Q & A Cram Exam 4
383. Which type of depreciation is usually incurable? a. Physical deterioration b. Physical obsolescence c. Functional obsolescence d. External obsolescence
D. External obsolescence
345. Which loan does NOT require a down payment? a. VA guaranteed b. Conventional c. FHA insured d. Adjustable rate mortgage
A. VA guaranteed
397. Depreciation can be taken on all of the following, EXCEPT: a. An office building b. A warehouse building c. A garage d. Land
d. Land
302. Which set of terms is NOT synonymous? a. Vendee, purchaser b. Mortgagee, lender c. Lessor, landlord d. Grantee, seller
D. Grantee, seller
323. Which entity would an owner approach when seeking to subdivide their land? a. Florida Real Estate Commission b. Division of Florida Land Sales c. Department of Housing and Urban Development d. Local planning board or the appropriate government agency
d. Local planning board or the appropriate government agency
308. Which of the following is a characteristic of a parol contract? a. In writing b. Signed by two witnesses c. Covered by statue of frauds d. Oral
d. Oral
398. To which type of transaction does Regulation Zapply? a. Single-family home used for rental income b. Building used for a gas station c. Vacant land used for a parking lot d. Single-family home used as residence
d. Single-family home used as residence
355. Which mortgage clause calls for the entire balance to be paid? a. Cognovit clause b. Special-purpose and circumstance clause c. Defeasance clause d. Acceleration clause
d. acceleration clause
374. Which appraisal method values the land separately from the improvements? a. Gross multiplier b. Income c. Comparable sales d. cost-depredation
d. cost-depredation
335. In the process of mortgage underwriting (qualifying), which is of most concern to the lender? a. Assets b. Credit history c. Deductions d. Income
d. income
399. Residential investment property is depreciated over a useful life of how many years? a. 27.5 years b. 31.5 years c. 39 years d. 17.5 years
A. 27.5 years
321. An owner wants to build a 15-foot deck on the side of a house. There is a ten-foot setback requirement. If he builds the deck, there would be only five feet left over. What can the owner do? a. Ask for a variance b. Request a special exception or special use c. Build the deck under a nonconforming use d. Send the plans to the building department for approval
A. Ask for a variance
389. Which appraisal approach would usually be requested by insurance companies? a. Cost-depreciation approach b. Sales comparison approach c. Income capitalization approach d. Land residual approach
A. Cost depreciation approach
314. The buyer signs an offer with a deposit, but the seller changes the price. What should the sales associate do? a. Make the necessary changes, have the seller sign and initial the changes, and then have the buyer initial the changes b. Make the changes, have the buyer sign, and then have the seller sign c. Prepare a new offer reflecting the changes and then have all parties sign d. Advise the seller that there can be no changes
A. Make necessary changes, have the seller sign and initial the changes and then have the buyer initial the changes
394. What would be an investor's motivation for deducting depreciation? a. Maximizing cash flow b. Minimizing cash flow c. Maximizing liability d. Minimizing income
A. Maximizing cash flow
370. All of the following are primary lenders, EXCEPT: a. Mortgage loan originators b. Commercial banks c. Life insurance companies d. Savings associations
A. Mortgage loan originators
303. Mr. Able sold his home to Mr. and Mrs. Baker and gave them a warranty deed. The Bakers moved into the home but did not record the deed. Two days later, Mr. Able died, and his heirs up north sold the property without any knowledge of the previous sale. The heirs conveyed title to Mr. and Mrs. Charles, who did record the deed. Who owns the property? a. Mr. and Mrs. Baker b. Mr. and Mrs. Charles c. Mr. Able's heirs d. The Charles and the Bakers as joint tenants
A. Mr. and Mrs. Baker
356. Which clause in a mortgage allows the borrower to borrow back up to the original loan amount? a. Open end clause b. Prepayment clause c. Reborrowing clause d. Escalation clause
A. Open end clause
354. Which mortgage provides an interest-only loan? a. Term mortgage b. Amortized mortgage c. Reverse mortgage d. Home equity loan
A. Term mortgage
343. A buyer takes over the seller's mortgage payments but does not assume liability. Which statement best describes this situation? a. The buyer is purchasing subject to the mortgage. b. The buyer is assuming the loan with novation. c. This is legal only when the mortgage contains a due-on-sale clause. d. This is an example of an assumption.
A. The buyer is purchasing subject to the mortgage
396. Which definition best describes the equity a homeowner has in their home? a. The difference between the market value and the mortgage balance b. The amount of upfront cash paid upon purchase of the home c. The amount still owed on the home d. The value determined by an appraiser
A. The difference between the market value and the mortgage balance
320. What do zoning laws regulate? a. Type of use b. Structures and building materials c. Public right of way and easements d. Color of exteriors, type of roof tile, etc.
A. Type of use
391. Which characteristic is NOT normally taken into account when determining the value of a good? a. Homogeneity of the product b. Transferability of the product c. Scarcity of the product d. Utility of the product
A. homogeneity of the product
366. Which condition would decrease the supply of loanable funds for real estate loans? a. The government bonds this year are 9% compared to 8% last year. b. There is a 3% increase in family income nationwide. c. People take money from their savings accounts to put into retirement accounts. d. There is an overall increase in consumer spending.
A.The government bonds this year are 9% compared to 8% last year
324. From which type of loss can zoning protect an owner? a. A loss in value due to decreased demand b. A loss in value in a residential area with urban encroachment c. A loss due to flooding d. A loss due to a change in market conditions
B. A loss in value in a residential area with urban encroachment
339. What part of an amortized mortgage payment reduces the principal balance? a. Debt service b. Amortization c. Interest d. Principal and interest
B. Amortization
353. What type of loan covers several parcels of land? a. Package mortgage b. Blanket mortgage c. Balloon mortgage d. Purchase money mortgage
B. Blanket mortgage
336. What title does a buyer have when they sign a sales contract (or have purchased under contract for a deed)? a. Ostensible title b. Real title c. Actual title d. Equitable title
D. Equitable title
344. Which clause in a mortgage requires the lender to look to the mortgaged property only for satisfaction? a. Defeasance clause b. Exculpatory clause c. Cognovit clause d. Subordination clause
B. Exculpatory clause
363. Savings associations look to what agency to sell their mortgages? a. FDIC b. Freddie Mac c. RTC d. FHA
B. Freddie Mac
384. A man lives in a neighborhood of $50,000 homes. He decides to install expensive imported marble tile throughout the home. Of which type of depreciation is this an example? a. Incurable physical depreciation b. Incurable functional depreciation c. Curable functional depreciation d. Curable physical depreciation
B. Incurable functional depreciation
379. With the income approach to appraising, the value of the property today is: a. More than the future value b. Measured in future benefits c. Not considered in an appraisal d. To be paid to the appraiser
B. Measured in future benefits
346. The buyer receives all of the following items at closing, EXCEPT: a. Deed b. Mortgage c. Opinion of title d. Closing statement
B. Mortgage
338. All of the following are required for a valid mortgage, EXCEPT: a. The legal description of the property b. Signature of the mortgagee c. Signature of the mortgagor d. It be in writing
B. Signature of the mortgagee
360. What happens when the Federal Reserve orders financial institutions to increase their reserves? a. The supply of loans increases. b. The supply of loanable funds is reduced. c. Interest rates go down. d. The money supply increases.
B. The supply of loanable funds is reduced
313. Which of the following is a unique characteristic of an option contract? a. Executed b. Unilateral c. Bilateral d. Parol
B. Unilateral
322. What is the term that is applied to the practice of keeping low-income people out of a particular neighborhood? a. Zoning b. Exclusionary zoning c. Nonconforming use d. Subdivision exception
B. exclusionary zoning
387. A house has a bathroom built onto the side of the kitchen. The bathroom has a laundry tub but no room for a bathtub. What is this an example of? a. Physical deterioration b. Functional obsolescence c. External obsolescence d. Economic obsolescence
B. functional obsolescence
361. Which entity controls the U.S. monetary policy? a. President of the United States b. Federal Reserve System c. Federal Trade Commission d. Federal Housing Finance Board
B. the Federal Reserve System.
317. What is an option contract? a. A unilateral contract, binding on both parties b. A bilateral contract, binding only on the optionee c. A unilateral contract, binding only on the optionor d. A bilateral contract, binding on both parties
C. A unilateral contract, binding only on the optionor
315. What type of listing is held by two or more licensed brokers? a. A multiple listing b. An exclusive right of sale listing c. An open listing d. A net listing
C. An open listing
340. Under what circumstance is personal property included in the purchase of a home as additional security for the loan? a. As an optional extra feature b. As an additional down payment c. As part of a package mortgage d. Never
C. As part of a package mortgage
347. Who are the three parties in a trust deed? a. Benefactor, trustee, and trustor b. Beneficiary, mortgagor, and trustee c. Beneficiary, trustor, and trustee d. Beneficiary, mortgagee, and trustor
C. Beneficiary, trustor, and trustee
392. All of the following are types of depreciation, EXCEPT: a. Physical deterioration b. External obsolescence c. Commercial depreciation d. Functional obsolescence
C. Commercial depreciation
373. Which combination of appraisal approach and property type would be agreeable to an experienced appraiser? a. Income approach: special-purpose properties b. Income approach: owner-occupied home c. Comparable sales approach: vacant land d. Cost-depreciation approach: residential land
C. Comparable sales approach: vacant land
328. Under specific circumstances, real estate law allows a broker to appoint one sales associate to represent the seller and another to represent the buyer. What term is used for a sales associate who meets all the qualifications of these circumstances? a. Dual agent b. Transaction broker c. Designated sales associate d. Special agent
C. Designated sales associate
351. Which clause in a mortgage calls for the principal balance to be paid in full? a. Satisfaction clause b. Defeasance clause c. Due on sale clause d. Cognovit clause
C. Due on sale clause
377. What are the main steps in direct capitalization when using the income approach to valuation of real estate? a. Estimate the gross income, add in the operating expenses, and capitalize the net operation income b. Estimate the capitalization rate, adjust the gross income for vacancies and divide c. Estimate gross income, deduct the vacancies and operating expenses, and capitalize the net operating income into value by dividing by an overall rate d. Identify the gross income, plan the appraisal, and collect the expenses
C. Estimate gross income, deduct the vacancies and operating expenses and capitalize the net operating income into value by dividing by an overall rate
318. A broker lists a property for $25,000, which must be all cash. A buyer makes an offer for $30,000 but asks the broker to show the additional $5,000 in the contract as a down payment, which the buyer does not intend to provide. The buyer does this to show a higher purchase price to the lender so that he can get approved for a $25,000 loan. Under this arrangement, the seller would only receive the $25,000, thereby meeting the seller's terms. What should the broker do? a. Charge a commission based on $30,000 b. Charge a commission based on $25,000 c. Find another buyer d. Withdraw from the listing
C. Find another buyer
334. The purchase price of a business, less the value of the tangible assets of that business, equals the intangible assets of the business. Which item would be an intangible asset of the business? a. Real property b. Office furniture c. Goodwill d. Personal property
C. Goodwill
368. Who could be the seller? a. Mortgagor b. Vendee c. Grantor d. Grantee
C. Grantor
350. What is the effect of positive leverage? a. Increases the lender's yield b. Increases the lender's loan to value yield c. Increases the borrower's yield d. Allows an individual to lift a heavy weight
C. Increases the borrower's yield
327. The owner of an apartment building would be required to provide all of the following EXCEPT: a. Heat and hot water b. Garbage pickup c. Laundry service d. Pest control services
C. Laundry service
357. All of the following entities make loans, EXCEPT: a. Life insurance companies b. Mortgage lenders c. Mortgage loan originators d. Commercial banks
C. Mortgage loan originators
400. When determining the net operating income (NOI) for direct capitalization, all of the following items are subtracted from the potential gross income (PGI), EXCEPT: a. Vacancies and collection losses b. Reserves for replacements c. Mortgage payments d. Property taxes
C. Mortgage payments
371. Which type of lending institution is formed by private investment groups to purchase real estate for investment and to make short-term construction and long-term mortgage loans? a. Credit union b. Savings association c. REIT d. Commercial bank
C. REIT
376. What is the term used to refer to the process of arriving at a final estimate of value in appraising? a. Highest and best use b. Averaging c. Reconciliation d. Computation
C. Reconciliation
349. All of the following loans can be first liens, EXCEPT; a. First mortgage b. Home equity loan c. Second mortgage d. Purchase money mortgage
C. Second mortgage
348. Which entity regulates a life insurance company in the primary mortgage market? a. RESPA b. The federal government c. The state in which it operates d. None, they are not regulated
C. The state in which it operates
388. All of the following are examples of physical depreciation, EXCEPT: a. Peeling paint b. Termites in the woodwork c. Dry rot in the walls d. A garage detached from a single- family home
D. A garage detached from a single-family home
337. In a lien-theory state, what instrument would be conveyed by the mortgagee to the mortgagor when the mortgage has been paid in full? a. A reconveyance deed b. A notice of redemption c. A quitclaim deed d. A letter of satisfaction
D. A letter of satisfaction
369. All of the following entities may assign a mortgage, EXCEPT: a. Freddie Mac b. A mortgagee c. Fannie Mae d. A mortgagor
D. A mortgagor
386. Amenities, or features, used to compare properties in an appraisal could include all of the following, EXCEPT: a. Intangible amenities b. Tangible amenities c. Location d. Ethnic makeup
D. Ethnic makeup
341. A buyer purchases a property with an existing mortgage and assumes personal responsibility for the note, Which term describes this situation? a. An assignment of mortgage b. Novation c. Purchasing subject to a mortgage d. An assumption of mortgage
D. An assumption of mortgage
306. Broker Brown gets a listing from Mr. Jones. Broker Brown agrees to advertise, caravan and print material intended to help in the sale of the house. Mr. Jones agrees to pay a commission to Broker Brown no matter who sells the house. Which type of listing is in place? a. An exclusive listing b. An implied listing c. A general agency agreement d. An exclusive right of sale listing
D. An exclusive right of sale listing
362. What is the function of a secondary lender as opposed to a primary lender? a. Provides money for purchase money mortgages b. Lends money directly to borrowers c. Provides second mortgage financing d. Buys existing mortgages
D. Buys existing mortgages
381. The steps in the cost-depreciation approach to estimating market value include all of the following, EXCEPT: a. Finding the current cost to reproduce the building as new b. Finding the land value using comparables c. Subtracting the accrued depreciation from the reproduction cost d. Calculating the net operating income
D. Calculating the net operating income
393. Which condition would NOT indicate functional obsolescence? a. Too few electrical outlets b. A house with one bathroom c. A poor floor plan d. Damaged carpet
D. Damaged carpet
395. Under Truth in Lending, "triggering terms" include information regarding all of the following, EXCEPT: a. Amount of down payment required in a credit sale transaction b. Amount of finance charge c. Number of loan payments d. Easy monthly payments
D. Easy monthly payments
372. All of the following statements apply to an estoppel certificate, EXCEPT: a. It may also be called a letter of estoppel. b. It is used to confirm that a lien or obligation exists. c. It is used to confirm the outstanding loan balance as of a given date. d. It forms a lien against the property.
D. It forms a lien against the property
307. What is the most likely consequence for a broker who negotiates a contract for the sale of a house between the owner and purchaser in violation of the statute off frauds? a. Have their registration suspended b. Have their registration revoked c. Lose their commission on the sale d. Not be disciplined
D. Not be disciplined
390. Who must pay any points that are due on a VA guaranteed loan? a. Seller b. Buyer c. Lender d. Party specified in the contract
D. Party specified in the contract
358. Which mortgage clause permits the mortgagee to have a third party appointed to collect income and manage the property until foreclosure proceedings have been accomplished? a. Personal representative clause b. Administrator's clause c. Redemption clause d. Receivership clause
D. Receivership clause
359. Which type of mortgage allows a homeowner, age 62 or older, to receive a lump sum or monthly advance based on the equity in their home? a. HELOC b. Home equity loan c. Purchase money mortgage d. Reverse mortgage
D. Reverse mortgage
311. Which statement is correct regarding a lease agreement for 12 months or less? a. Must be in writing to be valid (enforceable) b. Must be in writing to benefit the lessee c. Must be in writing to benefit the lessor d. Should be in writing to avoid misunderstanding
D. Should be in writing to avoid misunderstanding
352. What is included in the annual percentage rate (APR)? a. Annual interest b. Finance charge c. Simple annual interest d. Simple annual interest plus finance charges
D. Simple annual interest plus finance charges
310. A broker accepts a listing that has an unmerchantable title. A sales contract is signed, and a deposit is obtained contingent upon the owner clearing title. At closing, the owner cannot give a clear title. The deposit is returned to the buyer. Which statement applies to this situation? a. The broker is entitled to a full commission. b. The owner can sue the broker and the buyer. c. The buyer can sue the owner. d. The contingency was not met, so the contract is dead.
D. The contingency was not met, so the contract is dead
312. Florida has established three authorized brokerage relationships. Unless otherwise established by agreement, what is the broker's relationship with the public? a. Nonrepresentation b. Single agency c. Dual agency d. Transaction brokerage
D. Transaction brokerage
365. For which of the following are Fannie Mae and Freddie Mac responsible? a. Offering nonconforming loans b. Finding new sources in the primary mortgage market c. Insuring loans made by approved lenders d. Standardizing lending practices and forms
D. standardizing lending practices and forms
332. All of the following activities would be considered fraudulent, EXCEPT: a. A selling agent and a buying agent agree to split a commission with permission by all parties to the transaction. b. An agent for the buyer develops a scheme with the selling agent to obtain a contract with a higher purchase price. c. A buyer's agent chose not to inform the buyer about a planned airport extension adjacent to a prospective property. d. A broker arranges to collect commission from both parties in a transaction without informing the seller.
a. A selling agent and a buying agent agree to split a commission with permission by all parties to the transaction.
385. What is "price?" a. Amount actually paid in a real estate transaction b. Assessed value of a property c. Market value d. Actual or estimated amount to obtain, create, or reproduce a property
a. Amount actually paid in a real estate transaction
305. Broker Bob has an exclusive listing The owner calls and asks if Bob has any offers. Bob says no. Broker Charles submits an offer to the owner that is accepted. Which statement is correct? a. Bob can sue for unliquidated damages but not commission. b. Bob and Charles must share the commission. c. Bob receives no commission and can do nothing about it. d. Bob is entitled to full commission
a. Bob can sue for unliquidated damages but not commission.
329. In order for a broker to appoint designated sales associates to represent the buyer and seller, all of the following conditions must be met, EXCEPT: a. It is a residential transaction. b. It is a nonresidential transaction. c. The buyer and seller must sign statements. d. The buyer and seller must have assets of at least one million dollars.
a. It is a residential transaction.
319. Which statement best applies to a ‚Planned unit development (PUD)? a. It provides a higher number of dwellings and maximum utilization of open areas. b. It typically includes only residential use. c. It requires areas to be left open for future growth. d. It is a less efficient use of land than other types of communities.
a. It provides a higher number of dwellings and maximum utilization of open areas.
380. A house valued comparably to all houses in the neighborhood was assessed at a tax base $5,000.00 less than the others. Excluding any special tax exemptions, what should the property sell for? a. Less than the others b. More than the others c. Same as the others d. The property will not sell at all
a. Less than the others
326. What is the role of the local planning agency in matters concerning site planning, subdivision plat approval, and sign acceptability? a. Makes recommendations that are subject to the local governing body b. Is accountable to no other authority c. Has no authority d. Is not concerned
a. Makes recommendations that are subject to the local governing body
304. In the case of eminent domain, what should the owner expect to receive? a. Payment of fair compensation b. No compensation c. Payment of 50% of market value d. Payment of whatever they feel is appropriate
a. Payment of fair compensation
375. Which of the following could be an example of external obsolescence? a. The architectural design of a building b. A zoning change in the area c. Pealing palaton the exerion o the building d. An outdated oil-burning range in the kitchen
b. A zoning change in the area
333. What is the primary reason for the increased need for property managers over recent years? a. Farming b. Absentee ownership c. Stricter license law d. Channeling
b. Absentee ownership
330. All REALTORS are licensees, but not all licensees are REALTORS. What must a licensee do to become a REALTOR? a. File with FREC b. Become a member of a local Association of REALTORS c. Complete a FREC educational program d. Complete 45 hours of post-license education
b. Become a member of a local Association of REALTORS
301. Which covenant in a deed assures the grantee that there are no claims or liens on the property other than those specifically listed on the deed? a. Warrant of quiet enjoyment b. Encumbrance clause c. Seizin clause d. Warrant of further assurance
b. Encumbrance clause
364. All of the following are tools used by the Federal Reserve to control the money supply, EXCEPT: a. Changing the discount rate b. Setting fiscal policy c. Opening market operations d. Changing the reserve requirement
b. Setting fiscal policy
131. What does the term "follow-up" refer to in the real estate industry? a. A broker following up on his sales associates b. Staying in touch with a customer after the sale c. FREC following up on legally sufficient complaints d. Sales associates keeping up with "for sale by owners"
b. Staying in touch with a customer after the sale
378. Which principle of value indicates that the value of a property is sustained when the property is harmoniously used with surrounding properties in the same area? a. Contribution b. Conformity c. Balance d. Highest and best use
b. conformity
382. An appraiser is appraising an apartment building in a college town and finds that the students' leases are below the market. What type of rental income would the appraiser use to value the property? a. Gross rent b. Economic rent c. Contract rent d. Base rent
b. economic rent
216. A broker has a 90-day listing with Mr. and Mrs. Jones and shows the property to Mr. and Mrs. Smith prior to expiration of the listing. The Smiths show an interest in the property but go back north without making an offer. Next season, the Smiths are back and happen to meet Mr. and Mrs. Jones while shopping. After several meetings, the Smiths make an offer and purchase the property. The broker: a. Is the procuring cause of the sale and is entitled to a commission b. Is entitled to damages c. Is entitled to nothing d. May request FREC to interplead
c. Is entitled to nothing
325. Health ordinances are local laws and rules created to protect the general welfare of the citizens in the community. These could include all of the following areas of coverage, EXCEPT: a. Limitations on type and number of pets b. Restrictions and rules for outside burning c. Restrictions on the legal use of land d. Restrictions
c. Restrictions on the legal use of land
309. Which item creates a formal contract? a. An acknowledgment b. Signatures c. A written form d. A notary's statement
c. Written form
367. All of the following entities are secondary mortgage market participants, EXCEPT: a. Fannie Mae b. Freddie Mac c. Federal Reserve d. Ginnie Mae
c. the Federal Reserve
342. Complete the sentence. The maximum loan permissible for a VA loan is: a. $104.250 b. Determined by location c. Determined by the VA d. Determined by individual lenders
d. Determined by individual lenders
