Practice Exam: CA RE Practices

Drake's offer to purchase Kevin's condo currently has a financial contingency, an inspection contingency, an appraisal contingency, + a sale of current home contingency. Kev also got an offer from Lucy, which came in at $5,000 less than Drake's offer but w/ only an appraisal contingency. What is true about Drake's offer compared to Lucy's?

It's likely viewed as a less favorable offer

Ppt expense reimbursements are paid to the ___.

Ppt owner

The role of a ppt manager is to support the objectives + goals of the ___.

Ppt owner

What doc should detail the typical reports you'll need to provide for a ppt owner?

Property management agreement

Erica describes the condo she's listed as being "the best unit in the building." What's this an example of?

Puffery

What does RESPA stand for?

Real Estate Settlement Procedures Act

What type of real estate investment is similar to collateralize mortgage obligations (CMOs)?

Real estate mortgage investment conduit

Who delivers evidence of a clear title at closing?

Title insurance rep

Why does the closing agent review the purchase contract?

To gather closing-related info agreed to in the contract.

Marilyn is reviewing the inspection report w/ her buyer clients. What issue in the report should Marilyn flag as most significant?

presence of mold

Shopping centers + malls belong to which of these ppt categories?

retail

Who's responsibility for any tax reserves require to pay ppt taxes?

the buyer

Who closes on the mort. loan commitment at closing?

the buyer + the lenders attorney

Who is responsible for following up on issues identified in the inspection report to ensure that they are addressed?

the buyer's agent

There are four elements to misrepresentation. Except

the person who falsely rep the material fact did it innocently

According to custom, who pays the costs on the day of closing for ppt taxes, utilities, etc?

the seller

What best describes a net listing?

the seller specifies a price desired for the ppt + agrees to pay the broker any amount received more than that price.

what happens if an independent contractor earns $600 or more during the tax year?

the worker's brokerage firm must prepare + submit forms 1096 + 1099 to the IRS + distribute form 1099 to the worker

What is true about net listings?

they often involve a conflict of interest

What is true of "for sale" signs?

they req. the seller's written permission to post

You've been hard at work negotiating an offer for your client. The buyer is w/in $2,000 of the list price, but asks for a few window replacements, your client refuses to accommodate. The repair should cost $500 at most. How should you respond?

this is the best offer you you've had on the house. The request is pretty reasonable since the windows are broken.

What is a recommended way for listing agents to use the MLS?

to advertise their listings

The benefits of a home warranty for buyers are clear. Why might a seller want to offer a home warranty to buyers?

to protect themselves from any claims after closing

Amy owns a salon + spa. She's leasing a prime piece of RE in which she's installing salon chairs, counters, etc. What are these items considered?

trade fixtures

what can help a lic. avoid being accused of unauthorized practice of law?

using approved fill-in-the-blank forms

What is an element of positive misrep?

was not relied upon

imagine that you're an active RE lic. as well as an architect, + you'd like to partner w/ a builder who's just beginning a development. Which of these creates agency coupled w/ interest?

you agree to design the houses for this builder in return for getting the listing when the ppts are finished

At which point in the res. selling process does the RE pro prepare a comparative market analysis?

obtaining the listing

reporting local economic + other trends + accounts, will help you + the ppt owner plan + set goals. Which trend would have the most negative impact on your ppt's vacancy rates?

one of your closest competitors has just finished a complete reno of his ppt

What's it called when a lic. tries to induce sales by predicting a decline in the market value?

panic selling

Income that a ppt could bring in if it were leased at full capacity is:

potential gross income

Which type of closing is conducted w/ a neutral 3rd party holding the funds, buyer + seller may never meet?

Escrow closing

Example of puffery

"this condo has the best view this side of the river!"

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

$36,000

A ppt has 10 units + is 90% occupied. Rent is $500 per months, total vacancy + collection loss = 10% what's the potential gross income?

$60,000

You're listed a 1978 craftsman w/ some significant foundation issues - so significant that the buyers walked away after the inspection. They provided you and your seller with a copy of the report, which also points out wiring concerns. At today's open house, a prospective buyer asks to see a copy. You do ___?

Disclose any adverse material facts, but you don't have to provide the report

Evan has his home + cell # on the Do Not Call Registry. He received an unwanted solicitation call from a new RE lis. in the city. He told the lic. his # is on the DNCReg + that he does not wish to do bus. w/ the lic. A few days later, he got another unwanted call from the lic. What federal act is the lic. possibly violating?

Do Not Call Implementation Act of 2003

Prop 13 allows a ppt's base value to increase by a max of ___% annually, as an inflation factor.

2%

an investor is thinking about buying a $500k house to use as a rental ppt. She has $100k saved up for a down payment + will mortgage the remaining $400k. The annual cash flow is projected to be $25k. What is the potential return on investment?

25%

what's the failure rate for new RE lic?

87%

What's true about inadvertent misrepresentation?

A false statement was made.

MLS is:

A fee-based subscription + seller preferred

The ppt manager's primary responsibility to an owner is to ___.

Achieve the highest possible return on the owner's investment

Prior to signing the closing docs. the parties should have already ___.

Assumed themselves that the cond + contingencies of the purchase agreement have been met.

If a seller asks a buyer to waive the inspection contingency, how might the transaction process transpire + still protect the buyer?

Buyer has inspection, buyer makes offer, seller accepts offer

What describes the process of making a copy of a website for the purpose of obtaining money or data from unsuspecting users?

Cloning

In what type of market could the buyer's strategy be to offer up to 10% below list price?

Cold market

Melissa hasn't paid her mort. in months. What action can the lender take to recover money owed?

Foreclosure

Which of these is an example of an agent exercising the duties owed to customers + other parties?

Francie disclosed info about the flooding basement to the buyer + buyer's agent

In order for misrep. to occur, what must happen to the person who relied upon it?

He must be harmed

Jen + Tony, your buyer clients, really like the patio set + bedroom furniture in the house you've just shown them. However, you've suggested that they not ask for them as part of the offer to purchase b/c the market is ___.

Hot

the income from what reliable source benefits the entire community by funding essential services + public works?

ppt taxes

B/c these types of ppts have both specific physical + complex operational req/ they are usually handled by more experienced RE prof.

Industrial

Jason is the seller's agent. His seller has a leaky roof he'd rather keep secret from buyers. What should Jason do?

Inform the seller that the roof leak is a material fact that he is obligated to disclose to buyers

Nicholas is working w/ a buyer client who wants a special clause added to his purchase contract. How should Nicholas handle this?

Instruct the client to hire an attorney to draft the clause

Everything in your office is potentially at risk from thieves + other criminals. B/c of this, what should you never do?

Leave clients unattended in the office

Lenny is the listing agent for a ppt built in 1901. Old homes are very desirable in this area, + Lenny is expecting a fair amount of interest + multiple offers @ the planned open house. Which action best demonstrates good faith to his seller client in this scenario?

Lenny presents all formal written offers as they come in, discussing the merits + drawbacks of each, but ultimately lets the owner decide what action to take.

You receive a full price offer w/in one day for a new listing. Your seller is concerned the home was under priced. How should you respond?

Make sure your seller is informed. Review the info that shows the home was accurately priced.

Coin-operated laundry equipment, vending machines, + late fees are all examples of ___.

Misc. income

How often should accnting records for trust fund accounts be reconciled?

Monthly

Which clause in the listing agree. gives the listing broker the authority + obligates the broker to market the ppt to other brokers.

Multiple Listing Clause

Four brokerage firms operate in the same small city as Jackson's firm. All the firms charge approximately the same listing commission + pay approximately the same cooperating commission to the selling broker. The commission split w/in each firm are also similar. Is this an antitrust violation? Why/why not?

No, the fact that the fir's commission rates + splits are similar doesn't necessarily mean they are agreed to fix those values.

Reggie has thoroughly reviewed the sales contract w/ his clients, the Arnolds, + has confirmed that they understand all the terms + provisions. What should Reggie do next?

Recommend that the Arnolds review the sales contract w/ an attorney before signing it

What info in a report would NOT help your owner assess whether your rental rates are competitive?

The # of occupants in each of your units.

Grayson tells his seller clients, Geneva, that he'll reduce the listing commission if Geneva uses MBS Title Services to close her transaction. What type of illegal situation is this?

Tie-in arrangement

The main difference b/n loan pre-qual + loan pre-approval is that loan _______ doesn't include lender verification of buy-provided data

pre-qual

Lana is the client who is seeking to purchase some investment ppt. What does this tell you about her transaction?

She'll want cash flow + a high rate of return

why should you avoid describing a ppt as "secluded" when marketing through a social network?

Thieves may see this as an opportunity to enter the house unseen

Why might some agents work for buyers w/o ever having met them?

They're afraid to turn down any business

You're showing your buyer a house that clearly has a 2nd story addition. What important thing do you need to find out from the seller?

Whether or not the addition was permitted

Missing, cracked, or displaced shingles can indicate ___ damages.

Wind

What is the MLS

a database of RE info

Inadvertent misrepresentation

a false statement was made

Depositing trust funds into a trust account, provides protection for those funds should the broker or lic. be faced w/ ___.

accidents, death, litigation

Your brokerage firm uses preprinted sales contract forms, but your seller Marcus wants to add some language about staying in the house + renting from the buyer for a month after closing. What should you use to add this info?

addendum

What's misrepresentation?

an intentional or inadvertent misstatement of act.

When is the seller paid the full amount of the purchase price for the ppt?

at closing

Among other things, a listing in the MLS should always include ___.

at least one photo

Who's responsibility for paying appraisal + credit report fees?

buyer

what term is typically a standard part of the sales contract?

buyer option to purchase a home warranty

Why is scheduling an in-person meeting w/ potential buyers an advantage?

buyer will have already invested time w/ you + will be reluctant to start over again w/ another agent

What is not something an underwriter will evaluate before granting a loan?

census stats on a neighborhood's ethnic make-up

What could be an indication of a foundation problem?

crack in a basement wall

Which two items will appear on a closing statement?

credits and debits

the ppt management proposal includes info such as ___.

details about the ppt manager's qualification

What steps can the RE pro's take to assist buyers w/ ppt taxes?

disclose to buyers that a sale will prompt a reassment

ROI is determined by

dividing the cash flow by the initial cash invested

A ppt manager has just met w/ Lena, who is interested in renting a vacant unit. What's the best way for the ppt manager to determine how reliable Lena will be w/ rent?

get permission in writing fro Lena to run a credit report

Gary is a good broker to his new lic. that is most likely b/c he ___.

has a robust training program

Inconsistent temps. from room to room is a common ___ problem.

heating + cooling

Jerry, a lic., recieved a commission check. were should he deposit those funds?

in his own private account

Potential gross income is:

income the ppt would realize if it were fully rented

What makes a 'choose your neighbor' marketing letter potentially discriminatory?

it limits the availability of the ppt for sale to those who are pre-approved by neighbors

Coffeeshop, new owner, how does ADA affect the new business?

it's a commercial enterprise that's open to the public - she'll have to meet ADA laws

What strategy would help to make a 'choose your neighbor' marketing letter nondiscriminatory?

listing the ppt on the mls

Charles just learned that the master bath addition on the home he purchased was built w/o obtaining permits. It's actually situated too close to the lot line. What might Charles have to do to his master bath?

may need to be taken down

All the following reports may be your responsibility as a ppt manager expect ___.

neighborhood sales

Sheldon is busy preparing transaction paperwork for the ppt his clients is selling. What activities accompany this duty?

obtain signature + provide copies to the parties