Real Estate Practice Test #2

What is the effect when the buyer and the seller both sign a valid purchase contract? a. The seller retains reversionary rights. b. The buyer receives an interest known as equitable title. c. The seller transfers legal title. d. The buyer forfeits possessory rights.

. c. The seller transfers legal title.

. An owner wants to know how to determine the best asking price. How does a comparative market analysis (CMA) compare to an appraisal? a. A certified real estate appraiser prepares the CMA. b. An appraisal determines the sale price. c. A CMA contains a compilation of similar properties indicating trends and prices buyers are not willing to pay. A CMA is the same as an appraisal

a. A CMA contains a compilation of similar properties indicating trends and prices buyers are not willing to pay.

After the buyer and the seller entered into contract, they negotiated the sale of the side lot at the same time as the transfer of the home. What is this second document called? a. A contingency b. An addendum c. An amendment d. An option

a. A contingency

What is a buyer broker agreement? a. An employment contract b. A non-fiduciary agreement c. A guarantee that the buyer will pay less by employing the broker d. A discussion of the duties that the broker owes sellers

a. An employment contract

The buyer is in front of a house for sale, and with a cell phone, calls the listing agent. What disclosures, if any, must the listing agent make to this buyer? a. Any information that you give me at this time is not considered to be confidential. b. Although we haven't met, you can trust me with your financial information. c. There can be no disclosure until the first substantive meeting. d. I cannot tell you anything about the home you are calling on until we meet in person.

a. Any information that you give me at this time is not considered to be confidential.

2. A man owned his home for five years and when he married, he added his wife's name to the deed. Now they are preparing to sell the home they lived in for the last 25 years. Who must sign the listing agreement? a. Both husband and wife b. Only the husband c. Only the wife d. The heirs to the property

a. Both husband and wife

What document must be provided to the buyer at the earliest possible time? a. Consumer Notice b. Seller's property disclosure notice c. Lead-Based Paint Disclosure d. Buyer agency contract

a. Consumer Notice

In what type of buyer agency, if ever, is the broker entitled to a commission even if the buyer buys directly from the seller? a. Exclusive buyer agency b. Exclusive agency buyer agency c. Nonexclusive buyer agency d. Never

a. Exclusive buyer agency

What should the Seller's Property Disclosure Statement reveal? a. Material defects b. Potential for loss of value c. Potential for increase in value d. Racial composition of the neighborhood

a. Material defects

Which of the following has formulated a Code of Ethics for real estate licensees? a. National Association of REALTORS® b. Pennsylvania Real Estate Commission c. Fair Housing Counsel of Pennsylvania d. Philadelphia Housing Office

a. National Association of REALTORS®

The buyers are concerned that they might overpay for the property. What information may their buyer agent provide to ensure that they make the BEST investment? a. Prices of recently sold properties in the area b. The asking prices of similar properties c. Broker statement of area values What the seller paid for the property

a. Prices of recently sold properties in the area

The home was built in 1955 and has been owned continuously since then by one couple. Now they are planning to sell it. What must they provide their buyers? a. Protect Your Family from Lead in Your Home pamphlet b. A recent test for lead-based paint c. Money in an escrow account to pay for lead paint mitigation d. A statement that they did not use any lead-based paint

a. Protect Your Family from Lead in Your Home pamphlet

Which of the following actions would be considered legal? a. Requiring a person with a disability to establish an escrow account for the costs to restore a property after it has been modified b. Picturing only white people in a brochure as the "happy residents" in a housing community c. Charging a family with children a higher security deposit than those with no children d. Refusing to sell a house to a person who has a history of mental illness

a. Requiring a person with a disability to establish an escrow account for the costs to restore a property after it has been modified

For how long must a real estate licensee retain a copy of the signed Consumer Notice? a. Six months b. Six weeks c. One year d. Three years

a. Six months

Which of the following is an example of dual agency? a. The broker acting for both the buyer and the seller in the same transaction b. Brokers cooperating with each other c. The broker representing different principals d. The broker listing and selling the same property

a. The broker acting for both the buyer and the seller in the same transaction

Which of the following BEST describes earnest money? a. The consideration for the sale of the property b. The money put up by the buyer at the time the offer is made c. The commission to be paid to the broker d. The money to be used for paying for some of the closing costs

a. The consideration for the sale of the property

The agent has visited the prospective sellers three times hoping to list the property. When should the listing agent present the Consumer Notice to these sellers? a. The first time the licensee visits the home b. At the time the sellers sign the listing agreement c. Before the property is placed in the Multiple Listing Service (MLS) d. At the time the sellers accept an offer from the buyers

a. The first time the licensee visits the home

Which of the following should be included in the listing agreement? a. The listing price b. The seller's net after expenses c. The mortgage amount d. Automatic renewal clause

a. The listing price

Who does the real estate broker represent? a. Whoever hired the broker b. The buyer c. The seller d. Both the seller and the buyer

a. Whoever hired the broker

. In Pennsylvania, what is necessary in order to be compensated? a. Written agreement between a real estate licensee and a consumer b. Promise of compensation upon completion of the work c. Recommendation by a previous client d. Upon an action, such as showing a property to a prospective buyer

a. Written agreement between a real estate licensee and a consumer

The listing agreement should include a. a description of the premises. b. the number of times that the broker will show the property. c. a statement that the seller and broker will pursue legal action if either supplies incorrect information. an automatic renewal clause.

a. a description of the premises.

Before the agreement of sale is signed by both parties, real estate licensees must disclose all of the following details EXCEPT a. a murder was committed on the property. b. material defects. c. broker's commission. d. settlement expenses.

a. a murder was committed on the property.

A discrimination suit may be filed in federal court by the a. aggrieved person because of racial discrimination. b. Department of Housing and Urban Development. c. state or county nondiscrimination officer. Federal Housing Administration

a. aggrieved person because of racial discrimination.

An owner enters into an agreement not to sell a property to other interested parties for a specified time in exchange for some consideration, additionally granting a right in the agreement for the property to be purchased on or before the end of that time for a specified price. This agreement is called a. an option. b. a contract of sale. c. a right of first refusal. d. an installment agreement.

a. an option.

A customer may expect all of the following EXCEPT a. confidential information. b. disclosure about a physical problem with the property. c. reasonable skill and care. honesty and fair dealing

a. confidential information.

A system of rules and standards that goes beyond the letter of the law is called a. ethics. b. moral thinking. c. principled behavior. d. morality.

a. ethics

An errors and omissions insurance policy would most likely offer protection against an allegation of a. forgetting to turn on the burglar alarm after showing the property. b. antitrust activity. c. not showing the property to Asians. d. fraudulent activity.

a. forgetting to turn on the burglar alarm after showing the property.

The authority to install a For Sale sign on the property is usually included in the a. listing agreement. b. purchase agreement. c. separate document "Authority to Market". d. addendum specifying that the broker has the authority to make legal decisions on behalf of the seller client.

a. listing agreement.

The buyers want to be represented by several different agents looking at various properties. This is an example of a. nonexclusive buyer agency. b. exclusive buyer agency. c. exclusive agency buyer agency. d. transaction brokerage.

a. nonexclusive buyer agency

When hired by a management agreement, the broker represents the a. owner. b. tenant. c. buyer. d. seller.

a. owner.

The Civil Rights Act of 1866 prohibits discrimination in housing based on a. race. b. religion. c. sex. d. handicap.

a. race.

The amount of earnest money deposit is determined by the a. real estate licensing statutes. b. agreement between the parties. c. broker's office policy on such matters. d. acceptable minimum of 5 percent of the purchase price.

a. real estate licensing statutes.

A lender's refusal to lend money to potential homeowners attempting to purchase property located in predominantly minority neighborhoods is a. redlining. b. steering. c. qualifying. d. blockbusting.

a. redlining.

A licensee is hired as a buyer's agent by a first-time buyer to help with the purchase of a home. The buyer confides that being approved for a mortgage loan may be complicated by his bankruptcy filing two years ago. The buyer would like to find a seller who will accept an installment sale. In this situation, a correct statement about the licensee's responsibility regarding this information during the presentation of an offer to purchase a property is that the licensee is a. required to disclose it because it is a material fact—information important to the seller's evaluation of the offer. b. not required to disclose it because the seller might reject the offer. c. required to disclose it under the Fair Credit Registry Act. d. not required to disclose it because the licensee has no agency relationship with the seller.

a. required to disclose it because it is a material fact—information important to the seller's evaluation of the offer.

. A creditor is permitted to refuse to make a loan to an applicant who is a. too young to legally sign a contract. b. over the age of 70. c. the recipient of a public assistant program. d. not married.

a. too young to legally sign a contract.

Which of these meets the HUD definition of family as a protected class? a. A 62-year-old man with his 55-year-old wife b. A single parent with a foster child age 12 and a son age 19 c. A married couple and an elderly parent over the age of 65 d. Two middle-aged brothers

b. A single parent with a foster child age 12 and a son age 19

Which of the following is a similarity between an exclusive agency listing and an exclusive right-to-sell listing? a. Under both types of listings, the seller retains the right to sell the real estate without the broker's help and without paying the broker a commission. b. Both give the responsibility of representing the seller to one broker only. c. Under both, the seller authorizes only one particular salesperson to show the property. d. Both are open listings.

b. Both give the responsibility of representing the seller to one broker only

What is the effect of an option? a. Requires the optionee to complete the purchase b. Gives the optionee an easement on the property c. Keeps the offer open for a specified time d. Makes the seller liable for a commission

b. Gives the optionee an easement on the property

Which of the following is a unilateral contract? a. Option b. Installment sale c. Purchase agreement d. Lease

b. Installment sale

In Pennsylvania, what document must real estate licensees present to all prospective sellers? a. Official Notice b. Lead-based paint hazard disclosure c. Copy of the Pennsylvania Human Relations Act Equal housing poster

b. Lead-based paint hazard disclosure

Under what situation, if any, may a lender consider age when making a lending decision? a. When the applicant's source of income is public assistance b. Never c. If the applicant's income will drop due to retirement d. When the lender determines that the family income will drop when the wife has a baby

b. Never

In Pennsylvania, how can a broker guide the seller to an appropriate asking price? a. Conduct an appraisal. b. Present a recent comparative market analysis (CMA). c. No need, the broker should list at whatever the seller wants. d. Ask the salespeople in the office to view the property and then offer their suggestions.

b. Present a recent comparative market analysis (CMA).

What action is required by the Americans with Disabilities Act? a. Any existing premise must be remodeled, if requested by a person with a disability, regardless of the cost involved. b. Reasonable accommodations must be provided to people with disabilities. c. Real estate must be free of barriers to people with disabilities. d. All employers should adopt nondiscriminatory employment practices.

b. Reasonable accommodations must be provided to people with disabilities.

Which of the following may obligate a buyer client to owe a fee to the real estate agent? a. Signed the Consumer Notice b. Signed a written agency agreement c. Agent takes the buyer to see a property d. Asks for assistance in locating a home to purchase

b. Signed a written agency agreement

. A buyer who is a client of the broker wants to purchase a house that the broker has listed for sale. Which of the following is TRUE? a. If the listing salesperson and the selling salesperson are two different people, there is no conflict of interest. b. The seller and the buyer must be informed and agree to have the broker represent both of them. c. The buyer should not have been shown a house listed by the broker representing them. d. The broker should refer the buyer to another broker to negotiate the sale.

b. The seller and the buyer must be informed and agree to have the broker represent both of them.

At the time that the installment contract is signed, who has legal title to the property? a. The vendor/seller b. The vendee/buyer c. Held jointly by the vendor and vendee d. The trustee because the title is in limbo until all payments are received

b. The vendee/buyer

In Pennsylvania, when is a written agreement between the broker and consumer required? a. Only for residential listings but not commercial listings b. When the consumer may be obligated to compensate the broker for services c. Only for listing agreements longer than six months d. When the broker is not sure that the seller will ultimately pay the commission

b. When the consumer may be obligated to compensate the broker for services

The National Association of REALTORS® Code of Ethics is binding on a. its members. b. all real estate licensees. c. broker owners but not their affiliate salespeople. d. only salespeople but not broker owners.

b. all real estate licensees.

A broker has an exclusive-right-to-sell listing on a building. The owner is out of town when the broker gets an offer from a buyer to purchase the building, provided the seller agrees to take a purchase-money mortgage. The buyer must have a commitment from the seller before the seller is scheduled to return to the city. Under these circumstances, the a. broker may enter into a binding agreement on behalf of the seller. b. broker may collect a commission even if the transaction falls through because of the seller's absence from the city. c. buyer is obligated to keep the offer open until the seller returns. d. broker must obtain the signature of the seller to effect a contract.

b. broker may collect a commission even if the transaction falls through because of the seller's absence from the city.

It is illegal for a lending institution to refuse to make a residential real estate loan in a particular area only because of the a. questionable economic situation of the applicant. b. physical location of the property. c. applicant not being of legal age. d. deteriorated condition of the premises.

b. physical location of the property.

Statements by a real estate licensee exaggerating the benefits of a property are called a. polishing. b. puffing. c. prospecting. d. marketing.

b. puffing.

If, upon the receipt of an offer to purchase his property under certain conditions, the seller makes a counteroffer, the prospective buyer is a. bound by his original offer. b. bound to accept the counteroffer. c. bound by whichever offer is lower. d. relieved of his original offer

b.. bound to accept the counteroffer.

. After a completed application is submitted, the application must be accepted or rejected within a. seven days. b. two weeks. c. 30 days. d. 60 days.

c. 30 days.

The agency responsible for the enforcement of the Fair Housing Act is the a. Department of Justice. b. Federal Housing Administration. c. Department of Housing and Urban Development. d. Department of Veteran Affairs.

c. Department of Housing and Urban Development.

Which of the following gives the BEST evidence of the buyer's intention to carry out the terms of the real estate purchase contract? a. The "subject to" clause b. The agreement to seek mortgage financing c. The earnest money deposit d. The provision that "time is of the essence"

c. The earnest money deposit

. The relationship of a broker to a client is that of a. a trustee. b. a subagent. c. a fiduciary. d. an attorney in fact

c. a fiduciary.

A listing taken by a real estate salesperson belongs to the a. seller. b. salesperson. c. broker. d. salesperson and the broker equally.

c. broker

The Americans with Disabilities Act (ADA) has the greatest impact on a. single family homes. b. apartment dwellers. c. office buildings. industrial sites

c. office buildings.

A buyer agrees to buy a property for $230,000 and deposits $6,900 earnest money with the listing broker. However, the seller is unable to clear the title to the property, and the buyer demands the return of his earnest money as provided in the purchase contract. The broker should a. deduct his commission and return the balance to the buyer. b. deduct his commission and give the balance to the seller. c. return the entire amount to the buyer. give the entire amount to the seller to dispose of as he decides

c. return the entire amount to the buyer.

Complaints relating to the Civil Rights Act of 1866 are a. handled by state enforcement agencies. b. no longer reviewed in the courts. c. taken directly to a federal court. d. handled by the Department of Housing and Urban Development (HUD).

c. taken directly to a federal court.

A broker arrives to present a purchase offer to an invalid, and finds the woman's son and his wife present as well. In the broker's presence, the couple persistently urges the invalid to accept the offer, even though it is much lower than the price she has been asking for her home. If the invalid accepts the offer, she may later claim that a. the broker should not have brought her such a low offer for her property. b. she was under undue duress from her son and daughter-in- law and that, therefore, the contract is void. c. the broker defrauded her by allowing her son and his wife to see the purchase offer he brought to her. d. her consumer protection rights have been usurped by her son and daughter-in-law.

c. the broker defrauded her by allowing her son and his wife to see the purchase offer he brought to her.

Unless some other written agreement has been made, the broker will usually receive the sales commission from the seller when a. the purchaser takes possession of the property. b. the seller lists the property with the broker. c. the transaction is closed. d. an offer is procured from a ready, willing, and able buyer.

c. the transaction is closed.

At what time should a real estate licensee present the Consumer Notice to a prospective buyer? a. Never, this form must be given to sellers, not buyers b. After showing two properties c. At the open house as people sign in d. At the first substantive meeting

d. At the first substantive meeting

"I hear they're moving in. There goes the neighborhood! Better put your house on the market before values drop!" This is an example of what illegal practice? a. Redlining b. Steering c. Fraudulent advertising d. Blockbusting

d. Blockbusting

. A real estate licensee was representing a buyer. At their first meeting, the buyer explained that he planned to operate a dog-grooming business out of any house he bought. The licensee did not check the local zoning ordinances to determine in which parts of town such a business could be conducted. Which fiduciary duty did the licensee violate?

d. Care

A woman owns a two-unit apartment building and lives in the downstairs apartment. She wants to rent the second floor. She refused the first applicant, an African American male, stating that she did not want to rent to men. A few days later, this man noticed that a white male was moving into the building. The African American male may allege that the woman was discriminating against him under the a. Title VIII of the Civil Rights Act of 1968. b. Fair Housing Amendments Act. c. Housing and Community Development Act. d. Civil Rights Act of 1866.

d. Civil Rights Act of 1866.

What is the maximum listing period, if any, in Pennsylvania? a. 60 days b. Indefinitely, so long as the listing automatically renews c. 180 days d. One year

d. One year

Who is responsible for completing the Seller Property Disclosure Statement? a. Licensed home inspector b. Licensed engineer c. Listing agent d. Seller

d. Seller

The broker had a listing with a seller who had a heart attack and is in a coma and is not expected to live. In this situation, what is the status of the listing? a. The listing status has not changed. b. The heirs are obligated to relist with the broker. c. The seller's heirs are responsible for fulfilling the terms of the listing. d. The agency relationship has been terminated.

d. The agency relationship has been terminated.

Two salespeople working for the same broker obtained offers on a property listed with their firm. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make a decision about the first offer. Which of the following is TRUE? a. The broker's actions are permissible, provided the commission is split between the two salespeople. b. After the first offer was received, the broker should have told the salespeople that no additional offers would be accepted until the seller decided on the offer. c. The broker has no authority to withhold any offers from the seller. d. The broker was smart to protect the seller from getting into a negotiating battle over two offers.

d. The broker was smart to protect the seller from getting into a negotiating battle over two offers.

By Pennsylvania law, all of the following must receive the Consumer Notice EXCEPT a. a couple is selling their home. b. an individual is purchasing a home. c. a tenant is looking for a rental home. d. a corporation is selling the property.

d. a corporation is selling the property.

Under the Real Estate Seller Disclosure Act, the real estate licensee is responsible for a. completing the disclosure form. b. verifying the accuracy of the information on the disclosure form. c. all of these. d. advising the seller of the duty to disclose defects.

d. advising the seller of the duty to disclose defects.

In their offer to purchase a home, the buyers stated, "If we cannot obtain a mortgage loan for 5.5 percent or less, we will not purchase the property and we expect that the earnest money will be refunded." This clause is an example of a. a contingency. b. a reversionary right. c. an amendment. d. an addendum.

d. an addendum.

If a buyer defaulted some time ago on a written contract to purchase a seller's real estate, the seller can still sue for damages if he is not prohibited from doing so by the a. statute of frauds. b. law of agency. c. statute of limitations. d. broker-attorney accord.

d. broker-attorney accord.

When a prospective buyer makes a written purchase offer that the seller accepts, then the a. buyer receives legal title to the property. b. buyer may take possession of the real estate. c. seller grants the buyer ownership rights. buyer receives equitable title to the property

d. buyer receives equitable title to the property.

A broker did not have enough money in the business account to pay two salespeople, so he wrote two checks out of a trust account. After the next closing, the broker put the money back into the trust account. This an example of a. commingling. b. what needs to be done in the rat race. c. a reasonable business practice. d. conversion.

d. conversion.

A buyer makes an earnest money deposit of $1,500 on a $150,000 property and then withdraws her offer before the seller can accept it. The broker is responsible for disposing of the earnest money by a. turning it over to the seller. b. deducting the commission and giving the balance to the seller. c. returning it to the buyer. d. depositing it in a trust account for that purpose.

d. depositing it in a trust account for that purpose.

In Pennsylvania, the broker is providing communication and document preparation services and is assisting both parties in a transaction without advocating for either party. This broker is a a. transaction licensee. b. single agent. c. dual agent. d. designated agent.

d. designated agent.

Under a typical installment contract, the seller retains a. executor title. b. equitable title. c. qualified title. d. legal title.

d. legal title.