National Practice Exams

What is a township?

A 36-square-mile square formed in the use of the rectangular government survey system

When real estate licensee Brian discovered that real estate licensee Arnold was using a "Choose Your Neighbor" letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?

A charge of agreeing to discriminate by limiting access to the property

Lance purchased a home, but he won't own any real estate—just shares in a corporation. This is because his new home is ______.

A cooperative

Bob and Mary are financing $180,500 for a new home. Their lender will approve an interest rate of 5% if Bob and Mary pay two discount points at closing. How much will this cost them?

A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $180,500), which is $3,610.

Which of these Virginia transactions requires that the property disclosure be provided to the buyer?

A house for sale by owner

According to the Code of Ethics, which of these statements is most accurate when accepting compensation?

A licensee shall not accept compensation from more than one party to a transaction without the full knowledge and consent of all parties.

Which statement best describes an adjustable rate mortgage?

A loan with a rate that fluctuates based on the economic index to which it is tied

Phyllis bought a beach townhouse for $475,000 and put down $50,000 in earnest money. At closing, she paid $150,000, the balance of her intended down payment. The mortgage tax in the area is $.35 per $100 (or portion thereof). Calculate what Phyllis will pay for the mortgage tax.

A mortgage recording tax is based on the loan amount. Phyllis will pay a mortgage tax amount of $962.50 on her loan amount ($275,000 x .0035).

The Smithwicks, your buyer clients, obtained a 90% loan on their new $400,000 home. At closing, they paid $6,150 for points at closing. How many points did they pay?

A point is 1% of the loan amount. The Smithwicks' loan is $360,000 ($400,000 x .90), and they paid $6,150 for points at closing. Divide the cost in points by the loan amount to get the number of points they paid: ($6,150 ÷ 360,000 = 0.0170833, or 1.71).

Which of these areas would be included in the livable area calculation?

A pool house connected to the house by a hallway

Which of these is an example of blockbusting?

A real estate agent approaches a homeowner as soon as a demographic shift starts to occur in her neighborhood and convinces her that she needs to sell now, or she'll never be able to sell.

Which of the following is a way in which property taxes could impact your clients?

A sale in the area may prompt a reassessment, impacting new buyers.

Which of these statements about the size of a section of land is NOT true?

A section is 43,560 square feet.

Municipality XYZ created a document that regulates the permitted land uses and zoning classifications within the town boundaries, and does so while staying within the parameters of the comprehensive plan. Municipality XYZ has created _______.

A zoning ordinance

Stacy has gone into default on her mortgage. Her lender is demanding that the entire loan balance be paid in full. Which mortgage clause permits her lender to do this?

Acceleration

Demographics impact the housing market. Which of the following is a true statement?

An increase in the number of retirees in a given population would negatively impact the demand for large, single-family homes.

What does the FTC consider to be a deceptive ad?

Any ad likely to mislead consumers acting reasonably under the circumstances

A parcel of land measures one half mile by 3,000 feet. If price per acre is $4,200, what's the list price for this parcel?

Area = length x width. One mile = 5,280 feet. The area of this parcel is 7,920,000 s.f. ([5,280 ÷ 2] x 3,000). One acre = 43,560 s.f. The parcel is 181.8 acres (7,920,000 ÷ 43,560). So, the list price is $763,560 ($4,200 x 181.8).

What are improvements with regard to property?

Artificial attachments to land that include items such as fencing, buildings, and walkways

Margot and Steve owned several rental properties at the time of their divorce. The divorce decree gave ownership to Margot in return for a cash payment by Steve. Fast forward six years, and Margot is ready to sell the properties. She soon discovers, though, that Steve's name is still on the title. What's her best course of action?

Ask Steve to generate quit-claim deeds on the properties.

Roland's farm land is assessed at 1.5 million dollars and the improvements for $500,000. At a tax rate of 4 mills, how much are Rolan's monthly taxes?

Assessed value + improvements = total value of $2,000,000. Multiply 2 million by 4 (mills/millage rate) then divide by 1000 = $8,000 in annual taxes . Divide $8,000 by 12 to give you the monthly tax amount ($8,000 ÷ 12 = $667.00).

Seller Alec provided the Virginia Disclosure Statement to buyer Kelly two days before they ratified the contract. Three days after ratification, he learned that there was mining done on his property and he needs to disclose this. When does he need to make this additional disclosure?

Before closing

Zoe, seller, and Darnell, buyer, signed their purchase contract on Monday. The contract allows for Darnell to move in to the property one week before settlement. The day before Darnell is to move in to the property, Zoe provides Darnell with the disclosure statement. If Darnell wishes to terminate the contract, by when must he provide Zoe with a written termination notice?

Before moving into the property

Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?

Bilateral

Your new home listing has some minor condition issues, most of which the seller Barry disclosed properly when filling out the disclosure form. However, you noticed that he didn't disclose the test results that showed E. coli bacteria in his well water. You don't say anything, since it's not your role to fill out the disclosure form. If the buyer discovers issues with the well after closing, who is legally liable for this omission?

Both you and Barry

Which type of listing can help a real estate professional determine how quickly a home in a given price range received an accepted offer?

Pending

Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land's value, he jumped at the opportunity. What's this an example of?

Plottage

When you're using the sales comparison approach to value a property, which of the following is considered a category of adjustment?

Financing terms and cash equivalency

Gabe's home has an assessed value of $172,000, and his tax rate is .55%. What are the annual taxes?

First you have to convert the percentage to a decimal. .55% = .0055, so multiply the assessed value by the tax rate to calculate annual taxes: $172,000 × .0055% = $946.

Frances collected an earnest money check from her client, but didn't have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?

Frances is guilty of commingling.

Which of these would most likely be an implied contractual condition in a real estate sales contract?

Freedom from fraud and misrepresentation

Which of the following is a task that a licensee could perform for a customer in a transaction?

Providing the opposing party with signed copies of paperwork

Who typically prepares a comparative market analysis?

Real estate licensee

Richard is interested in purchasing some rural land and included outbuildings. When reviewing the legal description, he sees the name of a principal meridian. What type of legal description is this?

Rectangular government survey

Seller Gina feels awful that Martha, who was going to buy her property, lost her job. Gina decides to _________ Martha from the purchase contract.

Release

Harmony is looking at the legal description on her purchase contract. It mentions that the plat of her property is recorded in Map Book 12, page 14, at the county courthouse. What type of legal description is this?

Lot and block

Which of the following scenarios best describes a net listing?

Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.

The listing agent for a house promises the seller $500,000, but then assists the buyer in negotiating a better deal without letting the seller know. What violation has the listing agent committed?

Misrepresentation

Which of these is an example of a sub-agency relationship?

Morris, who's licensed independently, finds a buyer customer for Greg's listing with Marvel Homes and is obligated to act in the best interest of Marvel Homes' client.

Kiley Ann is thrilled to have her real estate license and to be hired on at New Beginnings Brokerage. She's not positive about Luis, her employing broker, though. He seems a little sketchy. For example, when she looks at her independent contractor agreement, it says that she's not entitled to unemployment insurance and has to pay her own income taxes. What should she do?

Review the requirements for independent contractors and be prepared to pay her own income tax and unemployment insurance.

The federal Government in the Sunshine Act is part of what?

The Freedom of Information Act

Kenneth plans to shop around for his mortgage loan to be sure he's getting the best interest rate and terms. What lender-provided document outlines loan rates and fees so he can make comparisons?

The Loan Estimate permits Kenneth to comparison shop.

Walt and Ginger were informed by their landlord that their option to purchase the bungalow they're renting has just been terminated. Which of the following things that can occur is likely to terminate an option to purchase?

They sublet the bungalow for a month without permission.

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Why should Shakira leave the discussion?

This conversation sounds like it might become an antitrust violation

Which of the following is NOT a protected class under federal or Virginia fair housing laws?

Those with assistance animals

On what type of listing (or listings) may a net listing be used in states where they are legal?

Open, exclusive agency, or exclusive right-to-sell listings

Eileen is preparing a report pursuant to the terms of a property management agreement. This report attempts to predict the income and expenses associated with running the property over the next year. What report is she preparing?

Operating budget

Seller Jason is giving listing agent Rebecca a tour of his house and pointing out all the features, even the spot in the attic where a previous owner's ghost likes to come back and visit. Jason asks Rebecca if buyers should be told about this. Which response is best?

"The presence of spirits stigmatizes the property. Many states don't consider this a material fact requiring disclosure, but this is my first ghost encounter, so I'll check our laws."

Your clients are looking at buying a $200,000 property with a 30-year loan at a 5% interest rate. If the amortization factor is 5.36822, how much would their principal and interest payment be per month? Remember: The monthly payment multiplier is per $1,000 of the mortgage.

$1,073.64

Kelly is purchasing a property that has an assessed value of $160,000. If the tax rate is 2.5%, what will Kelly likely pay annually in property taxes?

$4,000

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. How many payments will the borrower make over the course of the loan?

180

Which one of the following people does NOT have to fill out the Virginia Property Disclosure form in order to sell his or her property?

Cindy has to sell her townhouse because she hasn't paid state taxes in more than 10 years.

Which economic principle says that value is created and maintained when the characteristics of a property fit in with its surroundings?

Conformity

With the cost approach to value, what is the replacement cost?

Cost to build a functionally equivalent improvement

Danielle's friend, Joanna, is an agent. Danielle is considering listing her property and shares the details with Joanna. Joanna creates an MLS listing and places a sign in Danielle's yard. Danielle knows that Joanna will do a good job, so even though she hadn't actually agreed to let Joanna list the property, she permits her to start scheduling showings. Which of these is an example of ratification?

Danielle knows Joanna will do a good job, so she permits Joanna to start scheduling showings.

Prudence just finished paying off the debt on her loan, so the lender released the property's title to her. What clause in her mortgage stipulates this?

Defeasance

Ryan has engaged Jaclyn as his real estate agent to purchase a property. According to statute, what does Jaclyn owe any sellers she encounters in the process?

Disclosing Ryan's intentions related to the property

Fewer buyers in a higher price range would create what kind of pressure on housing prices?

Downward

The Town of Petersville has just decided to restrict density in one area of town that previously allowed a higher density. This is known as ______.

Downzoning

Smalltown is building a new interstate exchange to facilitate access to shopping and restaurants. In order to do so, it purchased two homes and tore them down so the ramps to and from the interstate could be constructed. What principal allowed Small town to do this?

Eminent domain

Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property?

Encroachment

Elvin owns 150 acres of prime hunting land. Every year, he gets requests from private groups that would like to use his land for a day or two during hunting season. He sometimes grants these requests, but this year, he's decided to only use it himself with his friends. Which right in the bundle of rights says that he can say no to these requests?

Exclusion

Your client submits an application to rent a condo unit. He has excellent credit and has had the same job for a long time. He uses a cane to help with his mobility. When his application is rejected, he feels it's due to his disability. He is protected under what federal law?

Fair Housing Amendments Act of 1988

What type of commercial lease allows the landlord to set an initial rental price, then increase rent based in changes to the property's appraised value?

Graduated

If Gus has the kind of license that requires 16 hours of continuing education, what else is true about his situation

Gus has to affiliate with a licensed broker.

Benjamin's house is for sale. It has a crack in the foundation. Potential buyer Shayna has not asked about the foundation. What are Benjamin's disclosure responsibilities?

He must disclose the crack if Shayna asks him about the foundation.

Oliver is working to provide a buyer and a lender with a formal opinion of the value of the property the buyer is purchasing. What is Oliver's role?

He's a certified or licensed appraiser.

Helen is purchasing a home for $150,000 and provides a $2,500 earnest money check to the seller, which will be applied to her down payment. She's financing the transaction, and her closing costs and down payment total $4,800. How much should Helen bring to the closing?

Helen must bring $2,300 to closing to pay the total amount due. She owed a total of $4,800 minus the earnest money she already paid ($2,500). That leaves her with $2,300 still to pay. This is the amount she still has to pay.

Jason's having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state's usury law. Which of these statements must be true?

His state's personal loan interest rate cap is less than 20%.

Thad received multiple offers on his property and is reviewing them with his agent Nora. All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a contingency that's generally the most risky. Which contingency is that?

Home sale

Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who's interested in Gertrude's property. What restrictions are in place for Homestead Realty?

Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality.`

Which of these situations represents the illegal practice of redlining?

Hunter, a mortgage broker, refuses to underwrite mortgage applications from applicants who are buying in specific neighborhoods, based on the neighborhood's demographics.

Amira's seller Tom just received the news that his buyers are walking away from the sale. They weren't willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What's the most likely reason for that?

If they see the report, they'll be required to disclose any adverse findings.

Seller Adelaide and buyer Colin close on a transaction for two rental condos on March 15. They live in a state where the seller is considered the owner of the property on the day of closing. The combined rental income per month is $4,000. How much rental income can Colin expect to earn in March?

In many states, the seller is considered the property owner on closing date. Divide the monthly income by the days in March ($4,000 ÷ 31 = $129.03) for daily rent, then multiply that by the 16 days Colin will own the property for the total of $2064.48.

The Druid Hills neighborhood sits firmly within a single-family residential zoning area. Most of the lots are one-third of an acre or larger. A 20-acre parcel on the edge of the neighborhood sold recently. The buyer wants to build condominium flats since multi-family housing is in short supply in the area. The town is considering rezoning that parcel to allow this development because the developer plans to also include a public park and a walking trail. What kind of zoning is this?

Incentive zoning

Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid?

Yes, the contract is valid.

How does title insurance affect the lender?

It protects the lender from loss due to defective titles.

You've just signed a listing with a new seller client. What's true about electronic delivery of written notice or contract forms to your seller?

It's allowed if the seller consented to it in the listing contract.

Joyce just closed on a condo for $366,900 and put down 20% to obtain an 80% loan and avoid having to pay for private mortgage insurance. How much equity does she have in her condo?

Joyce's equity is $73,380. The value of her condo is $366,900. She put $73,380 down ($366,900 x .20). Because she just closed, her equity is exactly the same as her down payment.

Which of these is an example of severability?

Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.

Krening Realty has been found guilty of running deceptive ads. Which of these statements about the potential penalty is NOT true?

Krening's broker may face jail time.

Which of the following describes a right-of-way easement?

Land that a railroad company runs its track through

Home inspector Maura was walking Thad through a property inspection. The frame house, on a slab foundation, had mulch piled up about 18 inches next to the house. Why was Maura noting this as a concern?

Mulch next to wood siding may lead to wood rot.

When property with a pre-existing lease is sold, the new owner ______.

Must honor the lease terms unless the lease states otherwise

Nathaniel assisted with the purchase of a commercial building that will be used as a community center. He doesn't hold a real estate license, yet his actions didn't violate any license laws. What must be true about Nathaniel's situation?

Nathaniel is a public official whose salaried duties include real estate transactions.

Shalonda is looking to purchase a home for $325,000 using a conventional loan. She has $49,000 to place as a down payment on the house. Which of the following statements is true?

The loan-to-value ratio exceeds 80%.

Eleanor is moving from a starter home into something a little larger. Her agent has cautioned her against making the offer on the new place contingent on the sale of Eleanor's starter home. Why the caution?

Sellers would view an offer without that contingency as a stronger offer.

Tres owns a warehouse in an area that is zoned light industrial. With an increased demand for housing in the area, Tres wants to create loft-style condos and have his property designated as residential, even though the surrounding buildings will remain light industrial. What type of zoning is this?

Spot zoning

The Fair Housing Board of Virginia has just issued a charge of discrimination. What is true about this situation?

The charge is referred to the attorney general's office.

Office space in a downtown high rise rents annually at $33.40 per square foot. Max's tenant client is interested in renting two adjacent suites: one is 7,152 s.f., and the second is 3,560 s.f. What's the monthly rental rate?

The combined monthly rental rate for the two suites is $29,815.07. The total square footage is 10,712 (7,152 + 3,560), so the annual rental amount is $357,780.80 (10,712 x $33.40). Divide that amount by 12 to get the monthly rental rate. $29,815.07

Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here?

The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz.

Which of the following statements about the number of contingencies in a sales contract is true?

The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted.

The Virginia Condominium Act is concerned that condo owners and potential buyers have the information they need to make informed decisions. To that end, which of the following does this act regulate?

The information that must be included in public offering statements

When calculating loan-to-value ratios, which of the following will be used by the lender?

The lesser of the sales price or appraisal value

To which of the following are most of the buyer's closing costs typically related?

The mortgage loan the buyer's obtaining

When state and federal laws differ, as they sometimes do with fair housing and/or human rights, which of these statements is true?

The state law may not remove rights granted to citizens under the federal law.

Your client, a builder, is considering buying three adjacent lots. They each have the same depth, 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?

The total street frontage is 446 feet. Add up the square footages of the three lots and divide by the lot depth (275) to get the total street frontage. (35,750 + 53,900 + 33,000) ÷ 275 = 446

Bernie represented Oscar in the sale of Oscar's home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?

Yes, because "exclusive right to sell" means Bernie gets paid no matter who finds the buyer.

Aldrich is conveying marketable title to a property buyer. Should he also furnish a title insurance policy?

Yes, because title defects not revealed in a title search can crop up even with marketable title.

Doug is a real estate licensee. He is a property manager for Julie. He is approached by Jessica to manage one of her new properties. Can Doug do this?

Yes, licensees can perform property management activities for multiple owners.