CE 30 Hour Practice Exam

Which of the following statements is an acceptable phrase to include in an MLS listing?

"Large backyard with ample room for all your outdoor activities"

You meet a buyer who has an exclusive agency agreement with another firm. Which of the following questions can you ask the seller?

"When does your agreement with your broker expire?"

If you have an 800-square-foot rectangular building and it sells for $75,000, that equates to ______ per square foot.

$93.75

Convert the following fraction to a decimal: 1/5.

0.2

What is 40% of 200?

80

You're performing a market analysis. Which of the following features, if present in the subject property and lacking in the comparable property, would warrant an addition to the sales price of the comparable?

A new roof

Harvey is an investor who found and closed on an investment property, then decided to sell a property other than the one originally marked for the exchange. What is this an example of?

A reverse tax-deferred exchange

Which of the following information can be found in a subject property's former listing on the MLS?

Amenities at time of listing

Which of the following could apply to closing costs for an investment property?

Amortized over the life of the loan

What's principal, as it relates to loans?

Amount of payment that will be applied to the loan balance

In South Carolina, which of the following parties must coordinate a residential real estate purchase and closing?

An attorney

South Carolina real estate broker James is explaining the Broker Disclaimer portion of the sales contract to his buyers. He says, "____________."

As a broker, I give no warranty about zoning or property condition

Seek a sale at the best price at terms acceptable to the seller.

Ask the seller what caused the stain.

Which of the following is indicative of a first-time homebuyer?

Asks a lot of questions

What can tax losses be used to offset?

Both passive and active income

Dynamic and static risk are considered ________ risks.

Business

Shelly's real estate investment strategy is to look for smaller multi-family properties, fix them up, and rent them out. Her investment strategy most closely matches which of the following?

Buy and hold

In South Carolina, unless the parties otherwise agree in the contract, the ______ is responsible for doing having the property surveyed prior to closing.

Buyer

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

Buyer has inspection, buyer makes offer, seller accepts offer

Which of the following statements about new construction properties is true?

Buyers of new construction tend to favor similar property types as buyers of existing properties.

Carmen is a REALTOR® and managing broker of three associated licensees: Brenda and Brandon, who are also REALTORS®; and Ian, who isn't. Who must abide by the National Association of REALTORS® Code of Ethics?

Carmen, Brenda, and Brandon

Which of the following is not something an underwriter will evaluate before granting a loan?

Census statistics on a neighborhood's ethnic make-up

In the South Carolina sales contract, the buyer is put on notice to obtain a new insurance policy and the seller is to cancel insurance as of _________.

Closing

In what type of market is pricing a home below market value an especially good strategy?

Cold Market

Tiffany just obtained a list of all of the homeowners in an area. She checks the numbers to make sure they're not on the Do Not Call Registry, then starts making calls to see if they or anyone they know is interested in selling their home. What method is this?

Cold calling

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

Cold market

Which of the following can be defined as what it would take to recreate that property if it disappeared off the face of the earth today?

Cost

Danny is buying Rudy's South Carolina property. A special assessment will apply after closing. Who's responsible for paying this?

Danny

What do investors call an investment in vacant land?

Dead money

Jane is a new homebuyer in South Carolina. She's placed $5,000 down as an earnest money deposit. What section of the sales contract protects her earnest money in the event she can't obtain a loan?

Finance

Which of these is a static risk?

Fire damaging the building

What type of buyer tends to know little about the home buying process, has limited funds, and may be borrowing down payment money from relatives?

First-time buyer

Maura is doing a market analysis for a distressed property. Which of the following properties would make a good comparable?

Foreclosed property

You're representing a seller. Which of the following is one of your duties?

Getting the seller an acceptable price and terms

Estate tax is calculated by first computing ______ , which is the total of the fair market value of all items owned by the deceased.

Gross estate value

Which of the following is a common issue licensees can expect from sellers?

Haggling over commission

Chester is moving on up! He and his wife are ready to sell their condo and purchase a new place. Chester is a real estate licensee and will list the property himself. What must Chester disclose to prospective buyers?

He owns the property

Jamie is looking to purchase a home. He is hesitant to ask for repairs and risk the seller accepting a different offer. In what type of market is this concern most valid?

Hot

Your client, Octavia, needs to sell quickly. She paid $250,000 for her condo, and her neighbor's condo sold two years ago for $300,000. A similar condo across town, however, recently sold for $400,000. Which factor should impact your list price strategy?

How soon Octavia needs to sell

Which of the following is a good tip to follow when identifying properties to show a buyer?

Identify properties within the buyer's price range.

Carol is performing a market analysis, and is working with three comparable properties to her subject property. How does she account for differences between the subject property and comparables?

If the subject property has a valuable feature lacking in the comparable property, she adds this value to the comparable property's sales price.

Which of the following is a true statement about the Entire Agreement section of a South Carolina sales contract?

Illegal provisions in the contract may be separated from the contract without affecting the other provisions.

Which of the following is an unauthorized practice of law?

Interpreting the legal consequences of a client's actions

What type of value may consumers be interested in if they are looking for the potential rate of return?

Investment value

Isabelle just took on a new listing, in which the owner is selling because a new freeway is being built right behind the house. The owner is concerned about the noise and other activity the freeway will bring, but doesn't want prospective buyers to know this. Which action best demonstrates good faith in this scenario?

Isabelle tells the owner that this is a material fact related to the property that must be disclosed to prospective buyers, or Isabelle will not take the listing.

What does income shelter mean?

It means that the income received is sheltered from taxation.

Which of the following is a true statement about the seller's property condition disclosure statement in South Carolina?

It must be completed by the seller unless both parties waive the requirement.

Why would a code of ethics provide minimum ethical expectations?

It sets a baseline for ethical standards.

Which of the following is one of the primary reasons that developers like to invest in unimproved land?

It's easier to build on a blank canvas than it is to retrofit existing infrastructure.

Lenny is the listing agent for a property built in 1901. Old homes are very desirable in this area, and Lenny is expecting a fair amount of interest and multiple offers at 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 and drawbacks of each, but ultimately lets the owner decide what action to take.

You've just pulled up in front of a gorgeous Craftsman-style home that you will be showing to your buyer clients. When viewing the home, what's the best approach to take?

Let the buyers explore on their own, but remain close enough to read their cues.

What board level provides the primary enforcement of the NAR Code of Ethics through hearings for both professional standards and arbitration?

Local

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.

What's interest?

Money paid for the use of money

Monica is acting as a listing agent for her friend, Brian. She and Brian met when they both began attending a support group for those living with HIV. Which of the following best represents an action Monica should take?

Monica cannot tell others about Brian's HIV status.

According to NAR's Code of Ethics, if you're representing a buyer, and the seller happens to be your ___________, you have to disclose this relationship to your client.

Mother

Carter represents a buyer whose offer on a property was accepted. His client is worried he's paying too much for the property, so Carter decides to try to convince the appraiser to value the property a little lower so his clients can try to get the seller to come down in the sales price. Is this okay?

No, Carter is trying to influence an appraiser.

Your buyer client, Percy, needs to obtain financing to buy his dream house. What's his first step?

Obtain a pre-qualification letter

In states where they're legal, for which type of listing or listings may a net listing be used? Select the most complete answer.

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

Which of the following expenses in a South Carolina residential purchase is considered a seller's transaction cost?

Payoff of mortgage

Land doesn't just cease to exist, a characteristic called ____________________. This is one reason that long-term, complex financing arrangements can be used.

Permanence

Peter is the listing agent for Mary. He's just received two offers on her property, one of which is a buyer Peter also represents. What's the best way to handle this situation?

Peter should disclose his agency relationships with all parties involved.

For both homeowners and real estate investors, buying real estate is considered a good way to _____________.

Preserve capital

Susan must get top dollar for her property. In preparing her market analysis, you find that competing properties are listed at $350,000 and $345,000. What's a good pricing strategy for Susan?

Price it at, or just below $350,000.

Which of the following is protected under the federal Fair Housing Act?

Race

Gilbert's buyer clients made an offer on a short sale property. The sellers returned a counter-offer that included an addendum from the lender releasing the lender from all title deficiency claims. The buyers asked Gilbert, "Does this mean that we have no way of guaranteeing a clean title on this property, or just that we won't sue the bank if there are title problems?" Gilbert is ethically obligated to _______.

Recommend they consult legal counsel to figure out how the addendum might affect them

The chance that an investor might lose money is known as __________.

Risk

Which of the following actions should be taken when holding an open house?

Schedule the open house soon after the property hits the market.

What responsibility does the seller's agent have to the seller?

Seek a sale at the best price at terms acceptable to the seller.

Which of the following factors should be considered when determining an acceptable sales price?

Seller's loan payoff amount

Changes in the national market may have little (or significantly delayed) impact on local markets. This is because the real estate market is ____________.

Slow to respond

Rowena, a South Carolina licensee, is about to sign a listing agreement—her very first! "Just sign here," she says, handing the listing agreement to the Smythes. Rewind, Rowena. What should she have had the Smythes sign first?

South Carolina Disclosure of Real Estate Brokerage Relationships form

Which of the following elements of the NAR Code of Ethics support, interpret, and amplify the articles?

Standards of practice

Chip and Jim are buyer and seller in a South Carolina sales transaction. Prior to closing, Chip calls Jim and asks if Jim will please leave behind the air compressor in the garage. Jim agrees. When Chip moves in, he sees the air compressor is gone. Which of the following is a true statement?

The air compressor has no bearing on the contract.

Who will pay recording fees for recording the deed?

The buyer

In South Carolina, which of the following items, if true, must be disclosed on page one of a sales contract in bold, underlined, all-caps wording?

The buyer or seller is a South Carolina real estate licensee.

Which of following is contained in a South Carolina sales contract?

The escrow agent's contact information

When performing a market analysis, the fewer adjustments that must be made to a comparable, ______.

The more similar it is to the subject property

Which of the following is true about attachments, other contingencies, terms and stipulations to a South Carolina sales contract?

The most recent changes are evidence of the parties' intent, when signed.

How is the payment for transaction costs determined in a sales transaction?

The parties negotiate these costs.

In a South Carolina real estate transaction, who's responsible for obtaining information about registered sex offenders in the vicinity of the property?

The parties to the contract

Which of the following is a common hurdle parties might encounter on the way to closing?

The property may not appraise

What is capital risk?

The risk that an investor cannot secure financing at an affordable rate

Keira makes it a point to always include comparable active listings when she prepares a market analysis. Why?

They show sellers the current competition.

Geraldine is preparing a comparative market analysis. Why might she used expired listings?

They show the price at which the home probably won't sell.

What's the purpose of a sales contract?

To document the agreement between a buyer and seller in a real estate sales transaction.

What can be depreciated by an investor?

Tools and equipment

In a South Carolina sales contract, how long after the repair procedure inspection deadline does the buyer have to notify the seller of defects?

Two days

It's impossible to generalize the impact events in other areas have on local real estate values. Which characteristic of the real estate market does this refer to?

Uniqueness

What type of information about real estate market trends can be obtained by simply driving through a neighborhood where an investor owns or is considering the purchase of property?

Vacancies and new construction

Which of the following is a true statement about pricing strategy for a market analysis?

What the seller paid in the past has no bearing on today's pricing strategy.

Under what circumstances are pocket listings more prevalent?

When inventory is low

To safeguard against potential conflicts of interest, Elizabeth always relies on ______.

Written disclosures

Carmen is the listing agent on a 15-year-old, 15-unit apartment building. She's updated two units, but the rest have their original design and appliances. When advertising the property, she described the building as having "most units equipped with modern fixtures and appliances." Henry made an offer on the property after only seeing the updated units. Later, upon closer inspection, he found that those were the only apartments with updated features. Did Carmen do anything wrong?

Yes, Carmen's advertisement exaggerated the property's "modern" conditions.

Ricky is working for Matt, a buyer client, who is interested in a property at which the listing agent offers compensation to cooperating agents. The listing agent has offered Ricky or any cooperating agent additional compensation if the transaction closes within 40 days. Is this ethical?

Yes, but only if all of the involved parties have full knowledge and provide consent.

Your seller client Clayton has found a house he'd like to purchase, but he needs to sell his current house before he can make an offer. Should his desire for another property impact pricing strategy?

Yes, if his desire for the other property outweighs his need to get top dollar for his house.

Your listing is a beautiful piece of land just feet from the shoreline. You know this property would be a great investment if it were subdivided and developed, but you don't mention the potential investment to the seller. You market the property, but no offers come in. After several months, you buy the property at a deep discount. Did you do anything wrong?

Yes, you failed to disclose the potential value of the property if it were subdivided and developed.

If your cousin Jack is contemplating his first home purchase and wants to use you as his agent, should you pre-qualify Jack before working with him?

Yes, you should determine whether Jack is ready to buy.

The Martins hired Janice to be their buyer's agent. Leaving their first property showing, the trio notices a property down the street with a for sale sign in the yard. Since the Martins are already here, they'd like to see that house, too. What's the best action to take?

You should call the number on the sign to schedule a showing.

Which of the following would you need to disclose about a listed property?

Your stepfather is the property owner