Real Estate Practice Exam Questions

39. Convert 3 mills to a decimal

.003

85. What represents dual agency?

1 broker with listing agreement and buying agreement

44. What is the transfer tax charged by the state of PA?

1% of the sales price

70. What type of property would be most appropriate to use the cost approach method?

25 year old church

98. What is the max profit a married couple can take on capital gain?

500k

29. Balloon Mortgage definition...

A mortgage with a balloon payment

46. What is the source of money for an FHA loan?

A qualified lending institution

69. Exclusive Right to Sell Listing definition...

A type of listing to list and sell real estate property in which the seller employs one broker but that broker earns a commission "no matter who sells the property including the owner"

76. Paid tax is a credit to whom?

Credit to the Seller

83. What is a broker's obligation to a buyer without buyer agency?

Give the agreement of sale

11. Which is not used to determine cost approach to estimate value? -Quantity Survey Method -Unit-in-Place Method -Square Foot Method -Gross Rent Multiplier Method

Gross Rent Multiplier Method

55. What is true about the contract rules regarding printed form sales agreement?

Handwritten words take precedent over printed words

36. Obligations of an owner in a listing agreement if he refused to sell when presented with a full offer...

He is liable for broker compensation

49. What is the first step in the appraisal process?

Indicate objective of appraisal

6. What is the salespersons obligation to a buyer under single agency listing?

Inform the buyer

9. What is homeowners insurance?

Insurance to protect owners from fires and other etc.

42. What is prorated by day on a HUD 1?

Interest on an assumed mortgage

19. All are typical duties of a property manager with the exception of...

Investing profits

48. What is private mortgage insurance?

It protects the lender if their is default

95. The mortgage amount relative to the property price is called...

Loan to Value

88. What is a characteristic of a VA Mortgage?

Must sign an affidavit saying that they intend to occupy the property.

61. Determine the value by the Income Approach formula

NET INCOME divided by RATE OF CAPITALIZATION

50. What is an example of external depreciation?

Nearby property that suffers from lack of maintenance and is negatively affecting the sellers property.

75. Is special price setting allowed for certain categories of people?

No it's illegal

16. Can a salesperson give legal advice?

No, not unless they are an attorney.

37. Is undisclosed dual agency allowable by law?

No, you can lose your license.

34. What rules require fair housing laws to be in a listing contract?

PA Human Relations Act

73. What is the PA law that prohibits discrimination in housing?

PA Human Relations Act

89. What is a mortgage that includes both real and personal property?

Package Mortgage

74. An example of an item that is prorated at settlement is...

Rental Income

64. What is the formula for the Gross Rent Multiplier?

SALE PRICE divided by MONTHLY RENT

30. What is the most reliable method of appraisal for residential real estate?

Sales comparison approach

18. Who is considered the lender in a purchase money mortgage?

Seller

59. What is a shares appreciation mortgage?

The lender receives a share of capital gain at time of sale.

97. What is a characteristic of negative amortization?

They are commonly found on Adjustable Rate Mortgages (ARM)

51. What is the role of a mortgage broker?

To find mortgage lenders for borrowers.

32. What would not be a depreciation of value?

Unimproved land

78. What are the conditions to when an agreement of sale becomes a binding contract?

When the buyer accepts the offer and the seller is notified.

96. Sale and leaseback definition...

a combination real estate transaction where there is both a sale of real property by an owner and then an immediate lease on the same property giving the seller the right to remain in the same property that was just sold.

4. Principal definition...

a consumer of real estate services who has entered into an agency relationship with a broker or another licensee employed by a broker.

25. Net listing definition...

a type of listing in which a seller desires to sell real property and receive a guaranteed amount of money for the sale, so that the broker's commission is any sale price amount of money over and above the guaranteed price to the seller.

66. Physical deterioration...

associated with normal wear and tear.

68. Proper listing price of the property...

based on seller

3. What is an example of functional obsolescence?

bathroom

41. Loan origination fee is a debit to whom?

buyer

81. Characteristics of sale and leaseback...

buyer becomes lessor

26. The main factor a property manager should use to evaluate a prospective tenant is

can they make monthly rent payments on time.

62. The following are typical property management operation expenses except...

ceiling replacement

31. Assemblage definition...

consolidating two separate lots into one.

92. What is a type of depreciation that is not curable?

external depreciation

8. All are examples of real estate except...

factories

65. The following are examples of agricultural property except...

government owned rural land

91. Regulation Z requires lenders to...

inform borrowers of HOME MORTGAGE LOANS of closing cost

45. What should you do about material defect disclosures?

inform the buyer and seller

63. Fiduciary responsibility in a property management contract is to the

lessor

23. Special agency listing definition...

n/a

58. All are examples of fiduciary responsibilities under a single agency listing agreement except.. .

negotiate lowest price.

54. What is not an example of a real estate business violation of the antitrust laws?

opening offices in new locations

57. Who are the parties in a listing agreement?

owner and listing broker.

67. All are federal income tax deductions for a homeowner except...

property management

27. All are examples of single agency disclosures with the exception of

revealing the owner will except less.

2. What are two examples of special use property?

schools and cemetary

71. Definition of appraisal...

supportable estimate of value

1. Brokerage definition...

the business practice of bringing together the parties in a practice.

94. Disclosure requirements to a seller under a listing agreement force brokers to disclose info except...

the buyer had AIDS

13. All are characterisitics of a contract for a deed except...

the buyer receives title when the contract is signed.

60. Reconciliation definition...

the process of comparing the property values derived from different approaches to value, selecting the most suitable approach for the particular property being appraised and coming to a final conclusion of value.

5. Capitalization definition...

the process of determining the present value of a property from it's future income.

10. Special agent definition...

the type of agency in which the principal authorizes the agent to represent the agent in "one specific transaction or business activity"

What is steering?

the unlawful act of keeping a buyer away from certain communities or guiding them to purchase in certain communities.

84. Redlining definition...

the unlawful practice of refusing real estate related business services based on location of a person's real property. ie: lending institutions or insurance companies

56. Equity definition...

the value of real estate above any debt on that property.

38. Earnest money deposit is a credit to whom

to the buyer

22. What is the purpose of RESPA?

to to provide disclosure of closing cost info.

77. When is the consumer notice given?

At the first discussion of needs and motivation.

93. What is a mortgage that encumbers several parcels of land?

Blanket Mortgage

21. Blockbusting definition...

An illegal real estate practice caused by inciting fear and panic selling by suggesting that persons of minority background are or may be moving into an area or that the majority of residents are moving out of an area.

17. Who determines the commission in a listing contract?

An agreement between the owner and broker

86. In a comparison between a land contract and a purchase money mortgage which is true?

Both represent forms of finacing

40. Typically who pays for title insurance?

Buyer

52. Who does a selling salesperson represent under buyer agency?

Buyer

20. Transfer tax is typically paid by for by whom?

Buyer and seller

90. What is a mortgage that will not fully amortize the loan?

Balloon Mortgage

85. What is a way of termination a listing agreement?

Bankruptcy Court

80. What does the C stand for in the fiduciary dities

Care and confidentiality

82. Selling agent represents who in a single agency listing agreement? (Scenario Question)

Dangerfield represents Crawford

28. Purchase money order is a debit to the...

Debit to the SELLER (It's a loan in which the seller provides financing to help buyer)

33. What has the greatest effect on real estate value?

Demand of people and location

15. Entitlement to commission when transaction is not consummated.

Except when listing broker does not disclose information

99. What is a fair housing exemption? (OLD PERSON COMMUNITY SCENERIO)

Familial Status