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Practice exam for California Real Estate Practice Class
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1 of 50 Which of the following newspaper information is not helpful in developing a Prospecting Plan?
A. Birth and Death Announcements
B. Code Violations and Tax Delinquencies
C. Promotions and Job Transfers
D. Editorials and Bid Proposals
2 of 50 Residential property includes all of the following EXCEPT which?
D. Vacation Home
3 of 50 Paul is filling out the Natural Hazard Disclosure Statement. Which of the following conditions is Paul not required to report on this form?
A. Lead-based paint was used in the home.
B. The property is in an area that could flood.
C. The home sits on an earthquake fault zone.
D. The property is in a state fire responsibility area.
4 of 50 Seller Kim tells her agent Greg that she would be willing to accept $185,000 on her $205,000 listed home. There are no offers on the property during the 6-month listing period and the listing expires. Several weeks later when showing another home to a buyer, Greg mentions that Kim would have accepted less for her home. Which is true?
A. Greg is violating the duties he owes to his new buyer.
B. Greg has put himself in a potential dual agency situation.
C. Greg has violated the duty of confidentiality to Kim.
D. Greg has no fiduciary responsibilities to Kim once the listing expired.
5 of 50 Jane has been working with some buyers for several weeks. She thinks they are really interested in one particular property, but when she approaches them about it, the buyer says, “The price is too high.” What would be a good response to that comment?
A. “I think they’re asking a fair price.”
B. “Well then, just offer less.”
C. “What do you think would be a fair price?”
D. “The comps say that this price is right on target.”
6 of 50 Broker Tami has a very low advertising budget. Which of these forms of advertising is she most likely to avoid?
B. Magazine ad
C. Direct e-mail
D. Newspaper ad
7 of 50 Glenna and Amanda just bought their first home. They will have a number of new expenses as a result of this purchase. Which of these expenses is not associated with owning a home?
A. Real estate taxes
B. Interest on the loan
C. Personal property tax
D. Homeowner’s insurance
8 of 50 Buyer Kirk submits an offer to seller Larry. Later that day, Kirk finds a home he likes better; so he withdraws his offer to Larry. Which is a true statement?
A. Kirk doesn’t have the right to withdraw the offer so soon.
B. Larry could sue Kirk.
C. If Larry verbally accepted the offer, Kirk is bound by it.
D. Kirk’s offer to Larry is legally cancelled.
9 of 50 Which of the following is a credit to the seller on the settlement statement?
A. Unpaid items due from seller
B. Sales price
C. Loan balance
D. Document preparation fees
10 of 50 There has been very little interest in the Bowers’ home this past week. What should agent Phil do?
A. Wait until next week to send an activity report, hoping things will pick up.
B. Suggest to the sellers that their listing price is too high.
C. Make up some statistics to share with the Bowers.
D. Send the weekly report as usual, emphasizing what your upcoming plans are for the week.
11 of 50 Jake and Janet are required to pay 4 points on the $80,000 loan they are getting. What will they have to pay the lender?
12 of 50 The manager of a large hotel refuses to rent a room to a blind person with a guide dog. What California Fair Housing law has the manager violated?
A. Unruh Civil Rights Act
B. Rumford Fair Housing Act
C. Holden Act
D. California Civil Rights Act
13 of 50 What is the most common reason that owners try to sell their homes themselves?
A. To hand pick the buyer
B. To have a quick sale
C. To control the flow of prospects
D. To save on commission
14 of 50 The title report on a property shows there is a lien on the property. Who is responsible for removing the lien to clear the title?
B. Title company
15 of 50 Agent Will has had a listing with the Bryants for 6 weeks. They called Will’s office and told the secretary they are upset and need to speak with Will. Which of these actions might have caused their upset?
A. Will’s weekly report indicates two showings and five inquiries for the week.
B. Will placed an ad in the most recent Home Buyer’s Guide.
C. The Bryants have not received any feedback from any showings in the past month.
D. Will conducted an agent open house last week that was attended by 25 agents.
16 of 50 When doing research to recommend a reasonable listing price for a home, the most critical part of the research deals with analyzing:
A. Asking prices for current homes
B. Listing prices of homes that sold
C. Listing prices of homes that expired unsold
D. Selling prices of recently sold homes
17 of 50 Kathy is a personal assistant at Action Realty. She doesn’t need a license to perform many activities at the firm, but which of the following would require her to have a license?
A. Forwarding calls from the public to one of the salespersons in the office.
B. Giving information about a listing to prospective buyers.
C. Maintaining the office filing system.
D. Preparing flyers and promotional materials for the broker’s approval.
18 of 50 The listing type that assures a broker that he or she will receive compensation no matter who procures the buyer is what kind of agreement?
A. Net listing
B. Exclusive-authorization-and-right-to-sell agreement
C. Open listing
D. Exclusive agency
19 of 50 When doing a competitive market analysis, the recently sold properties you include should have sold within what timeframe?
A. The past month
B. Past three to six months
C. Past seven months
D. Last six to nine months
20 of 50 Seller Patsy wants to net $150,000 from the sale of her home. She tells Broker Al that he can list the property for whatever price he wants and anything he gets above the $150,000 he can keep as his commission. What is this agreement called?
A. Exclusive agency
B. Open listing
C. Exclusive-authorization-and-right-to-sell agreement
D. Net listing
21 of 50 Once signed, escrow instructions can be changed only by:
A. The escrow agent
B. The broker
C. Amending the purchase agreement
D. Mutual consent of both parties
22 of 50 What is one of the major objectives of professional property management?
A. Maximize the return to the property management firm.
B. Minimize expenses while maximizing profits for the owner.
C. Help control area rent schedules.
D. Maintain 100 percent occupancy.
23 of 50 Which of the following statements best describes what happens in a mortgage loan transaction?
A. The lender gives a mortgage to the borrower and gets funds in exchange.
B. The borrower gives the lender a note and a mortgage in exchange for the funds.
C. The lender gives the borrower a mortgage and funds.
D. The borrower gets a note in exchange for a mortgage.
24 of 50 Tim thinks his buyers are ready to make an offer. He asks, “Which one of the children gets the basement bedroom with the private entrance?” What kind of closing technique is Tim using?
25 of 50 Mortgage lenders are required to disclose financing costs and annual percentage rate to the borrower under which law or regulation?
A. Equal Credit Opportunity Act
B. Truth in Lending
C. Real Estate Settlement and Procedures Act
D. Fair Housing laws
26 of 50 Veteran Bill has applied and been approved for a non-VA-guaranteed CalVet loan. Which of the following statements is not true?
A. Bill will pay a 3% down payment.
B. Bill is purchasing a 6-family apartment building.
C. If Bill pays off the loan early, there will be no prepayment penalty.
D. There is a loan protection plan included with the loan.
27 of 50 Tim and Sue have obtained a buydown loan on their newly built home. Which of the following statements is not true?
A. They will have to make a very high down payment.
B. Their interest rate will rise after the first few years.
C. The builder paid a lump sum amount at closing to reduce the interest rate for a few years.
D. The lender assumes Tim and Sue’s income will rise over the first few years of the loan.
28 of 50 Prospecting ends:
A. At the time of a sale
B. Two weeks after closing
C. When you have 200 names in your contact database
29 of 50 What is one way the Federal Reserve System regulates the money supply?
A. Printing money.
B. Buying government bonds.
C. Regulating reserves of institutions with savings accounts only.
D. Purchasing loans from primary lenders.
30 of 50 After six months time, manager Tim wants to terminate the lease of one of his month-to-month tenants. What must Tim do?
A. Give the tenant a 30-day notice.
B. Change the locks on the tenant’s apartment.
C. Give the tenant a 3-day notice to pay or quit.
D. Give the tenant a 60-day notice.
31 of 50 Which of the following AIDA characteristics is the most critical in the ad?
A. Capturing attention
B. Arousing interest
C. Creating desire
D. Prompting action
32 of 50 Alice is an employee of Mid-State Realty Services. She would likely be required to do which of the following?
A. List properties in her own name.
B. Attend weekly staff meetings at the office.
C. Accept commissions from referral agents.
D. Pay for worker’s compensation.
33 of 50 Sal bought a personal residence for $150,000. He made $150,000 of improvements during the three years he lived in it before he sold it. He sold the home for $750,000 and paid $50,000 in selling expenses, including the broker’s commission. On what amount will he pay capital gains tax?
34 of 50 At a community meeting, Broker Amanda tells a group of families in an established neighborhood that several Indian families are planning to buy homes in their neighborhood. She tells them that this action could decrease their property values. Which statement is true?
A. Amanda is guilty of blockbusting.
B. This action is legal but very unprofessional.
C. Amanda is guilty of redlining.
D. This action is deliberate misrepresentation.
35 of 50 Agent John just listed a home in a mid-range priced neighborhood. Which of these ad headlines would probably be the least effective for this home?
A. Large Back Yard
B. Three Bedrooms
D. Needs Paint
36 of 50 Agent Pam receives an offer on one of her listings for less than the asking price. The home has been listed for several months; so Pam does a CMA and determines that the offer is more than reasonable in today’s market. However, she believes the sellers will not be willing to accept the offering price. What would be a good approach for Pam to take?
A. Pam should tell them to reject the offer so that the buyers will counter back with full price.
B. She should advise them to let the offer expire with no action so the buyers will get nervous.
C. Pam should recommend that they counteroffer with a price halfway between asking and offering price.
D. She should persuade them to accept the offer.
37 of 50 Which of the following economic characteristics is true?
A. Land is plentiful.
B. Properties are very liquid and can move quickly.
C. Real estate can respond quickly to changes in the market.
D. Supply cannot be moved to a high demand area.
38 of 50 What is the primary role of Fannie Mae?
A. To purchase conventional, FHA and VA loans
B. To guarantee all FHA and VA loans
C. To originate FHA and VA loans
D. To insure conventional, FHA and VA loans
39 of 50 Prospects Mike and Marge arrive with agent Elaine at a showing. Elaine parks across the street from the home and Mike is disappointed by what he sees. He’s no longer interested in seeing the inside and Marge agrees. What should Elaine do?
A. Tell Mike that the sellers will be upset if they cancel the appointment.
B. Enumerate the home’s special features and hope they change their minds.
C. Tell them that this home is an exceptional buy and encourage them to look anyway.
D. Call the sellers immediately and let them know you won’t be coming by.
40 of 50 Which of the following Internet pages might not be of particular interest to buyers?
A. Mortgage loan calculator
B. Getting pre-qualified
C. Your current listings
D. Curb appeal information
41 of 50 What was the important ruling in Jones v. Mayer?
A. Sex became a protected class.
B. The definition of race was expanded to include ancestry.
C. The definition of handicap was expanded to include use of guide or support animals for deaf and blind individuals.
D. Discrimination on the basis of race is strictly prohibited, meaning no exceptions whatsoever.
42 of 50 Alex makes an offer to purchase one of Bill’s listings. Bill cannot contact the seller. In the meantime, Bill gets another offer on the property from another buyer at a higher price. What should Bill do?
A. Present the higher-priced offer first.
B. Decide which offer is best and present that one.
C. Present Alex’s offer first since it came in first.
D. Present both offers to the seller.
43 of 50 Which one of these statements would not be considered a measurable goal?
A. I will make two new contacts every day this week.
B. I will practice my listing presentations.
C. I will get three new listings this month.
D. I will complete a property management seminar within the next year.
44 of 50 Fair Housing laws are designed to:
A. Give housing choices to the widest range of people.
B. Restrict the housing market.
C. Prohibit discrimination.
D. Ensure fair real estate negotiations.
45 of 50 What is the Federal Housing Administrations primary role in the mortgage market?
A. To insure loans made by approved lenders
B. To guarantee loans made by lenders
C. To lend money directly to borrowers
D. To sell loans to other secondary mortgage marketers
46 of 50 Greg grew up in and lives in a rural area. He’s very comfortable selling that type of property and knows he can work well with clients in that area. What property type will be his specialty?
47 of 50 Which of the following would not qualify as a 1031 exchange?
A. An apartment building for a vacant lot
B. A rental condominium for a recreational vehicle
C. A farm for a storefront
D. A warehouse for a rental home
48 of 50 Which of these lenders would be the least likely to lend money for an investor to purchase an apartment building?
A. Savings bank
B. Life insurance company
D. All of the above
49 of 50 Greg and Wanda Sandler purchased their home 35 years ago and it was paid off at the end of thirty years. In order to supplement their fixed income, the Sandlers receive monthly checks from their bank. Most likely, what did they get?
A. Home equity loan
B. Amortized loan
C. Senior citizen loan
D. Reverse annuity mortgage
50 of 50 Eric is acting as a disclosed dual agent in a transaction. Which statement is true?
A. Eric can require that both the buyer and seller share equally in his commission.
B. He must withdraw his representation of one of the parties.
C. Eric may not represent the seller’s interests to the detriment of the buyer.
D. Eric’s broker should appoint Eric as the designated agent in this transaction.