Real Estate Sample Test One

An exclusive right-to-sell listing contract usually binds the seller to which of the following A. payment of a commission if the broker obtains an offer that meets all terms of the listing agreement B. sale of the property to a buyer if the buyer offers full price C. personal presentation of the subject property to perspective buyers at a reasonable hours D. Financing terms that must be met without change of the buyer

.A

A condominium owner holds exclusive legal title to A. the interior air space in his unit B. the land under his unit C. the common elements D. stock in the condominium association

A

A declaration made by a person to a qualified official stating that he freely and voluntarily executed a deed or other instrument is called an a. acknowledgment B. authorization C. execution D. authentication

A

A lender that makes a secured loan for the purchase of real estate is known as which of the following? A. the mortgagee B. the mortgagor C. the trustee D. the vendor

A

A listing salesperson should do all of the following except A. advise prospective buyers of the lowest price the seller will accept B. verify factual information about the property provided by the seller C. advise the seller that known property defects must be revealed to prospective buyers D. review local zoning laws that affect the property

A

A mortgage that covers a number of parcels of real property and that may provide for the separate sale of each parcel is called A. a blanket mortgage B. an open-end mortgage C. a wraparound mortgage D. a partially amortized mortgage

A

A property management agreement should contain which of the following information A. compensation, terms and responsibilities B. the names of person who will handle repairs C. a list of tenants and their dates of occupancy D. the name of the mortgage company

A

A rural township is replacing certain curbs and sidewalks. Any properties adjoining these improvements will be affected by which of the following? A. assessment B. appraisal C. condemnation D. consideration

A

An individual who engages another to act for him is referred to as A. principal B. a grantor C. a testator D. an agent

A

An investor purchases a property that has annual estimated vacancy, collection loss, and operating expenses of $24,250. If the property earns a $40,000 a year in gross income, and the investor expects a 15% return on investment, what is the value of the property A. $105,000 B. $161,670 C. $236,250 D. $266,670

A

Funds for for Federal Housing Administration loans are provided by A. qualified lending institutions B. any government agency C. Federal Housing Adm only D. Federal Deposit Insurance Corp only

A

If a salesperson is told by a seller that the listed property has a leaky roof, the salesperson must do which of the following A. inform prospective buyers about it B. require that it be repaired before selling the property C. enter information about it in the listing D. recommend that the seller lower the sales price

A

In a real estate advertisement that includes information on mortgage financing, which of the following statement is legally permissible if no further information is given A. "liberal terms available to qualified buyers" B. "two thousand dollars down" C. "monthly payment, four hundred dollars" D. interest rate only 9%

A

John Wilson sells a 40 acre parcel of land to Walter Frank. If Mr. Wilson wants to retain the right to cross the parcel to reach another tract behind the parcel, he must include which of the following in the deed A. an easement B. an encroachment C. a license D. a lease

A

Legal title to real estate is transferred by A. delivery and acceptance of deed B. redecoration of the deed C. the owner's titile insurance D. an abstract title

A

The Goldbergs, who own their house free of any encumbrance, are selling it to the Irwins for $115,000. The purchase price is to be paid by the Irwins' earnest money deposit of $2,000 and their cash payment of $28,000, with the Goldbergs taking back an amortized loan on the house for $75,000 at 13% interest for 20 years. This mortgage arrangement is best described as A. purchase-money mortgage B. partically amortized mortgage C. wraparound mortgage D. junior mortgage

A

The fiduciary relationship between a listing broker and a seller terminates if the seller does which of the following A. withdraws the property from the market and formally cancels the listing agreement B. requests that the listing be placed in the Multiple Listing service book C. accepts an offer directly from a buyer D. rejects an offer to purchase submitted through the broker

A

The period of time during which the income of a building provides is sufficient to warrant maintaining it is called the buildings A. economic life B. recapture limit C. reversing factor D. investment duration

A

The term "contractual ability" refers to which of the following A. The competence of the parties to a contract B. an agreement about terms between the parties to a contract C. the legality of the purpose of a contractual agreement D. the inclusion in a contract of all necessary clauses and covenants

A

The title insurance on a property is $174.90, the fee for the title search is $75.00, the cost of preparing papers is $15.50 and miscellaneous other fees amount to $6.10. If the seller agrees to pay 60% of the total closing expenses and the buyer pays the rest, how much more will the seller pay than the buyer A. $54 B. $108 C. $164 D. $271

A

Which of the following describes ownership of a property for a limited period of time A. life estate B. tenancy in common C. tenancy at sufferance D. determinable fee

A

Which of the following requires unit owners to be stockholders in the corporation that owns the building? A. a cooperative B. a condominium C. a syndication D. a time share

A

After listing their house for sale for $89,5000 with Broker Robinson, the Jacksons move with their adolescent son to another state. Several days later, Broker Robinson obtains an offer from the Browns to purchase the Jackson's house for $87,000. He mails the offer to the Jacksons for consideration. Which of the following actions by the Jacksons would be considered legally enforceable acceptance of the Browns' offer. A. they telephone Broker Robinson and verbally accept the offer as submitted B. The change the price in the offer to $88,500 and sign and return it by mail to Broker Robinson C. They sign the offer, as submitted and return it by mail to Broker Robinson D. Their son signs the offer, as submitted and returns it by mail to Broker Robinson

C

All of the following are usual elements in a valid deed EXCEPT the A. consideration B. grantor's signature C. grantee's signature D. property description

C

An option on real estate is which of the following A. a deposit B. a consideration C. a contract D. an endorsement

C

Broker Owens enters into a listing agreement to sell Ms. Allen's house. All of the following statements are true EXCEPT A. when Broker Owen's salesperson, Mark King shows Mr. Allen's property, he is a representative of of Ms. Allen B. Ms. Allen may terminate for cause the listing agreement with Broker Owens prior to the agreement's ending date C. When Broker Owens shows the house to a prospective buyer, Steve Smith, he is now an agent D. If the listing agreement provides for Broker Owens to invest money to improve Ms. Allen's residence, this is called agency coupled with interest

C

Carol Brown gives a parcel of land to Brant Tucker with an express condition in the deed that if he builds a store on the lot, the parcel will revert to her. In this situation, Mr. Tucker has a A. joint tenacy with Ms. Brown B. tenancy in common with Ms. Brown C. fee simple determinable D. life estate with a remainder interest

C

Failure to meet a mortgage obligation when due is known as which of the following A. duress B. deficiency C. default D. defaseance

C

For the purchase of a house, a buyer assumes the sellers loan balance of $43,000 with 9.5% interest payable in arrears. If September 1 payment has been made and the closing is scheduled for September 20, how much credit for interest is the buyer entitled to at closing A. $114 B. 216 C. $227 D. $340

C

In allegations of discriminatory practices under the Federal Fair Housing Act, the burden of proof is on the A. court B. defendant C. complaintant D. Department of Housing and Urban Development

C

In general, a cost approach appraisal would be most accurate if which of the following is true about a property with a building on it A. the property is in a high growth area B. the property yields a steady and safe income cash flow C. the building is new and being used to its highest and best use D. the replacement cost of the building cannot be estimated accurately

C

In order to sell individual lots in a subdivision, a developer would want which of the following clauses to be included in the mortgage encumbering the subdivision A. due on sale B. default C. partial release D. acceleration

C

Mary Shawn is anticipating selling her farm. To assist in setting a listing price for the property, her broker should recommend which of the following? A. a title search B. a survey C. comparative market analysis D. a replacement cost appraisal

C

The highest price that a property will bring in a competitive and open market where all conditions required of a fair sale are met is called A. loan value B. market profile C. market value D. highest and best use

C

The interest or value remaining in a property after all liens and other debts are taken into account is known as A. assessment B. valuation C. equity D. surety

C

The loan on a property is 60% of its appraised value. If the interest rate is 6% per year and the first semiannual interest payment is $360, what is the appraised value of the property? A. $10,000 B. $12,000 C. $20,000 D. $72,000

C

The most common method of estimating property value for fire insurance purposes is A. market comparison B. gross income C. replacement cost D. anticipated use

C

The provision in a sales contract that requires the buyer to begin making payments on an existing mortgage loan as a condition of the sale is known as A. a partial release clause B. an acceleration clause C. an assumption clause D. a subordination clause

C

The term "real estate" includes all of the following except A. air rights to above land B. growing oak and sycamore trees C. tractors and threshers D. barns and fences

C

To estimate the value of property using the direct sales comparison approach, an appraiser would rely on the market behavior of A. insurers B. brokers C. buyers D. lenders

C

When a mortgage loan requires periodic payments that will not fully amortize the amount of the loan by the final payment date, the final payment date is called A. a penalty payment B. a level payment C. a balloon payment D. an accelerated payment

C

Which of the following types of ownership is LEAST likely to be subject to securities regulations a. limited partnership B. subchapter S corporation C. joint tenancy D. joint venture

C

A broker should refer a prospective buyer to an attorney for advise about all of the following except A. a lien waiver B. a mechanics lien B. a title opinion D. market interest rates

D

A lender arranges a real estate loan of $8,400 with an interest rate of 11 % per year on the original amount. The interest is payable quarterly. If the principal is paid in one payment at the end of 15 months, what is the toal amount paid to the bank over the life of the loan? A. $1,155 B. $8,631 C. $9,324 D. $9,555

D

A rectangular survey must include which of the following A. metes and bounds measurements B. street address C. lot and block numbers D. township lines

D

A seller wishes to net $8500 from the sale of her property. If her broker is to receive a fee of 4% of the selling price and allowance of $50 expenses,what must the minimum seller price be A. $8,884 B. $8,896 C. $8,894 D. $9,000

D

A veteran who is trying to rent a house through a broker believes the broker has discriminated against him. If the veteran files a complain with the Department of Housing and Urban Development, HUD can do which of the following under the Federal Fair Housing Act A. fine the broker B. bar the broker from participating in both FHA and VA programs C. revoke the broker's license D. attempt to effect conciliation between the broker and the veteran

D

All of the following statements about a unit in a condominium building are true EXCEPT A. it can be individually mortgaged B. it is eligible for title insurance as a separate piece of property C. It is assessed for real estate purposes D. It is part of the common elements of the condominium

D

Government can exercise its powers over private property through all of the following EXCEPT A. taxation B. health codes C. eminent domain D. deed restrictions

D

If property taxes on a parcel of land have not been paid, which of the following is true? A. the property will be sold for an amount not to exceed the amount of past-due taxes B. the property taxes must be paid before the property can be sold C. The past-due taxes constitute a personal judgment against the owner of the property D. the past-due taxes constitute a lien on the property

D

In a property management budget, all of the following are considered operating expenses EXCEPT A. management fees B. heating fuel C. cleaning supplies D. roof replacement

D

In terms of real estate ownership, time sharing is best described as A. stock ownership in a cooperation, which owns the building and the exclusive right to possession of a particular unit B. individual ownership of portions of a building and joint ownership of common elements C. fee simple ownership with exclusive individual right to use a specific portion D. joint ownership of a property with the right to its exclusive use for a specified period

D

In the absence of specific contractual provisions to the contrary, if a seller defaults on a sales contract, the buyer may do all of the following EXCEPT: A. Sue the seller for specific performance B. sue the seller for damages C. Cancel the contract and retrieve any earnest money deposited D. Take physical possession of property on the scheduled closing date

D

Physical deterioration of a property is associated with which of the following A. eccentric design B. changing function C. obsolescence D. ordinary wear and tear

D

Property valued at $32,000 is assessed at 50%. If the annual property tax is $600, what is the rate of taxation? A. 1.34% B. 1.99% C. 2.67% D. 3.75%

D

Tax assessment based on the value of a property is known as which of the following A. appraisal B. accretion C. replacement cost D. ad valorem

D

The act of depositing something of value with a disinterested third party is known as the creation of which of the following A. a covenant B. a bond C. a deed of trust D. an escrow

D

The written transfer of an interest in a bond, mortgage, lease or other instrument is called A. a commitment B. a dedication C. a rejection D. an assignment

D

Under the federal income tax laws, an itemized deduction is allowed to homeowners for which of the following A. commissions paid on the purchase of a principal residence B. expenses involved in the upkeep and maintenance of a principal residence C. insurance premiums on policies required on a principal residence under the terms of a mortgage D. interest paid on a mortgage to acquire a principal residence

D

Which of the following charges is used to increase the yield to a lender on a real estate loan A. credit report B. appraisal C. title insurace D. origination fee

D

A $20,000 loan is to be paid off at the rate of $7.50 per $1,000 per month. If the annual taxes of $360.00 and the 3-year insurance premium of $54.00 on the property are to be prorated and included, what will be the first total monthly payment A. $119 B. $182 C. $234 D. $564

B

A deed that conveys title to a mortgage from a mortgagor and avoid the necessity of legal action to recover the lender's collateral is known as the deed A. of surrender B. in lieu of foreclosure C. of release D. of re-conveyance

B

A property is sold on July 15. The prepaid annual insurance is $750.00 and the annual water bill of $90.00 was prepaid in full on January 1. If these payments are prorated, what amount will be returned to the seller at closing A. $305 B. 385 C. $403 D. $455

B

A veteran who has a Veterans Administration loan on a property may do which of the following A. sell the property and transfer his loan to a new property B. sell the property to a non-veteran, who may then assume the balance of the loan C. default on payment without incurring any personal liability D. offer the property for rent immediately after purchasing

B

An agency replationship typically exists between which of the following? A. seller and buyer B. seller and broker C. borrower and lender D. lender and seller

B

By definition, individual ownership of units in a building and joint ownership of common areas are found in an A. cooperative B. condominium C. planned unit development D. planned residential development

B

Fidelity Mortgage Bank entered into a construction loan contract with Ella Feldman to build her new house. All of the following were most likely elements of the contract EXCEPT A. a take-out commitment from a permanent lender B. issuance of the total loan amount before construction began C. lien waivers for materials and mechanics D. a floating interest rate in excess of the prime rate

B

In order to modernize her store, Ms. Jones borrowed $4,300 at 6.5% interest. If she repaid the principal and interest in one payment at the end of 8 months, what was the total she paid A. $4,451 B. $4,486 C. $4,510 D. $4.580

B

Ms. Naguchi purchased a new home for $47,000. She paid a deposit of $2500 and secured a mortgage for 90% of the purchase price. How much cash will she need to bring to the settlement if the bank's total loan charge is 4 points, her lawyer's fee is 1% of the purchase price, and her net proration credit is $400? A. $2,200 B. $3,962 C. $4,150 D. $6,462

B

Ms. Warner's annual insurance premium was due April 1. She paid the $625 premium for the coming year on that date. If she sells her house on August 15 of this year, what prorated amount will be returned to her? A. $234 B. $391 C. $417 D. $625

B

Rescission of a contract is best defined as which of the following A. ratification of a contract by all parties B. cancellation of a contract C. a revision in the terms of a contract D. a transfer of responsibility from one of a contract's parties to a third party

B

The most common approach to valuation of single-family residential property is the A. income approach B. direct sales comparison approach C. replacement cost approach D. reproduction cost approach

B

The value of a property is $230,000 and the cap rate is 10.7%. Using the income approach, what is its net operating income A. $24,000 B. $24,610 C. $2,149,533 D. $2,461,000

B

Under the terms of a trust established by will, the trustee was required to sell the property the trust held. The type of deed that was delivered at closing was a A. contract for deed B. trustee's deed C. deed of release D. deed of trust

B

Which of the following is considered an encumbrance on a property? A. a latent structural defect B. ad valorem taxes C. water rights D. deferred maintenance fees

B

Which of the following types of deed provides the LEAST liability for the grantor a. a trustee's deed B. a quitclaim deed C. a special warranty deed D. a general warranty deed

B

A brokers and a salesperson share the commissions of the sales made by a salesperson in the ration of 3 to 2, respectively. If the salesperson lists and sells a property for $48,000 with a 6% commission, the broker will receive how much more than the sales person? A. $288.00 B. $480.00 C. $576.00 D. $1,728.00

C