Real Estate National Practice Exam

In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?

10 years

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?

180

Sebastien's four-story home includes a 400-square-foot unfinished bonus room on the top floor, an upper level with 850 square feet, a main level with 1,450 square feet (which includes a garage that's 500 square feet), and a finished basement that's 900 square feet. The MLS system in Sebastien's area includes below-grade square footage. What square footage will be reported on his MLS listing?

2,700 Sebastien should exclude the unfinished bonus room and the garage and add the remaining area (850 + (1,450 - 500) + 900).

How many acres are in a parcel described as, "The NE 1/4 SW 1/4 Section 3, Township 4S, Range 2W of the 6th PM"?

40

Shelly is a property manager. Her commission is a percentage of the rents she collects every month. Last month, she collected $78,450, and her commission was $5,491.50. What's her commission rate?

7%

What's the penalty for violating federal do not call rules?

A fine of more than $40,000 for each violation

Which of these examples describes a prepayment penalty?

A monetary penalty imposed on a borrower for paying off a loan before its intended time

Mike relocated for work and learned that the region in which he planned to buy a home had many old underground mines. In fact, Mike might even need to purchase mine subsidence insurance. What might a home inspector flag for Mike if there are any concerns about undermining?

A sinkhole on the property

Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______.

A zoning ordinance

Shannon doesn't understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?

Appraisal

Marsha made an offer of $325,000 on a home listed for $350,000. The seller accepted her offer. She's now having a(n) ______ done on the home to determine its actual value and hopes it comes in at more than $350,000.

Appraisal by an appraiser

What type of value is of interest to taxing authorities?

Assessed value

Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell's loss of acreage?

Avulsion Topic: Property ownership Subtopic: Land characteristics and legal descriptions

Prudence just finished paying off the debt on her loan, so the lender released the property's title to her. What clause in her mortgage stipulates this?

Defeasance

What happens when two fiduciary duties conflict? For instance, your clients ask you not to show their property on evenings and weekends, when most showings occur. To obey (a fiduciary duty) means to fail in reasonable skill and care (another fiduciary duty). What should you do?

Discuss the issue with your clients and let them decide.

Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal?

Document health and safety issues that may affect both the cost and enjoyment of the home.

The Graysons just closed on their new home. They move in tomorrow. What type of contract do the Graysons have?

Executed

Which of these would most likely be an implied contractual condition in a real estate sales contract?

Freedom from fraud and misrepresentation

What hazard do mining activities, landfills, or agricultural pesticides contribute to?

Groundwater contamination

Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?

Familial status

What are the main benefits to veterans of the VA-guaranteed loan program?

No down payment, no mortgage insurance, and no prepayment penalty

Jared, a seller, has found his own buyer and wants to terminate his exclusive right-to-sell listing agreement with Sue, his listing broker. Can he do so without penalty?

No, because the listing agreement is contractually binding.

Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the _______.

Offerors

Seller Gina feels awful that Martha, who was going to buy her property, lost her job. Gina decides to _________ Martha from the purchase contract.

Release

If a buyer makes an offer that the seller finds lacking, which of the following actions is the seller most likely to take?

Respond with a written counter-offer.

Which of these is a TRUE statement regarding truth in advertising violation penalties?

The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.

Alice listed a three-bedroom home for her client, but before she finds a buyer, the home burns to the ground. What happens to the agency agreement that Alice has with her client?

The agency agreement is terminated if the property is destroyed.

Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of the following statements about this situation is true?

The agency agreement only terminates if the broker or the principal declares bankruptcy.

Garrett wanted to move his real estate closing so that he can get through his wedding first. His broker and attorney encouraged him not to do it because of which contract clause?

Time is of the essence

In a real estate transaction in which you represent the seller, your duty to other parties is to ______.

Treat them honestly and fairly

What's another name for an escrow account?

Trust account

Sylvan, the seller, and Eric, the buyer, have signed an option agreement, which is an offer to purchase a specific piece of real estate without the obligation to buy it. Until Eric exercises his option to buy, only Sylvan is bound by the option agreement; he may not sell the property to anyone else during the option period. What type of contract is this?

Unilateral

Which of these might bring a charge of illegal steering against a licensee?

When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.

As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this?

Voidable

As a licensee, when questions arise that are outside of your scope of expertise, what should you do?

Refer clients and customers to a competent professional in that field.

The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility?

$1,055

Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have?

$105,000

Your seller wants to net $100,000 after the 5% commission is paid. Assuming no closing costs, at what price does the home need to sell for the seller to net this amount?

$105,263.16

Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase?

$208,000

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?

$3,200

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?

$315,789 Topic: Real estate calculations Subtopic: Calculations for transactions

After getting into a fender bender, Parker had to buy a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a notice from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?

Acceleration

After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing?

Accounting

Carlson presents a real estate purchase contract to his clients. Along with the contract are several supplemental documents attached to it. What are these called?

Addendums

What is a special flood hazard area?

An area where flood insurance is mandatory

Which of these situations might be addressed by limitations or a subject to clause in the deed Jane is using to convey property to Moira?

An easement runs across the property, permitting Jane's neighbors to access the neighborhood boat dock.

Why is a foreclosure more likely to have title issues than a non-foreclosure?

Borrowers who can't afford loan payments may have taken out other loans against the property.

Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission?

Both you and Barry

Which of the following features is most likely to be the cause of an adjustment to a comparable when preparing a CMA?

Busy street

A rundown home, overgrown with weeds and in desperate need of repairs, is driving down property values on the block. What economic principle is at work here?

Regression

Which legislative act prohibits certain types of electronic communication?

CAN-SPAM

Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?

CC&R

You're showing a house when you notice piles of what looks like sawdust outside near the basement windows. This may be evidence of which pest?

Carpenter ants

Rhonda and Jade both consider themselves to be African-American, although Rhonda has much darker skin and hair than Jade. When Rhonda went to the Valley Falls apartment manager's office to request a rental application, she was told there were no vacancies. Jade went in a day later and received an application. This may be discrimination based on _______.

Color

Which of these helps a licensee determine an appropriate listing price range?

Comparative market analysis

Real estate licensee William is preparing a sale agreement that will include an unusual circumstance. What's his best course of action?

Consult an attorney.

Sue is selling her house for $265,000. Closing is set for June 19, and Sue owns the day of closing. She has a loan balance of $78,000 at a 4.2% rate, and she's current on her payments. She prepaid the property taxes ($1,350) and insurance ($925). Using a calendar-year proration method for calculations, how will these amounts appear on Sue's closing statement?

Credit of $721.50 Tax daily rate: ($1,350 ÷ 365 = $3.70) 195 days (days from closing until year end) = a $721.50 seller credit. Any prepaid seller's homeowners insurance will be refunded to the seller outside closing, so this doesn't appear on the closing statements.

The Druid Hills neighborhood sits firmly within a single-family residential zoning area. Most of the lots are one-third of an acre or larger. A 20-acre parcel on the edge of the neighborhood sold recently. The buyer wants to build condominium flats since multi-family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this?

Incentive zoning

Which of the following describes the amount a lender charges a borrower for using money?

Interest

Which statement most accurately describes the type of notice provided by recording a change of ownership document?

Recording the deed provides constructive notice of the property sale.

Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she'll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?

It's a commercial enterprise that's open to the public.

What happens to an initial offer from the buyer after a seller counters?

It's no longer in play.

In which of these situations is Ronna's fiduciary duty of reasonable skill and care at odds with her duty of obedience?

Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.

Tyra owns a nail salon that's located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales. What kind of lease does Tyra have?

Percentage

Sandra and Dwight are neighbors who share a common driveway, but the driveway is on Dwight's property. What kind of ownership rights does Dwight have of the driveway?

Possessory Topic: Property ownership Subtopic: Encumbrances and effects on property ownership

When representing the seller, what duty do you owe a buyer?

Present offers from the buyer to your seller.

Subdivision regulations imposed by developers in an effort to maintain control of the development of the subdivision are an example of ______.

Private land use control

Which of the following is a characteristic of an abstract of title? Provides an attorney's opinion of the title Provides information about the payoff amount Provides information about the property location Releases an existing lien

Provides an attorney's opinion of the title

What factors directly affect an adjustable rate mortgage?

Rate, index, and margin

Tristan refused to let Marla list his property on the MLS, even though Marla told him that more exposure to the property would generate more potential buyers. Which two fiduciary duties are at odds in this situation?

Reasonable skill and care and obedience

Kiley Ann is thrilled to have her real estate license and to be hired on at New Beginnings Brokerage. She's not positive about Luis, her employing broker, though. He seems a little sketchy. For example, when she looks at her independent contractor agreement, it says that she's not entitled to unemployment insurance and has to pay her own income taxes. What should she do?

Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance. Topic: Practice of real estate Subtopic: Licensee and responsibilities

Sheila is unable to use her designated timeshare week this year. What will happen?

She can exchange the week for another.

Examples of real property include which of the following?

Shelves attached to the wall with brackets Topic: Property ownership Subtopic: Real versus personal property; conveyances

Why are lenders required to provide the Loan Estimate and Closing Disclosure forms to loan applicants and borrowers?

So borrowers can compare loans and make decisions regarding the affordability of loans offered Topic: Transfer of title Subtopic: Escrow or closing; tax aspects of transferring title to real property

According to the process appraisers follow, what action is taken first upon being assigned a property for appraisal?

State the problem.

Which statement about radon testing is true?

Test kits are available for purchase.

Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here?

The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz.

Kelly is closing on the house she's purchasing on Wednesday. Which of these statements is true?

The lender must provide the Closing Disclosure by Friday of the week before closing.

Harini had a lease with an option to buy on her condo since she wasn't financially stable enough to purchase the condo when she first signed the lease. Two years later Harini was in great financial shape, but she found out that the owner legally sold the condo to another buyer. Harini has to move out next month. What must have happened?

The option expired.

Gus has applied for a home equity line of credit from his federally insured bank so that he can make some renovations to his kitchen. The same bank is his lender for his home mortgage. Will this loan be subject to Real Estate Settlement Procedures Act requirements?

Yes, because RESPA applies to any residential loan transaction from a federally insured financial institution, including equity lines of credit.