Real Estate Exam #1
You've just received a trio from a title company. It contains an assessor's map, property profile, and one other item. What is it?
Deed
Which agency enforces fair housing law?
FHEO
What does the income approach to value rely on when valuing properties that are five or more units?
Gross income multiplier
A licensee's license can become inactive if ___________.
His principal broker's license is revoked or suspended
Which approach to value is typically used for investment property of two- to four-family units?
Income approach
What's the price at which a willing buyer and a willing seller would strike a deal given normal market conditions?
Market value (Both appraisers and real estate licensees use market value, although their approaches to determining market value may differ.)
On a closing statement, ______ goes in the seller's credit column and the buyer's debit column.
Prepaids
Who is responsible for ensuring accessibility requirements for a commercial property are met?
Property owners and property managers
What does the KREC Real Estate Purchase Offer or Contract state will happen if the property sustains material damage or is destroyed prior to closing?
The buyer has the option to declare the contract null and void
To see if you know your stuff, your new managing broker asks you what a short sale is. You do know your stuff, so you answer, "______."
The sale of a property at an amount less than is owed
What type of timeshare allows ownership rights for a set amount of time for a specified number of years?
Timeshare use
A buyer has received a Closing Disclosure from the lender. What's the purpose of this form?
To detail all costs the buyer will owe at closing
What entity sets the standards for the appraisal report?
USPAP
Jenner purchased his first home, to which he'll have access forever, as far as he knows. Jenner owns ______.
A freehold estate
What is it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer?
ACCEPTANCE occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.
As a part of a buyer's due diligence, which location-related issues should be researched?
Whether the property is insurable, located in a wetland, or located in an historic area
A town passes a zoning ordinance preserving the architectural style of an area and requiring plantings in the parking strips. This is an example of ______.
Aesthetic zoning
Which residential sales contract disclosure in Kentucky requires the licensee to obtain the buyer's and seller's acknowledgment of receipt?
Agency
Why do each of the three approaches to value used by appraisers lead to a different indication of value?
All of the approaches use different variables to estimate value.
Sue and Jim are hoping to expand their family, which means moving to a larger home. They're closing on their new home soon, but haven't yet sold their current one. Which type of loan will help them afford both homes for a short period of time?
Bridge loan
Who pays for the home inspection?
Buyer
How does appraiser Maribel measure depreciation when using the capitalized value method?
By applying a capitalization rate to an income comparison of similar properties
Because of the topography of Elsie's and Lawrence's respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence's property line. What word or phrase best describes Elsie's fence?
Encroachment
In what section of the Kentucky Property Management Agreement is the day that the property manager will provide reports to the owner each month identified?
Monthly statements
When property managers receive money, they need to ______.
Provide a receipt immediately, enter the dollar amount and unit into the ledgers, and promptly deposit the funds into the escrow or property management account.
National housing statistics have changed dramatically, but those changes haven't been observed at the local level. Which characteristic of the real estate market is described here?
Slow to respond
You're performing a market analysis for Kiki. Which factor would require an adjustment to a comparable property?
Square footage differences
After closing, the seller refused to deliver the title. The buyer met all of the obligations outlined in the written contract the two parties signed, so the buyer took the seller to court to force the seller to deliver the title. What is this an example of?
Suing for specific performance
Eva, Stella, and Lynn owned a vacation home two blocks from the beach. Sadly, Stella passed away over the winter, so when summer arrived, Eva and Lynn shared the home with Stella's nephew Drew, to whom Stella willed her share of the property. What type of ownership is this?
Tenancy in common - because only this provides for inheritance
The multiple listing service is a great place to research comparables when you're preparing a CMA. What sort of data can you find there?
What the current owners paid and how much was originally financed
An appraiser just finished an appraisal for a new client. How long must he retain the work file and the report?
For at least five years
Which of the following is an example of deceptive advertising?
Intentionally misidentifying a property's square footage
The doctrine of "use it or lose it" is known as the doctrine of ______.
Laches
James, a seller, signed a listing agreement that allowed him to contract with multiple agents but only pay a commission to the agent who located a buyer. This type of listing agreement is called ______.
Open Think of an open listing agreement as a free-for-all. Only the licensee who locates the buyer will be paid. If the seller locates the buyer, no commission is owed.
What is the first step to take when using comparable properties to determine the total accrued depreciation and depreciated value for a subject property?
Subtract the comparable property's land value from its selling price to figure out the improvements' depreciated value
If there's no state or local building code to cover a specific situation, what code must the builder abide by?
The federal building code The national codes apply unless stricter local or state building codes exist.
Rachel is subject to court-ordered supervision due to an antitrust violation. This oversight may continue for as long as ______.
10 years
In Kentucky, when an agreement terminates, a property manager must provide the property owner with a final account of transactions that occurred after the most recent monthly accounting. Within how many days of the agreement's termination must this must be completed?
60
Which of the following is most susceptible to a predatory lender?
A borrower with poor credit
Which of these is a central element of an antitrust violation?
A contract Antitrust involves a contract and conspiracy among competitors.
Ken, Barbie, and Skipper owned a property as a joint tenancy. When Skipper moved out of state, she sold her interest to Midge. Two years later, Ken died. How is the interest in the property divided?
Barbie owns two-thirds, and Midge owns one-third. Joint tenancy includes the right of survivorship, so Ken's interest will pass to the other tenants. But because Midge bought in later than the others, she isn't considered a joint tenant. Ken's share will therefore pass entirely to Barbie.
What information does Schedule A of an ALTA title commitment provide?
Basic facts related to the transaction and property, including a legal description
Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?
Bilateral A contract involving an exchange of promises or other consideration between two parties is a bilateral contract.
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
When sites with hazardous substances are identified, which one of the following provides the mandate that the responsible party cleans them up?
CERCLA
An appraiser reviews the expenses from an income property, and notices that the management records expenses when they're paid and income when it's received. What is this method of accounting called?
Cash basis
Which of these is a member of the primary mortgage market?
Citibank
You're a Kentucky licensee representing a buyer who's making an offer on a two-bedroom condo. You ask the seller's agent for a copy of the ______.
Condominium Seller's Certificate
In Kentucky, which of these is the correct term for the person who's entered into a written cooperation agreement with an out-of-state principal broker?
Cooperating broker
A couple at an open house ask a licensee for a flyer containing information about the property. At this point, what is the licensee's relationship with the couple?
Customers
Which of the following situations is an example of a non-agency relationship?
Dutton was previously a licensee. He's selling his home, and he wants Wanda, who's currently licensed, to assist him with the paperwork.
Which business is driving up demand for warehouses, especially those located near airports?
E commerce
Gene and Alex bought a property that backed up to a neighborhood park. The previous owner mentioned that ever since the park was built eight years ago, the next door neighbor who works at the park has cut through the yard to get to the park rather than going around via the streets, which saves about half a mile. What kind of easement is this?
Easement by prescription
Justin is representing the seller in a transaction. Which of the following tasks is he permitted to perform for the unrepresented buyer as a non-agent?
Explain to a buyer the purpose of the seller's property disclosure.
Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?
FHA, VA, or conventional
Robert, a developer, prefers to invest in unimproved land. This is likely because _______.
He doesn't want to retrofit an existing structure
Today is a big day for Bill (a builder). The footings for his new home are being poured. He couldn't be more thrilled. Which of the following can we conclude based on where Bill is in the construction of the new home?
He's obtained a building permit.
All of the offers have at least one contingency. Nora recommends that they reject the second offer, because it has a contingency that's generally the most risky. Which contingency is that?
Home sale contingency is the riskiest
KREC requires that electronic documents be ______.
Immediately available upon KREC request
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
What are the effects on a property if it includes an encumbrance?
It restricts the owner's use or decreases the value.
Avery, who holds a life estate with remainder interests, dies without heirs. When this happens, what happens to the property?
It reverts automatically to the person holding the remainder interest.
If you're working with potential buyers who are currently renting, why should you ask when their rental contract is up?
It will help you establish a purchase time frame.
What's a typical reason that a seller might opt for a short sale?
Job loss or other financial problems
Which of the following duties do Kentucky property managers perform?
Leasing the property and supervising maintenance work
In a trust, the trustee is the person who ______.
Makes sure the terms of the trust are carried out
The section of a property management plan that is likely to include demographic information about potential tenants is the _______ analysis.
Market The section of a property management plan that is likely to include demographic information about potential tenants is the market analysis.
Regarding information that licensees must disclose, what does the pneumonic MAAP stand for?
Material, Adverse, Actual, Physical
Which of the following is the price a lender believes the property will bring at a foreclosure sale?
Mortgage value
What are out-of-state brokers transacting commercial real estate in Kentucky required to have under Kentucky law?
Notice of affiliation
Iris is using the breakdown method to measure depreciation. By what other name is this method known?
Observed condition
Randa is trying to lower the vacancy rates for the commercial property she manages because her revenue targets will increase by 8% over the next year. What type of budget contains this revenue detail?
Operating budget
In Kentucky, whose written permission is required for listing contracts to be assigned from one brokerage firm to another?
Original principal broker's and seller's
Gene, a real estate licensee, prefers to use electronic documents and signatures because it means he doesn't have to track people down to deliver documents or have them signed. Which of these statements is true?
Parties to the contract decide whether or not to accept the use of electronic signatures and documents.
Which phase of the environmental site assessment involves addressing any on-going or potential issues?
Phase IV: Management
Who typically prepares a comparative market analysis?
Real estate licensee
What types of Kentucky property are governed by fair housing laws? All owner-occupied properties Any residential property built before 1978 Any type of real property marketed for sale or rent Residential real property marketed for sale or rent
Residential real property marketed for sale or rent
Which of the following is a reason all licensees should have errors and omissions insurance?
Risk is an inherent part of real estate activities.
Which of the following is a characteristic of value?
Scarcity
Which type of industrial building offers the best warehousing options for residential individuals and commercial firms?
Self storage facilities
Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?
Severalty
Kendrick bought into a cooperative housing project. When Kendrick purchased his unit, he received a proprietary lease. What else did he receive?
Shares in the cooperative corporation
The Siegels are purchasing a commercial investment property and plan to use straight-line depreciation on their financial statements and tax calculations. Which of the following would NOT be included in the Siegels' depreciation basis calculations?
The loan origination and lender fees that they paid at closing
Who selects the Kentucky Real Estate Commission chairperson?
The members of the commission
Sam, who owns two buildings with 16 different tenants, received a monthly statement of activity from his property manager, Sally. There appeared to be $500 in security deposits that's unaccounted for. Who is ultimately responsible for handling security deposits associated with a rental property?
The property manager
In Kentucky, licensees have three potential options for purchasing E&O insurance: a program KREC administers, independent insurers, or ______.
Their broker
Sgt. Johnson is an active member of the Marines. He's been serving for 10 years. He wants to buy a home with no money down. What loan option seems like the best fit?
VA
As part of a sales contract, the seller was supposed to provide a copy of the seller's disclosure to the buyer, but the seller failed to do so. What type of contract is this?
Voidable
For how long may a personal residence be depreciated?
Zero years (personal residences cannot be depreciated
What type of police power allows cities to identify specific uses for an area?
Zoning
What's the term for someone who has agency representation with the licensee?
client
Which economic principle is related to supply and demand?
competition
When a tenant pays rent to a landlord, the tenant is satisfying which element of a valid lease contract?
consideration
Under Article 10 of the National Association of REALTORS® Code of Ethics, equal professional service should be given to all clients and customers, irrespective of race, color, religion, sex, disability, _______, or national origin.
familial status
While newer homes typically employ circuit breakers to prevent electrical overload and fires, what do some older homes use?
fuses
If a comparable property is situated in a more desirable neighborhood, for what feature will an appraiser adjust the sales price when using the sales comparison approach?
location
For which of the following categories of adjustment are you most likely to see a dollar adjustment instead of a percentage adjustment?
physical features
Which of the following is a legal term that can mean the right to take products out of the soil?
profit
A neighborhood that has been disintegrating for some time is undergoing a rejuvenation, with several properties on one block being heavily renovated or entirely rebuilt. As a result, even the properties that are still old and shabby increase somewhat in value. This is the principle of ________.
progression
A professional, on-site measurement of the lot lines and dimensions of a property is known as ______.
survey