VA Real Estate Practice Exam National 2

A man buys a house for $11,000. In the years following his purchase, the value of his house appreciates 45%, then decreases 11.5% below the high point. What is the current value of the house? A. $14,116 B. $14,575 C. $15,950 D. $18,342

$14,116 Appreciated value = $11, 000 x 1.45 (145%) = $15,950. Depreciation: $15,950 x 0.115 = $1,834.25. From here, we can determine the current value of the property: Current value = $15,950 - $1,834.25 = $14,115.75.

A house is sold for $47,000, with a 75% loan for 25 years. The interest rate is 0.75% per month. A principal and interest payment of $288 is made every month. What is the total interest paid during the life of the loan? A. $35,250 B. $39,400 C. $79,313 D. $51,150

$51,150 Total loan = $47,000 Sales Price x 75% = $35,250 loan (principal) Monthly payment (principal and interest) = $288 per month. The problem tells us that the monthly payment is $288 per month and that the life of the loan is 25 years. Using this information, we can calculate the total paid to the bank over the life of the loan. Total number of payments = 25 x 12 = 300 payments Total amount paid = $288 x 300 = $86,400 From here, we can find the total interest by subtracting the loan principal from the total amount paid over the life of the loan. Total interest = $86,400 - 35,250 = $51,150

Harry the Homeowner buys a new home. The purchase is financed with a conventional, amortized loan equal to $67,000. The interest rate on the loan is 8%, payable over 30 years. Harry's first monthly payment is $500. What is the loan balance after Harry's first payment? A. $60,000.00 B. $64,557.00 C. $65,088.65 D. $66,946.67

$66,946.67 Interest (annual) = $67,000 x 0.08 = $5,360 Interest (monthly) = $5,360 / 12 = $446.67. Next, deduct Harry's monthly payment from the monthly interest to determine the principal amount, and then the new loan balance: Principal = $500 - $446.67 = $53.33. Loan balance = $67,000 - $53.33 = $66,946.67.

A property has a market value of $50,000, is assessed at 18% of market value, and taxed by the county at a rate of $75 per $1000 valuation. If the city received $10 for each $75 of taxes collected by the county, how much does the city receive? A. $56 B. $90 C. $562 D. $900

$90 Assessed value = $50,000 x 0.18 = $9,000 County Tax rate = $75 / $1,000 = 0.075 County Taxes = $9,000 x 0.075 = $675 Next, we can use this information to determine the amount of taxes received by the city: City Tax rate = $10 / $75 = 0.133 City Taxes = $675 x 0.133 = $89.78 Rounded to the nearest dollar, the city will receive $90 in taxes from the county.

John Doe is trying to rent a bedroom in his house. A Latin American applies and is told by the owner (Doe), "I will only rent to a Caucasian." Which law has John violated, if any? A. 1968 Fair Housing Law B. Civil Rights Act of 1988 C. Civil Rights Act of 1964 D. None of the above

1968 Fair Housing Law

A broker accepts an exclusive right-to-sell listing. However, the property is later sold by another broker. How many brokers could be owed a commission by the principals in this transaction? A. 0 B. 1 C. 2 D. 3

2

Betty makes a down payment of $20,000 for a house that costs $80,000. What percentage of the house price is her down payment? A. 15% B. 20% C. 25% D. 27%

25%

An option on real property is: A. Consideration B. A contract C. A license D. Both A and B

A contract

A new residential development requires all single-family houses to have brick fronts. This requirement is most likely an example of: A. Local building codes B. Municipal regulations C. A covenant D. A zoning ordinance

A covenant

A broker has an exclusive right-to-sell listing, but the seller finds his own buyer while the listing is still in force. The broker is entitled to: A. A full commission B. Half of the commission C. Reimbursement for out-of-pocket expenses D. No commission, because the owner is the one who sold the house

A full commission

The replacement cost of a property is the cost of constructing: A. A new building with the same functional utility as the original B. A new building with the same size, shape, and design as the original C. A new building using the original construction materials D. None of the above

A new building with the same functional utility as the original

A net lease affords the lessee with: A. The right to depreciate the building B. A deduction for interest payments on the loan C. A pro rata share of building expenses D. The right to assign the lease

A pro rata share of building expenses

Mortgage brokers: A. Discount loan B. Service a loan C. Act as intermediaries D. Close a loan

Act as intermediaries

Tax assessment of real property according to value is known as: A. Appraisal B. Ad valorem C. Replacement cost D. Accretion

Ad valorem

Building codes: A. Could be based on national standards B. Are enforced locally C. Involve a certificate of occupancy D. All of the above

All of the above

A condominium could be which of the following descriptions? A. Multi-story building B. Townhouse community C. Industrial office park D. Any of the above

Any of the above

Under which type of contract would the seller withhold legal title to property until the terms of the contract have been fulfilled? A. Contract for sale B. Option C. Installment sales contract D. Any of the above

Any of the above

In the process of taking a listing, a licensee notices a potential water stain in the basement. What should the licensee do? A. Ignore it, as it is not a latent defect B. Ignore it, if the damage appears to be old C. Ask the owner if there is a leak D. Nothing

Ask the owner if there is a leak

Encouraging a homeowner to sell his or her property because minority group families are moving into the neighborhood is: A. Redlining B. Steering C. Blockbusting D. Puffery

Blockbusting

A metes and bounds survey will most likely identify: A. Certain encumbrances B. All title defects C. Marketable title D. Liens

Certain encumbrances

A comparable for a property has a pool and sun roof, but the subject property does not. The price of the: A. Subject property will be adjusted higher B. Subject property will be adjusted lower C. Comparable property will be adjusted higher D. Comparable property will be adjusted lower

Comparable property will be adjusted lower

In terms of management, PUDs most clearly resemble: A. Leasing B. Cooperative ownership C. Condominium ownership D. Time-share ownership

Condominium ownership

Which of the following is required for a contract to be valid? A. Must be written B. Property description C. Consideration D. All of the above

Consideration

What is the result of recording a deed in the public office? A. Title will pass to the new owner on the date of recording B. Constructive notice C. Actual notice D. Both B and C

Constructive notice

When appraising a public library, which of the following appraisal approaches would be considered most reliable? A. Market data B. Capitalization C. Income D. Cost

Cost

When leasing property under a net lease, the tenant could deduct all of the following as business expenses, EXCEPT: A. Maintenance B. Fire insurance C. Depreciation D. Utilities

Depreciation

Which of the following does NOT reflect current real estate market conditions? A. Building permits B. Deed recordings C. Mortgage recordings D. Divorce filings

Divorce filings

How can a broker best demonstrate his compliance with Fair Housing Laws? A. Obtain the Equal Housing Opportunity Poster B. Document all transactions with all clients or customers C. Show all prospective buyers all listed properties D. All of the above

Document all transactions with all clients or customers

Charlie has an option to buy Jim's property, which expires on July 15th. Charlie does NOT exercise his option. After July 15th, if Jim wants to extinguish his duty to perform under the option, he: A. Must obtain a formal release from Charlie B. Does not have to do anything C. Must file a quitclaim deed in the public record D. Must record a release in the public record

Does not have to do anything

A decline in property values after building an airport near a residential subdivision would be an example of: A. Economic obsolescence B. Physical depreciation C. Functional obsolescence D. None of the above

Economic obsolescence

A lender advertises 80% LTV conventional loans. 80% is applied to: A. Appraised value B. Selling price C. The buyer's income D. Either A or B

Either A or B

What would most likely to be included in the sale of real property? A. An easement B. Enjoyment C. Trade fixtures D. A kitchen sink

Enjoyment

When the seller and purchaser sign a sales contract, the purchaser receives: A. Equitable title B. Possession C. Fee simple estate D. Formidable Interest

Equitable title

The difference between the property value and its debts is known as: A. Ownership B. Equity C. Collateral D. Novation

Equity

What are fees charged for the privilege of buying or selling property in a particular jurisdiction? A. Excise taxes B. Ad valorem taxes C. Special assessments D. None of the above

Excise taxes

Which of the following entities is NOT involved in the secondary mortgage market? A. Federal National Mortgage Association B. Government National Mortgage Association C. Federal Housing Administration D. Federal Home Loan Mortgage Corporation

Federal Housing Administration

Mr. Foster signed a 60 day exclusive right-to-sell listing with Broker Ruotolo. One week later, Foster signed an exclusive agency listing with Broker Gary, who sold the home a few days later. Assuming the agreements are valid, which of the following statements is correct? A. Foster must only pay Ruotolo B. Foster owes two full commissions C. Foster must only pay Ruotolo, and Ruotolo will split the fee with Gray D. Foster should give Ruotolo and Gray one half of the commission

Foster owes two full commissions

A salesperson took a listing on a property that had a foundation crack due to water seepage. Although the owner told him that the water problem was fixed, it's obvious that the owner only filled in and painted over the crack. If the salesperson shows the property without advising potential buyers of the issue, the salesperson would be guilty of: A. Fraud B. Misrepresentation C. Puffery D. Nothing

Fraud

Which of the following deeds creates the most liability for a seller? A. Special warranty deed B. Universal warranty deed C. General warranty deed D. Quitclaim deed

General warranty deed

Using a property in the most profitable manner is called the: A. Economic life B. Highest and best use C. Principle of conformity D. Reconciliation process

Highest and best use

All of the following terms are economic characteristics of land, except: A. Assemblage B. Scarcity C. Immobility D. Improvements

Immobility

A property owner tells the broker that his property is structurally sound, but the broker later discovers that there are termites on the property. The broker must: A. Inform the seller and all prospective buyers B. Contact a pest control company C. Encourage the seller to remedy the problem D. All of the above

Inform the seller and all prospective buyers

A homeowner may claim which of the following items as deductions on his federal tax return? A. Principal payments on the mortgage loan B. Interest payments on the mortgage loan C. Repairs and maintenance on the house D. Improvements made to the property

Interest payments on the mortgage loan

Two brokers agree that they will charge the same commission rate on all property listed by their offices. Such an action: A. Is common practice B. Is in violation of anti-trust laws C. Is prohibited by RESPA D. Both B and C

Is in violation of anti-trust laws

Jan accepts Jenny's offer to purchase. Jenny's salesperson delivers the down payment to Jan's salesperson. Jan's salesperson delivers the funds to her broker, who places the money into escrow. Jan's broker owes a fiduciary duty to: A. Jan B. Jenny C. Jan and Jenny D. None of the above

Jan and Jenny

A building supplier delivers bricks to a job site on July 1st for the construction of a patio. The contractor finished the patio on July 30th and was paid. The contractor files bankruptcy on September 1st. On September 5th, the building supply company filed a mechanics lien against the owner of the property. What is the effective date of the lien? A. July 1st B. July 30th C. September 1st D. September 5th

July 1st

A mortgage lender is known as the: A. Trustor B. Trustee C. Mortgagee D. Devisee

Mortgagee

A listing broker is showing property near a toxic waste dump. The broker does not tell a prospective buyer about the dump. By withholding this information, the broker is negligent in his fiduciary duty of: A. Obedience B. Loyalty C. Accounting D. None of the above

None of the above

Land is insurable primarily because of its: A. Uniqueness B. Indestructibility C. Improvement D. None of the above

None of the above

The relationship that generally exists between a salesperson and a seller is a: A. Universal agency B. Special agency C. General agency D. None of the above

None of the above

The state decides to widen a highway. It will be necessary to use six feet of private property on each side. The state's power to take this property is derived from: A. Police power B. Zoning power C. Condemnation proceedings D. None of the above

None of the above

What affect does HUD and FHA have on interest rates? A. Influences maximum interest rates B. Subsidizes interest payments C. Controls maximum interest rates D. None of the above

None of the above

Which of the following statements best describes the principle of highest and best use? A. Value created by, and maintained in proportion to, the use characterized by nearby real estate B. Property utilized in the most profitable manner C. Future performance, not past performance D. Property attains its highest value when homogeneously developed

Property utilized in the most profitable manner

The money under an FHA loan is provided by: A. The Federal Housing Administration B. Qualified lenders C. The FDIC D. The Federal Treasury

Qualified lenders

Which act regulates the closing procedures in a real estate transaction? A. ECOA B. RESPA C. FIRPTA D. Lead Act

RESPA

Which of the following items is most likely to be severed? A. Garden tractor B. Commercial cooler C. Rail fence D. Either B or C

Rail fence

Which item returns the parties to their original positions? A. Novation B. Subordination C. Recission D. Discharge

Recission

A couple has a good income and excellent credit. They want to buy and renovate a home in an economically distressed neighborhood, but have been turned down by 3 different lenders. This is most likely an example of: A. Good judgement on the part of the lenders B. Blockbusting C. Redlining D. Steering

Redlining

A developer has been successful in the renovation and redevelopment of apartment projects. The developer has an excellent credit history, but has been denied a loan to renovate a project in a crime-ridden area of town. This is an example of: A. Redlining B. Blockbusting C. Steering D. Permissible business judgement

Redlining

Which of the following practices would most likely deteriorate the economic status of a neighborhood? A. Redlining B. Steering C. Over-development of property D. Bulk zoning

Redlining

A buffer zone would most likely separate: A. Office space from retail space B. Light industrial from heavy industrial C. Open space from residential D. Residential from commercial

Residential from commercial

The covenant in a deed where the grantor guarantees that she owns the property and has the right to sell it is known as: A. Seisin B. Against encumbrances C. Warranty forever D. Quiet enjoyment

Seisin

A broker has been approached by a minority, who requests to see properties in a specific section of a city. The broker refuses and indicates that the buyer would be better off in a part of the city where there is a greater concentration of that minority group. The broker's illegal conduct is known as: A. Blockbusting B. Redlining C. Panic selling D. Steering

Steering

Prospective buyers discuss their housing needs with a sales agent. The agent discusses certain property, but avoids talking about houses located in a specific area that meet the buyers' criteria. Such action could be known as: A. Redlining B. Compromise C. Steering D. Blockbusting

Steering

All of the following choices are considered as legal descriptions of real property EXCEPT: A. Lot and block B. Metes and bounds C. Street address D. Government survey

Street address

Enforcement of the Fair Housing Law of 1968 is the primary responsibility of: A. The Federal Housing Administration B. The Federal Department of Housing and Urban Development C. The Federal National Mortgage Association D. The Government National Mortgage Association

The Federal Department of Housing and Urban Development

Upon listing a property, a broker discovers mold in the basement. The broker should inform: A. The seller only if he is a seller's agent B. The buyer only if he is a buyer's agent C. The buyer and the seller, regardless of who he represents D. No one

The buyer and the seller, regardless of who he represents

All of the following statements about the impossibility defense must be true, EXCEPT: A. At least one party is excused from performance B. At least one party cannot legally perform as agreed C. The contract could be rescinded, pursuant to a rescission agreement D. Neither party is liable for damages

The contract could be rescinded, pursuant to a rescission agreement

Phil is a salesman working for Broker Joan. Phil takes a listing on January 3rd. The listing is a 60-day exclusive right-to-sell agreement. On February 1st, Phil was killed in an automobile accident. What is the status of the listing? A. The listing becomes an open listing B. The listing terminates by operation of law C. The listing remains valid D. The seller may now list the property with another salesman working for Broker Joan

The listing remains valid

Which of the following statements is true about options? A. The optionor can void the option if another offer is submitted B. The optionee can allow the option to expire C. The optionee can extend the option period automatically D. Options only involve raw land

The optionee can allow the option to expire

A property management contract is between the property manager and: A. His or her employees B. The owner of the property C. The tenants D. All of the above

The owner of the property

Which of the following could have no legal effect on a valid contract to purchase? A. Interest rates substantially increase B. The salesperson dies C. The property is condemned D. The lending institution forecloses on the existing mortgage

The salesperson dies

Assemblage most often occurs where: A. Demand is high B. Demand is low C. The whole is more valuable than the parts D. Both A and C

The whole is more valuable than the parts

A religious organization operates a hotel as a means to raise money and support themselves. Which of the following statements is true? A. They are exempt from the 1968 Fair Housing Laws B. They may limit room rentals to members of the organization C. They are exempt from the "religion" portion of the Fair Housing Act D. They must make rooms available to all persons

They must make rooms available to all persons

A general agency empowers the agent to: A. Transact matters of all types for the client B. Transact the client's affairs in a certain business C. Perform only specific acts for the client D. Perform any legal act for the client

Transact the client's affairs in a certain business

Under a contract of sale, the seller is most likely to be the: A. Offeror B. Vendor C. Grantee D. Vendee

Vendor

Two brokers agree to charge the same commission rate on all property listed by their offices. Such an action: A. Is common practice B. Violates Anti-Trust laws C. Violates both RESPA and Regulation Z D. Violates the Fair Housing Law

Violates Anti-Trust laws

Under RESPA, the Mortgage Servicing Statement informs borrowers of: A. All the payments expected to be deposited into the escrow account B. The actual fees and services that will be provided C. Whether the lender expects someone else to service the loan D. Settlement service charges that the borrower will likely have to pay

Whether the lender expects someone else to service the loan

Which of the following items is NOT a latent defect? A. Worn carpeting B. Seasonal flooding in the basement C. A foundation crack covered with paneling D. A faulty, but working, heating system

Worn carpeting

Broker A shows a house with a faulty roof. When he finds out about the roof, should he tell the buyer/customer? A. Yes, it is an agency responsibility B. Yes, it is a material fact C. Only if he is a dual agent D. Only if he has the seller's permission

Yes, it is a material fact