What was the amount of the appraisal? a. $72,000 b. $41,280 c. $64,500 d. $30,960

C (Loan amount x 0.08 = $3,870 annual interest 0.08X = $3,870 X = $3,870 / 0.08 = $48,375 loan amount Now that we know the loan amount, we can determine the appraised value of the property: Appraised value x 0.75 = $48,375 0.75Y = $48,375 Y = $48,375 / 0.75 = $64,500 appraised value)

Prospective buyers discuss their housing needs with a sales agent. The agent discusses certain property, but avoids talking about houses located in a specific area that meet the buyers' criteria. Such action could be known as: a. Blockbusting b. Compromise c. Steering d. Redlining

C (Of the choices, this is most likely steering. Steering is the act of directing people into or away from specific areas of a community, often based on racial or ethnic characteristics.)

The real estate license of any person or firm may be revoked by which of the following entities? a. Attorney General of the Commonwealth of Virginia b. Virginia Association of Realtors c. Virginia Real Estate Board d. Both A and C

C (Only the Board can revoke real estate licenses. If court action was brought against a licensee, the Attorney General may request that the Board revoke the real estate license. However, only the Board may actually perform such an action.)

The primary purpose of a PUD is to: a. establish commercial zoning regulations b. provide suitable public housing developments c. concentrate building while maximizing open space d. promote home ownership

C (PUD stands for Planned Unit Development. PUDs are usually a group of single family homes whose owners pay a small association fee each month in order to maintain the community areas (parks, pools, recreation rooms, etc.). Planned communities are often designed to produce a high density of dwellings on small lots to maximize open space)

A licensee is on vacation when his license expires. He still needed to take one more continuing education course before his license expiration date. What should he do? a. Apply for a license as a new applicant b. Pay a $200 fee and re-apply for his license c. Take the continuing education course and apply to reinstate his license d. Take the continuing education course

C (Remember that licensees may renew a license within 30 days of expiration without penalty. We are not told how long ago the license expired, so an additional fee may or may not be required. However, the only choice that covers all situations is to take the course and apply for reinstatement.)

What are royalty interests commonly associated with? a. Air rights b. Leasing property c. Mineral rights d. Water rights

C (Royalty interests are commonly associated with mineral rights, where the owner retains mineral rights but receives a percentage of the revenue from the extraction and sale of minerals.)

Seller Chaney rejects three offers, all of which were $2,500 below the list price. Broker Rudy receives a fourth offer which is also $2,500 below the list price. What should Rudy do? a. Reject the offer in accordance with his duty of due diligence b. As Chaney's agent, inform the prospective buyers that the offer is rejected c. Give Chaney another offer that she is sure to reject d. Either B or C

C (Rudy is the agent of the seller (principal), so she must act in the seller's best interest in order to get the property sold. Rudy must present the offer immediately, even if Chaney has previously rejected offers of the same amount. The broker must submit all offers, but it is ALWAYS the seller's decision on whether to accept.)

What information can a broker disclose without violating the Virginia License Law? a. That the buyer is Mormon b. With the right terms, that the seller will accept a price below the listed price c. The number of points that will be paid by the seller d. That only people from Germany can live in the neighborhood

C (Saying anything about religion or national origin is a violation of the Fair Housing Law. A broker may only quote the listed price of property without violating his fiduciary. However, the number of points that will be paid is important and should be disclosed.)

A comparable for a property has a pool and sun roof, but the subject property does not. The price of the: a. Subject property will be adjusted higher b. Comparable property will be adjusted higher c. Comparable property will be adjusted lower d. Subject property will be adjusted lower

C (The adjustment process, or comparison process, is accomplished by adjusting the comparable sales prices based on their differences from the subject property. The price of the subject property isn't determined until the reconciliation stage, where the appraiser weighs all of the data according to his own knowledge and experience.)

A broker executes a listing agreement with her client. The broker subsequently learns that the property is in foreclosure. Which of the following choices is the broker's best course of action? A. Buy the property quickly B. Rescind the listing C. Sell the property before the foreclosure is completed D. Advise all prospective buyers of the pending foreclosure

C (The broker owes fiduciary duties to her client, which include the duty to keep her client's financial position confidential. The broker cannot disclose the pending foreclosure without consent because it might weaken the seller's bargaining position. The broker also has a duty to disclose material information to prospective buyers. However, a pending foreclosure is not material if the broker finds a buyer in time--it does not impact the property in any physical way or diminish ownership rights for future owners. If the broker can't sell the property before the foreclosure goes through, the seller no longer has any property to sell. Meanwhile, there is no basis for the broker to rescind the listing agreement and she risks violating a fiduciary duty in purchasing the property herself. Therefore, the best response is for the broker to sell the property before the foreclosure is complete. This satisfies her duty under the listing agreement.)

In the capitalization approach, the appraiser considers all of the following factors, EXCEPT: a. Cap Rate b. Estimated future net income c. Price of the subject property d. Amount of return on the investment

C (The capitalization approach uses a capitalization rate (cap rate), which reflects the rate of return on the investment. With this approach, the present property value is calculated by taking the estimated future net income (amount of return) and dividing it by the chosen cap rate (rate of return). The price of the subject property is not a factor, although the appraiser will use the price of comparable properties when determining an acceptable cap rate)

Which of the following could be innocent and unintentional? a. Concealment b. Fraud in the factum c. Misrepresentation d. Fraud in the inducement

C (The key to determining whether an action is fraudulent is whether or not it was intentional. If the deceit was not intentional, it is not fraud, but may be an instance of misrepresentation. Fraud includes intentionally making false statements and/or intentionally concealing material facts about real estate offered for sale.)

Which of the following actions is NOT a violation of Virginia License Law? a. Placing an earnest money deposit in an interest-bearing account, but failing to advise all parties of that fact b. Showing a home to a prospective buyer before the owner has signed a listing agreement c. Refusing to cooperate on the sale of property listed exclusively d. Accepting a net listing

C (The law does not specify that you must cooperate on listings; this is only customary. All other answers are violations of the law.)

With the permission of his broker, a salesperson is representing a buyer. The salesperson goes to a showing for a listed property and properly advises the listing broker that he is representing the buyer. This situation: a. Allows the salesperson to collect full commissions from both buyer and seller b. Would create a dual agency, which is illegal c. Is legal because proper disclosure has been made d. Is legal, but violates the REALTOR Code of Ethics

C (The question tells us that the listing broker was advised of the buyer/broker arrangement, therefore this is legal.)

Which of the following contracts provides instructions for the distribution of escrow money? a. Mortgage b. Deed c. Sales contract d. Listing contract

C (The sales contract should state the parameters of the sale, including how escrow funds will be distributed.)

A developer requires that any person who buys a home in a development must also agree to list his house with the developer when and if he decides to sell in the future. Is the developer in violation of anything? A. No, the developer shows strong business acumen B. No, the developer has the right to make stipulations of sales C. Yes, this practice is illegal D. Both A and B

C (This is a tie-in arrangement, and it is illegal. Tying arrangements include the act of restricting the purchase of a good or service (real estate) strictly to buyers who have agreed to also purchase another good or service from the same seller.)

Donnie sees a house for rent and calls to speak to the owner's agent, Sheila, to see about renting the property. Sheila asks Donnie the name of his employer to ensure he has a monthly source of income and he tells Shiela he is an active duty Marine. Sheila tells Donnie the owner won't rent to military because they deploy and aren't present to care for the property. Is this a legal reason for an application denial? a. Yes, valid reason for denial due to tenant unreliability b. No, it is a violation of Federal Fair Housing laws c. No, it is a violation of VA Fair Housing Laws d. Both B and C

C (This is a violation of Virginia Fair Housing laws, the Federally protected classes do not include source of income, military status or elderly but in Virginia they are protected classes. In Virginia and in the Sale and Rental of Housing It is illegal discrimination to refuse to rent or sell housing based on race, color, sex (including gender, gender identity, sexual orientation, and sexual harassment), source of income, military status, disability, familial status or national origin)

Which of the following statements is NOT true about title insurance? a. It will insure the owner against losses arising from title defects b. The policy will include a list of exclusions c. It serves many of the same functions as homeowner's insurance d. It will generally include exclusions for unrecorded easements

C (Title insurance and homeowner's insurance are two different things. Homeowner's insurance insures against physical damage to the home. A title insurance policy promises to reimburse the policy holder for specified title defects, and there are exclusions that will be listed in the policy.)

Which of the following actions is required to transfer title to property by deed? a. The deed must be recorded in the public record b. The deed must be signed by the buyer c. The deed must be signed by the grantor d. Both B and C

C (Title passes after the deed has been delivered and accepted. The grantor (seller) must sign the deed, but the grantee (buyer) does not need to sign the deed so long as the grantee is identified.)

An agent is asked to list a property for sale on the Multiple Listing Service (MLS). The rest of the duties to promote the seller's interest (marketing, negotiating, offers etc.) are listed as exclusions in the brokerage agreement. What type of agency is this? A. Independent contractor B. Designated agent C. Standard agent D. Limited service agent

D

An appraiser is estimating the value of a house. The sellers want to list for $370,000 since it has 4 bedrooms, 3 bathrooms, and a pool. A comparable property recently sold for $350,000 (with 3 bedrooms, 3 bathrooms, and a sun room). In the adjustment process, the appraiser estimates that an extra bedroom is worth $45,000, the pool is worth $4,000, and the sun room is worth $17,000. What is the adjusted sales price of the comparable property? a. $402,000 b. $318,000 c. $338,000 d. $382,000

D

Fabian owns a lot that measures 80 feet by 20 feet. What is the area of his lot? a. 1,400 square feet b. 1,200 square feet c. 1,500 square feet d. 1,600 square feet

D

Victor Vendee purchased a home from Veronica Vendor under a land installment contract. Victor has not made any of the required monthly payments in the last 4 months. Assuming applicable state law allows, which of the following choices is available to Veronica as remedy for Victor's default on the contract ? a. Send Victor a notice of foreclosure b. Send Victor a notice of forfeiture c. Begin the forfeiture process, with no notice required d. Both A and B

D

A person feels that his rights have been violated according to the Virginia Fair Housing Law. If he wants to file a formal complaint, it must be filed: a. Only against a licensed salesperson or broker b. Only with the Department of Housing and Urban Development (HUD) c. Within 90 days of the alleged act d. Within 2 years of the alleged act

D (A complaint can be filed up to 2 years after the alleged violation, either with the Real Estate Board (within 1 year) or in Virginia state court (within 2 years).)

A legally enforceable agreement under which both parties named in the agreement promise to do something for each other is called a ________________ ________________. a. Trusting promise b. Option agreement c. Legal pledge d. Bilateral contract

D (A contract is a legally enforceable agreement between competent parties who agree to perform, or refrain from performing, specified acts. Contracts may be unilateral (obligating only one party to act) or bilateral (obligating both parties to act). Option contracts are unilateral (single party promises to perform under specified conditions). Legal pledge and trusting promise may or may not have two parties and one or both may or may not promise anything. For this question Bilateral Contract is the best answer.)

A licensee was out of town on personal business. When she returned on January 6, she realized that her license had expired on December 31. What must the licensee do if she wants to remain licensed? a. Apply to have her license placed on inactive status b. Re-apply for her new license as a new applicant c. Meet the current educational requirements d. Meet the current educational requirements and pay the renewal fee

D (A license may be renewed within 30 days of expiration by completing the regular requirements (continuing education and renewal fee). If this grace period has passed, you must pay a reinstatement fee (instead of the renewal fee) and satisfy all continuing education requirements to keep your license.)

A listing will automatically terminate: a. If the listing broker goes bankrupt b. On the date specified in the listing agreement c. If the seller dies prior to receiving an offer from a ready, willing, and able buyer d. All of the above

D (A listing terminates if either the agent or the principal dies or goes bankrupt. Listings also terminate when they expire.)

If used to advertise property, which type of communication could trigger disclosure requirements by a licensee? a. Email b. Instant messaging c. Chat d. All of the above

D (All of the listed means of communication could trigger disclosure requirements if used by a licensee. In Virginia, licensee disclosures apply to all forms of advertisement (including electronic media).)

Ben and Jerry are communicating via instant messages. Ben is a licensee and Jerry is interested in locating property in Ben's area. Ben suggests that he may be able to help. Which of the following disclosures is Ben most likely required to make? a. disclosures b. Ben must disclose his email address c. Ben must disclose his username d. Ben must disclose his firm name, city, and state

D (Ben must disclose his firm name, city, and state since Board regulations now cover instant messages. These disclosures must be viewable on the main page or no more than one click away from the main page.)

Broker Carson lists a home belonging to Brandon. Buyer John, insisting on anonymity, has Salesperson Joan make an offer using her own name as the prospective buyer. What should Carson do in this situation? A. Submit the offer to Brandon B. Refuse to submit the offer to Brandon until the name of the undisclosed buyer is given C. Advise Brandon that an undisclosed buyer is involved in the offer D. Both A and C

D (Carson (the agent) must disclose all material facts about the transaction to his principal. Carson must also present all offers.)

The commission received by a broker who is a member of a multiple listing service is: A. Negotiated between buyer and seller B. Set by the MLS C. Set by the realty board D. Negotiated between broker and seller

D (Commission rates are ALWAYS negotiated between the broker and the seller. No group can set a specific commission rate, and any attempt to do so would be a violation of antitrust laws.)

Before discussing property with an unrepresented non-client, licensees must disclose whom they represent, if anyone, that has an interest in the property at issue. This disclosure may be oral until what point after which it will need to be in writing? A. Prior to showing a physical property B. Prior to discussing sales prices C. Prior to signing of a lease D. All of the above

D (Disclosures may be oral when triggered (qualified discussion, non-client, unrepresented), but must be written before any "specific real estate assistance" is provided. Showing a property and discussing sales prices would both be considered real estate assistance. A licensee must make written disclosure to an unrepresented landlord/tenant in all lease applications, or in the lease itself (whichever occurs first))

An owner entered into a valid listing agreement. During the period of the agreement, the seller sells the property himself. The seller is not legally required to pay a commission to any broker. What type of listing agreement did the seller have? a. an open listing b. an exclusive agency c. an exclusive right-to-sell listing d. either A or B

D (In an Exclusive Agency listing agreement the seller agrees to pay the exclusive agent a commission if he or she sells the property, and if any other broker sells the property as well. However, similar to the open listing agreement, the owner may sell the property himself and not be obligated to pay a commission to the broker.)

Salesperson Lisa is selling her townhouse to move into a luxury condominium. She advertised her property in the newspaper as follows: "Beautiful, 3 bedroom townhouse. Excellent assumption. Single females only. Call 123-4567 for details. Owner is licensed." Which of the following statements is true? a. Lisa has not violated Board regulations since she is not subject to the license laws b. Lisa has not violated Board regulations since she disclosed her license status c. Lisa has not violated the Virginia Fair Housing Act since it does not protect marital status d. Lisa is subject to Board censure for violation of Fair Housing laws

D (Licensees are subject to Board regulations, even when selling their own property. Here, we see an explicit violation of Fair Housing law on the basis of gender (remember that a person may NOT use discriminatory advertising to sell property). However, if Lisa were planning to share her townhouse, NOT sell it, such an advertisement would be ok. Board regulations strictly prohibit licensees from violating state or federal Fair Housing law. Therefore, Lisa's advertisement is cause for disciplinary action.)

A salesperson is employed by Broker Able, but she works alone to market and sell her own home. She must: a. Abide by all fair housing laws b. Disclose in all forms of advertising that she is a licensee c. Disclose to all buyers her license status d. All of the above

D (Licensees must make specified disclosures when selling their own property. Disclosure of license status is also required if they have any other interest in a property for sale (for example, if their firm or a family member has an interest in the transaction))

Morgan hasn't paid her property taxes for the last two years and when she goes to sell her house she is informed there is a lien on her property, what type of lien is this? a. Voluntary mechanics lien b. Involuntary mechanics lien c. Voluntary tax lien d. Involuntary tax lien

D (Liens always arise from a debt, either through agreement (like a mortgage) or by operation of law (unpaid taxes). There are two types of liens: voluntary (created through an agreement) and involuntary (created by operation of law). Unpaid tax liens are created by operation of law and therefore this lien would be involuntary)

Mr. and Mrs. Jones sold their home to a church, but retained the right to occupy the property as long as they lived. The interest of the church is that of a. Life estate b. Reversion estate c. Trustee d. Remainder estate

D (Mr. & Mrs. Jones deeded their home to the church, but reserved a life estate for themselves. The church therefore has a future estate and the Jones' are life tenants. Future estates include both remainder estates and reversion estates. The Jones' currently have a life estate in the property. After that estate expires, the church gets what's left (the remainder). As such, the interest of the church is that of a remainder estate. A reversion estate would be if the Jones' gave the property to someone else for a period of time and the property reverted back to the original owner (the Jones') after the current estate expired.)

When a salesperson terminates affiliation with a broker, that salesperson must: a. Give back all listings acquired while affiliated with the broker b. Mail his or her license to the board c. Return all customers cards to the employing broker d. Do nothing

D (Of the choices listed, the salesperson need not do anything. It is the broker, not the salesperson, who must return the license to the Board)

A fee simple estate could be subject to which of the following controls? a. Zoning and building codes b. Subdivision restrictions c. Escheats d. All of the above

D (Private property is restricted by both government and private interests. Government rights in private property include: zoning, building codes, and escheat. Private restrictions on private property include restrictive covenants (subdivision restrictions). Therefore, all of the listed restrictions restrict fee simple ownership of real property.)

If a real estate broker refers a client to a particular settlement service or mortgage broker what must they provide the client? A. Closing Disclosure B. Servicing Disclosure Statement C. Special Information Booklet D. Affiliated Business Arrangement Disclosure

D (Sometimes, several businesses that offer settlement services are owned or controlled by a common corporate parent. These businesses are known as "affiliates." When a lender, real estate broker, or other participant in settlement refers borrowers to an affiliate for a settlement service (such as when a real estate broker refers a client to a mortgage broker affiliate), RESPA requires the referring party to provide borrowers with an Affiliated Business Arrangement Disclosure. This form reminds borrowers that they are generally not required, with certain exceptions, to use the affiliate and are free to shop for other providers.)

The Truth In Lending Act (TILA) applies to advertisements that promote: Question 18Select one:a. Consumer credit b. A consumer lease c. Consumer reports d. Both A and B

D (State licensing laws and licensee codes of ethics require that licensees use advertising that is truthful, not misleading. TILA applies to advertisements that promote "consumer credit" or a "consumer lease" as defined in the Act)

A private homeowner is selling his property, but refuses to enter into a contract because the offerer's are a minority couple. Has the homeowner violated the law and, if so, which law? a. Yes, Title VIII of the 1968 Federal Fair Housing Act b. Yes, the Civil Rights Act of 1964 c. No, the owner is exempt from the law because he is selling his own property in his own name d. Yes, the Civil Rights Act of 1866

D (The 1968 Fair Housing Act grants an exemption to private individual owners: Private individual owners of single-family housing are exempt from the non-racial protections of the Fair Housing Act, provided they: 1) do not own more than three single-family houses at any one time; 2) do not sell more than one single family house in any two year period; 3) do not employ a real estate agent; and 4) do not use discriminatory advertising. Note that racial discrimination is never exempted and some exemptions are not available when there is a real estate agent involved in the transaction)

Virginia Fair Housing Laws apply to: a. All real estate transactions b. All real estate transactions with the exception of industrial sales c. Residential sales only d. Residential sales and rentals

D (The Virginia Fair Housing Act applies to residential sales and rentals only.)

Broker Johnson has listed Cheever's property and sells it to Brevard for $75,000. Before closing, Broker Johnson discovers that the property has a roof defect but the roof is still under warranty. What should Broker Johnson do? a. As his agent, tell Cheever only b. Tell no one since the warranty provides coverage c. Tell Brevard only to satisfy his fiduciary duty d. Tell Cheever and Brevard to avoid liability

D (The broker is obligated to reveal all material facts about a property to both parties. Warranties do not relieve sellers or agents of their duty to disclose all material property defects.)

A broker's listing almost sold until the home inspection revealed significant structural issues and the potential buyers chose to find another property. In a second attempt to sell the property, the broker has an open house and a prospective buyer asks to see a copy of any inspections done on the property. What should the broker's response be? a. The broker must comply and provide a copy of the home inspection b. The broker is not required to provide the previous home inspection report c. The broker only has to disclose material adverse facts about the property d. Both B and C

D (The broker must disclose all known material adverse facts about the physical condition of the property, however does not have to disclose an actual copy of the previous home inspection.)

The listing broker discovers that a property's value has been adversely affected by proposed construction of a new power plant. She must: A. Inform the seller B. Inform the buyer C. Inform the lender D. Both A and B

D (The broker must inform the parties of this material fact.)

Jueng is interested in purchasing a home, and the seller has an existing mortgage with an interest rate well below the current market rates. Jueng is considering assuming the seller's mortgage. What are the potential advantages and disadvantages of this option? a. Seller has full liability for repayment of the debt but loan will have a higher interest rate b. Lower interest rate but lengthier loan process c. Ability to negotiate terms of the loan but higher monthly payments d. A lower interest rate but full liability for repayment of the debt

D (The potential advantages of assuming the seller's mortgage include benefiting from the lower interest rate, which can lead to lower monthly payments compared to obtaining a new mortgage with a higher rate. Additionally, the assumption process may be quicker and involve fewer fees compared to getting a new mortgage. The potential disadvantages include the fact that Jueng would need to meet the lender's qualification criteria and obtain approval for assumption. He would also assume personal liability for the full repayment of the debt, just like the original borrower. Furthermore, assuming a mortgage might limit Jueng's ability to negotiate the terms of the loan, such as the loan amount or interest rate)

A person engaged to act in place of another by contractual agreement is: A. A principal B. An agent C. An attorney-in-fact D. Either B or C

D (The question could describe the precursor to either an agency relationship or a power of attorney. The principal is the person contracting someone to act on their behalf, not the person acting.)

An offer is written for a property late Friday night, but the salesperson is getting ready to leave town for the weekend. What should the salesperson do? a. Tell the seller that there is an offer, but it will have to wait until Monday to be presented b. Tell the buyer it will have to wait until Monday c. Ask another salesperson in the office to present the offer d. Immediately present the offer

D (The salesperson must present the offer to the seller immediately. Failure to do so is grounds for discipline.)

The principal broker of a real estate franchise must make certain disclosures when advertising. In which of the following forms of advertising are these disclosures NOT required? a. In radio and television advertisements b. On "For Sale" signs places on specific property c. In newspaper ads consisting of more than 28 lines of copy d. None of the above

D (There are disclosure requirements for each of these advertising methods. In Virginia, advertising includes all forms of representation, promotion, and solicitation related to licensed real estate activity (for any purpose, in any medium). Therefore, "none of the above" is the best answer choice.)