Real estate test

5. A house has been listed for sale for more than one year and the owner is very anxious to move into a retirement community. A real estate professional, who is a subagent of the seller, tells a prospective buyer to make a low offer because the seller is likely to accept it. Regarding the real estate professional's conduct in giving that advice to the buyer, which of the following is FALSE?

A. The real estate professional acted appropriately to sell the seller's property.

1. The rights of ownership of real property include all of the following EXCEPT

A. compatibility

70. A licensed real estate sales associate has a written agreement with the employing broker indicating that the sales associate will not be treated as an employee. The sales associate's income is solely from commissions. The IRS will MOST likely consider the sales associate

B. Self employed

11. A father conveyed the family home to his daughter by will as a life estate pur autre vie for the life of her mother. If the daughter should die before the mother, who gains possession of the property?

B. The mother

8. A broker's newest sales associate brings in a listing for the sale of a condominium. In this transaction, the sales associate

B.acts on behalf of the broker.

28. A house sold for $180,000 and the buyer obtained an FHA-insured mortgage loan for $120,000. If the lender charged two discount points, the buyer would pay

C. $2400

2. An important characteristic of land is that it may be modified or improved at some point in time. An improvement may increase the value of real estate greatly. All of the following are considered to be improvements EXCEPT

C. Building

80. A standard rectangular survey system section contains

D. 640 acres

4. A real estate professional sells property listed by another brokerage firm in the multiple listing service. The real estate professional has been working with the buyer for many months but does not have an agency agreement with the buyer. The real estate professional has fiduciary obligations to

D. The selle

24. A business tenant has a percentage lease stating rent payment is the greater of 2% of the business's total gross sales volume or a minimum base rental of $1,000 per month. In the past year, sales totaled $435,000. How much rent did the business pay?

a. $12,000

92. A buyer has deposited 10% of the sales price of a condominium with the broker as earnest money, and the bank has agreed to lend $171,500, which is 80% of the sales price. How much additional funding must the buyer provide to complete this transaction?

a. $21,437.50

13. The owner of 50 acres of land with 500 feet of frontage on a desirable recreational lake wishes to subdivide the parcel into salable lots, but wants to retain control over the lake frontage while allowing lot owners to have access to the lake. Which of the following types of access rights would provide the greatest protection for a prospective lot purchaser?

a. Appurtenant easement

49. Which of these laws prohibits housing discrimination only on the basis of race?

a. Fair Housing Amendments Act of 1988

62. Which of these is a general, statutory, and involuntary lien on both real and personal property?

a. Federal tax lien

31. In what way does a deed of trust differ from a mortgage?

a. Number of parties involved in the loan

50. The Fair Housing Act is administered by the

a. Office of Equal Opportunity.

82. Which of the following is a lien on real estate?

a. Recorded mortgage

67. Which of the following is NOT a test to identify a fixture?

a. Size of the item

6. A real estate professional who represents the seller is showing a house to a prospective buyer- customer. The real estate professional knows that the house has water problems in the basement. Which of the following is TRUE?

a. Withholding the information prevents the buyer from making an informed decision.

46. A property owner who does not want to deal with the everyday tasks of managing a rental property can hire

a. a property manager.

44. General real estate taxes are also called

a. ad valorem taxes.

35. A property owner bought acreage but never saw it and did not use it. The owner regularly paid the real estate taxes on the acreage. Without the owner's knowledge, a stranger moved a mobile home onto the property, drilled a well for water, and lived there for many years. This person may become the owner of the acreage if there has been compliance with state laws regarding

a. adverse possession.

86. The seller conveyed a quitclaim deed to the buyer. Upon receipt of the deed, the buyer may be certain that

a. all of the seller's interest in the property, if any, belongs to the buyer.

66. Rights or privileges that are connected with real property are

a. appurtenances.

40. A broker receives an earnest money deposit with a written offer to purchase that includes a 10- day acceptance clause. On the fifth day, before the offer is accepted, the buyer notifies the broker that the offer is being withdrawn and demands the return of the earnest money deposit. In this situation, the

a. buyer cannot withdraw the offer because it must be held open for the full 10 days.

64. The primary mortgage market lenders that have most recently branched out into making mortgage loans are

a. credit unions.

97. A real estate transaction will close on November 15. The seller is responsible for costs up to and including the date of closing, and has already paid the property taxes of $5,116 for the calendar year. At closing, the buyer will be

a. debited $639.50.

42. Which of the following is not generally exempt from paying real estate taxes?

a. for-profit senior living facility.

14. A homestead exemption protects against judgments

a. of unsecured creditors.

81. After real estate has been sold by the state or county to satisfy a delinquent tax lien,. defaulted owners usually have a right to

a. redeem the property within the time specified by law.

41. The law that requires real estate contracts to be in writing to be enforceable is the

a. statute of frauds.

78. A trust that is established after the death of the owner is called a

a. testamentary trust.

89. A suit to quiet title refers to

a. the removal of a cloud on the title by court action.

19. This year's property taxes on a parcel are $1,743.25 and have not been paid. If a sale of the property is to be closed on August 12, what is the approximate tax proration that will be charged to the seller based on a 360-day year?

b. $1.074

98. A house sells for $215,000. The listing brokerage receives a 6% commission on the sale. How much does the listing brokerage receive?

b. $12,900

25. A lease provides that the tenant pays $760 minimum rent per month plus 4% of the gross sales in excess of $150,000 per year. If the tenant paid a total rent of $20,520 last year, what was the gross sales volume?

b. $435.000

93. What would it cost to put new carpeting in a room measuring 18 feet by 20 feet if the carpet costs $16.95 per square yard, plus a $250 installation charge?

b. $928

71. Assume that the listing and selling brokers split a commission evenly. What is the sales price of the property if the listing broker received $2,612.50 and the total commission rate is 5.5%?

b. $95,000

3. A business owner leases a space to open a restaurant and installs ovens, booths, counters, and other equipment. When would these items become real property?

b. After they are installed

59. Who are the parties to a listing agreement?

b. Seller and broker

56. A title insurance policy that protects the interests of a mortgagee is called

b. a lender's policy.

45. All of these are examples of government policies that can affect the real estate market EXCEPT a. the Federal Reserve Board's discount rate.

b. a shortage of skilled labor or building materials.

32. A document that protects against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called

b. a title insurance policy.

39. An option is granted when an owner gives the potential purchaser the right to purchase the property

b. at a fixed price within a certain period of time.

84. When a prospective buyer makes a written purchase offer that the seller accepts, the

b. buyer receives equitable title to the property.

65. A loss in the value of a property improvement for any reason is

b. depreciation.

10. The type of real estate ownership that is MOST inclusive is a

b. fee simple estate.

34. The clause in a deed that defines the ownership right received by the grantee is the

b. habendum clause.

48. Another word for uniqueness is a. scarcity.

b. nonhomogeneity.

43. Taxes levied on a property owner to pay for installation of sidewalks or sewers are called

b. special assessments.

16. In a limited partnership,

b. the general partners run the business.

91. Any of the following clauses in a loan agreement enable the lender to demand the entire remaining debt be paid immediately EXCEPT

c, a defeasance clause.

29. A buyer bought a house for $125,000. The house, which had originally sold for $118,250, appraised for $122,500. Based on these facts, if the buyer applies for an 80% mortgage, what will be the amount of the loan?

c. $100,000

7. What is a commission of 5% on a sales price of $250,000?

c. $12,500

26. According to a broker's comparative market analysis, a property is worth $225,000. The homeowner bought the property for $190,000 and added $50,000 in improvements, for a total of $240,000. The property sold for $222,500. Which amount represents the property's market value?

c. $225,000

9. The commission on the sale of a house is $9,410, and 30% of that amount goes to the broker who listed the property. Of the remainder, the broker whose sales associate who brought a buyer to the transaction gets 45%, and the sales associate receives the balance. How much does the sales associate receive?

c. $3,622.85

21. An appraiser estimated the replacement cost of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. What is the current value of the building?

c. $420,000

23. Find the cost to build a fence 6 feet 6 inches high around a lot measuring 90 feet by 175 feet, if the cost of erecting the fence is $2.25 per linear foot and the cost of material is $1.82 per square foot of fence?

c. $7,462.40

20. A loan on an investment property closed on July 1 for $765,000 at 5.5% interest amortized over 25 years at $4,697.77 per month. Using a 360-day year, what would the principal amount be after the monthly payment was made August 1?

c. $763,808.48

99. Twenty years ago, a vacant lot was purchased for $26,500. The owner made no improvements during that time and recently sold the lot for $62,275. What was the seller's percentage of gross profit?

c. 135%

18. "Beginning at the SE corner of the NE¼ of section 14, then due west 5,280 feet more or less to the SW corner of the NW¼ of section 14, then north along the west line of section 14 2,640 feet, more or less, to the NW corner of said NW¼, then in a straight line to the point of beginning." How many acres does this parcel contain?

c. 160

88. Which of the following is an involuntary alienation of property?

c. Condemnation

27. A suburban home with four bedrooms and only one bathroom suffers from what condition?

c. Functional obsolescence

76. Which of the following is the BEST way to ensure that there are no encroachments and verify the boundaries of a parcel of land?

c. Get a spot survey

87. Which of the following is a voluntary alienation of the property?

c. Owner sale

68. Which of the following BEST defines the law of agency?

c. Rules of law that apply to the responsibilities of a person who acts as agent for another state's licensing agency

69. A real estate broker sold a home to a buyer after telling the buyer that the foundation was "solid as a rock" when the broker knew for a fact that it was slowly sinking into the landfill on which it was built. Now that the sale is completed, which of the following is LEAST likely to happen to the real estate broker?

c. Successful defense against all charges based on loyalty to the broker's client-seller

53. Three siblings bought a farm together, and the deed listed only each of their names. What form of ownership are they presumed to have taken?

c. Tenancy in common

61. Which of these would permit a law enforcement officer to seize and sell a debtor's property?

c. Writ of execution

57. In real estate, a sales associate is always

c. a licensee who performs real estate activities on behalf of a broker.

58. An individual who is authorized and consents to represent the interests of another person is

c. an agent.

33. The type of title insurance that will protect the owner and heirs is called

c. an owner's policy.

52. If the government acquires privately owned real estate through a condemnation suit, it is exercising its power of

c. eminent domain.

73. The process by which government can acquire ownership of private land for public use is

c. eminent domain.

55. The grantor is conveying an interest that is less than fee simple absolute. This explanation of the extent of ownership will be found in the

c. habendum clause.

12. The owner of two acres of land sold one acre to a neighbor and reserved an appurtenant easement over that acre for ingress and egress to the remaining acre. The acre retained by the property owner

c. is the dominant tenement.

60. A buyer and a seller enter into a sales contract for the sale of a home. The seller backs out of the deal at the last minute, and the buyer suffers a financial loss of $1,500 and must rent a home in which to live. Unless the contract provides otherwise, all of these are legal actions that are likely to succeed EXCEPT

c. the seller is not liable because the buyer should not have incurred the $1,500 cost before the sale.

77. A primary feature of property held in joint tenancy is that

c. there is a right of survivorship.

38. Under the terms of a trust established by a will, the trustee is required to sell the real estate the trust holds. The deed that will be delivered at settlement of such a sale is a

c. trustee's deed.

100. A buyer offers $26,280 for a 20% share in a property. What is the total value of the property?

d. $131,400

22. Property purchased five years ago was assessed for tax purposes at 50% of market value. The tax rate was $4.90 per $100 of assessed valuation. The current tax owed, imposed at the same tax and assessment rates, has increased by $637. How much has the market value of the property increased to result in the tax increase, assuming straight-line appreciation?

d. $26,000.00

30. A developer is planning a warehouse that will contain 103,000 square feet. Construction costs are estimated to be $62 per square foot. Ninety-five percent financing is available for the structure. How much money must the developer put up to complete the project?

d. $319,300

94. A home containing 4,320 square feet was recently constructed on a $145,000 lot. Construction costs were $80.25 per square foot, and other fees and costs totaled $12,785. What was the total construction cost of the property?

d. $504,465

17. Which of the following parcels of land is the smallest?

d. 5% of a township

96. A proration of any prepaid utility charges is reflected at closing in which of the following ways?

d. Debit to the buyer, credit to the seller

74. A real estate buyer want to ensure that the property can be willed to her family buyer want? members. Which form of ownership would the

d. Fee simple estate

72. Which of the following is NOT a type of listing contract?

d. MLS

47. Which of these is an example of an economic characteristic of land?

d. Scarcity

37. In which of the following situations could a quitclaim deed NOT be used?

d. To warrant that a title is valid

90. When a mortgage loan has been paid in full, it is important for the borrower to be sure that

d. a satisfaction of mortgage is recorded

75. A tax lien on property can hinder its sale because it is purchaser must satisfy.

d. an encumbrance.

51. The Fair Housing Act does NOT prohibit discrimination on the basis of

d. annual income

83. The statute of frauds requires real estate contracts to be

d. in writing to be enforceable.

63. A deed of trust involves all of these terms EXCEPT

d. mortgagor.

85. On Monday, the seller offers to sell a vacant lot to the buyer for $42,000. On Tuesday, the buyer counter offers to buy for $40,500. On Friday, the buyer learns that several other prospects may be making offers on the property, so the buyer withdraws the counteroffer and agrees to the original asking price of $42,000. Under these conditions, there is

d. not a valid agreement because the buyer's counteroffer was a rejection of the seller's offer, and once rejected, an offer cannot be accepted later.

36. A grantor does NOT wish to convey certain property rights. The grantor may note the exceptions in

d. the deed of conveyance.

15. The owner of oceanfront property noticed that people from town walked along the shore behind the house on the property. The owner learned that the local citizens always walked along the beach, but the owner went to court to try to stop people from walking along the water's edge behind the home. The owner is likely to be

d. unsuccessful because the owner's property extends only to the high-water mark and the public may use the land beyond that point.