Real Estate: CA: Real Estate Principles: RE chapter Final Exam

All but which of the following is NOT an AIDA feature? Action Desire Aspiration Interest

Aspiration

Who is liable for the withholding on the sale of a property owned by a foreigner? Buyer Seller Agent Escrow Officer

Buyer

Most of the escrow instructions are drawn from the: Title policy California purchase agreement Transfer disclosure statement Broker's transaction file

California purchase agreement

Salesperson Carol arrives at the first showing she has scheduled with prospects Mark and Melinda. When Carol pulls in front of the home, Melinda decides immediately that she doesn't want to see the inside. What should Carol do? Tell Melinda that the sellers will be very disappointed if they cancel the appointment. Enumerate the home's special features and hope she changes her mind. Call the sellers immediately and let them know you won't be coming by. Emphasize that this home is a great buy and it would be a shame for them to dismiss it without looking first.

Call the sellers immediately and let them know you won't be coming by.

Jim and Jane are buying a home for $120,000. They have $20,000 for a down payment and assumed the seller's mortgage of $75,000. Jim and Jane financed the remaining $25,000 through the seller. What kind of a mortgage do they have? Buydown loan Balloon note Purchase-money mortgage Wraparound loan

Purchase-money mortgage

Which of the following is not considered a benefit of investing in real estate? Having a monthly income. Reducing taxes. Realizing a quick profit. Hedging against inflation.

Realizing a quick profit.

Sally and Dan must pay 2 points on their new $65,000 loan. What will they have to pay at closing for the points?

$1,300

Nancy bought her home last year for $425,000. Her property taxes would be assessed at a maximum of:

$4,250

Jenny's home appraised for $550,000. Her asking price was $560,000 and the property sold for $575,000. What will the new owners pay in property taxes? $5,500 the first year, plus a maximum 2% increase in market value per year $5,600 every year, with no increase $5,750 the first year, plus a maximum 2% increase in market value per year $5,750, plus a maximum 10% increase in market value per year

$5,750 the first year, plus a maximum 2% increase in market value per year

Mark believes he has been discriminated against during his home search. How long does he have to file a complaint with the Department of Housing and Urban Development? 6 months 12 months 18 months 24 months

12 months

According to the law governing mortgage loan brokers, what is the maximum commission Broker Dan can charge for securing a $15,000 second mortgage for a period of 4 years? 5% 10% 12% 15%

15%

What is the minimum period of time over which the owner of an apartment building can depreciate the improvements? 18 years 27.5 years 30 years 32 years

27.5 years

Jane sold her personal home for $148,000. Two months later she purchased and moved into a new home that cost $145,000. The adjusted cost basis of the first home was $140,000. For purposes of federal income tax, which statement is true? A basis of $148,000 and no taxable gain A basis of $145,000 and a taxable gain of $3,000 A basis of $130,000 and a taxable gain of $18,000 A basis of $140,000 and no taxable gain

?? A basis of $140,000 and no taxable gain

When dealing with the sale of a business, which is not a true statement? A Bill of Sale gives title to the business equipment. Goodwill is an intangible asset that results from the reputation of the business. Tangible assets transferred in the sale include inventory, fixtures and equipment. The UCC is a body of law that standardizes a number of business practices.

A Bill of Sale gives title to the business equipment.

When conveying title to real property, what is needed to create a valid escrow? A real estate broker knowledgeable in escrow procedures to handle the escrow. A document that describes all the escrow activities. A binding contract between the buyer and seller and the delivery of transfer documents to a third party. The services of an attorney who routinely performs escrows as part of his or her practice.

A binding contract between the buyer and seller and the delivery of transfer documents to a third party.

Which is true about listings? A net listing is illegal in all states. An open listing is an exclusive contract. A seller can sell his or her own home and owe no commission if he or she signs an exclusive agency listing. An exclusive listing must always be at least 30 days long.

A seller can sell his or her own home and owe no commission if he or she signs an exclusive agency listing.

When agent Tom meets with his sellers to explain his advertising plan, he should make sure the owners understand that: Advertising a similar property can and does create interest in their property. He can't afford to continue advertising if the ads he places fail to generate interest. There are only so many advertising dollars to go around. Most of the advertising budget is earmarked for low-priced homes.

Advertising a similar property can and does create interest in their property.

Regulation Z of the Truth-in-Lending Law would apply to real estate loans for all except which of the following? Residential loan Agricultural loans over $25,000 Agricultural loan under $25,000 Personal Loan

Agricultural loan under $25,000

According to income tax law, John could adjust the cost basis of his personal residence for which of the following items? Cost of replacing the water heater Cost of adding a new garage Depreciation All of the above

All of the above

Real estate agents are authorized to do which of these? Perform all activities in the name of the broker. Make deposits into their own escrow accounts. Take on listing responsibilities for other MLS listings. All of the above

All of the above

Salesperson George received an offer that he believes is both fair and reasonable but it does not meet the sellers' asking price. What course of action should George follow? Recommend that the seller decline the offer. Work toward acceptance. Recommend a counteroffer back to list price. All of the above

All of the above

RESPA requires the use of the Closing Disclosure for which types of transactions?

All real estate transactions

When agent Hal shows a home he should never: Ask questions of the prospects' children. Start in the room with the best features. Allow indoor pets to leave their designated area. Leave everything as it was when he entered.

Allow indoor pets to leave their designated area.

Harry has some buyers that he believes are ready to make an offer. He says to them, "Would you prefer to take possession on September 1 or October 1?" What kind of closing technique is Harry using? Bonus Alternative Ownership Standing-room-only

Alternative

Patrick has a written independent contractor agreement with his broker Tami. Last year, about 25% of his income came from sales commissions. The other 75% came from an hourly wage paid by Tami. For income tax purposes, the IRS would probably classify Patrick as:

An employee

When you show property: Ask questions that will sell the home's specific features. Never show more than 4 homes in one day. Never cancel a scheduled appointment. Be sure to show the prospects at least one home beyond their means to peak their interest.

Ask questions that will sell the home's specific features.

When analyzing the data collected for a competitive market analysis, all of the following statements are most likely true except which? Data on homes that sold over six months ago is less reliable. Homes with listing prices that are too high take longer to sell. Asking price is a good indicator of selling price. Research properties should match the subject property's characteristics as closely as possible.

Asking price is a good indicator of selling price.

Which of these statements is not true? Asking price is a good indicator of selling price. Data on homes that have sold is more reliable if it is recent. Most often a property fails to sell because of overpricing. Actual sale price of similar homes has an impact on what a home is worth in the current market.

Asking price is a good indicator of selling price.

What is the penalty for a homeowner's failure to let an assessor know that the home is no longer eligible for a homeowner's exemption? Assessment with interest Assessment with penalty Assessment with interest plus a 25% penalty Penalty of 35% of the assessed value only

Assessment with interest plus a 25% penalty

In a transaction that involves the purchase of a business, what document functions in the same way as the deed in a personal real estate transaction? Mortgage Deed of Trust Warranty deed Bill of Sale

Bill of Sale

Builder Monty must secure a loan with mortgages on five different lots. What type of loan will he need? Bridge loan Blanket loan Construction loan Package loan

Blanket loan

Agent Dan tells his buyers that the seller will leave the washer and dryer if the buyers make an offer now. What kind of closing technique is Jim using? Standing-room only Alternative Ownership Bonus

Bonus

Seller Jim tells his agent Brenda that he does not want his home marketed to families with children. Brenda refuses. Which statement is true? Brenda must follow all of Jim's instructions. Brenda has violated the fiduciary duty of obedience to Jim. Brenda could be liable for a breach of the listing contract terms. Brenda has not violated any fiduciary duty.

Brenda has not violated any fiduciary duty.

Which of these statements would not be a good objective in a prospecting plan? Hold one open house per week. Call five people on my contact list when I have time. Make contact with the Sunday FSBOs on Monday morning. Contact three people every week for referrals.

Call five people on my contact list when I have time.

Which law first prohibited discrimination based on race, color, religion or national origin? Civil Rights Act of 1866 Housing and Community Development Act Civil Rights Act of 1968 Fair Housing Amendment Act

Civil Rights Act of 1866

An apartment manager seeks to evict a tenant for filing a discrimination complaint. What California Fair Housing law has the manager violated? Civil Rights Act of 1964 Rumford Fair Housing Act Holden Act California Civil Rights Act

Civil Rights Act of 1964

George and Susan are selling their home. Which of the following charges will appear as a credit to them on the settlement statement? Loan balance Contract sale price Unpaid items still due from sellers Document preparation fees

Contract sale price

The public report that a developer must provide when offering subdivided lands for sale is provided by which agency? Department of Housing and Urban Development Department of Real Estate Recorder's Office in the county where the land is located The county planning commission

Department of Real Estate

Karen and Al obtained a 30-year fixed-rate, fully amortized loan when they purchased their home. Which statement is true? Each of their payments is for the same amount. They will owe a balloon payment at the end of the loan term. The same amount will go toward the principal every month. The interest payment is always smaller than the amount allocated to the principal.

Each of their payments is for the same amount.

Mortgage lenders are prohibited from discriminating in giving credit to prospective borrowers based on race, color, religion, national origin, sex, marital status, age or dependency on public assistance under which law or regulation? Equal Credit Opportunity Act Truth in Lending Real Estate Settlement and Procedures Act Community Reinvestment Act

Equal Credit Opportunity Act

Theresa just bought her first new home. She put 30% down and got a mortgage for the remainder. The difference between what Theresa owes and what her home is worth is known as what? Principal Equity Replacement cost Capital gain

Equity

Broker Jill has an agreement with seller Alice that says Jill will receive compensation if anyone except Alice sells Alice's home. What kind of agreement is this? Exclusive agency Net listing Right-to-sell agreement Open listing

Exclusive agency

Who are the major participants in the secondary mortgage market? Freddie Mae, Ginnie Mac and the Fed Fannie Mae, Ginnie Mae and Freddie Mac FHA, VA and the Fed GMAC, FHA, FNMA

Fannie Mae, Ginnie Mae and Freddie Mac

Which paragraph of the purchase agreement states that the balance of the purchase price will be deposited into escrow prior to closing? Finance Terms Offer Closing and Occupancy Allocation of Costs

Finance Terms

Four years ago, Sam purchased a vacant lot for $10,000. He just sold it for $13,000. During the time Sam owned the property he paid $350 per year in taxes, $150 per year on maintenance like grass cutting and $90 per year on miscellaneous expenses. How much did Sam gain or lose on the sale? Gained $640 Gained $2360 Lost $640 Lost $2360

Gained $640

A lender might investigate a borrower's personal assets if that borrower was part of which of the following organizations? General partnership Corporation Limited partnership REIT

General partnership

Grace sold her property. She had already paid the property taxes for the year. The closing date was October 1; however, the contract allowed Grace to continue to occupy the property until the end of the year. How was the tax proration treated on the closing statement? Grace was credited for three months taxes. The buyer was credited with three months taxes. Grace was credited with nine months taxes. None of the above

Grace was credited for three months taxes.

An agent open house can be especially significant for a property that: Has just had the price reduced. Is in an area where few homes are for sale. Has unusual features or amenities. Is overpriced.

Has just had the price reduced.

Agent Dan received an offer on his listing with sellers Mark and Amy for less than asking price. Which of these actions would be the least desirable action for Dan to take? Dan should set up a meeting with Mark and Amy as soon as possible. He should study the other terms of the offer so that he can point out the offer's other positive benefits. Dan should prepare a statement of the sellers' net and a new CMA to take to the presentation. He should tell Mark and Amy the offering price over the phone so that they can think about it before the meeting.

He should tell Mark and Amy the offering price over the phone so that they can think about it before the meeting.

Alice is planning her career and setting her goals. Which of the following would be considered an intermediate goal? I will complete the GRI certification in the next four years. I will do two practice listing presentations per week with an experienced agent for the next two months. I will open my own office within nine years. I will distribute 200 business cards every week for the next six weeks.

I will complete the GRI certification in the next four years.

Which is not a true statement about the Agency Disclosure? The listing agent must provide the disclosure to the seller prior to securing the listing agreement. The selling agent must provide the disclosure to the seller "as soon as practicable" prior to presenting a purchase offer. If the selling agent does not deal directly with the seller, the selling agent is not required to provide the disclosure. The selling agent must provide the disclosure to the buyer "as soon as practicable" prior to the execution of the buyer's offer to purchase.

If the selling agent does not deal directly with the seller, the selling agent is not required to provide the disclosure.

According to ECOA, lenders cannot discriminate against potential borrowers on the basis of all but which of the following? Marital status Age Income Religion

Income

The word "boot" usually applies to Income tax Mortgages Promissory notes Trust deeds

Income tax

The interest rate in an adjustable rate mortgage is tied to an economic factor called the Adjustment Margin Index Reserve

Index

Tom and Mary want to purchase their first home. Which of the following would be the least likely place for them to obtain a loan? Insurance company Credit union Mortgage company Savings and loan association

Insurance company

Which statement is not true about an agency relationship? It is based on authorization. It is determined by who pays the compensation. It is based on mutual consent. It can exist without compensation.

It can exist without compensation.

Which statement is true about a comparative market analysis (CMA)? A CMA is the same as an appraisal. It can help a seller decide what to ask for the property. An agent is obligated to complete a CMA on each listing he or she takes. It is not a valid way to arrive at market value.

It can help a seller decide what to ask for the property.

Who usually provides the funds for FHA loans? The Fed Sellers Lenders FHA themselves

Lenders

Which disclosure relates to special taxes that were levied for streets and sewers in new developments? Subdivision Disclosure Mello-Roos Community Facilities Act Public Report Notice of Adverse Action

Mello-Roos Community Facilities Act

Which of the following is not a primary lender? Mortgage company Holding warehouse agency Insurance company Credit union

Mortgage company

Which of the following is not a form of personal advertising? Car signs Business cards Multiple Listing service Name tags

Multiple Listing service

Which of the following duties is not a permitted activity for an unlicensed personal assistant? Negotiate agreements regarding commission structuring. Secure documents that are public information from the courthouse and other sources available to the public. Have keys made for company listings. Write advertisements and promotional materials with the approval of the licensee and supervising broker.

Negotiate agreements regarding commission structuring.

Salesperson Larry is writing an advertisement for one of his listings. Which of the following phrases should he avoid? Desirable neighborhood Apartment complex with chapel Mother-in-law suite No wheelchairs

No wheelchairs

Which statement is true about a homeowner's exemption? It must be filed every year. Certain homeowners may qualify for a $10,000 exemption. Once filed, it remains until terminated. None of the above.

Once filed, it remains until terminated.

Mr. and Mrs. Haley are purchasing beachfront property in an upscale development. The home comes equipped with all furnishings. The Haleys want to get a mortgage that will cover the purchase price plus all the furnishings. What kind of mortgage are they looking for? Package Blanket Wraparound Buydown

Package

Agricultural land includes all of the following EXCEPT which? Orchards Pastureland Parks Farms

Parks

Which statement is true about a loan that has a negative amortization? At the end of the term, the loan balance will be negative. The borrower makes payments of interest only over the term of the loan. Payments will not be enough to retire the loan. All adjustable rate mortgages have negative amortization.

Payments will not be enough to retire the loan.

When the rent for a property is computed on the gross sales at the site, what kind of lease is in place? Net lease Percentage lease Gross lease Graduated lease

Percentage lease *made on site

Pam just bought her first home and wants to budget for upcoming expenses. She will need money for all of the following home-related expenses EXCEPT which one? Personal property tax Maintenance Heating and air conditioning Property insurance

Personal property tax

Jean makes an offer to purchase one of Helen's listings. Helen cannot contact the seller. In the meantime, she gets another offer on the property from another buyer at a much lower price. What should Helen do? Present both offers to the seller. Present Jean's higher-priced offer first Decide which offer is best and present that one. Call the second buyer and tell him that she cannot present the offer to the seller because it's much too low.

Present both offers to the seller.

Which of these statements is not true? Ethics plays a significant role in good real estate transactions. Real estate associations promote a code of ethics so that they will have solid ground for license suspensions. Ethics has to do with what is right. Good ethical practices have to do with trustworthiness, honesty and competence.

Real estate associations promote a code of ethics so that they will have solid ground for license suspensions.

When doing a competitive market analysis, an agent looks at all but which of the following factors? Prices of properties currently on the market Prices of sold properties Properties that were listed but did not sell Recently renovated properties

Recently renovated properties

Which of these items would be a credit to the buyer on the settlement statement? Sales price Loan origination fee Loan amount Recording fees

Sales price

Which of the following best describes prospecting? Seeking buyers for your listings. Seeking listings. Seeking both buyers and sellers. Seeking buyers for other agents' listings.

Seeking both buyers and sellers.

When there are only a few homes available in a very desirable area, it is said to be a Seller's market Buyer's market Lender's market Depressed market

Seller's market

Broker Alice needs to prepare an ad for a pre-owned mobile home. Which statement is not true? Alice cannot advertise the mobile home as new. She cannot say "No down payment" if one is required. Alice will have 24 hours to remove any advertising after the home sells. She can advertise that the home can travel on the highway if it meets certain requirements.

She can advertise that the home can travel on the highway if it meets certain requirements.

Jake has decided to specialize in working with clients who purchase schools. What property type will he be dealing with? Commercial Industrial Recreational Special-purpose

Special-purpose

Carl has a habit of directing minority clients to the south end of town because he feels they would be more comfortable in that neighborhood. This practice is: Blockbusting Redlining Panic selling Steering

Steering

Farming in real estate terms refers to the: Practice of prospecting all venues at once Technique of prospecting in a targeted area Ability to prospect without a plan Tactic of prospecting other agent's clients

Technique of prospecting in a targeted area

Which of the following prospecting techniques do you have to use carefully because it has tended to upset people in recent years? Facebook and Twitter advertising Direct mail Placing ads Telephone calls

Telephone calls

The Housing Financial Discrimination Act is also known as The Rumford Act The Holden Act Title VIII The Unruh Act

The Holden Act

What happens when the terms of a loan are satisfied? The lender can keep anything left in the escrow account. The borrower must get an appraisal of the property before the lender turns over the legal title. The lender cannot charge a fee to close out the loan. The borrower receives a release of mortgage document.

The borrower receives a release of mortgage document.

What piece of information is missing from a blind ad? The price The property's address The broker's identification The property's features

The broker's identification

Abby applies for a federally-related loan to purchase a home. The lender must furnish a copy of the CFPB booklet to Abby no later than the third business day from which date? The date Abby receives the good faith estimate. The date escrow is opened. The date the lender receives her application. The date Abby makes the request to receive the booklet.

The date Abby receives the good faith estimate.

Sharon and Steve have just taken a second mortgage on their home. Which is a true statement? The second mortgage has now become the primary loan. This mortgage is not negotiable. They're probably paying a higher interest rate on the second mortgage. The first and second mortgages will be rolled into one.

The first and second mortgages will be rolled into one.

Greg and Joyce have an adjustable rate mortgage on their home. What is the key feature of this type of loan? The principal never amortizes. The term of the loan can be shortened. The interest rate can vary. The monthly payments increase overtime.

The interest rate can vary.

The owner of an apartment building told his manager not to rent to an Asian family. Which statement is true? The manager must follow the owner's instructions. The manager should set up his screening process to check for nationality. The manager should tell the owner that his request is a violation of fair housing law. The manager should rent to the Asian family and not tell the owner.

The manager should tell the owner that his request is a violation of fair housing law.

A safety clause in a listing contract means what? The broker may claim a commission if the owner sells to a person the broker introduced to the property (and whose name the broker provided to the owner) within a certain time after the listing expired. The owner is protected from any liability from actions the broker performed while the listing was in force. The broker can extend the term of the listing agreement if a buyer is preparing to make an offer. The seller may not have to pay a commission if the buyer doesn't complete the offer.

The owner is protected from any liability from actions the broker performed while the listing was in force.

Under federal income tax law, the "basis" for a personal residence is which of the following? The purchase price, plus depreciation The purchase price, plus improvements The fair market value at the time of sale The appraised value prior to sale

The purchase price, plus improvements

Under which circumstance may withholding be required of the buyer? The seller resides in another state. The buyer is not from California. The seller is a foreign person. The buyer is a foreign person.

The seller is a foreign person.

"Value" in real estate has what meaning? Asking price well below market The use of a parcel of land The function a parcel might have to a number of people The worth and use of a parcel to a particular person for a particular purpose

The worth and use of a parcel to a particular person for a particular purpose

RESPA gives the buyer the right to review the completed closing disclosure: Three business days before closing On or before closing One business day prior to closing One day after loan commitment

Three business days before closing

What is the VA's primary role in the mortgage market? To insure loans made by approved lenders. To guarantee loans made by lenders. To lend money directly to borrowers. To buy loans from other secondary mortgage marketers.

To guarantee loans made by lenders.

Dave and Nadine have decided that they want to become property investors. What is most likely their main motivation for investing? To plan for retirement To save on taxes To make money To have a second home to enjoy

To make money

When purchasing a business, a buyer is required to notify all creditors of the impending sale. This is a requirement of which of the following? Real Estate Law The Code of Ethics California State Civil Code Uniform Commercial Code

Uniform Commercial Code

Which of the following is not a good direct mail technique? Use a self-folding mailer. Hand address the mailer. Use an attractive first-class stamp. Offer something valuable to the reader.

Use a self-folding mailer.

Patty is a licensed real estate assistant. Which of the following activities would she not be authorized to perform? Give out listing information over the phone. Conduct an open house on her own. Write and sign commission checks to salespersons. Explain the paragraphs in the purchase agreement to a buyer.

Write and sign commission checks to salespersons.

Which kind of lease increases at specified intervals? Net Gross Percentage Graduated

graduated

Jonestown Community Bank refuses to lend money to potential homeowners trying to purchase property in the predominantly Asian neighborhood on the west end of town. This practice is:

redlining