Real Estate General Practice Exam

Personal property is generally conveyed by a a. bill of sale b. certificate of title c. quitclaim deed d. trut deed

a. bill of sale

A restaurant opened in a neighborhood and was enjoying substantial profits. Within a year, another restaurant was built across the street and resulted in the first restaurant losing, in the next year, 30% of its profits. This is an example of the principle of a. competition b. conformity c. highest and best use d. progression

a. competition

In the appraisal of a public building, an appraiser would use the a. cost approach b. income capitalization approach c. sales comparison approach d. gross rent multiplier

a. cost approach

Using $9.91 as a mortgage factor what is the monthly payment for a $150,000 loan at 11.5% for 30 years? a. $1,429.50 b. $1,486.50 c. $1,525.50 d. $1,581.00

a. $1,429.50

A home is valued at $92,000. Property in this city is assessed at 70% of its value, and the local tax rate is $3.40 per $100. What is the amount of the owner's monthly taxes? a. $182.47 b. $260.67 c. $2,189.60 d. None of these

a. $182.47

Which of the following statements concerning encumbrances is NOT true? a. All encumbrances are liens b. All liens are encumbrances c. Restrictions beneficial to the grantee are encumbrances d. An easement is a physical encumbrance

a. All encumbrances are liens

All of the following agencies are included in the secondary mortgage market EXCEPT a. FHA b. FNMA c. GNMA d. FHLMC

a. FHA

You listed a home that was subsequently shown by six cooperating outside brokers. How many seller-agency relationship are invalid in this transaction? a. One b. Six c. Seven d. None of these

a. One

A broker listed a residential property under a valid written listing agreement. After the sale was completed, the owner refused to pay the broker's fee. Which of the following can the broker do? a. She can take the seller to court and sue for the commission b. She is entitled to a lien on the seller's property for the amount of the commission c. She can go tot court and stop the transaction until she is paid d. She can collect the commission from the buyer

a. She can take the seller to court and sue for the commission

Two unrelated people own a three-unit apartment building as tenants in common. One wants to sell but the other does not. What of the following statements describes the legal rights of the party who wants to sell? a. The party may request a court to partition the building b. The party may require the co-owner to sell c. The part may record a lis pendens on the property d. The party may refinance the mortgage in her/his own name, thus eliminating the co-owner's interest in the property

a. The party may request a court to partition the building

You have a mortgage in which you make the same payment each month for principal and interest, with the principal payment increasing and the interest payment decreasing from month-to-month. This is called a(n) a. amortized mortgage b. term mortgage c. reverse annuity mortgage d. partially amortized mortgage

a. amortized mortgage

All of the following statements correctly describe a legal life estate EXCEPT a. during his or her life estate, the life tenant is generally answerable to the holder of the future interest b. the life tenant may not commit any acts that would permanently injure the property c. there may be a reversionary interest d. there may be a remainder interest

a. during his or her life estate, the life tenant is generally answerable to the holder of the future interest

You are working as a buyer's broker for a client. All of the following would describe your role as a buyer's broker EXCEPT a. you should show the buyer properties only in which your commission is protected b. you should counsel the buyer about developing accurate objectives c. you should search for the best properties for your buyer to inspect, widening the marketplace to include homes for sale by owners (FSBOs) d. you should help the buyer prepare the strongest offer

a. you should show the buyer properties only in which your commission is protected

A broker sold a home for $146,000. The broker charged the owner 6% commission and will pay 25% of that amount to the listing salesperson and 30% to the selling salesperson. What amount of commission will the listing salesperson receive from the sale? a. $2,058 b. $2,190 c. $2,628 d. None of these

b. $2,190

Which of the following is NOT a sage in the appraisal process a. State the problem b. Analyze the tax consequences of the property owner c. Reconcile the data for the final value estimate d. Analyze and interpret the data

b. Analyze the tax consequences of the property owner

Which of the following is a similarity between an exclusive-right-to-sell listing and an exclusive-agency listing? a. Under both, the seller avoids paying the brokerage a commission if the seller sells the property without the help of the brokerage b. Both give the responsibility of representing the seller to just one brokerage firm c. Both are net listings d. Under both, the seller authorizes one specific salesperson to show the property

b. Both give the responsibility of representing the seller to just one brokerage firm

Which agency is involved in purchasing government-related loans? a. Fannie Mae b. Ginnie Mae c. Freddie Mac d. The "Fed"

b. Ginnie Mae

Which of the following types of clauses governs the right of a listing broker to collect a commission from an owner who waits until the listing period expires and then personally contracts to sell the property to a party the broker had shown the property to during the listing period? a. Alienation b. Protection c. Defeasance d. Habendum

b. Protection

You mortgaged your property and just made the final payment. Recording which of the following documents will provide notice that the mortgage lien has been removed? a. Reconveyance deed b. Satisfaction of mortgage c. Alienation of the mortgage instrument d. Reversion of the deed

b. Satisfaction of mortgage

Which of the following is NOT a specific lien? a. Mortgage lien b. State inheritance taxes c. Real estate taxes d. Mechanic's lien

b. State inheritance taxes

A state wants to build a publicly owned convention center to attract private development in its largest city. Can the sate use eminent domain to acquire the land? a. No b/c private investments would not be allowed b. Yes, if just compensation is paid to the owners of the land c. No, b/c eminent domain can only be used for highway expansion d. Yes, if the owners hold fee-simple interest in the land

b. Yes, if just compensation is paid to the owners of the land

All of the following would be considered real property EXCEPT a. mineral rights b. a leasehold estate c. fixtures d. air

b. a leasehold estate

An option, prior to being exercised, is an example of a. an assignable contract b. a unilateral contract c. bilateral contract d. an executed contract

b. a unilateral contract

The movement of land caused by an earthquake would be an example of a. accretion b. avulsion c. erosion d. hypothecation

b. avulsion

Your aunt died intestate and you inherited her house. The way in which you acquired the title to her house is by a. curtesy b. decent c. escheat d. laches

b. decent

A person who receives real property by will is called a a. trustee b. devisee c. testator d. hypothecator

b. devisee

The highest form of ownership interest a person may hold in real estate is a. life estate b. fee simple c. legal life estate d. base fee

b. fee simple

A four-bedroom house with one bathroom would be an example of a. physical deterioration b. functional obsolescence c. economic obsolescence d. environmental obsolescence

b. functional obsolescence

A salesperson presented an offer that was accepted and received an earnest money payment for $2,000. The salesperson should a. hold the payment until the buyer has received a financing commitment b. give the earnest money to his broker c. open up a trust account and deposit the payment in it d. deposit the payment tin the seller's checking account

b. give the earnest money to his broker

Commissions and fees paid by the seller to a listing agency are determined by a. standards promulgated by the local board of REALTORS b. negotiations between the seller and the listing licensee c. applying the prevailing customary fees charged in that area d. an industry index computed monthly from multiple-listing service data

b. negotiations between the seller and the listing licensee

You have entered into a lease that requires you to pay 20% of the owner's expenses. Your lease would be an example of a. variable lease b. net lease c. percentage lease d. gross lease

b. net lease

The servient estate in an easement appurtenant is the property a. owned by the landlord b. on which the easement is placed c. owned by the tenant d. that benefits from the easement

b. on which the easement is placed

You wrote an offer on a house for $214,000. The seller gave you a counteroffer for $218,000. The seller may withdraw the counteroffer any time a. within 72 hours after acceptance b. prior to the buyer's acceptance c. prior to removal of all contingencies in the offer d. prior to the closer

b. prior to the buyer's acceptance

Strict liability under Superfund means that a. each of the individual owners is personally responsible for the damages in whole b. the owner is responsible to the injured party without excuse c. the liability is not limited to the person who currently owns the property but also includes people who have owned the site in the past d. the owner is not responsible to the injured party unless it can be proved that the owner was aware of the problem

b. the owner is responsible to the injured party without excuse

A sale is to close on June 23. Real estate taxes of $2,640 for the current year have NOT been paid. What is the amount of the real estate tax proration to be credited to the buyer? (Use a 30-day month for calculation) a. $168.67 b. $868.67 c. $1,268.66 d. None of these

c. $1,268.66

You receive a monthly salary of $600 plus 3.5% commission on all of your listing that sell, and 2.5% on all of your sales. None of the listings that you took sold last month, but you receive $8,460 in salary and commission. What was the value of the property you sold? a. $131,000 b. $224,571 c. $314,400 d. None of these

c. $314,400

A mother wants to know how much money her son owes on his mortgage loan. The mother knows that the interest part of the last monthly payment was $473.26. If her son is paying interest at the rate of 9%, what was the outstanding balance of the loan before the last payment was made? a. $52,584.44 b. $55,921.03 c. $63,101.33 d. None of these

c. $63,101.33

You bought a home one year ago for $83,500. Property in your neighborhood is said to be increasing in value at a rate of 6% annually. If this is true, what is the current value of your real estate? a. $86,840 b. $87,675 c. $88,510 d. None of these

c. $88,510

An appraiser uses the cost approach in appraising a home. The appraiser should NOT use which of the following types of info? a. Physical deterioration b. Cost of replacement of the house c. Depreciation of the land d. Economic obsolescence

c. Depreciation of land

If the Federal Reserve Board raises its discount rate, which of the following is likely to occur? a. Mortgage money will become more available b. Interest rates will stay the same c. Mortgage money will become less available d. Interest rates will decline

c. Mortgage money will become less available

Only July 1 an owner and a salesperson entered into a six-month exclusive-right-to-sell agreement for a residential property. On July 15, the owner rejected a low offer and fired the listing agent. On August 1, there was a house fire that required extensive kitchen repairs. On September 12, the owner entered into another exclusive-right-to-sell agreement with a salesperson from a different agency. On January 1, the property was still unsold. On which date was the first listing agreement MOST likely to terminate and why? a. July 15, bc the salesperson was dismissed b. August 1, bc the listed property suffered material damage c. September 12, bc the owner breached the first listing agreement by signing a second d. January 1, bc the first listing agreement ended at midnight on Dec 31

c. September 12, bc the owner breached the first listing agreement by signing a second

Which of the following is NOT a category protected by federal fair hosing laws against discrimination in housing? a. Race b. National origin c. Sexual orientation d. Familial status

c. Sexual orientation

If a husband and wife own an apartment building and the husband owns an undivided three-fourths interest and the wife owns a one-fourth interest, what type of tenancy exists? a. Leasehold estate b. Joint tenancy c. Tenancy in common d. Tenancy by the entirety

c. Tenancy in common

A broker listed an owner's home and later received an offer from another licensee that met all of the listing terms and conditions. After considering the offer, the owner informed the broker that the owner no longer wished to sell and asked to be immediately released form the listing agreement. Which of the following statements BEST describes the broker's position in the situation? a. The broker must release the owner without obligation b. The broker must tell the owner that the offeror may sue for specific performance c. The broker may succeed in collecting an earned commission from the owner d. The broker may keep the earnest money that accompanied the offer as liquidated damages.

c. The broker may succeed in collecting an earned commission from the owner

You have entered into an installment land contract for the sale of your home. Which of the following statements is FALSE? a. The buyer is the vendee b. The buyer will take possession when the contract is signed by both parties, if the contract so provides c. The buyer will hold legal title during the term of the contract d. The buyer will hold equitable title during the term of the contract

c. The buyer will hold legal title during the term of the contract

All loans subject to the Real Estate Settlement Procedures Act (RESPA) require lenders to a. charge the seller for all loan discount points b. document any reason for declining credit to a loan applicant c. deliver a Uniform Settlement Statement (HUD-1) form to both buyer and seller d. allow the buyer to rescind the contract any time prior to the first payment due date

c. deliver a Uniform Settlement Statement (HUD-1) form to both buyer and seller

Your neighbor has given you revocable permission to go hunting on his farm. You have a(n) a. leasehold estate b. easement appurtenant c. license d. defeasible fee estate

c. license

A broker acting as the agent of a seller a. can agree to change in the listing price without the principal approval. b. may share her commission with he salesperson of another broker c. must report all offers to the principal unless instructed otherwise d. must maintain as confidential all information the principal says not to disclose.

c. must report all offers to the principal unless instructed otherwise

The city in which you live has zoning ordinance. The basis for the city to have such an ordinance is a. eminent domain b. escheat c. police power d. riparian right

c. police power

A house that is the lease expensive in its neighborhood has nevertheless grown significantly n value over the years bc of an increasing number of larger, more expensive houses being built nearby. This growth in value is an example of the principle of a. regression b. competition c. progression d. highest and best use

c. progression

The Civil Rights Act of 1866 prohibits discrimination based on a. handicap b. familial status c. race d. sex

c. race

A competitive market analysis reflect the use of the a. cost approach b. income approach c. sales-comparison approach d. gross-rent-multiplier method

c. sales-comparison approach

In MOST states, the listing broker has a fiduciary duty with a. the customer b. the listing salesperson c. the principle d. the buyer

c. the principle

A salesperson desires to advertise a property without including the brokerage name. This situation is allowed when a. the salesperson is the listing agent b. the salesperson includes his or her name in the ad c. the salesperson is the actual owner and advertising as for sale by owner d. the salesperson is willing to pay for the ad

c. the salesperson is the actual owner and advertising as for sale by owner

All of the following are examples of a leasehold estate EXCEPT a. an estate for years b. periodic estate c. time-share estate d. estate from year to year

c. time-share estate

Broker Xavier is showing buyer Yang, an Asian, homes only in Asian neighborhoods. The broker may be guilty of a. arbitrage b. blockbusting c. redlining d. steering

d. steering

Brokers who violate the Sherman Antitrust Act may be punished by a maximum fine of a. $10,000 b. $25,000 c. $50,00 d. $1 million

d. $1 million

Licensed or certified appraisers performing federally related transactions must comply with the Uniform Standard of Professional Appraisal Practice (USPAP). A federally related transaction is any transaction with a value greater than a. $100,000 b. $150,000 c. $200,000 d. $250,000

d. $250,000

Your are selling your house and buyer is assuming your outstanding mortgage, which has an unpaid balance of $58,700 after last payment on August 1. If the annual interest rate is 9% and interest is paid in arrears each month, what is the amount of mortgage interest to be debited against you at closing, using a closing date of August 18? a. $161.43 b. $176.10 c. $190.78 d. $264.15

d. $264.15

A listing broker is considered to have earned a commission from a principal when which of the following events occur? a. An offer to purchase been presented to the client b. Title has been transferred to the buyer c. The seller accepts and signs an offer to purchase d. A "ready, willing, and able buyer" signs a non contingent or cash offer that meets the terms of the listing contract

d. A "ready, willing, and able buyer" signs a non contingent or cash offer that meets the terms of the listing contract

In theory, which of the following types of deeds gives you a property buyer the MOST protection against problems that may rise tight the title a. Quitclaim b. Bargain and sale c. Special warranty d. General warranty

d. General warranty

Which of the following terms are NOT related? a. Freehold estate-fee simple b. Grantor-person conveying title c. Leasehold estate-personal property d. Police power-deed restriction

d. Police power-deed restriction

You are preparing a competitive market analysis on a house that you hope to list for sale. Which of the following approaches to value will you use in the development of the estimated value? a. Cost approach b. Gross rent multiplier c. Income approach d. Sales comparison approach

d. Sales comparison approach

A salesperson listed a home for sale and transferred to another brokerage firm two weeks later. Which of the following statements describes the status of the listing? a. The listing is terminated b. The listing is transferred to the new brokerage c. The two brokerage firms will negotiate to decide who will hold the listing d. The listing will stay with the former brokerage firm of the salesperson.

d. The listing will stay with the former brokerage firm of the salesperson.

Salesperson Alvarez for broker Brooks has listed a home. Salesperson Cooke for broker Davidson is acting as a buyer's agent and is trying to sell the same home to his buyer. Salesperson Cooke is primarily responsible to a. his own buyer b. salesperson Alvarez c. broker Brooks d. broker Davidson

d. broker Davidson

When property transfers from one party to another, recording the deed provides what is called a. validation of the agreement between the parties b. a writ of attachment c. certificate of title d. constructive notice

d. constructive notice

Riparian rights would exist in a a. condo on a bay b. house on a bay c. hotel whose land abuts a large lake d. cooperative on a river

d. cooperative on a river

A meatpacking plant has just been built one block from your house. The strong odors are lowering property values in your neighborhood. The loss in value would be classified as a. functional obsolescence b. physical deterioration c. the principle of change d. external obsolescence

d. external obsolescence

A commercial las that allows rent to be increased or decreased periodically based on changes in economic indicators is a(n) a. graduated lease b. gross lease c. percentage lease d. index lease

d. index lease

All of the following correctly describes how real estate licensees should handle the possibility of hazardous substances on a property being sold EXCEPT a. clients should be asked about the possibility of hazardous substances on the property b. licensees should consider the consequences of potential liability c. licensees should be scrupulous in considering environmental issues d. licensees should not disclose the problem, b/c it might harm the seller

d. licensees should not disclose the problem, b/c it might harm the seller

A buyer has entered into an agency agreement with more than one buyer's agent but only owes compensation to the one who puts an actual transaction together. The arrangement is known as a(n) a. multiple-listing agreement b. exclusive right agreement c. exclusive agency agreement d. nonexclusive agency agreement

d. nonexclusive agency agreement

According to the law of agency, a real estate broker owes the principal all of the following duties EXCEPT a. exercising reasonable care b. acting in good faith c. conforming with the principal's legal instructions d. offering legal advice

d. offering legal advice

A developer was able to buy two adjoining sing-family lots for $20,000 each. He combined the lots into one parcel with a value of $90,000. The developer's action reflects the process of a. accession b. attachment c. exchange d. plottage

d. plottage

Sources of groundwater contamination do NOT include a. waste disposal sites b. underground storage tanks c. use of pesticides in farming communities d. radon

d. radon

A claim based on adverse possession of property must NOT be a. notorious b. open c. hostile d. secretive

d. secretive

First Bank holds a lien on a home on which Second Bank already had a lien. The lenders subsequently entered into an agreement in which First Bank moved into a first lien position. This is an example a. hypothecation agreement b. disintermediation agreement c. reverse annuity mortgage d. subordination agreement

d. subordination agreement

You signed a lease for one year and took possession of an apartment. When the lease expired, you continued to live in the apartment without the owner's consent. Your tenancy would be considered to be a(n) a. estate for years b. estate from year to year c. tenancy at will d. tenancy at sufferance

d. tenancy at sufferance

A broker was employed by an owner, as an agent, tot sell her home. All of the following statements correctly describe the broker's relationship to the owner EXCEPT a. the broker has become the seller's agent b. the broker owes fiduciary duty to the seller c. the broker is a special agent d. the broker is a general agent

d. the broker is a general agent