National Real Estate Practice Exam

Dale and Barbara, your buyer clients, aren't thrilled about the current interest rates on home loans. They opt to pay two discount points to their lender to bring down their monthly payment. They're financing $235,000 on their new $400,000 home, so how much can they expect to pay for points at closing?

$4,700

A local buyer is purchasing a property for $120,000. What will the seller pay in transfer tax if the rate is $.37 per $100?

$444

Amy is purchasing a $500,000 property, financing $400,000. Assuming a mortgage recording tax rate of $0.115 per $100, what's the mortgage recording tax amount?

$460

Casey signed a contract form offering a purchase price of $309,000 on a home, and gave his agent a $5,000 earnest money deposit. The owner is out of town and her agent can't reach her. At this point, what does Casey have?

An offer

Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparables that lack features of his subject property, and others that have even more desirable features, to balance out the comparison.

Bracketing

In the sales comparison approach, using comparables that are five and 15 years old when appraising a subject that is 10 years old is an example of what?

Bracketing

Jerry is holding an open house for a property he has listed. He speaks to several visitors, but none of them discuss making an offer. What are these visitors called?

Customers

Derrick was thrilled to find out that the land he purchased includes several small caves. He's been spelunking for about three years and looks forward to exploring the caves on weekends. Which real property right allows him to do so?

Enjoyment

Which real property ownership right protects the owner from harassment or interference?

Enjoyment

The secondary mortgage market buys loans from the primary market. How does this aid the lending market?

Ensure funds are available to borrowers

A home equity line of credit (HELOC) is based on the homeowner's available ______.

Equity

When working with a seller, you signed a listing agreement that ensured you'd receive a commission, provided the property sold during the listing term. What type of listing agreement did you sign?

Exclusive right to sell

Nearby industrial odor is an example of which type of depreciation?

External depreciation

Goldie and Kurt are looking at purchasing their first home. Their credit history is a little shaky and they don't have enough money saved to put down 20%. What type of loan seems most appropriate?

FHA

Which agency prohibits unfair acts, practices, or methods of competition, and enforces federal antitrust and consumer protection laws nationally?

Federal Trade Commission

Which of these statements accurately describes an environmental site assessment or an environmental impact statement?

Federally funded construction projects require an environmental impact statement.

Joe gave land to a school, but still wanted to have some control over its use, so a deed was prepared that gave the school title as long as the land is used for educational purposes. What type of interest does the school have?

Fee simple determinable

Which of these statements best describes value in use?

How much the property is worth to its owner as it's currently used

Trenton Excavating owns land on which it intends to build an equipment storage facility. It's found to be contaminated with agricultural chemicals. What's true of Trenton's liability?

If Trenton had no knowledge of the damage and no reason to suspect that the property was contaminated, it may be immune from liability.

Candace and Phil Tolson listed their home for sale with Trent Richards, the broker for Richards Homes. Sadly, Trent became incapacitated due to a car accident. What's the status of the listing agreement?

The agreement terminates by operation of law

What's the relationship between the Loan Estimate and the Closing Disclosure?

Lenders issue the Loan Estimate within three days of receiving an application, and Closing Disclosure figures should be similar to the Loan Estimate.

Leo's client is looking for a property with at least 2,500 finished square feet. Leo finds a 2,200-square-foot property with all the other features the client is looking for, and purposely doesn't mention the square footage to his client. His client agrees to look at the property, falls in love with it, and wants to make an offer, but does not realize it doesn't contain his desired square footage. Which of these statements accurately represents Leo's level of misrepresentation in this situation?

Leo knew about the square footage and intentionally didn't mention it. He's guilty of intentional misrepresentation.

Annabelle's previous transactions have all been median-priced, detached single-family residential homes in the main part of the city or its suburbs. In which of these situations would Annabelle be practicing within her area of competence?

Listing a property in the main part of the city that she'll market as a fixer-upper

The legal description of the project, easements that run with the land, and street and traffic patterns are all under consideration when a local planning board ______.

Reviews a developer's project plat

Margaret isn't ready to buy Jill's property, but she pays Jill a fee that guarantees she'll be notified if another buyer appears. If another buyer does make an offer, Margaret has the opportunity to purchase at the price and terms of the offer. Margaret has a(n) ______ on Jill's property.

Right of first refusal

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances

Assuming licensee Shannon has actual knowledge of all of the following property issues, which of these issues should she disclose to prospective buyers?

The upstairs bathroom has a leaky toilet.

If there is some kind of defect on a property's title, what effect does this level of transferability have on the property's value?

The value falls.

Which statement correctly identifies a federal fair housing law and what it addresses?

Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion

Jason bought a home four years ago for $153,000. If his home appreciated at an annual rate of 3%, how much would his home be worth today (round to the nearest dollar)?

$172,203

Daisies in the Drive-Thru is a flower shop in a converted 2,000-sq.-ft. fast food building. Its annual rent amount is $15.25 per square foot with a triple net fee of $2 per square foot. What's the monthly lease payment?

$2,875

The owner of a duplex charges $2,000 per month for each unit. Over the last 12 months, one half of the property was vacant for six months. What was the owner's effective gross income for this 12-month period?

$36,000

What is the ROI for this scenario? An investor pays $80,000 cash toward the purchase price, finances the rest, and has a cash flow of $11,000 after repairs and debt services.

13.75%

Assuming that the seller pays for the date of closing, if closing is July 7, how many days will the seller be responsible for paying using a statutory year?

187 days

Over how many years is a residential income-producing property depreciated?

27.5 years

Based on federal housing law, which of the following would be protected?

A 35-year-old single Jewish man.

Jenna was surprised that the charming Tudor she was touring was still on the market. "I don't see anything bad on the disclosure," she told her agent, "and the price seems fine. Why do you think it hasn't sold?" Her agent Louise responded, "Well, I heard that UPS was opening a new air hub two miles away early next year." Why might this affect Jenna's or other buyers' interest in the property?

A UPS hub would mean many more flights overhead each day.

Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns ______.

A freehold estate

Elaina and Allen just purchased a home using a deed of trust. Which of the following is most likely true about their home loan?

A trustee will hold title until the loan is paid

The element of a deed that signifies the grantor's intention to transfer title to the grantee is the ______.

Act of conveyance

Jansen and his listing agent just left the closing on Jansen's house. What kind of notice does Jansen, his agent, the buyer, and the buyer's agent have regarding the sale of Jansen's house?

Actual notice

When using the MARIA acronym to test whether an item is a fixture, what do the two A's stand for?

Adaptability of item to land's use and agreement of the parties

The town planning and zoning board is considering some new zoning regulations to ensure that one of the neighborhoods maintains its designation on the National Register of Historic Places. What type of zoning are they likely to enact?

Aesthetic zoning

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?

Amendment

Which of these situations might be addressed by a subject to clause or limitations in the deed Jane is using to convey property to Moira?

An easement runs across the property, permitting Jane's neighbors to access the neighborhood boat dock.

Marsha made an offer of $325,000 on a home listed for $350,000. The seller accepted her offer. What service will her lender order to determine the home's actual value?

Appraisal by an appraiser

Hank leases 150 acres from Sara and Jesse. He has an option contract attached to his lease, with an option to purchase which can be exercised within the next two years. He just told Jesse that he's ready to purchase the land, and they've negotiated a purchase price and closing date. What kind of contract is this?

Bilateral

Breanna signed a purchase offer stating she'd buy Kathy's home for $150,000. Kathy rejected that offer but said she'd sell it to Breanna for $200,000. Breanna agreed to these terms, and they added their signatures. Which of the following statements is correct?

Breanna accepted the offer Kathy made.

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan?

Buydown

Which legislative act prohibits certain types of electronic communication?

CAN-SPAM

Chrissy lives in Lake Ridge Estates, a neighborhood in which vinyl siding may not be used on homes. This HOA regulation is what kind of private land control?

CC&R

One week before closing is scheduled, Zach decides he's changed his mind and refuses to buy Kim's house. Kim sues Zach, and the courts agree that Zach should compensate Kim for the loss of other potential sales while the property was under contract to Zach. What kind of damages are these?

Compensatory damages

What are the two types of physical depreciation?

Curable and incurable

The Amarals are purchasing the house of their dreams and have plans to stay in it for at least the next three decades while they pay back their conventional 30-year loan. Their primary focus, over the life of the loan, is to reduce their payments as much as possible. What is something that could help them achieve this?

Discount points

Which of the following properties requires a lead disclosure.

Duplex built in 1959

When it comes to earnest money, which one of the following statements is true?

Earnest money must be placed in a trust account.

Easements are a type of encumbrance that can affect a property. Which of the following is true about easements?

Easements are often established by a written agreement between the parties.

What are the two categories of comparison when evaluating comparables to a subject property in the market comparison approach?

Elements and units

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 Smalltown to do this?

Eminent domain

Sam decided to build a swimming pool in his yard. He built it one foot inside his neighbor's property. What is this an example of?

Encroachment

Jerome is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?

Get a low 4.925% APR

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property.

Nick and Chris tine own a Taco Bell franchise. They built the restaurant on land they've leased from the Fargood Foundation. What type of lease do they have?

Ground lease

Marta and Kim are excited because Marta received a prestigious fellowship, and she'll be studying in Spain for a year! Kim is taking a leave of absence from her job to accompany Marta. They don't want their home in a gated community to sit empty, so they'd like to rent it out for the year. What might prohibit them from doing so?

Homeowner regulations

Which act states that communities and facilities that meet certain criteria for providing housing to older persons are legally exempt from familial status discrimination?

Housing for Older Persons Act of 1995

Charlie represents Sue, a buyer, in a transaction. A licensee from another firm represents the seller, Claude. Claude will pay a 6% commission to his listing firm, and that firm will split the commission with Charlie's firm. Charlie will be compensated through his brokerage. What's true about this situation?

In this transaction, Charlie only represents Sue, and the other licensee only represents Claude.

Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated

Which clause in a contract states that one or more parties won't be held liable if there are losses or expenses related to the contract?

Indemnification clause

The EPA-approved pamphlet, "Protect Your Family From Lead in Your Home," provides buyers and renters with ______.

Information about identifying and controlling lead-based paint hazards

What impact does the Clean Water Act have on wetlands use?

It governs the use, maintenance, and development of wetlands.

How does title insurance affect the lender?

It protects the lender from loss due to defective titles.

Tom and Rosanne are interested in a property, but before making an offer, they want to make sure there aren't any registered sex offenders living in the neighborhood. Which statement is most accurate?

It's up to the buyer to perform due diligence and research whether sex offenders live in the area. Licensees can direct clients to the state's registry.

Which of these is an example of puffery?

Kevin's MLS remarks note that the condo has the city's "most beautiful twilight view of downtown and the bay."

Which body of law contains the rules governing the relationship between a real estate professional and the person being represented?

Law of agency

John is considering purchasing an office building and is trying to determine whether or not it's a good investment. The methods of income approach he may use when estimating the value are all of the following EXCEPT for which?

Market or sales comparison

Which option is of the most concern to licensees and advertising when it comes to the Federal Trade Commission?

Misleading ads

Carla Ricardo has been offered her dream job in another state. She asks her current landlord to let her out of her lease early. The landlord agrees to do so, with no strings attached. Carla and her landlord have decided to terminate the contract through ______.

Mutual agreement

In which of the following situations can the state use its power of escheat?

Nadine died with no heirs and no debt.

What is the federal program that was created to help mitigate future flood losses across the country?

National Flood Insurance Program (NFIP)

Serena just finished making a buyer presentation to Mark and Debbie Calhoun. Now that they understand the difference between being customers and being clients, they're anxious to be represented. What is one of their duties as buyers represented by an agent?

Notifying Serena of any material changes

When does a breach of contract occur?

One party fails to meet the obligations of the contract.

How are fines assessed for violations of the CAN-SPAM Act

Per violation, which can be a single email

When a contract doesn't provide specific dates for when the terms need to be met, what should the parties assume regarding performance of the contract?

Performance must take place within a "reasonable time."

What is the term for an increase in property value caused by the joining of two neighboring parcels of land?

Plottage

The Nelsons are selling their home. The neighborhood they are moving out of is very popular and they have received multiple contracts on their property. Their broker, Jim Murphy, is getting lots of calls from aggressive agents trying to secure the deal for their clients. What is the best way for their broker to respond?

Politely respond by saying, "I take my instructions from my client." Then keep lines of communication open.

Three brokers meet and agree that all of their listing contracts will have one-year terms. Of which type of antitrust violation is this an example?

Price fixing

Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor weren't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.

Rescinding the contract unilaterally

Kelvin isn't sure how to read this legal description, but his agent said something about reading it from right to left. Here's the description: "The north half of the northwest quarter of Section 6, Township 8 North, Range 68 west of the 5th principal meridian." What land description method did surveyors use for this piece of property?

Rectangular government survey

Patricia is meeting with James and Cindy, potential buyers of a listing. They are in the office to make an offer when James says, "The only thing that bothers me are those black spots on the ceiling in the bathroom. Do you think that could be the bad kind of mold? It's not dangerous, is it?" What should Patricia do?

Refer James and Cindy to a qualified mold professional.

Which of the following scenarios is an example of corrective maintenance that may be overseen by a property manager?

Replacing a section of roof after a leak

Mavis is a buyer's agent working with Blaine, an unrepresented seller. Mavis's buyer, Cintra, makes an offer on Blaine's property. Mavis assists Blaine with the paperwork. What's Mavis's relationship to the parties?

She's an agent to Cintra, and the seller is her customer.

Which of the following is an example of a fixture that is real property?

Shelves attached to the wall with brackets

Which of these scenarios is an example of two parties rescinding a contract?

Sherman, the seller, decides not to sell his condo after all. Fortunately, his buyer, Alice, decided to join the Peace Corps. They mutually agree to cancel the sale with no penalty on either side, and each signs paperwork to this effect

Which of these situations represents a unilateral contract?

Sherry promises to give Brent a ride home from work, and then doesn't show up.

Which one of the following could be a clue that a property was formerly a waste disposal site?

Soft spots, mounds, and discolored soil

Which one of these statements accurately represents one of the required elements in a deed?

The deed includes an act of conveyance.

Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now?

The lender tells the trustee to release the title to Olivia.

When seeking a property appraisal, which of these factors requires a lender to comply with AIR?

The lender wishes to sell the loan to Fannie Mae.

Harriet, an out-of-state licensee, is friends with Tonya, a licensee who works with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which one of the following statements about this fee is true?

Tonya must pay the referral fee through her brokerage firm to Harriet's brokerage firm

In a real estate transaction in which you represent the seller, your duty to other parties is to ______.

Treat them honestly and fairly