Real Estate Practice Exam
An example of a positive choice is
("I can arrange to show you this home at 5 pm today, or would 6 pm be more convenient?")
Which of the following is an open-end question?
("Why did you want a three-car garage?")
A real estate agent was found to have made 10 solicitation calls in violation of the do-not-call registry prohibitions. What is the maximum fine that could be imposed?
($160,000)
The Civil Rights Act that applied to race only was the
(Civil Rights Act of 1866.)
An Act of Congress that specifically reaffirmed the Civil Rights Act of 1866 was the
(Civil Rights Act of 1968.)
The agency or office responsible for handling violations of the Rumford Fair Housing Act is the
(Department of Fair Employment and Housing)
The MOST effective form of advertising used in the real estate business is
(Internet.)
The Civil Rights Act that only applies to discrimination by a business is the
(Unruh Act.)
By initialing the dispute resolution clause, the parties agree to
(a binding arbitration.)
An example of a negative ad would MOST likely be an ad for
(a fixer-upper.)
A property brief is
(a flyer describing a property.)
AIDA stands for
(attention, interest, desire, action.)
Owners should be made aware that
(buyers often purchase a different home than the one whose advertisement drew their initial response.)
Agent group-visitations to new listings are known as
(caravans.)
The MOST valuable portion of the competitive market analysis deals with
(comparable listings that have been recently sold.)
The type of advertising that is MOST expensive per viewer impression is
(direct mail.)
Real estate professionals prefer to take
(exclusive right-to-sell listings.)
As to ethical conduct, a good rule of thumb is
(if it is illegal, it is unethical.)
The reason MOST often cited by owners as to why they were unhappy with their listing agent is
(lack of communication.)
LTV stands for
(loan-to-value ratio.)
Matching your speech to that of the prospective buyer is called
(mirroring.)
A broker sold a property for the list price. Despite the fact the broker had a valid listing, the broker was NOT entitled to a commission because the listing was a
(open listing.)
An example of a free ad is a
(press release.)
A visually evident condition that should alert a reasonably diligent real estate agent as to a problem is commonly referred to as a(n)
(red flag.)
Most real estate agents are involved primarily in the sale of:
(residential property.)
Rehearsing presentations is a form of
(role-playing.)
When dealing with a prospect who is slow and methodical, the salesperson should
(slow down and simplify details.)
Advertising a home for sale in a minority area exclusively in a paper aimed at that minority group would MOST likely be regarded as
(steering.)
The real estate marketplace is a stratified marketplace. Stratified means that:
(the marketplace is not the same in different price ranges.)
An opt-out mechanism is required
(to be excluded from further unsolicited e-mail advertisements.)
In choosing a broker, a new licensee should place primary consideration on
(training provided.)
"Bait-and-switch" advertising is specifically prohibited by the
(truth-in-lending law.)
Familial status protection prevents discrimination against
- families with children. - pregnant women. - persons in the process of obtaining custody of a minor.
The IRS will treat the real estate salesperson as an independent contractor if 3 criteria are met. These criteria include:
-the salesperson must be licensed as a real estate agent. -reimbursement to the salesperson must be solely based on sales, not on hours worked. -there is a written contract that states the salesperson shall be treated as an independent contractor for tax purposes.
The proposition which limits the basic tax levy to 1 percent of value is Proposition a. 13. b. 58. c. 60. d. 90.
a (13.)
A government agency which guarantees that holders of mortgage securities will get timely principal and interest payments is the
a (Government National Mortgage Association - GNMA)
A buyer for a lower-priced home, without a down payment, is MOST likely to qualify for a
a (VA loan.)
The current interest rate on an adjustable-rate mortgage that does NOT have a reduced introductory rate would be determined by
a (adding the index rate and the margin.)
On a seller's closing statement, a sale listing commission to be paid to a broker would generally be a
a (debit to the seller.)
"Time is of the essence" means that
a (performance must be within stated deadlines.)
The MOST abundant property type, subject to professional management, is(are) a. residential. b. stores. c. offices. d. industrial.
a (residential.)
A real estate broker advertised a property for a principal. She did not advertise her name. Her action was proper because she included
a. "agt." b. "bro."
Tie-downs could include
a. "isn't it?" b. "don't you?" c. "shouldn't they?"
15. Which of the following agents need to provide an agency disclosure?
a. Listing agents selling their own listings b. Listing agents not selling their own listings c. Selling agents working with the buyer
Agent inspection disclosure requirements apply to
a. accessible property areas. b. 1 to 4 residential units. c. visual inspection.
Handicapped protection under the Fair Housing Act, as amended, includes protection for persons who
a. are mentally handicapped. b. have AIDS.
Environmental hazards include
a. asbestos. b. lead. c. radon.
Buying motives include
a. comfort and convenience. b. health. c. desire for profit or gain.
Some general rules for display advertising include
a. don't use more than two typefaces in an ad. b. ads in the outside column will generate c. more interest than ads in the inside columns. c. lower-case letters are easier to read than capital letters.
Legal notices that can be a source for listings include
a. evictions. b. code violations. c. tax delinquencies.
Callers who respond to "For Sale" signs
a. find the area acceptable. b. are satisfied with the exterior appearance of the home.
A qualified acceptance of an offer a. is not an acceptance. b. would be a counteroffer. c. both a and b. d. neither a nor b.
a. is not an acceptance. b. would be a counteroffer.
Disadvantages of home-ownership include
a. large initial investment. b. increase in expenses. c. lack of liquidity.
It is proper professional conduct to
a. leave your business card at each property. b. avoid making uncomplimentary remarks about the property when the owners are present. c. wait to show a property until another agent and his or her clients have departed.
Seller financing disclosure should include
a. terms of the note. b. notice that the note, if not fully amortized, will have a balloon payment. c. if buyer will receive cash at closing..
The danger associated with adjustable-rate loans is that
a. the interest rate could increase to the cap. b. payments could increase.
Buyers have statutory rescission rights in sales involving
a. time shares. b. undivided-interest subdivisions.
A real estate salesperson does NOT have to check the do-not-call registry when making a solicitation call
a. to a commercial number. b. in response to an inquiry made within 3 months. c. if there was an existing business relationship within 18 months.
To overcome sales resistance, the salesperson can
a. welcome objections. b. concede before answering.
When advertising mobile homes, a real estate licensee may NOT
a.indicate that there is no down payment when one is, in fact, required. b. advertise a used mobile home as being new. c. make a false statement that a mobile home can travel California highways.
The right of rescission, which applies to loans that place a lien on the borrower residence, is effective until midnight on the
b (3rd business day after signing.)
A change-of-ownership statement must be filed within how many days of change of ownership? a. 30 b. 45 c. 60 d. 90
b (45)
Which tax would be MOST difficult to evade? a. Income b. Property c. Inheritance d. Gift
b (Property)
The MLO endorsement to a license is a requirement of
b (SAFE Act.)
An MLO endorsement is required for a licensee who negotiates
b (a loan for a single family home.)
A lease for a definite time period would be a(n) a. periodic tenancy. b. estate for years. c. estate at sufferance. d. estate at will.
b (estate for years.)
Primary financing refers to
b (first trust deeds or mortgages.)
Tax shelters refer to a. property taxes. b. income taxes. c. inheritance taxes. d. sales taxes.
b (income taxes.)
Large loans for shopping centers are MOST likely to be
b (life insurance companies.)
Portfolio loans
b (loans that the lender keeps)
Conforming loans are
b (loans which meet the underwriting standards for purchase by Fannie Mae or Freddie Mac.)
A convertible ARM means the loan
b (may be converted to a fixed-rate loan.)
A lease whereby the tenant pays the landlord a set rent and also pays taxes, insurance, and other property expenses is a a. gross lease. b. net lease. c. percentage lease. d. none of the above.
b (net lease.)
Megan's Law is a disclosure act that relates to
b (sex offenders.)
A borrower who expects to remain in a property for many years, would MOST likely
b (to pay an overall lower interest rate and higher loan-origination fee.)
The court action to evict a tenant is known as a(n) a. 3-day notice. b. unlawful detainer action. c. 30-day notice. d. none of the above.
b (unlawful detainer action. )
A loan covering 2 properties would BEST be described as a
b. blanket trust deed.
When the sellers resist making concessions to (or countering) a reasonable offer, an effective approach to use, that has no rational basis, would be which of the following?
c ("Why not split the difference?")
A property was listed at $100,000. An offer of $96,000 is received. In explaining the difference, the agent should consider saying.
c ("You are getting 96 percent of your asking price.")
Every residential homeowner is entitled to an exemption from the full cash value of a. $4,000. b. $5,000. c. $7,000. d. $50,000.
c ($7,000.)
A residential homeowner can deduct which of the following from their total taxable income when figuring their tax bill? a. Property taxes b. Interest payments c. Both a and b d. Neither a nor b
c (Both a and b)
Which of the following advantages are offered by a commercial sale-leaseback to the seller/lessee? a. Lease payments are deductible business expenses. b. Capital can be freed. c. Both a and b. d. Neither a nor b.
c (Both a and b.)
Who ultimately determines price?
c (Buyers)
A lease whereby the landlord receives a set rent and the landlord pays property expenses is a a. net lease. b. percentage lease. c. gross lease. d. none of the above.
c (gross lease.)
Which is a characteristic of loans made by mortgage loan brokers? a. They generally use their own funds. b. They generally service the loan they make. c. Both a and b. d. Neither a nor b.
d (Neither a nor b.)
For a valid 1031 exchange a. the property must be held for productive use in a trade or business, or for investment. b. real property must be exchanged for real property. c. the exchanger cannot have control of the buyer's money. d. all of the above are required.
d (all of the above are required.)
In qualifying for a loan, a borrower seeking the largest loan possible based on income would MOST likely choose a. an adjustable-rate mortgage. b. a fixed-rate mortgage. c. an assumable loan. d. all of the above, as the loan amounts would be the same.
d (all of the above, as the loan amounts would be the same.)
Advantages of open houses include the fact that they are a source of d. all of the above.
d (all of the above.)
As to depreciation for tax purposes, purchasers must now use a. the straight-line method. b. 27.5 years for residential property. c. 39 years for nonresidential property. d. all of the above.
d (all of the above.)
Escrow licensees are prohibited from a. paying referral fees to real estate brokers. b. permitting one party to make additions, deletions, or alterations to escrow instructions unless initialed by all parties. c. accepting escrow instructions containing blanks to be filled in after the escrow instructions are signed. d. all of the above.
d (all of the above.)
Exceptions to the licensing requirements of escrow companies include a. brokers. b. banks. c. attorneys. d. all of the above.
d (all of the above.)
In deciding on which adjustable-rate mortgage to take, a borrower should consider a. the initial or qualifying rate. b. how long the rate is in effect. c. to what index the interest rate is tied. d. all of the above.
d (all of the above.)
Items, other than price, and terms for which agreement between buyer and seller MUST be reached, include a. occupancy date. b. name of escrow. c. what does and does not stay with the house. d. all of the above.
d (all of the above.)
The 1968 Federal Fair Housing Act, as amended, prohibits discriminatory practices and provides protection as to discrimination based on
d (all of the above.)
Ways to kill a sale include a. being argumentative. b. straying from the subject. c. exhibiting fear. d. all of the above.
d (all of the above.)
The broker's exemption to the escrow licensing requirement applies when the broker a. represents the buyer. b. represents the seller. c. is a principal in the transaction. d. any of the above.
d (any of the above.)
An escrow has a duty to warn parties to the escrow of a. possible fraud. b. risks of the transaction. c. both a and b. d. neither a nor b.
d (neither a nor b.)
A standard policy of title insurance covers all EXCEPT a. forgery. b. lack of capacity of a grantor. c. failure of delivery of a prior deed. d. right of parties in possession.
d (right of parties in possession.)
When there are multiple offers to be presented to an owner, you MUST present them
d (together, in a non-prejudicial manner.)
An extended coverage policy of title insurance covers all EXCEPT a. water rights. b. rights that a correct survey would reveal. c. rights that a physical inspection would reveal. d. zoning regulations.
d (zoning regulations.)