Real Estate Sales Person/ Broker Exam 2019 Test #6
Which of the following advertising phrases would be proper under the Federal Truth-in-Lending Law:
A: "Take over a 7% annual interest rate mortgage" B: "Assume a 7% mortgage" C: "Assume a 7% annual percentage rate mortgage" * D: All of the above.
Mr. Smith bought a property for $72,000 with a $20,000 cash down payment and a $52,000 loan. The loan did not require interest and did not require any payments for one year. One year later, he sold the property for double its purchase price. Each dollar of his original cash investment is now equal to
A: $2.00 B: $4.60 * C: $7.30 D: $9.20 $72,000 x 2 = $144,000; $144,000 - $52,000 = $92,000; $92,000 divided by $20,000 = $4.60.
A balloon payment would be necessary on which of the following loans?
A: $22,500 with interest at 14.25% per year payable $320 a month for 10 years; the total interest is $19,827.60 ** B: $40,000 with interest at 13.5% per year payable $519.34 a month for 15 years; the total interest is $53,481 C: $25,000 with interest at 12% per year payable $556.17 a month for 5 years; the total interest is $8,370 D: None of the above. $320 X 12 X 10 = $38,400 payments. $22,500 + 19,827.60 = $42,327.60 amount owed.
If a person borrowed $26,500 for 20 years at 15% interest per annum, using a straight note, he would pay interest of:
A: $33,300 B: $62,200 C: $79,500 * D: $95,400 $26,500 X 15% = $3,975. $3,975 X 20 years = $79,500.
A kiosk is the term used to identify:
A: An information booth in a mall * B: A construction crane C: An addition to a shopping center D: A special compartment to hold a security key for use by the fire department.
Funds can be withdrawn from a broker's trust fund account by which of the following authorized persons:
A: Any unlicensed person employed by the broker;B: Any one of the corporate directors;C: Any person employed by the broker;D: Anyone who is officially authorized by the broker in writing.
In appraising, the term "market value" is most nearly synonymous with
A: Assessed value B: Inherent value C: Market price * D: Utility
Sometimes an appraiser estimates the value of a property by using three approaches. After he has done this, his next step would be to:
A: Average the value indications B: Reconcile the value indications * C: Finalize the value indications D: Amortize the value indications
If a selling broker accepts the universal offer of sub-agency by virtue of the MLS listing, the broker would owe fiduciary duties to:
A: Both the seller and the buyer B: The seller * C: The buyer D: The Multiple Listing Service
If the owner of a property thinks that his property has been over-assessed by the county assessor, he would contact the:
A: California Bureau of Real Estate B: Board of Supervisors C: Assessment Appeals Board * D: County tax collector.
Which of the following would not be considered a demand source for mortgage money?
A: Construction B: Federal National Mortgage Association * C: Refinancing D: Sales financing
Which of the following is the best term to substitute for the term "Market value":
A: Cost; B: Price; C: Value in use; D: Value in exchange or most probable selling price *
An important difference between types of title insurance is that an extended coverage policy:
A: Covers risks that cannot possibly be known to the insured; B: Covers risks that normally would be known through familiarity with the property or by personal inspection; * C: Covers also loans against the property made after the policy date; D: Is available only to lenders who hold a recorded trust deed against the property.
Landlords often require a net lease on commercial property to:
A: Designate a percentage of the net income from the business for the lessor B: Provide for payment of taxes and insurance by the lessor C: Set funds aside to offset depreciation D: Provide a net income to the lessor *
Legally and technically, property is defined as:
A: Freehold estates B: Things which buyers and sellers own C: Rights or interests which a person has in the thing owned * D: Only personal property
According to generally accepted practices, an escrow agent is authorized to:
A: Give the buyers advice about the best financing which is available B: Change the escrow instructions when asked to by the listing broker C: Call for funding of the buyer's loan * D: Authorize a pest control company to make corrective repairs.
A buyer and seller initial the liquidated damages clause in a real estate purchase contract and then the buyer defaults. The deposit is:
A: Given to the seller when escrow opens; B: Limited to 3% of the selling price C: Divided equally between the seller and the listing agent * D: Used to pay any costs incurred and then returned to the buyer
In which of the following ways could an agency relationship not be created?
A: Implied contract B: Oral contract C: Written contract D: Voluntary offer by the agent *
When a buyer signs an exclusive authorization to locate a property there is ususally a clause in the form which allows the broker to:
A: Incur expenses on behalf of the buyer; B: Collect a commission whether a property is found or not; C: Act exclusively for that buyer and no other buyer during the time limits of the agreement; D: Represent other buyers during the time limits of the agreement *
Properties located in an area with poor local sewer service would probably suffer a loss in value from:
A: Incurable physical deterioration B: Curable functional obsolescence C: Incurable functional obsolescence D: External obsolescence *
Which of the following would usually be true concerning a hard money second trust deed:
A: It always has lower than normal rates B: It is secured by real estate and given to a third party to obtain a cash loan * C: It is carried back by a conventional lender D: It is always repayable in three years.
Which of the following would be true about a lis pendens:
A: It can only be removed by a court order B: It can be recorded no matter what the type of lawsuit is C: It may affect title to real property based on the results of the lawsuit * D: None of the above
Which of the following should be considered an expense item when arriving at a net income for a 100-unit apartment complex:
A: The addition of a club-house B: Income tax C: Depreciation D: The salary for a part-time gardener *
When a proposed development project has received a negative declaration on its proposed development, it means:
A: The development project cannot be built as proposed B: Additional clearance must be secured from the local building department C: The EPA will require re-submission of the proposal along with a petition of at least 65% of the affected landowners D: The proposed project is anticipated to have no adverse effect on the environment *
A "standby loan commitment" refers to:
A: The fee that a mortgage loan broker collects for committing to a loan for a borrower B: A lenders decision to make a construction loan C: The origination charge that a lender will collect for making a construction loan D: A commitment by the lender to make a permanent takeout loan upon the borrower's demand *
Which of the following is not a test for a fixture:
A: The intention of the parties B: The method of attachment C: The agreement of the parties D: The time of attachment. *
When budgeting for a real estate office, the phrase "company dollar" means:
A: The money required to establish an office and run it for a given period of time B: The income of an office after all expenses are subtracted C: The income of an office after all commissions are subtracted * D: None of the above
Most lenders who make construction loans will release the final payment to the general contractor when:
A: The owner or his representative has recorded a notice of completion B: The owner has occupied the completed buildings; C: The note and trust deed have been executed; D: The mechanics lien period has expired. *
Of the following items, which one would normally appear on the seller's closing statement as a credit to the seller:
A: The proration of prepaid taxes * B: The pay-off of an existing trust deed loan C: The payment of a commission to the listing agent D: The proration of prepaid rent.
Which of the following would appear as a debit on a buyer's closing escrow statement:
A: The purchase price * B: Interest accrued and due on an existing trust deed to be assumed by the buyer; C: The amount of a new purchase money trust deed to the seller D: Rental payments on the property collected in advance by the seller
When the value of a property is estimated by analyzing the income from the property, the appraiser would be careful to give proper attention to:
A: The quantity of the income; B: The quality of the income; C: The durability of the income; D: All of the above. *
Which of the following employees of a real estate broker would always be required to hold a valid real estate salespersons license:
A: The receptionist B: The telephone operator C: The bookkeeper/secretary D: None of the above
When one holding a salesperson's license advertises the lease, sale, purchase or exchange of real property for another as an agent, the salesperson must include in the advertising:
A: The salesperson's last name B: The employing broker's last name* C: The employing broker's last name and address D: Both A and B
Broker Sanchez has obtained a buyer for a single-family residence. 'The buyer will use FHA financing.' As the close of escrow approaches, the buyer asks the broker to loan him $500 to help with the closing costs. If the broker does so, which of the following could be prosecuted for violation of the FHA regulations:
A: The seller B: The broker C: The buyer D: Both the broker and the buyer *
Of the following, which is the best definition of a balloon payment:
A: The tenth annual payment on a 30-year loan; B: The required payment of the interest that has accumulated prior to the first regular installment; C: The required payment of the entire balance due; * D: A payment required to prevent the imposition of a prepayment penalty.
Which of the following would impair the security of a trust deed recorded on real property:
A: The trust deed is recorded after a declaration of homestead B: The trust deed is recorded after a work of improvement was commenced and a mechanic's lien is recorded on the work * C: A judgment lien is placed on the property D: None of the above
When considering VA loans, the unique feature about down payments which are required is:
A: They are never more than 3% of the CRV B: There is no down payment * C: They are determined by the CRV D: They vary according to the amount borrowed.
Michaels owns 80 acres of land. It is 1/2 mile long by 1/4 mile wide. He wants to determine the topography of the land and so he asks Jones to clear 4 strips, each one 50 feet wide. One strip will run the length of the land and 3 strips will run the width of the land. If Jones charges $60 per acre of cleared land, he will receive:
A: $348 B: $380 C: $444 * D: $520 50 X 2640 = 132,000 SQ. FT. 50 X 1320 = 66,000 X 3 = 198,000SQ. FT. 132,000 + 198,000 = 330,000 SQ. FT. Then there are 3 squares of land measuring 50 ft. by 50 ft where the strips crossed that we have counted twice, so we need to subtract them. 50X 50 X 3 = 7,500 SQ. FT.330,000 - 7,500 = 322,500 SQ. FT. 322,500 divided by 43,560 = 7.404 acres. 7.404 x $60 = $444.24.
If the Smiths sold their house for $73,700, and this was 17% more than what they paid for it, the purchase price was most nearly:
A: $58,380 B: $61,920 C: $62,992 * D: $65,420 $73,700 divided by 117% = $62,991.45.
An income property rents for $1,000 a month. The operating expenses are $3,000 a year. During the past 5 years it has been vacant for 3 months. If an appraiser used a 10% capitalization rate the value of the property would be:
A: $74,951 B: $79,000 C: $84,000 * D: $91,000 $1,000 x 12 = $12,000 X 5 years = $60,000. $1,000 X 3 =$3,000 vacancy. $60,000 - $3,000 = $57,000 divided by 5 years = $11,400 annual gross income. $11,400 - $3,000 expenses = $8,400 net income. $8,400 divided by 10% = $84,000.
The local mortgage company has loaned a buyer 80% of the appraised value of a single-family residence. Interest for the first year of the loan amounts to $8,100, and is calculated at an annual rate of 9%. The appraised value of the property would be most nearly:
A: $95,000 B: $105,000 C: $112,500 * D: $115,900 $8,100 divided by 9% equals $90,000 - loan amount $90,000 divided by 80% equals $112,500 - appraised value.
If a broker takes an exclusive listing to negotiate a loan secured by a lien on real property, that listing is limited to a term of not more than:
A: 30 days B: 45 days * C: 60 days D: 180 days
Which of the following represents the minimum time period for an exclusive right to sell listing on real property:
A: 30 days; B: 90 days; C: 6 months; D: Whatever time period is agreed to by seller and broker. *
A man owns a lot that measures 150 feet deep by 50 feet wide. The local zoning laws require a 20 foot front setback and a 4 foot setback on both sides and at the back. The buildable area of this lot is:
A: 5,292 square feet * B: 5,460 square feet C: 6,500 square feet D: None of the above After taking 20 feet off of the front and 4 feet off of the back the depth of the buildable area would be 126 feet. After taking 4 feet off of each side the width of the buildable area would be 42 feet. 126 x 42 = 5,292.
An agent supplies the following information concerning an apartment building: Gross income - $80,000; Operating expenses - $25,000; Depreciation - $10,000; Vacancies - 10%; Value - $450,000. What would be the capitalization rate:
A: 8.2% B: 9.3% C: 10.4% * D: 11.5% $80,000 x 10% = $8,000 vacancy. $80,000 - $8,000 = $72,000 effective gross income. $72,000 - $25,000 expenses = $47,000 net income. $47,000 divided by $450,000 value = 10.4444%.
In appraising real property by the market data approach, the appraiser often takes into account certain non-property characteristics of the two properties. Which of the following would not be considered a non-property characteristic:
A: A "distress" sale B: The location and size of the parcel * C: The economic viability of the neighborhood; D: The presence of seller financing.
When an appraiser is appraising a property he usually considers all of the following except:
A: A definition of value B: Identification of property rights to be valued C: The property rights to be valued D: The assessed value *
A listing agreement is:
A: A promise for a promise B: A bilateral contract C: An employment contract D: All of the above *
The consideration for a contract could be which of the following:
A: A promise to perform a future act B: A service which is to be performed in the future C: Money which is to be paid D: All of the above *
The buyer's earnest money deposit may be:
A: A promissory note B: A post-dated check C: Anything that the seller considers valuable D: Any of the above *
An appraiser is appraising a single-family residence, and notices an abandoned gas station next door. The appraiser would logically recommend which of the following:
A: A structural pest control report B: A toxic waste report from the EPA * C: Rezoning of the property D: A soils report by a civil engineer.
When real property is being escrowed, the escrow holder may do which of the following:
A: Accept written instructions from the seller and buyer to change the price and terms without the approval of any agents * B: Receive closing funds on the buyer's behalf from the broker's trust account C: Try to settle a disagreement between the buyer and seller D: Cancel the escrow if the buyer doesn't perform in a timely manner.
An appraiser who does not use generally accepted appraisal methods in order to influence an FSLIC or FDIC insured lender may be guilty of:
A: Acting unethically; B: Breaking the Rules and Regulations of the California Bureau of Real Estate; C: A misdemeanor; D: A felony *
When a parcel of real estate is being sold by a California corporation, who would sign the grant deed in behalf of the corporation
A: All board members B: Any two board members C: The president and secretary of the corporation * D: There is no law specifying the necessary signatures
When the deposit receipt on the sale of a house states that the property is being sold "as is," it:
A: Also requires a real estate transfer disclosure statement; B: Provides that the buyer should beware; C: Means that nothing is warranted; D: Does not require a real estate transfer disclosure statement.
Gorham owns a property valued at $80,000, and owes $49,000 to Beneficial Savings and Loan on a first trust deed and note on the property. She has agreed to sell the property to her nephew for $1,000 cash, loaning the nephew $79,000 on a new trust deed, which includes the amount due Beneficial. Gorham has agreed in the loan documents to make the payments on the existing trust deed to Beneficial as they become due. The new trust deed Gorham is to receive is properly termed:
A: An all-inclusive trust deed B: A wrap-around deed of trust C: An over-riding trust deed D: Any of the above *
Broker Jones, who is not a member of any trade organization, has been using a new advertising slogan: "A new breed of Realtor." Concerning this practice:
A: It is grounds for revocation or suspension of his real estate license * B: It is permissible, providing the word "realtor" is not capitalized C: It is acceptable as long as he is not licensed in more than one state D: It is a violation of the Fair Housing Laws.
In which of the following ways does real property differ from personal property:
A: It is immovable by law * B: In the method conveyed C: In the acquisition and transfer of title D: In the type of loan instrument
All of the following are essentials of each and every contract, except;
A: Lawful object B: Mutual consent C: Capable parties D: A proper writing *
One might normally expect to find reference to the CPI (consumer price index) in which of the following:
A: Lease agreements for single-family residences B: Commercial leases * C: Deposit receipts D: Listing contracts
Real estate licensees should know that pest control operators are required by law to:
A: Make all needed corrections before the close of escrow B: Charge no more than the maximum set by law for an inspection C: Furnish a copy of any inspection report to the owner of the property * D: Inspect the property within 10 days of the opening of escrow. Of the choices given, only answer "C" gives a requirement of the law.
If a lender accepts a deed in lieu of foreclosure from a trustor, the lender
A: Must also receive a power of sale from the trustor B: Will own the property free and clear of any other loans C: Must go to court and get a deficiency judgment D: Will assume any junior liens *
According to the bankruptcy code, the debts that are discharged are those that exist:
A: On the day of the publication of notice of bankruptcy B: On the day when the bankruptcy petition was filed * C: On the day of the discharge D: On the day when the bankruptcy case is closed.
A trust deed note in favor of a state savings and loan association on a single-family owner-occupied residence could be prepaid without penalty:
A: Only if the loan is more than 7 years old B: If the lender exercises the due-on-sale provision in the note, even when the borrower has signed a waiver of right to prepay without penalty * C: If the loan is assumed by a buyer of the house; D: Any time, whether there is a written agreement to pay a prepayment charge or not.
By law, a broker must provide Worker's Compensation insurance coverage for which of the following:
A: Only those employees who are between 21 and 65 years old B: Only those who earn more than the minimum wage C: Only office employees D: All employees, regardless of age, position, or amount of compensation *
In a condominium complex a sidewalk would be:
A: Part of the common area * B: At least 4 feet wide C: Made of asphalt D: Owned as a fee simple estate
A subdivider has a blanket encumbrance on many lots. The blanket encumbrance includes a release clause which states that when a certain amount is paid for each lot, it will be released from the blanket encumbrance. When the price of each lot is paid, the beneficiary will execute a:
A: Partial reconveyance deed B: Partial subordination clause C: Request for partial reconveyance * D: None of the above.
Waters which are below the ground but are not restricted to a bed or well-defined channel would be known as:
A: Percolating waters * B: Alluvion C: A subterranean lake D: Non-riparian waters
When a real estate agent acts exclusively as a buyer's agent, he can:
A: Present offers directly to the seller B: Present offers to the seller and seller's agent * C: Withhold negative information about the buyer from the seller D: Act as agent of the seller when his commission is paid by the seller.
A real estate licensee has a practice that when he is approached by members of minority groups who want to be shown property, he avoids showing them property in integrated areas. This would be an example of:
A: Redlining B: Blockbusting C: Steering * D: Proper conduct
An extended coverage policy of title insurance protects the holder of the policy against all of the following risks except:
A: Rights of the parties in possession of the property B: Forgery in the title documents C: Defective delivery of a recorded deed D: Regulations of municipalities concerning capacity and use. *
Which of the following would be defined as a fixture in the law
A: Something that is made part of a chattel real B: Something referred to by actions but not referred to in the sales contract C: Something incorporated into the land * D: Something used in an extraordinary way with the land
"Turnkey projects" are:
A: Subdivisions that have been approved by the local authorities but not the state authorities; B: Construction projects that are ready for occupancy * C: The interior areas of subdivisions; D: Rural subdivisions.
When a man bought a property, he was not told about the septic tank installation. The buyer's right would be to:
A: Sue the broker for disciplinary action B: Rescind the contract * C: Demand that the seller pay for a percolation test; D: File a report with the local health department.
While appraising a residence in a hillside subdivision, the appraiser observes cracks in the foundation and notices that the doors and windows do not close properly. The appraiser would probably recommend that which of the following be ordered
A: Termite inspection report B: A home warranty protection policy C: A special studies zone map D: A soils engineering report. *
Which of the following must be given by the seller of a condominium to the buyer:
A: The CC&&R's B: The by-laws C: A copy of the most recent financial statement D: All of the above *
Tom and Trudy Thompson are both 83 years old and have an annual income of $18,000. They own their home free and clear and want to defer paying property taxes on the property. To receive claim forms and additional information about this program, they should contact:
A: The California Bureau of Real Estate B: The Department of Housing C: The county assessor D: The state controller's office *
A broker advertises the sale of "Mega Bucks Trust Deeds" in a newspaper. In the advertisement he offers a specific yield which he arrives at by looking at his yield for the past year. Which of the following is true concerning this advertisement:
A: This is illegal according to the Truth-in-Advertising law B: It is legal if the California Bureau of Real Estate has confirmed the yield that is stated C: It is legal if he also gives the actual interest rate specified in the note and the discount from the outstanding principal balance * D: There is no law covering this subject.
Which of the following is the purpose of the Federal Truth-in-Lending Act:
A: To limit interest rates B: To regulate fees charged by lenders C: To provide consumers information concerning the cost of credit * D: All of the above.
Of the following liens, the one that would be given priority would be a:
A: Trust deed signed and recorded April 28,1990 B: Trust deed signed on April 27, 1990 and recorded on April 29, 1990 C: Mechanics lien applicable to work that was started on April 25, 1990 D: Street improvement assessment lien created May 10, 1990 *
Certain junior trust deeds on newly-subdivided land cannot be re-sold for a specified time. Such notes can be resold
A: Twelve months after creation B: Twenty-four months after creation C: Thirty months after creation D: In the thirty-seventh month after creation *
By law and regulation, a real estate agent is obligated to communicate any offer to the principal:
A: Unless the offer includes a condition precedent B: Only if it is in writing * C: Whether the offer is verbal or written until the agency is terminated D: Unless the principal has already accepted another offer
When the letters "HVAC" appears in a commercial or industrial lease, it normally refers to:
A: Use of a Household Vacuum on the Average Carpet; B: High Voltage Alternating Current; C: Homesteads, Vacancies, and Additional Conveyances; D: Heating, Ventilating and Air Conditioning.*
A mortgage loan may be insured by:
A: VA B: FHA or a private mortgage insurer * C: FNMA D: The beneficiary
To determine the net income for appraisal purposes, one would deduct which of the following from the scheduled gross income of the property:
A: Vacancies, capital improvement costs, and depreciation allowance; B: Vacancies, reserves, and depreciation allowance; C: Vacancy charge, fixed expenses, operating expenses, and reserve charges; D: Vacancies, reserves, and debt service.
If a person obtains a contract through duress, that contract is:
A: Valid B: Void C: Voidable * D: Unenforceable.
When comparing a straight note with an installment note, the straight note:
A: Will have equal annual principal reduction payments B: Will have no principal payments during the term of the loan exception the last payment * C: Will have a total effective interest rate greater than if the loan were an installment loan D: None of the above.
Johnson is buying a new house and wants to obtain an FHA loan. Johnson has a good credit history but an irregular income. According to FHA, the payments:
A: Will have to be monthly * B: Could be quarterly C: Could be semi-annual D: Could be made at any agreed upon interval.