Quizzes

Which of the following is a triggering term when used in advertising financing? A) "10% down" B) "financing available" C) "low monthly payments" D) "we work with all credit histories"

A) "10% down" Triggering terms include a specific payment, rate, or down payment amount that's used in advertising, which prompts the requirement for full disclosure of all the terms of a loan.

What's the annual interest on a $20,000 loan on which the interest rate is 6.5%? A) $1300 B) $130,000 C) $3076 D) $30,769

A) $1300 You can find the annual interest owed by multiplying the total loan amount by the interest rate (total X rate = interest).

What did the sellers originally pay for their property if they sold it for $268,550 and realized a 13% profit? Round to the nearest cent. A) $237,654.87 B) $243,671.43 C) $308,678.16 D) $334,516.65

A) $237,654.87 Take the sales price of the property divided by the total profit (100% +13% = 113%). Then divide $268,550 by 1.13.

Daisy in the drive-thru is a flower shop in a converted 2000 square-foot fast food building. Its annual rent amount is $15.25 cents per square foot with a triple net fee of two dollars per square foot. What's the monthly least payment? A) $2,875 B) $28,750 C) $3450 D) $34,500

A) $2875 Daisy's monthly rent is 2000 X ($15.25 + $2) = $34,500/12= $2,875

If a properties income value is $200,000 and it's earning a net operating income of $40,000, what is the cap rate? A) 20% B) 25% C) 40% D) 5%

A) 20% The cap rate is 20%. To calculate cap rate, divide the income by the property value. The formula is this is right = income divided by value.

How many decimal places should be displayed on your calculator? A) 5 B) 4 C) 3 D) 2

A) 5 Your calculator should be set to display at least five decimal places. Setting the calculator to display a minimum of 5 decimal places cuts back on rounding errors.

Under ______, landowners can be held responsible for the cleanup costs of hazardous waste, even if they did not cause the waste. A) CERCLA B) DECLRA C) SARA D) SEQRA

A) CERCLA Under CERCLA, landowners can be held responsible for the cleanup cost of hazardous waste, even if they did not create or cause the waste.

Construction projects that are funded by a federal agency will likely require an ________. A) Environmental impact statement B) Environmental investigation report C) Environmental management plan D) Environmental site assessment

A) Environmental impact statement The environmental impact statement is required by the National Environmental Policy Act.

What does the Financial Institutions Reform, Recovery, and Enforcement Act require? A) Federally related appraisals must be conducted by an appraiser, who is either licensed or certified by the state B) Federally related transactions need to be appraised C) Non-federally related transactions must be appraised by government employees D) Real estate licenses who perform appraisals must have a federal security clearance

A) Federally related appraisals must be conducted by an appraiser, who is either licensed or certified by the state

Marsha's title insurance policy was issued on closing day, which was June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will not be addressed in the schedule of exceptions? A) Marsha's second mortgage on the property, which she plans to get next January B) Marsha's unrecorded lease on the property C) Smith and Martin Building and Rehab's mechanics lien, which was filed

A) Marsha's second mortgage on the property, which she plans to get next January Title insurance typically covers events or claims filed on the public record before the title insurance policies affect date, but excludes disclosed and undisclosed easements

Which of the following is most susceptible to a predatory lender? A) a borrower with poor credit B) a family C) a minority D) an investor

A) a borrower with poor credit Borrowers with poor credit, are most susceptible to predatory lenders because these borrowers have fewer loan options for home buying.

Nina and Rob prepaid some of their interest to their lender when financing their new home what's this called? A) a buydown B) a down payment C) an adjustable rate mortgage D) an interest-free loan

A) a buydown With a buy down, the borrowers pay a lump sum to buy down the interest rate, lowering their monthly payment.

What's depreciation? A) a decrease in property value B) an increase in property value C) a refinancing strategy D) paying off of a loan overtime

A) a decrease in property value Depreciation is a decrease in property value. This may not equate to an actual loss of value, however, because it relates to perceived building deterioration. Deterioration is used by investors as a tax management tool.

Rhonda and her husband filed for bankruptcy five years ago. They want to purchase a new house but don't have the best credit score. They've decided to buy the home using an FHA loan. Which of these is a true statement? A) a minimum down payment of 3.5% is required B) mortgage insurance is not required C) the loan-to-value ratio must be less than 80% D) they must have PMI

A) a minimum down payment of 3.5% is required Borrowers with an FHA loan must pay a minimum down payment of 3.5% and have MIP. Private mortgage insurance (PMI) applies only to conventional loans.

Giselle Web is three months behind in her rent and has received several reminders from the landlord that the rent is past due. Unbeknownst to Giselle, the landlord's begun working through proper channels to legally end Giselle's lease before the contract end date. The landlord is terminating Giselle's lease through _______________. A) actual eviction B) constructive eviction C) expiration D) mutual agreement

A) actual eviction The landlord is attempting to remove Giselle through a suit for possession. Through this process of actual eviction, the tenant is forced to vacate the premises, and the landlord regains possession of the property.

A comparable property sold one month ago for $400,000. That property has a three car garage, whereas the subject property you're preparing to list only has a two car garage. What should you do to determine the subject properties? Market value? A) adjust the comparables price down B) adjust the comparables price up C) adjust the subject price down D) adjust the subject price up

A) adjust the comparables price down To determine the value of a subject property, start with the comparables, selling price and adjust it from there. The comparable has a three car garage, not to like the subject property. Therefore, the comparable needs to be adjusted down.

With which type of mortgage does the interest rate vary according to a specified index? A) adjustable rate B) balloon rate C) fixed rate D) straight term

A) adjustable rate A loan with a rate that's adjusted, usually annually, based on the behavior of the economic index with which it is associated (e.g., the Consumer Price Index) is called an adjustable rate mortgage.

Which of the following is true about adverse possession? A) after meeting all the criteria for adverse possession, and individual automatically owns the property and can obtain a title B) an individual must either meet the criteria for adverse possession, or file a new deed at the county clerks office C) an individual who has permission to possess the property of another legally owns it after 20 years D) it allows you to receive title to a property by simply paying a nominal fee

A) after meeting all the criteria for adverse possession, and individual automatically owns the property and can obtain a title After meeting all the criteria for adverse possession and individual automatically owns the property and can obtain a title

Which of the following is a downside of automated underwriting? A) allowances for special circumstances can't be made B) closing costs are reduced C) it makes the process of underwriting much faster D) there is no chance of personal prejudice entering into the decision

A) allowances for special circumstances can't be made With a computer making the decision, there is no human element, which means there is no one to make allowances for special circumstances.

What is the three-property rule as it relates to tax-deferred exchanges? A) an investor can identify up to three replacement properties, and not encounter a restriction regarding fair market value, as long as debt load requirement is met B) an investor cannot exchange into more than three properties per exchange C) an investor can only perform an exchange with three properties D) an investor must own three properties before they qualify for tax-deferred exchanges

A) an investor can identify up to three replacement properties, and not encounter a restriction regarding fair market value, as long as debt load requirement is met

Which economic principle states that the value of property today is impacted by the current value of the total expected future benefits? A) anticipation B) conformity C) highest, and best use D) progression

A) anticipation Anticipation says that the value of property today is impacted by the current value of the total anticipated future benefits

Marsha made an offer of $325,000 on a home listed for $350,000. The seller accepted her offer. What service will her lender order to determine the home's actual value? A) appraisal by an appraiser B) assessment by the seller's agent C) estimate by her broker D) quote by property insurer

A) appraisal by an appraiser An appraisal by an unbiased appraiser will give her an estimate of the true (or fair market) value of what the home is worth

Which of the following would a home inspector note as a defect in a report due to its link to lung cancer? A) asbestos tiles in a basement B) cedar shake siding C) copper water pipes D) old linoleum tiles in a kitchen

A) asbestos tiles in a basement Asbestos decays, and when it's disturbed, it becomes friable. Once it's friable, it releases particles into the air. When inhaled, these particles can damage the cells that line the lungs. Long-term exposure can lead to lung cancer.

Which deed type may come with or without covenants of warranty? A) bargain and sale B) full covenant and warranty C) quitclaim D) referee's

A) bargain and sale A bargain and sale deed may come with or without covenants of warranty. Generally, bargain and sale deeds are known for not containing warranties.

Besides the federal rules, which Texas entity, or entities set for the state rules surrounding kickbacks? A) both TREC and the TDI B) Texas Association of REALTORS C) Texas Real Estate Commission D) The Texas Department of Insurance

A) both TREC and the TDI In addition to the federal prohibitions against kickbacks to real estate licensees, Texas has its own set of rules, addressing kickbacks. Both TREC and the TDI have established prohibition.

Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission? A) both you and Barry B) neither you nor Barry C) only Barry, as

A) both you and Barry Licenses are responsible for disclosing known environmental issues. To not disclose something that you know about leaves you as well as the seller open to a lawsuit.

How can a foreclosure process be temporarily stalled? A) by filing for chapter 7 bankruptcy B) by fleeing the state C) by paying off all debts D) by request

A) by filing for chapter 7 bankruptcy Both chapter 7 and 11 bankruptcy filings can temporarily stall the foreclosure process.

Michelle and Ben are in the market for a new home. Before getting too far into their search, they start by visiting a mortgage broker to learn more about the mortgage terms they may qualify for and compare mortgage options. What type of system is the mortgage broker using to support this? A) closed CLO B) MLS C) open CLO D) quid pro quo

A) closed CLO Closed CLO's are assessed through an intermediary such as a real estate or mortgage professional.

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed the highest priority? A) conditions of sale B) location C) market conditions D) physical characteristics

A) conditions of sale The elements appraiser consider in the sales comparison approach are applied in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Which of the following is defined as what it would take to recreate a property if it disappeared off the face of the earth today? A) cost B) insurance C) price D) value

A) cost Replacement cost is the entire term. The cost approach works with this idea: What would it cost to replace the building on the land as it is now?

A ________ is a method of conveying real property from one party to another. A) deed B) power of attorney C) promissory note D) recordation

A) deed A deed is a method of conveying real property from one party to another. A deed should be recorded to protect the parties interest.

Joe Bob is the grantor of a deed, and is in the final stages of transferring a deed to the new owner, Frank. What must Joe Bob do in order to satisfy delivery and acceptance of the deed to Frank? A) deliver the deed to Frank, his agent or attorney, or the title company issuing the title B) get Frank's signature on the official acceptance, letter, notarized, and recorded at the county clerks office C) send the deed via certified mail so that the shipment is officially tracked D) submit deliver

A) deliver the deed to Frank, his agent or attorney, or the title company issuing the title Joe Bob has to deliver the deed to Frank, his attorney or agent, or the title company issuing the title and acceptance is presumed.

Ricardo has left a gift of real property in his will to his son, Juan. Ricardo is the ____________ and Juan is the ______________. A) devisor, devisee B) devisor, legatee C) legator, devisee D) legator, legatee

A) devisor, devisee The devisor is the one giving the gift of real property by will, and the devisee is the recipient of the gift of real property by will.

How do you calculate the monthly rate for annual taxes using a statutory year? A) divide by 12 B) divide by 360 C) divide by 365 D) multiplied by 12

A) divide by 12 Whether using a statutory or Calendar year, there are 12 months in a year. Divide the annual taxes by 12 to get the monthly rate.

Which one of the following options provides three valid examples of a private land use control? A) easement, lien, deed restriction B) eminent domain, taxation, easement C) lien, subdivision regulation, mortgage D) subdivision regulations, taxation, eminent domain

A) easement, lien, deed restriction Private land use controls limit the use of the land. It's possible to restrict the land without impacting its use.

Under what type of police power is a property owner compensated for the loss of a property? A) eminent domain B) escheat C) riparian D) taxation

A) eminent domain Under eminent domain, a property owner is compensated for the loss of property.

In Texas, which type of leasehold last for a defined time period and automatically terminates when that period? A) estate for years B) periodic estate C) tenancy at sufferance D) tenancy at will

A) estate for years An estate for years is a leasehold estate in which the right to possession of a property is granted for a defined period of time and automatically terminates when that period ends.

Which term refers to a person receiving title, often called the "party of the second part," in a deed? A) grantee B) grantor C) notary public D) witness

A) grantee The person receiving the title, second (after the grantor) is referred to as the grantee, or "party of the second part," in a deed.

Because these types of properties have both specific physical and complex operational requirements, they are usually handled by more experience real estate professionals. A) industrial B) leisure C) residential D) retail

A) industrial Because industrial properties have both specific physical and complex operational requirements, they are usually handled by more experienced real estate professionals.

Which of the following is the cost of replacing a building in the case of total loss? A) insured value B) investment value C) mortgage value D) value in use

A) insured value Insured value should be the cost of replacement in the event the property's destroyed

Which of the following describes a deed restriction? A) it can be placed on a single property, an entire subdivision, or neighborhood B) it ensures compliance with zoning and public safety and preserves property value C) it must be placed by the property owner within one year of purchasing the property D) it's limited to three years in duration

A) it can be placed on a single property, an entire subdivision, or neighborhood A subdivision developer may place deed restrictions prior to offering properties for sale.

Why is it important to help estimate buyers closing cost? A) it helps buyers determine what they can afford and what a home purchase costs B) it helps. Sellers negotiate the contract. C) it provides a comparison for the loan disclosures they'll receive D) it's a requirement for both regulatory agencies and the NAR

A) it helps buyers determine what they can afford and what a home purchase costs Neither regulatory agencies nor NAR require that licenses help buyers estimate, closing costs, though some brokerage firms may require or encourage it. Estimation is usually provided as a way of helping buyers determine affordability.

Which practice involves talking the consumer into refinancing over and over so a lender can charge fees? A) loan flipping B) poison lending C) premeditated lending D) turnover lending

A) loan flipping Loan flipping is a tactic that predatory lenders use.

You want to become a planned unit development (PUD) property manager. What is an area of responsibility that you will undertake? A) managing maintenance, landscaping, security issues, and concerns, and enforcing the regulations B) overseeing the construction of commercial buildings C) paving the way with municipal agencies and other local organizations to embrace the development project D) working primarily with lenders and investors

A) managing maintenance, landscaping, security issues, and concerns, and enforcing the regulations PUD, property, managers, handle maintenance, landscaping, security issues, and concerns, as well as regulation enforcement.

Mick focuses on originating mortgage loans at a company that has in-house loan processors and underwriters. The options he offers consumers are limited to the products his company offers. What's Mick's position? A) mortgage banker B) mortgage broker C) mortgage servicer D) real estate investor

A) mortgage banker Mortgage bankers work for institutions that have in-house, processors and underwriters, allowing them to lend money fairly quickly, but their lending options are generally limited to their own suite of products .

Jacob wants to give a written termination notice to his month-to-month tenant. How much notice must he give the tenant? A) one month B) one week C) three weeks D) two weeks

A) one month In TX, the landlord must provide one month's written notice for a month-to-month tenancy unless the contract specifies otherwise.

Which of the following types of tenancy comes with an automatic renewal clause? A) periodic estate B) tenancy by a service member C) tenancy from month to month D) written estate for years

A) periodic estate In Texas, a periodic estate or tenancy at will automatically renews itself for successive tenancy unless one party terminates by giving proper advanced notice.

Which of the following is a top priority for a buy-and-hold investor? A) positive cash flow B) quick turnaround C) steep discounts on property D) very motivated sellers

A) positive cash flow The buy-and-hold strategy relies on positive, cash flow for long-term income, tax breaks, and depreciation to make money from the investment.

Which of these properties are exempt from the FIRREA federal appraisal guidelines? A) properties valued at $400,000 or less B) properties valued at $450,000 or less C) properties valued at $500,000 or less D) refinanced properties

A) properties valued at $400,000 or less

Identify the buyer's responsibilities at and before closing. A) supply a certified check in the amount needed to complete the purchase, the loan documents, and proof of homeowners insurance B) supply, the deed, conveying the property, an insurance policy, and the payoff statement C) supply, the deed, conveying the property, the title abstract, and proof of homeowners insurance D) supply the title abstract, affidavit of title, and a certified check in the amount needed to complete the purchase

A) supply a certified check in the amount needed to complete the purchase, the loan documents, and proof of homeowners insurance Some of the responsibilities of the buyer include supplying a certified check in the amount, needed to complete the purchase, the loan documents, and proof of insurance

Recently, Francine and her husband, Frank, decided to purchase and restore a historic home in the downtown area. To be eligible for the tax credit for these renovations, Francine and Frank must follow specific federal guidelines when they renovate and restore the home. In addition, the home must be designated as an actual historic property by which of the following? A) the Department of the Interior B) the Federal Housing Administration C) the Internal Revenue Service D) the U.S. Historic Gu

A) the Department of the Interior The Department of the Interior must have designated the property as an historic property, and it must be listed in the National Register of Historic Landmarks.

Who is responsible for obtaining a home inspection? A) the buyer B) the lender C) the seller D) the title insurance company

A) the buyer All buyers should be advised to obtain a professional home inspection to determine the properties condition.

What is the NOI divided by V = R used to calculate? A) the capitalization rate B) the rate of future growth C) the recapture rate D) the terminal value

A) the capitalization rate This is the formula to calculate a capitalization rate, which is the expected rate of return on investment.

Which of the following best defines capitalization rate? A) the expected rate of return on investment B) the rate at which assets depreciate overtime C) the rate of capital recapture D) the value of a business as an investment

A) the expected rate of return on investment A capitalization rate is the expected rate of return on an investment, and is based on the performance of comparable properties.

Which entity establishes zoning ordinances? A) the local governing body B) the planning board of appeals C) the state D) the zoning board of appeals

A) the local governing body The local governing body (town council, city council, village board, etc.) establishes zoning, ordinances with input from the planning board. The planning board lays out the zones of a community.

Jeff has filed a quiet title suit against Roger. What's the purpose of this suit? A) to clear up a cloud on tile B) to clear up a property line dispute C) to exercise his right to quiet and enjoyment of the property D) to prohibit the seller from releasing the buyers name

A) to clear up a cloud on tile A quiet title suit seeks to "quiet" (remove) claims against a properties title.

Which of the following scenarios accurately represents your environmental disclosure responsibility as a real estate licensee? A) you must disclose all known environmental hazards for both residential and commercial properties B) you must disclose all known environmental hazards for commercial properties; only residential disclosure is the seller's sole responsibility. C) you must disclose all known environmental hazards for residential properties only; commercial disclosure is the seller's

A) you must disclose all known environmental hazards for both residential and commercial properties Your responsibility as a real estate professional includes disclosure of all known environmental (or property condition) defects, regardless of the type of property.

Seller Misty tells you that she had some asbestos removed from her home three years ago. She asks if she needs to disclose it. What should you say? A) "no, it's not necessary to disclose asbestos that's been remove removed" B) "yes, you must disclose the current or past presence of asbestos" C) " you only have to disclose it if you didn't have a licensed professional remove it" D) " you only have to disclose it if the buyer asks about it"

B) "yes, you must disclose the current or past presence of asbestos" In most states, sellers are required to disclose any past or present asbestos in a home.

Giant Industries has a $674,232 gross operating income, operating expenses of $329,129, and other expenses totaling $38,719. What is the net operating income? A) $306,384 B) $345,103 C) $383,822 D) $635,513

B) $345,103 The formula for finding net operating income is: gross income - operating expenses = net operating income. So, $674,232 - $329,129 = $345,103. Other expenses, like loan interest and debt repayments, aren't included in this calculation.

A buyer put down $50,000 towards the purchase price, financed the rest, and now has a cash flow of $10,000 after repairs and debt service. What is the buyers ROI? A) 15% B) 20% C) 24% D) 28%

B) 20% Return on investment or ROI = cash flow, divided by cash investment. $10,000 divided by $50,000 = 20%

Which of Texas's adverse possession statutes is the absolute bar against the claims of others? A) 10-year limitations period B) 25-year limitations period C) 5-year limitations period D) 3-year limitations period

B) 25-year limitations period Under the 25-year limitations period statute, the adverse possessor must be in good faith, and have a recorded deed, the possession of which protects the holder against the claim of all others.

A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall? A) 12.59% B) 7.9% C) 8.67% D) 9.2%

B) 7.9% The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R). So $67,500 ÷ $850,000 = .079 or 7.9%. This formula can work in reverse as well: value (purchase price) × cap rate = net operating income (V × R = I).

Which act requires a property manager to send an adverse action letter to the rejected applicant if the decision to reject were based in whole or in part on the applicants credit score? A) Fair and Accurate Credit Transaction Act of 2003 (FACTA) B) Fair Credit Reporting Act (FCRA) C) Identity Theft Enforcement and Protection Act D) USA PATRIOT Act

B) Fair Credit Reporting Act (FCRA) This is an FCRA requirement. The adverse action letter must disclose the score, the date it was generated, which agency was utilized, and factors that adversely affected it.

Amy purchased a new home and obtained financing through a bank, called Natula Bank. Natula originated the loan, but before Amy's first mortgage payment was due, it sold her loan to CitiMortgage. As a loan originator, what market is Natula Bank operating in? A) Federal Reserve System B) Primary Mortgage Market C) Secondary mortgage market D) stock market

B) Primary Mortgage Market Lenders that operate loans operate in the primary mortgage market.

Which veteran loan program in Texas offers qualified veterans help with repairs on their current home? A) Texas Veterans Land Board B) Veterans Home Improvement Program C) Veterans Housing Assistance Program D) Veterans Land Program

B) Veterans Home Improvement Program The VHIP helps qualifying veterans compete repairs or home improvements on their current home. Remember that the "I" represents "improvements."

Before moving out, Texas tenant Adam failed to give sufficient notice to his landlady, Yolanda. Yolanda is so happy the lease agreement included that provision in bold type about tenants who failed to give sufficient notice, and what that means with regard to the security deposit. Given the situation, which of the following statements is true? A) Adam can expect to receive half his security deposit back B) Yolanda does not have to refund any of Adam's security deposit C) Yolanda has to refund

B) Yolanda does not have to refund any of Adam's security deposit Bylaw, landlords may also keep a tenants deposit if the tenant does not provide the required move out notice to the landlord.

Select the statement that accurately reflects the type of deed used for the transfer. A) a bargain and sale deed conveys property in a foreclosure proceeding B) a deed of trust convey real estate to a trustee for the beneficiary named in the deed C) the referee's deed conveys property from one spouse to another in a divorce proceeding D) a warranty deed convey REO property for the lender

B) a deed of trust convey real estate to a trustee for the beneficiary named in the deed A deed of trust conveys legal property title to a third-party trustee, who holds it for the beneficiary.

Which of the following statements is true regarding tenant's indemnity? A) a tenant has no indemnity concerns with regard to damages or losses to commercial property B) a tenants indemnity is usually limited to issues on the leased premises, and doesn't include claims or losses that arise when the landlord's or the landlord's agents' negligence or willful misconduct C) indemnity, provisions in the lease, rarely require that a tenant pay a landlord for damages in the event a claim is f

B) a tenants indemnity is usually limited to issues on the leased premises, and doesn't include claims or losses that arise when the landlord's or the landlord's agents' negligence or willful misconduct

A comparable residential property sold one month ago for $300,000. That property is on a busy street, whereas the subject property you're preparing to list is a corner lot on a quiet street. What should you do to determine the subject property's market value? A) adjust the comparables price down B) adjust the comparables price up C) adjust the subjects price down D) adjust the subjects price up

B) adjust the comparables price up To determine the value of a subject property, start with the comparables value (selling price) and adjust from there. A corner lot on a quiet street is valued higher than a property on a busy street. Adjust the comparables price to account for this.

What is dynamic risk? A) an insurable business risk that includes insuring for accidental liability, fire, theft, and vandalism B) an uninsurable business risk resulting from economic, tax, and market changes C) the risk that an investor cannot secure financing at an affordable rate D) the risk that is directly related to leverage

B) an uninsurable business risk resulting from economic, tax, and market changes Dynamic risk are those business risks that cannot be lessened with insurance.

Which of the following statements is true about appraisals? A) "appraisal" and "CMA" are interchangeable terms for a property valuation B) appraisals may only be performed by certified appraisers (with certain exceptions in some states) C) either certified appraisers or managing brokers, may perform appraisals D) real estate licenses may perform appraisals on foreclosed properties, but a certified appraiser must perform all other appraisals

B) appraisals may only be performed by certified appraisers (with certain exceptions in some states)

In which of the following does a new tenant take the place of a departing tenant, becoming solely responsible for the lease? A) actual eviction B) assignment C) constructive eviction D) sublease

B) assignment Under an assignment, the vacating tenant is released from his obligation under the lease, and a new tenant takes over the lease agreement.

The risk that an investor cannot secure financing at an affordable rate, is called ________ risk. A) Business B) capital C) financial D) leverage

B) capital A purchase can be put in jeopardy. If an investor cannot secure the financing needed at an affordable rate.

Which classification of appraisers can appraise all types of real property without regard for transaction value? A) appraiser trainee B) certified general appraiser C) certified residential appraiser D) licensed appraiser

B) certified general appraiser

Ensuring you've answered the word problem correctly is which of the following steps? A) analyzing B) checking C) choosing D) inserting

B) checking You should always check your answer to make sure it makes logical sense.

The amount covered by the new loan is a ______. A) credit to the brokerage B) credit to the buyer C) credit to the seller D) debit to the buyer

B) credit to the buyer The amount covered by the new loan is credited to the buyer towards the purchase price of the property.

Which of the following may an owner place on the land when it's sold to limit the use of the property? A) charter B) deed restriction C) lis pendens D) subordination agreement

B) deed restriction An owner may place a deed restriction on a property to preserve the use of the property, or to preserve the quality of the neighborhood.

Area vacancy rates have historically been around 15%, but have increased to 25%. Which of the following is a true statement? A) both supply and demand for rental space has increased B) demand for rental space has decreased C) demand for rental space has increased D) vacancy rates will soon return to the 15% average

B) demand for rental space has decreased When vacancy rates increase, demand has decreased. Vacancy rates are available through the US Census Bureau and local business development associations.

Mario lives in a state that requires an abstract of title for property conveyance. The chain of title is broken approximately 50 years prior to the current date. Which of these properly identifies the status of Mario's title? A) as long as the chain of title is traceable for at least, the past 30 years, Mario will have marketable title B) depends on his states. Laws, Mario may have marketable title. C) Mario will have to perform his own research to find information necessary for repairing the

B) depends on his states. Laws, Mario may have marketable title. If a link in the chain of title is broken, the attorney performing the search will branch out from public records to try to mend the link. State laws dictate how far back the chain must be unbroken for a title to be marketable.

Malcolm purchased an old convenience store, and after renovations will open a small vegan grocery. He paid $517,000, of which $417,000 was for the building, and renovations cost him $107,000. What does the amount $524,000 represent? A) cash position B) depreciable basis C) income baseline D) investment basis

B) depreciable basis The acquisition cost of an investment property plus any improvements or renovations is the investments depreciable basis.

Which of the following is a tactic used by a predatory lender? A) charging minorities lower interest rates B) encouraging debt C) refusing to loan to minorities D) selling mortgages on the secondary market

B) encouraging debt Predatory lenders take advantage of consumer naïveté to increase their debt while financing risky loans.

When it comes to landlord-tenants regulations, a property manager needs to know ________. A) architectural trends B) fair housing laws C) how much money all tenants have in their bank accounts D) the names of the tenants' children

B) fair housing laws

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first? A) conditions of sale B) financing terms and cash equivalency C) market conditions D) physical characteristics

B) financing terms and cash equivalency When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

In Texas, which deed type provides the strongest and broadest form of guarantee of title? A) bargain and sale deed B) full conveyance and warranty deed C) quitclaim deed D) referee's deed

B) full conveyance and warranty deed A full covenant and warranty deed provides all six covenants.

What two types of data does an appraiser gather? A) computer and hand-written B) general and specific C) old and new D) related and non- related

B) general and specific Appraisers gather general data about the economy and area, as well as specific data related to the property

An investor is analyzing a property by looking at its ability to produce future income. The property is a 10-unit apartment building. Which of the following would be used to determine this value? A) effective gross income B) gross income multiplier C) gross rent multiplier D) potential gross income

B) gross income multiplier Remember, rent has four letters. Gross rent multiplier is used for income-producing properties with four or fewer units. Properties with five or more units use gross income multiplier

Bryant is a professional who spends his days drafting plans for new communities. He must consider what these newly developed areas of town will require, including streets, and open areas like parks. In what profession does Bryant specialize? A) he's a developer B) he's a planner C) he's a real estate licensee D) he's in the zoning committee

B) he's a planner Bryant is in urban planner. In addition to spending his days drafting plans for new communities, he really enjoys researching sustainable infrastructure for water and other utility pipelines.

Joann purchased her house with a mortgage loan from her friendly neighborhood bank. Which of these most likely happened to Joann's loan soon after she received it from her bank? A) her bank foreclosed on the loan B) her bank, sold it on the secondary market as an investment product C) she received another loan on the secondary market when her bank demanded full payment D) she sold the loan on the primary market for a lower interest rate

B) her bank, sold it on the secondary market as an investment product Loan originators, like Joann's friendly neighborhood bank, generally sell their loans on the secondary market as an investment products. This keeps funds available to originate more loans.

Calculating the return on investment can be a part of determining a property's ________. A) assessed value B) investment value C) list price D) market value

B) investment value Calculating the return on investment can be a part of determining a property's investment value.

In Texas, leases have the implied covenant of quiet possession. What does this mean? A) landlord have to install soundproof in each apartment B) landlords must give the tenant actual possession of the leased premises C) tenants cannot run noisy appliances, or have loud parties between the hours of midnight and 8 AM D) tenants must agree to take possession of the property during the week and between normal work hours

B) landlords must give the tenant actual possession of the leased premises Implied covenant of quiet possession means that a landlord must give the tenant actual possession of the leased premises

What are the two types of real estate investment trust? A) debt and credit B) mortgage and equity C) mortgage and lease D) residential and commercial

B) mortgage and equity The two major investment choices for REIT's are mortgage and equity.

Darrel loves working in the mortgage lending industry. On a daily basis, he works with multiple lenders to find and negotiate the best deals for his customers. What is Darrel's profession? A) mortgage banker B) mortgage broker C) mortgage servicer D) real estate investor

B) mortgage broker Darrel is a mortgage broker. Brokers work with multiple lenders and aren't tied to a specific suite of loan products, as mortgage bankers may be.

Hunter Green is getting ready to move into a new apartment in a small town in west Texas. The landlord has already informed Hunter that she will require a security deposit from him and that the amount of the deposit will be equivalent to ______ rent. A) four months B) one month C) three months D) two months

B) one month In Texas, landlords normally ask for the equivalent of one month's rent for the security deposit.

In Texas, landlords normally ask for the equivalent of __________ for the security deposit. A) four months' rent B) one month's rent C) three months' rent D) two months' rent

B) one month's rent

Which phase of the environmental site assessment involves a review of the properties, history and examination of its physical features? A) phase III: clean-up B) phase I: investigation C) phase II: testing D) phase IV: management

B) phase I: investigation The first phase of the site assessment is when the property is reviewed and examined.

In which market do lenders that operate real estate loans operate? A) government market B) primary mortgage market C) Real estate investment trust market D) secondary mortgage market

B) primary mortgage market The primary mortgage market is where loans are made to consumers for they're bundled and sold on the secondary market

What information about the property is included in the Uniform Residential Loan Application? A) income B) property value C) survey D) taxes

B) property value The loan and property information section includes information, such as property address, number of units, loan, purpose, and property value.

Which type of property manager is most likely to work for real estate developers and investors? A) office B) real estate development C) residential D) retail

B) real estate development Real estate development property managers are most likely to work with real estate, developers and investors. They may or may not also handle the leasing of the building to tenants after the building's constructed.

Consideration is one element of a valid contract. In a lease, which of the following does the lessee give as consideration? A) possession B) rent C) term D) use

B) rent In a contract, the consideration is something of value each party gives through the agreement.

For loan prequalification, what do lenders base their estimates on? A) a borrower's FICO score B) the accuracy of a borrower's disclosures C) the loan to value ratio D) the property's estimated value

B) the accuracy of a borrower's disclosures Prequalifying is based on what a borrower chooses to disclose to a loan officer or broker about such issues as their regular income, credit, score, total assets, and available down payment funding.

Which of the following closing activities occurs prior to closing? A) a number of contracts are signed by the parties in attendance at the closing, such as the mortgage, loan commitment, and the title insurance contract B) the buyer obtains a binder for homeowners insurance coverage on the new home C) the buyer provides closing funds to the seller D) the seller is paid the balance of the purchase price

B) the buyer obtains a binder for homeowners insurance coverage on the new home Before closing, the buyer obtains a binder for insurance coverage on the new home

Marsten is the personal representative for his grandmother's estate. After her death, he learns that he can't distribute the estate's property until after the will goes through probate. What does this mean? A) Marsten must apply through the courts to manage his grandmother's estate B) the court, must determine the wheels validity and supervise distribution of the estate C) the courts must contact all potential errors to learn of their wishes, recording distribution of the estate D) the court

B) the court, must determine the wheels validity and supervise distribution of the estate The executor carries out the provisions of the will and sees the property distribution after the will has been through probate.

Let's say you take out a 30-year adjustable rate mortgage loan with a five-year interest-only payment period. How long will you make interest-only payments? A) the final 25 years B) the first 5 years C) the first year D) the full 30 years

B) the first 5 years The interest-only payments will be made for the first five years. After that, you'll be paying both principal and interest.

Who, or what entity requires the property to be free and clear of encumbrances and requires that title insurance and hazard insurance be provided at closing? A) the broker B) the lender C) the seller D) the title insurance representative

B) the lender The property is the underlying collateral for the loan; therefore the lender wants to know that it's free of encumbrances-or, if encumbrances exist, they're known and have minimal impact on the value of the property.

When completing a CMA, what might be indicated if a comparable property had a quick sale? A) it's a buyers market B) the market for similar homes is good C) the other agent was incompetent D) the property was priced too high

B) the market for similar homes is good

In situations where a least property is sold, and the tenant have been notified of the transfer of their security deposits, who is responsible for refunding the security deposit when the tenants leases are up? A) no one. Tenants must forfeit their security deposits B) the new owner C) the original owner D) the original owner and new owner share joint responsibility

B) the new owner The new owner assumes this responsibility. The seller is responsible for ensuring that the new owner sends written notification to the tenants, letting them know that the security deposits are now in the new owners hands.

What is financial risk? A) the risk that an investor cannot secure financing at an affordable rate B) the risk that is directly related to leverage C) the risk that the property has a bad location D) the risk that the required return on investor capital will not be met

B) the risk that is directly related to leverage The more money and investor leverages (or borrows), the greater the financial risk.

When a buyer assumes the sellers current loan, what is the purpose of an estoppel certificate? A) to establish the relationship between the buyer and the sellers lender B) to show the balance due on the loan C) to show the balance owed at closing D) to show the total purchase price

B) to show the balance due on the loan An estoppel certificate is used when a buyer assumes the sellers existing loan to show the balance due on that loan.

CERCLA created a super fund partially funded by taxes from the chemical and petroleum industries. When would super fun monies be applied to the cleanup of hazardous materials? A) when more than one party is found, responsible, to avoid litigation B) when responsible parties cannot be found C) when responsible parties, do not wish to pay D) when the site is on public land

B) when responsible parties cannot be found The Comprehensive Environmental Response, Compensation and Liability Act created a Superfund to provide for cleanup of hazardous waste sites when a responsible party cannot be identified.

What phrase or words are required on a deed, and are considered an "act of conveyance"? A) " between _______ and _______." B) "forever and always" C) "grant and convey" D) "witnesseth and acknowledged"

C) "grant and convey" The phrase, "grant and convey," or either word must be on a deed as part of the granting clause, and is considered as the act of conveyance.

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell? A) $150,000 B) $300,000 C) $315,789 D) $450,000

C) $315,789 In order to calculate this, start with 100% minus a 5% commission, which is 95% or .95. Take $300,000 and decide this amount by .95.

Yasmin listed a house at a 6% commission rate, and it just sold for $463,500. Her brokerage and the buyer's agent's brokerage split the commission equally between them. Then Yasmin, who has a 60/40 commission split with her broker (Yasmin gets the higher split), took her check to the bank. How much did Yasmin earn from this transaction? A) $5,562 B) $6,909 C) $8,343 D) $9,200

C) $8,343 The total commission from the sale was $27,810 ($463,500 x 0.06). Split with the buyer's broker, Yasmin's firm's share is $13,905 ($27,810 divided by 2). Yasmin's 60% share of the firm's commission works out to $8,343 ($13,905 x0.06).

Jared has a 70/30 split with his brokerage firm, and his firm has a 50/50 split with cooperating brokerages. Last month, he was paid $12,239.50 in commissions from his home sales, which totaled $538,000. Assuming every transaction for the month was shared with a cooperating brokerage, what is Jared's brokerage's commission rate? A) 2.3% B) 3.8% C) 6.5% D) 7.6%

C) 6.5% Jared was paid $12,239.50, which is 70% of the amount paid to his broker as commission. That makes his firm's commission $12,239.50 divided by .70 =$17,485. Multiply that by two for the total commission the firm grossed, since it's shared 50/50 with a cooperative brokerage (the brokerage that brings the buyer to the sale), giving you $34,970. Then divide by the total sales amount for the brokerage's commission rate: $34,970 divided by $538,000 = 0.065, or 6.5%.

Any financial institution with deposits that are insured by a federal government agency can sell mortgages to which institution? A) Fannie Mae (FNMA) B) Farmer Mac C) Freddie Mac (FHLMC) D) Ginnie Mae (GNMA)

C) Freddie Mac (FHLMC) Any financial institution with deposits that are insured by a federal government agency can sell mortgages to Freddie Mac (FHLMC or the Federal Home Loan Mortgage Corporation)

Property owner Susan, and property manager Phil just entered into a property management agreement. Which of the following is NOT something that would be addressed in the agreement? A) fees, the property manager will charge tenants B) fees to be paid by the owner C) Phil's power to sell the property without consulting Susan D) the extent of the managers authority to act for the owner

C) Phil's power to sell the property without consulting Susan Phil has the ability to make day-to-day decisions regarding the property, but he can't sell or refinance it without getting Susan involved.

Which of the following describes a buydown? A) ABC Lending charges origination points and offers a 4.5% rate. B) Buyers pay the seller a prepaid lump sum prior to closing to reduce the sales price. C) Your clients opt to pay their lender two discount points in a lump sum so they can lock in a reduced interest rate. D) Your seller's pay some of the buyers closing costs so the buyer can put more money to their down payment.

C) Your clients opt to pay their lender two discount points in a lump sum so they can lock in a reduced interest rate. With a buydown, the borrower pays a lump sum to the lender to buy down the interest rate, lowering their monthly payment.

Cheri is the lessee of a house with a detached garage. Harriett has leased only the garage from Cheri. However, Cheri remains bound by the terms of the lease agreement with the lessor. This is an example of _______. A) an actual eviction B) a novation C) a sublease D) constructive eviction

C) a sublease A sublease is a lease by a tenant or lessee of part or all of leased premises to another person but with the original tenant retaining some right or interest under the original lease. The lessee remains responsible to the lessor. Many leases prohibit subletting without the lessor's permission.

How does the Fed maintain a balanced economy? A) by limiting the number of loans a bank may originate B) by purchasing loans on the secondary market C) by regulating the flow of available funds and interest rates D) by shutting down the stock market

C) by regulating the flow of available funds and interest rates The Fed maintains a balanced economy through reserve requirements and discount rates.

The risk that is directly related to leverage is called ________ risk. A) business B) capital C) financial D) leverage

C) financial The more money and investor, leverages (or borrows), the greater the financial risk.

Which of these is a static risk? A) a decline in economic conditions in the area B) changes in tax code C) fire damaging the building D) market change

C) fire damaging the building Static risks are those where the effects can be lessened with insurance. This includes vandalism, theft, fire, and accidental liability.

Lisa purchased an older home with a large backyard that's perfect for her pack of collies to romp in. Six months after she bought the property, a total stranger knocked on her door and told her he's the true property owner. After investigating, it turns out the person who sold Lisa the property had forged the deed without the true owner's knowledge. What's true about Lisa's situation? A) her homeowners policy may protect her from loss B) her lender must initiate a quiet title action to resolve

C) her title insurance policy may protect her from loss Title insurance policies are used to cover the policyholder from losses, such as forged documents, that later put ownership into question.

In the case of adverse possession, possession and use of a property must be open and notorious. What else must it be? A) discontinuous B) friendly C) hostile D) reasonable

C) hostile The possession of the property must be without permission of the owner, or "hostile."

Identify the purpose of the appraisal leads the appraiser to do what next? A) determine highest and best use B) estimate value of land C) identify data needed D) use three approaches to estimate value

C) identify data needed The first step is to state the problem, so the appraiser can then identify the data that is needed

Which one of the following statements about investors and tax depreciation is true? A) depreciation is not limited to investment properties B) investors are not allowed to take a business production for annual depreciation C) investors can depreciate an appreciating asset D) most investors try to avoid depreciation

C) investors can depreciate an appreciating asset

Richard just purchased 200 acres of timber land. He initially wanted his nephew, licensee Randy, to help with the purchase, but Randy suggested Richard find a broker who specialized in farm, ranch, and other land sales. What benefits timberland offer? A) land with grass B) land with oil C) land with trees D) land with water

C) land with trees Timberland refers to land with trees. As a specialist in timber land, a licensee would want to know all there is to know about land and the included rights.

What information does the loan estimate provide to buyers under required disclosures law? A) broker commission rates B) final closing costs C) loan payment schedule D) referral fees

C) loan payment schedule Lenders provide the loan estimate within three days of receiving a borrowers application. Borrowers receive final closing cost information (on the closing disclosure) three days before closing.

In a sublease situation in Texas, who has the right to evict the sublease? A) either the landlord or the original tenant B) only the landlord C) only the original tenant D) sublessees cannot be evicted

C) only the original tenant Only the original tenant can evict a sublessee.

What might the government do if property owners failed to pay taxes on their property? A) do nothing B) evict those living on the property C) place a lien on the property D) take ownership of the property

C) place a lien on the property Unpaid taxes become a lien on real estate.

A _________ is made when a property is sold for more than the original price. A) loss B) net to seller C) profit D) proration

C) profit In order to make a profit, you must sell the property for more than you originally paid for it. The profit is the difference between amount paid and amount received.

Jasmine has a tendency-at will lease agreement with her landlord. How much notice must she give her landlord when she's ready to terminate the lease? A) 30 days B) none C) proper advance notice D) two weeks

C) proper advance notice A Texas tenant may terminate-at-will lease agreement with proper advance notice.

What does a mortgage real estate investment trust invest in? A) lease contracts B) personal property C) real estate debt D) real estate property

C) real estate debt Mortgage REIT's don't buy properties, but instead invest in real estate debt, primarily commercial and residential mortgage-backed securities

Which of these types of tenants most often uses a percentage lease? A) manufacturing B) residential C) retail D) triple net

C) retail Percentage leases are used most often with retail tenants. Tenants pays a percentage of their income, realized from retail activities to offset lower rent.

John recently bought a home on a few acres of land from the Rubinos. The EPA, notified him that a hazardous material site had been discovered on the outskirts of his property. After an investigation, the EPA determined that both John and the Rubinos are responsible for sharing the cost of the cleanup. What type of liability is this? A) joint and several B) limited C) retroactive D) strict

C) retroactive Both the current and prior owners have been found liable, which is an example of retroactive liability.

Which of the following key players attends closing to grant property to the buyer and receives payment? A) buyer B) buyer's agent C) seller D) seller's agent

C) seller The seller attends closing to grant property to the buyer and receive payment.

In Texas, how many days after a tenant moves in does a landlord have to re-key and test all key-operated devices? A) five B) one C) seven D) three

C) seven Landlords must re-key and test all key-operated devices-at the landlord's own expense-no later than the seventh day after a new tenant moves in.

What's a fraction? A) a fixed charge B) part of 100 C) something that's divided into a number of equal parts D) the loan amount

C) something that's divided into a number of equal parts A fraction is something that's divided into a number of equal parts. For instance, 2/3 is two equal parts; each is one third.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) created a _________ to clean up, hazardous waste sites and respond to spills that may endanger public health or the environment. A) campaign B) committee C) superfund D) task force

C) superfund In 1980, Congress established CERCLA as a superfund to clean up hazardous waste sites and health and environmental hazards.

Your buyer client, Harry, is making an offer on a house that uses an HVAC system manufactured in 2005. What's important about this? A) because the system is older, Clean Air Act regulations require Harry to carry extra homeowners insurance as a condition of its mortgage. B) Clean Air Act regulations require Harry to replace the HVAC system, which is too old to operate legally C) the EPA likely prohibits the refrigerant used in such an old system, so Harry's home warranty may not cover neces

C) the EPA likely prohibits the refrigerant used in such an old system, so Harry's home warranty may not cover necessary repairs Because the system was manufactured prior to EPA prohibition of the refrigerant Freon, Harry's home warranty, may not cover certain repairs.

Which of the following is a true statement about U.S. Department of Veterans Affairs loans? A) all properties are eligible B) all veterans are eligible C) the VA will guarantee a loan based on the sales price or the certificate of reasonable value (CRV) D) VA loans can be used for investment properties

C) the VA will guarantee a loan based on the sales price or the certificate of reasonable value (CRV) When granted, the loan guarantee amount is limited by either the CVR, or the sales price, whichever is lower.

The capitalization process uses a capitalization rate, which is based on what? A) estimates of future sales B) last year's sales C) the performance of comparable properties D) the stock market

C) the performance of comparable properties The capitalization rate is based on the performance of comparable properties. It's the expected rate of return on an investment and can be calculated using the formula of NOI divided by= R

In a 1031 exchange, there are rules governed by Section 1031 of the Internal Revenue Code. The rules include _______. A) the basis of the original property is canceled B) the new property must be lower value than the relinquished property C) the property in an exchange, must be like-kind D) the replacement property Hass to come with less debt load

C) the property in an exchange, must be like-kind Like-kind is a requirement. The replacement property has to come with the same or greater debt load for the investor and the basis of the original property carries over to the new property. It must also be a non-owner owner-occupied (investment) property.

Consider the travel, tourism, and hospitality industry for a moment. Visiting the best beaches? No problem. Now consider acting as a real estate licensee specializing in resort and vacation properties. It's a whole different beach volleyball game, right? What type of information should licensees know and understand before they can competently represent clients in this specialty area? A) how to dodge those annoying two hour timeshare meetings B) the best prices during hurricane season C) the reg

C) the regulations for timeshare properties and vacation rentals It is critical that licenses working with resort properties and vacation rentals have a thorough understanding of the laws and regulations that apply to these properties and transactions timeshare laws are only part of the requirements that a licensee in this area should know.

Who usually pays the broker commission? A) the buyer B) the lender C) the seller D) the title company

C) the seller The seller usually pays the broker commission from the proceeds of the sale.

When you use a comparative market analysis to calculate a suggested listing price range for a particular property, which of the following actions will you take? A) adjust prices from all properties, listed or sold within a 1 mile radius of the subject property B) calculate a price range, based on data from expired listings and pending sales C) use adjusted prices from comparables and refine a range, using active listings, expired listings, and possibly pending listings D) use the price of sold comparable and active listings, adjusted for time listed

C) use adjusted prices from comparables and refine a range, using active listings, expired listings, and possibly pending listings

A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value? A) $100,000 B) $20,000 C) $200,000 D) $25,000

C. $200,000 The formula is : income divided by capitalization rate= value (I /R= V). Remember to convert the 15% to a decimal by moving the decimal point over two places to the left : $30,000 / .15 = $200,000

Smalltown is building a new interstate exchange to facilitate access to shopping and restaurants. In order to do so, it purchased two homes and tore them down so the ramps to and from the interstate could be constructed. What principal allowed Smalltown to do this? A) abandonment B) doctrine of laches C) eminent domain D) escheat

C. Eminent domain Eminent domain is the power of the government to take private land for public use.

Which type of payment is made at the end of the term for a balloon mortgage? A) amortized B) interest-only C) lump sum D) tax free

C. Lump sum A lump sum payment is made at the end of the loan terms, unless the borrower sells or refinances the home.

What type of investment strategy is most similar to a 1031 tax-deferred exchange? A) buy and hold B) fix and flip C) rolling over funds from one IRA into another D) wholesaling

C. Rolling over funds from one IRA into another The 1031 exchange is similar to rolling over retirement funds the investor rules over the capital gains from the sale of one property into the purchase price of the next property deferring (but not avoiding) taxes on that gain.

Ezra's listing sold for $100,000. His commission rate was 4%, and the property appraised at $95,000. What's Ezra's commission before splits or sharing with the cooperating agent? A) $1,900 B) $2,000 C) $3,800 D) $4,000

D) $4,000 Commissions are based on sales price, not appraised value or list price, and 4% of $100,000 is $4,000.

A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)? A) 0.125 B) 125 C) 1.25 D) 12.5

D) 12.5 Calculate GIM by dividing the $5 million sales price by the $400,000 gross annual income: $5 million / $400,000= 12.5

The Loan Estimate must be provided to the consumer within ________ days after they apply for a loan. A) 5 B) 9 C) 7 D) 3

D) 3 The lender must provide the Loan Estimate no later than three days after the consumer applies for a loan.

You're working with buyers who are preapproved for a loan up to $90,000. If they estimate paying $525 per month toward interest, what interest rate are they assuming? A) 171% B) 43% C) 6% D) 7%

D) 7% You can find the interest rate by dividing total interest paid by the loan balance. So $6,300 (which we get by taking $525 per month times 12 months per year) is divided by $90,000.

Who grants title to the property being sold and receives payment? A) attorney B) broker C) buyer D) Seller

D) Seller The seller grants title to the property being sold and receives payment in return.

CERCLA was amended in 1986 to exempt certain landowners from liability for Cleaning up hazardous contamination on their property. That amendment is called the _______. A) Environmental Responsibility Amendment B) Fair Housing Act C) Hazardous Contamination Amendment D) Superfund Amendments Act Re-authorization Act

D) Superfund Amendments Act Re-authorization Act The SARA says that certain landowners-deemed "innocent" -aren't responsible for cleanup of hazardous contamination on their property.

Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy? A) the covenant against encumbrances B) the covenant of seisin C) the covenant of the right to convey D) th

D) The covenant of warranty - The covenant of warranty assures that the grantor will warrant and defend the title against the lawful claims of others.

Victor bought a property from Yolanda for $200,000. Under the terms of a land contract Victor agreed to pay Yolanda in monthly installments of $4000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title? A) a trustee B) Victor C) Victor's beneficiary D) Yolanda

D) Yolanda The seller retains the title in a land contract. When the loan balance is paid in full, the seller gives the buyer title.

David is an active duty member of the US Air Force. Assuming he and the property meet the qualifications, which type of mortgage may be the best option for him? A) a conventional loan B) a Ginnie Mae-originated loan C) an FHA loan D) a VA-guaranteed loan

D) a VA-guaranteed loan A VA-guaranteed loan may be a good option for David as an active duty member of the armed forces.

What is a government sponsored enterprise (GSE)? A) a member-based cooperative that provides credit for loans B) an association that takes in savings deposits and lends out through loans C) a national bank that offers consumer and business loans D) a privately held financial services company with a public purpose

D) a privately held financial services company with a public purpose

Which of the following provides an opinion of list price range by looking at recently sold properties, comparing current competing properties and properties that didn't sell, and estimating buyer appeal regarding the style, location, and size? A) appraisal B) broker price opinion C) collective market analysis D) comparative market analysis

D) comparative market analysis

Brandy is going to purchase a strip mall. She is trying to determine exactly how much to borrow for this purchase. She understands that the more she borrows, the greater her risk. What type of risk is she evaluating? A) business risk B) Capital risk C) dynamic risk D) financial risk

D) financial risk The more money and investor leverages, (or borrows), the greater the financial risk

The Johnsons have owned a small restaurant for more than 20 years. It's open for lunch and dinner six days a week, and 80% of its weekday revenue comes from the happy hour, drink and appetizer specials. The town in which their restaurant is located recently constructed a new Middle School and stripped the liquor license from the Johnson's restaurant, because it no longer complies with the ordinance to be 500 feet from the school property. The Johnsons have accused the town of ___________. A) condemnation B) eminent domain C) escheat D) inverse condemnation

D) inverse condemnation Inverse condemnation occurs when a properties value is negatively affected by a government regulation, but the owner is not offered just compensation, according to the requirements of the Taking Clause.

Which classification of appraiser can perform appraisals of simple residential one- to four-unit properties with a value less than $1 million, but not of properties with greater value A) Appraiser trainee B) certified general appraiser C) certified residential appraiser D) licensed appraiser

D) licensed appraiser

Which of the following options describes a loans beginning balance? A) amount of payment that will be applied to the interest B) amount of payment that will be applied to the loan balance C) amount to be sent as payment each month D) loan balance before the monthly payment is applied

D) loan balance before the monthly payment is applied The beginning balance is the loan balance before the monthly payment is applied.

The _________ is used by the borrower when shopping for a loan. A) closing disclosure B) good faith estimate C) HUD - 1 D) loan estimate

D) loan estimate The loan estimate form can be used during the shopping process to compare "apples to apples".

Which payment plan consists of the borrower making payments of interest and principal on a periodic basis, with a large amount due at the end of the loan term? A) flexible payment plan B) fully amortized loan payment plan C) interest-only payment plan D) partial amortized payment plan

D) partial amortized payment plan Using a partial amortized payment plan, the borrower makes payments on a mortgage or deed of trust on a periodic basis, with a large sum (a balloon payment) due at the end of the loan term.

In an interest-only loan, what does the lump sum payment include? A) interest and principal B) interest only C) interest, principal, and taxes D) principal only

D) principal only When the loan term is over, the borrower has to pay the remainder of the money owed, which is the entire principal.

The use of one investment to finance another is called _________. A) blockbusting B) churning C) equity build-up D) pyramiding

D) pyramiding Pyramiding makes use of one investment to finance another. This can be done through selling, or refinancing the first property, then using that equity to purchase another property.

In the real estate business, whose primary role is it to provide training to individuals who want to obtain their real estate license or who need to keep their license current? A) real estate attorney B) real estate broker C) real estate counselor D) real estate educator

D) real estate educator This is the role of the real estate educator, who educates individuals on the laws, rules, and practices in the area of pre-licensing, continuing education, and post-licensing.

In the real estate business, which professionals primary role is to provide brokerage services to their clients, while under the supervision of a broker? A) real estate attorney B) real estate counselor C) real estate educator D) real estate sales agent

D) real estate sales agent It's the sales agent's primary role to provide brokerage services to their clients; however, their activities must be performed under the supervision of a broker.

Maggie is meeting with a prospective tenant client who wants her to negotiate a two-year lease for him. Prior to entering into an agency representation agreement with her prospective client, what must Maggie do in accordance with Texas law? A) check her prospective clients credit rating B) locate one or more potential rental properties for her prospective client C) negotiate the terms of her commission D) review the Information About Brokerage Services form with her prospective client

D) review the Information About Brokerage Services form with her prospective client Texas law requires licenses to provide the Information About Brokerage Services (IABS) document to both the lessor and Lisi when negotiating a residential lease that is for one year or longer.

Which of these is the lender's attorney's responsibility at the closing? A) obtaining homeowners insurance for the buyer B) providing an affidavit of title C) providing the abstract of title D) reviewing the appraisal, survey, and inspection reports

D) reviewing the appraisal, survey, and inspection reports The lenders attorney will review the appraisal and inspection reports before or at the closing.

Broker Mica wants to figure out her commission from her current sale. Which numbers does she need to do this? A) appraised price and commission rate B) list price and commission rate C) loan amount and commission rate D) sales price and commission rate

D) sales price and commission rate To figure out a commission, you'll need the sales price and commission rate. The calculation is : sales price x commission rate = total commission.

Luciana is very successful in her profession, partially because she was fortunate enough to connect with several developers in the early days of her career. Since then, she's built a solid reputation as the "go to" person in the state to list properties on the MLS and show model homes in newly developed communities. What's Luciana's profession? A) she's a homebuilder B) she's a planner C) she's a real estate attorney D) she's a real estate licensee

D) she's a real estate licensee Luciana is a real estate licensee. A real estate license is required to list properties on the MLS.

On which principle of value is the sales comparison approach based? A) anticipation B) competition C) conformity D) substitution

D) substitution The sales comparison approach is based on the principle of substitution. It compares similar properties to the subject property and makes adjustments to determine value based on the sales price of the comparables.

The economic principle that tells us that when supply goes up, prices goes down is also called ________. A) conformity B) price dropping C) regression D) supply and demand

D) supply and demand Supply and demand says that when supply goes up, prices go down because there is less demand

Which of the following must adhere to the rules of the Securities and Exchange Commission? A) LLC's B) LLP's C) partnerships D) syndicates

D) syndicates Because they sometimes meet the definition of "dealing in securities," syndicates must adhere to the rules and regulation of the SEC.

Allentown sits on the river, and it's many bridges need repair. Which police power is Allentown likely to use in order to fund improvements on its bridges? A) condemnation B) escheat C) taking D) taxation

D) taxation The purpose of taxation is to meet the need for public, works by funding them through a stable source of income that allows many to share the burden.

Which one of the following pieces of information should all commercial leases contain? A) a confidentiality clause B) a non-compete clause C) a nondisclosure agreement D) the lease agreement start and end dates

D) the lease agreement start and end dates All commercial leases should contain the lease agreement start and end dates

Marshall is a home inspector who is walking the lot of the property he's inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report? A) a pass, providing neighborhood access to a pond cuts through part of the subject property B) the apple tree on the adjacent property drops apples onto the subject property C) the city, seized the neighboring property to be used in a street widening D) the neighbor, installed a basketball hoop next to his dr

D) the neighbor, installed a basketball hoop next to his driveway 6 inches over the property line An encroachment occurs when someone illegally places, a structure or object on another person's property like a basketball hoop.

How is reasonable belief defined in adverse possession? A) after continuous and reasonably interrupted use of 10 years or more, the possessor can believe in actual ownership rights B) everyone believes that they are all licensed real estate professionals C) the possession is reasonably taken, and must be believed to be without the owners consent D) the possessor must reasonably believe in the right to possess the property

D) the possessor must reasonably believe in the right to possess the property The only thing that is required to define reasonable belief in adverse possession is the possessor reasonably believes in the right to possess the property. This is usually due to a defective deed that is believed valid, but not always.

In addition to the property address, the lease agreement starts and end dates, and the monthly rent and deposit amounts, which of the following pieces of information should all commercial leases contain? A) a complete list of the other tenants and their rental rates B) a copy of the tenant's credit report C) a detailed description of the property D) the purpose for which the space is being rented

D) the purpose for which the space is being rented All commercial leases should specify the purpose for which the space is being rented.

Which of the following would be considered a seller debt in the closing statement? A) the buyers share of prorated items B) the discount points on the buyers loan C) the purchase price D) the sellers current mortgage payoff

D) the sellers current mortgage payoff The sellers debts include expenses, the sellers share of prorated items, and the payoff of the sellers current mortgage loan or other lien.

According to the laws of descent, who will inherit the property when there are no surviving heirs? A) friends of the family B) private auction C) the neighboring property owner D) the state

D) the state The state receives the property when there are no surviving heirs.

Who would inherit the property if both a husband and wife died interstate, leaving behind their two grown children and five grandchildren? A) the children and the grandchildren B) the grandchildren C) the state D) the two grown children

D) the two grown children The surviving children would inherit the property. The grandchildren would not inherit unless their parents (the decedent's children) had pre-deceased them.

The idea that money gains or loses value over time describes which concept? A) inflation B) interest C) time is money D) time value of money

D) time value of money Time impacts money in two ways. Money that just sits there. Loses value overtime. Money that earns interest grows overtime.

In the real estate business, which professional funds high-risk loans with less favorable terms? A) develop B) investor C) property D) traditional lender

D) traditional lender Due to the higher risk of development projects, traditional lenders tend to offer those loans with less-favorable terms, such as larger down payments, or shorter repayment periods.

Which of the following can be defined as what a property is worth? A) appraisal B) cost C) price D) value

D) value Value means worth. It is different from cost and price.

Jillian grew up visiting her grandmother, who owned five acres of forested land and a pond that the two of them swam in frequently. When Jillian's grandmother left her the property, Jillian moved in and put a fence around the forest and pond. When her neighbor went to sell his property, he discovered via survey that the pond was actually on his property. Jillian wants to claim adverse possession and keep the pond, but she's only lived there for three years. What, if anything, can she to do valid

She can use the principle of tacking. Jillian can use the principle of tacking, meaning that she can "tack "her grandmother's usage onto her own to get to the seven years that are required. She can then claim adverse possession that way.