National Real Estate Exam Questions

Which of the following terms identifies the clause that allows a lender to call the entire remaining loan balance due in the event of buyer default? A. Novation B. Entitlement C. Acceleration D. Hypothecation

Acceleration

A licensee representing a seller has which of the following duties? A. Advising the buyer about the terms of an offer to purchase B. Disclosing confidential information about the seller only if directly asked by the selling broker C. Seeking additional offers to purchase after an offer has been accepted by the seller D. Advising the seller to obtain advice about material matter beyond the licensee's expertise

Advising the seller to obtain advice about material matter beyond the licensee's expertise

When may a salesperson open his own real estate business without a sponsoring broker? A. If he hires a broker to work with him B. If he takes listings in name of company only C. When the business is a corporation or LLC this is licensed D. After he meets all requirements and becomes the sponsoring broker

After he meets all requirements and becomes the sponsoring broker

Map question

2702 York

Discount points A. Increase yield to seller B. Decrease yield to seller C. Increase yield to lender D. Decrease yield to lender

Increase yield to lender

A licensee commits fraud. Claims he did not because he wasn't trained, who is held liable? A. Licensee B. Both the licensee and the broker C. Broker D. No one

Both the licensee and the broker

A real estate professional working with a buyer has disclosed the options for representation under state law but has not signed a buyer representation agreement and considers that buyer a customer. While showing the buyer a property, which of the following statements by the professional could create implied agency in a jurisdiction where the common law of agency prevails? A. "You should consider having any property inspected by a professional." B. "You should speak to an attorney about how to take title to the property." C. "You should offer $20,000 less than the asking price due to the repairs needed on the property." D. "You should be pre-qualified by a lender since most sellers will request this information when you make an offer."

"You should offer $20,000 less than the asking price due to the repairs needed on the property."

How much earnest money is required to constitute a contract agreement? A. $1 B. 10% of asking price C. $1000 to show good faith D. $0 because consideration can be in the form of a promise to fulfill ones end of the bargain

$0 because consideration can be in the form of a promise to fulfill ones end of the bargain

RESPA would apply to which of the following? A. Subdivisions only B. 1-4 residential family dwellings C. Residential mobile homes only D. Commercial real estate

1-4 family residential dwellings

RESPA would prohibit which of the following acts? A. Subdivisions only B. 1-4 residential family dwellings C. Residential mobile homes only D. Commercial real estate

1-4 residential family dwellings

A real estate agent uses inappropriate comparable properties for purposes of valuation in a comparative market analysis to help her buyer client determine a reasonable offer. Which outcome below would expose the agent to liability A. An under-secured loan B. A mortgage not funding C. An inflated appraised value D. A buyer overpaying for a property

A buyer overpaying for a property

Which of the following would be considered a property improvement? A. An alteration to land to make it more useful B. Increase in value of property C. A chicken coop permanently attached to land D. Decrease in depreciation

A chicken coop permanently attached to land

A buyer has specified in writing an interest in purchasing a property without any legal obligation and without defining a specific project. This is referred to as A. An option B. No binding option C. A letter of intent D. A project intent letter

A letter of intent

3 people were concurrent owners of a parcel of real estate when one of the women owners died that interest became part of the deceased's estate. The deceased was A. A tenant by the entireties B. A joint tenant C. A tenant in common D. A severalty owner

A tenant in common

X signs a sales contract with a mortgage contingency, but tells the seller that if X is unable to secure a loan, they will pay cash. X has paid earnest money. When can X cancel the transaction and still get the earnest money back? A. X's relative would not give cash B. Lender charged 3 points instead of 1 point C. An undisclosed issue would not allow the lender to disburse the loan in time D. Verbal agreement is unenforceable

An undisclosed issue would not allow the lender to disburse the loan in time

The broker company wants to disclose earnest money from their earnest account for transactions that did not close A. Ask for mutual release from the broker companies B. Issue a 60-day letter to the parties as to the release process C. Ask for a mutual release from the Indiana Real Estate Commission D. Transfer the money to the Indiana Real Estate Commission within 60 days

Ask for mutual release from the broker companies

A licensed broker, acting as a real estate appraiser, accepts an appraisal assignment based on a predetermined value. The broker may A. Be subject to license revocation or suspension B. Receive a fee depending upon the amount of predetermined vale C. Be required to disclose this fact to the listing broker D. Advertising for future assignments based on this practice

Be subject to license revocation or suspension

X owns a farm in Oakton. It can be divided into two lots. X builds a new house and provides access to it over an existing driveway that leads to X's original house. Y buys the new house. Y's deed indicates that the easement over X's property allows Y to use X's driveway to access Y's home. 10 years later Y says "I'm selling the house that you built. Are you interested?" X replies, "Yes I will move in myself and have my son sell it to Z." After moving in Z builds a fence over X's driveway. X asks why the fence was put up and says that now they cannot use the driveway. Z explains that they want to plant a garden near the driveway and doesn't want anyone else to use it. What is X's best recourse? A. Sue Y for not selling home back B. Sue Z for not allowing easement C. Build a new driveway D. Tear down fence and continue using driveway

Build a new driveway

Subdivider met mapping regulations of local government and applied to have subdivision plat approved. Once approval is granted, what additional steps must be taken before lots are sold?

Building permits must be obtained

What is the primary reason for secondary mortgage market?

Buy from banks so banks can make loans

A property is listed at $450,000, and the pre-qualified buyer believes no additional financing will be needed. The buyer is then notified the property is encumbered with $30,000 mortgage. The buyer's agent advises his buyer to assume equity by paying the $30,000 mortgage. The sales contract closed with no mention of existing mortgage terms. The closing statement reflects the price of the property at $450,000 with a credit of $30,000 mortgage. The deed to the buyer was exempt and the loan did not fund. When the mortgage debt was not paid, the mortgage foreclosed. Who is liable for the foreclosure? A. Buyer B. Mortgagee C. Buyer's Agent D. Seller's Agent

Buyer

Loan estimate and disclosure forms have been deliverers to the client. During final walkthrough what could allow the client to extend closing an additional 3 days? A. Change in fixed rate B. Taxes

Change in fixed rate

Another term for personal property A. Fixtures B. Realty C. Chattels D. Naturales

Chattels

To an individual who you are representing they would be considered the A. Customer B. Client C. Principal D. Beneficiary

Client

Permitted land uses and set asides, housing projections, transportation issues, and objectives for implementing future controlled development would all be found in a community's ________________? A. Land controller B. Enabling Act C. Zoning authority D. Comprehensive plan

Comprehensive plan

Working to convince a potential buyer that a single-family house near a university could be converted to student housing, a broker guarantees the buyer substantial profit. Such a guarantee A. Maybe unethical but is not violation of the real estate rules and regulations B. Requires comparable sales information to support the claim of future value C. Is an acceptable professional practice if the property is properly zoned D. Constitutes failure to engage in competent practice under the real estate rules and regulations

Constitutes failure to engage in competent practice under the real estate rules and regulations

Which of the following are most likely to be addressed by building codes? A. Deed restrictions B. Construction standards C. Permissible use of structures D. Restrictive covenants

Construction standards

Broker thinks the metes and bounds description is incorrect. What should they do? A. Leave it be as it is out of their expertise B. Contact a surveyor C. Contact county assessor D. Correct in the MLS

Contact a surveyor

A recently widowed farm owner has called a broker to list his one-acre building site in order to raise the money to pay the property taxes. How should the broker proceed? A. Pace off the land, put markers on the corners, and advertise the building site for sale B. Contact the municipality to determine if this is possible, and then have a surveyor prepare the description C. Draw up the legal description of the property, list it, and begin the marketing campaign D. Refuse the assignment, as one cannot divide and sell a portion of one's land without selling all of it..

Contact the municipality to determine if this is possible, and then have a surveyor prepare the description

Borrower applied for a loan on the home of their dreams and were approved for very specific terms based on their credit scores and income. At closing, the interest rate had doubled in the loan documents that were presented for their signatures. The borrowers were told that this was likely to be their only chance to receive any sort of loan and that they must sign today. They were told if they did not sign that they would lose the house. This was A. Acceptable because the purchasers would still get their home B. Acceptable because the lender did secure some sort of financing C. Unacceptable because the lender did secure some sort of financing D. Unacceptable because the borrowers were pressures to take the loan

Unacceptable because the borrowers were pressures to take the loan

A selling managing broker receives a promissory note as earnest money on an offer. The selling managing broker should A. Inform the seller prior to acceptance that the earnest money deposit is other than cash B. Place the note in the broker's safe until the sale is consummated C. Return the note to the buyer after the offer is accepted D. Deposit the note in an escrow/trust account

Inform the seller prior to acceptance that the earnest money deposit is other than cash

Buyer Jim signs a purchase contract at the asking price with no contingencies and the 30-day closing date as specified by the seller. Seller Tom changes the contract closing date 40 days and signed the contract. The contract, in its present form is A. Valid with the 30 day closing date, since Buyer Jim met all the terms as originally specified by the seller B. Valid with the 40 day closing date, since a 10 day extension is not considered material to the contract C. Invalid, since the signed documents do no yet indicate mutually agrees upon terms D. Enforceable, since the seller has provided valid counter odder

Invalid, since the signed documents do no yet indicate mutually agrees upon terms

A void contract is one that A. Is not in writing B. Is rescindable by agreement C. Is missing an essential element D. Contains an element defective in nature

Is missing an essential element

Which of the following statements is true concerning an unrecorded deed? A. It is not valid between the grantor and the grantee B. It need not name the grantee C. It need not contain a legal description D. It does not give constructive notice of ownership

It does not give constructive notice of ownership

A contract us terminated if A. One of the parties decides not to go forward B. Third party intervenes C. It is impossible for one of the parties to perform D. One party assigns his rights to another

It is impossible for one of the parties to perform

Which of the following is a feature of a quitclaim deed? A. It need not contain a legal description B. It must contain the grantee's signature C. It does not pass title to real property D. It need not contain warranties

It need not contain warranties

One of the major disadvantages of real estate as an investment is that A. Managing it requires expertise B. It is highly speculative C. It's liquidity is limited D. The tax advantages are minimal

It's liquidity is limited

What is the best way to discover most encroachments on a piece of property? A. Title insurance B. Chain of title C. Land survey D. Seller

Land survey

All of the following would be considered real property except? A. Mineral rights B. Leashold estate C. Fixtures D. Air

Leashold estate

What type of insurance plan decreases the amount of coverage as the mortgage balance decreases? A. Owner's Policy B. Leasehold Policy C. Lenders/Loan Policy D. Homeowner's Policy

Lenders/Loan Policy

What is the downside of real estate as an investment A. Little liquidity B. Average person cannot afford it C. Doesn't keep up with inflation rate D. Returns are relatively small

Little liquidity

Rental rates are best demonstrated by A. Brokers opinion of value B. Local supply and demand C. The MLS D. The principle

Local supply and demand

Which of the following actions BEST demonstrates compliance with Fair Housing Laws? A. Maintaining accurate written records of all businesses done with minorities B. Maintaining accurate written records with any client or customer C. Refer prospects to ones supervising broker or another agent if one is uncomfortable working with them to ensure they receive proper service D. Show minority prospects property in many neighborhoods/communities even though they may not qualify for or be interested in properties available

Maintaining accurate written records with any client or customer

Which of the following inducements is ALLOWED? A. Providing a free home warranty to the buyer without the seller's knowledge B. Making a donation to the buyer and seller's favorite charity with their knowledge and approval C. Offering $100 card on Facebook to anyone who sends them a listing referral D. Rebating a portion of the commission to the buyer outside of closing

Making a donation to the buyer and seller's favorite charity with their knowledge and approval

A broker has a listing agreement to deliver to his out of town client. To properly secure his listing, the agreement A. Must have original ink signature B. Must be retained in the broker's files for 3 years C. May be an oral agreement D. May be in electronic format

May be in electronic format

A listing agent is holding an open house. His advertising flyers are distributed among potential buyers and he runs out. An expensive car pulls up and the customer asks him what the price of the house is. He over prices at 800k. What is the agent guilty of? A. Conciliation B. Price fixing C. Advertising violation D. Misrepresentation

Misrepresentation

If a person is a licensee, but not a broker, that person A. Cannot be paid through that sponsoring broker B. Must be licensed through sponsoring broker C. Need not affiliate with sponsoring broker D. Can earn fee directly from principal

Must be licensed through sponsoring broker

A lease in which the tenant pays a fixed or base rent and a percentage of the costs for maintaining the building is a A. Net lease B. Gross lease C. Percentage lease D. Sublease

Net lease

What kind of lease would REQUIRE the leases to pay the taxes. insurance, repairs and other operating expenses of the premises in addition to the regular rent payment A. Net lease B. Gross lease C. Percentage lease D. Sublease

Net lease

Landlord sells property to a third party but tenants have signed a 1-year lease. What is true about the new owner?

New owner cannot take possession until lease expires

A landlord used their master key to enter rental(s) without consent from the tenant(s). Are they allowed to do this? A. No, because of quiet enjoyment B.. No, because it would violate the tenants interest in their freehold estate C. Yes, because the landlord has the right of ownership D. Yes, because of co-tenancy

No, because of quiet enjoyment

A real estate brokerage advertises specifically for a buyer who wishes to purchase using VA loans. Do these advertisements violate veterans rights or the advertising rules of the Federal Fair Housing Act? A. Yes, because such advertising falsely implies that only military veterans can qualify for purchase B. Yes, because such advertising discriminates against individuals who have not saved in the military C. No, because brokers are entitled to direct property advertisements to any specific segment of the population D. No, because veterans from all protected classes can qualify for VA loans

No, because veterans from all protected classes can qualify for VA loans

Brokerage firm holding earnest money deposits in trust account pending closing to take place in a month. Broker is short on funds and uses some of the earnest money deposit to cover his rent. Broker knows he will have another closing in a week and can return the funds. Are the broker's actions legal and why? A. Yes, as long as he can return the funds prior to closing, no harm done B. No, illegal act of convengence and could result in loss of license C. Yes, because broker could arrange for this temporary loan by getting permission from the seller D. No, illegal act of conversion could result in criminal penalties and loss of license

No, illegal act of conversion could result in criminal penalties and loss of license

X owns a farm in Oakton. It can be divided into two lots. X builds a new house and provides access to it over an existing driveway that leads to X's original house. Y buys the new house. Y's deed indicates that the easement over X's property allows Y to use X's driveway to access Y's home. 10 years later Y says "I'm selling the house that you built. Are you interested?" X replies, "Yes I will move in myself and have my son sell it to Z." After moving in Z builds a fence over X's driveway. X asks why the fence was put up and says that now they cannot use the driveway. Z explains that they want to plant a garden near the driveway and doesn't want anyone else to use it. Does X have the right to use the driveway? A. Yes, X was the original owner B. Yes, the easement X granted to Y still stands C. No, the easement is no longer valid D. No, unless X gets permission from Z

No, the easement is no longer valid

Fred had right of first refusal and the seller decides not to sell A. Nothing can be done because the seller isn't obligated to sell B. Fred can sue and force specific performance

Nothing can be done because the seller isn't obligated to sell

A licensee is the property manager for a shopping center. The shopping center owner tells the licensee to avoid internet marketing because he distrusts the technology. The licensee discusses with the owner, but eventually complies. The licensee's compliance is due to the duty of A. Care B. Loyalty C. Obedience D. Fair dealing

Obedience

The servient estate in an easement appurtenant is A. Owned by the landlord B. On whichever property the easement was placed C. Owned by the tenant D. The beneficiary of easement

On whichever property the easement was placed

In a jurisdiction where the common law of agency governs real estate activities, a buyer is signing open buyer agency agreements with many brokers. He has been viewing multiple properties with multiple brokers. The buyer will be liable for

One commission to the broker who locates the property that he purchases

A borrower was offered a home loan of $100,000 with an interest rate of 3%. All appropriate forms and disclosures were utilized. This would be an example of predatory lending if the loan required the borrower to A. Repay the loan in 15 days B. Make payments every other week C. Pay a prepayment penalty of 20% of the balance D. Submit all payments in US currency

Pay a prepayment penalty of 20% of the balance

A broker meets with his client who owns a vacant retail store this is in demand by fast food stores. The area is growing rapidly, and the occupants have a history of successfully growing their business. The owner has asked the broker to recommend the most beneficial type of lease to maximize his income. What kind of lease should the broker recommend? A. Gross lease B. Sandwich lease C. Percentage lease D. Reappraisal lease

Percentage lease

An owner has a freestanding cabinet that was custom-built to fit an alcove of the living room. When the owner sells the home, the cabinet will be BEST described as

Personal property

A broker takes a check from a client for repairs for $800, the repairs were only $700. The client gets the receipt and notices $100 is missing. What should the managing broker do?

Personally apologize, explain the situation and write a check for the $100

A home warranty for a previously owned home would most likely cover which of the following? A. Structure and building defects B. Appliances and personal property of the seller until closing C. Appliances and personal property of the buyer after closing D. Plumbing, electrical, and other home systems along with major appliances

Plumbing, electrical, and other home systems along with major appliances

Example of modular construction A. Home used as a model B. Prefabricated homes C Apartment building D. Mobile home

Prefabricated homes

Owner wants to list a property for sale "as is". Listing should A. Assume owner will accept a relatively low price for the property B. Conclude he is relieved of any responsibility if buyer later discovers defects that were not disclosed C. Question the seller if any known defects D. Assume house is a "fixer-upper"

Question the seller if any known defects

Seller A entered into an option contract with Buyer B. The contract allowed for a price of $200,000 which Seller A honor for a 12 month period exclusively for Buyer B. This would be an example of a A. Unilateral contract in which only Buyer B has made a promise to perform B. Bilateral contract where both parties have an obligation to perform C. Implied contract D. Unenforceable contract

Unilateral contract in which only Buyer B has made a promise to perform

A broker listed a home. The listing agreement must be delivered to the owner A. Within 3 business days B. In triplicate C. Within 5 business days D. Upon signing the agreement

Upon signing the agreement

A potential home seller meets with an agent to discuss a property. She tells the agent that her sisters both have equal share of their mothers trust. The property sits adjacent to a busy freeway and there is construction work in progress next door. What is the most appropriate action the agent should take next? A. Verify identity of woman and ask for all records pertaining to trust before moving on to any selling discussions B. Have sisters sign a release of liability so she can be the sole signer for all documents going forward C. Begin a 6-month probate if in agreement D. Gather all details and findings of issues with property noise etc. to properly disclose in listing E. Tell her not to worry about the noise because a new buyer will be given constructive notice E. get the property in the MLS as quickly as possible

Verify identity of woman and ask for all records pertaining to trust before moving on to any selling discussions

A vet with a thriving practice who wants to add a satellite office on the south side of town. He will consider an existing building but would prefer a vacant parcel on which he will build to his own specifications. He prefers a property of at least one acre, and will need a building of at least 2,700 square feet. The broker has located two properties that may suit and has obtained the surveys on both. How should the broker advise the ver with regards to offering for either property?

Verify the zoning for both properties

A 15 year old inherited property, the contract is A. Void B. Voidable C. Enforceable D. Invalid

Voidable

Benefit of general warranty A. Warrants entire chain of title B. Seisin C. Real and personal property protection D. Doe not need to be recorded

Warrants entire chain of title

An appraisal made by a certified appraiser is required A. Before real property can transfer from one owner to another B. When heirs receive property C. When the buyer is using an FHA loan to purchase D. Before any property settlement in a divorce

When the buyer is using an FHA loan to purchase

Buyer and seller enter into a contract. The buyer refuses to purchase for a reason not excused by a contingency. Which statement is correct? A. The seller is entitled to damages the buyer caused, which are taken from either the earnest money deposit or the 20% down payment B. The original buyer gets the earnest money deposit back as soon as there is a new offer C. The seller has the right to terminate the contract and keep the earnest money deposit D. The seller has the right to keep 20% of the down payment on property

The seller has the right to terminate the contract and keep the earnest money deposit

A single property is regulated by building codes, zoning and deed restrictions. The rules are in conflict with one another. Which must the property owner obey? A. Deed restrictions always take precedent over other rules B. Zoning always takes precedent over other rules C. Building codes must be obeyed no matter what the other rules exist D. The strictest to most limiting restriction applies

The strictest to most limiting restriction applies

A feature of joint tenancy with a survivorship is that A. It provides for the disposition of personal possessions B. A corporation can be a joint tenant C. The surviving joint tenant(s) acquire the property free and clear of any liens against the deceased D. It eliminates probate

The surviving joint tenant(s) acquire the property free and clear of any liens against the deceased

A tenant with a disability may reasonably make reversible changes in the physical structure of an apartment to accommodate the tenant's disability if the A. Owner is aware of it and gives permission B. The tenant pays for modifications C. Other tenants are also permitted to make modifications D. Apartment is in a building with four or more units

The tenant pays for modifications

Why do lenders use the standardized forms issued by Freddie Mac & Fannie Mae? A. They require for obtaining a pass through certificate B. They are required by all warehouse agencies C. They are required of lenders who want to sell mortgages in the secondary mortgage market D. They require for obtaining a guarantee of payment of all interest and principal to holder

They are required of lenders who want to sell mortgages in the secondary mortgage market

A seller received an offer for their house, but sent back a counter offer and in that counter offer they specified a period of time in which the buyer had to accept. During that time the seller gets a better offer from a different buyer. Does the seller have to wait to hear back about the counter offer before accepting the new offer?

They can rescind offer and accent new ofer as long as original offer has not been accepted

Under normal circumstances, the purpose of a protection clause in a listing agreement is

To preserve the brokers right to a commission if she registers a buyer to whom she showed the property during the listing, and the buyer purchases it later the listing expires

Private controls on land use include A. Building codes B. Deed restrictions C. Zoning D. Flood plan management

Deed restrictions

When a seller instructs a broker not to show a property to someone not of a specific race. The broker should reply A. Sorry under these conditions you will have to sell without the services of a real estate broker B. All brokers must comply with Fair Housing Laws. I cannot place a listing on your property C. I will do my best, but I will have to show it if anyone asks to see it D. Don't worry, they probably won't want to see it anyway

All brokers must comply with Fair Housing Laws. I cannot place a listing on your property

A prospective seller has arrived to discuss a listing with a broker for a 3-bedroom, 1-bath house with a swimming pool and a 2 car detached garage. She explains to the broker that her mother had the property in a trust and she has 2 sisters that have an equal share of their mother's estate. The house faces the freeway and the prospective seller says she has been at the house during rush hour and hasn't notices any noise. There is also some kind of work going on in a vacant lot next to the house. What should the broker do next? A. Ask to see her identification, a copy of the trust, and review the preliminary report before she does anything further with the sale B. If in agreement with prospective seller, prepare a 6-month probate listing agreement C. Have the other siblings sign a release of liability, so the prospective seller can be the designated signer of all paperwork D. Gather information that is necessary to properly disclose the activity, construction, and noise in the neighborhood E. Get in touch with, hold the mortgage, and find out how long they have before the mortgage accelerates F. Advise the prospective seller that it is not necessary to disclose the freeway because the buyer will have constructive notice

Ask to see her identification, a copy of the trust, and review the preliminary report before she does anything further with the sale

Federal rules require closing disclosure documents provided by lender. Broker should counsel the borrower to review document and compare it with the Loan Estimate document. Closing disclosure should be received by the homeowner A. At closing of transaction B. Not later than 30 days following closing C. At least 3 days prior to loan consummation D. No later than 3 business days following loan application

At least 3 days prior to loan consummation

A seller made a counteroffer to a buyer and has agreed to keep the offer open for a set period of time. Meanwhile a second buyer makes the seller a higher offer. Which statement is true?

The seller can rescind the counter offer and accept the second buyer offer

A successful contractor does beautiful finish work for an investment company. the investment company buys properties that need extensive work. They have been making a decent income by improving them and turning them over quickly. The market has recently slowed and the investors need to sell one of the properties in their portfolio. They have gotten behind in paying the contractor for his work and assume they will pay him from the proceeds of the sale. A week later the investors accept an offer to put it in escrow. Considering the contractor's professional relationship with the investment company, which of the following circumstances would be most likely to cause a delay in the close of escrow? A. Contractor seeks satisfaction of the lien within 150 days of purchasing materials B. Contractor files a notice of a mechanics lien in the public record where the property is located C. Contractor posts the property with a notice of non-payment D. Contractor inform the prospective buyers that the investment company failed to pay him, and threatens buyers with liability if they were to continue with the sale

Contractor files a notice of a mechanics lien in the public record where the property is located

A broker knows the construction costs and square footage on a property. What is the best approach they should consider? A. Cost B. Income C. Market D. Sales comparison

Cost

An appraiser knows construction costs and square footage of land. What approach to value do they need to determine? A. Cost B. Income C. Market comparable D. Sales

Cost

20x22 garage must be attached to house in a subdivision. This type of regulation is? A. Municipal B. Covenant C. Zoning D. Building code

Covenant

A real estate broker enters into an agreement to represent a buyer who is seeking a property to purchase, and remains a single agent throughout the transaction. A seller with whom the broker negotiates is the broker's A. Client B. Principal C. Customer D. Fiduciary

Customer

Which of the following will not terminate an offer to purchase real estate? A. Death of offeror/offeree B. Contingency acceptance agreement C. Revocation of an offer if not met within time specified D. Failure to accept offer within time stated therein by the offer

Death of offeror/offeree

X receives possession of property under a deed that states that X will own the property as long as the present building on the property is not torn down. The type of estate that X holds is A. Life estate B. Non-destructible estate C. Fee simple D. Determinable fee estate

Determinable fee estate

Neighbor A has a property adjoining to neighbor B. Neighbor A has been driving across the yard of neighbor B for the past 8 years to access his property even though there is a direct access to his property. The common principle created is A. An encumbrance B. Easement by taking C. Easement by prescription D. Easment by necessity

Easement by prescription

In real estate, a "client" is best described as a person who has A. Engaged in a phone call conversation with a real estate licensee B. Entered into an agency relationship with a real estate licensee C. Visited an open house and had a discussion with a real estate licensee D. Been provided with a service in the ordinary course of a real estate transaction

Entered into an agency relationship with a real estate licensee

An investor has come to the broker because he may be interested in selling one of his residential properties. His family has owned the 8-unit building for several years and have kept accurate records of income expenses. The investor brings out a file of lavish improvements that he has completed inside each of the units, including granite counters, top of the line appliances and marble floors. He has no idea what the property is worth and has asked the broker to tell him what his potential profit will be before he agrees to list it. In this situation, what is most important for the broker to explore before counseling the investors and putting his units on the market? A. Be honest with the investor and tell him that he was foolish for spending so much money on rental properties and he should keep the property until he is able to depreciate all the improvements over the next 31 years. B. Establish what the expenses, income, and vacancy rate of the investors building is, and then do an analysis using 4 to 5 comparable 8-unit buildings that have sold n the same area in the past 6-9 months to come up with the market value. The broker could estimate the investors profit. C. Explain that he will develop his opinion of value by using the income approach and that the investors may not be able to recover all the cost of his improvements D. Confirm the purchase price that was eight years ago so he will be able to accurately depreciate the property to come to his present market value E. Advise that he Is not an appraiser, but would be happy to complete a sales comparison to develop an opinion of value and add the cost of his improvements F. Explain that the property' market value will reflect comparable sales with lower quality improvements and that the investor will not get back his expanse of improvements. The broker will assign them some value and hope to recapture some of the investor's costs

Explain that he will develop his opinion of value by using the income approach and that the investors may not be able to recover all the cost of his improvements

Which of the following does NOT buy loans in the secondary mortgage market? A. Federal National Mortgage Association (Fannie Mae) B. Government National Mortgage Association (Ginnie Mae) C. Federal Home Loan Mortgage Corporation (Freddie Mac) D. Federal Housing Administration (FHA)

Federal Housing Administration

Townships, ranges, and sections are used in which type of legal description? A. Metes & bounds B. Recorded plat C. Government survey D. Points of beginning

Government survey

A broker's license has a tenant client who wishes to minimize any future increase in expenses for the office space she is interested in leasing. What type of lease should the broker recommend?

Gross lease

A client is leasing a building and wants to minimize her expenses. What lease should she ask for? A. Net lease B. Gross lease C. Percentage lease D. Sublease

Gross lease

Person willing to pay $100/month and nothing more to rent a heated garage. What lease is appropriate? A. Net lease B. Gross lease C. Group lease D. Indexed lease

Gross lease

X wants to only lease a garage that is part of the property. What would be the best type of lease to use? A. Ground lease B. Net lease C. Percentage lease D. Gross lease

Gross lease

To participate in a referral service, a broker company must A. Be a member of a franchise B. Have a written agreement with the cooperating broker C. Be licensed in the state to which they are sending the referral to D. Place their license in a referral status with the state licensing board

Have a written agreement with the cooperating broker

When compared with a 30-year payment period, taking out a loan with a 20-year payment period results in A. Higher monthly payments B. Lower monthly payments C. Greater impound requirements D. Lower equity build up

Higher monthly payments

An agent working as a subagent of the seller would suggest that the buyer hire an inspector from an outside service in all of the following cases EXCEPT A. Slow drain in toilet B. Sawdust in kitchen cabinets C. Smell of gas in basement D. Hinge off door

Hinge off door

A broker has listed a property for $225,000. An offer of $210,000 contingent upon inspection comes in the first week and the seller accepts it. Another offer of $205,000 comes in the second week. The seller accepts it as a secondary offer contingent upon termination of the first offer. The first offeror demands the seller spend $5,000 in repairs before going through with the purchase. The seller may do all of the following EXCEPT A. Agree to do the needed repairs and consulate the transaction with the first offeror B. Ignore the demand and sell the property to the second offeror C. Terminate the first agreement in writing and sell to the second offeror D. Refuse to do the repairs and still proceed with the sale in as is condition

Ignore the demand and sell the property to the second offeror

In which of the following cases will a formal appraisal AlWAYS be required? A. When the seller wants to be sure od the home's value B. When the buyer wants to obtain private mortgage insurance C. In order to obtain and FHA insured loan D. To determine a home's market value

In order to obtain and FHA insured loan

An appraiser who is estimating market value of a mixed-use commercial property with living space above it would use which two approached to value? A. Income and sales approach B. Cost approach and sales comparison C. Sales comparison and ad valorem D. Income and cost approach

Income and sales approach

An elderly couple is represented by a broker who does not hold any professional license other than the broker license. The couple finds a home they want to purchase and ask their broker's advice about how to take title, explaining that they want to be sure that when one of them dies, the other will automatically become the sole owner of the home. It would be MOST appropriate for the broker to A. Recommend that they consult a real estate attorney about the best way to ensure this outcome B. Explain that this is a complex matter that is beyond his expertise C. Recommend that they take title as joint tenets or tenants by entirety to ensure the desired outcome D. Explain the basic differences between the state's forms of joint ownership and suggest consulting an estate planning professional

Recommend that they consult a real estate attorney about the best way to ensure this outcome

An elderly couple is represented by a broker who does not hold any professional license other than the broker license. The couple finds a home they want to purchase and ask their broker's advice about how to take title, explaining that they want to be sure that when one of them dies, the other will automatically become the sole owner of the home. It would be LEAST appropriate for the broker to A. Recommend that they consult a real estate attorney about the best way to ensure this outcome B. Explain that this is a complex matter that is beyond his expertise C. Recommend that they take title as joint tenets or tenants by entirety to ensure the desired outcome D. Explain the basic differences between the state's forms of joint ownership and suggest consulting an estate planning professional

Recommend that they take title as joint tenets or tenants by entirety to ensure the desired outcome

A buyer is concerned about a possible encroachment on a property a listing agent is showing. What should the listing agent advise the buyer to do. A. Not buy it because there may be a violation B. Recommend the buyer hires a surveyor to conduct a through finding C. Ask the listing agent to provide records showing there is no violation or demonstrate otherwise D. Assure the buyer that there is no issue

Recommend the buyer hires a surveyor to conduct a through finding

A broker with a license in inactive status is permitted to do which of the following? A. Refer listings to the broker's previous managing broker for a fee B. Conduct open houses on belief of the other licencees C. Appraise real estate for a fee D. Waive requirements for continuing education

Refer listings to the broker's previous managing broker for a fee

The purchase and sales agreement provides for the release of earnest money to the seller after the buyer's property inspection. The seller requests the earnest money prior to the property inspection. The broker should A. Release the earnest money to the seller immediately B. Notify the buyer of the broker's intention to release the money to the seller C. Release the earnest money on the buyer's verbal approval D. Refuse to release the earnest money

Refuse to release the earnest money Earnest money can be disbursed only at closing, or if contract fails/breaches, can be released upon a written agreement from both parties to a transaction

A seller's agent is contacted by a potential buyer whose financial status is questionable. When asked to write and offer the agent should A. Refuse to write the offer B. Relay any reservations to the seller C. Ask for a high earnest payment D. Require the buyer's financial statement to accompany the offer

Relay any reservations to the seller

What action returns a contract's parties to their positions before the contract, including return of any deposit? A. Cancellation B. Rescission C. Substitution D. Subordination

Rescission

Deed restriction means the same as A. Lease restriction B. Mater plan C. Restrictive covenant D. Variance

Restrictive covenant

A purchase agreement will not be terminated EXCEPT for the following reason A. Death of offeror/offeree B. Contingency acceptance agreement C. Revocation of an offer if not met within time specified D. Hospitalized buyer

Revocation of an offer if not met within time specified

You are hosting an open house and Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. They tell you that the house is exactly what they are looking for and they are very interested in purchasing it. You give them information showing the various types of financing available, down payment options, and projected payments. The Martins tell you they have been working with Mary of XX realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card The first thing on Monday morning the Martins call and indicate that they have tried to reach Mary and cannot. They indicate that they have a written buyers agency agreement with Mary's broker. They are afraid that someone else will buy the house. Which of the following should you do? Select the best option A. Seek advice from your supervising broker B. Tell them to come to your office C. Ask them to bring the buyers agency agreement to your office D. Tell them to be patient and to continue to try to reach Mary E. Tell them to call Mary's supervising broker or branch broker F. Tell them you are sorry, but there is nothing that you can do

Seek advice from your supervising broker

A purchase contract required that the property be free of tenants when the property conveyance occurred. On the day of closing, the tenants were still living in the property. Who is responsible for ensuring that tenants vacated the property prior to closing? A. Buyer B. Sellers Agent C. Seller D. Listing Agent

Seller

The current real estate market has been booming for the last 5 years and there is still demand for properties, though the market has slowed for both rental and sales analysis of the area's job market shows a rise in unemployment and stagnant wages, though living costs are still rising. For the last few years the area has welcomed influx of new residents, but this ha almost stopped as job opportunities decline. A real estate broker has been asked by a homeowner whether to sell now or wait until the market higher in the net year or two. Given the facts, what course of action would a prudent professional recommend to the seller? A. Selling the property now, as the market appears likely to adjusted downward B. Renting the property until market peaks in a few years, then selling it C. Holding the property for another year, as the market runs in seven year cycles further appreciation can be expected D. Holding the property until it reaches the level of appreciation the seller is seeking, as the market will continue to appreciate

Selling the property now, as the market appears likely to adjusted downward

An associated licensee has decide to disclose latent defects in properties he lists for the brokerage firm only if a buyer makes a specific inquiry. The broker in charge has never discussed this issue with the licensee and does not require any reporting from associated licensees because they are independent contractors. When the licensing board investigates complaints arising from this practice, they are likely to find the broker in charge A. Has no liability; as an independent contractor, the licensee is solely responsible for failing to disclose material facts B. Liable only if he was aware that the associated licensee had adopted the policy of nondisclosure C. Liable only if the broker was aware of the defects the associated licensee failed to disclose D. Share the liability for his licensee's wrongdoing

Share the liability for his licensee's wrongdoing

Seller's broker negotiating to convince lender to accept less than the balance due as satisfaction to the debt A. Negotiated balance reduction B. Equitable redemption C. Debt forgiveness D. Short sale

Short sale

A listing broker has recently sold a house to an investor. Prior to making an offer, the investor told the broker he planned to turn the large property into apartments. It was in a neighborhood that had many multi-family properties. The buyer has now discovered that the other properties are non-conforming, and that the area is zoned single family. The broker A. Should have asked the seller about the local zoning ordinances B. Is responsible for the buyer's failure to do due diligence C. Should have advised the buyer to check the zoning in the area before purchasing property D. Need not worry as his errors and omission insurance should cover this

Should have advised the buyer to check the zoning in the area before purchasing property

A buyer is purchasing a bank owned property. The broker explains the type of deed she will be receiving only promises that the bank has the right to sell the property and that they have not encumbered it. What type of deed will the buyer most likely receive? A. Special Warranty B. General Warranty C. Trustee's deed D. Deed in lieu

Special Warranty

A new sewer will need to go into a subdivision. What type of assessment should the buyers be notified before a decision to purchase is made A. Special assessment B. Utility assessment C. Special subdivision assessment D. Ad valorem

Special assessment

If someone gets a deed at a foreclosure sale saying the bank had the right to seize it, what deed is this? A. Deed in lieu B. Special warranty C. General warranty D. Trustees deed

Special warranty

The statement "A contract for the transfer of interest in land, must be in writing", best defines which of the following real estate concepts? A. Acknowledgment B. Mutual consent C. Statute of frauds D. Statutes of limitation

Statute of frauds

Broker is showing a house and knows that there was a murder/suicide within. What should the broker do A. Say nothing B. Tell potential buyer

Tell potential buyer - if representing buyer Say nothing - if representing seller

A client wants to give $500 bonus check for their hard work, the licensee should A. Take the $500 checkin and immediately deposit it B. Tell the client to give to their managing broker C. Say that he can't accept it as its illegal D. Put it in their escrow account

Tell the client to give to their managing broker

A seller is unhappy with the effort being put forth by the listing broker and wishes to terminate the listing and relist with a different broker. How should the broker advise the seller? A. Tell the seller to send a certified notice to the listing broker terminating their relationship. A listing broker is a unilateral contract which may be terminated by either party B. Tell the seller to ask the listing broker to agree to terminate the listing. Agency is a bilateral relationship which may be terminated bu mutual consent C. Advise the seller to record a notice of termination at the register of deeds, thereby serving all connections with the listing broker and permitting the new listing agreement D. The seller may withdraw the listing from the local MLS and enter into a listing agreement with a new broker at anytime, as a listing is.a service terminated whenever the service being rendered is unsatisfactory.

Tell the seller to ask the listing broker to agree to terminate the listing. Agency is a bilateral relationship which may be terminated bu mutual consent

Property located by the airport that needs more land for runway. What should you tell your client that decides not to sell

That the city and local entities can take her property by eminent domain

A broker has been charged with using improper terms without full disclosure when advertising a real estate property. The broker has MOST likely violated A. The Real Estate Settlement Procedures Act (RESPA) B. The Equal Credit Opportunity Act (ECOA) C. The Truth in Lending Act D. Usury laws

The Truth in Lending Act

A potential buyer seems to be very knowledgeable about home purchases, and decided not to require an inspection, hoping that the lack of an inspection contingency will help to convince the seller that his offer is the best deal. The buyer's broker has noticed a few things that have raised his concerns about the condition of the house. What responsibility, if any, does the buyer's agent have in this situation? A. The agent should demand that the buyer order an inspection before he writes an offer B. This buyer is surely aware that he is taking a risk, so the buyer's agent should write the offer as instructed C. Sine the seller is required to disclose any material defects, the buyer's agent should go along with his client's strategy D. The agent should explain his concerns to the buyer and work to persuade the buyer include an inspection contingency

The agent should explain his concerns to the buyer and work to persuade the buyer include an inspection contingency

The proper way for a listing broker company to split a commission is to pay A. 50% of the total fee to the broker B. 35% to the total fee to the selling broker company C. Only the agreed amount to the selling broker D. The agreed amount to the selling broker company

The agreed amount to the selling broker company

On a rectangular survey what is Range 3 West?

The answer has a 12 and 18

A listing broker presents an offer from a customer that meets every term asked for in the listing agreement. The seller decides not to sell. Which of the following statements is MOST likely true? A. The broker could collect commission B. The broker could sue for specific performance C. The buyer could sue for specific performance D. The seller will not have to pay a commission

The broker could collect commission

A broker hires an inactive broker to conduct open houses. Which of the following statements about this situation is CORRECT? A. The broker must obtain managing broker approval B. The broker may compensate the inactive broker at closing C. The broker may face disciplinary action for incompetent practice D. The broker must compensate the inactive broker on an hourly basis

The broker may face disciplinary action for incompetent practice

In a case of alleged illegal conduct by a broker in the course of a real estate transaction, which of the following statements about the managing broker is TRUE? A. The managing broker will be held accountable only for the broker's actions of which the managing broker has knowledge B. The managing broker may be held accountable for any actions of the broker C. The broker will be held solely responsible for the broker's illegal conduct D. The broker may be held accountable for the actions of the client

The managing broker may be held accountable for any actions of the broker

An item may be considered personal property as opposed to real property provided that A. The owner intends to remove it after a period of time B. It can be removed without altering the integrity of the appearance of the structure C. It is unnecessary to the integrity of the structure D. The owner installed sometime after acquiring real property

The owner intends to remove it after a period of time

A broker has listed a home in a horse property area that is now surrounded by suburban residential subdivisions with much smaller lots. The listed property immediately adjacent to a new subdivision and the city is demanding that the road separating the listing from the residential lots must be paved. There have been neighborhood hearings regarding a proposed special assessment affecting both the horse property owners and the subdivision developer. Condemnation of some land to provide enough space for the road plus sidewalks is also being considered. Since there have been no formal actions on either of these proposals, the sellers instruct the broker not to disclose the meetings to any potential buyers .What are the broker's obligations? A. The broker must inform the sellers that she has a duty to disclose these material facts even if the seller prefer not to disclose B. The sellers are correct. Since no formal governmental action has been taken, there is no current lien or other impairment of the property. If anything specific happens it will be public record and therefore no private disclosure would be needed C. Since the horse property has been in place for some time, these obligations will fall entirely on the developer of the new subdivision. the city cannot do anything to change the horse property or take away any land, so there is nothing to disclose D. The fact that public meetings have been held places these proposals in the public domain" and any potential buyer is obligated by law to research such property conditions. The sellers and their broker need not mention mere speculation as factor affecting their property

The broker must inform the sellers that she has a duty to disclose these material facts even if the seller prefer not to disclose

A broker notifies their broker company that they are moving to another firm at the end of the month. Which of the following statements is TRUE? A. The broker company needs to give the broker a copy of all the listing files B. The broker shall turn over to the broker company all of the names of their clients unless they have a written agreement to the contrary C. The broker shall turn over to the other broker company any listing obtained unless they have a written agreement to the contrary D. The broker company needs to collect all the yard signs from the broker

The broker shall turn over to the other broker company any listing obtained unless they have a written agreement to the contrary

An advantage of PMI A. The entire loan in insured B. The sellers pay the premium C. The buyers can purchase a higher priced home D. The loan can close quicker

The buyers can purchase a higher priced home

A buyer and seller have negotiated a contract on the seller's property. With a closing date set for June 14th. Time is of the essence. On June 12th the listing agent tells the buyer's agent that the seller will be unable to close on the 14th. the seller can close on the 16th. At this time what is true? A. The contract is terminated B. The contract is void C. The contract is voidable by the buyer D. The contract is voidable by either party

The contract is voidable by the buyer

A broker is asked to compute the capitalization rate for an investment property valued at $750,000. Which formula should the broker use?

The income approach It is a real estate valuation method that uses the income the property generations to estimate fair value. Its calculated by dividing the net operating income by the capitalization rate

A tenant executes a 1-year lease on a residential property. FIve months later the landlord sells the property to a third party who wants to take procession. If the lease is silent which of the following best describes the status of the lease? A. The lease is not terminated and the buyer does not take possession until lease expiration B. The landlord as the seller has the right to terminate the lease by operation law C. Landlord cannot sell the property to the buyer as the tenant must be given the first right of refusal D. Buyer as the new titleholder can terminate the lease

The lease is not terminated and the buyer does not take possession until lease expiration

The truth in lending law allows Americans a right of recission if each of the following events occurs in sequence even if on different days. The time for recission begins when the A. The loan is funded by the lender B. The loan application is submitted to the lender C. The lending instrument is signed by the borrower D. The loan is approved by the lender

The lending instrument is signed by the borrower

The buyer was given a loan estimate at the time of the application for the mortgage and it is now 3 business days before the closing. The appraisal and the closing disclosures have been given to the buyer. The buyers broker meets her client at the property for a walkthrough and to review the documents. Which of the following documents will result in the buyer having the right to an additional 3 days to review the documents? A. There was a mathematical error on the proration of taxes or utilities B. Appliances are missing even though the seller agreed to include them C. The loans product has changed from fixed rate to one that is adjustable D. There was an omission in the property disclosure of a recently discovered special assessment

The loans product has changed from fixed rate to one that is adjustable

You are hosting an open house and Mr. and Mrs. Charles Martin come into the house. You greet them and show them the house. They tell you that the house is exactly what they are looking for and they are very interested in purchasing it. You give them information showing the various types of financing available, down payment options, and projected payments. The Martins tell you they have been working with Mary of XX realty, a competing real estate company. Before leaving, you thank them for coming and give them your business card. The Martins come to your office and explain that neither Mary nor her supervising broker are available. They insist that you immediately write an offer for the house. What should you do? Select the best option A. Write an offer after entering into a buyer broker agreement with the Martins B. Write the offer, but explain that they may owe Mary for the supervising broker because of the preexisting agreement C. Write the offer after trying to contact the Martins' broker yourself D. Refuse to write the offer and explain that doing so would be unethical E. Refuse because writing the offer would be illegal F. Refuse and tell the Martins to contact someone else in Mary's office

Write the offer, but explain that they may owe Mary for the supervising broker because of the preexisting agreement

The buyer gave the broker an earnest money deposit of $5,000. As closing was approaching, the buyer discovered he needed $2,000 back in order to pay a charge card and get his debt to income ratio where it needed to be to obtain the loan. The broker wrote him a check for $2,000 from the trust account. Is this acceptable, why or why not? A. Yes, because the transaction has not yet closed therefore the buyer may request his money B. Yes, because this practice would be permissible with the seller and buyer's written permission C. No, because under no circumstances may money be taken from the broker's trust account; it belongs to the transaction D. No, because the withdrawal of the $2,000 would have reduced the amount of deposit to less than the minimum required

Yes, because this practice would be permissible with the seller and buyer's written permission

A salesperson represents the seller of a commercial property. The salesperson tells the buyer a new highway exit ramp will be built within six months to give access to the property although that is only one of the several possibilities being considered by local planners. The exit ramp is subsequently located elsewhere. Could the salesperson be liable to the buyer for the statement about the ramp? A. No, the statement was the salesperson's opinion B. No, the statement was puffing C. Yes, the statement was puffing D. Yes, the statement was material misrepresentation

Yes, the statement was material misrepresentation