California “Real Estate Practice Class” Questions with no Answers for Preview (ALL R.E. PRACTICE QUESTIONS)
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California: Real Estate Practice – Ch1 Quiz with no answers
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1 of 10 Broker Alice has hired several independent contractors in her firm. Which of the these activities does she have control over?
A. What the licensees wear.
B. What percent of commission the licensees can charge.
C. How much time the licensees must spend in the office.
D. Whether or not the licensees attend staff meetings.
2 of 10 Which of these statements is true?
A. Salesperson Harry can solicit his own listings.
B. Salesperson Julie can receive her commission from the cooperating broker in her latest transaction.
C. Salespersons must perform all of their activities on behalf of their employing broker.
D. Broker Tom has only limited responsibility for the actions of his licensees.
3 of 10 Which of the following would be an example of a licensee specializing in business type?
A. Jim specializes in clients who want to buy restaurants.
B. Alice knows everything about the exclusive east side neighborhoods.
C. Tom specializes in options.
D. Chris is a buyer’s agent.
4 of 10 Which of the following is NOT a condition of the safe harbor test?
A. Person must be properly licensed.
B. Gross income must be based on production.
C. Clearly written contractor agreement must exist.
D. Gross income must be based on hours worked.
5 of 10 Alice has decided that she will specialize in selling farm land. Which area of specialization would she fall into?
A. Geography
B. Type of property
C. Business type
D. Type of client
6 of 10 Which of the following statements is not true?
A. A broker may require licensees to carry high levels of automobile insurance.
B. It’s a good idea for brokers to carry workers’ compensation coverage.
C. A broker is not responsible for the acts of independent contractors.
D. Employee status versus independent contractor status is an IRS issue.
7 of 10 Which of the following is not a national real estate trade organization?
A. NAR
B. CAR
C. NAREB
D. AREAA
8 of 10 Which of the following circumstances would concern you about working for Broker John?
A. John offers weekly training seminars.
B. There are several successful agents at John’s office.
C. John’s office has a selection of books, CDs and tapes for agent use.
D. John expects his agents to spend 5 hours a week on unsupervised telephone duty.
9 of 10 A shopping center would be primarily categorized as what type of property?
A. Residential
B. Agricultural
C. Investment
D. Commercial
10 of 10 All of the following are true statements about goals except which one?
A. Goals should be measurable.
B. It’s easier to prioritize your tasks if your goals are in writing.
C. Once you set a goal you should never change it.
D. Goals must be realistic if you hope to accomplish them.
Ch1 bonus questions
1. What economic factors affect the real estate market as well as other goods and services?
2. How are properties affected by the local economy?
3. Other than residential list three kinds of property in the real estate market.
4. Jim has decided that he will learn all he can about the new subdivisions at the west end of town. Jim has decided to specialize in what area of real estate?
5. From whom may a salesperson receive compensation for performed activities?
6. What is the major difference between an employee and an independent contractor?
7. What kinds of insurance do brokers normally require of their employees?
8. What should a licensee’s written employment agreement contain?
9. Give an example of a specific short-term goal.
10. What do you need to remember about making phone calls to potential clients?
11. What is meant by the term “sphere of influence”?
12. What are members of NAR required to do?
Ch2 – Quiz with no answers
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1 of 10 Which Fair Housing Law added sex to the list of protected classes?
A. Housing and Community Development Act
B. Rehabilitation Act of 1973
C. Jones v. Mayer
D. Fair Housing Amendments Act
2 of 10 Which is not a true statement about the Americans with Disabilities Act?
A. A broker might need to change the layout of the office to make the aisles wider for clients in wheelchairs.
B. A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities.
C. An apartment manager might be required to allow a tenant with a disability to widen a doorway.
D. A shopping center might have to remodel their public restrooms.
3 of 10 How long must trust account records be kept?
A. 1 year
B. 2 years
C. 3 years
D. 5 years
4 of 10 If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?
A. 30 days
B. 90 days
C. 1 year
D. 2 years
5 of 10 Which of the following is not a source of information for professional ethics codes?
A. State laws
B. Licensing regulations
C. Real estate associations
D. Real estate schools
6 of 10 A broker induces an owner to sell by telling him that Hispanics are moving into the neighborhood. This broker is guilty of what prohibited activity?
A. Redlining
B. Panic selling
C. Steering
D. Misrepresentation
7 of 10 If a broker receives a deposit check with a purchase contract, which of these is he not allowed to do?
A. Deposit it directly into escrow.
B. Give it to the principal.
C. Deposit into the brokerage business account.
D. Hold it with the buyer’s permission until the contract is accepted.
8 of 10 Which California Fair Housing law provides protection from discrimination by business establishments?
A. Rumford Fair Housing Act
B. Unruh Civil Rights Act
C. Holden Act
D. Fair Employment and Housing Act
9 of 10 A person who believes he or she has been discriminated against has how long from the time of the alleged violation to file a suit in a state or federal court?
A. 6 months
B. 12 months
C. 18 months
D. 24 months
10 of 10 Which of these is not an exemption to fair housing law?
A. Senior housing for residents 62 or older
B. A religious organization providing housing to members only
C. The sale of a single-family home by an owner who owns five residences
D. Rental of a unit in an owner-occupied four-family flat
Bonus Ch2 questions
1. Why is it important for licensees to understand the Americans with Disabilities Act?
2. Alex Jones owns a duplex and lives in one unit. He refuses to rent the other unit to families with children. What would you say about Alex’s actions?
3. If a person feels like he or she has been discriminated against, how long does that person have to file a complaint?
4. Salesperson Sally tells her senior citizen buyers that the home they want to view is located in a neighborhood with several small children and loud teenagers. She tells them they would not be comfortable in this home and she shows them a list of homes in other neighborhoods she thinks would be more appropriate. What would you say about Sally’s behavior?
California: Real Estate Practice – Ch3 – Quiz with no answers
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1 of 10 Which of the following types of agency is not allowed in California?
A. Dual agency
B. Buyer’s agency
C. Single agency
D. Designated agency
2 of 10 Which of the following is not a fiduciary duty an agent owes to his or her principal?
A. Loyalty
B. Confidentiality
C. Accountability
D. Blind obedience
3 of 10 When must a listing agent present the Disclosure Regarding Real Estate Agency Relationships to the seller?
A. Prior to bringing an offer to purchase.
B. Prior to accepting the listing.
C. As soon as possible.
D. Prior to conducting any showings.
4 of 10 Timeshare buyers have the right to rescind a transaction within what timeframe after signing the purchase contract?
A. 1 day
B. 3 days
C. 7 days
D. Never
5 of 10 The principles of an agency relationship include all of these factors except which one?
A. Mutual consent
B. Authorization
C. Compensation
D. Fiduciary duties
6 of 10 Which booklet is not part of the Combined Hazards Book?
A. The Residential Environmental Hazards Guide
B. Protect Your Family From Lead In Your Home
C. The Homeowners Guide to Earthquake Safety
D. Consumer Guide to Disclosure for Buyers
7 of 10 Which disclosure form gives detailed information about the property’s condition?
A. Real Estate Transfer Disclosure Statement
B. Agency Disclosure
C. Natural Hazard Disclosure Statement
D. Mello-Roos Report
8 of 10 Which disclosure is required by the Real Estate Settlement Procedures Act?
A. Good faith estimate
B. Rights regarding discrimination
C. Transfer of the loan collection
D. All of the above
9 of 10 Agent Paul is bound to inform his client of all facts that might affect the client’s interests — both what Paul knows and what he “should have known.” Which of these situations would not be something Paul “should know”?
A. There is a crack in the basement wall.
B. The owner of the property is HIV positive.
C. The air conditioner does not work.
D. The casement windows have broken seals.
10 of 10 If an agent does not comply with the requirement of conducting a visual inspection of a property, how long after possession does the buyer have to file a suit?
A. 6 months
B. 12 months
C. 24 months
D. 36 months
Bonus ch3 questions –
1- When is an agency relationship created?
2- What exception exists to the duty of obedience when working with a client?
3- An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?
4- Amanda calls broker Tim to schedule a showing of one of his listings. Amanda loves the home and wants to make an offer. What should Tim do next?
5- When must a licensee provide an agency disclosure to a prospective client?
6- What is the Real Estate Transfer Disclosure Statement and who is responsible for providing it?
7- Agent Jim needs to do a visual inspection of his listing. What kinds of things should he be looking for?
8- Why should agent Grace give her client a Combined Hazards Book?
9- What required disclosure is a result of Megan’s Law?
10- Which disclosures are NOT required to be made when selling residential property?
11- What is a public report and when must it be provided?
12- What does TRID require of lenders?
California: Real Estate Practice – Ch4 – Quiz with no answers
answers will be revealed with proper subscription
1 of 10 All of the following are good newspaper sections to read for prospecting except which?
A. Obituary column
B. Classified rental ads
C. Business section
D. Special announcements
2 of 10 Developing a prospecting plan is similar to:
A. Establishing goals.
B. Developing an earnings statement.
C. Setting a training schedule.
D. Writing a meeting agenda.
3 of 10 Which of the following is not a legal notice that can provide a listing lead?
A. Death notice
B. Vacancy
C. Divorce
D. Tax delinquency
4 of 10 All of these are true of prospecting except:
A. It can provide a steady stream of future clients.
B. It helps to identify buyer and seller needs.
C. It keeps your name in front of potential buyers and sellers.
D. It guarantees sales.
5 of 10 Prospecting:
A. Only needs to be done periodically.
B. Is critical to your success in real estate.
C. Is helpful but not necessary.
D. Is best left to experienced brokers.
6 of 10 Which of the following is not a probable reason for a listing to expire without selling?
A. No open houses
B. Needs repair
C. Not properly priced
D. Not marketed correctly
7 of 10 How might probate information help in prospecting?
A. Gives the names of lawyers who might require property assistance.
B. Allows the agent to determine community market trends.
C. Shows property addresses that should be excluded from prospecting.
D. Provides the names of individuals who may want to sell inherited property.
8 of 10 Which of the following is a good direct mail technique?
A. Self folding mailer.
B. Use self-folding mailers.
C. Print postage labels from your computer.
D. Hand address the envelopes.
9 of 10 Which of the following statements is not true?
A. Retired persons are a good source of neighborhood information.
B. You can use a reverse telephone directory to get the names of residents.
C. Knocking on doors never requires special permits.
D. Visiting a neighborhood with a co-worker could make you feel more comfortable.
10 of 10 Which of these Internet pages might be of particular interest to sellers?
A. Staging a home
B. Inspection tips
C. List of sold homes
D. All of the above
Ch4 Bonus questions
1- What do you need to check if you want to conduct a door-to-door canvass in a neighborhood?
2- Name one advantage and one disadvantage of telephone contacts.
3- What is a good approach to use when contacting the owner of an expired listing?
4- What are the major areas of newspaper leads?
5- What kind of newspaper ad could you place to solicit a listing?
6- List four sections of an Internet website that might be of particular appeal to prospective buyers.
7- How can a builder help you generate leads?
8- Why is it important to have a written prospecting plan?
California: Real Estate Practice – Ch5 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 What form can an agent use to show a seller what he or she will net on the sale of the property?
A. Statement of Closing Costs
B. Competitive Market Analysis
C. Sale Price Disclosure
D. Estimated Seller Proceeds
2 of 10 A competitive market analysis contains information about all of the following items except which?
A. Currently listed homes
B. Recently sold homes
C. Recently remodeled homes
D. Similar expired listings that didn’t sell
3 of 10 A listing presentation can be compared to:
A. A training session
B. An employment interview
C. A practice closing
D. A sure sale
4 of 10 All of the following are benefits of listing with an agent except which?
A. Preparation of an appraisal of the property
B. Help during escrow
C. Qualification of buyers
D. Help with required forms and disclosures
5 of 10 How many properties should be included for comparison in a competitive market analysis?
A. Two properties in each category
B. Five current listings — three recently sold and two expired
C. A minimum of three properties in the recently sold category
D. Twelve properties total
6 of 10 Which of the following is not a true statement?
A. Buyers looking at FSBO homes are usually looking for a bargain.
B. FSBO sellers believe they will save money if they sell themselves.
C. FSBO sellers who list with an agent will pay their own advertising costs.
D. Buyers of FSBO homes are usually the ones who save money.
7 of 10 A presentation manual:
A. Should be professionally produced.
B. Can be used in place of a verbal presentation.
C. Is not necessary if the verbal presentation is strong.
D. Lends good visual support to what the agent is saying.
8 of 10 Which of the following will give you comparative market data the fastest?
A. Multiple listing service
B. County records
C. Company files
D. Title companies
9 of 10 Which of the following items would not usually be included in a presentation manual for buyers?
A. Documents showing your affiliations with real estate organizations.
B. Services offered to buyers.
C. Your plan for finding the buyer a home.
D. A list of former client references
10 of 10 A competitive market analysis is an attempt to:
A. Find things in the home a seller needs to repair.
B. Establish a home’s fair market value.
C. Discover why some homes haven’t sold.
D. Convince a seller to list with you.
Ch5 Bonus questions
1- What is a competitive market analysis?
2- When looking at homes currently for sale, what is important for a prospective seller to know about asking price?
3- When preparing a competitive market analysis, what categories of homes should an agent research?
4- What is a good method for estimating what a seller will net from the sale of the property?
5- Your listing presentation manual should be made up of two sections that address what issues?
6- What is the main reason sellers choose to sell their property without an agent’s help?
7- Name three benefits of listing a home with an agent that you could share with sellers.
8- What is an important issue for potential buyer clients to understand?
Ch6 – Quiz with no answers
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1 of 10 The Lead-Based Paint Disclosure is required for homes built:
A. Before 1978
B. Before 1976
C. After 1980
D. After 1975
2 of 10 Which of these documents is for sellers only and not for buyers?
A. Smoke Detector Statement of Compliance
B. Real Estate Transfer Disclosure
C. Residential Listing Agreement
D. Seller’s Affidavit of Nonforeign Status and/or California Withholding Exemption
3 of 10 Which of the following forms is non-standard and should be prepared by a broker to give to sellers?
A. Natural Hazards Disclosure
B. Water Heater Compliance
C. Estimated Seller’s Proceeds
D. Defective Furnaces in California
4 of 10 Which is true of an exclusive-authorization-to-acquire-property agreement?
A. The buyer must pay the broker a commission.
B. The broker will owe fiduciary responsibilities to the seller as well as the buyer.
C. It must specify a definite termination date.
D. Commission is never involved.
5 of 10 All of the following are valid listing agreements. Which one is illegal in many states?
A. Exclusive agency.
B. Open.
C. Exclusive-right-to-sell.
D. Net.
6 of 10 In the listing agreement, a seller can choose to decline/disapprove all but which of the following items?
A. Sign in yard
B. Broker compensation to other brokers
C. Posting to MLS
D. Lockbox
7 of 10 When the broker and seller agree that the broker can receive commission for a specified number of days after the listing expires if selling to a “named” party on a list, it’s referred to by what term?
A. Security clause
B. Non-penalty clause
C. Safety clause
D. Effective period
8 of 10 Which kind of listing gives one broker the right to sell, but allows the owner to sell the property and not owe a commission to the broker?
A. Non-exclusive agency
B. Exclusive agency
C. Exclusive-right-to-sell
D. Net
9 of 10 An agent must give a copy of the listing agreement to the sellers:
A. At the time the agent presents an offer.
B. At the time the agreement is signed.
C. When the seller pays commission.
D. After the agent has had time to make copies at the office.
10 of 10 Which of the following statements is not true about a net listing?
A. Sets a limit on the commission a broker can earn.
B. Is generally viewed as unprofessional.
C. Is illegal in many states.
D. Allows a broker to have as a commission anything above the minimum the seller sets.
Ch6 Bonus questions
1- What is an important thing to remember about listing agreements?
2- Describe an open listing.
3- What is the major difference between an exclusive-authorization-and-right-to-sell listing and an exclusive-agency listing?
4- What is the agreement that a broker can enter into with a buyer?
5- What does the safety clause in the listing agreement do?
6- What does the security and insurance clause of the listing agreement address?
7- What does the paragraph in the listing agreement titled “Entire Contract” deal with?
8- What does the Water Heater Statement of Compliance address?
California: Real Estate Practice – Ch7 – Quiz with no answers
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1 of 10 Which of the following actions by an agent would most probably upset the sellers?
A. Conducting an agent open house.
B. Sending a weekly activity report.
C. Sharing all visitor comments two weeks before the listing ends.
D. Placing a classified ad in the weekend paper.
2 of 10 All of these statements are true except which one?
A. Virtual tours are a very expensive marketing tool to use.
B. An agent should print off a copy of the listing on the company’s Internet site to send to the sellers.
C. Participation in the MLS increases a licensee’s inventory.
D. Property evaluations from other agents have valuable information for sellers.
3 of 10 All of these items are important to include on your weekly activity report except which?
A. Number of calls that week
B. Agent comments about the property
C. Classified ads placed on the property
D. Number of hits on the company website
4 of 10 If someone shows up at the sellers’ door unexpectedly to see the home, the sellers should:
A. Tell them to call your office.
B. Invite them in and show them around.
C. Take their names and call your office.
D. Ask them to leave.
5 of 10 You should try to attach a rider strip to your For Sale sign that has:
A. Your home telephone number.
B. Your GRI designation.
C. Your cell phone number.
D. Your fax number.
6 of 10 If there is no interest in the property on a given week, the agent should:
A. Skip the activity report for that week.
B. Share that information with the sellers.
C. Tell the sellers you expect an offer to be coming soon.
D. Tell the sellers it’s time to reevaluate the price.
7 of 10 Which of these forms is not filled out by the seller?
A. Smoke Detector Compliance
B. Modification of Terms
C. Transfer Disclosure Statement
D. Water Heater Compliance
8 of 10 Which of these marketing tools is not considered a traditional tool?
A. Flier
B. Classified ad
C. Photos
D. Video tour
9 of 10 Which of these is not a helpful homeowner tip?
A. Display lots of family photos to impress potential buyers.
B. De-clutter your garage and basement.
C. Bake muffins or cinnamon rolls to create a “homey” feel.
D. Make sure all light bulbs and lamps are working and are bright.
10 of 10 All of these activities are appropriate to do within the first few days of obtaining a listing except which?
A. Give the sellers a copy of some homeowner’s tips.
B. Discuss modifying the listing price.
C. Explain your marketing plan to the sellers.
D. Have the broker send a “thank you for listing” letter to the sellers.
Ch7 Bonus questions
1. What is the primary criticism that sellers have about their agents?
2. When you meet with your sellers after you obtain the listing, what is one of the first things you should share with them to get them involved in the process?
3. What kinds of things should you include in a weekly activity report?
4. How can you prepare your sellers for receiving offers?
5. Name four traditional marketing tools that you should use with every listing you get.
6. What are some important tips for home tours?
7. In addition to agent and MLS home tours, what are some other ancillary tools you can use?
8. What should you keep in mind when developing your marketing plans?
California: Real Estate Practice – Ch8 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 Which of these statements is not true?
A. Radio advertising is not as effective as other methods because listeners can be distracted by their activities and not hear the ads.
B. Newsletters can be a very effective advertising forum for niche marketers.
C. Advertising in the telephone directory is cost effective because the directories can reach every home in the marketing area.
D. Magazine ads are significantly more expensive than newspaper ads.
2 of 10 Which of these is not an AIDA characteristic?
A. Interest
B. Attention
C. Desire
D. Activity
3 of 10 What kind of ad usually combines both institutional and product advertising?
A. Classified
B. Display
C. Press release
D. Television
4 of 10 An unlicensed person engages in advertising that conveys the clear impression that he is a licensed real estate broker or is an officer or employee of a corporation who knowingly advertises a false statement concerning any land or subdivision. In this scenario, which of the following is not true?
A. The advertiser is subject to a fine.
B. The advertiser can be sentenced to up to a year in prison.
C. The person is breaking the law.
D. The advertiser must prove he was grandfathered in as a licensee.
5 of 10 All of these would be effective at capturing a reader’s attention except which?
A. Use as little white space as possible.
B. Use a question as a headline.
C. Use available color.
D. Make the headline bold and all caps.
6 of 10 Which of these is not a tool to help evaluate advertising effectiveness?
A. Telephone log
B. Code in a print ad
C. Advertising budget
D. Designated telephone number
7 of 10 Which kind of advertising aims at increasing sales by informing the public of a company’s capabilities?
A. Operational
B. Institutional
C. Product
D. Classified
8 of 10 Which of these is a free form of advertising?
A. Shopping guides
B. Telephone directory
C. Press release
D. Blind ad
9 of 10 Which of these words or phrases might be considered discriminatory when used in advertising?
A. No smoking
B. Couples only
C. Handicap accessible
D. Kids welcome
10 of 10 The cost of doing direct mail advertising depends on all of these things except which?
A. How you target your audience
B. The frequency of the mailings
C. The number of pieces you send
D. The date of the mailing
Bonus ch8 questions
1. Name and define the two forms of advertising.
2. Explain the method used to write good advertising.
3. What is important to remember about capturing the reader’s attention?
4. What do many firms do to avoid confusion with their advertising plan?
California: Real Estate Practice – Ch9 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 All of these questions could help you determine a prospect’s capacity to make a purchase except which one?
A. How much do you have in your savings account?
B. Have you been pre-qualified or pre-approved by a lender yet?
C. Do you need the equity from your current home for the new home purchase?
D. Where do you and your spouse work?
2 of 10 Which of these is not a good technique to get the name of a caller who is reluctant to give you that information?
A. Offer to mail the caller a set of fliers on interesting properties.
B. Ask the caller if he or she would like to receive e-mails on newly listed properties.
C. Offer to show the caller a newly-listed, not-yet-advertised property, even if one doesn’t exist.
D. Offer to call the prospect when new listings that meet his or her criteria come on the market.
3 of 10 Sara just bought her first new home. She put 20% down and got a mortgage for the remainder. The difference between what Sara owes and what her home is worth is known as what?
A. Principal
B. Capital gain
C. Replacement cost
D. Equity
4 of 10 Which of the following would be the least desirable phone handling technique?
A. Answer a question with a question when possible.
B. Give as much detailed information about the property as you can.
C. Ask the caller “when” not “if” he or she wants to see the property.
D. Arrange to meet the prospect at your office.
5 of 10 Which of these statements is not true about qualifying buyers?
A. You’ll know how much house they can afford.
B. Lenders are in the best position to qualify buyers.
C. Sellers are apt to choose qualified buyers over ones who have not been qualified.
D. Collecting information and pre-qualifying buyers yourself is the easiest and best approach.
6 of 10 A buyer calls your office to inquire about a property he saw advertised. He sounds really excited about this property. Where is it that he likely found out the property was for sale?
A. On the Internet
B. In a classified ad
C. From the For Sale sign
D. From a direct mail flier
7 of 10 Most buyers who see a newspaper ad that interests them:
A. Drive by the property.
B. Call your office.
C. Check out your Internet site.
D. Visit your office.
8 of 10 Which of the following is not an advantage of home ownership?
A. Increase in property value
B. Increase in equity
C. Repairs and maintenance
D. Tax deductions
9 of 10 A reference list of alternative comparable properties is sometimes referred to as the:
A. Cheat sheet.
B. Telephone answering register.
C. Switch sheet.
D. Alternative list.
10 of 10 Prospects Jim and Linda arrive with agent Bill at the first showing. When Bill pulls in front of the home, Linda decides immediately that she doesn’t want to see the inside. What should Bill do?
A. Tell Linda that the sellers will be very disappointed if they cancel the appointment.
B. Launch into your list of the home’s special features and hope she changes her mind.
C. Emphasize that this home is a great buy and it would be a shame for them to dismiss it without looking first.
D. Call the sellers immediately and let them know you won’t be coming by.
Bonus ch9 questions –
1- What is the most important factor for a prospective homebuyer to consider in the decision to purchase?
2- What is floor time and why is it important?
3- When handling a telephone inquiry, why should you limit the amount of information you give out about the property?
4- Agent Greg receives a call about one of his firm’s ads. He succeeds in setting up an appointment to meet with the caller. What approach can Greg use to discourage the person from calling other agents?
California: Real Estate Practice – Ch10 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 All of the following are good approaches for handling objections except which?
A. View an objection as the buyer’s request for more information.
B. Use the “yes-but” technique to handle the objection.
C. Ask the buyer more questions.
D. Tell the buyer it’s not an issue.
2 of 10 Offering a buyer more than one option and having him or her choose is using what kind of closing technique?
A. Bonus
B. Alternative
C. Ownership
D. Standing-Room-Only
3 of 10 Which paragraph of the purchase agreement states that if the buyer defaults after acceptance, he or she may be liable for the broker’s commission?
A. Terms and conditions of offer
B. Final Verification of Condition
C. Dispute resolution
D. Liquidated damages
4 of 10 Which of these is not an important aspect of selling?
A. Establishing buyer rapport
B. Knowing your inventory
C. Giving buyers your opinion of what works best for them
D. Handling objections
5 of 10 What would be the least effective way to get to know your buyers’ needs?
A. Ask closed-ended questions.
B. Listen carefully to everything your prospects say and repeat some specifics back at appropriate times so that they know you have heard what they said.
C. Watch actions and body language.
D. Ask open-ended questions.
6 of 10 Which of these is an emotional reason that buyers buy property?
A. Tax advantages
B. Status
C. Investment
D. Schools
7 of 10 Which paragraph of the purchase agreement must be initialed by both buyers and sellers for it to apply?
A. Final Verification of Condition
B. Removal of contingencies
C. Liquidated damages
D. Buyer indemnity and seller protection
8 of 10 What does the paragraph on repairs state?
A. The buyer must make all repairs.
B. If checked, the seller can complete repairs after closing.
C. The seller can do all repairs himself.
D. All repairs must be in compliance with existing building codes.
9 of 10 All of these might be a buying signal except which?
A. Taking room measurements.
B. Asking about a possession date.
C. Moving closer to the agent to get a better look.
D. Walking through the home quickly.
10 of 10 Agent Jim tells his buyers that the seller will leave the riding lawn mower if the buyers make an offer now. What kind of closing technique is Jim using?
A. Assumptive
B. Alternative
C. Bonus
D. Ownership
Bonus ch10 questions
1- What are the five aspects that are involved in any selling approach?
2- When establishing rapport, what’s one of the best ways to get to know your buyers?
3- What signals do buyers use to indicate they may be willing to make a purchase?
4- What’s a bonus closing and what’s important to keep in mind about this technique?
5- Why is it important for the buyers to indicate whether or not they intend to occupy the property?
6- What’s important to know about the Liquidated Damages paragraph?
7- What happens if the parties do not initial the section of dispute resolution that deals with binding arbitration?
8- Which section of the purchase agreement does not apply directly to the buyers and sellers?
California: Real Estate Practice – Ch11 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 When you receive an offer on a listing for less than asking price, you should not:
A. Study the other terms of the offer so that you can maximize the offer’s benefits and minimize the lower price.
B. Set up a face-to-face meeting with the sellers as soon as possible.
C. Prepare additional documentation to take to the presentation.
D. Give the sellers the price over the phone so that they can think about it before you meet with them.
2 of 10 When presenting information about the buyers to the sellers, which piece of information might not be useful in helping the sellers make a decision?
A. The buyers’ family is pressuring them to purchase this home.
B. The buyers have been pre-qualified by a lender.
C. The buyers are interested in another property.
D. The buyers love the landscaping improvements the sellers have made.
3 of 10 Jake has received two offers on one of his listings. The home is listed at $210,000. One offer is for $208,000; the other is for $200,000. What should Jake do?
A. Present the $208,000 offer today and wait for a response from the sellers before he presents the other offer.
B. Present the $200,000 first and recommend rejection. Then present the $208,000 offer.
C. Present the $208,000 offer and the $200,000 offer together at the same presentation meeting.
D. Hold both offers because he heard that a full-price offer is on its way.
4 of 10 Once an offer has been accepted, the agent should do all of the following except which?
A. Make sure all required disclosures have been done.
B. Attend the final walkthrough.
C. Be sure all requested inspections have been ordered.
D. Meet with the buyers’ lender to ensure they’re getting a good deal.
5 of 10 Which of these is not a true statement?
A. A purchase offer is a binding contract between the buyer, the seller and their agents.
B. If a seller changes the terms of the offer to purchase, he has created a counteroffer.
C. An offer or counteroffer can be withdrawn at any time before it has been accepted.
D. Once the offer or counteroffer is accepted and the offeror has been notified, a legal contract is formed.
6 of 10 Who typically presents an offer to the sellers?
A. Selling broker
B. Listing agent
C. Listing broker and selling broker
D. Selling agent
7 of 10 Which of these is not a good thing to do when writing a counteroffer?
A. Fill out a separate, numbered counteroffer form.
B. Rewrite whole paragraphs to ensure clarity.
C. Date and attach supporting documents.
D. Exert pressure on the sellers to include something the other party wants.
8 of 10 Which of these statements about counteroffers is not true?
A. A counteroffer represents a rejection of an offer.
B. A counteroffer by a seller to a buyer turns the seller from offeree to offeror.
C. A counteroffer can give the buyers an “out” if they want one.
D. If the buyer rejects the first counteroffer, the seller can accept the first offer.
9 of 10 When you believe an offer is both fair and reasonable but it does not meet the sellers’ asking price, you should:
A. Make no recommendations and let the sellers decide on their own.
B. Recommend a counteroffer back to list price.
C. Work toward acceptance.
D. Recommend that the seller delay response to make the buyer nervous and then submit a counteroffer.
10 of 10 Most sellers object to offers based on:
A. Closing issues
B. Offering price
C. Financing issues
D. Contingencies
Bonus ch11 questions –
1- When preparing to present an offer to the sellers, what kinds of supporting information can be helpful?
2- What is important to remember about multiple offers?
3- When making your presentation, what topics should you cover?
4- Why is it important to talk to the sellers about the buyers?
5- What actions can the sellers take regarding the purchase offer?
6- What is important for the sellers to know about a counteroffer?
7- Ben and Blanche receive a $200,000 offer on their home, which is listed at $208,000. They were counting on a full-price offer and are very disappointed. What approach can their agent take to change the sellers’ perception of the offer?
8- When does a purchase offer become a legal contract?
California: Real Estate Practice – Ch12 – Quiz with no answers
Answers will be revealed with proper subscription
1 of 11 A growing equity mortgage:
A. Is an adjustable rate loan.
B. Allows quick repayment of the loan through accelerated payments.
C. Includes a margin.
D. Has a payment cap.
2 of 11 Which statement is true?
A. A borrower cannot qualify for a conventional loan unless he or she can make a 20% down payment.
B. Private mortgage insurance is available for FHA loans.
C. A borrower can request the cancellation of PMI payments when the equity reaches 20% of the appraised value.
D. A lender can continue to collect PMI payments until the homeowner’s equity reaches 25%.
3 of 11 Which loan covers the period of time between the end of one mortgage and the beginning of another?
A. Construction
B. Wraparound
C. Open-end
D. Bridge
4 of 11 Which of these is also called a contract for deed?
A. Purchase money mortgage
B. Lease purchase
C. Second mortgage
D. Installment land sales contract
5 of 11 Which of these statements is true about a CalVet loan?
A. Loan terms are from 15 to 25 years.
B. If the loan is VA guaranteed, no down payment is required.
C. There is a 6-month pre-payment penalty for paying off the loan early.
D. Interest rates are typically fixed rate.
6 of 11 Which of the following is not true about reverse annuity mortgages?
A. The lender makes payments to the borrower.
B. This mortgage type is popular among the elderly.
C. The borrower pays a fixed rate of interest.
D. The loan must be repaid before the borrower’s death.
7 of 11 In which of the following types of loans is the payment allocated only to interest?
A. Straight
B. Balloon
C. Amortized
D. Adjustable rate
8 of 11 A blanket mortgage:
A. Covers more than one piece of property.
B. Entails entering into two agreements simultaneously.
C. Is subordinate to a first mortgage.
D. Reduces the monthly payment for a borrower during the initial years.
9 of 11 Lenders can charge all of the following except which fee when a borrower gets a loan?
A. Loan origination fee
B. Points
C. Survey fee
D. Discount points
10 of 11 Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points?
A. $680
B. $1,360
C. $2,040
11 of 11 Which of the following is a low loan-to-value ratio?
A. Jake is getting a VA loan with no down payment.
B. Sandy and Bill are putting 30% down on their home purchase.
C. Alice is getting a conventional loan and making a 15% down payment.
D. Tim and Gail have qualified for an FHA loan.
Bonus ch12 questions –
1- How much is the loan origination fee and what does it cover?
2- What kind of problem can result from a straight loan?
3- What kinds of limits are placed on the interest rate in an adjustable rate mortgage?
4- Describe a reverse annuity mortgage.
5- Define the term loan-to-value ratio.
6- When is a lender required to terminate a borrower’s private mortgage insurance?
7- What is the difference between an FHA loan and a VA loan?
8- What is the major difference between a CalVet loan and other loans?
9- Define a purchase money mortgage.
10- What’s the difference between a lease purchase and a lease option?
11- Greg and Joyce purchased a home from the builder who offered to pay $5,000 at closing as an incentive to get them to buy. What kind of mortgage might they get?
12- What are grant programs typically used for?
California: Real Estate Practice – Chapter 13 Quiz with no answers
Answers will be revealed with proper subscription
1 of 12 California law requires that a licensee acting as a loan broker keep the Mortgage Loan Disclosure Statement on file for how long?
A. 1 year
B. 2 years
C. 3 years
D. 4 years
2 of 12 Which of the following statements is not true about the Federal Reserve?
A. Regulates reserve requirements for all institutions that offer checking accounts.
B. Supervises the Truth in Lending Act.
C. Supervises the Federal Housing Authority.
D. Engages in open market operations.
3 of 12 All of the following are primary mortgage market lenders except which?
A. Investment groups
B. Credit unions
C. Mortgage bankers
D. Holding warehouse agencies
4 of 12 RESPA applies to:
A. Second mortgage on a time-share
B. First mortgage on a single-family home
C. Primary mortgage on an office building
D. Settlement charges on a shopping center
5 of 12 Regulation Z applies to:
A. $35,000 farm loan
B. $50,000 restaurant loan
C. $75,000 condominium loan
D. $85,000 warehouse loan
6 of 12 The maximum commission amount a mortgage loan broker can charge on a second mortgage loan of 3 years for $18,000 is what?
A. $900.00
B. $1,500.00
C. $1,800.00
D. $2,700.00
7 of 12 Who is FNMA?
A. Fannie Mae
B. Ginnie Mae
C. Fannie Mac
D. Freddie Mac
8 of 12 Fannie Mae does all of the following activities except which?
A. Buys conventional, FHA and VA loans.
B. Buys pools of mortgages in exchange for mortgage-backed securities.
C. Guarantees payment of all interest and principal on mortgage-backed securities.
D. Administers special assistance programs.
9 of 12 When a lender is evaluating a buyer’s ability to repay a loan, the lender looks at all of these items except which one?
A. Educational history
B. Past credit history
C. Present employment status
D. Liabilities
10 of 12 Which statement is not true?
A. Mortgage brokers do not lend money.
B. Mortgage bankers bring borrowers and lenders together.
C. Mortgage bankers are a large source of residential loans in California.
D. Mortgage bankers originate loans.
11 of 12 ECOA requires that a lender send a denial notice within:
A. 30 days
B. 60 days
C. 90 days
D. 120 days
12 of 12 The amount of debt, time and method of payment, interest rate and other loan terms are part of the:
A. Mortgage
B. Promissory note
C. Contract for deed
D. Purchase agreement
Bonus ch13 questions –
1- What is the role of the Fed?
2- Explain the difference between the primary and secondary mortgage markets.
3- Differentiate between mortgage brokers and mortgage bankers.
4- What do Fannie Mae and Ginnie Mae do that Freddie Mac does not?
5- If lenders intend to sell mortgages in the secondary market, what must they do?
6- List the steps of underwriting.
7- What makes up a mortgage?
8- What actions does a lender take to sell a mortgage in the secondary market?
9- What is the basic purpose of Truth in Lending – Regulation Z?
10- What is the right to rescind and what is not covered by this rule?
11- What are the penalties for violating Regulation Z?
12-What does ECOA prohibit?
California: Real Estate Practice – Chapter 14 Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 Which item is not covered by CLTA, ALTA or ALTA-R insurance policies?
A. Acts of minors
B. Mining claims
C. Forgeries
D. Federal estate tax liens
2 of 10 Accepting referral fees:
A. Is common business practice.
B. Could be a violation of state licensing laws.
C. Is permissible if being accepted on behalf of a third party
D. Is permissible in amounts under $50.
3 of 10 Which of the following statements is NOT true regarding a broker acting as an escrow agent?
A. A broker may advertise that he or she is an escrow agent.
B. A broker cannot use the word “escrow” in a fictitious name.
C. The broker must conduct the escrow personally and not delegate any escrow activities.
D. Written escrow instructions must include a statement with the broker’s name, indicating he or she is a licensed real estate agent.
4 of 10 RESPA gives the buyer the right to review the completed closing disclosure how long before closing?
A. Two calendar days
B. One business week
C. One calendar week
D. Three days
5 of 10 RESPA applies to all of the following EXCEPT which?
A. Condominium purchase
B. Seller-financed loan
C. Loan involving a second mortgage
D. Federally-insured loan
6 of 10 Which of the following is not an item that a buyer usually pays at closing?
A. Fee for clearing the title
B. Mortgage recording fee
C. Homeowner’s insurance
D. ALTA policy
7 of 10 Which statement is not true about opening escrows?
A. The escrow holder will need information about the broker’s commission.
B. The escrow holder will use the purchase agreement as the basis for writing the escrow instructions.
C. The buyer’s and seller’s agents will sign the escrow instructions.
D. Once escrow instructions are signed, changes can only be made with the written agreement of all parties.
8 of 10 Proof of ownership of a property is called:
A. Marketable title
B. Abstract of title
C. Evidence of title
D. Title commitment
9 of 10 Who is responsible for ordering the preliminary title report?
A. Buyer
B. Escrow officer
C. Seller
D. Real estate salesperson
10 of 10 Which of these individuals could not act as an escrow agent without an escrow license?
A. Attorney
B. Banker
C. Broker
D. Real estate salesperson
Bonus ch14 questions –
1- What is escrow?
2- Who needs title insurance and why?
3- What is the difference between CLTA and ALTA policies? How does ALTA-R differ from ALTA?
4- What items are not covered by any title insurance policy?
5- What is the Closing Disclosure?
6- What is the ultimate result of using the Closing Disclosure form?
7- If an item is paid for in advance by the seller, how will it be handled on the settlement statement?
8- What do you call those items that have been incurred by the seller but not paid, and how will they be handled on the settlement statement?
California: Real Estate Practice – Chapter 15 Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 Gail is a licensed real estate assistant. Which of the following activities would she not be authorized to perform?
A. Discuss a contract with a buyer.
B. Conduct an open house on her own.
C. Write and sign commission checks to salespersons.
D. Meet with an inspector at a listing.
2 of 10 Assistants who are asked to be available for tasks in the field rather than in the office are referred to as:
A. Part-time workers
B. Field staff
C. On-call assistants
D. Commission-only assistants
3 of 10 Which of these items on a resume accompanying an application for an assistant’s position should be kept brief?
A. Interests
B. Technical skills
C. People skills
D. Education
4 of 10 What is a good method for an assistant to keep track of the various types of files a real estate broker must have?
A. An ABC filing system
B. A master transaction file
C. A hybrid filing system
D. A cross-referencing system
5 of 10 Which of the following would not be a reason to choose to be an assistant?
A. To gain self-confidence
B. To learn more about the real estate business
C. To have a stable, steady income
D. To make more money than a real estate agent
6 of 10 A real estate assistant:
A. Must have a real estate license.
B. Needs a license to perform activities that are not strictly administrative in nature.
C. Can perform some real estate activities without a license.
D. Must have an assistant license.
7 of 10 Which statement is not true?
A. Sending cards and newsletters is a good way to keep in contact with clients and prospects.
B. An assistant should never be left with the task of taking photos of a new listing.
C. An assistant can keep track of the progress of activities during escrow.
D. In most situations, an assistant should not have the responsibility of in-person contact with clients.
8 of 10 Which statement is true about a real estate assistant?
A. Does not need to be familiar with office policy.
B. Must be a full-time employee.
C. May be an independent contractor.
D. Must start out as a part-time employee.
9 of 10 Janet is an unlicensed assistant. She can do all of the following except which?
A. Prepare a listing contract.
B. File a listing contract.
C. Gather listing forms for her employer.
D. Prepare color flyers on listings.
10 of 10 Assistants who are hired to work part time:
A. Work 12-15 hours per week.
B. Get salary plus benefits.
C. Usually get a percentage of the commission in addition to a salary.
D. Should get workmen’s compensation.
Bonus ch15 questions –
1- What is important to know about unlicensed real estate assistants?
2- What types of office administration tasks are important for a licensed assistant to perform?
3- In what three ways can an assistant aid an agent with appointments?
4- Why is coordinating escrow so important and how can an assistant help?
California: Real Estate Practice – Chapter 16 Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 According to FIRPTA, what percent would a buyer who is buying the property as a personal residence need to withhold when purchasing a $200,000 home from a foreigner?
A. 0%
B. 15%
C. 3.30%
D. 10%
2 of 10 How long must buyers and brokers keep the documentation on a foreign sale?
A. 2 years
B. 3 years
C. 4 years
D. 5 years
3 of 10 Homeowners can deduct all but which of the following from their income taxes?
A. Mortgage interest
B. Depreciation
C. Prepayment penalties
D. Property taxes
4 of 10 A totally disabled veteran could be eligible for a property tax exemption of up to what amount?
A. $50,450
B. $100,730
C. $191,266
D. $206,850
5 of 10 Mike bought his home last year for $150,000. His property taxes would be assessed at:
A. $1,000
B. $1,500
C. $2,250
D. $3,000
6 of 10 When a person acquires new property, which is true?
A. The owner has 30 days to notify the county assessor.
B. The seller must file a bill of sale with the county clerk.
C. The owner has 45 days to pay the new property taxes.
D. The owner has 45 days to file a change in ownership statement.
7 of 10 Bill and Brenda bought their home for $150,000 seven years ago and have lived in it ever since. They made $50,000 of improvements. They sold the home for $450,000 and paid $30,000 in selling expenses, including the broker’s commission. On what amount will they pay capital gains tax?
A. $0
B. $100,000
C. $250,000
D. $300,000
8 of 10 When is the first installment of property taxes due?
A. First of February
B. Tenth of April
C. First of November
D. Tenth of December
9 of 10 How can a seller lessen the tax impact of selling a home for enough profit that he or she will be boosted to a much higher tax bracket?
A. There is nothing that can offset this problem.
B. Do a tax-free exchange instead.
C. Participate in a tax shelter program.
D. Do an installment sale.
10 of 10 Which proposition limited the maximum amount of tax on real property?
A. Proposition 13
B. Proposition 58
C. Proposition 60
D. Proposition 90
Bonus ch16 questions –
1- When is real property reassessed?
2- What does Proposition 58 state?
3- For whom do property tax exemptions exist and for how much?
4- Explain the documentary transfer tax.
5- Under what circumstances can a loss on the sale of a personal residence be deducted from income taxes?
6- What items can an owner of an income-producing property deduct that an owner of a personal residence cannot?
7- What are the capital gains exclusions associated with the sale of a personal residence?
8- What is important for a broker to remember about the Foreign Investment in Real Property Tax Act?
California: Real Estate Practice – Chapter 17 Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 Which figure represents the amount of income available as a return to an investor?
A. Net operating income
B. Potential gross income
C. Adjusted gross spendable income
D. Effective gross income
2 of 10 Which lender typically deals in interim financing?
A. Commercial bank
B. Life insurance company
C. Syndicate
D. Real estate trust
3 of 10 Which of these lenders would be most likely to finance a large shopping mall?
A. Commercial bank
B. Seller
C. Savings and loan association
D. Life insurance company
4 of 10 Examining the economic soundness of a property means looking at all of the following except which?
A. Zoning issues
B. Community growth trends
C. Refinancing
D. Income projections of the property
5 of 10 When all members have unlimited liability for debts and obligations of the group, the organization is a:
A. Limited Partnership
B. Corporation
C. General Partnership
D. Syndicate
6 of 10 What is the foremost reason people invest in property?
A. To save on taxes
B. To make money
C. To plan for retirement
D. To have a second home to enjoy
7 of 10 Which of the following is a possible benefit of investing in real property?
A. Capital outlay
B. Financing
C. Appreciation
D. Property management
8 of 10 An association of two or more people who combine financial resources to achieve investment objectives is:
A. Not allowed in California.
B. A syndicate.
C. Made up of wealthy individuals.
D. A group of brokers.
9 of 10 Which statement is not true about a Real Estate Investment Trust?
A. Sells ownership shares.
B. Receives special tax considerations.
C. Offers high yields to customers.
D. Easy to qualify for.
10 of 10 Which of the following is not a possible benefit of investing in real property?
A. Tax shelter
B. Liquidity
C. Income
D. Stability
Bonus ch17 questions –
1- What are the three important considerations for a good property investment?
2- What are some tax benefits associated with investing?
3- How could refinancing be an investment benefit?
4- How is property management seen as a risk to investing?
5- How do life insurance companies get involved in the investment market?
6- How does a limited partnership differ from a general partnership?
7- What does the net operating income of a property represent?
8- When studying the characteristics of an area in which an investment property is located, what factors should the investor look at carefully?
California: Real Estate Practice – Chapter 18 Quiz with no answers
Answers will be revealed with proper subscription
1 of 10 What kind of lease contains a recapture clause?
A. Percentage
B. Net
C. Gross
D. Graduated
2 of 10 When can a landlord enter a tenant’s property to make repairs or show it?
A. Only after receiving the tenant’s consent.
B. During business hours and only after giving the tenant 24 hours notice.
C. Anytime he or she chooses.
D. Only with a court order.
3 of 10 The IREM designation reserved for individuals who meet a certain level of education and experience is:
A. CPM
B. ARM
C. CPR
D. AMO
4 of 10 When setting up a rent schedule, a property manager should analyze all but which of the following?
A. Neighborhood amenities
B. Community growth
C. Area vacancy rates
D. New home sales
5 of 10 California allows a property manager to charge a non-refundable fee for which?
A. cleaning
B. security
C. background check
D. breakage by children
6 of 10 How often can a tenant call his or her own professional to make repairs and then deduct the amount from the next month’s rent?
A. Never
B. Once every 3 months
C. Once a year
D. Twice in a 12-month period
7 of 10 Which document shows the assets and liabilities of a business?
A. Bill of sale
B. Balance sheet
C. Profit and loss statement
D. Purchase contract
8 of 10 A lease that has no time limit is an:
A. Estate for years
B. Estate at will
C. Estate from period to period
D. Estate at sufferance
9 of 10 Which of the following represents an intangible business asset?
A. Equipment
B. Inventory
C. Goodwill
D. Fixtures
10 of 10 When a tenant agrees to pay all taxes, insurance, maintenance and repairs, that tenant has what kind of lease?
A. Gross
B. Percentage
C. Net
D. Graduated
Bonus ch18 questions
1- What is goodwill as it relates to a business?
2- List the three Institute of Real Estate Management property management designations.
3- What are the three general responsibilities of a property manager?
4- Describe how a property manager can receive his or her fees.
5- What should a good management contract contain?
6- Which type of leasehold estate is commonly referred to as a periodic tenancy?
7- Define a gross lease.
8- Under what conditions may a landlord enter a tenant’s property?
Practice exam for California Real Estate Practice Class
Answers will be revealed with the correct subscription
Tip: to find a certain word or key term, press at the same time, the buttons:
( Ctrl and F ) on Windows computers
(Command and F ) on Mac computer
to bring up the in-page search box
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?
A. Apartment
B. Condominium
C. Motel
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?
A. Internet
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?
A. $800
B. $1,600
C. $2,400
D. $3,200
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?
A. Broker
B. Title company
C. Buyer
D. Seller
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?
A. Bonus
B. Alternative
C. Ownership
D. Standing-room-only
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
D. Never
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?
A. $0
B. $150,000
C. $200,000
D. $500,000
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
C. $125,000
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?
A. Special-purpose
B. Agricultural
C. Commercial
D. Recreational
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
C. Syndicate
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.
California: Real Estate Practice – Sample of Final Course Exam
Answers will be revealed with the correct subscription
Tip: to find a certain word or key term, press at the same time, the buttons:
( Ctrl and F ) on Windows computers
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to bring up the in-page search box
1- The amount that a seller takes away from a sale is termed:
A) Net sale price
B) Seller’s proceeds
C) Gross sales price
D) Profit margin
2- Which of the following best describes prospecting?
A. Seeking buyers for your listings
B. Seeking listings
C. Seeking both buyers and sellers
D. Seeking buyers for others agents’ listings
3- A property manager can refuse to rent to applicant Mike for any of the following reasons except which?
A. Mike has changed jobs six times in the past six months.
B. He is married with two children
C. Mike has been late with his rent payments seven times in the past year
D. He had a serious physical altercation with his downstairs neighbor
4. Which law extended discrimination to include handicap and familial status?
A. Jones v. Mayer
B. Housing and Community Development Act
C. Civil Rights Act of 1968
D. Fair Housing Amendment Act
5. Sharon and Steve have just taken a second mortgage on their home. Which is a true statement?
A. The second mortgage has now become the primary loan.
B. This mortgage is not negotiable
C. They’re probably paying a higher interest rate on the second mortgage.
D. The first and second mortgage will be rolled into one.
6- According to California real estate law, how often must a broker balance his or her trust accounts?
A. Weekly
B. Monthly
C. Quarterly
D. Annually
7- In the initial meetings with the prospects, the agent should do all of the following except which?
A. Give the prospects a black copy of a purchase agreement to look over.
B. Ask the buyers to sign a real estate transfer disclosure statement.
C. Discuss alternative properties that may be interest.
D. Have the prospects sign the disclosure about agency relationship
8- When considering making a loan to a borrower, which of the following factors would probably exert the least amount of influence on the lender?
A. The borrower’s income
B. The value of the property the borrower wants to purchase
C. The borrower’s job stability
D. The neighborhood in which the property is located
9- Which California Fair Housing Law Prohibits discrimination based on sexual orientation of source of income?
A. Civil Rights Act of 1964
B. Rumford Fair Housing Act
C. Holden Act
D. California Civil Rights Act
10- Which of the following prospecting techniques do you have to use carefully because it has tended to upset people in recent years?
A. Facebook and Twitter advertising
B. Direct mail
C. Placing ads
D. Telephone calls
11- 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?
A. Exclusive agency
B. Net listing
C. Right-to-sell agreement
D. Open listing
12- The second installment of property taxes comes due on:
A. 1-Feb
B. 30-Apr
C. 1-Nov
D. 31-Dec
13- Seller Jim tells his agent Branda that he does not want his home marketed to families with children. Brenda refuses. Which statement is true?
A. Brenda must follow all of Jim’s instructions.
B. Brenda has violated the fiduciary duty of obedience to Jim.
C. Brenda could be liable for a breach of the listing terms.
D. Brenda has not violated any fiduciary duty.
14- Value includes which of the following aspects?
A. Desire
B. Ability to pay
C. Usefulness
D. All of the above
15- Karen and Al obtained a 30-year fixed-rate, fully amortized loan when they purchased their home. Which statement is true?
A. Each of their payments is for the same amount
B. They will owe a balloon payment at the end of the loan term.
C. The same amount will go towards the principal every month.
D. The interest payment is always smaller then the amount allocated to the principal.
16- Dave and Nadine have decided that they want to become property investors. What is most likely their main motivation for investing?
A. To plain for retirement
B. To save on taxes
C. To make money
D. To have a second home to enjoy
17- The general law of agency applies to
A. Brokers dealing with sellers
B. Salespersons dealing with buyers
C. Insurance agents dealing with customers
D. All business transactions
18- 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?
A. Mortgage
B. Deed of Trust
C. Warranty deed
D. Bill of Sale
19- Which of the following is not an advantage of hosting an open house?
A. Generates leads for new listings.
B. Pleases the sellers by inv=creasing activity.
C. Identifies buyers for other properties.
D. Allows viewing access to strangers
20- Which of the following would not be an essential component when researching the purchase of an apartment building?
A. Analyzing neighboring cities.
B. Studying population trends in the area.
C. Analyzing the income potential of the property.
D. Understanding characteristics of the rental market.
21- Which form of advertising is considered the most cost-effective method for selling a home?
A. Radio
B. Newspaper
C. Magazine
D. Television
22- 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. A basis of $148,000 and no taxable gain
B. A basis of $145,000 and a taxable gain of $3,000
C. A basis of $130,000 and a table gain of $18,000
D. A basis of $140,000 and no taxable gain.
23- 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:
A. Steering
B. Blockbusting
C. Panic-selling
D. Redlining
24- When talking to his investment clients, Broker Adam often to tax shelters. This term typically refers to
A. Mortgages
B. Interest income
C. Income taxes
D. Property taxes
25- According to the law governing mortgage loan brokers, what is the maximum commission Broker Claire can charge for securing a $50,000 first mortgage for a period of 2 years?
A. 5%
B. 10%
C. 15%
D. 20%
26- Which is true about listings?
A. A net listing is illegal in all states.
B. An open listing is an exclusive contract.
C. A seller can sell his or own home and owe home and owe no commission if he or she signs an exclusive agency listing.
D. An exclusive listing must always be at least 30 days long.
27- 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?
A. Package
B. Blanket
C. Wraparound
D. Buydown
28- 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?
A. The date Abby receives the good faith estimate.
B. The date escrow is opened.
C. The date the lender receives her application.
D. The date Abby makes the request to receive the booklet.
29- Which of the following is not a good direct mail technique?
A. Use a self-folding mailer.
B. Hand address the mailer.
C. Use an attractive first-class stamp.
D. Offer something valuable to the reader.
30- Being prepared to handle incoming phone calls means all of the following except which?
A. Knowing your inventory
B. Understanding the kind of responses your advertising generates
C. Knowing the community
D. Being able to anticipate the caller’s requirements
31- 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:
A. An independent contractor
B. A self-employed person
C. An employee
D. A real estate assistant
32- Broker Alice has a listing agreement with Jack. If Broker Tom procures a buyer for Jack, Tom will get the commission and Alice will not. What kind of listing agreement does Alice have with Jack?
A. Exclusive agency
B. Net
C. Exclusive-authorization-and-right-to-sell
D. Open
33- Which statement is true about a loan that has a negative amortization?
A. At the end of the term, the loan balance will be negative.
B. The borrower makes payments of interest only over the term of the loan.
C. Payments will not be enough to retire the loan.
D. All adjustable rate mortgages have negative amortization.
34- Sarah is an employee and Ken is an independent contractor at Kerns Realty. Which of the following statements is true?
A. Ken is responsible for his own taxes, while the broker pays Sarah’s.
B. Ken must obtain his own training. The broker will not provide any.
C. Neither Sarah nor Ken can get employer-provided health insurance.
D. Ken and Sarah both must be at the office from 9 a.m. to 5 p.m.
35- Who benefits from Private Mortgage Insurance?
A. The borrower’s family in case of his or her death
B. The lender in case of the borrower’s death
C. The lender against delinquent payments
D. The lender in case of the borrower’s default
36- Broker Eric secures a loan for buyer Paul. The fees that Eric charges Paul for making the loan could be any but which of the following amounts?
A. $390
B. 5% of the principal
C. Actual costs under $700
D. Any of the above
37- When dealing with the sale of a business, which is not a true statement?
A. A Bill of Sale gives title to the business equipment.
B. Goodwill is an intangible asset that results from the reputation of the business.
C. Tangible assets transferred in the sale include inventory, fixtures and equipment.
D. The UCC is a body of law that standardizes a number of business practices.
38- When using the straight-line method of depreciation, each year of economic age is given a rate that
A. Varies each year according to a table provided by the IRS
B. Is equal for each year over the life of the property
C. Is high during the first five years of the ownership period, then reduces gradually over the life of the property
D. Varies according to the expired life of the improvements made to the property
39- When doing a competitive market analysis, an agent looks at all but which of the following factors?
A. Prices of properties currently on the market
B. Prices of sold properties
C. Properties that were listed but did not sell
D. Recently renovated properties
40- Which of the following phrases should Salesperson Brenda avoid when writing an advertisement for one of her listings?
A. Kosher meals available
B. Christian home
C. Fourth-floor walk-up
D. Walk to bus stop
41- Agricultural land includes all of the following EXCEPT which?
A. Orchards
B. Pastureland
C. Parks
D. Farms
42- Alice is planning her career and setting her goals. Which of the following would be considered an intermediate goal?
A. I will complete the GRI certification in the next four years.
B. I will do two practice listing presentations per week with an experienced agent for the next two months.
C. I will open my own office within nine years.
D. I will distribute 200 business cards every month for the next six months.
43- The Equal Credit Opportunity Act (ECOA) requires lenders to:
A. Give credit to all potential borrowers.
B. Give a discount to families with children.
C. Consider child support payments in the decision.
D. Specialize by geographic area.
44- Jim owns a gift shop in a commercial building. He pays rent for occupancy, plus maintenance and operating expenses. What kind of lease does Jim have?
A. Net lease
B. Percentage lease
C. Gross lease
D. Graduated lease
45- Kirk wants to get an FHA loan. Which of the following is Kirk himself not likely to do during the application process?
A. Find a home that meets FHA requirements.
B. Agree to pay mortgage insurance.
C. Find a lender who is willing to do FHA loans.
D. All of the above.
46- A life insurance company would most likely invest in all but which of the following properties?
A. Shopping mall
B. Apartment complex
C. Industrial complex
D. Local beauty salon
47- Which of the following duties is not a permitted activity for an unlicensed personal assistant?
A. Negotiate agreements regarding commission structuring.
B. Secure documents that are public information from the courthouse and other sources available to the public.
C. Have keys made for company listings.
D. Write advertisements and promotional materials with the approval of the licensee and supervising broker.
48- The public report that a developer must provide when offering subdivided lands for sale is provided by which agency?
A. Department of Housing and Urban Development
B. Department of Real Estate
C. Recorder’s Office in the county where the land is located
D. The county planning commission
49- 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?
A. Standing-room only
B. Alternative
C. Ownership
D. Bonus
50- 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?
A. Assumptive
B. Alternative
C. Ownership
D. Standing-room-only
51- Which statement is true about a homeowner’s exemption?
A. It must be filed every year.
B. Certain homeowners may qualify for a $10,000 exemption.
C. Once filed, it remains until terminated.
D. None of the above.
52- Which statement is true about a listing contract?
A. It must be in writing to be enforceable.
B. It can be considered an employment contract.
C. It creates an agency relationship.
D. All of the above.
53- Greg sold an apartment building he owned for 20 years. He paid $100,000 for it, and made $300,000 worth of improvements. His depreciation was $2,500 per year. He sold the building for $1,000,000 and paid $60,000 in commission to the broker. What is Greg’s capital gain on the apartment?
A. $450,000
B. $540,000
C. $590,000
D. $600,000
54- 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?
A. Buydown loan
B. Balloon note
C. Purchase-money mortgage
D. Wraparound / wrap around loan
55- Greg is approved for a Cal-Vet loan. Who will pay the points?
A. The seller
B. The state
C. Greg
D. No one – there are no points.
56- Which is not a true statement about the Agency Disclosure?
A. The listing agent must provide the disclosure to the seller prior to securing the listing agreement.
B. The selling agent must provide the disclosure to the seller “as soon as practicable” prior to presenting a purchase offer.
C. If the selling agent does not deal directly with the seller, the selling agent is not required to provide the disclosure.
D. 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.
57- Under federal income tax law, the “basis” for a personal residence is which of the following:
A. The purchase price, plus depreciation
B. The purchase price, plus improvements
C. The fair market value at the time of sale
D. The appraised value prior to sale
58- 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?
A. Equal Credit Opportunity Act
B. Truth in Lending
C. Real Estate Settlement and Procedures Act
D. Community Reinvestment Act
59- Which of the following is a seller’s request that an agent cannot honor?
A. Please remove your shoes before entering the home.
B. Do not show to Mexicans.
C. Always call before showing.
D. Do not show the home between 10 a.m. and noon on Sundays.
60- Seller Tom has an agreement with Broker Bill, Broker Jim and Broker Joe. Whoever brings the buyer will get the commission. What kind of agreement is this?
A. Exclusive agency
B. Net listing
C. Open listing
D. Exclusive-authorization-and-right-to-sell agreement
61- Bill and Sue secured a mortgage loan that is tied to an index which fluctuates over the life of the loan. What kind of loan do they have?
A. Amortized
B. ARM
C. Balloon
D. Growing equity
62- When agent Hal shows a home he should never:
A. Ask questions of the prospects’ children.
B. Start in the room with the best features.
C. Allow indoor pets to leave their designated area.
D. Avoid negative comments while he’s inside the home.
63- 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?
A. $5,500 the first year, plus a maximum 2% increase in market value per year
B. $5,600 every year, with no increase
C. $5,750 the first year, plus a maximum 2% increase in market value per year
D. $5,750, plus a maximum 1% increase in market value per year
64- Which of the following is not a form of personal advertising?
A. Car signs
B. Business cards
C. Multiple Listing service
D. Name tags
65- Which of the following items is usually not prorated at closing?
A. Real estate taxes
B. Title insurance
C. Mortgage interest
D. Homeowner’s insurance
66- When doing a listing presentation which of the following items would you not describe to the owners as being a benefit of listing with an agent?
A. Availability of multiple listing service
B. Amount of commission charges
C. Broker-paid advertising and promotion
D. Assistance with filling out disclosures
67- Hannah is a real estate assistant. Her broker has asked her to be available for tasks in the field rather than in the office. What would we call Hannah?
A. On-call assistant
B. Field staff
C. Part-time worker
D. Commission-only assistant
68- Greg and Joyce have an adjustable rate mortgage on their home. What is the key feature of this type of loan?
A. The principal never amortizes.
B. The term of the loan can be shortened.
C. The interest rate can vary.
D. The monthly payments increase overtime.
69- According to ECOA, lenders cannot discriminate against potential borrowers on the basis of all but which of the following?
A. Marital status
B. Age
C. Income
D. Religion
70- Which of these items would be a credit to the buyer on the settlement statement?
A. sales price
B. loan origination fee
C. loan amount
D. recording fee
71- When agent Jane meets with her sellers to offer suggestions, she most likely would not give them:
A. Cleaning tips
B. Advice to be home during showings
C. Landscaping instructions
D. Suggestions for improvements
72- According to RESPA, a buyer or seller cannot legally be charged at closing for which of the following items?
A. Loan origination fee
B. Referral fee to a homeowner’s insurance agent.
C. Title insurance
D. Attorney fees
73- Which of these is not a buying signal?
A. Buyer Jim asks if he can visit the property for a second time.
B. Buyer Amanda asks if she can measure the windows to see if her current drapes will fit.
C. Jim and Amanda whisper and frown when they see the basement.
D. Amanda smiles at Jim when she sees the whirlpool tub.
74- Which statement is not true about an agency relationship?
A. It is based on authorization.
B. It is determined by who pays the compensation.
C. It is based on mutual consent.
D. It can exist without compensation.
75- All but which of the following is NOT an AIDA feature?
A. Action
B. Desire
C. Aspiration
D. Interest
76- 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?
A. 6 months
B. 12 months
C. 18 months
D. 24 months
77- Which of the following Internet pages might not be of particular interest to buyers?
A. Mortgage loan calculator
B. Information on current loan programs
C. Definition of financing terms
D. Curb appeal information
78- Nancy bought her home last year for $425,000. Her property taxes would be assessed at:
A. $425
B. $1,500
C. $2,250
D. $4,250
79- 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?
A. Insurance company
B. Credit union
C. Mortgage company
D. Savings and loan association
80- Which of the following is an example of commingling?
A. Broker John puts $500 into his trust account.
B. Broker Alice holds an uncashed check until the offer is accepted.
C. Broker Harry deposits $1000 into his brokerage business account.
D. Broker Gina puts $150 into her trust account.
81- Jake has decided to specialize in working with clients who purchase schools. What property type will he be dealing with?
A. Commercial
B. Industrial
C. Recreational
D. Special-purpose
82- What is the minimum period of time over which the owner of an apartment building can depreciate the improvements?
A. 18 years
B. 27.5 years
C. 30 years
D. 32 years
83- Matt is computing the adjusted cost basis of his apartment building for income tax purposes. Which of the following items can Matt not add to the original cost when doing the computation?
A. Cost of a new parking lot
B. Installation of central air conditioning
C. Mortgage payments on the property
D. Addition of a tenant laundry facility
84- 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?
A. Gained $640
B. Gained $2360
C. Lost $640
D. Lost $2360
85- Which paragraph of the purchase agreement states that the balance of the purchase price will be deposited into escrow prior to closing?
A. Finance Terms
B. Offer
C. Closing and Occupancy
D. Allocation of Costs
86- Which of the following is not considered a benefit of investing in real estate?
A. Having a monthly income.
B. Reducing taxes.
C. Realizing a quick profit.
D. Hedging against inflation.
87- What information can you gather from the newspaper to help develop a Prospecting Plan?
A. Death Notices and Building Permits
B. Deeds and Property Inspections
C. Land Titles and Home Warranties
D. Service Ads and Display Ads
88- Sally and Dan must pay 2 points on their new $65,000 loan. What will they have to pay at closing for the points?
A. $650
B. $1,300
C. $1,950
D. $2,600
89- Who selects the escrow company?
A. The buyer and seller
B. The broker
C. The seller’s agent
D. The seller alone
90- Marsha has been keeping track of the effectiveness of her advertising campaigns. She is probably using all but which of the following tools?
A. Code in a print ad
B. Telephone log
C. Designated telephone number
D. Advertising budget
91- This paragraph of the purchase agreements informs the seller of the buyer’s right to inspect the property and can cancel or request maintenance based on findings.
A. Repairs
B. Buyer Indemnity
C. Dispute Resolution
D. Conditions Affecting Property
92- Which of the following situations is not exempt from the seller disclosure requirement?
A. Greg Burns is selling his interest in his home to his wife Melanie as part of their divorce settlement.
B. Jim Sharp is purchasing his father’s home.
C. The court has ordered the transfer of Sally Green’s home to her friend Penny Jacobs as part of the settlement of Sally’s estate.
D. All of the above
93- Jim has created a nice property flier for the James’ home. Jim should not use this flier as a:
A. Handout at open houses
B. Substitute for advertising
C. Handout for other agents
D. Mailer for telephone inquiries
94- Seller’s agent Pam was unaware of the fact that the heating system of a home she had listed was defective. She sold the property and several months later the buyer sued Pam for not disclosing the problem. Which statement is true ?
A. The buyer was responsible for making the discovery, so Pam is therefore liable.
B. Pam is not liable since it was summer and the heating problem was not obvious.
C. The seller did not disclose the problem on a seller’s disclosure form so Pam is off the hook.
D. Pam is has no duty to investigate and may rely on the opinion of a heating professional or home inspector.
95- Who is liable for the withholding on the sale of a property owned by a foreigner?
A. Buyer
B. Seller
C. Broker
D. Escrow Officer
96- Which statement is not true about a listing contract?
A. It must be in writing to be enforceable.
B. It can be considered an employment contract.
C. It is a unilateral contract.
D. It creates an agency relationship.
97- Buyer Randy makes an offer to purchase one of Broker Tom’s listings on June 15. Randy gives Tom an earnest money check for $1,000 and asks Tom to hold it until June 30, regardless of the date the seller accepts the offer. What should Tom do?
A. Deposit the check into his trust fund account on the next business day.
B. Present the offer and tell the seller that the check needs to be held until June 30.
C. Refuse to accept the offer and check.
D. Give the check to the seller.
98- Grant moves into his new office space while he awaits the completion of the negotiations of the lease terms. During this interim period, grant makes monthly rent payments and the owner accepts them. How would Grant’s lease at this time be classified?
A. Estate for years
B. Estate from period to period
C. Estate at will
D. Estate at sufferance
99- All exclusive listing agreements must have
A. Compensation defined
B. Definite termination date
C. A list of personal property included in the sale
D. Escrow company named
100- What does the Real Estate Disclosure Law refer to?
A. Disclosure of agency relationships
B. Disclosure of financing terms
C. Disclosure of property condition
D. Disclosure of natural hazards
101- Which type of loan typically carries the most loan points?
A. FHA
B. VA
C. Cal-Vet
D. Conventional
102- What is the minimum period of time over which the owner of a commercial building can depreciate the improvements?
A. 20 years
B. 27.5 years
C. 30 years
D. 39 years
103- Kirk and Sandy obtained a wraparound mortgage. Which of these statements is true about the wraparound mortgage?
A. Their first mortgage will get paid off immediately.
B. The original loan becomes subordinate to the wraparound.
C. They can make payments directly to the original lender.
D. Their lender can profit from the difference in interest rates.
104- Lorna and Hal have obtained a growing equity mortgage for their new home. What does that mean?
A. The loan will be distributed to them gradually.
B. The interest rate will increase gradually over time.
C. The loan term will extend gradually over time.
D. Their loan payments will gradually increase.
105- Agent Alice has received an offer that she believes is not in the sellers’ best interest. What should Alice do?
A. Make no recommendations and let the sellers decide on their own.
B. Tell the sellers exactly how she feels and why she thinks the offer is not a good one.
C. Recommend a counteroffer back to list price.
D. Work toward acceptance.
106- If broker Tim advertises a property for sale that he doesn’t intend to sell so that he can attract potential buyers, Tim is practicing:
A. Display advertising
B. Ethical advertising
C. Product advertising
D. Bait-and-switch advertising
–00cceshop00—7.23 continue-cali practice
1) Single-family, multi-family (duplex, triplex, etc.), apartment buildings, condominiums, and cooperatives are part of what property category?
a. Industrial
b. Leisure
c. Residential
d. Retail
2) Title companies are a useful relationship to cultivate for many reasons. For example, what can they provide you with to help you in your business?
a. E & O insurance
b. Mailing lists
c. Properties to sell
d. Training
3) Gordon is busy preparing transactional paperwork for the property his client is selling. What activities accompany this duty?
a. Obtain signatures and provide copies to the parties.
b. Prepare a comparative market analysis.
c. Prepare marketing materials.
d. Write the MLS listing.
4) A title company, a title representative, and a mortgage broker are three ______ after you are licensed.
a. Entities you should avoid
b. Professional relationships you should establish
c. Professions you should study
d. Services you are prohibited from recommending
5) Because these types of properties have both specific physical and complex operational requirements, they are usually handled by more experienced real estate professionals.
a. Industrial
b. Leisure
c. Residential
d. Retail
6) Sophie has been working hard since she started as a real estate licensee, but the market is slow, and she has yet to complete a single transaction. What strategy could help her find more listings, even though the market is slow?
a. Being more flexible in the types of properties she handles
b. Learning to work with commercial real estate
c. Reaching out to her sphere
d. Signing up with a listing service
7) Hotels, motels, golf courses, resorts, and sporting arenas belong to which of these property categories?
a. Industrial
b. Leisure
c. Residential
d. Retail
8) Rhonda is considering what her niche should be. Which of the following would make the best niche for her to pursue?
a. She could focus on only residential properties.
b. She could focus on single-family properties that list between $300,000 and $500,000.
c. She could guarantee a sale at list price within 30 days.
d. She could start learning Spanish and serve Spanish-speaking clients.
9) At which point in the residential selling process does the real estate professional prepare a comparative market analysis?
a. Closing
b. Listing and marketing
c. Managing the transaction
d. Obtaining the listing
10) Marketing exclusively to which of the following niches may be illegal?
a. Catholic parishes
b. Commercial investors
c. Dentists
d. First-time buyers
11) Sheldon has worked hard to create a marketing plan tailored to his client’s property, to hold open houses and arrange showings, to help his client stage the property so that it appeals to buyers, and, finally, to negotiate a deal with a buyer and the buyer’s broker. His client has now accepted the offer. Has Sheldon completed what is needed for the commission check to be sent to his broker?
a. No. Sheldon is still in the marketing phase of the selling process.
b. No. Sheldon still needs to complete the listing activities of the selling process.
c. No, Sheldon still needs to complete the transactional activities of the selling process.
d. Yes!
12) The real estate cycle is affected primarily by __________________.
a. Availability and affordability
b. Immigration
c. Marriages and family size
d. Population growth
13) Shopping centers and malls belong to which of these property categories?
a. Industrial
b. Leisure
c. Residential
d. Retail
14) Licensee Bonita has just submitted an MLS listing with photos for her client. Which of the following steps will she need to complete next?
a. Expose the property to prospective buyers using a tailored marketing plan.
b. Meet with the client for a listing presentation.
c. Prepare the seller’s net sheet.
d. Verify the progression of the buyer’s loan.
15) What is the advantage to niche marketing?
a. Focuses your efforts and increases your chances of being noticed
b. Guarantees a minimum income
c. Reduces the real estate professional’s liability
d. Requires no marketing effort
16) Erica presented an offer to her seller client, and after a bit of negotiating with the buyer and buyer’s broker, the offer was accepted. Which one of these activities will Erica be taking care of at this point in the sales process?
a. Arrange a showing of the property.
b. Prepare a comparative market analysis.
c. Sign a listing agreement with her client.
d. Verify progression of the loan through the buyer’s broker.
17) When Henry first began his real estate career, he focused on residential properties. As he gained more experience, he found that he really enjoyed helping business owners find warehouses for their products, or properties where they could conduct manufacturing activities. Of the primary categories of real estate, what types of properties does Henry handle?
a. Industrial
b. Leisure
c. Residential
d. RetailWarehouses and manufacturing facilities are industrial properties.
18) At which point in the residential selling process does scheduling a photographer take place?
a. Listing and marketing
b. Managing the transaction
c. Obtaining the listing
d. Preparing for listing
19) Which of the following groups represents a niche?
a. Empty nesters
b. Home buyers
c. Homeowners
d. Urbanites
20) Which of the following is true about interviewing at a brokerage?
a. Being a new licensee is a distinct advantage.
b. Most brokers prefer not to hire new licensees.
c. Very few licensees are selected; it’s highly competitive.
d. You are interviewing the broker as much as the broker is interviewing you.
21) It’s your first week in real estate and you realize you made a terrible selection with your broker—she’s awful! What is your best course of action?
a. Quit the business
b. Sit tight; you can’t leave until two years have passed
c. Switch brokerages
d. Turn in a letter of resignation
22) Jill is trying to choose between two brokers. One no longer practices real estate, while the other is a very active broker. If training with her manager is a concern for her, which broker should she choose?
a. The active one, because she can learn on the job
b. The active one, because she’ll likely get more leads
c. The one who’s not practicing, because it’s best to learn from someone who’s not practicing
d. The one who’s not practicing, because she’ll likely get more time with the broker
23) One of the best ways to select a brokerage and managing broker with whom to work would be to ________.
a. Call the Better Business Bureau
b. Interview other new licensees
c. Interview several managing brokers
d. Request an income guarantee
24) What’s floor time?
a. Overtime
b. Time spent at an open house that is vacant, without chairs
c. Time spent evaluating carpeting and linoleum for possible upgrades
d. Time spent in the office instead of the field
25) As a new licensee, how should you select a broker to work with?
a. Broker interviews
b. Salary comparison
c. Volume of business
d. Working hours comparison
e. A broker who provides a variety of marketing materials is most likely ______.
f. A graphic design expert
g. A micromanager
h. Going to be difficult to work with
i. Invested in the success of affiliated licensees
26) Karen, a new licensee, is interviewing at a brokerage and asks to see its policies and procedures manual. Why might she do this?
a. To determine whether there are systems in place for her success
b. To find out if the brokerage has a policy of promoting from within
c. To look like she knows what she’s doing to the broker
d. To see if the brokerage pays overtime
27) Laura, a new licensee, just started working for broker Bill. Which of the following is a true statement?
a. Laura likely won’t get a salary for six weeks.
b. Laura may leave the brokerage and join another at any time.
c. Laura must stay with Bill for at least two years before she transfers brokerages.
d. Laura will be put on a three-month probation.
28) Will is looking at two brokerage offices. The commute to one is 45 minutes, and it’s in a neighborhood he intends to farm. The other brokerage is within walking distance of his house. Which office is best for Will’s business?
a. The closer one, because gas is expensive.
b. The closer one, because he can meet clients at the office easier.
c. The commuting one, because he will spend most of his time in the field.
d. The commuting one, because most business is conducted in the car.
29) Broker Bob and new licensee Lisa are meeting to determine whether they will work together. Which of the following is a true statement?
a. Bob is the only one with a decision to make.
b. Lisa should make sure the fit is right before agreeing to work with Bob.
c. Most brokers prefer new licensees.
d. New licensees should accept work with the first broker who offers.
30) Michelle always volunteers for floor time. Why might she do this?
a. She doesn’t like being in the office.
b. She needs the overtime pay.
c. She really likes flooring and interior design.
d. She’s hoping for leads.
31) Shaniqua’s appointment with a prospective broker was cut short because the broker said he had a client meeting. This broker is likely _____________.
a. A managing broker but not practicing
b. A practicing broker
c. Lying; brokers do not meet with clients
d. Politely blowing her off
32) Gary is a good broker to his new licensees. That is most likely because he ______.
a. Guarantees the success of his licensees
b. Has a robust training program
c. Offers comprehensive vision and dental insurance
d. Pays a competitive salary to his independent contractor licensees
33) One of the best ways to select a brokerage and managing broker with whom to work would be to ________.
a. Call the Better Business Bureau
b. Interview other new licensees
c. Interview several managing brokers
d. Request an income guarantee
34) Will is looking at two brokerage offices. The commute to one is 45 minutes, and it’s in a neighborhood he intends to farm. The other brokerage is within walking distance of his house. Which office is best for Will’s business?
a. The closer one, because gas is expensive.
b. The closer one, because he can meet clients at the office easier.
c. The commuting one, because he will spend most of his time in the field.
d. The commuting one, because most business is conducted in the car.
35) Which of the following factors helps the IRS determine whether a licensee is classified as an employee or an independent contractor?
a. Whether another broker supervises the licensee
b. Whether the brokerage offers regular guidance and instruction to the licensee
c. Whether the firm provides the licensee with a copy of the brokerage’s policies and procedures manual
d. Whether the licensee receives benefits from the brokerage firm
36) Lisette is an employee at ABC Brokerage. She’s not licensed and her role is to answer phones and process paperwork. She’s supervised by broker Bob. Which of the following statements is true?
a. Bob can control the number of hours that Lisette works each day.
b. Bob can define the results he wants Lisette to achieve, but he isn’t allowed to direct how she does her work.
c. Lisette is paid according to what she produces at work, not by the number of hours she works.
d. Lisette is responsible for paying her own work expenses.
37) Which of the following statements is true of independent contractor licensees?
a. Their brokerage firm pays certain expenses, such as gas and travel time.
b. They receive benefits, such as sick pay, from their brokerage firms.
c. They’re paid by the job.
d. They’re required to do work in a certain order.
38) Real estate licensees may be classified as ______ for tax purposes, even though they’re subject to supervision from a more experienced broker.
a. Employees
b. Employment agency employees
c. Independent contractors
d. Unlicensed assistants
39) Because of the employing party’s lack of control over the individual, which of these is not classified as an employee?
a. Common law employee
b. Hired worker
c. Independent contractor
d. Statutory employee
40) What form do independent contractors file with the IRS to deduct business expenses?
a. Schedule C
b. Schedule D
c. Schedule E
d. Schedule for Independent Contractor Expenses
41) What happens if an independent contractor earns $600 or more during the tax year?
a. Nothing, but the worker must still pay self-employment taxes.
b. The broker must withhold income taxes and FICA from the worker’s pay.
c. The independent contractor must change his worker classification to employee and have taxes taken out of his pay.
d. The worker’s brokerage firm must prepare and submit forms 1096 and 1099 to the IRS and distribute form 1099 to the worker.
42) The way in which independent contractors and employees are compensated and how their income is reported to the IRS differ. Which of the following statements describes how independent contractors are compensated and their income reported?
a. The worker does not receive a salary and must pay self-employment taxes.
b. The worker receives a salary and must pay self-employment taxes.
c. The worker receives a salary, and taxes are withheld from his pay.
d. The worker receives a salary, and the brokerage firm pays federal and state unemployment taxes on the worker’s behalf.
43) Which type of worker, though an independent contractor, is defined as an employee by statute for certain employment tax purposes? A food delivery driver who is paid on commission is an example.
a. Common law employee
b. Independent contractor
c. Statutory employee
d. Statutory non-employee
44) Which of the following is a reason that the federal and state government classify workers into taxing categories?
a. To determine whether the worker is exempt or non-exempt for purposes of the Fair Labor Standards Act
b. To ensure brokers withhold income taxes from their independent contractors
c. To ensure brokers withhold taxes for independent contractors
d. To ensure that both employees and independent contractors receive health insurance benefits
45) For tax purposes, employees are required to complete IRS form W-4. Which IRS form or forms are independent contractors required to complete?
a. W-2 form
b. W-3 form
c. W-4 form
d. W-9 form
46) What type of worker, defined under tax law as an independent contractor and not an employee, includes direct sellers and licensed real estate agents?
a. Common law employee
b. Employee
c. Statutory employee
d. Statutory non-employee
47) Which of the following statements applies to independent contractors?
a. Their broker sets their work hours.
b. Their broker supervises them.
c. Their work must be done in a specific location.
d. They’re paid by the hour, not by the job.
48) Andrew just received a compensation check from his brokerage firm. Since Andrew is an independent contractor, what determines how he’s paid?
a. Andrew’s date of hire
b. Andrew’s sales
c. The number of hours that Andrew worked
d. The number of sales agents at the brokerage
49) Which of the following is a reason you should avoid posting photos of yourself with expensive jewelry or belongings?
a. It allows strangers to connect with you through your personal social media accounts.
b. It can make your client’s home a target while you’re away.
c. It gives criminals a road map to your door.
d. It may attract thieves.
50) The “who, where, when” safety tip refers to telling someone who you are with, where you will be, and when you will be there. Why should you make sure clients you’re meeting know you have shared this information?
a. If clients know how busy you are, they won’t take up too much of your time.
b. This way, your clients know you’re very busy and have made time for the meeting anyway.
c. You’ll look prestigious to your clients.
d. You’re less likely to be attacked when clients know you would be missed and that you’ve shared their identifying information with others.
51) Chuck arrives at a vacant home for a showing. He thinks he sees a light on inside the home and distinctly remembers turning off all of the lights when he left yesterday. He decides to be safe and take a walk around the house and discovers a basement window propped open. What should he do?
a. Call the authorities to check it out.
b. Enter the home and wait for the client.
c. Leave immediately without telling anyone.
d. Wait for the client to arrive so that they can enter the house together.
52) When it’s second nature for you to consider the risks before doing anything—even marketing yourself—you’ve adopted a “_____________” mindset.
a. Economics first
b. Paranoid
c. Risky
d. Safety first
53) Showing which of the following can make your loved ones vulnerable?
a. Your Agent of the Month award
b. Your car keys
c. Your cell phone
d. Your family photos
54) You are meeting a new potential client at your listing. You’ve only talked to the prospect on the phone. You arrive first, and take a few minutes to review all of the egress points in the house. What is this an example of?
a. Fighting back
b. Installing a safety app
c. Situational awareness
d. Using an escape route
55) Which of the following is true about performing an Internet search on your name?
a. It can help you monitor your online reputation.
b. It can hurt your reputation.
c. It can’t help your personal marketing efforts.
d. It is a waste of time.
56) How can privacy tools available on most social networking sites protect your personal safety?
a. They can allow you to control what pictures and information other people see.
b. They can allow you to upload your photos faster.
c. They can help you to avoid posting provocative pictures of yourself.
d. They can make your online information completely private.
57) If you’re alone at an open house, what should you never post online?
a. A professional photo of yourself
b. Photos of the home’s selling features
c. That you have a great listing
d. That you’re alone at an open house
58) Which of the following are reasons you should insist clients enter a space first?
a. If you enter a space first, you could be cornered, locked in, or pushed from behind and disabled.
b. It is poor etiquette.
c. The person might see something you don’t want them to see.
d. The person might take one look at the property and try to leave.
59) Janice has encountered a creepy individual who claims to be interested in a home purchase, but continually sends inappropriate and threatening emails to her personal account, and also frequently leaves her voicemail messages on her cell phone. She could have avoided this situation if she had done what?
a. Scrapped the provocative photos
b. Set up separate personal and business accounts and only allowed strangers to contact her through her business account
c. Turned off location information
d. Used her phone’s privacy settings
60) If someone steals this, they could have access to your family, personal information, contacts, photos, email, and social media accounts. What is it?
a. Family photos
b. Your Agent of the Month award
c. Your car keys
d. Your cell phone
61) For safety reasons, which of the following should not appear in your personal marketing?
a. Your home address
b. Your office address
c. Your office email address
d. Your office phone number
62) When you meet a new client for the first time, you should always do what?
a. Meet them at a public place nearby.
b. Meet them at the brokerage office first.
c. Meet them at the listing first so that you can expedite the sale.
d. Meet them at your home.
63) It’s a bad idea to include information about your loved ones and pets in your personal marketing because it’s a safety risk to your loved ones. From a safety standpoint, there’s also another reason to avoid including this information in your personal marketing. What is it?
a. Names and birth dates of children and pets can be used as clues to your passwords.
b. Your business associates might not like it.
c. Your family and pets might make you look bad.
d. Your loved ones might not like it.
64) Telling someone that your co-workers know where you are and whom you are with is an example of _____________.
a. Fighting back
b. Getting out
c. Talking your way out
d. Wasting time
65) Janet is so happy to finally be on vacation. As she sits happily in her lounge chair on the beach, she decides to share her joy with her social media friends. From her phone, she posts, “Having such a great time just being alone. I can’t believe I have the whole week all to myself.” Since she’s turned off her location tracking information, she feels it’s okay to let the world know she’s on vacation. Is that a good idea?
a. No, Janet’s home could be robbed while she’s away.
b. Yes, her friends will be so envious!
c. Yes, it’s great social marketing to let everyone know she’s in a tropical paradise.
d. Yes, no one knows where she is.
66) In order to protect the confidentiality of client data, which of the following should you avoid?
a. Displaying photos of your family.
b. Ensuring that client paperwork is properly secured.
c. Leaving clients/customers unsupervised in the office.
d. Sharing personal information about your family.
67) Which of the following precautions can help keep you from being cornered, locked in, or pushed from behind and disabled?
a. Always carry a fully charged cell phone.
b. Always make sure to go first into a space.
c. Always make sure you follow a client into a space.
d. Always make sure your car is not blocked in.
68) Many lawsuits have been filed against companies that fail to protect the security of what?
a. Confidential client data
b. Personal belongings of employees
c. Public information
d. Your bowl of jelly beans
69) Why should you always meet new clients at the brokerage first?
a. To impress them with your work space.
b. To make sure they’re really interested in the listing.
c. To photocopy their ID and introduce them to others.
d. To show them other listings they might be interested in.
70) When meeting a new client for the first time, where would be an ideal place to meet?
a. At a home the client wants to see
b. At your brokerage
c. In your car
d. In your home office
71) Privacy tools are available on most social networking sites. How can they be used to protect your personal safety?
a. They can allow you to control what pictures and information other people see.
b. They can allow you to upload your photos faster.
c. They can help you to avoid posting provocative pictures of yourself.
d. They can make your online information completely private.
72) Which of the following is true about getting to safety?
a. Each person and each situation is different.
b. Once you are in danger, there is no chance for escape.
c. There is one approach that works for pretty much every situation.
d. You should never try to talk your way out of a dangerous situation.
73) When you’re planning your personal marketing materials, you should always consider ___________ a top priority.
a. Economics
b. Government control
c. Safety
d. the Internet
74) Practicing strategies for getting to safety is known as ______________________.
a. Avoiding all contact with people
b. Hoping for the worst
c. Imagining failure
d. Mental rehearsal
75) Having information about clients you’re meeting gives authorities something to work with in case something goes wrong. This is why you should do what?
a. Collect identifying information from the client/customer
b. Complete an agent itinerary form
c. Dress for safety
d. Insist that clients enter first
76) Janet is so happy to finally be on vacation. As she sits happily in her lounge chair on the beach, she decides to share her joy with her social media friends. From her phone, she posts, “Having such a great time just being alone. I can’t believe I have the whole week all to myself.” What feature on her phone might make this dangerous?
a. Photo editor
b. The ability to track her location through GPS
c. Web browser
d. Wireless connection
77) Personal ___________ is an area where many people do not consider their safety.
a. Checking
b. Choice
c. Marketing
d. Space
78) When presented with a dangerous situation, saying something like, “My office knows where I am and who I am with” is an example of _________.
a. Fighting back
b. Getting out
c. Talking your way out
d. Wasting time
79) How can you mentally prepare for getting to safety?
a. Avoid all contact with people.
b. Hope for the best.
c. Imagine failure.
d. Rehearse successful escape strategies.
80) It’s acceptable from a safety standpoint to include ______ in your personal marketing.
a. Your home address
b. Your home phone number
c. Your office address
d. Your personal cell phone number
81) What information should you avoid sharing so that would-be criminals cannot find out where you are or when you are away from home?
a. Location information
b. You list of contacts
c. Your privacy tools
d. Your profile photo
82) Why is it a good idea to turn off location sharing information when using social media?
a. Because other licensees may see where your listings are
b. Because potential criminals can use it to find out when you are home and where your home is located
c. So everyone knows what a glamorous life you lead
d. So your clients can always find you
83) You should always make sure this is secure (locked) when not in use.
a. Your Agent of the Month award
b. Your bowl of jelly beans
c. Your computer
d. Your family photos
84) Because each person and each situation is different, it’s important that you ______.
a. Do nothing
b. Ignore your intuition
c. Rely on others to decide the best way to proceed
d. Stay calm and assess the situation
85) You should be very cautious when approaching a vacant home. If you see anything suspicious, what should you do?
a. Call the authorities to check it out.
b. Enter the home and wait for the client.
c. Leave immediately without telling anyone.
d. Wait for the client to arrive so that you can enter the house together.
86) Which of the following photos should a licensee avoid posting on social media when advertising an open house?
a. A glamorous selfie
b. The front door, showing the address
c. The landscaping
d. The outdoor pool
87) When considering your personal marketing, what should one of your primary concerns be?
a. How envious everyone will be when they see that photo of you wearing your huge diamond ring and bracelet
b. How fabulous you look in that sundress on vacation
c. How to best use your personal assets to attract customers of the opposite sex
d. The overall intention of your marketing
88) When it comes to personal marketing, photos of you should be what?
a. Glammed up and ready to go
b. Professional, almost understated
c. Provocative
d. Revealing
89) It’s important that you present yourself both professionally and safely in your _____________.
a. Conversations with friends
b. Family life
c. Personal marketing plan
d. Private life
90) What should you do when working alone in the office?
a. Eat all of the donuts
b. Lock doors and windows
c. Move a lot of files around so it looks like you’ve been busy
d. Open the doors and windows to attract foot traffic
91) In order to avoid sharing where you are and when you are away from home, you should disable_______________.
a. Location information/location sharing in social media
b. Your list of contacts
c. Your privacy tools
d. Your profile photo
92) Which of the following represents a safety risk and should be avoided when meeting with clients?
a. Carrying a fully charged cell phone
b. Entering the room last
c. Wearing comfortable clothing
d. Wearing high-heeled shoes
93) Which of the following can be a valuable tool for protecting your personal safety, but can also be a risk?
a. Disclosing the names and ages of your children
b. Family photos
c. Leaving clients unattended in the office
d. Your cell phone
94) How can carrying a fully charged cell phone assist you with personal safety when showing a home?
a. It allows you to stay up-to-date with social media
b. It can allow you to call for assistance if your safety is threatened.
c. It helps ensure your car is not blocked in.
d. It makes you look important.
95) If this is not secure, then your clients’ data and your computer systems are also endangered.
a. Your Agent of the Month award
b. Your bowl of jelly beans
c. Your computer
d. Your family photos
96) Why are most new real estate licensees hesitant to market to their friends and family?
a. Their brokers don’t want them marketing to that audience.
b. They are afraid they’ll be asked to reduce their commissions.
c. They don’t want to seem pushy.
d. They want wealthier clients than their friends and family.
97) Deborah was initially thrilled when she signed a listing agreement with her client, Jeb, to sell his five-bedroom colonial in a beautiful neighborhood. Since then, however, it was becoming more and more difficult to get along with Jeb. She felt like she was doing her best to sell his house, but with every day that passed without an offer, he became more and more disagreeable. She wondered what she could do to resolve the situation. What advice would you give Deborah?
a. Might as well ask your broker to send back your license; you’re not cut out for this business.
b. Refer Jeb to a colleague who might be a better match and take the referral fee.
c. Tell Jeb what a jerk he is and that he’d better shape up if he really wants his house to get sold anytime soon.
d. Tough it out and do what it takes to make the client happy.
98) Which of the following is a true statement about working in real estate?
a. Everyone in the business is ethical.
b. It involves nights and weekends.
c. It’s a good hobby career.
d. You’ll probably mesh with all of your clients.
99) In real estate marketing terms, what’s a farm area?
a. An agricultural district
b. A targeted market
c. Vacant land
d. Your sphere of influence
100) What are the two places you should concentrate your marketing efforts before all others?
a. Billboards and bus benches
b. Craigslist and Facebook
c. Radio and TV advertising
d. Sphere and farm
101) How would you qualify a member of your sphere?
a. By asking if they know someone to whom they would refer real estate business
b. By income
c. By location
d. By running a credit check
102) You should try to have a face-to-face meeting with each person in your sphere at least how often?
a. Daily
b. Monthly
c. Quarterly
d. Weekly
103) Of the following marketing techniques, which is most essential for a new licensee?
a. Ability to smooth talk people
b. A love of leisure time
c. A strict 9-to-5 work ethic
d. Perseverance
104) Which of the following is most true about a career in real estate?
a. It requires a strong work ethic.
b. It’s all about schmoozing.
c. It takes minimal effort to succeed.
d. Most people succeed.
105) What’s one mistake that new real estate licensees frequently make regarding their “sphere”?
a. Asking for referrals
b. Connecting with people they don’t know
c. Not promoting their services to friends and family
d. Sending quarterly newsletters
106) What’s a popular myth about real estate?
a. Cyclical nature
b. Easy money
c. Hard work
d. Service counts
107) Rather than spend money on lead generation programs, new real estate licensees should focus on which of the following marketing techniques?
a. Billboards
b. Cold calling
c. Newspaper inserts
d. Sphere marketing
108) What’s the failure rate for new real estate licensees?
a. 24%
b. 56%
c. 71%
d. 87%
109) Calli is a new licensee. If she wants to succeed in real estate, she should ______.
a. Seek out a broker who does a lot of business.
b. Try to be all things to all people.
c. Work a regular work week (Monday through Friday, 9 a.m. to 5 p.m.).
d. Work hard and stick with it.
110) Which of the following describes marketing to one’s sphere?
a. Buying ad space on bus benches
b. Buying display advertising
c. Connecting with your own network of family and friends
d. Picking a geographic area in which to concentrate efforts
111) Stacey is a new licensee. In order to get the most out of her marketing efforts, what she should concentrate on?
a. Billboards and benches
b. Craigslist and Facebook
c. Her sphere and farm area
d. Radio and TV advertising
112) In order to succeed in real estate, you need to ______.
a. Be disciplined and diligent
b. Focus on making money, not building relationships
c. Never work for free
d. Understand that it’s a better hobby than a business
113) Your cousin wants to get into real estate. Now that you know the reality, you tell your cousin, ______.
a. “Buy advertising; it always works.”
b. “This is the easiest job you’ll ever have.”
c. “Where you work doesn’t really matter.”
d. “You should have six months’ living expenses set aside before beginning.”
114) Natalie has been concentrating her marketing efforts in her farm area, which is ______.
a. An agricultural district
b. A targeted market
c. Her sphere of influence
d. Vacant land
115) Natasha has been working her farm area and is starting to see results. If her efforts are most efficient and effective, how often is she likely sending out her newsletter to the contacts in her farm area?
a. Daily
b. Monthly
c. Quarterly
d. Weekly
116) Which of the following is true about careers related to your real estate experience?
a. Because real estate is so specialized, experience in the field doesn’t translate well to other professions.
b. It’s possible to transition to one of several related careers after becoming an experienced real estate professional.
c. Preparing comparative market analyses allows you to work as an appraiser.
d. Real estate counselors don’t need as much experience as a real estate licensee.
117) Which one of the following is a true statement about commissions when working within a real estate team?
a. Any split you receive will likely be less than if you were not in a team.
b. Commission splits are standard among all teams.
c. It takes longer to earn a commission in a team than if you go on your own.
d. Members of a team share commissions only among team members; the brokerage does not take a split.
e. Malcom decided to join a team within his first brokerage. He will likely _______.
f. Be required to forego his commission for the good of the team
g. Receive a commission check sooner than if he’d been on his own
h. Receive a team blazer
i. Work the full array of real estate tasks
118) Which of the following is true about careers related to real estate?
a. A real estate attorney must have a broker’s license.
b. A real estate license qualifies you for a law degree, with practice limited to real estate.
c. Complementary careers include real estate counseling, appraisal, and education.
d. Only brokers with a teaching certification can be real estate educators.
119) Barb is a real estate broker and has decided real estate sales are not for her. She likes valuing properties, though. What might be a natural career change for her?
a. Real estate appraiser
b. Real estate educator
c. Stager
d. Transaction coordinator
120) What is one advantage of joining a real estate team within a brokerage?
a. Doing so allows you to specialize.
b. Joining a team offers higher commission per transaction.
c. Team membership gives you broad experience.
d. The cooperative agreement includes free advertising.
121) Which one of the following is true about a real estate team?
a. Members compete with one another for business.
b. Only the team leader is responsible for supervision.
c. Team members are generalists.
d. There is usually one lead generator and several specialists, such as buyer agents.
122) You’ve been in real estate for a while, have your broker’s license, and have been serving as an associate broker for several years. If you have business acumen and like managing people, a natural next step in your career would be becoming a _______.
a. Real estate broker
b. Real estate counselor
c. Real estate educator
d. Sales associate
123) Which real estate career requires the ability to advise clients using your extensive real estate expertise and ability to evaluate the potential of a given property?
a. Real estate attorney
b. Real estate counselor
c. Real estate educator
d. Real estate investor
124) What is one disadvantage of joining a team?
a. It may take longer to earn a commission.
b. The risks are minimized.
c. The salary is lower.
d. You may not learn all aspects of real estate due to specialization.
125) Rob is a real estate broker who enjoys helping buyers locate loan programs that suit their financial situation. What’s an obvious alternate career path for Rob?
a. Mortgage broker
b. Real estate appraiser
c. Real estate educator
d. Real estate stager
126) If a new licensee is worried about making commission soon, what is one strategy that could help?
a. Buy display advertising.
b. Join a team.
c. Send a mailer.
d. Spend more than usual on marketing campaigns.
127) If an agent lists a home for his sister and it sells, can the agent accept his commission directly from his sister?
a. No, agents cannot accept commissions from immediate family.
b. No, the commission must go through the agent’s broker.
c. No, the commission must go through the escrow company first.
d. Yes, because she’s a close relative.
128) At what point must an agency disclosure be given?
a. As soon as the relationship becomes more than casual
b. At the first contact
c. At the first conversation
d. At the first in-person meeting
129) Jeremy, a buyer, refused to sign Calli’s agency disclosure form. Later, he decided to use Calli as his agent. How many disclosure forms must Calli retain in her files?
a. Four
b. One
c. Three
d. Two
130) What happens if a consumer who refused to sign an agency disclosure later decides to use that same licensee as their agent?
a. An amendment noting the change in agency status must be signed
b. A new agency disclosure must be signed
c. Nothing, as long as the consumer was presented with the form the first time
d. The old agency disclosure must be discarded
131) Jim from Greater SW Realty represents Andy as the buyer of a parcel of land. Roger, also from Greater SW Realty, has the listing for that land. Is this a dual agency situation?
a. No, because each party has their own representation.
b. No, because land is not subject to dual agency requirements.
c. Yes, because any time more than one party is involved in a transaction, it is dual agency.
d. Yes, because both Jim and Roger work for the same broker.
132) Brenda, a consumer, meets Charlie, a licensee. Which of the following actions could Brenda take that would meet the definition of “more than casual” relating to agency disclosure?
a. Asking for a copy of a flyer for her brother, who is looking to buy
b. Asking for advice in negotiating with another party
c. Inquiring about the availability of a property
d. Inquiring about the price of a property
133) Bradley provided his clients with a dual agency disclosure. He obtained his clients’ signatures and provided copies to his clients. What step did he miss?
a. He did not make sure his clients understood the form before signing it.
b. He did not offer to also mail his clients a certified copy.
c. He did not receive his broker’s permission.
d. No steps; if he obtained signatures, he has done his job.
134) Brad is a dual agent representing Gina and Dawn as buyer and seller, respectively. If Gina tells Brad that Dawn’s home was her childhood home and she is absolutely determined to live there, may Brad share this with Dawn?
a. No, because this is confidential information.
b. Yes, because Dawn may be willing to cut Gina a break because of the family connection to the property.
c. Yes, Dawn will think that is cute.
d. Yes, he must tell her because it is a material fact.
135) Gillian is a real estate licensee who attends a party at the home of a mortgage broker, Tim, with whom she has worked in the past. At the party, Tim offers Gillian tickets to a concert, saying that he can’t use them. She accepts gladly, and laughs when Tim says as he hands the tickets over, “And all I ask in return is that you send a customer or two my way!” Is Gillian guilty of a violation?
a. No, but Tim is.
b. No, there is no violation.
c. Not unless she neglects to disclose the exchange and the value of the tickets to her broker within three days.
d. Yes, Gillian is guilty because she has accepted what is essentially a referral fee from a mortgage broker.
136) Cheri, a licensee, refuses to negotiate for either party in her dual agency transaction. What might happen to Cheri?
a. Nothing; this is perfectly legal.
b. She can be cited for failure to perform.
c. She can be sanctioned for breach of contract.
d. She may lose her license; this is a flagrant violation of licensee duties.
137) For how long must a licensee retain a signed agency disclosure?
a. Forever
b. For one year after the agency relationship ends
c. For three years
d. Until the agency relationship ends
138) Harriet, an out-of-state licensee, is friends with Tonya, a licensee who works with Perfectly at Home. Harriet referred one of her buyer friends to Tonya, so Tonya plans to pay Harriet a referral fee. Which one of the following statements about this fee is true?
a. It’s illegal for Tonya to pay an out-of-state licensee a referral fee.
b. Referral fees have no disclosure requirements.
c. Tonya must pay the fee directly to Harriet since Harriet is an out-of-state licensee.
d. Tonya must pay the referral fee through her brokerage firm to Harriet’s brokerage firm.
139) Kamut met with Amy, a buyer, and showed her his new listing. If Amy is unrepresented, did Kamut err by not providing Amy with an agency disclosure?
a. No, because he is the listing agent
b. Only if Amy asked for advice or offered confidential information
c. Yes, because any time you meet with a buyer, you must provide agency disclosure
d. Yes, because he showed her property
140) With written permission, Robert, a licensee, represents two separate parties who each want to buy a new townhome. What do you know about Robert’s situation?
a. Robert is a dual agent
b. Robert is breaching his fiduciary duty
c. Robert is in violation of agency law
d. Robert must also be an attorney
141) Margie wrote an offer for Lisa on 645 Rudolph Street on Tuesday. Before hearing back, another client decides she would also like to write an offer on 645 Rudolph Street. May Margie write a competing offer?
a. No, this would breach her fiduciary duty to Lisa.
b. Yes, if both parties sign a dual agency disclosure.
c. Yes, if Lisa doesn’t find out about it.
d. Yes, if the new offer is lower than Lisa’s offer.
142) Risa is a licensee. She told Kim, her seller client, about Ranger’s willingness to pay more for her house—something Ranger did not want Kim to know. Did Risa violate her duties?
a. No, because a licensee’s duty to a seller is greater than that to a buyer
b. No, because licensees may share confidential information with their clients, no matter the source
c. Yes, because Ranger did not want the seller to know
d. Yes, if Ranger is also a client
143) Before entering into an agency relationship with a consumer, what must a licensee do?
a. Ask their broker’s permission
b. Discuss commission rates
c. Provide a lead-based paint pamphlet
d. Provide an agency disclosure form and obtain signatures
144) Which of the following situations would require agency disclosure?
a. A prospective buyer asks a licensee whether appliances are ENERGY STAR®
b. A prospective buyer asks a listing agent the price of the property
c. A prospective buyer asks an agent their license status
d. A prospective buyer asks an agent why the sellers are moving
145) Chuck represents Benny. April is buying Benny’s property, but Chuck does not represent her. Which duty does Chuck owe Benny that he does not owe to April?
a. Confidentiality
b. Disclosure of material facts
c. Good faith
d. Honesty
146) To whom does an agent owe the duty of disclosure of material facts?
a. All parties to a transaction
b. The buyer, if a client
c. The seller, if a client
d. The seller or buyer, if they are customers
147) Which of the following situations would qualify as “more than casual,” and therefore require an agency disclosure form to be signed?
a. When a ‘for sale by owner’ seller asks a licensee whether the licensee believes the house is overpriced
b. When a licensee shows a couple who is expecting their first child around an open house
c. When a listing agent shows an unrepresented buyer their own listing
d. When a listing agent shows a visitor around at an open house
148) Connie is a new licensee and has just entered into an agency relationship after obtaining a signed agency disclosure from her new client. What must Connie do now?
a. Give a copy to her client and retain the form for three years
b. Have the form notarized and provide a copy to her client
c. Record the document with the county
d. Shred the document, as it contains financial information
149) You work for XYZ Realty under the supervision of broker Luke. Your buddy in the next county gave you a referral fee. The check came to your office in your name. You deposit it. Is this okay?
a. No, because agents can only be paid directly if they’re paid in cash.
b. No, because all compensation must come through your broker.
c. Yes, if the check is endorsed by your broker, as well.
d. Yes, provided your broker knows about the check.
150) To whom must a licensee, representing a buyer, disclose agency status?
a. All parties in the transaction
b. Broker
c. Buyer
d. Seller
151) Bill is a seller who tells his neighbor, “I got lucky! My listing agent is buying my house from me.” What could be the danger to Bill?
a. Additional taxes may apply if the sale happened too quickly
b. Bill might have to pay extra commission
c. Bill’s agent might not have marketed the property well, hoping to get a reduced price
d. His neighbors won’t want a real estate licensee living next to them
152) Which of these is NOT an example of agency coupled with interest?
a. Carma agrees to list Tera’s property for free if Tera signs an agreement to purchase her new home through Carma.
b. Gene, a real estate professional, is purchasing a home for his personal use. He negotiates a reduction in the sales price in return for taking no commission from the seller.
c. Jeanine agrees to charge no commission from her buyer’s purchase of a four-plex if the buyer agrees to pay Jeanine a 3% fee for each unit for which she finds a tenant after the sale.
d. Rhoda loans Carl the money to catch up his mortgage payments in return for a listing agreement to sell Carl’s home for a 4% commission.
153) Mark didn’t like the offered cooperative commission rate, so he wrote a higher commission rate into his buyer client’s offer. Did he do anything wrong?
a. No, as long as he had his client’s permission.
b. No, because commission rates are negotiable.
c. Yes, because he is interfering with the contractual relationship between the listing agent and seller.
d. Yes, because making a change to a contract is practicing law without a license.
154) Max has a written agency agreement with Rufus in which Max will receive all of the listings in the subdivision that Rufus purchased (with Max’s representation) and is developing. One day when Rufus is visiting the site of the subdivision, a work truck accidentally runs him over and he’s seriously injured. Rufus can no longer run the development of the subdivision. What happens to Max’s agency coupled with interest?
a. It’s still in place because it doesn’t terminate on the death or incompetence of the principal.
b. Max has no recourse; the agency relationship is terminated and he receives no compensation.
c. Max now owns the subdivision as a result of the principal’s death or incapacity.
d. Rufus must now pay Max the commission that he didn’t get from the original listing, and the agency relationship is terminated.
155) Imagine that you’re an active real estate licensee as well as an architect, and you’d like to partner with a builder who’s just beginning a development. Which of these creates agency coupled with interest?
a. You agree to design the houses for this builder in return for getting the listings when the properties are finished.
b. You agree to list the properties for a reduced commission once they’re built.
c. You have the builder and developer sign listing agreements now that will be effective when the properties are complete.
d. You tell the builder that he has to hire you to design the houses if the builder wants you to list them when they’re finished.
156) Under what circumstances would undisclosed dual agency be most likely to occur?
a. When meeting a buyer at an open house
b. When meeting a seller at an open house
c. When representing a seller and assisting an unrepresented buyer
d. When representing the buyer and assisting a seller who is represented by another broker
157) Janice is a licensee with a buyer client who just found a great house. Which of the following is she NOT required to disclose to her client?
a. She co-owns the property.
b. She knows the house was damaged in a severe fire two years ago.
c. She lives two blocks away.
d. The owner is her brother-in-law.
158) Danielle is selling her home and has enlisted Camden as her agent. Shortly after signing the listing agreement, Camden informs Danielle that he’d like to purchase her home. What can Danielle do?
a. Danielle may cancel the listing agreement and seek representation from another agent.
b. Danielle must accept Camden’s offer.
c. Danielle must cancel the listing agreement.
d. She already signed the listing agreement with Camden. She must fulfill the contract.
159) Which of the following is a true statement about buying one’s own listing?
a. Even when it’s legal, some brokerages won’t allow their agents to do it.
b. If full disclosure is provided to the seller, it is fine to do.
c. It is always illegal.
d. It’s a great way to make money in real estate.
160) Sue believes she’s about to get into an undisclosed dual agency position. What should she do?
a. Inform all parties to the transaction
b. Inform the seller
c. Say nothing
d. Terminate her agency relationship
161) If a listing agent is interested in purchasing her own listing, what must that agent do?
a. Disclose to the seller that the agent is interested in purchasing the property.
b. Hold any other offers so the seller accepts the listing agent’s offer.
c. Price the property above fair market value so the seller gets a better deal.
d. Price the property below fair market value so the agent gets a better deal.
162) Which of these is an example of agency coupled with interest?
a. A listing agent agrees to accept a commission of 2.5% upon sale of the property.
b. A listing agent agrees to split the commission on the sale of a property with a cooperating agent who brings the buyer to the table.
c. An agent foregoes buyer agent commission, provided the purchasing developer gives the agent the listings on the developed lots.
d. An agent is interested a property the agent has listed.
163) You’ve been practicing real estate for a while and decide to purchase a property as an investment along with a business partner (who’s not a real estate broker). Since you’re a licensee, which of these actions must you take?
a. You must be represented by another broker in this transaction.
b. You must disclose your licensed status, any conflicts of interest, and any relevant facts that might affect the seller’s decision to accept your offer to the seller.
c. You must offer the full list price, regardless of any other factors affecting the property value.
d. You must sign an agency agreement to represent your business partner before you can make an offer to the seller.
164) Savvy’s buyer client made an offer on a property but is having second thoughts. Savvy tells her client that she’ll ask the seller’s agent for an extension on the inspection period “to gather more bids,” and use that time to look at other properties to avoid losing out on the current property. Savvy’s client found a property she liked better, so they made an offer. The offer was accepted, so Savvy contacted the first property’s agent to terminate that offer. Is this wrong?
a. No, she acted in her client’s best interest.
b. No, she fulfilled her duty of loyalty to her client.
c. Yes, she broke a contract.
d. Yes, she did not treat the other party honestly, or act in good faith.
165) In a real estate transaction, which two parties are owed the same duties?
a. Clients and cooperating agents
b. Clients and customers
c. Clients and other parties
d. Customers and other parties
166) In a real estate transaction in which you represent the seller, your duty to other parties is to ______.
a. Be honest in all matters that do not affect your client’s interests
b. Be polite and courteous
c. Maintain the confidentiality of all matters that other parties disclose to you
d. Treat them honestly and fairly
167) Jason is the seller’s agent. His seller has a leaky roof he’d rather keep secret from buyers. What should Jason do?
a. Fulfill his duty of loyalty. Revealing the roof leak may not be in his client’s best interest.
b. Fulfill his duty of obedience by keeping the roof secret, as his client instructed.
c. Inform the seller that the roof leak is a material fact that he is obligated to disclose to buyers.
d. Quit representing the seller.
168) When representing the seller, what duty do you owe a buyer?
a. Advise the buyer on negotiating a better price.
b. Pre-qualify the buyer before presenting their offer to your seller.
c. Present offers from the buyer to your seller.
d. Recommend the buyer obtain a property inspection.
169) Jerry is a licensee employed by Sal, a real estate broker. Jerry must adhere to the policies, procedures and lawful instruction of Sal. What duty is this an example of?
a. Accountability
b. Disclosure
c. Obedience
d. Reasonable skill and care
170) Zack represents a seller and receives an offer through another agent. The offer is higher than the listing price. The property is already listed at a very high price, and no other offers have been received. Is Zack obligated by his duties to the other party to disclose that the offer is too high?
a. No, but Zack should honor his duty to all parties by asking his client to decline the offer.
b. No, his fiduciary duty is to his own client. The buyer’s agent must be responsible for advising on a fair price for the property.
c. Yes, Zack must be honest and fair with all parties in the transaction.
d. Zack can request that both parties consent to dual agency so that he can negotiate an honest price that will be fair to all.
171) In which of these situations has the licensee compromised the duties of loyalty and disclosure?
a. Diana, the seller’s agent, presented an offer to the seller even though it was under list price.
b. Hillary, in working with the seller, told the buyer about a material defect the seller hadn’t disclosed.
c. Josie, in listing Rob’s property, failed to disclose to Rob that he represents the seller.
d. Nate didn’t tell his client about a conflict of interest related to the sale of his client’s property.
172) Which of the following is an example of an agent exercising the duties owed to customers and other parties?
a. Ari didn’t present the buyer’s offer to the seller, since it was a lowball offer.
b. Francine disclosed information about the flooding basement to the buyer and buyer’s agent.
c. Mark complied with the buyer’s agent’s instructions to change the available times for showings so the potential buyer could see the property.
d. With her client’s permission, Missy shared the entire inspection report with the seller’s agent.
173) You represent Ember as her listing agent. Ashley is the buyer, and Trinity represents her. What duties do you owe Trinity?
a. Honesty and fairness
b. The duty of confidentiality
c. The duty of loyalty
d. The same duties you owe Ember
174) Your seller client asks you not to mention to buyers that the basement leaked last year. Should you obey?
a. No, because obedience is not a required duty.
b. No, because the leak occurred last year.
c. No, because this is a material fact related to the property.
d. Yes, because obedience is a fiduciary duty.
175) Your seller client needs to sell as soon as possible. How should you respond if a prospective buyer asks you whether your seller is firm on price?
a. “I don’t know.”
b. “The seller believes the home is priced fairly. I suggest you write your highest and best offer.”
c. “The seller is highly motivated.”
d. “The seller would probably be willing to entertain any offer.”
176) Jack is a licensee employed by Steve, a real estate broker. Jack just heard that the brokerage is representing a well-known professional athlete looking for a new property. He tells a couple of his friends, who happen to be avid fans. Which duty did Jack break?
a. Accounting
b. Confidentiality
c. Disclosure
d. Reasonable skill and care
177) Which of the following duties are owed to customers and other parties to a real estate transaction?
a. Fairness and loyalty
b. Honesty and fairness
c. Honesty and obedience
d. Obedience and loyalty
178) Which of the following is an example of self-dealing?
a. A licensee lists his property with another firm and sells his home without informing buyers of his license status.
b. A licensee purchases a listing through his cousin but does not inform the seller.
c. A licensee purchases a property for personal profit.
d. A licensee sells a property for personal profit.
179) Which of the following is true of a material fact?
a. A material fact is known only to real estate licensees.
b. A material fact is only related to the condition of a property.
c. A material fact need not be disclosed to all parties.
d. A material fact would cause a reasonable person to not take an action that would otherwise be taken, or take an action that would otherwise not be taken.
180) Leo’s client is looking for a property with at least 2,500 finished square feet. Leo finds a 2,200-square-foot property with all the other features the client is looking for, and purposely doesn’t mention the square footage to his client. His client agrees to look at the property, falls in love with it, and wants to make an offer, but does not realize it doesn’t contain his desired square footage. Which of these statements accurately represents Leo’s level of misrepresentation in this situation?
a. Because Leo didn’t state the square footage, he’s not guilty of misrepresentation.
b. It’s the buyer’s responsibility to ensure that the property has the proper square footage, so Leo’s in the clear.
c. Leo accidentally omitted a material fact. This is considered unintentional misrepresentation.
d. Leo knew about the square footage and intentionally didn’t mention it. He’s guilty of intentional misrepresentation.
181) Which of the following is true about inadvertent misrepresentation?
a. A false statement was made.
b. No harm was done to anyone.
c. The person hearing the false statement did not rely upon it.
d. The
182) Which of the following is an example of puffery?
a. “I love this house, and I know it will appreciate better than the average house its size!”
b. “This apartment will definitely increase in value. You can’t lose!”
c. “This condo has the best view this side of the river!”
d. “This home is built to last. You won’t have maintenance issues for a decade, at least!”
183) In order for misrepresentation to occur, what must happen to the person who relied upon it?
a. He must be harmed.
b. He must believe the statement to be false.
c. He must not be harmed.
d. He must research all claims.
184) The main difference between puffery and misrepresentation is that _______.
a. Misrepresentation doesn’t exaggerate
b. Misrepresentation falsely represents material facts that a reasonable person would rely upon
c. Puffery doesn’t make wild claims
d. Puffery is used to help sell a property
185) What is misrepresentation?
a. An inadvertent misstatement of fact only
b. An intentional misstatement of fact only
c. An intentional or inadvertent misstatement of fact
d. A statement of opinion or exaggeration that’s generally understood to not be a statement of fact person making the false statement knew it was false.
186) What’s the difference between commingling and conversion?
a. Commingling involves client funds; conversion involves your own funds.
b. Commingling is mixing client funds with your own; conversion is using them.
c. Only commingling is illegal.
d. They’re essentially the same thing.
187) One element of intentional misrepresentation is that ______.
a. No one relied on the false statement
b. The false statement did not cause harm to the person who relied upon it
c. The person making the false statement knew it was false (or should have known)
d. The person relying on the false information knew it to be false
188) What is the difference between positive misrepresentation and inadvertent misrepresentation?
a. Positive involves a beneficial outcome; inadvertent results in a negative outcome.
b. Positive means intentional; inadvertent means it wasn’t intentional.
c. Positive means made by the seller’s side; inadvertent is misrepresentation by the buyer’s side.
d. Positive means the parties agreed to the facts; inadvertent means the parties disputed the facts.
189) What is puffery?
a. A home’s list price is inflated to make it appear more luxurious than it really is
b. An intentional or inadvertent misstatement of fact
c. A real estate licensee boasts about the price for which he can sell a home
d. A statement of opinion or exaggeration that’s generally understood not to be a statement of fact
190) What types of misrepresentation exist?
a. Blatant and hidden
b. Blatant and unintentional
c. Intentional and accidental
d. Positive and unintentional
191) Which of the following is true about positive misrepresentation?
a. A principal was harmed by the misstatement.
b. The misstatement ended in a positive outcome.
c. The misstatement wasn’t relied upon.
d. The person making the misstatement did not know it was false.
192) Which of the following is an example of a material fact?
a. The fact doesn’t influence the value of the property.
b. The fact would not have resulted in a different outcome.
c. The seller would have accepted an offer regardless of the fact.
d. The seller would not have accepted an offer had the fact been known.
193) A licensee stating that a property is “guaranteed to increase in value over the next five years” is an example of ______.
a. A fact
b. An aphorism
c. Misrepresentation
d. Puffery
194) Which of the following is true of the harm caused to a person relying on false information?
a. The harm can be physical or monetary.
b. The harm must be monetary.
c. The harm must be physical.
d. The monetary harm must exceed a specific dollar threshold.
195) As soon as potential buyers contact Amelia, she sets them up to receive weekly emails with listings that fit what they’re looking for. The thing is, they hardly ever get in touch with her after that. What’s the best thing Amelia could do to improve her likelihood of sealing the deal?
a. Call to make sure her emails aren’t going into their spam folders.
b. Have an in-person buyer presentation meeting.
c. Increase the number of emails to three times a week.
d. Send them a postcard, as well.
196) What type of buyer tends to know little about the home buying process, has limited funds, and may be borrowing down payment money from relatives?
197) First-time buyer
198) Retiree
199) Trade-down buyer
200) Trade-up buyer
201) Janelle is eager to have a place to call her own. She brings her mom and best friend to every showing and relies heavily on their opinions, since she doesn’t know much about the process. After years of apartment living, she’s looking for a place with some space and privacy. What type of buyer is Janelle?
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
202) A call from a buyer who saw your sign in the yard of a recent listing needs to be qualified. What problem situation is possible with these types of buyer calls?
a. Buyers who call after seeing your sign are probably not serious about buying.
b. Buyers who call after seeing your sign are unlikely to have a pre-approval letter.
c. Buyers who call after seeing your sign may already be working with a licensee at your firm.
d. Buyers who call after seeing your sign may have another home to sell before buying.
203) Which of the following is a true statement regarding working with buyers?
a. Assisting buyers is typically a very short-term prospect.
b. It’s important to work with all buyers, whether or not they’re currently ready to buy.
c. They will always buy from you if you put in effort for them.
d. You should pre-qualify buyers before deciding to work with them.
204) Prior to offering services to a potential buyer, why would an agent want to ask questions to pre-qualify a buyer?
a. To add the buyer to a contact database
b. To find out if the buyer is worth the agent’s time
c. To steer the buyer toward a specific lender
d. To take the buyer away from a competing agent
205) Owning a condo on a golf course is Tom’s goal, and Erma is happy to be along for the ride. The condo association takes care of maintenance, and Tom is steps away from the clubhouse at all times. What better way to spend their golden years? What type of buyers are Tom and Erma?
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
206) From a buyer’s perspective, what’s the primary benefit of signing a buyer agency agreement?
a. It ensures a higher level of service.
b. It ensures that the buyer will find the right property at the right price.
c. The buyer cannot purchase real estate without one.
d. The buyer is on the hook for the entire commission without one.
207) Where is the best place to hold a sit-down meeting with a new buyer client?
a. At the buyer’s home
b. At your office
c. Over the phone
d. Via a video conference
208) A prior client referred her sister to you because she wants to finally buy a house instead of renting. When you meet with the sister, she shares that she’s been looking for almost 18 months and “simply can’t find anything suitable.” What red flag does this indicate?
a. The buyer has unrealistic expectations and may never commit.
b. The buyer has used too many contingencies with her prior offers.
c. The buyer probably can’t get financing.
d. The housing inventory is too small to support the buyer population.
209) What’s an appropriate strategy when working with a new buyer who hasn’t been pre-qualified and isn’t working with a lender?
a. Ask the buyer a series of financial questions to determine the price range the buyer should be looking in.
b. Provide the buyer with contact information for three qualified lenders.
c. Recommend your favorite lender.
d. Refuse to work with a buyer until the buyer has been pre-qualified.
210) A buyer representation agreement establishes an agency relationship between which parties?
a. Buyer and broker
b. Buyer and salesperson
c. Seller and broker
d. Seller and salesperson
211) ________ have a fixed income, but they may have large down payments from selling prior homes. Accessible properties with little to no maintenance tend to be attractive to these buyers.
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
212) Licensee Janice has found a way to work with prospective buyers without ever leaving her desk: She sets them up with automated email messages for listings that meet their criteria, and answers any questions they have when they call. Is Janice doing anything wrong?
a. No, this is how agents work with buyers.
b. No, this is how all agents work.
c. Yes, because she should meet them in person before working for them.
d. Yes, because this constitutes the illegal practice of real estate.
213) What’s something you should definitely do when conducting a buyer presentation?
a. Ask probing financial questions.
b. Explain the transaction process.
c. Focus on your track record as a sales professional.
d. Obtain copies of the buyer’s last two pay stubs.
214) Judy is in her 70s and has just listed her two-story home on a quarter-acre lot. Although she loves her home, it’s getting harder to go upstairs and to manage all the yard work that her land requires. She’s going to make an offer on a small, one-story condo where she can walk to the market. What type of buyer is she?
a. First-time buyer
b. Investor
c. Retiree
d. Trade-up buyer
215) Butch and Meg listed their five-bedroom Colonial and are looking for a three-bedroom luxury townhome to buy. Now that their kids have grown and moved away, they don’t need such a big house, but definitely want to be close to parks, major travel routes, and the local casino (Meg loves the slots). What buyer category most fits Butch and Meg?
a. First-time homebuyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
216) Danny and Sandy just had their second child. They live in a two-bedroom home and would like for their girls to each have their own room, so they’re looking for a home with at least three bedrooms. What kind of buyers are they?
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
217) When preparing a buyer presentation, what should you keep in mind?
a. The buyer’s national origin
b. Ways to build trust
c. Your commission
d. Your well-rehearsed sales pitch
218) This type of buyer is new to the process and asks a lot of questions. The buyer may be moving out of a family home or apartment into a small, modest home.
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
219) Why might you opt out of working with a buyer unless you’re working under an agency agreement?
a. An agency agreement is required by law.
b. Having an agency agreement allows you to represent the buyer’s interests.
c. It commits the buyer to a two-year contract.
d. It would be dual agency.
220) What is a major benefit to a buyer for signing a buyer representation agreement?
a. It costs less
b. It guarantees the agent will get a commission
c. It makes the buyer look better
d. Representation
221) When working with new buyers, it’s important to qualify the buyers before devoting too much time to them. What type of qualifying is important?
a. Age
b. Ethnicity
c. Family status
d. Readiness
222) Claudius has some trust issues; he’s been to three different brokerages already and still refuses to sign an agency agreement. He says he wants to “keep my options open.” What should you tell him?
a. “I can’t represent you without a written agreement.”
b. “If you sign today, I’ll waive the administrative fee.”
c. “Signing the form is legally required.”
d. “You won’t be able to enter into a contract without buyer representation.”
223) Why might a licensee want a buyer to sign a buyer representation agreement?
a. It helps ensure buyer loyalty.
b. It provides the agent with bragging rights.
c. It’s required by law.
d. It will ensure that he’ll receive the standard commission rate.
224) When buyers contact you for the first time, why is it important to ask how they found you?
a. If they refuse to give you an answer, they are probably not serious buyers.
b. It can help you determine what additional questions to ask.
c. You want to make sure it isn’t a telemarketer just claiming to be a potential buyer.
d. You want to make sure your name isn’t appearing anywhere that you haven’t approved.
225) ______ rely on their knowledge from previous homebuying experiences. This experience helps them to identify what they’re looking for in a new property, which is often more space or a newer home with a good location and extra living space.
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
226) Why should you ask potential buyer clients if they need to sell their home before purchasing a new one?
a. If they don’t, they’re probably wasting your time.
b. Selling their home before purchasing a new one is more work for you and might not be worth your time.
c. Their current home might be a potential listing for you.
d. You won’t need to check their credit if they’ve qualified for a home in the past.
227) What is the primary purpose of making a buyer presentation before representing a client?
a. To build trust
b. To earn your commission
c. To establish credentials
d. To show properties
228) Maurice is meeting with a buyer who is also selling his current home. Which question should Maurice ask to pre-qualify the buyer?
a. Are you currently working with any other agents?
b. Have you ever been convicted of any felonies?
c. What is your income?
d. What is your tax bracket?
229) From a real estate licensee’s standpoint, what’s the purpose of qualifying buyers before working with them?
a. To determine their financial wherewithal
b. To determine their readiness to purchase and make sure they’re not already working with another agent
c. To learn if you have things in common with them
d. To pre-qualify them for a loan
230) What type of agreement is most commonly used as a buyer representation agreement?
a. Exclusive right-to-represent
b. Exclusive right-to-sell
c. Net listing
d. Open listing
231) What’s the purpose of a buyer presentation?
a. To build rapport with the buyer
b. To run the buyer’s numbers for financial purposes
c. To sell the buyer on a specific neighborhood
d. To sell the buyer on your credentials
232) This type of buyer lives on a fixed income and is looking for a smaller property that requires little to no maintenance. Accessibility is an appealing feature this buyer type.
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
233) Which of the following is a good tip to follow when identifying properties to show a buyer?
a. Identify properties above the buyer’s price range.
b. Identify properties sold within the last three to six months.
c. Identify properties that are no longer on the market.
d. Identify properties within the buyer’s price range.
234) Rose, a new licensee, is thrilled that a potential buyer client has agreed to have a sit-down meeting with her. Where should this meeting take place?
a. Anywhere, as long as it’s a public place
b. At a coffee shop
c. At Rose’s office
d. At the buyer’s home
235) “I get why YOU want a buyer representation agreement,” your buyer tells you. “But what’s in it for me?” You answer ____________.
a. “It is required by law.”
b. “Without it, I owe you no duties.”
c. “Without it, I won’t work very hard for you.”
d. “Without it, you are unrepresented.”
236) Mark is trying to set up a face-to-face meeting with potential buyers the Tomlins, but the Tomlins have refused. What should Mark do next?
a. Give their number to a colleague and hope for referral compensation.
b. Give up.
c. Politely insist on a meeting.
d. Wait a week and then call them again.
237) What is the very first thing that a licensee should do when beginning a buyer presentation?
a. Discuss any agency disclosure information.
b. Do a walk-through to understand the buyer’s style and preferences.
c. Have the buyers sign a representation agreement.
d. Present the buyer with a rate card.
238) Dawn is a real estate licensee working with Midge, a buyer. If Dawn were trying to explain the advantages of a buyer representation to Midge, what could she say?
a. “All buyers are required to sign buyer representation agreements.”
b. “Buyer representation agreements don’t obligate you in any way.”
c. “Without a written representation agreement, I don’t represent you.”
d. “You won’t owe as much commission if we work under an agreement.”
239) Using a buyer’s pre-approval or pre-qualification can help in ______ properties.
a. Identifying
b. Inspecting
c. Researching
d. Showing
240) If you’re working with potential buyers who are currently renting, why should you ask when their rental contract is up?
a. It’s illegal to buy a house if they are currently under a rental contract.
b. It will help you establish a purchase time frame.
c. Renters are rarely serious buyers.
d. You will need to talk to their landlord before you can begin searching for a home for them.
241) If buyer customers initially contact you because they saw your number on a yard sign, what could this mean?
a. The buyers are not serious about buying a home.
b. The buyers do not want to commit to becoming your clients.
c. This could end up being a dual agency situation.
d. You cannot answer any questions since you represent the seller.
242) Kramer is a buyer who just signed a buyer agency agreement. He likely did this so that ______.
a. He could avoid breaking the law
b. He could avoid paying commission
c. He would receive a higher level of service
d. He would receive more service while paying a bit more for that service
243) Bonnie always schedules an in-person meeting with prospective buyers before she begins sending them data on properties. Why might this be?
a. She needs their written permission to send them data.
b. She needs to define the buyers’ needs and wants.
c. She needs to have them sign an agency agreement before she can work with them.
d. She needs to see if she likes them enough to work with them.
244) Which of the following is an advantage of scheduling an in-person meeting with potential buyers?
a. Because they have invested time with you, they’ll be less likely to want to start all over with another broker.
b. You can ask them a series of questions to determine if they have the financial means to be worthwhile clients.
c. You can impress your boss by holding a steady stream of meetings at the office.
d. You have the opportunity to show them high-end properties that will result in a hefty commission for you.
245) Boy, have these last 18 years flown by. The Martins remember the day their son was born like it was yesterday. And here he is today, preparing to head off to college. Now that he’ll be out of the house soon, the Martins really don’t need a house this large. What type of buyer are the Martins?
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
246) Licensee Alex is doing a buyer presentation for the Reynolds family. She explains that she would be committed to helping them find a property that will best meet their needs. She will work around their second-shift schedules whenever possible, and always returns calls within the same business day unless she is with another client. Which quality does this demonstrate?
a. Confidentiality
b. Experience
c. Professionalism
d. Service mindset
247) Which of the following is a role of an agent who’s assisting the buyer, but representing the seller?
a. Advise the buyer on an appropriate price.
b. Negotiate for the buyer.
c. Present the buyer’s offer.
d. Select the buyer’s lender.
248) Why might some agents work for buyers without ever having met them?
a. It’s the most effective use of their time.
b. They believe they’ll be able to get the buyer to commit to an agency agreement later.
c. They don’t particularly like people.
d. They’re afraid to turn down any business.
249) What’s an advantage an in-person meeting has over another way of communicating with a potential buyer client?
a. It increases the likelihood that the buyer will purchase a more expensive property.
b. It puts pressure on clients to sign a buyer representation agreement.
c. Licensees can get a signed agreement faster that way.
d. Since they’ve had face time with the licensee, buyers are more likely to stay with that broker.
250) Buyers in this category want to purchase smaller homes, likely because their children have moved out or because their financial situation has changed. Many look for smaller properties that can offer the same quality of living as the property they’re moving from.
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
251) What type of buyer tends to look for properties with less space than their existing home, but that will still offer them a similar quality of living?
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
252) The Elliotts have lived in their current house for five years. Space got a little tight after their first child was born. Now that they’re expecting their second child, they’ve decided they really need a new house with more space in a good school district. What type of buyers are the Elliotts?
a. First-time buyers
b. Retirees
c. Trade-down buyers
d. Trade-up buyers
253) If your cousin Jack is contemplating his first home purchase and wants to use you as his agent, should you pre-qualify Jack before working with him?
a. No, because you can’t work with relatives.
b. No, it’s not necessary to pre-qualify relatives.
c. Yes, because he’s a relative, you can ask financial questions and pre-qualify him yourself.
d. Yes, you should determine whether Jack is ready to buy.
254) These types of buyers want to purchase larger or newer homes. They’re fairly knowledgeable because they’ve purchased before.
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
255) Which of the following items can you expect to see on a buyer representation agreement?
a. Description of the property being sought and obligations of the seller to the buyer
b. Description of the property being sought, method and timing of the broker’s compensation, and obligations of the buyer and the buyer’s agent
c. Method and timing of the broker’s compensation and obligations of the seller to the buyer and agent
d. Obligations of the buyer, the seller, the buyer’s agent, and the seller’s agent
256) Rick is a licensee who’s meeting with a prospective new client, Kate. Kate is looking to purchase a home, and would like Rick to represent her throughout the process. Which agreement should Rick and Kate enter into?
a. Exclusive right-to-represent
b. Exclusive right-to-sell
c. Net listing
257) When working with potential buyers who say they just want a little information but won’t sign a buyer representation agreement, why should you recommend they become clients?
a. By law, buyers must be represented in order for the transaction to proceed.
b. If they won’t sign an agency agreement, there’s a higher chance they won’t be loyal to you.
c. It’s illegal to give potential buyers information without a signed buyer representation agreement.
d. When they sign a buyer representation agreement, you can then run their credit report to make sure they’re worth your time.Open listing
258) Buyers are typically in a power position in ______ markets.
a. Cold
b. Dynamic
c. Hot
d. Static
259) Your buyer client is making an offer on her first home Although she can afford the full listing price, you advise her to offer 10% below the list price. What’s a good reason for doing so?
a. The market is cold.
b. The market is heating up.
c. The market is hot.
d. The market is neutral.
260) Which of the following is an example of an escalator offer with a cap?
a. Buyer offers $750,000. Seller accepts.
b. Buyer offers $750,000. Seller counters at $775,000. Buyer accepts.
c. Buyer offers $750,000. Seller counters at $775,000. Buyer counters back at $765,000.
d. Buyer offers $750,000 with clause that buyer will beat all competing offers by $5,000 up to $775,000.
261) When a seller’s need is related to obtaining a specific price, what can a buyer offer to meet that need?
a. An escalation clause
b. A quick closing
c. Full price or more than full price
d. Waive appraisal
262) If a seller is concerned about an appraisal, what can a buyer do to address this need when structuring the offer?
a. Allow an escalation clause.
b. Offer a quick close.
c. Offer full price or more than full price.
d. Waive the appraisal.
263) Which of these dangers might buyer’s agents see from clients in a cold market?
a. Being outbid by another buyer
b. Being tempted to offer above their price range to win a bidding war
c. Waiting too long and missing the market
d. Waiving inspection
264) When a seller wants to expedite the closing process, what can a buyer offer to address this need?
a. An escalation clause
b. A quick closing
c. Full price or over full price
d. Waive appraisal
265) Dani is in love with the ranch-style home on Cardinal Avenue, says she simply must have it, and is willing to pay cash. The seller is concerned about an appraisal. Which of the following would be a good strategy for structuring her offer?
a. Include an escalation clause.
b. Offer a quick close.
c. Waive the appraisal.
d. Waive the inspection.
266) ______ tend to benefit most in a hot market.
a. Buyers
b. Clients
c. Customers
d. Sellers
267) Which of the following is an example of an escalator offer without a cap?
a. Buyer offers $750,000. Seller counters at $775,000. Buyer accepts.
b. Buyer offers $750,000. Seller counters at $775,000. Buyer counters back at $765,000.
c. Buyer offers $750,000 with clause that buyer will beat all competing offers by $5,000.
d. Buyer offers $750,000 with clause that buyer will beat all competing offers by $5,000 up to $775,000.
268) Which of the following is a way a buyer’s agent can find off-market listings?
a. Check out For Sale by Owner sites.
b. Contact sellers who are under contract to see if they’ll terminate their contract.
c. Search the MLS.
d. Visit real estate brokerage websites to see what properties they are advertising.
269) Jamie is looking to purchase a home. He is hesitant to ask for repairs and risk the seller accepting a different offer. In what type of market is this concern most valid?
a. Cold
b. Dynamic
c. Hot
d. Static
270) With certain types of off-market listings only the listing agent, the seller, and individuals the seller and listing agent have informed know the property is for sale. What’s another term these listings are also known as?
a. Illegal
b. MLS listings
c. Pocket listings
d. Sold properties
271) In what type of market could the buyer’s strategy be to offer 10% below list price?
a. Cold market
b. Hot market
c. Neutral market
d. Secondary market
272) Sellers are typically in a power position in ______ markets.
a. Cold
b. Dynamic
c. Hot
d. Static
273) The Hendersons are having a very difficult time finding a property that meets their needs. What is a way they can find off-market listings?
a. Ask a real estate agent to poll her sphere of influence.
b. Ask a real estate agent to search the MLS.
c. Search homebuying websites.
d. Visit real estate brokerages to see what properties they are advertising.
274) Your buyer clients really like the patio set and bedroom furniture in the house you’ve just shown them. Because the market is hot, what would you advise they do?
a. Ask for the one thing they like best as part of their offer but not the other.
b. Ask for those items and more as part of their offer.
c. Ask for those items as part of their offer.
d. Don’t include those items in their offer.
275) Your buyer clients are submitting an offer on a newly built home in a very trendy part of town. The seller requires that the home be sold for at least $450,000. What is a good strategy for structuring the offer in this case?
a. Offer a quick close.
b. Offer full price or more.
c. Waive the appraisal.
d. Waive the escalation clause.
276) When competing against other offers, what can a buyer do to make their offer more competitive?
a. Include inspection and appraisal contingencies
b. Include terms favorable to the buyer
c. Include terms favorable to the seller
d. Obtain a pre-qualification instead of a pre-approval
277) Bob and Dina are putting together an offer on the property. Which of these items would make their offer LESS competitive and possibly cause another buyer’s offer to be accepted?
a. Higher-than-full-price offer
b. Large earnest money payment
c. Seller grace period after closing
d. Seller pays a portion of the buyer’s closing costs
278) The National Association of REALTORS® Board of Directors enacted MLS Statement 8.0. What’s its more common name?
a. Clarity in Cooperation
b. Clear and Cooperative
c. Clear Cooperation policy
d. Cooperative Clarity
279) Your buyer clients are submitting an offer on a home where the seller is moving to another state and wants to expedite the closing process. What would be a good strategy for structuring an offer in this case?
a. Include an escalation clause.
b. Make a full price offer.
c. Offer a quick close.
d. Waive the appraisal.
280) How may licensees market office exclusive listings?
a. Announcements to other licensees affiliated with the same brokerage firm
b. A page on the firm’s website
c. Emails to a curated list
d. Private listing network
281) In what type of market is a buyer cautioned against asking for personal items?
a. Cold market
b. Hot market
c. Neutral market
d. Secondary market
282) Which of these actions could make a buyer’s offer more competitive?
a. Below-list-price offer
b. Full-price offer, with seller paying buyer closing costs
c. Higher-than-full-price offer
d. Include terms favorable to the buyer
283) What is the buyer benefit of including a cap on an escalator offer?
a. It could cause the buyer to lose out on a property by as little as $1.
b. It helps ensure the buyer stays within an affordable price range.
c. It helps the buyer avoid a default.
d. It tells the seller the maximum the buyer is willing to pay.
284) Larry is buying a new home and has assembled quite a list of repairs he’d like the seller to make to the property. The seller, fearing she might lose this buyer, agrees to every item on the list. In what type of market is this concern most valid?
a. Cold
b. Dynamic
c. Hot
d. Static
285) ______ tend to benefit most in a cold market.
a. Buyers
b. Clients
c. Customers
d. Sellers
286) In what type of market could a buyer’s strategy be to ask the seller to pay closing costs?
a. Cold market
b. Hot market
c. Neutral market
d. Secondary market
287) Which of the following statements accurately represents a major difference between a pre-approval letter and a pre-qualification letter?
a. Buyers receive a pre-approval letter only after the lender has verified at least some information the buyer provided.
b. Pre-approval letters mean that the buyer has received final approval for a loan after going through the entire loan process.
c. Pre-qualification letters are more difficult to get than pre-approval letters.
d. Unlike a pre-approval letter, a pre-qualification letter ensures that the lender has verified information the buyer provided.
288) What happens when an appraisal comes in lower than the agreed-upon sales price?
a. A new appraisal will always be ordered.
b. The buyer will be forced to terminate the contract immediately.
c. The parties may choose to negotiate the difference.
d. The seller must reduce the price to the appraised value.
289) Which of the following is true regarding loan pre-qualification and pre-approval?
a. Pre-approval is preferred over pre-qualification because it’s stronger proof that a buyer is qualified to purchase the property.
b. Pre-qualification and pre-approval don’t carry any weight with sellers.
c. Pre-qualification is a more thorough process than loan pre-approval because a buyer’s financial information is verified.
d. Pre-qualification is preferred over pre-approval because it’s faster.
290) Which of the following is an example of a cloud on a title?
a. An unbroken chain of ownership
b. A paid-off mortgage
c. A property with a city easement that prohibits the owners from installing a pool
d. A third party has staked a claim on a property
291) What’s one of the main purposes of a home inspection?
a. To create a maintenance plan for the new home owner
b. To discover cosmetic and structural issues
c. To discover cosmetic issues
d. To discover defects that could materially affect value
292) Closing issues do occur. Which is a common closing issue?
a. Either the buyer or seller fails to appear.
b. The buyer doesn’t bring a cashier’s check to closing and fails to wire funds.
c. The seller leaves valuable artwork behind.
d. The seller refuses to move out.
293) Susan has been pre-approved for her new home loan, and the closing process is well underway. She’s so excited that she tells you she’s going to use her credit card to purchase a complete set of living room and dining room furniture. What should you tell her?
a. It’s important to avoid spending money on non-essentials or adding to her debt load prior to closing on the loan.
b. She should use money from her savings account to make the purchase instead of using her credit card.
c. She should use store credit instead of her credit card to purchase the furniture since the interest rate is probably lower.
d. She should wait until after she closes on the home and then use a home equity line of credit to make her furniture purchases.
294) What are the hurdles that most often delay or prevent closings?
a. Buyer and seller disagreements, commissions, and contingency issues
b. Inspection issues, paperwork, and recording problems
c. Loans and appraisals, titles, and home inspections
d. Titles, commission, and lending problems
295) Your seller clients are angry because the buyer’s financing fell through. “The buyer was pre-qualified! How can this happen?” they ask. How do you answer?
a. Pre-qualification does not equal pre-approval.
b. The lender must have used the wrong formula.
c. We can sue.
d. You win some, you lose some.
296) Sean represented Jamie as a buyer’s agent. Jamie purchased a property that allowed cooperating agents to receive compensation of 2.5% of the sales price upon closing of the transaction. Sean hasn’t been paid and the transaction closed six months ago. What can Sean do?
a. Sean can ask the buyer to write a check for his commission.
b. Sean can ask the seller to write a check for his commission.
c. Sean can bring action against the broker who did not pay his commission.
d. Sean can’t do anything. The statute of limitations has passed.
297) Drake’s offer to purchase Kevin’s condo currently has a financing contingency, an inspection contingency, an appraisal contingency, and a sale of current home contingency. Kevin also got an offer from Lucy, which came in at $5,000 less than Drake’s offer but with only an appraisal contingency. What is true about Drake’s offer compared to Lucy’s?
a. It’s likely viewed as a less favorable offer.
b. It’s likely viewed as a lowball offer.
c. It’s likely viewed as a more favorable offer.
d. It will likely set off a bidding war.
298) Which of the following is a common hurdle parties might encounter on the way to closing?
a. A change in unemployment statistics in the area
b. Low appraisal
c. Revised income tax deductions
d. The bankruptcy of a major area employer
299) You’re working as a buyer’s agent for Neil and Sharon, who just found the home of their dreams. However, they’re concerned about the condition of the roof and the moisture in the basement, and don’t have endless funds to make repairs. When they ask you about adding contingencies to their offer, what do you tell them?
a. “In order to avoid lawsuits down the line, let’s add as many contingencies as possible to protect our interests.”
b. “Pick the three contingencies that mean the most to you, and let’s go with those.”
c. “Sellers don’t like contingencies. We want the strongest offer possible, so let’s remove all of them.”
d. “You definitely want to make it as easy as possible for the seller to choose your offer, but you have to protect your interests.”
300) The appraisal can be a sticky wicket on the way to closing. Which of the following is a true statement about appraisals and closings?
a. If an appraisal comes in higher than the agreed-upon sales price, the buyer must pay more for the property.
b. If an appraisal comes in lower than the agreed-upon sales price, the seller must lower the sales price.
c. If the appraisal comes in lower than the sales price, the buyer may be able to negotiate a lower price.
d. It is the buyer agent’s responsibility to share market comparables with the appraiser.
301) Your clients, the Manfreds, are first-time homebuyers. They barely scraped together their down payment and really want to minimize their cash outlay. They would prefer to avoid the home inspection and just have their parents look over the property, saving the $500 for other purposes. What should you tell them?
a. “Great idea!”
b. “I have to obey you; it is my fiduciary duty.”
c. “In that case, let’s remove the home inspection as a contingency.”
d. “I would not recommend that.”
302) What’s the purpose of the financing contingency?
a. To make sure the seller’s interests are protected
b. To obligate the seller to lower the price if interest rates rise
c. To protect the buyer in case the buyer cannot obtain financing
d. To provide for seller financing in case the buyer’s financing falls through
303) As a buyer’s agent, which of the following is a best practice to help avoid closing issues?
a. Call the sellers the morning of closing to remind them of their closing appointment.
b. Have a meeting with all parties involved in a closing a day before closing is scheduled.
c. Make copies of all the closing paperwork for the lender.
d. Review the closing statement in advance.
304) Your client wants to include multiple contingencies in his offer. But you know several buyers are interested in the property, and it’s going to be a competitive bidding situation. You say to your client, ______.
a. “Contingencies always kill a deal.”
b. “Great idea. This will help our offer stand out.”
c. “Let’s evaluate which contingencies matter most to you and consider omitting the rest.”
d. “To be competitive, you should remove all contingencies.”
305) Your client Katrina is ready to close on her new home, but when you checked yesterday, the seller still hadn’t dealt with the foundation issue that the inspector found. What is your responsibility at this point?
a. Ensure that Katrina knows that not all contingencies have been cleared.
b. Make the seller fix the foundation issue.
c. Report the seller and the seller’s agent to the real estate commission.
d. Threaten the seller’s agent with a lawsuit if the problem isn’t quickly fixed.
306) From a seller’s perspective, what represents the best offer?
a. A full-price offer contingent on a satisfactory pest inspection
b. A full-price offer that includes seller-paid repairs
c. A full-price offer without a contingency
d. An offer $5,000 over full price that is contingent on the buyers selling their current home
307) Why is it important to record closing documents?
a. Not important at all
b. To make them a matter of public record
c. To receive the property keys
d. To serve as the actual conveyance
308) What effect does a pre-approval letter have on an offer?
a. It assures the seller that the buyer’s financial information has been verified.
b. It has no effect.
c. It kills it.
d. It provides some assurance to the seller, but not as much as a pre-qualification letter would.
309) As a buyer’s agent, what is your responsibility regarding the funds the buyer must provide at closing?
a. You must deliver them.
b. You must make sure your buyer knows they’re required and the amount needed.
c. You must pick them up.
d. You must pick up and deliver them.
310) Margo has found her dream house. It’s listed at $370,000, and she plans to offer $365,000. She has a letter from her lender stating that she’s been pre-approved for a maximum $375,000 loan. Why should she ask her lender to re-write the pre-approval letter?
a. By law, the letter can only note that she’s been approved for the amount she’s offering.
b. By providing the letter with her maximum loan amount, Margo risks reducing her negotiating ability.
c. Pre-approval letters should only state that the buyer’s income, assets, and liabilities have been verified.
d. The lender must issue a separate letter for each offer the buyer intends to make.
311) Besides the appraisal, what’s a common hurdle as transactions approach closing?
a. The buyer changes his mind.
b. The buyer’s financing falls through.
c. The property burns down.
d. The seller dies.
312) What does the underwriting step of loan processing typically involve?
a. Property inspection
b. Title search
c. Verification of the borrower’s financial situation
d. Verification of the seller’s financial situation
313) What’s one purpose of the final walk-through?
a. To begin moving in the buyer’s belongings
b. To confirm the property is in the expected condition
c. To hand over the key to the buyer
d. To see if the buyer still wants the house
314) Part of your job as a buyer’s agent is to ______.
a. Clear any title cloud that has been discovered
b. Consult with the official entities that keep track of chain of ownership
c. Pay the preliminary title report fee
d. Review the preliminary title report
315) What is the schedule of exceptions?
a. A list of items title insurance won’t cover
b. An appraiser’s list of unrelated properties
c. An inspection repair list
d. An underwriting issue
316) The main difference between loan pre-qualification and loan pre-approval is that loan ______ doesn’t include lender verification of buyer-provided data.
a. Pre-approval
b. Pre-qualification
c. Research
d. Underwriting
317) Which of the following is true regarding the buyer’s check for closing?
a. It may be a personal check, cashier’s check, or wired funds.
b. It must be in the form of a cashier’s check or wired funds.
c. It must be mailed within five business days of the closing.
d. It must be signed by a notary public.
318) Your buyer clients had a home inspection done, and it turns out that the water heater is on its last legs and should be replaced immediately before it bursts. What advice do you provide to your buyers?
a. To ask the sellers to replace the water heater or issue a credit
b. To pay for the replacement immediately, even before closing
c. To schedule the replacement immediately after closing
d. To walk away, because if the water heater is bad, there are likely other issues
319) Which of the following is NOT something an underwriter will evaluate before granting a loan?
a. Census statistics on a neighborhood’s ethnic make-up
b. Credit
c. Monthly housing expenses
d. Monthly income
320) Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What’s his first step?
a. Complete a loan application.
b. Obtain a pre-qualification letter.
c. Sign a purchase agreement.
d. Write an offer.
321) Which contingency protects the buyer in the event the buyer cannot get a loan?
a. Appraisal
b. Financing
c. Inspection
d. Interest rates
322) What’s a good strategy for an agent representing a seller as the closing date approaches?
a. Call the buyers daily to check on loan status.
b. Demand answers from title reps and lenders.
c. Use a closing task checklist.
d. Wait and see.
323) It’s January, and the pool at Roger’s listing has been prepped for winter for several weeks. The homeowner assures Roger that it’s in good working order. Roger has no reason to disbelieve the homeowner, so he tells prospective buyers that the pool is fine. The property sells, spring comes, and the new owners call to complain that the pump doesn’t work, and the pool drain appears to be clogged. What did Roger commit?
a. Fraud
b. Negligent misrepresentation
c. Puffery
d. Unintentional misrepresentation
324) What does the Federal Trade Commission consider to be an unfair ad?
a. Any ad or business practice that causes or is likely to cause injury
b. Any ad that is likely to mislead consumers acting reasonably under the circumstances
c. Any ad that makes a health claim
d. Any ad with a claim that’s difficult to evaluate
325) What does the FTC consider to be a deceptive ad?
a. Any ad likely to mislead consumers acting reasonably under the circumstances
b. Any ad or business practice that causes or is likely to cause injury
c. Any ad that makes a health claim
d. Any ad with a claim that’s clearly not true
326) The Lanham Act gives companies what right?
a. The right to a trial by jury
b. The right to make misleading advertising claims less than 10% of the time, which is known as the Lanham Percentage Right
c. The right to pursue clients by whatever means possible
d. The right to sue competitors using deceptive claims in ads
327) What should a licensed broker offering pre-paid rental listing services do at least four days before referring a listing to prospective tenants?
a. Confirm the property is still available
b. Offer the property family and friends first
c. Post it on Craigslist
d. Renew his PRLS license
328) Which of the following items would be considered a truth in advertising violation according to FTC guidelines?
a. An advertisement lists the square footage of the living area as 3,145 feet, which doesn’t include storage outbuildings.
b. An advertisement states “HVAC unit like new!” when in fact the unit is used but has had most of the parts replaced recently.
c. An MLS listing shows a property as available even though the parties closed on the transaction three weeks ago.
d. The licensee’s name in an ad is followed by the designation REALTOR®. The licensee is a member of NAR.
329) Which of the following scenarios is considered a violation of FTC advertising rules?
a. Marcy just listed the Brown property with the following description: “2,000 square feet of living space for a total of 2,800, including two outbuildings and an unfinished garage.”
b. Sarah just started her career as a solo agent and decided to try a new marketing campaign slogan: “Come let our team of hard-working agents find you the home of your dreams!”
c. Shelia just closed on the Martin property yesterday. She’s taken down all the signs and online listings for it.
d. Vickey just posted an MLS listing for the Kennedy property without her principal broker’s approval.
330) Marcus, a listing agent, told a potential buyer that his seller client’s property had no flooding issues, though the seller had mentioned water in the basement a few years back when there was a particularly heavy rainy season. Which of these statements is true?
a. Marcus committed intentional misrepresentation because he knew his statement was false.
b. Marcus committed unintentional misrepresentation.
c. Marcus didn’t commit misrepresentation, because the property current has no flooding issues.
d. Marcus is guilty of puffery.
331) Which federal act protects consumers from unwanted email solicitations?
a. Anti-Spam Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Email Implementation Act of 2003
d. Junk Email Prevention Act of 2005
332) Jerrold reviews the floor plan of the house he’s going to sell. It’s 3,800 square feet. In his advertising, he bumps that number up to 4,000 square feet to better justify its asking price. What has Jerrold done?
333) Active misstatement
334) Exaggeration
335) Intentional misrepresentation
336) Puffery
337) You’ve started creating your own advertising. Where can you look for reliable information?
a. Brokerage policy manual
b. Copy other peoples’ advertisements
c. Google it
d. Your broker friend’s website.
338) Even though the Federal Trade Commission is concerned with all ad claims, what sort of ads would most likely concern the commission?
a. Ads for products that don’t offer any specific value to consumers
b. Ads making exaggerated claims most reasonable consumers wouldn’t believe
c. Any ad that is demonstrably false
d. Any ad that makes a health or safety claim or any claim that’s difficult for the consumer to evaluate
339) What’s it called when a licensee tries to induce sales by predicting a decline in market value?
a. Assertive bargaining
b. False advertising
c. Harassment
d. Panic selling
340) Which of these is an example of puffery?
a. Kari’s ad boasts that the property is “just blocks from the proposed metro light rail station.”
b. Katherine’s ad for her newly renovated home states, “New from the studs up.” Her carpenter might tell you a different story.
c. Kevin’s MLS remarks note that the condo has the city’s “most beautiful twilight view of downtown and the bay.”
d. Kim notes that the property “overlooks a serene, peaceful green space.” It’s next to a cemetery.
341) Which of these is a TRUE statement regarding truth in advertising violation penalties?
a. A cease-and-desist order from the Federal Trade Commission related to deceptive advertising becomes effective 30 days after issuance.
b. The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.
c. The Federal Trade Commission typically imposes jail time for truth in advertising violations.
d. The severity of the civil penalty for violating truth in advertising laws is based on the number of consumers affected by the deceptive ad.
342) Lot and Block Realty received a cease-and-desist order from the FTC due to misleading ads the firm was running. When does the order become effective?
a. 30 days after issuance
b. 90 days after issuance and for 120 days total
c. Immediately upon issuance
d. Retroactive from the first date of the prohibited activity
343) Krening Realty has been found guilty of running deceptive ads. Which of these statements about the potential penalty is NOT true?
a. If Krening violates the cease-and-desist order, the firm may face penalties of more than $50,000 per violation.
b. Krening may be required to run corrective advertising.
c. Krening’s broker may face jail time.
d. The firm may face civil penalties ranging from the thousands to millions of dollars, depending on the infraction.
344) Which option is of the most concern to licensees and advertising when it comes to the Federal Trade Commission?
a. Excessive advertising costs
b. Location of ads
c. Misleading ads
d. Paper waste
345) Which of the following is required on any first-point-of-contact advertising?
a. License number
b. Personal contact information
c. Personal photo
d. Sales volume
346) What does the Federal Trade Commission regulate?
a. Advertising
b. Commission disbursements
c. Federal real estate transactions
d. Listing trades
347) Gregory has been bombarded with emails from a local real estate licensee. He keeps opting out of these emails, but they just keep coming. What federal law is the licensee possibly violating?
a. Anti-Spam Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Spam Act of 2003
d. Junk Email Prevention Act of 2005
348) Where is required information included on your website?
a. On a page marked required information only
b. On every page
c. On the contact page only
d. On the home page only
349) Which organization would you call to file a deceptive ad complaint?
a. The Better Business Bureau
b. The Department of Justice
c. The Federal Bureau of Investigation
d. The local police department
350) Nicholas is a new licensee in an area where there are a lot of condominiums and dwellings geared toward tourism and seasonal residents. He tries to drum up business by sending faxes to dozens of condo complexes. Which federal act might he be violating?
a. Anti-Telemarketer Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Call Implementation Act of 2003
d. Junk Fax Prevention Act of 2005
351) Which federal act makes phone solicitation to numbers on the Do Not Call Registry illegal unless a prior relationship or permission exists?
a. Anti-Telemarketer Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Call Implementation Act of 2003
d. Junk Fax Prevention Act of 2005
352) Which federal act makes it illegal to send unsolicited commercial solicitations via fax without the recipient’s permission or an established relationship?
a. Anti-Telemarketer Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Call Implementation Act of 2003
d. Junk Fax Prevention Act of 2005
353) Ken, a licensee, has published an ad claiming that he can sell homes for 25% more than any of his competitors. The Federal Trade Commission determined this to be a deceptive ad. What might the FTC require Ken to do as a penalty for his deception?
a. Discontinue publishing any ads for one full year.
b. Live up to the claims in his ad within the next six months or go to prison.
c. Pay each client 25% of the sale price for every house he sells.
d. Take out new ads correcting the misinformation in his original ad.
354) What types of advertising fall under California Department of Real Estate’s rules and regulations?
a. Advertising by any means
b. Only print advertising
c. Only radio advertising
d. Only TV advertising
355) Which of the following is an example of deceptive advertising?
a. Including the broker’s name in an advertisement
b. Including the listing price in an advertisement
c. Intentionally misidentifying a property’s square footage
d. Promptly removing an ad after a transaction closes
356) Your seller client has listed a beautiful piece of land on the water. You know this property would be a great investment if it were subdivided and developed, but you don’t mention the potential investment value to the seller because you want the property for yourself. You also don’t market it or present any offers. After several months, you buy the property at a deep discount. What does this make you guilty of?
a. Active misstatement
b. Negligent misrepresentation
c. Passive fraud
d. Puffing
357) Evan has his home and cell number on the Do Not Call Registry. He received an unwanted solicitation call from a new real estate licensee in the city. He told the licensee his number is on the Do Not Call Registry and that he does not wish to do business with the licensee. A few days later, he got another unwanted call from the licensee. What federal act is the licensee possibly violating?
a. Anti-Telemarketer Act of 2000
b. CAN-SPAM Act of 2003
c. Do Not Call Implementation Act of 2003
d. Junk Fax Prevention Act of 2005
358) What’s it called when you contact the public with unsolicited offers via a multitude of types of communication and in high frequency, even with buyer permission?
a. Fraud
b. Harassment
c. Misrepresentation
d. Panic selling
359) Which of these scenarios is basically the same as fraud?
a. Frank noted that his listing is in a city-approved urban renewal district.
b. Jeannie’s ad read “all new fixtures,” when most of the fixtures were just cleaned up and re-installed.
c. Margo’s listing read, “This is the most beautiful home you’ll find in this price range!”
d. Terrance’s ad mistakenly noted a property’s square footage as 2,575 instead of 2,775.
360) The Perfect Home brokerage firm was found guilty of running deceptive ads. The Federal Trade Commission might require all of the following EXCEPT ______.
a. Letters of apology to all affected consumers
b. New ads to correct previous misinformation
c. Notification to consumers about deceptive ad claims
d. Specific disclosures to consumers
361) Which of the following must a California real estate licensee include on all first point of contact promotional materials, whether electronic, or in print?
a. Broker address
b. Broker phone number
c. License number
d. Number of years in business
362) Aside from your name, what else must be included on every page of your website, according to the DRE’s rules?
a. City and state where the brokerage is located and jurisdiction
b. License number and responsible broker’s identity
c. Personal contact number
d. Personal photo
363) Under what circumstances may you withhold a listing from the MLS?
a. If it’s a hot market
b. If the seller gives written permission
c. If you believe you can find a buyer soon
d. If you intend to purchase the property yourself
364) Which of the following is a true statement about the MLS and sellers?
a. For most sellers, listing on the MLS is not cost effective.
b. It’s rare for sellers to decline advertising their property on the MLS.
c. Most sellers dislike advertising their property on an MLS.
d. Sellers are required to list their properties on the MLS if they’re working with a real estate licensee.
365) You’re posting a listing on the MLS. Which of the following are you allowed to do according to most MLS guidelines?
a. Post the listing without a photo
b. Self-promote
c. State that a property is “one block” from downtown, if it is
d. Withhold the listing for two weeks prior to posting it on the MLS
366) What does MLS stand for?
a. Market listing service
b. Maximum listing service
c. Membership listing service
d. Multiple listing service
367) Which of the following is acceptable to include in an MLS listing?
a. Children home alone from 2 to 4 p.m. No calls during that time.
b. House includes an alarm system.
c. Owner works the night shift.
d. Valuable artwork located throughout.
368) Licensee Jared states in an MLS record that his listing is in one neighborhood, when it’s actually a few miles away. Why is this a potential violation?
a. It’s not an MLS violation.
b. Licensees are supposed to use the map rather than rely on written neighborhood information.
c. Neighborhood information is not appropriate to include.
d. This is most likely fraud or misrepresentation.
369) Among other things, what should a listing in the MLS always include?
a. A relatively vague description, so people want to come and see the details
b. At least one photo
c. The seller’s bottom-line sales price
d. The seller’s contact information
370) Which should be included in an MLS policy for your firm?
a. An ad that can be tailored to each listing agent promoting her services
b. A policy to promote all listings in-house for two weeks prior to posting on the MLS
c. Tips on how long to delay posting price changes to see if other offers may come in
d. When and if listing data should be submitted to you for approval
371) Your client, Brenda, doesn’t want to be on the MLS because of privacy concerns. You tell her that one advantage to the MLS for her is ______.
a. It makes a private sale easier
b. No one will see the list price on the MLS
c. The MLS makes it easier to sell her property quickly
d. You won’t have to work as hard
372) Which of the following is a recommended way for listing brokers to use the MLS?
a. To advertise their listings
b. To enhance their reputations
c. To promote themselves and their firms
d. To steal their competitor’s listings
373) Which of the following statements is true about the MLS?
a. Expired and withdrawn listings may not be included on the MLS.
b. It’s free to members of the National Association of REALTORS®.
c. Listing fees vary by listing price.
d. Self-promotion isn’t allowed.
374) What is the MLS?
a. A database of real estate information
b. A list of buyers and their contact information
c. A server that records incoming data in a mirror image
d. Photo editing software for real estate licensees
375) Which of the following actions would be an MLS violation?
a. Emphasizing that the property is adjacent to the public library
b. Hiring a professional photographer to make a run-down property look as good as possible
c. Lowering the price after getting the seller’s permission to do so
d. Publishing the broker’s website and email address in the public remarks
376) The MLS offers several advantages to sellers. What’s one of these advantages?
a. Increased market exposure
b. Increased privacy
c. Increased security
d. Lower brokerage fees
377) Which of these photos would be a potential MLS violation?
a. A view of the master bedroom, including the bed, dresser, and jewelry armoire
b. Multiple exterior photos, taken in different seasons
c. Photos taken after a professional cleaning service and stager spruced it up
d. The recently updated bathrooms and kitchen
378) Which of the following is true about MLS usage?
a. An MLS listing is private.
b. Membership is free for brokers.
c. MLS has zero liability concerns.
d. Terms of cooperation and compensation, if any, must be listed.
379) What advantages does an MLS provide to a broker?
a. An easy way to find buyers
b. Contains information from all over the world
c. Greater access to listings
d. Self-promotion
380) Which of the following is true about the security of your clients’ information?
a. Client data can be compromised if the brokerage’s computer system is compromised.
b. Data security is one-size-fits-all.
c. Poor record retention ensures data security.
d. There is nothing a licensee can do to safeguard client data.
381) Which of the following is true about online rental scams?
a. Once they occur, there is nothing you can do.
b. They are a legitimate way to make extra money from your listings.
c. They are also known as “phishing.”
d. You can reduce the risk by monitoring Internet activity on your listings.
382) Haley has just discovered that one of her listings has been used in an online rental scam. What can she do?
a. Contact the FBI and ask for it to be removed.
b. Contact the rental site where the property is advertised and ask for it to be removed.
c. Create a Google alert to remove it.
d. Create an “if this, then that” recipe to remove it.
383) How does data encryption protect your and your clients’ personal information?
a. It allows regular updates to processes without your approval.
b. It ensures that you do not access unsecure sites.
c. It prevents hackers from accessing your computer.
d. It turns information into indecipherable code.
384) What’s the term for the online rental scams that con artists create by stealing information about properties from online real estate listings?
a. Partitioning
b. Scraping
c. Scrounging
d. Slicing
385) When information is stolen from online real estate listings, what is it known as?
a. Partitioning
b. Scraping
c. Scrounging
d. Slicing
386) Stealing listing photos and information and using them to fraudulently rent out a property is known as what?
a. A Groupon
b. An online rental scam
c. A recipe
d. Phishing
387) Why should you avoid describing a property as “secluded” when marketing through a social network?
a. Everyone defines secluded differently, so it isn’t specific enough.
b. Most homebuyers are interested in being part of a community.
c. Property descriptions should focus more on the home, not its surroundings.
d. Thieves may see this as an opportunity to enter the house unseen.
388) As a security precaution, which of the following is something you should do?
a. Limit the amount of personal information you post.
b. Post addresses to open houses on social media sites.
c. Post photos of yourself with expensive jewelry or belongings.
d. Post that you’re alone at an open house.
389) Everything in your office is potentially at risk from thieves and other criminals. Because of this, what should you never do?
a. Invite clients to the office.
b. Leave clients unattended in the office.
c. Lock your computer.
d. Use a computer.
390) If online security is a concern, which of the following websites would be the safest?
a. http://amazon.com
b. https://www.google.com
c. http://www.facebook.com
d. http://www.msnbc.com
391) What’s the purpose of a firewall?
a. It backs up your files to an external hard drive.
b. It encrypts your email.
c. It prevents hackers from infecting your system with viruses, worms, and malware.
d. It stores logins and passwords.
392) UETA supports the use of electronic documents and leaves the decision whether to use an electronic medium for agreements up to the _______.
a. Broker
b. Customers
c. Parties
d. Seller client
393) What’s the biggest security issue with using social networking sites to market your listings?
a. Criminals may use social networking sites to identify properties that are vacant or have high-end possessions.
b. It may not be effective since you’re casting a wide net rather than targeting potential buyers.
c. People may misinterpret your listing information and hold you responsible for their misunderstanding.
d. People you don’t know will have your name and contact information.
394) Which of the following describes the process of making a copy of a website for the purpose of obtaining money or data from unsuspecting users?
a. Backing up files to an external hard drive
b. Cloning
c. Encrypting your email
d. Storing logins and passwords
395) Which of the following statements is true about advertising rules and technology-based media?
a. Advertising rules apply online, just as they do in other media.
b. Licensees shouldn’t advertise online.
c. Only brokers can advertise online.
d. Only certain types of properties can be advertised online.
396) What are the three areas of technology where licensees are most exposed to litigation risks?
a. Presentation software, emails, and word processing software
b. The MLS, emails, and voicemails
c. Websites, emails, and spreadsheets
d. Websites, social networking, and emails
397) Which of the following should be avoided because it can attract thieves?
a. Giving referrals
b. Posting friend requests
c. Posting photos of your clients’ expensive belongings
d. Turning off location information
398) Technology poses risks for everyone, but real estate licensees need to be especially careful. Which of the following is true about risks related to computer systems?
a. Client data can be exposed when a brokerage’s computer system is compromised.
b. Client data can’t easily be compromised through a brokerage computer.
c. Laptops that aren’t attached to the brokerage server are not at any risk.
d. Licensees can do little to reduce risks related to brokerage computer systems.
399) Social media sites are great for marketing, but which of the following would you want to avoid accepting from people you don’t know?
a. Compliments
b. Flowers
c. Friend requests
d. Referrals
400) When a website has an S in the “http” portion of the URL, such as: “https://www.google.com,” what does it mean?
a. It is a phishing website.
b. It is a secure website.
c. It is a single sign on website.
d. It uses more than one “http.”
401) What can brokerages do to ensure licensees use technology properly?
a. Forbid new technology from being used for marketing and communication.
b. Have a solid policies and procedures manual in place.
c. Review all communications sent between licensees and consumers.
d. Track internet and phone usage.
402) In online rental scams, con artists fraudulently rent out a property they don’t own and collect the funds. Where do they get the information about the property?
a. A fence
b. Google alerts
c. Online real estate listings
d. Property owners
403) The Uniform Electronic Transaction Act (UETA) makes it legal and binding for contracts to be ______.
a. Completed verbally
b. Filed without signatures
c. Signed electronically
d. Written by a broker
404) What’s a password vault?
a. A security tool that stores logins and passwords
b. Malware hackers use to steal passwords
c. Software that encrypts your email
d. Software that prevents hackers from infecting your system with viruses, worms, and malware
405) What should brokerages do with regard to using social networking sites to market real estate?
a. Allow verbiage, but no pictures, in social network marketing.
b. Ban their use until real estate-specific social networking is created.
c. Create policies and procedures that address proper social networking use.
d. Discourage sal
406) California has established a tax lien date when a tax lien attaches to a property. Which of these statements accurately describes the tax lien date?
a. The date is January 1 following the fiscal year for which the property tax is delinquent.
b. The date is July 1 following the fiscal year for which the property tax is delinquent.
c. The date is June 30 for the fiscal year for which the property tax is delinquent.
d. The date is when the property tax bill first becomes delinquent.
407) What’s required in order for a homeowner to receive a $7,000 exemption on property tax?
a. The property may not be secured by a mortgage lien.
b. The property owner may not own other real property in the state.
c. The property owner must be a veteran.
d. The property owner must reside in the home.
408) A tax lien remains in effect until the tax debt is ____________ by either being paid or the property being sold.
a. Assumed
b. Forgiven
c. Satisfied
d. Sold
409) Which of these California properties does NOT qualify for exemption from property tax?
a. A public elementary school
b. A public university
c. A rental property in a low-income neighborhood
d. A synagogue built in 1975
410) A tax ____ is a legal claim to property as a means of satisfying a delinquent property tax debt.
a. Assessment
b. Bill
c. Lien
d. Valuation
411) ______ taxes are a reliable source of income for the state because they are difficult to conceal, their value tends to remain relatively steady, and people tend to pay them.
a. Alcohol
b. Income
c. Property
d. Sales
412) Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?
a. $336,000
b. $387,000
c. $420,000
d. $432,000
413) Prop 13 allows a property’s base value to increase by a maximum of ______ % annually, as an inflation factor.
a. 2
b. 3
c. 5
d. 8
414) A property can’t be redeemed after the last day before it’s ______ to satisfy the debt.
a. devalued
b. given to the government
c. seized
d. sold
415) For which of these situations will a California property be assessed property taxes for multiple base year values?
a. Buffy and Bill have an older home in the mountains, and recently decided to have a contractor bring it up to code with seismic retrofits.
b. Elderly Martha now uses a wheelchair to get around, so she had some modifications made to her home to accommodate it.
c. Samantha needed more room for her growing cat family, so she had a contractor build an addition to the home she’s owned for the past 10 years.
d. Will bought an older house, immediately tore it down, and constructed a new one.
416) You’ve assisted the Juarez family with the purchase of a beautiful home in an established neighborhood. The sellers had owned the home since 1980. What’s true about the amount of property tax the Juarezes will pay for their new home?
a. It will be reassessed because of the transfer, and the Juarezes will be taxed at 1% of the home’s current market value.
b. It will be reassessed because of the transfer, and the Juarezes will be taxed no more than 2% of the home’s current market value.
c. It will be the same as the tax the seller paid annually, according to Proposition 13 limits.
d. It will no longer be covered under Proposition 13 property tax limits due to the transfer, so the Juarezes may be assessed as much as 35% of the home’s current market value.
417) Which of these statements about property tax in California is NOT true?
a. A change in ownership will cause the base value of the property to be reassessed using the year of transfer.
b. An improvement to a property that hasn’t changed ownership, such as adding a swimming pool, will result in multiple base value years.
c. Certain improvements to property, such as a seismic retrofit, won’t affect its base value.
d. If the property is sold, the base value will change but can increase by no more than 2%.
418) If a property is owned by a charitable organization, a hospital, or a ________, it’s not taxable.
a. Church
b. Farmer
c. Fraternal organization
d. Labor union
419) Under the Morgan Bill, taxpayers were given a means to resolve questions and file __________.
a. appeals
b. complaints
c. construction permits
d. taxes
420) Which of these California properties will receive a new base year value?
a. Jack and Jane have owned their home since they got married and have maintained it in beautiful condition, though they’ve never made any additions.
b. Natalie has owned her home since 2006. She likes it just the way it is, and hasn’t made any changes.
c. Ron has owned an acre of unimproved desert land since 1982. He plans to use it for his retirement, though he hasn’t yet made any improvements to it.
d. Steve is selling his condo so he can travel the world with his new wife, unencumbered by worldly possessions.
421) When property taxes go unpaid, a ___________ is placed against the property.
a. Hold
b. Lien
c. Lock
d. Note
422) San Diego homeowner Carl hasn’t paid his property taxes for three years in a row. The county has a tax lien attached to his property. Can the county foreclose on Carl?
a. No, a property tax lien doesn’t give the lien holder the power of sale.
b. No, California law prohibits foreclosure for a tax lien.
c. Yes, but only if his taxes remain unpaid for five years.
d. Yes, they can foreclose immediately.
423) The Morgan Bill provided taxpayers access to explanations of their _______.
a. debts
b. property lines
c. responsibilities
d. rights
424) A county courthouse is exempt from property taxes because it is ______-owned.
a. Government
b. Previously
c. Privately
d. Publicly
425) Angie, a California homeowner, neglected to pay her property tax bill on time. Which of these statements is NOT true?
a. If she doesn’t pay the debt in full, the county will place a lien on her property.
b. She’ll be required to pay a redemption fee to completely satisfy the debt.
c. She now owes the amount of the tax bill plus additional penalties until she settles the debt.
d. The county may foreclose on her property within 180 days of the delinquency.
426) If a lien is released because the tax debt has been satisfied prior to further action being taken, the property owner will receive a certificate of _____________.
a. Achievement
b. Disposition
c. Redemption
d. Transfer
427) _______ values can change significantly from year to year, which is the reason for so many assessment and reassessment rules.
a. loan
b. neighborhood
c. property
d. tax
428) Tax ______ are a means of getting the property owner to pay their delinquent tax debt.
a. Attorneys
b. Laws
c. Liens
d. Statements
429) San Diego homeowner Carl hasn’t paid his property taxes for three years in a row. The county has a tax lien attached to his property. Can the county foreclose on Carl?
a. No, a property tax lien doesn’t give the lien holder the power of sale.
b. No, California law prohibits foreclosure for a tax lien.
c. Yes, but only if his taxes remain unpaid for five years.
d. Yes, they can foreclose immediately.
430) The Morgan Bill provided taxpayers access to explanations of their _______.
a. debts
b. property lines
c. responsibilities
d. rights
431) A county courthouse is exempt from property taxes because it is ______-owned.
a. Government
b. Previously
c. Privately
d. Publicly
432) Angie, a California homeowner, neglected to pay her property tax bill on time. Which of these statements is NOT true?
a. If she doesn’t pay the debt in full, the county will place a lien on her property.
b. She’ll be required to pay a redemption fee to completely satisfy the debt.
c. She now owes the amount of the tax bill plus additional penalties until she settles the debt.
d. The county may foreclose on her property within 180 days of the delinquency.
433) Tax ______ are a means of getting the property owner to pay their delinquent tax debt.
a. Attorneys
b. Laws
c. Liens
d. Statements
434) Sellers of single to four-family dwellings must disclose _________.
a. average utilities
b. Mello-Roos
c. pet damage
d. unpaid taxes
435) A homebuyer in California learns the home is subject to a Mello-Roos assessment. What does this mean?
a. The buyer will pay an additional transfer tax at closing.
b. The property is located in a community that has a homeowners association.
c. The property is located in a community that has funded improvements with a voter-approved bond.
d. The property tax is not restricted by the normal base value limits.
436) Mello-Roos was enacted in 1982 to provide for non-specific _____________ improvements.
a. General
b. Power
c. Sewer
d. Street
437) Which statute was enacted in 1885 and had provisions for the addition of sewers and finishing of street surfaces?
a. Mello-Roos
b. Street Improvement Act
c. The Improvement Bond Act
d. Vrooman Street Act
438) What’s NOT true about the Mello-Roos Community Facilities Act?
a. A Community Facilities District must be designated.
b. It allows communities to fund general improvements.
c. It uses a voter-approved bond to fund services and facilities for the community.
d. Property owners pay this assessment as a separate ad valorem tax.
439) This statute allows a public agency to issue bonds for the improvement of subdivision street surfaces.
a. Mello-Roos
b. Street Improvement Act of 1911
c. The Improvement Bond Act of 1915
d. Vrooman Street Act
440) Which of these acts can issue bonds that carry up to 6% interest?
a. Mello-Roos
b. Street Improvement Act of 1911
c. The Improvement Bond Act of 1915
d. Vrooman Street Act
441) To whom should you refer your clients for specific advice about income taxes?
a. Church leaders
b. County attorney
c. Managing broker
d. Tax professional
442) Select the statement that accurately depicts property ownership income tax implications.
a. During the ownership stage, both investors and homeowners may be able to deduct mortgage interest paid.
b. First-time home buyers can deduct closing costs paid.
c. Homeowners can deduct depreciation during the ownership stage; investors can’t.
d. When homeowners sell their property, they’ll need to calculate the depreciable basis on the property.
443) Capital gains fall into which stage of the property ownership life cycle?
a. Acquisition
b. Capital gains are not part of the property ownership life cycle.
c. Ownership
d. Reversion
444) You’re working with a couple who are in the market for their first home. They’re full of questions, and today they’re asking about how homeownership will affect their tax burden. Of course, you answer by providing information that’s within the scope of your license. Which of these taxes would you mention to your clients as relevant to homeownership?
a. Capital gains credit for purchase of a property priced below market value
b. Deduction of most closing costs on income tax for the year of purchase
c. First-time homebuyer income tax credit based on purchase price of property
d. Possible income tax deductions for prepaid interest on a loan
445) In what year was the California estate tax enacted by popular vote?
a. 1971
b. 1982
c. 1988
d. 1992
446) Each year, investors are permitted to ______ a specific amount for tax purposes.
a. Add
b. Deduct
c. Depreciate
d. Subtract
447) Your seller client has accepted an offer on his home, and you’re on your way to closing! Which of these is NOT a tax aspect that you’ll explain to your client (in basic terms) related to the transfer of property?
a. “If you make a profit on the sale of this property, you’ll have to pay a capital gains tax when you file your income taxes.”
b. “Property taxes are prorated so you’ll only pay for the time you owned the property.”
c. “When you’re buying your next home, the transfer will trigger a reassessment for property tax purposes.”
d. “Your title will reveal any tax liens, so the title company will review it to ensure that isn’t an encumbrance.”
448) To depreciate real property, the business owner must own the property and use it for ______ or income-producing activity.
a. A rental
b. A residence
c. Business
d. Charitable works
449) When you’re representing a client in a real estate transaction, what’s your responsibility regarding tax advice?
a. You must be able to advise your clients on the best way to minimize their tax liability related to a purchase or sale.
b. You must not address tax aspects of a transaction in any way, since this would be working outside your area of expertise.
c. You’re obligated to answer all questions the clients have regarding property taxes and general tax advice.
d. You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.
450) The income from property taxes benefits the _______________ by paying for emergency services, education, and roads.
a. Community
b. Elderly
c. Local budget
d. State government
451) Property is no longer ______ after the taxpayer has retired the property from service.
a. Appreciable
b. Depreciable
c. Taxable
d. Useful
452) A _______ home is a pre-fabricated structure built away from the site where it will be placed as a home.
a. micro
b. mobile
c. non-traditional
d. retirement
453) Who will be responsible for paying use tax if a boat is purchased from a seller who doesn’t hold a seller’s permit?
a. The Board of Equalization
b. The buyer
c. There is no use tax on boat sales
d. The seller
454) A mobile home attached to a foundation is considered an _____________ to the real property.
a. Addition
b. Asset
c. Attachment
d. Improvement
455) In central California, Documentary Transfer Taxes are paid by the ___________.
a. Buyer
b. Buyer and seller
c. County clerk
d. Seller
456) When is the Documentary Transfer Tax collected?
a. 30 days after closing
b. As soon as the documents are filed
c. At closing
d. On the first tax bill after the property has been sold
457) Use tax is owed to the state for the ____ of personal property
a. purchase
b. rent
c. sale
d. use
458) Mobile home taxes are calculated based on the value of the __________.
a. land it sits on
b. mobile home community
c. neighborhood
d. structure
459) The documentary transfer tax is _____ cents for every $500.
a. 25
b. 48
c. 55
d. 65
460) Sometimes, the __________ of the property can have the burden of being responsible for paying sales tax.
a. Broker
b. Buyer
c. Licensee
d. Seller
461) Once a mobile home is attached to a foundation, it is _______________ into real property.
a. Grandfathered
b. Leveled
c. Transformed
d. Written
462) If a seller removes a building from the land prior to sale of the property, the seller may be responsible for paying _______ on that building
a. closing costs
b. interest
c. rent
d. sales tax
463) Sales tax is paid to the state by retailers even if their ________ didn’t pay sales tax.
a. accountant
b. customers
c. neighbor
d. parents
464) Mobile homes are subject to _________ tax after they are sold.
a. property
b. sales
c. temporary
d. use
465) What’s true about the documentary transfer tax in California?
a. Most real estate transactions in California don’t incur a documentary transfer tax.
b. The county documentary transfer tax rate for the entire state is set at 55 cents per $500 of sales price, and some cities add an additional transfer tax.
c. The documentary transfer tax is collected by the state, although cities may add an additional tax.
d. The documentary transfer tax, when used, is always paid by the buyer since the new deed is recorded on the buyer’s behalf.
466) Sales tax applies to nearly everything in California. One major exception is ________.
a. Alcohol
b. Car sales
c. Food
d. Tobacco
467) Use tax applies for merchandise that will be used, consumed, ____________, or given away.
a. Broken down for parts
b. Destroyed
c. Re-sold
d. Stored
468) Two large local brokerage firms agreed to lower their commission rates to the same amount—approximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?
a. The agreement between the two firms
b. The dollar amount the competitors lost
c. The marketing efforts the two firms used
d. The size of the two brokerage firms
469) What’s an antitrust violation’s central element?
a. Conspiracy
b. Fraud
c. Greed
d. Profit
470) Which of these is a central element of an antitrust violation?
a. A contract
b. Customer relationships
c. High stakes
d. Interstate dealings
471) Two real estate firms in one small town, Vineyard Realty and Homestead Homes, agreed to charge the same commission rate to avoid the possibility of clients selecting a firm based simply on price. What specific federal legislation prohibits this?
a. The Clayton Act of 1914
b. The Federal Trade Commission Act of 1914
c. The Restraint of Trade Act of 1894
d. The Sherman Antitrust Act of 1890
472) Which act created an agency to investigate antitrust practices?
473) Attorney General Act
474) Clayton Act
475) Federal Trade Commission Act
476) Sherman Antitrust Act
477) Five competing brokerage firms in the same area agreed to cooperate in setting a standard commission rate for the area. This makes them guilty of a per se antitrust violation. What is a per se antitrust violation?
a. Boycotting
b. Collusion among the parties
c. No intent needs to be proven
d. Price fixing
478) The _____ is the name of California’s antitrust law.
a. Cartwright Act
b. Clayton Act
c. Federal Trade Commission Act
d. Sherman Act
479) Which agency prohibits unfair acts, practices, or methods of competition, and enforces federal antitrust and consumer protection laws nationally?
a. Attorney general’s office
b. Consumer Reports
c. Federal Trade Commission
d. National Bar Association
480) Which of these has examples of antitrust violations common to real estate?
a. Fraud, concealment, and misrepresentation
b. Profiteering, racketeering, and domineering
c. Puffery, hyperbole, and exaggeration
d. Tie-in arrangements, market allocation agreements, and group boycotting
481) Which of these statements most accurately represents existing federal antitrust legislation?
a. The Clayton Act supports the Sherman Antitrust Act’s purpose of prohibiting monopolies by prohibiting mergers or acquisitions that would create a monopoly.
b. The Federal Trade Commission Act established the Sherman and Clayton acts to prevent collusive activities that limit competition.
c. The Federal Trade Commission Act prevents one large firm from acquiring another similar firm that would result in a restraint of trade.
d. The Sherman Antitrust Act was passed to supplement the Clayton Act in an effort to prevent mergers that create monopolies.
482) Which of the following is true of developing a market niche based on any legal category (e.g., farming or prospecting a specific area)?
a. It’s an example of a tie-in arrangement and is an antitrust violation.
b. It’s an example of group boycotting and is an antitrust violation.
c. It’s an example of market allocation and is an antitrust violation.
d. It’s permissible.
483) Business is booming for Johnstone Realty, a new brokerage firm in town. The other firms in the area are unhappy about the cooperating split Johnstone offers, and they all agree to not show Johnstone’s listings to their buyer clients. What is this an example of?
a. Blockbusting
b. Group boycotting
c. Market allocation
d. Steering
484) Acme Realty offers flat fee, menu-based services. Berringer Realty and Hawthorne Real Estate Group decide to not show any of Acme’s listings and to prohibit showings from Acme buyers to drive Acme out of business. What is this an example of?
a. A tie-in arrangement
b. Group boycotting
c. Market allocation
d. Price fixing
485) Which of the following is true of a brokerage having a pricing policy for its associated licensees?
a. It’s an example of a tie-in arrangement and an antitrust violation.
b. It’s an example of market allocation and an antitrust violation.
c. It’s an example of price fixing and an antitrust violation.
d. It’s permissible.
486) Which of the following is an example of illegal market allocation?
a. Acme Realty and Hawthorne Realty Group agree to divide the city in half, each working its own half.
b. Acme Realty and Hawthorne Realty Group each discuss with their licensees where the most lucrative deals can be found.
c. Acme Realty and Hawthorne Realty Group each try to win the million-dollar listings.
d. Acme Realty maps out a plan to dominate the eastern part of the city.
487) Where can an agent report an antitrust violation?
a. Citizens Complaint Center of the DOJ’s Antitrust Division
b. The Department of Housing and Urban Development
c. The Department of State
d. The Federal Bureau of Investigation
488) Which of the following is true of refusing to buy services from a vendor because of shoddy business practices or pricing?
a. It’s an example of a tie-in arrangement and an antitrust violation.
b. It’s an example of group boycotting and an antitrust violation.
c. It’s an example of price fixing and an antitrust violation.
d. It’s permissible.
489) Which type of antitrust violation occurs when real estate firms agree to divide their market so they don’t compete with one another?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangements
490) According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to eliminate discounts to all customers or certain types of customers?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
491) Americo Realty and Heart of the Home Real Estate both charge the same commission rates. For this to be price fixing, what must occur?
a. An agreement between competing firms to standardize commission rates
b. An agreement between individual licensees in a single firm to fix commission rates
c. An offer of a cooperating brokerage commission
d. A public announcement of commission rates charged
492) Which of the following is true about discussing or implying a standard commission for the industry?
a. It’s an example of a tie-in arrangement and is an antitrust violation.
b. It’s an example of market allocation and is an antitrust violation.
c. It’s an example of price fixing and is an antitrust violation.
d. It’s permissible.
493) In addition to fines, individuals who violate antitrust laws may face imprisonment for up to what length of time?
a. 10 years
b. 30 days
c. One year
d. Two years
494) Which of the following statements could indicate a price fixing violation?
a. “I base my price on my services.”
b. “My price is non-negotiable.”
c. “This is the price my brokerage requires me to charge.”
d. “This is the standard price for a full-service listing.”
495) Deb, a licensee, is unhappy with the marketing materials a local company produced. While having coffee with Irving, a licensee with another firm, she tells him about her troubles and recommends he not do business with this company. Irving agrees and even volunteers to spread the word among his colleagues. What’s this an example of?
a. A tie-in arrangement
b. Group boycotting
c. Market allocation
d. Price fixing
496) When working with a developer who’s purchasing undeveloped land for a new subdivision, ABC Realty stipulates in the contract that in order to purchase the undeveloped land, the developer must purchase grading services from Bulldozers-R-Us. Which antitrust violation is this?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
497) Which of the following is true of agreeing with a competitor to segment the market between you?
a. It’s an example of a tie-in arrangement and an antitrust violation.
b. It’s an example of group boycotting and an antitrust violation.
c. It’s an example of market allocation and an antitrust violation.
d. It’s permissible.
498) Which of the following is true about tie-in arrangements?
a. They involve market allocation.
b. They involve price fixing.
c. They’re an antitrust violation.
d. They’re a type of mortgage fraud.
499) Which typociation meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that ervice?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
500) A consumer is moving to a new area and uses social media to try to line up a real estate professional to help him find a new home. He asks how much he’ll need to pay his licensee. One firm he contacts tells him that all licensees in the area charge at least 2%. What antitrust violation does this imply?
a. A tie-in arrangement
b. Group boycotting
c. Market allocation
d. Price fixing
501) Which of the following is an example of an illegal tie-in arrangement?
a. ABC Realty requires that all buyers who work with their company be qualified by ABC Mortgage company, an affiliated business.
b. MNQ Realty offers the services of an affiliated business, with full disclosure of its business relationship.
c. TUV Realty offers a variety of financing providers to potential clients.
d. XYZ Realty requires all buyers who work with their company to obtain financing through XYZ Mortgage company.
502) Marcy is found guilty of price fixing. It’s safe to assume that she must have done what?
a. Agreed with a competitor to charge a specific amount
b. Charged a fixed commission price her broker asked her to use
c. Charged a separate co-op fee for different brokerages
d. Deviated from the standard commission rate
503) In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?
a. 10 years
b. One month
c. One week
d. One year
504) Which of the following is the best example of a tie-in arrangement?
a. A business offers add-on services for its best customers.
b. A business requires its clients to also purchase service.
c. Competing businesses agree to similar pricing strategies.
d. Competing companies agree to not do business with a third.
505) Which of the following is true of discussing the business model of competitor A with competitor B in order to determine a joint course of action against competitor A?
a. It’s an example of a tie-in arrangement and an antitrust violation.
b. It’s an example of group boycotting and an antitrust violation.
c. It’s an example of price fixing and an antitrust violation.
d. It’s permissible
506) A new real estate professional is getting to know licensees at his new firm, Tremont Homes. One licensee tells him there’s an unwritten agreement with a neighboring firm that Tremont serves the mid-town area, and everyone who has prospective clients in that area refer their leads to Tremont. What’s this an example of?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangements
507) Three brokers meet and agree that all of their listing contracts will have one-year terms. Of which type of antitrust violation is this an example?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
508) Question 3
509) How does California inform consumers that commissions are not set by law?
a. Commissions are set by law
b. Through a commission disclosure statement
c. Through language on the agency disclosure form
d. Through specific language on listing agreements
510) Licensee Audrey was convicted of an antitrust violation. What is the maximum prison sentence she can serve?
a. 10 years
b. Five years
c. No prison time
d. Two years
511) An agent is trying to build up business for a friend’s mortgage company. She offers to charge a lower commission rate to clients who use her friend’s mortgage company for their financing. What’s this an example of?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
512) Penalties for antitrust violation may include ______.
a. Additional education requirements
b. Community service
c. Fines and/or prison sentences
d. Fines only
513) According to the Department of Justice, an agreement between competitors to establish or adhere to uniform price discounts is a type of which antitrust violation?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
514) A couple of licensees you know from different firms are tired of competing with one another for the same listings. You overhear them saying, “You take the north side of town and I’ll take the south, so we aren’t stepping on each other’s toes.” You stop their conversation to tell them they’re committing an antitrust violation. Which one is it?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangementsble.
515) Which of the following is an example of price fixing?
a. A brokerage requires all licensees to offer a fair cooperative brokerage fee.
b. Three brokerages agree to purchase office supplies together to obtain a bulk discount.
c. Twelve brokerages discuss compensation of associated independent contractor licensees.
d. Two brokerages determine a standard commission rate.
516) What’s market allocation?
a. Agreeing with a competing firm on how to split a market
b. Deciding to own the market with aggressive marketing strategies
c. Deciding which clients you will work with, and which you won’t
d. Partnering with a branch office to dominate a market
517) Four brokerage firms operate in the same small city as Jackson’s firm. All the firms charge approximately the same listing commission and pay approximately the same cooperating commission to the selling broker. The commission splits within each firm are also similar. Is this an antitrust violation? Why or why not?
a. No. The similarities between commission rates may be suspect, but the similarity between commission splits doesn’t matter.
b. Not necessarily. The fact that the firms’ commission rates and splits are similar doesn’t necessarily mean they agreed to fix those values.
c. Yes. The fact that the firm’s commission rates and splits are so similar is a restraint of trade.
d. Yes. The firms’ internal commission splits can be the same, but they can’t all charge the same commission rate.
518) As part of its penalty for violating antitrust law, Homes4Cheap, Inc. has been ordered to undergo court-ordered supervision. How long can this supervision last?
a. 10 years
b. One month
c. One week
d. One year
519) Which of these situations represents an illegal tie-in arrangement?
a. Grayson tells his seller client, Geneva, that he’ll reduce the listing commission if Geneva uses MBS Title Services to close her transaction.
b. Martha gives her buyer clients a list of home inspectors and encourages them to call several who are both on and not on the list to find one who meets their needs.
c. Monica agrees to rebate a portion of the commission earned when her buyer client buys a house if the client also lists her current home with Monica.
d. Trina tells her buyer, Martin, that she won’t perform any brokerage services for him unless he signs an agency agreement.
520) Which of the following statements could indicate a price fixing violation?
a. “My contract length is non-negotiable.”
b. “My listing agreements are generally 90-day contracts.”
c. “The MLS requires us to have at least 90-day listings.”
d. “With today’s market conditions, we could expect the house to take two months to sell. Let’s set a term of four months for our listing contract.”
521) Any agreement between competing firms that restricts trade or discourages competition is a violation of antitrust law. An agreement between competitors to do which of the following is also an antitrust violation?
a. Increase choices for consumers
b. Increase the number of competitors in the field
c. Join a professional association
d. Restrict choices for consumers
522) Unhappy with some of the fees a local mortgage company charges her clients, Renee decides to not do business with that company and convinces buyer brokers who show her listings to not do business with this company, either. What is this an example of?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
523) Rachel is subject to court-ordered supervision due to an antitrust violation. This oversight may continue for as long as ______.
a. 10 years
b. Five years
c. She remains in the state where the violation occurred
d. She’s lice
524) Which of the following is true of the practice of basing the length of a listing term on how long it takes in your market to sell similar properties?
a. It’s an example of a tie-in arrangement and an antitrust violation.
b. It’s an example of market allocation and an antitrust violation.
c. It’s an example of price fixing and an antitrust violation.
d. It’s permissible
525) Several brokerages in a certain area agree to stop running advertisements in a local publication. What type of antitrust violation is this?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
526) Which type of antitrust violation occurs when the providing of one service is made dependent on the customer or client obtaining another recommended service?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
527) Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Why should Shakira leave the discussion?
a. She needs to get to work developing this model for herself.
b. The group seems bent on creating a tie-in arrangement.
c. This conversation seems to be turning into a discussion of market allocation.
d. This conversation sounds like it might become an antitrust violation.
528) Avoiding antitrust violations is critical. Which one of the following actions will help you avoid price fixing allegations?
a. Consult with competitors to determine competitive pricing.
b. Engage in discussions about fees with agents from other companies.
c. Establish fees independently or as a company.
d. Promote “industry rates” in conversations with consumers.
529) Jarvis, a designated broker, discusses antitrust scenarios at staff meetings and makes certain his firm makes independent decisions about co-op fees. This is a great way for Jarvis to do what?
a. Avoid antitrust violations
b. Eliminate the competition
c. Get in trouble with the DOJ
d. Inadvertently violate antitrust law
530) A Department of Justice deputy district attorney general said that the National Association of REALTORS®’ action of obstructing Internet-based brokers who offered alternative services and lower costs to consumers had this result, making it an antitrust violation.
a. Increased competition
b. Increased consumer fees
c. Reduced competition
d. Reduced consumer fees
531) One of the actions that landed the Consolidated Multiple Listing service of South Carolina in court was that it gave Columbia brokers the ability to exclude rivals from outside of Columbia. What type of antitrust violation does this exemplify?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
532) In the 1950 case involving the District of Columbia’s Washington Board of REALTORS® in which the National Association of REALTORS® became involved, the board required that brokers should maintain the standard rates of commission adopted by the board, and no business should be solicited at lower rates. No member may charge less than this rate when involved in the sale, exchange, lease, or management of real property in the District of Columbia. What were the parties guilty of?
a. Fair housing law
b. Group boycotting
c. License law
d. Price fixing
533) The 1970 case against Prince George’s County Board of REALTORS® found that the board was suggesting commission rates and publishing schedules of commission rates. What type of antitrust violation was this?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
534) The MLS in your area prohibits limited service agents from listing properties for sale. This is ______.
a. An antitrust violation
b. A risk management technique to prevent antitrust violations
c. Common to all MLS systems
d. Fine as long as it prohibits all discount agents
535) The Kentucky Real Estate Commission’s action of prohibiting brokers from offering rebates and other inducements to consumers was deemed to be this type of violation, in which guilt is established in light of existing circumstances.
a. Fair housing
b. Per se
c. Rule of reason
d. Tying
536) Avoiding antitrust violations is critical. Which one of the following actions will help you avoid price fixing allegations?
a. Consult with competitors to determine competitive pricing.
b. Engage in discussions about fees with agents from other companies.
c. Establish fees independently or as a company.
d. Promote “industry rates” in conversations with consumers.
537) One of the actions that landed the Consolidated Multiple Listing service of South Carolina in court was that it gave Columbia brokers the ability to exclude rivals from outside of Columbia. What type of antitrust violation does this exemplify?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
538) One of the actions that landed the Consolidated Multiple Listing service of South Carolina in court was prohibiting members from offering home sellers the opportunity to avoid paying a broker’s commission if the seller located a buyer on their own. What type of antitrust violation does this exemplify?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
539) The 1970 case against Prince George’s County Board of REALTORS® involved a consent decree. What is this?
a. A compromise where the party agrees to stop certain illegal actions without admitting guilt
b. A decision issued by the court ordering the defendant to stop performing certain illegal actions
c. A guilty plea
d. An innocent plea
540) The 1970 case against Prince George’s County Board of REALTORS® found that the board was refusing to work with members who didn’t follow certain suggestions. What is this an example of?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangement
541) The 1950 case involving the District of Columbia’s Washington Board of Realtors and the National Association of REALTORS® determined that real estate boards that set schedules of fixed or mandatory real estate commissions or fees violated this law.
a. Fair housing laws
b. Licensing laws
c. The Federal Trade Commission Act
d. The Sherman Antitrust Act
542) The 1950 case involving the District of Columbia’s Washington Board of REALTORS® and the National Association of REALTORS® determined that “trade” involves which transactions?
a. Both interstate and intrastate
b. Interstate only
c. Intrastate only
d. Only transactions outside Washington, D.C.
543) Which of the following is true about for sale signs?
a. They must be located at least 20 feet away from the mailbox.
b. They must be visible from the sidewalk.
c. They must be visible from the street.
d. They require the seller’s written permission to post.
544) Identifying properties being sold by owners and persuading them to list with a licensee describes the ______ approach to finding listings.
a. Cold calling
b. Expired listings
c. Farming
d. Owner sales
545) When finding listings, which statement describes the owner sales approach?
a. Choosing a neighborhood and concentrating real estate activities there
b. Contacting homeowners whose listing contracts have ended without a sale
c. Contacting prospective clients through previous clients, co-workers, networks, etc.
d. Identifying properties being sold by owners and persuading them to list with a licensee
546) What is an open listing agreement?
a. One in which anyone can find the buyer, but the listing agent still gets paid
b. One in which only the person who finds the buyer gets paid
c. One in which the price is negotiable within a specified range
d. One in which there’s no end date
547) Why should sellers remove family photos and other personal items prior to showings?
a. Because family photos are old fashioned.
b. So that buyers can picture their own items in the home.
c. So that no one steals important photos.
d. To protect themselves from visitors with criminal intent.
548) You receive a full-price offer within one day for a new listing. Your seller is concerned the home was under priced. How should you respond?
a. Advise the seller to reject the offer and hold out for something better if that’s how he feels.
b. Ask the buyer to justify her offer in writing, explaining why she was so quick to buy.
c. Make sure your seller is informed. Review the information that shows the home was accurately priced.
d. Tell the seller it is what it is and it’s too late now to change things.
549) When finding listings, which statement describes the expired listings approach?
a. Choosing a neighborhood and concentrating real estate activities there
b. Contacting homeowners whose listing contracts have ended without a sale
c. Contacting prospective clients through previous clients, co-workers, networks, etc.
d. Identifying properties being sold by owners and persuading them to list with a licensee
550) Which of the following actions should be taken when holding an open house?
a. Limit advertising.
b. Only be present to open and close the house.
c. Schedule the open house for a day and time when the owner can be present.
d. Schedule the open house soon after the property hits the market.
551) When using the farming approach, affinity is a key factor when identifying a neighborhood. Which statement best describes affinity?
a. An area that is not currently farmed by another licensee
b. An area that the licensee likes
c. An area with a fair amount of listings—not too many, not too few
d. An area with a variety or home styles, sizes, features, price points, amenities, buyers, etc.
552) Bernie represented Oscar in the sale of Oscar’s home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?
a. No, because he found his own buyer.
b. No, because Oscar retained his exclusive right to sell.
c. Yes, because “exclusive right to sell” means Bernie gets paid no matter who finds the buyer.
d. Yes, because Oscar is not a real estate licensee.
553) What’s the purpose of advising sellers to remove personal effects from their homes prior to showings?
a. To give the impression that they need money so that buyers will make their offers higher
b. To increase the likelihood that they’ll be out of the house by the time the transaction closes
c. To make it easier for prospective buyers to visualize themselves in the home
d. To remove objects that may be tempting to thieves
554) You have a seller who is refusing a very good offer on a property that’s been on the market for a while. How can you help your client?
a. Give up and move on to the next client. Sometimes clients are impossible to work with.
b. Tell the client it’s his house and his choice, but you think he should accept.
c. Try and help the seller see the big picture and the value of an offer on the table.
d. Try to work with the buyer to get a much higher offer, since this might make the client happier.
555) When finding listings, which statement describes the cold call approach?
a. Contacting homeowners to determine whether they or anyone they know is interested in selling
b. Contacting homeowners whose listing contracts have ended without a sale
c. Contacting prospective clients through previous clients, co-workers, networks, etc.
d. Identifying properties being sold by owners and persuading them to list with a licensee
556) Camille is working with a seller who has asked her to lower her commission rate. What’s the best way for her to explain why she won’t do it?
a. Explain that her broker won’t allow her to change the rate.
b. Explain that her fee is based on the services she provides.
c. Explain that her rate is in line with the industry standard.
d. Explain that her rate is the standard rate for the area market.
557) Which of the following best describes a net listing?
a. The seller and agent agree to split the profit from the proceeds of the sale.
b. The seller reserves the right to sell the property and not have to pay a commission.
c. The seller specifies a desired price for the property and agrees to pay the broker any amount received that’s more than that price.
d. The seller works with many agents, and only the agent who procures the buyer is owed a commission.
558) Seller Jeremiah has no cash on hand, but the buyers have outlined some repairs they want made in order to close on the purchase. Which of the following is his best option if he wants this transaction to close?
a. Do the repairs himself, even if he’s not qualified.
b. Offer a seller credit to cover the cost of the repairs.
c. Reduce the sales price by twice the amount estimated for the repairs.
d. Tell the buyers he can’t make the repairs and hope they’ll agree to buy the house anyway.
559) Which items should sellers put into storage to help de-personalize their home?
a. Expensive artwork
b. Prescription medications
c. Refrigerator magnets and children’s artwork
d. Window coverings
560) Contacting homeowners whose listing contracts have ended without a sale describes the ______ approach to finding listings.
a. Expired listings
b. Farming
c. Owner sales
d. Referral
561) Matt’s sellers have a valuable artwork collection displayed in their home that perfectly showcases various rooms. What advice should Matt provide to his sellers when preparing to sell the home?
a. Install a video camera system to be sure the artwork isn’t stolen.
b. Leave the artwork on display.
c. Note in the contract that the artwork isn’t part of the personal property that will stay with the property.
d. Remove the artwork and replace with suitable, less-expensive pieces as necessary.
562) 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 ______.
a. Exclusive agency
b. Exclusive right to sell
c. Open
d. Seller’s choice
563) Ariana’s seller clients have photos of the entire family on display in the grand stairway of their home. Ariana advises her clients to remove the photos. Which step in the preparation phase is Ariana addressing?
a. Accessorize
b. Declutter
c. De-personalize
d. Repair
564) Tiffany just obtained a list of all of the homeowners in an area. She checks the numbers to make sure they’re not on the Do Not Call Registry, then starts making calls to see if they or anyone they know is interested in selling their home. What method is this?
a. Cold calling
b. Farming
c. Owner sales
d. Referral
565) Your seller client pushes back when you share that your commission rate is 7%. He thinks that’s way too much. Which of the following is the best response?
a. “I base my commission on my services. These are the services I will provide for you. Which would you like to forego?”
b. “If you’re already disagreeing with my methods, it’s clear that we’re not a good fit. I’ll be happy to refer you to one of my colleagues.”
c. “With all due respect, I’m the real estate expert. As such, my rate is non-negotiable.”
d. “You’re right. I’ll adjust the commission rate.”
566) Your seller client is very attached to her home and has not agreed with any price ranges you’ve presented. She insists on pricing the home at 15% above the current market, claiming the home has a certain air about it that is priceless (but 15% higher is a start). How should you advise this seller?
a. Advise your client she wait until the market comes up to meet her expectations to sell.
b. Be honest and realistic about expectations, but do as the seller wishes regarding the price.
c. Be kind but firm. Advise the seller that the home’s value is dictated by the market, not her perception.
d. Tell her if she can’t be realistic, she needs to find a new agent because you’re done arguing.
567) Which of the following is a common issue licensees can expect from sellers?
a. Donating the property to charity
b. Haggling over commission
c. Insisting on putting the listing into the MLS personally
d. Tiered bonuses
568) You’re representing a seller. Which of the following is one of your duties?
a. Assisting the seller with hiding defects, such as water intrusion and mold
b. Getting the seller an acceptable price and terms
c. Making sure the seller profits on the sale of the property
d. Purchasing the property in the event that it does not sell
569) Emily received Gerty’s name from a previous client whose home she sold. This is an example of ______.
a. A referral
b. Branching
c. Cold calling
d. Farming
570) Contacting homeowners to determine whether they or anyone they know is interested in selling describes the ______ approach to finding listings.
a. Cold calling
b. Farming
c. Owner sales
d. Referral
571) Contacting prospective clients through previous clients, co-workers, and networks describes the ______ approach to finding listings.
a. Branching
b. Cold calling
c. Farming
d. Referral
572) Which of the following scenarios best describes a net listing?
a. Carmel is selling her condo for $280,000 and is offering 6% commission to the listing broker.
b. Jason is listing his duplex for $400,000 but reserves the right to find his own buyer and not have to pay a listing commission.
c. Maeve wants to get at least $350,000 when she sells her property and tells her listing agent, Stan, that he can keep anything above that amount.
d. Ralph is selling his townhome for $225,000 and is paying a brokerage fee of $25,000.
573) When working with a seller, you signed a listing agreement that ensured you’d receive a commission, provided the property sold during the listing term. What type of listing agreement did you sign?
a. Exclusive agency
b. Exclusive right to collect commission
c. Exclusive right to sell
d. Net listing
574) Tamara has identified a neighborhood where she’ll concentrate her real estate activities. She starts by sending postcards to all residents, then walks door to door to introduce herself. Over time, she sends more communications, participates in neighborhood events, and eventually becomes the “go to” real estate professional for the neighborhood. What approach has she used?
a. Branching
b. Cold calling
c. Farming
d. Owner sales
575) Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice’s needs?
a. Exclusive agency
b. Exclusive right to sell
c. Net
d. Open
576) When using the farming approach to find listings, what factors are important when identifying an area?
a. Average home price, population density, turnover
b. Diversity, affinity, amenities
c. Turnover, affinity, diversity
d. Turnover, density, affordability
577) Choosing a neighborhood and concentrating real estate activities there is an example of the ______ approach to finding listings.
a. Branching
b. Cold calling
c. Farming
d. Owner sales
578) Which of the following is true about net listings?
a. The listing agent is guaranteed at least some commission.
b. They don’t include compensation for the buyer’s agent.
c. They often involve a conflict of interest.
d. They’re legal in all 50 states.
579) Jane is working with her first seller client. She’s excited to begin marketing the property and to hold an open house. Which of the following is something she should do?
a. Limit advertising.
b. Only be present to open and close the house.
c. Schedule the open house for a day and time when the owner can be present.
d. Schedule the open house soon after the property listing hits the market.
580) What’s the best way for a licensee to prevent the potential issue with sellers of believing that a property has sold too quickly or took too long to sell?
a. Advise the seller to file a complaint with the local association of REALTORS® if they’re unhappy with the service received
b. Educate sellers about why a list price has been recommended, and the effect of current market conditions on the length of time a property takes to sell.
c. Explain that real estate is a complicated game with many factors affecting the length of time a property takes to sell.
d. Keep a record of the number of hours spent on marketing each property, and show that to the seller.
581) What’s the best way to explain to sellers why you won’t lower your commission rate?
a. “My broker won’t allow me to lower my rate.”
b. “My fee is based on the services I provide.”
c. “This is the industry standard.”
d. “This is the standard rate for this market.”
582) Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?
a. Broadcast clause
b. Marketing clause
c. Multiple listing clause
d. Provisionary clause
583) Michael scours the local newspaper, looking for homes for sale without real estate professional representation. This isn’t because he wants to buy the house, but because he wants to represent the seller. What approach is this?
a. Cold calling
b. Expired listings
c. Farming
d. Owner sales
584) Which of the following is true about lockboxes?
a. They must be hidden from plain sight.
b. They must be visible from the sidewalk.
c. They must be visible from the street.
d. They require a seller’s written permission to post.
585) When finding listings, which statement describes the referral approach?
a. Choosing a neighborhood and concentrating real estate activities there
b. Contacting homeowners whose listing contracts has ended without a sale
c. Contacting prospective clients through previous clients, co-workers, networks, etc.
d. Identifying properties being sold by owners and persuading them to list with a licensee
586) Mardee represented condo owner Carol, and they signed an exclusive agency listing agreement. If Carol found her own buyer, would she owe Mardee a commission?
a. No, because Carol is not a real estate licensee.
b. No, because Carol procured the buyer.
c. Yes, because they have an exclusive agency listing agreement.
d. Yes, but she only owes the listing commission.
587) Which of the following describes how a real estate licensee should advise a client to prepare a property for the market?
a. Mask, hide, and paint over
b. Purchase new furniture and artwork
c. Put expensive artwork and figures on display
d. Repair, declutter, and de-personalize
588) De-personalizing a home allows buyers to _______.
a. Identify furniture they want to purchase from the sellers
b. Imagine themselves in the home
c. Move in more quickly
d. Spot the high-value items
589) What strategy can a licensee use when a seller client is presented with reasonable offers, but refuses to budge on price or terms?
a. Advise prospective buyers that their offers won’t be considered unless they meet the seller’s stiff requirements.
b. Help the seller remember the goal of a closed transaction.
c. Stop presenting offers received until the seller agrees to consider negotiating.
d. Threaten to cancel the listing agreement.
590) Why should you know when the seller can vacate the property?
a. If a buyer wants to close before the seller can vacate, the seller may need to rent it back from the buyer.
b. You’ll need to know when you can have the property staged.
c. You’ll want the house empty for showings.
d. You’ll want to schedule the closing during the seller’s occupancy.
591) Martin has a new listing. He wants to post a for sale sign in his seller’s yard. What must he obtain before doing so?
a. A flier box
b. A permit
c. A separate phone number
d. The seller’s written permission
592) Gary is preparing to place a lockbox on the property that his brokerage has recently listed. Which of the following is true?
a. He must get the seller’s permission to place the lockbox.
b. Lockboxes aren’t a good idea.
c. The lockbox can’t remain on the property for longer than 60 days.
d. The lockbox must be visible from the street.
593) Anya, a real estate licensee, asks her sellers why they want to sell their property. Is this an appropriate question?
a. No, because it’s none of her business—she’s there to sell a house, no matter the reason.
b. No, because she is breaching her duty of confidentiality.
c. Yes, because she needs to include this information in the property’s marketing materials.
d. Yes, because she needs to know their motivations to do her job properly.
594) Which of the following factors should be considered when determining an acceptable sales price?
a. Seller’s loan payoff amount
b. What personal property will be left in the property
c. What type of financing the seller will accept from the buyer
d. When the seller can vacate the property
595) Why should you have a conversation about financing for the property with the seller before you sign the listing agreement?
a. Financing information must be documented on the listing agreement.
b. It’s important to understand the financing that sellers will have available when they purchase their next property.
c. Some sellers can’t accept, or won’t qualify to accept, certain types of financing—such as FHA or VA loans—so you should know that up front.
d. You should only worry about financing if you’re a dual agent also representing a buyer.
596) When using the farming approach, turnover is a key factor when identifying a neighborhood. Which statement best describes turnover?
a. An area that is not currently farmed by another licensee
b. An area that the licensee likes
c. An area with a fair amount of listings—not too many, not too few
d. An area with a variety of home styles, sizes, features, price points, amenities, buyers, etc.
597) A buyer has assembled quite a list of repairs he’d like the seller to make. The seller, fearing she might lose this buyer, agrees to every item on the list. In what type of market is this concern most valid?
a. Cold
b. Dynamic
c. Hot
d. Static
598) In a hot market, when all other sellers are listing at or above market rate, what pricing strategy will likely induce a bidding war?
a. Pricing far above market value
b. Pricing in line with comparable properties
c. Pricing just above market value
d. Pricing just below market value
599) Which of the following is an example of an escalator offer?
a. Buyer offers $650,000. Seller accepts.
b. Buyer offers $650,000. Seller counters at $675,000. Buyer accepts.
c. Buyer offers $650,000. Seller counters at $675,000. Buyer counters back at $665,000.
d. Buyer offers $650,000 with clause that buyer will beat all competing offers by $3,000 up to $675,000.
600) Dan just listed a property two days ago and already has offers pouring in. It’s a hot market and properties are moving quickly. Which of these options is the best strategy?
a. Have buyers submit their “highest and best” offers and then help his seller decide which offer is most appealing.
b. Leave it on the market for a few more days to allow time for even more offers to come in.
c. Reject all offers and put the home back on the market for a higher price.
d. Submit only prime offers to his seller client.
601) Which of the following is a legitimate reason to counter an offer?
a. A $50 curtain
b. A cracked tile
c. A free-standing fire pit
d. Price
602) What happens to an initial offer from the buyer after a seller counters?
a. It becomes the back-up offer.
b. It’s accepted by the seller until the buyer accepts the counter.
c. It’s no longer in play.
d. Sellers cannot counter a buyer’s initial offer.
603) Norm has a listing. He can’t post it to the MLS and he can’t advertise it to the broad public. He can talk to colleagues at his brokerage firm about it, but it’s going to take a lot of work to sell this property without having all of his marketing tools at his disposal. What type of listing does he likely have?
a. Net listing
b. Office exclusive
c. Open listing
d. Secret listing
604) In what type of market is pricing a home below market value an especially good strategy, as buyers are scarce and unlikely to consider at or above-market homes?
a. Cold market
b. Hot market
c. Neutral market
d. Warm market
605) A buyer, hoping to beat out all other offers, included a clause in the offer that reads, “Buyer to beat all competing offers by $1,000 up to a price of $700,000. Seller to provide copies of competing offer to buyer on acceptance.” What type of offer is this?
a. Bad
b. Dynamic
c. Elevator
d. Escalator
606) A listing that’s not posted on the MLS and is kept off-market is commonly known as a(n) ______.
a. Exclusive agency listing
b. Open listing
c. Pocket listing
d. Secret listing
607) In what type of market are buyers typically in a power position?
a. Cold
b. Dynamic
c. Hot
d. Static
608) How do agents commonly market an office exclusive?
a. Inform colleagues at their firm about the listing
b. Market the listing on the MLS
c. Place ads in local newspapers
d. Place advertisements on social media
609) What is a pocket listing?
a. A listing in which the buyer and seller are represented by the same real estate licensee
b. A listing only advertised on the MLS
c. A listing widely advertised through the MLS, social media, and other means
d. An off-market listing, not posted on the MLS
610) Which of the following are common with cold markets?
a. Bidding wars
b. Multiple offers
c. No or low offers
d. Offer terms unfavorable to buyers
611) A buyer is reluctant to ask for repairs and risks the seller accepting a different offer. In what type of market is this concern most valid?
a. Cold
b. Dynamic
c. Hot
d. Static
612) Seller repairs, lengthy closing dates, and seller-paid closing costs are terms buyers may ask for in a ____________ market.
a. Cold
b. Dynamic
c. Hot
d. Static
613) Whoa—this market is hot, hot, HOT! You’ve had five offers come in since you listed your seller client’s home yesterday. Of the options listed, which is the best strategy?
a. Accept a middle-of-the-road offer, but on the condition that no home inspection repairs will be performed.
b. Have all buyers submit their “highest and best” offer, then help the seller decide which offer is most appealing.
c. Leave it on the market for another three days to allow time for even more offers to come in.
d. Reject the offers and put the home back on the market for the amount of the highest offer.
614) If a seller asks a buyer to waive the inspection contingency, how could the transaction process transpire and still protect the buyer?
a. Buyer has inspection, buyer makes offer, seller accepts offer
b. Buyer makes offer, inspection performed, seller accepts offer
c. Buyer makes offer, seller accepts offer, closing occurs, inspection performed
d. Buyer makes offer, seller accepts offer, inspection performed
615) In a neutral market, what pricing strategy may generate interest in the property, possibly prompting multiple offers?
a. Pricing above market value
b. Pricing at market value
c. Pricing below market value
d. Pricing in line with comparable properties
616) Waiving inspection, waiving appraisal, and offering the seller possession after closing are all terms buyers may offer a seller to make their offer more appealing in a _________ market.
a. Cold
b. Dynamic
c. Hot
d. Static
617) Which of these offers would be the most appealing to a seller?
a. A full-price offer waiving inspection, conventional financing with 20% down, closing in 45 days
b. An all-cash offer $15,000 below list price and closing in two weeks
c. An offer $10,000 over list price, contingent upon appraisal and inspection, conventional financing with 20% down, closing in 30 days
d. The best offer is the one a seller determines is best for his unique needs and motivations.
618) What’s an effective pricing strategy when listing a home in a cold market?
a. Price the home above market value.
b. Price the home above market value and decrease the price after a month if it doesn’t sell.
c. Price the home at exact market value.
d. Price the home below market value.
619) Which party tends to benefit in a hot market?
a. Buyer
b. Client
c. Customer
d. Seller
620) Which party tends to benefit in a cold market?
a. Buyer
b. Client
c. Customer
d. Seller
621) Kurt is pricing a home for a client in a cold market. It’s a great property, and he knows it would sell for above market value if the market were better. All things considered, what’s the best pricing strategy for the home?
a. Price the home above market value.
b. Price the home above market value and decrease the price after a month if it doesn’t sell.
c. Price the home at its exact market value.
d. Price the home below market value.
622) In what type of market are sellers typically in a power position?
a. Cold
b. Dynamic
c. Hot
d. Static
623) In a hot market, what pricing strategy may incite bidding wars?
a. Pricing at or just below market value
b. Pricing far above market value
c. Pricing in line with comparable properties
d. Pricing just above market value
624) Which of the following is a danger of office exclusives?
a. Higher commission rates
b. Increased market exposure
c. Lower listing prices
d. Reduced market exposure
625) What should an agent do if a seller client requests an office exclusive?
a. Advertise the listing on the MLS
b. Fully inform the seller about the dangers of reduced market exposure
c. Negotiate a higher commission, as there is a greater burden on the agent to find a buyer
d. Prepare advertising for social media and local newspapers
626) When a seller counters the buyers’ original offer, what options do buyers have?
a. They can accept, counter, or reject the offer.
b. They can accept the offer and counter back.
c. They can only accept or reject the counter-offer.
d. They can only accept the counter-offer.
627) Which of these standard forms is used to document an agreement between a seller and a listing broker to cease marketing a property?
a. Cancellation of Listing
b. Modification of Terms
c. Seller Instruction to Exclude from the MLS
d. Termination of Buyer Agency
628) Which of the following requires that contracts transferring ownership of real property be in writing to be enforceable?
a. Code of ethics
b. Fair Housing Act
c. Statute of frauds
d. Statute of limitations
629) Which of these statements accurately describes the purpose of a Buyer Non-agency Agreement?
a. Establishes a non-exclusive listing agreement between a seller and a broker.
b. Establishes an open listing agreement between a seller and a broker.
c. Protects the listing broker from implied agency by notifying the buyer that the listing broker is not the buyer’s agent.
d. Protects the listing broker from implied agency by notifying the seller that the listing broker is not the seller’s agent.
630) If two parties enter into a contractual agreement with each other to perform an illegal act, which of the following statements is true of the contract?
a. It is voidable, because Jesse is not mentally competent to sign a contract.
b. It is voidable, because Jesse probably signed it under duress.
c. It is voidable, because the consideration, as a percentage rather than a dollar amount, is not clearly stated.
d. It is void because it is not for a lawful purpose.
631) Consent is not present when _______.
a. The contract is for an unlawful purpose
b. The contract is not in writing
c. The contract is signed by a minor
d. The contract is signed under duress or undue influence
632) If a minor enters into a contract with an adult, which of the following is true?
a. The adult may legally hold the minor to the contract, but the minor cannot legally hold the adult to the contract.
b. The contract is valid, and both the minor and the adult may legally hold the other party to the contract.
c. The contract is void, and neither the minor nor the adult may legally hold the other party to the contract.
d. The minor may legally hold the adult to the contract, but the adult cannot legally hold the minor to the contract.
633) Which of the following individuals would be a competent party to a contract?
a. Byron, a 17-year-old MENSA member
b. Claudia, a 37-year-old in-patient receiving treatment for schizophrenia
c. Graciella, a 28-year-old unemployed parolee
d. Norman, a 40-year-old heroin addict
634) Which of the following is an essential element of a valid real estate contract?
a. Duress
b. Legal purpose
c. Misrepresentation
d. Mutual mistake
635) Which of these descriptions matches the purpose of a Modification of Terms form?
a. Used to modify the terms of a listing agreement, such as price and expiration date
b. Used to modify the terms of a sales offer, such as price and contingencies
c. Used to modify the terms of broker compensation for a purchase agreement
d. Used to prepare a counter-offer to the terms in a sales contract
636) Which element of a valid contract is established by getting the signatures of all parties?
a. Competent parties
b. Consideration
c. Lawful objective
d. Offer and acceptance
637) Which of these sentence most accurately reflects what the seller needs to understand about MLS listings when completing a listing agreement?
a. California sellers must complete a seller instruction form that specifies which MLS data to include in Internet listings.
b. Listing a property in the MLS has the potential to negatively impact the sales price.
c. Listing property in the MLS is required under California law.
d. Using the MLS exposes the property to other agents and their buyer clients, and opting out has the potential to reduce the number of offers.
638) What does the REO stand for in “C.A.R. REO advisory listing form”?
a. Ransom E. Olds
b. Real estate owned
c. REO Speedwagon
d. Rome State Airport
639) Amy is working with seller clients who have suggested they would like the property to go to another African-American family. Which section of the listing agreement would help Amy convey why she cannot market the property this way?
a. Anti-discrimination disclosure
b. Equal housing opportunity
c. Fair housing rules
d. Illegal practices
640) Who may unilaterally cancel a listing agreement?
a. No one
b. The broker
c. The listing agent
d. The seller
641) You have a seller client who hasn’t had any offers and wants to extend the listing period. Which C.A.R. form would come in handy now?
a. Additional Agent Acknowledgement (AAA)
b. Expiration Date Extension (EDE)
c. Modification of Terms (MT)
d. Notice to Buyer to Perform (NBP)
642) Carter, a licensee, never posts his clients’ property on the MLS. This gives him the opportunity to find the buyer himself, potentially doubling his commission. What disadvantage might apply to Carter’s clients?
a. Their properties may be over-exposed.
b. Their properties may not sell for top dollar.
c. They may receive too many offers if Carters’ network is too wide.
d. They will pay more commission overall.
643) What does the successor and/or assigns section of the Residential Listing Agreement state?
a. It prohibits the licensee from assigning the listing agreement to the licensee’s broker.
b. It prohibits the seller from assigning the listing agreement to another licensee.
c. It prohibits the seller from assigning the listing agreement to anyone else.
d. It states that the listing agreement is binding on the seller’s heirs.
644) In the listing agreement, how is the responsibility for marketing and showing the property described?
a. Both seller and broker are responsible.
b. The listing agreement does not account for responsibility in this area.
c. The responsibility lies solely with the listing agent and brokerage.
d. The seller is solely responsible.
645) Caryn is a listing agent for Bret and has just provided him with an offer on his property. Bret informs Caryn that the home is in foreclosure. What do we know about this situation?
a. Bret is within his rights to withhold this information.
b. Bret should have disclosed this to Caryn per the listing agreement.
c. Caryn cannot disclose this situation to the buyer.
d. This situation is not covered by the listing agreement.
646) Andy has decided to drop the price on his townhome. His listing agreement states the list price as $650,000. How can he account for the price drop?
a. Ask his agent to change it on the MLS
b. Complete a Modification of Terms form before changing it on the MLS
c. He cannot change it, but may accept a lower offer
d. Once the listing term expires, he may relist it at the new price
647) Which of these advance fee agreements is legal in California?
a. A broker and a property owner agree to an advance fee for loan modification that will save the money in the long run.
b. A broker and seller agree to an advance fee for marketing a multi-million dollar property that is not approved by the Department of Real Estate.
c. A broker and seller agree to an advance fee for marketing a time-share property and the agreement was approved by the Department of Real Estate.
d. A broker tells a new buyer client the types of wine she prefers just before winking suggestively.
648) What does the SSIA stand for in C.A.R. Form SSIA?
a. Shoe Service Institute of America
b. Short sale ill advised
c. Short sale information and advisory
d. Short sale inspection advisory
649) Which of these statements best describes one of the purposes of including a section about the entire agreement in the Residential Listing Agreement?
a. Both parties are required to read the entire agreement.
b. Each term must be valid, or the entire agreement will be voided.
c. Every term in the listing agreement must be initialed to be valid.
d. Everything the parties are contracting to is in the listing agreement.
650) Which of these is a likely reason for a listing agent to use a Modification of Terms form?
a. A buyer has made an offer below list price and the seller is willing to take that offer.
b. The seller wants to move up the expiration date because the property sold right away.
c. The seller wants to raise the list price after receiving no offers.
d. The seller wishes to lower the list price to encourage more offers.
651) One of Amy’s clients has a property that received eight offers before the deadline. Assuming Amy received no special instructions on presenting offers, how many of the offers must she present to the seller?
a. As many of the offers that were at list price or higher
b. Eight
c. None
d. The top three
652) Which of the following situations entitles Gary to commission with a 30-day protection clause?
a. Buyers viewed the property 15 days after the listing expired and made an offer that was accepted.
b. Buyers who viewed the property while it was listed with Gary made an accepted offer 10 days after the listing expired.
c. Gary told his overseas cousin about the property, and his cousin returned to the U.S. 35 days after the listing expired to make an offer.
d. The seller told a group of colleagues about the house 20 days after the listing expired, and one eventually came to see the house, which led to a contract.
653) Jeremy signed a listing agreement with a broker, Ralph. Jeremy was then run over by a cement truck and died. What happens to his agreement with Ralph?
a. It becomes void.
b. It continues and is binding on Jeremy’s heirs.
c. It gets assigned to Jeremy’s attorney.
d. It is terminated.
654) Which of the following advance fees is legal?
a. Bart, a licensee, receives an advance fee directly from his principal after having the advance fee agreement approved by California DRE.
b. Homer, a licensee, receives an advance fee from his client, Edna Krabapple. He does not report this to his broker.
c. Lisa, a licensee, receives approval for her advance fee agreement from California DRE and is paid through her broker.
d. Marge, a licensee, uses an advance fee agreement obtained through a stationery form and does not submit it to California DRE for approval, but is paid through her broker.
655) Which of these statements about seller initials on listing agreements is true?
a. Seller initials must be notarized to be enforceable.
b. Sellers only need to initial those pages that contain handwritten insertions.
c. Sellers should initial each page to indicate their understanding of the terms on that page.
d. Sellers should not initial listing agreements; that is the role of the broker.
656) Which of these statements accurately describes what a seller is agreeing to in the seller representations portion of a listing agreement?
a. Sellers must disclose all material facts about the property.
b. Sellers must disclose financial issues that may affect the sale, such as delinquency in payments, bankruptcy, or receipt of a notice of default.
c. Sellers must own the property with a clear title.
d. Sellers will represent the brokerage and need to behave with professionalism.
657) Marty, a licensee, has a listing agreement with Becca, the seller. Whenever anyone tries to show Becca’s property, Becca says it’s not convenient. What is true about this situation?
a. Becca is in violation of the listing agreement.
b. Becca is within her rights, but isn’t being very fair to Marty.
c. Marty must terminate the listing agreement.
d. Marty will have to procure the buyer.
658) Which of the following distressed property types is covered by the Residential Listing Agreement?
a. Chapter 114
b. REO
c. Short sale
d. Short sale and REO
659) Why is it so necessary to obtain signatures on a listing agreement?
a. Any real estate contract must be in writing to be enforceable.
b. Every blank needs to be filled in on a form contract.
c. Signatures are required to list the property on the MLS.
d. Your broker may be fined for approving a listing agreement that is not signed.
660) Which of the following is a true statement regarding a licensee’s role in preparing a real estate contract?
a. A licensee has legal authority to draft any real estate contract or addendum.
b. A licensee may not alter an existing form.
c. A licensee must use standardized language when writing an addendum.
d. A licensee’s role is limited to filling in the blanks.
661) Amy is explaining the broker and seller’s duties section of a listing agreement to a new client. Which of these would be an accurate statement to make?
a. The extent of the broker’s duties depends on the type of listing agreement.
b. The seller agrees to set a list price that’s within the range recommended by the broker.
c. The seller and broker will take turns showing the property to potential buyers.
d. The seller and the broker agree to exercise reasonable effort and cooperation in the sale of the property.
662) California law requires a notice about compensation to the broker in the listing agreement. What does that notice need to communicate?
a. Net listings are illegal.
b. Net listings are required by law.
c. The amount or rate of the commission is fixed by law.
d. The amount or rate of the commission is not fixed by law.
663) Which of these agreements needs to be signed before all of the others?
a. Agency disclosure
b. Keysafe/lockbox authorization
c. Listing agreement
d. Seller’s instructions to the broker
664) Which of the following statements accurately describes the information needed to complete the property to be acquired section of a buyer representation agreement?
a. The characteristics of the property the buyers would like to purchase, such as price range.
b. The legal description for the property the buyer has made an offer to purchase.
c. The loan amount for which the buyer is pre-approved.
d. The neighborhoods the buyer would like to exclude from the search based on ethnic make-up.
665) A buyer representation agreement that states the buyer will only work with one agent is ______ buyer representation agreement.
a. An enforceable
b. An exclusive
c. An illegal
d. A non-exclusive
666) One of the buyer representation forms published by C.A.R. is the BRNN. What do the two Ns stand for?
a. Non-exclusive, non-binding
b. Non-exclusive, not for compensation
c. Non-inclusive, not for compensation
d. Not for pay, not for fools
667) One of the buyer representation agreements published by C.A.R. is the BRNE. What does the ‘NE’ stand for?
a. Nebraska
b. No errors
c. Non-exclusive
d. Non-exempt
668) Which type of a buyer representation agreement allows a buyer to enter into agreements with multiple brokers and pay only the broker who found the property that was ultimately purchased by the buyer?
a. Exclusive listing agreement
b. Non-exclusive buyer representation agreement
c. Non-exclusive, not for compensation buyer representation agreement
d. Open listing agreement
669) The two advisories listed in the other terms and conditions section of a C.A.R. buyer representation agreement are the buyer’s inspection advisory and the _______________________.
a. Market condition advisory
b. REO advisory
c. Statewide broker’s advisory
d. Statewide buyer and seller advisory
670) Imagine you’re preparing an exclusive buyer representation agreement with a client and need to explain the options available for agency relationship. Which of these is accurate?
a. Because our brokerage lists properties as well as assists buyers, dual agency is required.
b. If we find a property you like that is listed by my broker, I may need to act as a dual agent.
c. Under an exclusive agency agreement, I will never represent anyone but you.
d. With the exclusive agency agreement, you are my exclusive client, but I may not be your exclusive broker.
671) When explaining the buyer representation agreement to a client, you will mention which advisories found in the other terms and conditions section?
a. The agency advisory and the statewide buyer and seller advisory
b. The agency disclosure and buyer’s inspection advisory
c. The buyer’s inspection advisory and the keysafe/lockbox advisory
d. The buyer’s inspection advisory and the statewide buyer and seller advisory
672) Which of these real estate contracts would not include a section on broker compensation?
a. Exclusive listing agreement
b. Non-exclusive buyer representation agreement
c. Non-exclusive, not for compensation buyer representation agreement
d. Open listing agreement
673) Which type of buyer representation agreement published by C.A.R. does not include a broker compensation section?
a. BRE
b. BRNBC
c. BRNE
d. BRNN
674) Which of the following is true regarding the BRNN?
a. It informs the consumer of the benefits of dual agency.
b. It requires the buyer to compensate the licensee in the event the licensee procures a property for the buyer.
c. It safeguards the licensee from claims of undisclosed dual agency.
d. It safeguards the licensee’s compensation.
675) What makes a non-exclusive buyer representation agreement different from an exclusive buyer representation agreement?
a. An exclusive agreement is used when the buyer has already made an offer on a single property.
b. A non-exclusive agreement allows the broker to present a listing to multiple buyers.
c. A non-exclusive agreement allows the buyer to work with other brokers, any one of whom may end up representing the buyer in the transaction.
d. A non-exclusive agreement is used when the buyer is willing to consider the purchase of multiple properties.
676) When working with flippers, it is recommended you have systems in place that ______.
a. Alert you when your client is talking to another agent
b. Allow you to make offers quickly
c. Make temporary, surface improvements to properties so they show better
d. Prevent others from viewing properties your client is interested in
677) What link did researchers find between education and residential stability?
a. Children are less likely to be held accountable for their actions
b. Children are more likely to go on to earn a PhD
c. Children are more likely to have access to excellent schools
d. Children are more likely to stay in school and perform well
678) Real estate is a ______, unlike stocks or bonds.
a. Buy-and-hold investment
b. Novice-friendly investment
c. Tangible asset class
d. Tax-free holding
679) Involvement in community organizations is most strongly tied to:
a. High economic level
b. Home ownership
c. Long-term residents
d. Low economic level
680) What factor is a primary concern to the fix-and-flip investor?
a. Finding quality renters
b. Generating long-term positive cash flow
c. Obtaining top dollar when selling
d. Selling quickly for fair market value
681) What will be of the highest concern to a fix-and-flip investor once the property is rehabbed?
a. Getting publicity for the remodel
b. Holding multiple open houses to meet new prospective buyers
c. Holding out for the highest sales price
d. Making a profit quickly to start a new project
682) If you have a client who wants stability, security, and comfort in a real estate purchase, what types of property will you target in your search?
a. Fixer-upper
b. Income-producing
c. Retail/commercial
d. Single-family residential
683) The U.S. Department of Housing and Urban Development cites discrimination and ______ as two barriers to a stronger level of minority homeownership.
a. A cultural bias toward renting
b. An insufficient supply of affordable housing
c. Lack of interest in owning a home
d. Small popul
684) Investor Maisy found a great deal on a property. Instead of closing on it herself, Maisy is going to “assign” it to another investor for a fee. What type of investor is Maisy?
a. Buy and hold
b. Con artist
c. Fix and flipper
d. Wholesaler
685) One reason that minority groups tend to be homeowners less frequently than white Americans is due to a ______.
a. Lower birth rate
b. Lower interest in homeownership
c. Older median age
d. Younger median age
686) What type of investor frequently “assigns” deals to other investors, rather than buying properties himself?
a. Commercial investor
b. Fix and flipper
c. Foreign investor
d. Wholesaler
687) Which of the following is a top priority for a buy-and-hold investor?
a. Positive cash flow
b. Quick turnaround
c. Steep discounts on property
d. Very motivated sellers
688) Which type of investor will find a property in disrepair, make the required repairs, then sell the property for a profit?
a. Appreciator
b. Buy and hold
c. Flipper
d. Wholesaler
689) Your client explains that she wants to purchase a property using funds from the refinance of her current property. What type of client is this?
a. Investor
b. Risk-averse
c. Trade-down buyer
d. Trade-up buyer
690) Low-income and minority buyers face a number of obstacles to homeownership, including:
a. An insufficient supply of affordable housing
b. Competition from foreign investors for affordable housing
c. Immigration status
d. Long-term rental leases
691) Lana is a client who is seeking to purchase some investment property. What does this tell you about her transaction?
a. Security and comfort are important elements of her purchase.
b. She’ll most likely use a conventional or government-backed mortgage.
c. She’ll want cash flow or a high rate of return.
d. She’s looking for a property that will appeal to her emotions.
692) Obtaining a home loan is not the simplest process. Immigrants from some countries may find it particularly difficult because ______.
a. Credit tends to be easier and simpler to obtain in their home countries
b. Lack of English language skills make the homebuying process hard to follow
c. The concept of a mortgage does not exist in their country
d. Their savings can be tied up in foreign investments
693) Which type of investor finds a deeply discounted property, closes on the property transaction, and then immediately sells it to another investor?
a. Buy-and-hold investor
b. Buy-and-sell investor
c. Fix-and-flip investor
d. Wholesaler
694) You’ve helped an investor client with several purchases over the last few years. You’re beginning to wonder if you’ll actually get the chance to list one of her properties, but she is happy to rent them out. What type of investor is she?
a. She is likely a buy-and-hold investor.
b. She is likely a fix-and-flipper.
c. She is likely a monopolizer.
d. She is likely a wholesaler investor.
695) Home owners tend to be ______________ than their renting counterparts.
a. Healthier
b. Less politically active
c. More politically active
d. More religious
696) Aside from cash flow, appreciation, and earning passive income, what is another reason someone may want to legally invest in real estate?
a. For depreciation
b. For liquidity
c. To hedge against inflation
d. To launder money
697) Communities with a high rate of home ownership and long-term renters are likely to ______.
a. Have a higher crime rate, except for violent crimes and homicide
b. Have a higher crime rate, including violent crimes and homicide
c. Have a lower crime rate, except for violent crimes and homicide
d. Have a lower crime rate, including violent crimes and homicide
698) Which type of investor would be interested in a “fixer” property?
a. Buy and hold
b. Deep pocket
c. Flipper
d. Wholesaler
699) Blain is a wholesale investor. Which of the following strategies will interest him most?
a. Getting top dollar for the property, even if it takes several weeks
b. Improving the property and then reselling immediately at market price
c. Marketing the property to a specific investor type
d. Reselling the property without putting any time, money, or energy into cleaning it up
700) The buy-and-hold investor enjoys appreciation potential, tax write-offs, and ______.
a. Current income
b. Flipping
c. Foreign market bumps
d. Quick profit
701) How do current homeownership rates compare to the rates in 2004?
a. Declined
b. Plummeted to less than 60% of the 2004 rate
c. Slightly higher
d. Stayed flat
702) Statistically, black and Hispanic applicants for conventional home loans are more likely to be denied than white applicants because ______.
a. They apply for a larger loan
b. They are more likely to make mistakes on the credit application
c. They do not speak English as well
d. They tend to make significantly less money per year
703) What are two ways in which an investor’s approach to strategy might be categorized?
a. High dollar and low dollar
b. Primary and secondary
c. Property type and investment strategy
d. Successful and unsuccessful
704) What will a fix-and-flip investor want to do after a renovation?
a. Buy additional properties for deep discounts and sell them at wholesale.
b. Get top dollar for the property, even if it takes several months.
c. Market the property to a specific investor type.
d. Resell immediately at market price.
705) Investors seek to __________ funds to gain maximum return from their investment.
a. Leverage borrowed
b. Leverage saved
c. Reinvest
d. Use tax-exempt
706) What makes real estate an appealing investment for some people?
a. Ability to control aspects of the investment
b. Extremely low risk
c. No capital requirements for investment
d. Quick return
707) What is a major advantage of real estate investment over other types of investment?
a. Ability to leverage
b. Aesthetics
c. Availability
d. Familiarity
708) Which type of investor markets to renters rather than buyers?
a. Buy-and-hold
b. Deep pocket
c. Fix-and-flip
d. Wholesale
709) What is the purchase agreement phrase that wholesalers rely on for their investment strategy?
a. “Ad valorem”
b. “Deal or no deal”
c. “Or assigns”
d. “Quit claim”
710) Real estate investing may be done individually, in partnerships, or through what other means?
a. Corporations
b. Credit reports
c. Credit unions
d. E&O insurance
711) Which of the following is a benefit of home ownership, according to research studies?
a. Community stability
b. Fully integrated neighborhoods
c. Greater amounts of open space
d. Increased economic opportunity
712) What’s considered a critical source of home financing in minority communities?
a. Government-backed loans
b. Kickstarter campaigns
c. Private loans
d. Savings
713) After the renovation, what will a fix-and-flip investor want to do next?
a. Buy additional properties for deep discounts and sell them at wholesale.
b. Get top dollar for the property, even if it takes several months.
c. Market the property to a specific investor type.
d. Resell immediately at market price.
714) Your client explains that she wants to purchase a property using funds from the refinance of her current property. What type of client is this?
a. Investor
b. Risk-averse
c. Trade-down buyer
d. Trade-up buyer
715) An investor you know rarely sells any of his investment properties. Instead, he maintains the property while enjoying property appreciation and rental income. What’s this strategy known as?
a. Buy and hold
b. Fix and flip
c. Profit scheme
d. Wholesale
716) The IRS requires foreign property owners to withhold _____ of the gross purchase price when they sell real property they own in the U.S.
a. 12.5%
b. 15%
c. 22%
d. 5%
717) What advantage does the 1031 tax-deferred exchange offer?
a. It allows investors to avoid ever paying taxes from gains realized on their investments.
b. It allows investors to defer capital gains taxes when selling a property, provided they buy another property.
c. It offsets capital gains for homeowners who have lived in the home for at least two years.
d. It provides a tax shelter for non-real estate investments.
718) Rob purchased a property five years ago for $200,000. He put down $50,000 and financed $150,000. Today, the property is valued at $250,000. What is this an example of?
a. Depreciation
b. Equity buildup
c. Pyramiding
d. Rate of return
719) John wants to do a 1031 tax exchange with a property he just sold. How many calendar days does he have to identify a new property for the exchange?
a. 180
b. 30
c. 45
d. 60
720) What is an agent’s role in locating properties for an investor?
a. It is up to the client to find the properties; the agent just gets involved once the property has been identified
b. Leave no stone unturned
c. Search the MLS daily
d. Wait for instructions from the client and act accordingly
721) The use of one investment to finance another is called _______.
a. Blockbusting
b. Churning
c. Equity build-up
d. Pyramiding
722) “Complete remodel that’s move-in ready!” is a phrase you’d most likely use when marketing a property for a ______ investor.
a. Buy-and-hold
b. Deep pocket
c. Fix-and-flip
d. Wholesale
723) Who is the withholding agent under Foreign Investment in Real Property Tax Act?
a. The buyer
b. The buyer’s lender
c. The seller
d. The seller’s real estate broker
724) Which of these is a recommended source for a real estate professional to use when looking for opportunities for an investor client?
a. Construction trade associations
b. Home inspection trade associations
c. Personal injury attorneys
d. Sheriff’s sales
725) In 2020-21, 51% of foreign real estate purchases occurred in which four states?
a. California, Nevada, Colorado, and New York
b. Florida, California, Texas, and Arizona
c. New Mexico, California, Oregon, and Florida
d. New York, Wyoming, Florida, and Vermont
726) What is the capital gains exclusion amount?
a. $125,000 for single taxpayers, $250,000 for married couples filing jointly
b. $250,000 for single taxpayers, $500,000 for married couples filing jointly
c. $25,000 for single taxpayers, $50,000 for married couples filing jointly
d. $50,000 for single taxpayers, $100,000 for married couples filing jointly
727) Which of these is a recommended place for a real estate professional to search for properties when working with an investor client?
a. Door-to-door in low-income neighborhoods
b. Handyman companies
c. Home decorator conventions
d. “Subject to court approval” listings in the MLS
728) After the renovation, what will a fix-and-flip investor want to do next?
a. Buy additional properties for deep discounts and sell them at wholesale.
b. Get top dollar for the property, even if it takes several months.
c. Market the property to a specific investor type.
d. Resell immediately at market price.
729) Why might an investor offer to purchase a property as-is, waiving the inspection and the appraisal as part of their negotiating strategy?
a. Naivety
b. The investor intends to live there
c. The property is in poor condition
d. To soften the blow of a low-ball offer
730) Your client is making an offer on a property, but the offer is substantially lower than asking price. The seller is a family with four small children. What might you do to help increase the chances of having the low offer accepted?
a. Allow the family to remain in the home rent-free for a month.
b. Compliment the children a lot to the parents.
c. Offer to act as a buyer agent for the family.
d. Offer to babysit so the parents can take an evening off.
731) Why would you ask investors about their experience?
a. As an icebreaker for more serious questions
b. To decide if they really need your help or not
c. To get a feel for how successful they may be at investing
d. To see if you will learn anything from them
732) Olivia purchased a property five years ago for $200,000. She put down $50,000 and financed $150,000. Today, the property is valued at $250,000. She’d like to purchase another property, so she refinanced her current property and used the equity to purchase a new property. Of what is this an example?
a. Depreciation
b. Equity build-up
c. Pyramiding
d. Rate of return
733) Why would you ask an investor how many offers she plans to submit?
a. To find out how much money she has.
b. To find out if you will be asked to write a few, dozens, or hundreds of offers.
c. To help the investor clarify her goals.
d. To impress her with your business acumen.
734) How should you tailor your marketing strategies for investment properties?
a. By property type and investment type
b. By visibility of property
c. On commission to be realized
d. On sales price
735) You’ve just met a potential new investor client. You ask about investment goals, partnerships, and service requirements. Why?
a. To build rapport
b. To demonstrate your expertise
c. To let the investor know you want business
d. To qualify the investor
736) Blain is a wholesale investor. Which of the following strategies will interest him most?
a. Getting top dollar for the property, even if it takes several weeks
b. Improving the property and then reselling immediately at market price
c. Marketing the property to a specific investor type
d. Reselling the property without putting any time, money, or energy into cleaning it up
737) What’s the name of the tax program that requires a withholding of a portion of the gross purchase price when foreign owners of real estate in the U.S. sell that property?
a. Foreign Investment in Real Estate Property Tax Act (FIRPTA)
b. Foreign Investor Real Estate Investment Tax (FIRE-IT)
c. Foreign Real Estate Tax Withholding Act (FRETWA)
d. Tax Withholding for Foreign Holding Act (TWFHA)
738) Why would a licensee working with an investor want to foster a relationship with a title company?
a. To get leads on available properties
b. To get referrals to other investors
c. To get the client better deals on settlement costs
d. To get the client better deals on title insurance
739) Your investor client has made a low offer on a property, but so far there’s been no response. She doesn’t want to offer on another property yet because she doesn’t have enough cash on hand to purchase two properties at the same time. What’s the best way to avoid this situation in the future?
a. Ask your client to offer something closer to the list price.
b. Avoid getting too hopeful about each offer.
c. Explain to sellers that they can always rent back from the buyer.
d. Set an expiration date for the offer.
740) Why might a licensee working with an investor attend tax, foreclosure and builder auctions?
a. For the free lunches
b. To get leads on properties
c. To get referrals
d. To meet other licensees
741) Which type of investor would be interested in a “fixer” property?
a. Buy and hold
b. Deep pocket
c. Flipper
d. Wholesaler
742) Why would you ask an investor, “Who’s on your team?”
a. To determine if the investor has a support team prepared and is ready to buy
b. To determine if there will be a RESPA violation if you work with this person
c. To see if the investor knows anyone you know
d. To see if you and the investor support the same sports team
743) Agent Jim is trying to determine the type of services his new investor client may want from him. Which of the following questions would help Jim get a big picture of the types of services his client is going to need?
a. “Have you purchased residential or commercial properties?”
b. “Have you worked with a real estate agent before?”
c. “What’s your end goal?”
d. “Who’s on your team?”
744) The increase a property’s value beyond what the investor originally invested as a down payment is called _______.
a. Equity buildup
b. Pyramiding
c. Rate of return
d. Satisfaction of mortgage
745) How might you convince a seller to accept your buyer client’s low offer?
a. Make veiled threats.
b. Pay cash.
c. Play hardball.
d. Spend time pointing out the property’s flaws to the seller.
746) To whom would a 1031 tax exchange usually appeal?
a. Investors
b. Retailers
c. Traditional homebuyers
d. Wholesalers
747) Which of the following is a good source for leads on discounted investment properties?
a. Criminal attorneys
b. Divorce attorneys
c. Game wardens
d. Home inspectors
748) Which of the following is a recommended negotiation strategy with sellers when you’re making a low offer on behalf of a client?
a. Asking the seller to make all necessary repairs
b. Offering to close quickly
c. Playing hardball with the seller
d. Telling the seller that your buyer has big plans for the property
749) When marketing a commercial space to investors, what information will they likely be most interested in?
a. Cash flow analysis and projections
b. Estimate for rehabbing the property
c. Recent upgrades to the structure
d. Whether they can sell immediately
750) Shania is looking for opportunities to assist her investor client. She looks at FSBO sites on the Internet, checks her feed for foreclosures and REO properties, and calls a colleague who specializes in bankruptcy sales. Who else could she connect with to find suitable opportunities for her client?
a. Criminal attorneys
b. Home decorators
c. House painters
d. Probate attorneys
751) Which five countries had the highest percentage of buyers in 2020-2021?
a. Canada, Mexico, China, India, and the United Kingdom
b. France, Germany, Spain, Switzerland, and Sweden
c. Pakistan, Belgium, Cambodia, Poland, and Korea
d. Russia, Japan, South Africa, Iran, and Syria
752) Morgan is a single taxpayer and real estate investor. She buys homes for cheap, fixes them up while living in them, and sells them for a profit. How much can she exclude if she realizes a gain from the sale of her current property (assuming she meets all the criteria to exclude the gain)?
a. $25,000
b. $250,000
c. $50,000
d. $500,000
753) Which of the following would make the “Choose Your Neighbor” flyer an allowable strategy for finding prospective buyers?
a. As part of a comprehensive marketing strategy that doesn’t limit or restrict potential buyers
b. For property located in a gated community
c. For rural properties greater than 20 acres
d. With seller consent
754) Ana lives in a condo complex in which her children are not allowed to play outside after dark, with or without their parents. According to the Fair Employment and Housing Act (FEHA), which type of discrimination is this?
a. This is considered discrimination based on familial status.
b. This is considered discrimination based on national origin.
c. This is considered discrimination based on racial status.
d. This is not discrimination, but is a rule that owners and tenants must obey.
755) Which of the following is an example of discrimination under the Fair Employment and Housing Act (FEHA)?
a. A landlord refuses to rent to a couple that have been on the waiting list for four months, because when they were called and given notice of their approval, the tenants refused to pay the security deposit.
b. A landlord refuses to rent to a tenant who has poor credit and unstable employment history.
c. An owner refuses to sell a house to an unmarried couple on the basis of his religious beliefs that having a sexual relationship outside of marriage is sinful.
d. An owner refuses to sell a house to a same-sex couple that offered less than the asking price.
756) Are immigrants to the United States covered under federal fair housing laws?
a. No, never
b. Yes, if they have a green card
c. Yes, if they have a work or student visa
d. Yes, regardless of immigration or resident status
757) What makes a “Choose Your Neighbor” marketing letter potentially discriminatory?
a. It limits the availability of the property for sale to those who are “pre-approved” by neighbors.
b. It prevents illiterate neighbors from participating in selection of buyers.
c. The letters don’t allow neighbors to agree on the actual buyer.
d. There’s no requirement for the number of neighbors who receive the letter.
758) Based on Article 10 in the NAR Code of Ethics, the NAR appears to take what stand on discriminatory practices by its members?
a. Article 10 does not address discrimination.
b. Discrimination is not prohibited, but it is not recommended.
c. Members must not discriminate based on the federally protected classes and several others.
d. Members must not discriminate based on the federally protected classes only.
759) When real estate licensee Brian discovered that real estate licensee Arnold was using a “Choose Your Neighbor” letter to market a property without also listing the property in the MLS, in the local paper, or even putting a for sale sign in the yard, what charge could he bring against Arnold to the National Association of REALTORS®?
a. A charge of agreeing to discriminate by limiting access to the property
b. A charge of misrepresenting the property for sale
c. A charge of not fulfilling his fiduciary duties to his client by not conducting a complete marketing plan
d. A charge of unfair practice because his mother did not get one of the “Choose Your Neighbor” letters
760) REALTOR® Arnold was instructed by his client Sebastian to find a buyer who would “fit into the neighborhood.” What is Arnold’s responsibility in this situation?
a. Arnold must comply with his client’s instruction, regardless of his own feelings on the subject.
b. Arnold must conduct his usual advertising strategies and find covert methods for selecting buyers that meet his client’s desired profile.
c. Arnold must explain to his client the responsibilities for fair treatment that they both have under fair housing laws.
d. Arnold must explain to Sebastian that he cannot continue to work as his agent under the circumstances.
761) Which of the following strategies would help to make a “Choose Your Neighbor” marketing letter non-discriminatory in its effect?
a. Ensuring that the letter was given to neighbors on both sides of the street
b. Giving the letter to at least 20 neighbors
c. Listing the property on the MLS
d. Providing the letter in multiple languages for non-English speakers
762) A tenant of an apartment complex has a degenerative joint disease. The landlord refused her reasonable request for an accessible parking space and an extra key for her live-in caregiver. Which of the following is true?
a. The landlord does not have to do anything for the tenant.
b. The landlord may charge the tenant for better parking and for the extra key.
c. The landlord must only provide ramp access at the buildings entrance and has not discriminated.
d. The landlord must provide reasonable accommodations and has discriminated based on a disability.
763) Michael, an agent, is representing Felicity, a seller. Felicity tells Michael that she does not want to sell to anyone who is Hispanic. Which of the following describes Michael’s responsibilities?
a. Michael is allowed to prepare an advertisement which states, “Home for sale, $140,000. No Hispanics.”
b. Michael is allowed to tell any prospective buyers and their agents that Felicity will not sell to Hispanics.
c. Michael may follow Felicity’s instructions and show the house to anyone except Hispanics.
d. Michael may inform Felicity of fair housing laws.
764) A complete marketing campaign that includes the use of ‘Choose Your Neighbor’ letters in conjunction with an MLS listing, for sale signs, and advertisements in several newspapers is _______.
a. Effective
b. Illegal
c. Overkill
d. Unethical
765) Joe and John, a same-sex married couple, are working with Andy, a real estate professional, and are looking for a new home. Joe and John find a property they like and decide they want to make an offer. Which of the following is Andy’s responsibility in this situation?
a. Andy must ask the homeowner if they will sell to a same-sex couple who is married and living an alternative lifestyle.
b. Andy must explain the law to Joe and John, and the association must meet to decide if they will be allowed to live in the property.
c. Andy must follow the same rules, regulations, and ethical behaviors he would with any other clients, and promote the best interest of his client.
d. Andy must read the rules and regulations within the contingency period for Joe and John, and ensure the association will allow same-sex married couples as residents.
766) If you are charged with violating Article 10 of the NAR Code of Ethics, what’s the best defense you can provide for yourself?
a. Adequate justification for why it was appropriate to discriminate against a protected class in that particular situation
b. Character witnesses from within your firm
c. Character witnesses from your pool of previous clients
d. Clear records that prove you treat all clients the same, regardless of protected class
767) Which of the following is a violation of the Fair Employment and Housing Act (FEHA)?
a. A Hispanic applicant for a one-bedroom apartment was denied based on his low credit scores.
b. A Hispanic applicant for a one-bedroom apartment was denied based on the fact the tenant has a pet dog, which would be a violation of the no-pets policy.
c. A Hispanic applicant for a one-bedroom apartment was denied on the basis of his race.
d. A Hispanic applicant for a one-bedroom apartment was denied on the basis of the tenant having bad references from previous living arrangements.
768) Jim is an agent representing a buyer, Rashon. Rashon is African-American and wants to purchase a property in a neighborhood where his children will play only with children of his race. Which of the following is Jim’s responsibility?
a. Jim should not show properties based on race. If Rashon requests to be shown properties only in specific areas, then Jim can abide by those requests without commenting on the ethnic composition of the neighborhoods.
b. Jim should only show Rashon properties in predominantly African-American areas.
c. Jim should research the race, religion, and sexual orientation make-ups of each neighborhood he plans to show Rashon.
d. Jim should show Rashon properties in all areas and comment on the ethnic makeup of each neighborhood.
769) Article 10 of the NAR Code of Ethics states that REALTORS® ______.
a. May deny services to anyone at anytime
b. May not deny equal professional services to anyone buying or selling a home
c. May not deny equal professional services to anyone for reasons related to specific NAR protected classes
d. May not deny equal professional services to people belonging to a federal Fair Housing Act protected class
770) 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.
a. Familial status
b. Genetic makeup
c. Sexual orientation
d. Veteran status
771) Under what circumstances could a landlord legally refuse to rent to someone based on their national origin?
a. If the applicant does not speak English well
b. If the applicant is from a Muslim country
c. If the applicant is in the country illegally
d. Never
772) Fair housing laws give homeseekers a legal right to which of the following?
a. Access to a “rent to own” program for properties when they can’t pay the required down payments
b. Complaint process for rejected home offers, even if the offer is significantly below list price
c. Credit to purchase the home of their choice, regardless of ability to repay
d. No discriminatory limitations on communities or locations of housing
773) If a real estate professional discovers that another real estate professional is engaging in discriminatory marketing practices, what action should he or she take?
a. Make a complaint to the Department of Justice
b. Make a complaint to the National Association of REALTORS® or to the Department of Housing and Urban Development
c. Make a complaint with the county commissioner
d. Make a complaint with the local police
774) If a tenant who is an illegal immigrant files a complaint with HUD, how will HUD respond to the complaint?
a. HUD does not ask for or investigate immigration status, and will respond to the complaint by investigating the alleged discrimination.
b. HUD will deny the complaint based on the complainant’s immigration status.
c. HUD will investigate the complaint, but charges immigrants a fee for doing so.
d. HUD will refer the complainant to the U. S. Immigration and Customs Enforcement agency.
775) Which of the following is the best reason to support diversity in a real estate office?
a. It creates a challenging workplace.
b. It’s hard to find employees.
c. It’s politically correct.
d. It’s the best way to provide service to a broad array of clients.
776) The Asian Real Estate Association of America (AREAA) membership “includes housing and real estate professionals of all cultural backgrounds and is open to those who support the mission of ______.”
a. Advocating for public policy that serves all America
b. Educating real estate professionals who serve minority home buyers and sellers
c. Increasing sustainable home ownership in the Asian community
d. Promoting democracy in housing for African-Americans
777) The ______ is a purpose-driven organization propelled by a passionate combination of entrepreneurial spirit, cultural heritage, and the advocacy of its members.
a. Asian Real Estate Association of America (AREAA)
b. Minority Real Estate Professionals of America (MREPA)
c. National Association of Hispanic Real Estate Professionals (NAHREP)
d. National Association of Real Estate Brokers (NAREB)
778) Josefina is a new licensee starting at a brokerage where she is the only Hispanic and the only person who speaks both Spanish and English. How does this make her an asset to the brokerage?
a. She can shadow more experienced agents and help them with their work.
b. She can work with Spanish speaking clients more easily than other licensees can.
c. She is new and can be molded to the ways of the brokerage.
d. She will bring in clients from her extended family and social connections.
779) How might a company help its non-English-speaking agents from another country succeed in its U. S. offices?
a. By forcing them to speak English
b. By giving them an Anglo boss
c. By giving them bonuses for excellent work
d. By providing English as a second language (ESL) classes and tutors
780) What organization’s mission is to promote democracy in housing?
a. Asian Real Estate Association of America (AREAA)
b. Minority Real Estate Professionals of America (MREPA)
c. National Association of Hispanic Real Estate Professionals (NAHREP)
d. National Association of Real Estate Brokers (NAREB)
781) A buyer who discovers after closing that a seller wasn’t honest about the property condition on the required disclosures can ______.
a. Cancel the agreement and locate another property
b. File a claim with the state commission
c. Get a refund of the earnest money
d. Sue the seller
782) Marilyn is reviewing the inspection report with her buyer clients. Which of the following issues in the report should Marilyn flag as most significant?
a. Broken dishwasher
b. Lack of deadbolts
c. Non-working sump pump
d. Presence of mold
783) Most often, what’s the first course of action for disputed home warranty claims?
a. Arbitration
b. Condemnation
c. Litigation
d. Mediation
784) Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step?
a. Arbitration
b. A second round of mediation
c. Condemnation
d. Litigation
785) Amira’s seller Tom just received the news that his buyers are walking away from the sale. They weren’t willing to proceed after they saw the inspection report. Neither Amira nor Tom has requested a copy of the report. What’s the most likely reason for that?
a. Amira doesn’t trust this particular inspection company.
b. If they see the report, they’ll be required to disclose any adverse findings.
c. They are unwilling to pay for the report as the buyer requires.
d. Tom wants to pay for his own inspector so that he can question the inspector.
786) Which of the following statements would you use to educate your seller about the responsibility to disclose?
a. “If you know about a problem with the property, don’t tell me about it because I will be obliged to disclose it to the buyer.”
b. “You and I have a legal obligation to disclose all of the information we know about this property that might be meaningful to a buyer.”
c. “You do not need to disclose anything about the property unless the buyer asks a direct question.”
d. “You should not hide any material information that you know about, but you need not disclose information without cause.”
787) John and Amy purchased a builder’s home warranty when they bought their home. They have found structural damage that could be a detriment to their home. On average, how many years does a home warranty cover structural damage?
a. 10 years
b. Five years
c. One year
d. Three years
788) When a buyer finances a newly built home with a Federal Housing Administration loan, what does the FHA require the builder to do?
a. Create a fund equaling 20% of the home’s cost set aside to cover construction defects for the next 10 years
b. Provide a builder-backed home warranty
c. Provide the buyer with a 30% discount on materials and labor for home repairs
d. Purchase a third-party home warranty to protect the buyer
789) Your buyer clients are excited because the property they made an offer on provides a home warranty. What should you tell them?
a. Check the coverage at the time of purchase.
b. Check the coverage if an appliance breaks.
c. It protects brokers too.
d. They’re getting a great deal.
790) Jared is your client who is selling his four-bedroom home. When you ask him if he is aware of any physical defects with the property, he states that the property is “in fine shape.” Yet you’ve noticed several issues with rotted doorsills, crumbling masonry, and a suspicious moisture stain on the ceiling. If Jared won’t come clean about issues of property condition, what should you do?
a. Decline the listing
b. Find ways to hide the issues that you noticed so that potential buyers won’t see them
c. Have Jared sign a waiver so that you cannot be held liable for issues he does not disclose
d. Have the buyer sign a waiver so that you cannot be held liable for issues he does not disclose
791) What is the primary reason for a listing agent to educate the seller about the obligation to disclose material facts?
a. It helps the seller see the agent as a professional
b. So that the agent cannot be held liable if the seller is dishonest
c. So the agent’s reputation with any cooperating broker is protected
d. To protect both the seller and the agent from liability
792) Roy purchased a newly constructed home with a warranty that covers major structural defects for 10 years, and systems (HVAC, electrical, plumbing) for three years. After living in the home a few months, Roy notices the following defects and submits them all. Which one will likely be covered by the warranty?
a. A baseboard with paint drips
b. A light fixture that doesn’t match other light fixtures in the home
c. A split ceiling joist in the basement
d. A tear in the carpet
793) When selling real estate, the seller has a responsibility to disclose all material facts about the property, even those he __________.
a. Believes may happen in the future
b. Couldn’t possibly be aware of
c. Doesn’t know about
d. Should know about
794) When may a home warranty be purchased?
a. Only at the time the property is listed
b. Right after closing
c. When something breaks
d. When the property is listed or at the time of closing
795) What California case helped define the level of responsibility that real estate professionals and sellers have when it comes to disclosure of material facts?
a. Alton v. Burger
b. Easton v. Strassburger
c. Eaton v. California Bureau of Real Estate
d. Salsbury v. Tartar
796) Which of these transactions requires a selling broker to perform a reasonably competent visual inspection, according to California Civil Code Section 2079?
a. Sale of a four-bedroom ranch home
b. Sale of a home as ordered by a probate court
c. Sale of a six-unit apartment building
d. Transfer of a three-unit apartment building by a trustee in a bankruptcy
797) Darren and Natalie are first-time buyers who have decided to purchase a newly built townhouse. Their agent, Jenner, tells them that the builder must provide a one-year home warranty. Which of the following conditions is most likely true?
a. Darren and Natalie are getting a USDA rural development loan.
b. Darren and Natalie are using an FHA-insured loan.
c. Darren and Natalie are using conventional financing.
d. Darren and Natalie made an all-cash offer.
798) Homebuyer Nancy has made an offer to purchase a house and has plans to schedule a home inspection. How can her agent assist her in relation to the home inspection?
a. Negotiate a kickback from the home inspector.
b. Pay for the home inspection.
c. Require the buyer to use the agent’s favorite home inspector.
d. Review the inspection report with her and discuss options.
799) Shane’s buyers learned during the inspection that there was water damage around the fireplace and that the chimney needed new flashing and to be repointed. To whom must Shane disclose that information?
a. Any party to the transaction
b. Only the listing agent
c. Only the sellers
d. Only the sellers and the lender
800) Why is a home inspection recommended?
a. It gives the buyer a snapshot in time of the home’s condition.
b. It helps the buyer identify cosmetic changes that must be made.
c. It’s free to the buyer.
d. It’s required by law for most residential transactions.
801) Donald and Martina decided to purchase a newly built home, and their agent, Ed, recommended that they get a professional home inspection done. The couple tells Ed that they thought inspections were only for older homes. How should Ed respond to that?
a. Ed needs to inform his clients that home inspections are most important for newer properties.
b. Ed should let them know that lenders for new construction loans require inspections.
c. Ed should remind them that every dwelling, no matter the age or size, should have a home inspection.
d. Ed should tell him that he doesn’t trust the builder.
802) When a buyer is represented by a licensee, who is responsible for following up on issues identified in the inspection report to ensure that they are addressed?
a. The buyers
b. The buyer’s agent
c. The listing agent
d. The sellers
803) The benefits of a home warranty for buyers are clear. Why might sellers want to offer a home warranty to buyers?
a. To allow the buyer the option to customize features of the home.
b. To allow the buyer to customize certain items.
c. To keep from having to buy new appliances before putting the home on the market.
d. To protect themselves from any claims after closing.
804) Your buyer clients Sylvie and Daryl reviewed their inspection report and decided that they would address small repairs themselves, but they want the seller to have regrading done to direct water away from the house. What is your responsibility at this point?
a. You must identify three potential contractors from whom the sellers can select.
b. You need to communicate to the listing agent that the buyers are requesting regrading.
c. You need to send the report to the sellers and ask them what they’d be willing to fix.
d. You should help the buyers gather tools and materials for the small repairs.
805) In the Easton v. Strassburger case, the seller had taken measures to stabilize the soil as a result of previous landslides. What did the court determine was the seller’s responsibility to the buyer as a result?
a. To complete the repair and remediation process prior to the sale
b. To disclose to the buyer that there were existing issues with soil movement, and the related repairs that had been made
c. To offer to pay half of the cost to complete the soil stabilization efforts
d. To purchase a home warranty for the buyer in case the soil continued to cause issues
806) Leslie is a listing agent for a well-maintained two-story home that her client, Jerry, is selling. She has performed her visual inspection of the property, noted a few small issues, and made sure that Jerry understands his obligations for disclosure. What else does Leslie need to do to complete her responsibilities for disclosure?
a. Ask Jerry to repair the issues that she found
b. Ask Jerry to verbally disclose material defects to potential buyers
c. Show the issues that she noted to a home inspector, if the buyer uses one
d. Use the proper disclosure forms
807) Diana is selling her condominium. She has a responsibility to ________to the buyer.
a. Disclose all material facts about the property
b. Explain why she is selling
c. Introduce her neighbors
d. Show her condo in its best light
808) You’ve listed a 1918 Craftsman with some significant foundation issues—so significant that the buyers walked away after the inspection. They provided you and your sellers with a copy of the inspection report, which also points out some wiring concerns. At today’s open house, a prospective buyer asks to see a copy of any inspections done on the property. What should your response be?
a. You should ask the buyers who walked away whether you can provide a copy.
b. You should disclose any adverse material facts, but you don’t have to provide the report.
c. You should provide an inspection report, but only if specifically asked.
d. You should provide an inspection report to all prospects, along with seller disclosures.
809) In Easton v. Strassburger, what caused the court to rule that the seller and seller’s broker were negligent?
a. The broker acted in an undisclosed dual capacity.
b. The property was misrepresented as being larger than it actually was.
c. The seller charged the buyer illegal fees.
d. The seller had knowledge of a defect that was not disclosed to the buyer.
810) In the Easton v. Strassburger case, the seller’s agent noticed some uneven flooring on the property. What did the court determine was his responsibility in that situation?
a. To decline the listing, citing seller fraud
b. To have the seller fix the issue
c. To inspect and disclose the issue
d. To request that his broker fix the issue
811) You’re conducting your visual inspection of your client’s property and come across a room painted in psychedelic colors. Should you note this as an adverse material defect for disclosure to potential buyers?
a. No, this is not an adverse material defect.
b. Yes, a room that requires repainting is a physical defect with the property.
c. Yes, this must be disclosed to buyers, who will probably not want to live with those colors.
d. You should wait and see if you can find buyers who look as if they might like that kind of thing, then decide.
812) When you perform a required visual inspection of a property, what will you be looking for?
a. Clues to possible physical defects, such as moisture stains, uneven floors, or cracks in the walls
b. Design and remodeling ideas
c. Evidence of proper house cleaning
d. Opportunities to improve the way the home is staged for showings uyers gather tools and materials for the small repairs.
813) Insurance claims might not appear on a CLUE report for a property if the claims were made more than ______ years ago.
a. 10
b. Four
c. Nine
d. Seven
814) After closing, a buyer discovers the seller wasn’t honest about the property condition on the state’s required disclosures. What can the buyer do?
a. Ask for a refund of his earnest money.
b. Sue the seller for fraud or breach of contract.
c. Terminate the contract.
d. The buyer has no options after closing.
815) When a real estate professional is representing a seller in a residential transaction, when should the property disclosures be made available?
a. As soon as practicable before accepting an offer
b. Prior to advertising the property for sale
c. Prior to placing the listing in the MLS
d. Within seven days of the transfer of title
816) California law places an obligation on _____ to disclose all known material facts to the buyer in a residential transaction.
a. The seller only
b. The seller’s agent only
c. The seller’s and buyer’s agents only
d. The seller, the seller’s agent, and the buyer’s agent
817) Marla’s excited about closing on a cute lakefront cottage. But when she reads the report from the home inspection, she learns that the chimney leaks and that there is water damage in several places. This wasn’t on any of the seller’s disclosures. Which of these is the best option for Marla?
a. Complete the purchase and plan to spend a lot of money trying to make her cottage leakproof.
b. Complete the purchase, then sue the seller for fraud.
c. Find a lawyer and file a class action suit against the chimney mason.
d. Terminate the agreement and ask for a refund of her earnest money.
818) Your buyer clients Josie and Terry made an offer that was accepted on a cute bungalow in a city neighborhood. They just received the inspection report and were delighted to see only minor condition issues. They’d like the sellers to replace two windows that have broken seals. In response, the sellers asked for a copy of the inspection report. What must you do?
a. You can copy the pages related to the windows and provide those.
b. You can only provide a copy if you get permission from Terry and Josie.
c. You must request permission from the inspector, who holds the copyright.
d. You’re required to provide a copy of the report to the sellers.
819) Home inspector Murray is explaining to first-time buyers what he looks for during a home inspection. What is his primary goal?
a. Document health and safety issues that may affect both the cost and enjoyment of the home.
b. Estimate how much cosmetic upgrades may cost the buyers.
c. Verify lot lines and acreage calculations.
d. Verify the presence of any easements or encroachment on the property.
820) Yolanda purchased a house from the Griffins 10 months ago. Shortly after she moved in, the city began work on building a middle school on the empty lot right across the street. She feels that the city’s plans must have been known to the Griffins and should have been disclosed, and she really doesn’t want to live across the street from a school. Is it too late for her to take legal action against the Griffins?
a. No, Yolanda can take legal action against the buyers at any time while she still owns the property.
b. No, Yolanda can take legal action at any time within two years after taking possession of the property.
c. Yes, the buyer can only take legal action within six months of taking possession of the property.
d. Yes, Yolanda should have canceled the contract within three days of receiving seller disclosures.
821) When you represent a seller in a residential transaction, you will complete a ______________ as part of the disclosure process.
a. Crime statistics report
b. Local schools search
c. Title search
d. Visual inspection of the property
822) A seller’s agent has ______ to disclose material facts about a residential property to the buyer.
a. An affirmative duty
b. No clear legal duty
c. No responsibility
d. To follow the seller’s direction
823) Lamar closes on his new home next week. It’s a 37-year-old split level, so his agent asked if he’s interested in purchasing a home warranty. “Why would I need a warranty?” he wondered. “Didn’t the home inspection identify all of the issues?” What’s the agent’s best response to Lamar’s question?
a. A home warranty will cover all problems that come up in the future.
b. A home warranty will cover things like appliances and major systems.
c. Buying a home warranty almost guarantees you won’t have any issues!
d. If you purchase a home warranty and something breaks, you can sue the seller.
824) Seth is a licensee working for a buyer, Britney. Britney wants to make sure the seller accepts her offer on a charming Cape Cod, so she tells Seth she wants to make a full-price, non-contingent offer right away. How should Seth respond?
a. “I highly recommend a home inspection contingency with your offer to protect yourself in the event there are major defects with the house.”
b. “Since you love this house, this is the best way to make sure you get it. Let’s write up the offer and send it over right now.”
c. “Your offer may be more attractive if we come in at $5,000 over the list price.”
d. “Your offer would be more attractive if it were all cash.”
825) Home inspector Maura was walking Thad through a property inspection. The frame house, on a slab foundation, had mulch piled up about 18 inches next to the house. Why was Maura noting this as a concern?
a. Mulch is a flammable substance.
b. Mulch isn’t a sustainable material.
c. Mulch next to wood siding may lead to wood rot.
d. That amount of mulch might kill the plants it’s meant to protect.
826) Bill is joining his inspector Hank for an inspection of the property he hopes to purchase. Hank notices that the dirt on the exterior of the home slopes toward the house. He explains that it should slope away from the home. When it doesn’t, what problem might this create?
a. Basement leaks
b. Chimney issues
c. Contamination of the home’s water source
d. Mosquito breeding
827) Which of the following statements about the duty to disclose adverse material facts is true?
a. Licensees are required to disclose only those material facts of which they have actual knowledge.
b. Licensees don’t have to communicate adverse material facts if a property is being sold with any kind of “as-is” or “where-is” clause.
c. Licensees must disclose adverse material facts either before or after closing.
d. Licensees owe this duty to their clients only.
828) If you see sawdust and can’t explain its presence, it’s probably a sawdust-like material called frass created by which pest?
a. Carpenter ants
b. Fire ants
c. Fireflies
d. Slugs
829) How can you determine lot size, easements, and encroachments of a property? Select the answer that would provide the most comprehensive search.
a. Check the county recorder’s office and local building board.
b. Research the deed and title history, check maps at the county recorder’s office, and review land surveys.
c. Review subdivision maps, pace off the property, and check tax records.
d. Search the property’s deed and title history, ask the neighbors, and pace off the property.
830) Which of the following can indicate an electrical problem?
a. A broken light bulb
b. A burned or discolored outlet
c. An outlet that only works when the switch is turned on
d. A switch that’s cool to the touch
831) Marshall is a home inspector who is walking the lot of the property he’s inspecting with a survey in hand. Which of the following will he note as an encroachment on the inspection report?
a. A path providing neighborhood access to a pond cuts through part of the subject property.
b. The apple tree on the adjacent property drops apples onto the subject property.
c. The city seized the neighboring property to be used in a street widening project.
d. The neighbor installed a basketball hoop next to his driveway, six inches over the property line.
832) Charles just learned that the master bath addition on the home he purchased was built without obtaining permits. It’s actually situated too close to the lot line. What might Charles have to do to his master bath?
a. Get his neighbor’s permission for the proximity to the lot line.
b. Pay an exorbitant zoning fee.
c. Since it’s a bathroom and not a bedroom, he won’t have to mitigate.
d. Take the addition down.
833) Why should buyers ask sellers of older homes whether they’ve replaced the wiring system?
a. Because out-of-date electrical wiring can cause a wide a variety of problems.
b. Because the buyer will be required to update the wiring if it’s more than 10 years old.
c. Because the seller will be required to update the wiring if it’s more than 10 years old.
d. Buyers shouldn’t ask about the wiring.
834) Which one of the following could be an indication of a foundation problem?
a. Crack in a basement wall
b. Doors that open and close easily
c. Lack of moisture in the basement
d. Windows that open and close properly
835) You’re showing your buyers a house that clearly has a second-story addition. What important thing do you need to find out from the sellers?
a. How much the seller’s heating and cooling bills went up after the addition was put on
b. Whether or not a licensed general contractor did the work
c. Whether or not the addition was permitted
d. Whether or not the materials used match the original construction
836) Greg and Neha are interested in buying a ranch-style home in a suburban family neighborhood. The sellers have only lived there for 19 months, so they have no information about the addition that was put on 20 or 30 years ago. Why does it matter whether the owners at the time got permits to do the addition?
a. If the addition WAS NOT permitted, it may need to be inspected to ensure it meets code and perhaps even be taken down.
b. If the addition WAS NOT permitted, the lender will require additional title insurance.
c. If the addition WAS permitted, then the owners can use it as a rental suite.
d. If the addition WAS permitted, the sellers can raise the listing price.
837) Which of these could be signs of flood damage?
a. Hot and cold rooms in the house
b. Misaligned doors
c. Soft or uneven floors
d. Windows that won’t open
838) Your home inspector Mason found some discoloration in the attic and near the windows on the second floor. Why does he think this may be a concern?
a. Dark stains in the attic could mean plumbing problems.
b. It could be a sign of fire damage.
c. It means that the homeowners haven’t insulated well.
d. It’s indicative of insect activity.
839) Which one of the following is a common chimney or fireplace problem?
a. Creosote
b. Damage around the fascia
c. Holes in the soffit
d. None of these
840) Your buyers step outside to view the backyard of a property they’re touring, but then they can’t get the back door closed again. You recognize that this could be a symptom of ____, and realize that if they are interested in this property, they will want to discuss this issue with a home inspector.
a. A foundation problem
b. An HVAC problem
c. Constant freezing and thawing
d. Poor general maintenance on the home
841) Which one of the following scenarios describes an adverse condition that would need to be disclosed?
a. A hailstorm damaged some shingles last year.
b. The county offers a homestead exemption.
c. The furnace is three years old.
d. The school across the street is adding full-day kindergarten next year.
842) The seller disclosure indicates that the central air conditioning unit is 26 years old. Why might this worry Margot’s buyers?
a. Central air conditioning isn’t a sustainable technology.
b. Older units are bigger and more unsightly.
c. The unit may need to be replaced.
d. They were hoping for window air conditioning.
843) Which one of these items around the fireplace could be a clue that there is a problem?
a. Ash and soot in the firebox
b. Cracked or sloping firebox or hearth
c. Hole in the soffit
d. Missing mantle
844) Seth is a licensee representing seller Dora. Which of these items is Seth required to disclose to prospective buyers about the property?
a. Dora doesn’t use the back door because the steps leading to the yard are rotted.
b. Dora keeps sunflowers planted in the back yard because the local birds can eat the seeds.
c. The neighborhood kids like to ride their bikes in Dora’s driveway.
d. The pink geraniums in the window boxes are fake.
845) Regarding information that licensees must disclose, what does the pneumonic MAAP stand for?
a. Mandated, Ambiguous, Actual, Prohibited
b. Material, Adverse, Actual, Physical
c. Misrepresentation, Attainable, Affiliated, Performance
d. Mobile, Artificial, Absolute, Protected
846) Assuming licensee Shannon has actual knowledge of all of the following property issues, which of these issues should she disclose to prospective buyers?
a. The nearby school system is one of the worst in the area.
b. The neighbors like to throw a lot of parties.
c. The tree in the front yard is at least 50 years old.
d. The upstairs bathroom has a leaky toilet.
847) ______ around pipes, vents, or other protrusions is a prime spot for roof damage or water leaks.
a. Fascia
b. Flashing
c. Gutters
d. Soffit
848) Wendell just listed Barb’s home. Barb told him that there weren’t any easements on the property, and Wendell hasn’t seen a copy of the survey. What is Wendell’s responsibility relative to the disclosure of any easements?
a. He only needs to disclose easements if they’re known.
b. He should commission a survey if an existing one can’t be found.
c. He should do a title search to confirm any easements.
d. He should require his seller to do online research in the county records database.
849) Inconsistent temperatures from room to room is a common indication of a problem with what system or home feature?
a. Electrical
b. Foundation
c. Heating and cooling
d. Roofing
850) Three days ago, there was a severe thunderstorm in Shirley’s town. Today, there’s still a large puddle of water on her property, but it doesn’t appear the neighboring properties have any puddles. This could indicate a(n) ______ problem.
a. Drainage
b. Easement
c. Encroachment
d. Foundation
851) Why would a buyer want to know if any easements or encroachments exist on a property?
a. Both easements and encroachments affect the property’s lot size, enjoyment, and use, which can affect a property’s value.
b. Both easements and encroachments are illegal. The buyer could end up in court.
c. The buyer may need this information to provide evidence for litigation.
d. The buyer will have to remove these before the property can be re-sold.
852) Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor’s property. What will an inspector document as existing on the neighboring property?
a. Easement
b. Eminent domain
c. Encroachment
d. Necessity
853) What information about a property is the licensee required to disclose to potential buyers?
a. Any known or assumed information about a property
b. Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property
c. Only information that the seller wants the licensee to share with prospective buyers
d. Only information that would make the property sell more quickly
854) Which of the following scenarios describes information that a licensee must disclose?
a. The licensee heard a rumor that the city may buy houses on the street next year to build a freeway ramp.
b. The licensee learned that the property had a tax reassessment last year.
c. There are community-wide rumors that the property in question is haunted.
d. The seller didn’t disclose any leaks, but the licensee sees moisture on the basement floor.
855) Basement wall cracks and leaks can be indicators of ______ problems.
a. Chimney/fireplace
b. Foundation
c. Roof
d. Window
856) Which of the following can indicate issues with heating and cooling?
a. A furnace or air conditioning unit that does not kick on when the temperature is adjusted
b. Consistent temperatures throughout the home
c. Moisture in the basement
d. Windows that won’t open or close
857) Which of the following could be a sign of a plumbing problem?
a. Copper pipes
b. Cracks in the basement wall
c. Low water pressure
d. Rotting around the soffit
858) Which type of pest may make mud tubes—tunnels that run along the walls—or shed tiny wings?
a. Carpenter ants
b. Fire ants
c. Powder post beetles
d. Termites
859) What does the MAAP method help licensees determine?
a. What their gross commission will be
b. When to report another licensee for an ethics violation
c. Whether a fair housing violation has occurred
d. Which property facts they need to disclose
860) Which of the following is an example of an easement?
a. A path providing neighborhood access to a pond cuts through part of Hillary’s property.
b. Michael installed a basketball hoop next to his driveway, six inches outside his property.
c. The city seized a formerly private parcel of land for public use.
d. The state took ownership of Don’s property when no heirs could be located following his death.
861) Discoloration along walls and sagging or uneven floors can be signs of ______.
a. Electrical issues
b. Fire damage
c. Flood damage
d. Wind damage
862) A sloping hearth is a common ______ issue.
a. Chimney/fireplace
b. Foundation
c. Roof
d. Window
863) Missing, cracked, or displaced roof shingles can indicate ______ damage.
a. Electrical
b. Fire
c. Water
d. Wind
864) You’re showing a house when you notice piles of what looks like sawdust outside near the basement windows. This may be evidence of which pest?
a. Carpenter ants
b. Fire ants
c. Ladybugs
d. Powder post beetles
865) Paul and Blake are touring an open house when they notice that the glass on the sliding patio door is very foggy. Is this a concern, and if so, why?
866) No, this is not a concern, as it only indicates poor cleaning habits.
867) No, this is not a concern as it’s common in cold climates.
868) Yes, this could be a sign of fire damage.
869) Yes, this is a sign of a leaky seal which reduces efficiency.
870) Foggy windows indicate broken seals on dual pane windows, which allow moisture to build up between the panes. This reduces efficiency, which means energy bills may go up.
871) Question 2
872) Janine, a professional home inspector, notices a lot of small holes burrowed into a home’s attic beams. This could indicate the presence of which pest?
873) Fire ants
874) Slugs
875) Wood-boring beetles
876) Wood wasps
877) Buyer Peter is eager to make an offer on the two-story home you just showed him, but you’re concerned about the back bedroom, since it looks like a relatively recent addition. When Peter asks you why it’s an issue, how do you respond?
a. It doesn’t fit aesthetically with the rest of the house.
b. The extra bedroom is inconsistent with the rest of the neighborhood, reducing its value.
c. You’re certain it’s not built to code, so Peter shouldn’t make an offer on the property.
d. You recommend that Peter check on the permits for it, so that he doesn’t buy the house and then have to correct or even remove the addition because it wasn’t built to code.
878) Why are galvanized pipes a problem in older homes?
a. They are not a problem.
b. They are out of date and can lead to a variety of electrical problems.
c. They can rust and cause leaks and low water pressure.
d. They indicate the heating and cooling system(s) are outdated.
879) While showing your buyers through a home, you flipped on the light in the powder room and were concerned because the light switch felt warm. Why is this a concern?
a. Warm light switches might mean the house doesn’t cool well.
b. Warm light switches might mean the house doesn’t heat well.
c. Warm light switches might mean there is an electrical problem.
d. Warm light switches might mean there is a structural problem.
880) Water buildup, ice damming, and a fascia damaged by moisture are common ______ issues.
a. Chimney
b. Foundation
c. Roof
d. Window
881) Which one of the following could indicate a problem with the chimney flue or ventilation?
a. Damage around the fascia
b. Doors that won’t open
c. Drafts near the fireplace
d. Holes in the soffit
882) Mike relocated for work and learned that the region in which he planned to buy a home had many old underground mines. In fact, Mike might even need to purchase mine subsidence insurance. What might a home inspector flag for Mike if there are any concerns about undermining?
a. A sinkhole on the property
b. Lack of birds and other wildlife
c. Stagnant pond water
d. Trees and shrubs that don’t seem to grow
883) Which of the following statements about material facts is true?
a. All material facts are related to physical conditions.
b. All parties considering a property would regard each material fact in the same way.
c. A material fact may have more or less effect on a buyer based on the buyer’s needs and values.
d. Material facts are only those that can be easily seen or discovered.
884) Which one of the following is a common problem with roof shingles?
a. Clean fascia
b. Discoloration or curling
c. Soffit without holes
d. Water buildup and ice damming
885) What can water damage on a ceiling or wall indicate?
a. Air flow issues
b. Electrical issues
c. Foundation issues
d. Plumbing issues
886) Why is it important for buyers to ask when a chimney or fireplace was last inspected?
a. It could reveal important information about the unit’s maintenance and functionality.
b. It’s not important for buyers to ask this.
c. The buyer will then know if they need to have the chimney cleaned soon after they purchase the property.
d. This gives the buyer an idea of when it may need to be replaced.
887) What did the NAR survey results indicate about selling property that carried a stigma of being haunted?
a. Most buyers would consider a haunted house if the price were slashed by more than 50%.
b. Most buyers would expect to pay more than market value for a haunted house
c. Ninety percent of buyers would walk away from a purchase if told that the house could be haunted
d. Over half of potential buyers would consider buying a haunted house
888) Frank’s youngest daughter recently died of AIDS. He and his wife are selling the home where she lived her last few weeks, and where she died. Which of the following is true?
a. The death must be disclosed to potential buyers because it happened fewer than three years ago.
b. The death must not be disclosed, even if asked directly, because it was caused by AIDS.
c. The death on the property must be disclosed, but the cause of death cannot be disclosed unless a buyer asks directly.
d. The death on the property should be disclosed, as should the cause of death, as this creates a stigmatized property.
889) Brenda is working with the seller of a property that is a little run down, but has lots of potential. The seller is a widow who has decided to move. Her husband died in the home seven months ago of natural causes. Does Brenda need to advise her client that this fact should be disclosed?
a. No, because it happened more than six months ago
b. No, Brenda should tell her client not to tell prospective buyers about the death, even if asked
c. Yes, a death on a property must always be disclosed, no matter when or how it happened
d. Yes, because it happened fewer than three years ago
890) A property on the market was the site of a double murder. The surviving owner moved out and put the home up for sale. The event happened more than one year ago. How does this affect the property?
a. The murders are confidential information, and the listing agent should not discuss the event with potential buyers.
b. The murders make the property famous and the listing price should be set slightly over market value.
c. The murders may create a stigma on the property, and must be disclosed.
d. The murders need not be disclosed because they happened more than one year ago; they should not have any effect on the sale of the property.
891) Stacy is selling her home in a nice neighborhood. She no longer wants to live there because a gruesome murder occurred next door. Would Stacy need to disclose that this is why she is selling?
a. No, but she should disclose that the neighbors were the victims of a violent crime.
b. No, she is not required to disclose a death that didn’t occur on her property.
c. Yes, murder must always be disclosed, even if it’s not on the property itself.
d. Yes, the murder next door stigmatizes her property and she must disclose.
892) Which of the following is true about a Mello-Roos tax?
a. It appears on a homeowner’s utility bill.
b. It usually applies for no more than three years.
c. Payment is voluntary.
d. The assessment may be $25 to $300 per month.
893) When selling a property within one mile of _________, sellers must include relevant disclosures.
a. A bar or liquor store
b. A former military training ground
c. A meth lab
d. A red light district
894) Why is it considered a good idea to disclose the facts regarding a stigmatized property?
a. Because it will increase the value
b. To avoid liability if a buyer finds out later and considers it a problem
c. To develop buyer interest in the property
d. To develop your reputation as an agent who can move challenged properties
895) A Mello-Roos district is ____________.
a. A defined area subject to a special tax that is used to develop or support infrastructure for the community
b. A defined community subject to special restrictions on property taxes
c. An area subject to homeowners association fees
d. A term for a subdivision built in the 1980s
896) Which of the following events would stigmatize a property?
a. Former residence of a celebrity
b. Located near a former hazardous waste facility
c. More than three sales within the last year
d. Site of a notorious murder
897) A _____________ is a defined area subject to a special tax that is used to develop or support infrastructure for the area.
a. Community-Funded Mello-Roos Area
b. Mello-Roos Community Facilities District
c. Mello-Roos Community Tax Area
d. Mello-Roos Infrastructure Funding Area
898) Tom is acting as the listing agent for a property that has had a bit of a troubled past. Neighbors tell him gleefully that it’s famous for being haunted. He feels that buyers don’t need to know this, since he doesn’t believe in ghosts. Which of the following is true?
a. Although Tom is not required to disclose this, he should do so if asked directly.
b. Tom is not required to disclose the rumor that the house is haunted unless he experiences a “haunting” himself.
c. Tom should disclose the possibility that the home is haunted.
d. Tom should not disclose the “haunting,” but should warn potential buyers of the possibility that the neighbors may be crazy.
899) When Lori and Nick sold their home, they were required to inform potential buyers that the property was part of a Mello-Roos district. Why?
a. New homeowners must know to comply with Mello-Roos rules regarding house color and landscaping.
b. The new owners would be required to hold membership in a club in order to live in the community.
c. The new owners would be subject to a property tax that is not readily discoverable.
d. The stigma attached to a Mello-Roos neighborhood requires disclosure.
900) The Notice of Airport disclosure is required because _____________.
a. Buyers may want to rent an airplane hangar if the airport is nearby
b. Many commuters appreciate living near an airport
c. Noise and vibrations from airplanes can be disturbing to those living under or near the flight paths
d. The airport may need to expand in the future, requiring homes to be demolished
901) Jan and Ken are purchasing a home on the edge of a suburban development. They chose the area because it was very near a more rural area, so they found it funny when the seller provided a _____________, as if they would not have already noticed the cows in a nearby pasture.
a. Notice of Airport in Vicinity
b. Notice of Hazardous Gas
c. Notice of Mining Operation
d. Notice of Right to Farm
902) You have listed a property for Jim and Alice, a couple who loves DIY projects. Does the TDS provide a place for sellers such as these to disclose non-permitted work they have done on the property?
a. No, but their agent should note it on the AVID form.
b. No, there is no requirement that unpermitted work be disclosed
c. Yes, but they will need to use the TDS Supplementary Disclosures form.
d. Yes, they can record such issues in the seller’s information section of the TDS
903) Sellers Matt and Kyle are fed up with their obnoxious neighbor, who insists on doing home construction work with power tools late at night, and having loud arguments with his family during the day. Does the TDS require them to disclose this type of nuisance?
a. No, but this issue can be added as a Supplemental Disclosure
b. No, there is no requirement that nuisance neighbors be disclosed
c. Yes, but only if a complaint has been made to the police so that an official report can be attached
d. Yes, they can record such issues in the seller’s information section of the TDS
904) Della wants to help her seller client properly meet her obligations for disclosure, so she asks the client to complete the ______________ prior to filling out the TDS.
a. Agent Visual Inspection Disclosure
b. Property Condition Review
c. Seller Property Questionnaire
d. Seller Visual Inspection Disclosure
905) Material facts that are required for disclosure can be captured on the _______ in addition to, but not as a substitute for, the Transfer Disclosure Statement.
a. Property Condition Review
b. Seller Property Questionnaire
c. Seller Visual Inspection Disclosure
d. Supplemental Transfer Disclosure Form
906) What is the name of the standard form that allows sellers of residential property to provide buyers with disclosures required by statute?
a. The Agent Visual Inspection Disclosure
b. The Real Estate Transfer Disclosure Statement
c. The Required Property Disclosure Form
d. The Seller Property Questionnaire
907) Transactions involving which of the following properties require a Real Estate Transfer Disclosure Statement?
a. Five-unit apartment building
b. Hospital
c. Manufactured home
d. Retail store
908) During your visual inspection of a property that you are listing for sale, you notice some termite damage on two of the doorsills. How should you report this issue?
a. Call the buyer’s agent and describe it.
b. Document the issue on the AVID form and attach it to the TDS.
c. Notify the home inspector, should the buyer employ one.
d. On the Termite and Pest Disclosure form provided by C.A.R.
909) What’s true about completing the Transfer Disclosure Statement (TDS) for residential property in California?
a. Only the seller may complete the Seller’s Information section.
b. The escrow agent must verify the information provided in the Seller’s Information section.
c. The seller’s agent uses the Seller’s Property Questionnaire to transfer information to the Seller’s Information section.
d. The Seller’s Information section should be completed by a qualified professional, such as a home inspector.
910) One of the listing agent’s primary responsibilities regarding the TDS is to ___________.
a. Complete the seller information section
b. Educate buyers of their option to waive receipt of the TDS
c. Ensure that buyers do not see it prior to closing
d. Ensure that the form is completed thoroughly by the proper parties and that all issues are fully disclosed
911) Your client, a seller in a residential transaction, is completing the seller’s information sections of the TDS. He has marked some “yes” responses in Section C, and needs to explain the issues, but complains to you that there is not enough space on the form. What do you tell your client?
a. Attach additional sheets to the form
b. Don’t bother with that, because it’s not required
c. Provide the client with the TDS – Expanded version of the form
d. Write smaller and abbreviate
912) Dylan is working as a buyer’s licensee for Sophia. When Sophia wonders about the condition of the HVAC system in the older home she is considering, what is the best advice Dylan can give her?
a. If she is concerned about it, she should not offer for an older property.
b. It is probably in fine shape.
c. It probably does need to be replaced.
d. The seller is required to disclose any known issues with systems such as the HVAC.
913) Which party or parties in a residential transaction must sign the Real Estate Transfer Disclosure Statement?
a. Buyer and buyer’s agent
b. Seller and buyer
c. Seller and seller’s agent
d. Seller, buyer, seller’s agent, buyer’s agent
914) Della has a new listing for a duplex. To fulfill her obligations as the seller’s agent, she performs her diligent and reasonably competent inspection of the property, using the _________ to record her observations.
a. Agent Visual Inspection Disclosure
b. Property Condition Review
c. Seller Property Questionnaire
d. Seller Visual Inspection Disclosure
915) One of the listing agent’s main responsibilities regarding the TDS is to ______________.
a. Complete the seller’s information section
b. Educate buyers of their option to waive receipt of the TDS
c. Educate the seller regarding the legal responsibility to complete it properly
d. Ensure that buyers do not see it prior to closing
916) When Tara is working with a client to sell his mountain cabin, she asks the client to complete the Seller Property Questionnaire and the TDS. The seller says, “But we haven’t received any offers yet.” What can Tara tell him about the timing required for providing the TDS?
a. The TDS is required to be submitted when the property is listed.
b. The TDS is required to complete the agency agreement, and must be completed as soon as possible.
c. The TDS must be available to prospective buyers at least 10 days prior to the acceptance of any offer.
d. The TDS should be submitted as soon as is practicable.
917) Your clients have made an offer to purchase on a beautiful home that is in a perfect location for their family. The offer is accepted. A week later, the seller’s agent finally provides the TDS and other required disclosures. To everyone’s dismay, the disclosures show that there are some serious issues that were not apparent in your visual inspection. What can your buyers do?
a. Buyers have seven days after delivery of the TDS to rescind the purchase agreement.
b. Buyers have three days after delivery of the TDS to rescind the purchase agreement.
c. They can back out of the contract, but will have to give up their earnest money.
d. They must continue with the purchase, but they can sue the seller for breach of contract.
918) Licensee Carla has been representing sellers Marie and Harvey for three months, and they’ve finally accepted an offer on their home. The buyers’ agent contacts Carla the next day and asks for the Natural Hazards Disclosure statement. Carla is sure she already gave the buyers this form, along with other disclosures, the first time she showed the property to them. She can give them a new copy now, but why does this matter?
a. Carla could get reprimanded by the DRE for her failure to provide the disclosure in the proper timeframe.
b. Carla’s oversight in providing her client with the utmost skill and care could cost her the commission on the sale.
c. The buyers have a right to rescind the offer without penalty if the disclosure is received after their offer is made rather than before.
d. The information on the NHD is only good for 30 days, so the seller will have to pay to have a new NHD created by the disclosure company.
919) The Residential Earthquake Hazards Report must be provided to prospective buyers in residential transactions involving homes built before __________.
a. 1900
b. 1945
c. 1960
d. 1978
920) The booklet Residential Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants provides information about which of these hazards?
a. Hazards to the environment created by typical household products
b. Natural hazards that can have a negative effect on property condition
c. Potential health risks of a variety of environmental hazards
d. The erosive effects of weather on home-building materials
921) Many supplementary statutory disclosures will be included in the ____________ when provided by a third-party company.
a. Agent Visual Inspection Disclosure
b. Natural Hazards Disclosure statement
c. Real Estate Transfer Disclosure Statement
d. Seller Property Questionnaire
922) Data regarding Mello-Roos fees disclosed to a prospective buyer should include the amount of the fees as well as _______.
a. Requirements for waiving the fee
b. The assessment’s purpose
c. The history of the Mello-Roos district
d. The text of the Mello-Roos Community Facilities Act
923) You’re explaining the use of the Natural Hazard Disclosure statement to your seller client. You describe the natural hazard zones it covers. Which of these is NOT one of the natural hazard zones included in the disclosure?
a. Flood hazard zone
b. High fire hazard area
c. Seismic hazard zone
d. Severe weather area
924) Ted is selling his home near a golf course. His agent provides a prospective buyer with the booklet Residential Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants. Ted happens to know that pesticides used on the golf course can sometimes drift into his open windows if the wind is right, causing his whole family to have trouble breathing. Does he need to disclose this?
a. No, but Ted should have a word with the managers of the golf course
b. No, providing the booklet absolves him of a responsibility to disclose specific hazards
c. No, this issue is not a problem if the windows are closed
d. Yes, Ted and his agent need to disclose specific environmental hazards
925) The Natural Hazard Disclosure statement is used for _____________.
a. All residential transactions, regardless of type of transfer
b. Residential transactions in rural areas only
c. Residential transactions that also require the TDS
d. Residential transactions that do not use the TDS
926) Which of these statements about the Natural Hazard Disclosure is NOT true?
a. Buyers of residential properties must receive the NHD statement no later than seven days after offer acceptance.
b. Sellers can pay a natural hazard disclosure company to provide the completed disclosure.
c. Sellers may complete the form themselves using publicly available information.
d. The disclosures regarding location of the property within any of six natural hazard zones are required only for residential properties of one to four units.
927) Sellers, landlords, and real estate agents are required to include a ______ in the contract or lease if the real estate was built prior to 1978.
a. Denial of responsibility for lead-based hazards
b. Lead abatement discount
c. Lead warning statement
d. Notice of local lead renovators
928) Where is the Residential Earthquake Hazards Report found?
a. In the Homeowner’s Guide to Earthquake Safety
b. In the Natural Hazards Disclosure Statement
c. In the Real Estate Transfer Disclosure Form
d. In the Residential Environmental Hazards booklet
929) Jerry is purchasing a condo in a Mello-Roos district. As his agent, where can you advise him to look for information about Mello-Roos taxes assessed on the property?
a. In the AVID
b. In the MRD
c. In the NHD
d. In the TDS
930) How many days are sellers required to give buyers to conduct a risk assessment for lead-based paint or lead-based paint hazards?
a. 10
b. 21
c. 30
d. Three
931) A seller may obtain required disclosure information about Mello-Roos fees from _____________.
a. A title search
b. The assessing agency
c. The loan provider
d. The property tax statement
932) The EPA-approved pamphlet, “Protect Your Family From Lead in Your Home,” provides buyers and renters with ______.
a. A list of health centers that can treat the effects of lead toxicity
b. A list of homes that have been confirmed as containing lead-based paint
c. Information about identifying and controlling lead-based paint hazards
d. Information about the presence of lead in heating and cooling systems
933) Federal law requires disclosures about what potential hazard in residential properties built prior to 1978?
a. Arsenic
b. Asbestos
c. Lead
d. Radiation
934) What’s true about the Natural Hazard Disclosure statement?
a. Buyers must receive the NHD within seven days after offer acceptance, but it can be provided to prospective buyers at the first opportunity.
b. It’s not required unless the buyer requests it.
c. It’s required only if the property is located in one of six natural hazard zones.
d. Sellers must provide the NHD to the buyer at least three days before closing unless the buyer waives the right to the disclosure.
935) The _____________ is a good resource for determining if certain disclosures are required for a specific transaction.
a. California Civil Code
b. California DRE Publications
c. C.A.R. Sales Disclosure Chart
d. State Attorney General’s Office
936) The appraisal finally came in and it’s lower than the sales price the parties have contracted; an appraisal contingency was in place, but the lender failed to meet the appraisal deadline. What happens now?
a. The buyer’s earnest money is at risk.
b. The buyer will be sued for default.
c. The seller can sue for breach of contract.
d. The seller must reduce the sales price to the appraised value.
937) Which of these statements about inclusions and exclusions is true?
a. Buyers may use this section to specify which items they want the seller to upgrade.
b. Exclusions that are not listed in the MLS cannot be excluded in the sales contract.
c. Sellers may use this section to indicate personal property that is included in the sale.
d. Televisions that are fixed to the wall are typically considered to be real property.
938) You’re helping prepare a sales contract for buyer clients. When is it acceptable for you to provide your clients with legal advice?
a. Never
b. When explaining how to take title
c. When the clients ask directly
d. When your broker is unavailable (as long as you verify the information afterward)
939) Which of these scenarios could lead to a breach of contract lawsuit over the sale of a tenant-occupied property?
a. The buyer agrees that the tenant will remain in possession, then gives 90 days’ notice to a month-to-month tenant after closing.
b. The rent in the existing lease agreement does not cover the cost of the buyer’s new mortgage payment.
c. The seller agrees that the premises will be vacated by closing, then never gives the tenant notice.
d. The seller indicates that the tenant will remain in possession, and the tenant does remain.
940) Alexandra is helping her clients, the Kents, fill out the Offer section of a purchase agreement. What amount will they put in this space?
a. The difference between the down payment and loan amounts
b. The Kents’ purchase offer
c. The seller’s listing price
d. The seller’s listing price minus the down payment and loan amounts
941) Daisy is a buyer who made an offer for an older house on three acres. Daisy reviewed the seller disclosures and ordered a professional home inspection. Based on the results of the inspection, which showed a number of latent defects that made Daisy uncomfortable, she decided to exercise her contractual right to cancel the agreement. What’s NOT true about this situation?
a. Daisy is entitled to receive her earnest money back as long as she’s formally canceled the purchase agreement within the time period specified in the contract contingency.
b. Daisy is obligated to give the seller a copy of the inspection report at no cost.
c. If Daisy hadn’t decided to cancel the agreement, she could have exercised her contractual right to request the seller make repairs to the property based on the inspection reports.
d. The seller is obligated to repair the defects identified in the inspection report before accepting any other offer.
942) Don and Becky realized too late that the contract they signed for the sale of their home didn’t include any language about a rent-back if the home they’re building isn’t ready in time. What can their listing agent do?
a. Create a contract addendum with the required language.
b. Create a contract amendment with the required language.
c. Create a counter-offer to present to the buyers.
d. Terminate the contract on Becky and Don’s behalf.
943) Marco is anxious to buy a home and is willing to waive the inspection contingency. Do you still need to provide him with a Buyer’s Inspection Advisory?
a. No, because the form is only used for short sales.
b. No, because to do so would constitute disobeying your client’s wishes.
c. Yes, because Marco should still be advised of the reasons inspections are needed.
d. Yes, because the Buyer’s Inspection Advisory is a prerequisite for waiving the inspection contingency.
944) In the Inclusions and Exclusions section of the sample purchase agreement you reviewed, the parties can indicate additional items that seller will leave, as well as ________________________.
a. Items for which the buyer must pay a premium.
b. Items the seller will lease to the buyer.
c. Items the seller will remove that would normally stay.
d. Items the seller will upgrade prior to closing.
945) Marco needs to sell his property before he can afford to buy new property. What addendum must be included with his offer on a house?
a. Back-up contingency
b. Funds Pending contingency
c. Sale of Buyer’s Property contingency
d. Short Sale addendum
946) In the sample sales contract you reviewed, the cost of title insurance was allocated to the buyer or the seller in which subsection?
a. Escrow and Title
b. Government Requirements and Retrofit
c. Inspections, Reports, and Certificates
d. Other Costs
947) How soon after closing must buyers take possession of the property?
a. On the day of closing
b. The timing is not stipulated
c. Within 30 days, unless otherwise specified
d. Within three days after closing
948) What’s the purpose of a sales contract?
a. To document the agreement between a buyer and seller in a real estate sales transaction
b. To notify the public that an offer has been made on a specific property
c. To serve as an agreement between the seller and the licensee that the seller intends to sell the house
d. To verify that the seller has the legal right to sell the property
949) You’re a new licensee who’s thrilled to be working with five different buyer clients. Under what circumstances is it appropriate for you to determine the earnest money amount for your clients?
a. If the buyer is a first-time buyer
b. If the buyer is buying a second home
c. If the buyer seems confused
d. In none of these circumstances
950) Shannon doesn’t understand why her agent wants her to add a contingency to her purchase offer. Her agent, Scott, explains that the property is in a transitional neighborhood, and it might be overpriced. What type of contingency is Scott recommending?
a. Appraisal
b. Financing
c. Home sale
d. Inspection
951) While explaining the property condition section, Amy tells her client that the seller can’t tear down walls before closing because the agreement is to sell the property ________________________.
a. At current value
b. In its current condition
c. With material defects
d. Without improvements
952) You’re working with a buyer who wants the seller to pay the costs to install smoke alarms, which are required by law. In the sample sales contract you reviewed, which of these subsections would be used to identify that request for the seller?
a. Escrow and Title
b. Government Requirements and Retrofit
c. Inspections, Reports, and Certificates
d. Other Costs
953) Annie helped her client Richard complete the ______, which documents Richard’s purchase offer to the seller for the property he is interested in buying.
a. Buyer representation agreement
b. Listing agreement
c. Promissory note
d. Purchase agreement
954) Other names for the ______ are offer to purchase, sales agreement, contract of purchase and sale, purchase agreement, and earnest money agreement.
a. Agency agreement
b. Brokerage relationship disclosure form
c. Promissory note
d. Sales contract
955) Which section of the sample purchase agreement you reviewed lists required agency disclosures?
a. Agency section
b. Finance Terms section
c. Offer section
d. Purchase Price section
956) Calli is a buyer who just learned that the price she offered on a house was $10,000 more than it actually appraised for. Calli doesn’t want to pay more than the house is worth, and the seller won’t budge on price. What is Calli’s best option?
a. She can back out due to the appraisal contingency.
b. She can reduce the amount of her down payment by $10,000.
c. She can take out a second loan for $10,000.
d. She can terminate, but she will lose her earnest money.
957) Offer to purchase, sales agreement, contract of purchase and sale, and purchase agreement are other names for which of the following?
a. Buyer representation agreement
b. Listing agreement
c. Promissory note
d. Sales contract
958) Which of these statements about closing and possession is true?
a. Buyers and sellers may agree to transfer possession prior to closing, at closing, or after closing.
b. It is unlawful for a seller to transfer property to the buyer prior to closing.
c. Sellers must transfer possession to buyers at the same time as closing.
d. Tenants must be evicted prior to transfer of possession.
959) Which section of the sample purchase agreement you reviewed explains how and when the balance of the buyer’s down payment is to be made?
a. Finance Terms section
b. Financing section
c. Purchase Price section
d. Settlement section
960) Which of these disclosure requirements is a real requirement found in the C.A.R. Residential Purchase Agreement?
a. Buyers may waive the right to statutory and lead disclosures.
b. Sellers must disclose if the property is located in a very high fire hazard zone or state fire responsibility area.
c. Sellers must provide the buyer with information about registered sex offenders in the area.
d. Sellers of property with HOA fees must provide records of fee payments.
961) In the buyer’s investigation of property section of the sample sales contract you reviewed, the ___________ is obligated to cover the cost of any damages caused by inspection.
a. Broker
b. Buyer
c. Home inspector
d. Seller
962) Which one of the following statements is true about a sales contract that’s been signed by both parties, and both parties have been notified of its acceptance?
a. It can also be called the consumer notice.
b. It consists of two pages: a brief description of the agreement and a signature page.
c. It’s a legally binding contract.
d. It’s the document buyers and their agents use to enter into a business relationship.
963) Lena’s buyer client Mindy is making an offer on Joe’s house. Which party decides how much earnest money to offer?
a. Joe
b. Joe’s agent
c. Lena
d. Mindy
964) What is a contingency?
a. A condition
b. A deadline
c. A promise
d. A warranty
965) Which of these subsections found in the allocation of costs section identifies who will pay for a natural hazard zone disclosure report?
a. Escrow and Title
b. Government Requirements and Retrofit
c. Inspections, Reports, and Certificates
d. Other Costs
966) Which of these statements is true?
a. Buyers who need to sell their property before purchasing a new one should make the offer contingent on that sale.
b. It is highly unusual for buyers to make offers contingent on the sale of their property.
c. There is no buyer’s sale contingency in California.
d. The Sale of Buyer’s Property contingency form is a required addendum to all sales contracts.
967) Which one of the following is used to document a buyer’s offer to a seller?
a. Listing agreement
b. MLS listing
c. Promissory note
d. Sales contract
968) Kirby, a buyer, offers to allow the seller to remain for three days after closing. How might this be accounted for in the sample purchase agreement you reviewed?
a. In a separate rental agreement
b. In the Inclusions and Exclusions section
c. In the Possession section
d. In the Sale and Leaseback section
969) In the sample purchase agreement you reviewed, where is allocation of transfer fees communicated?
a. Escrow and Title
b. Government Requirements and Retrofit
c. Inspections, Reports, and Certificates
d. Other Costs
970) Which of the following is synonymous with a sales contract?
a. MLS listing
b. Mortgage
c. Offer to purchase
d. Promissory note
971) Amy is about to complete her very first sales contract. What should she do to prepare?
a. Grab waters for herself and her clients.
b. Have a drink. It’s time to celebrate!
c. Nothing. The sales contract will write itself.
d. Review the contract and make sure she understands what each section means.
972) Which of these buyer and seller advisories is so unusual that it would need to be written into most residential purchase agreements as an “other” term?
a. Buyer’s Inspection advisory
b. Haunted House advisory
c. REO advisory
d. Short Sale advisory
973) By agreeing to the property condition section of the purchase agreement you reviewed, the seller is agreeing to sell the property in its current condition and remove _______________________.
a. Debris and personal property
b. Fixtures
c. Improvements
d. Material defects
974) In what section of the sample purchase agreement you reviewed does the buyer agree to pay for damages caused by the buyer’s home inspector?
a. Buyer’s Investigation of Property
b. Damages Not Waived
c. Seller Damage Contingency
d. Seller’s Notice to Buyer
975) Whose responsibility is it to understand the ins and outs of the sales contracts?
a. Brokers
b. Buyer agents
c. Real estate professionals and their clients
d. Seller agents
976) According to the property condition section of the sample purchase agreement provided, the property is being sold _________, or in its current condition, unless the parties agree otherwise in writing.
a. As-is
b. By default
c. Under warranty
d. With material defects
977) What type of agreement accounts for commission to be paid and includes the seller’s permission for marketing the property?
a. The buyer’s agency agreement
b. The listing agreement
c. The sales agreement
d. The seller’s agency agreement
978) Your seller, Steven, has agreed to make certain repairs. Besides performing the repairs, what else must he do?
a. Post a bond for $1,000 with escrow to cover any defective workmanship
b. Provide a warranty for the repairs completed
c. Provide the buyer with copies of invoices and receipts
d. Use a contractor specified by the buyer
979) Your client, Mindy, had to put another $15,000 down on a house she’s buying because it didn’t appraise at the sales price and the seller won’t budge. Mindy is furious and blames you. Is she right?
a. No, because agents are not responsible for anything
b. No, because you’re not responsible for setting the sale price
c. Yes, and while it’s not nice of Mindy, this was your responsibility
d. Yes, but only if you provided comparables
980) In the purchase agreement, a party who has legal power of attorney to sign on behalf of another entity is referred to as a __________________.
a. Broker
b. Buyer’s agent
c. Representative agent
d. Representative party
981) A buyer put $10,000 down on a $400,000 purchase price, then defaulted. If the seller obtains maximum liquidated damages, how much will the seller collect?
a. $10,000
b. $12,000
c. $15,000
d. $5,000
982) Wanda is a buyer and waited until the last day of her inspection period to try to schedule an inspector. She then had to ask for an extension of the inspection period, which the seller signed. On what part of the sales contract you reviewed did Wanda fail to deliver?
a. As long as the addendum is signed, she did nothing wrong
b. The inspection period section
c. The liquidated damages section
d. The requirement to not unduly delay
983) Whose written and signed instructions does escrow follow?
a. The listing agent
b. The seller
c. The seller and buyer together
d. The selling agent
984) Which of these statements accurately describes the standard terms for proration of property taxes and other items found in the sample purchase agreement you reviewed?
a. Payments on Mello-Roos are the only property tax item that is exempt from proration.
b. Property taxes and other items are prorated up until closing, and the buyer is responsible for the prorated costs that remain.
c. Supplemental tax bills received by the buyer after transfer of title and possession shall be billed directly to the seller.
d. The seller is obligated to prepay all property taxes in full prior to close of escrow.
985) Your client, Lisa, is buying a home on behalf of her parents, who had been in an assisted care facility but, due to a juicing regimen, have sprung back admirably and are moving to Florida. Lisa is in charge of her parent’s trust and has authority to sign on their behalf. What box must you indicate on the sales contract?
a. “Absentee buyers”
b. “Buyer is signing in a representative capacity”
c. “Health rebound facilitates purchase”
d. “Trust estate”
986) The mediation provision found in the sample purchase agreement you reviewed applies _________________.
a. If both parties initial the section
b. To all parties, even if the provision is not initialed
c. To foreclosures and unlawful detainer actions
d. To the seller only
987) According to the sample purchase agreement you reviewed, a notice to perform may be issued by either party no sooner than two days __________________________.
a. After the applicable deadline
b. After verbal notice
c. Before closing
d. Before the applicable deadline
988) Who retains the right to cancel if the buyer doesn’t respond to a notice to buyer to perform?
a. Both buyer and seller
b. Escrow
c. The buyer
d. The seller
989) If a buyer defaults on the purchase of a $300,000 single dwelling residential property after paying a $40,000 deposit, what is the maximum amount of liquidated damages that may be awarded to the seller?
a. $10,000
b. $12,000
c. $1,500
d. $9,000
990) The ______ is a neutral third party that assembles and processes all of the pieces of a real estate transaction, records the transaction, and disburses and distributes funds according to the parties’ instructions.
a. Escrow holder
b. Personal assistant
c. Transaction agent
d. Transaction broker
991) In the Effect of Cancellation on Deposits subsection of the sample purchase agreement you reviewed, the parties agree that if they exercise their right to cancel the agreement, they will _____________________.
a. Attend mediation to resolve disbursement of escrow funds
b. Forfeit funds held in escrow to the other party
c. Pay $1,000 each to escrow
d. Sign a mutual agreement to release funds from escrow
992) In a friendly phone call, Herbert, a seller, told Max, the buyer, that he would leave behind the swing set in the back yard. Herbert took the swing set with him when he left. What do we know about this situation?
a. Herbert is in breach of contract.
b. Herbert must compensate Max for the cost of the swing set.
c. Herbert must return the swing set
d. The offer is not part of their contract.
993) The _____________ section of the purchase agreement is not for the buyer to fill out. It is where the seller indicates whether the offer is accepted or countered.
a. Acceptance of Offer
b. Accepted or Countered
c. Expiration of Offer
d. Terms and Conditions
994) According to the scope of duty section in the sample purchase agreement you reviewed, it is outside the broker’s scope of duty to _____________________.
a. Compare market values
b. Consult on the price to offer
c. Decide what price to offer
d. Provide a price opinion on a property
995) You’re getting ready to write up an offer for your client, Bill. Before you complete the deadline for seller’s response, what might be a good way to make sure it doesn’t expire before the seller has a chance to sign it?
a. Call the seller’s agent to find out if the client will be in town to sign it.
b. Write it for plenty of time, such as a month or longer.
c. Write “offer does not expire” in the expiration section.
d. Write two offers: one that expires in two days and one that expires in a week, and send them both to the listing agent.
996) Within how many days following the acceptance must escrow receive a copy of the purchase agreement, according to Section 20 of the sample sales contract you reviewed?
a. One
b. Seven
c. Three
d. Two
997) Julie accepts an offer at 2 p.m. on Wednesday, August 5, and is relieved when the buyer produces verification of the funds for down payment and closing, on the final day of the three days allowed after acceptance. The buyer produced verification of funds on ___________________.
a. Friday, August 7
b. Monday, August 10
c. Saturday, August 8
d. Tuesday, August 11
998) Which of the following statements is true about the amount of liquidated damages a seller may collect?
a. It equals 3% of the sales price plus the earnest money.
b. It is capped at 3% of earnest money.
c. It maxes out at 3% of sales price, but may not exceed the earnest money deposited.
d. It may not exceed 3% of the sales price unless the property is valued at or above $1 million.
999) Which of these sellers’ actions meets the standard terms for final verification of property condition and repairs found in the sample purchase agreement you reviewed? In other words, which seller is following the standard terms of the contract?
a. The seller forgets to repair holes in the wall and places a plant in front of them before the buyer arrives for final verification of property.
b. The seller hires a contractor to repair holes in the wall and informs the buyer that the contractor never provided a receipt.
c. The seller hires a contractor to repair holes in the wall starting the day the buyer is scheduled to verify final condition.
d. The seller repairs holes in the walls and documents that they were completed six days before close.
1000) Marcus puts his initials at the bottom of the Acceptance of Offer section on a purchase agreement and declares it is time to celebrate. Assuming he put his initials on a C.A.R. residential purchase agreement, what did he just do?
a. Confirmed receipt of a buyer’s offer to purchase his property
b. Confirmed receipt of a seller’s acceptance of his offer to buy a house
c. Countered a buyer’s offer to buy his property
d. Rejected a buyer’s offer to purchase his property
1001) Who is responsible for the payment of property taxes after closing?
a. Escrow
b. The buyer
c. The seller
d. The seller and buyer share the responsibility for any property taxes that are billed after closing.
1002) The Time Periods section of the sample purchase agreement you reviewed gives the buyer a deadline for removing the ___________________.
a. Funds from escrow
b. Inspection contingency
c. Notice to perform
d. Title insurance
1003) Charles, an on-record representative for Breck in Breck’s purchase of a house, initials a page on the sales contract. Those initials have the same effect as if _____________.
a. It had been a signature
b. They were Breck’s initials
c. They were notarized
d. They were recorded with the county clerk
1004) Certain expenses of home ownership will be prorated at closing, with the seller paying up through the closing date, and the buyer responsible for ______.
a. All items that are now liens
b. Expenses incurred after close of escrow
c. Sending future supplemental tax bills to the seller
d. The full amount of property taxes from date of offer
1005) In the event of a dispute between the parties, what does the sample sales contract you reviewed have to say about mediation and arbitration?
a. The parties agree to arbitrate, and failing that, to mediate.
b. The parties agree to mediate any disputes and relinquish their right to arbitrate.
c. The parties agree to mediate first, then, failing that, to arbitrate or go to court.
d. The parties agree to submit to binding mediation, rather than going to court.
1006) A buyer defaults on the purchase of an $800,000 single dwelling residential property after paying a $160,000 deposit. What is the maximum amount of liquidated damages that may be awarded to the seller?
a. $24,000
b. $4,800
c. $48,000
d. $80,000
1007) If an offer is accepted at 2 p.m. on Tuesday, August 4, when, according to the sales contract, does a deadline that falls “five days after acceptance” occur?
a. 11:59 p.m., August 10
b. 11:59 p.m., August 11
c. 2 p.m., August 11
d. 2 p.m., August 9
1008) Which of these statements best summarizes the purpose of the Final Verification of Condition section of the sample purchase agreement you reviewed?
a. This section provides a deadline for removal of the final condition contingency.
b. This section provides joint instructions to a neutral third party, who will verify condition of the property.
c. This section states that the buyer has the right to verify the property is being sold in the agreed-upon condition within a specified time period.
d. This section states that the seller has the right to notify the buyer when they are ready for final verification of condition.
1009) If seller repairs are required in a transaction, by when must they be completed?
a. Any time prior to closing, unless agreed otherwise
b. Prior to final verification of condition
c. Prior to settlement
d. Up until 10 days post closing, unless agreed otherwise
1010) You’re working on a deal and escrow did not close. When will you receive commission owed to you?
a. As mutually agreed between the client and broker
b. At the date originally specified for closing
c. Never; if escrow doesn’t close, the agent earns nothing
d. Within 10 days of the original closing date
1011) Jake was afraid there would be competing offers, so he put a very short turn-around time on the expiration of his offer. What will happen if his deadline to respond passes?
a. As long as the seller accepts, it doesn’t matter when the acceptance occurs, provided Jake acknowledges the acceptance.
b. As long as the seller accepts within 48 hours after the deadline and Jake acknowledges the acceptance, the offer can be kept alive.
c. The offer will be null and void.
d. The seller will have to fill out an “additional signature addendum” if accepting past the deadline.
1012) If Barney were awarded $6,000 as the maximum amount of liquidated damages allowed on a residential property after the buyer breached the contract, what was the purchase price?
a. $200,000
b. $400,000
c. $50,000
d. $600,000
1013) Amy’s seller client has received a written notice to perform the delivery of required disclosures. Which of the following can you safely assume is true?
a. It has been two days since the seller was given verbal notice that the deadline passed.
b. The buyer is creating an excuse to back out of the sale.
c. There are fewer than two days remaining to meet the originally agreed-upon deadline.
d. The seller has breached the contract of sale.
1014) Your buyer gave the seller a notice to perform. According to the sample purchase agreement you reviewed, how many days does the seller have to respond?
a. One day
b. Seven days
c. Three days
d. Two days
1015) Which of the following statements about the seller’s acceptance of the buyer’s offer is true?
a. If the seller does not accept the buyer’s offer by the date and time specified in the purchase agreement, the offer is null and void.
b. If the seller does not provide acceptance by the date and time specified in the contract, the offer is assumed to be accepted.
c. Once the seller accepts the buyer’s offer, no changes can be made to the contract.
d. The seller can verbally accept the offer.
1016) If a buyer must deliver notice to the seller no earlier than two days prior to Monday, August 5, when may the notice be delivered?
a. Friday, August 2
b. Saturday, August 3
c. Thursday, August 1
d. Wednesday, July 31
1017) If you know the seller will be out of town when your buyer client wishes to make an offer, you can extend the deadline to accept in the _______________ of Offer section.
a. Deadline
b. Expiration
c. Extension
d. Rescission
1018) According to the sample purchase agreement you reviewed, what must the buyer or seller do before cancelling a sales contract for failure of the other party to close escrow?
a. File an affidavit with the county clerk
b. Have a notarized copy of the sales contract entered into the public record
c. Provide a demand to close escrow
d. Provide a notice to perform
1019) What is the purpose of the preliminary title report?
a. Documents the title’s legal description to be used in the contract
b. Identifies all title issues that cloud the title
c. Offers to issue a title insurance policy
d. Serves as a promise from the seller to the buyer that the property title is clear
1020) Which of the following buildings requires disclosure of an airport in the vicinity?
a. An apartment building
b. A retail facility
c. A warehouse distribution center
d. Personal property mobile homes
1021) The buyer in a transaction has requested a particular closing agent in her offer. What kind of provision would this be considered?
a. Additional provision
b. Contingency
c. Possession
d. Purchase price and earnest money
1022) To which of the following properties does an agency disclosure form apply?
a. A five-plex
b. A five-plex and a four-plex
c. A four-plex
d. An office building
1023) Your buyer, Billy, wants to make an offer on the craftsman house he saw today, but he wants the sellers to start the paperwork for a tax reassessment before closing. This isn’t part of the standard sales contract in your area. What will you use to accomplish this request?
a. Addendum
b. Amendment
c. Annotation
d. Appendix
1024) Contingencies normally include the responsible party’s name, the deadline for the contingency removal, and ______.
a. The actions required for removal
b. The date the contingency was added
c. The reason the contingency was added
d. Three reasons the contingency is required
1025) Your brokerage firm uses pre-printed sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information?
a. Addendum
b. Amendment
c. Annotation
d. Appendix
1026) Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needed to move the closing date to June 15. What document should she use to make this change?
a. Addendum
b. Amendment
c. Annotation
d. Appendix
1027) What is the purpose of the C.A.R. Sales Disclosure Chart?
a. It provides examples of case studies in disclosure law.
b. It’s a checklist for items you must complete when presenting an agency disclosure form to your clients
c. It’s a reference guide for disclosure law.
d. It’s a template for creating your own disclosure forms.
1028) Camille, a buyer, wants to change the price already agreed to in a sales contract. What document should she use?
a. Addendum
b. Amendment
c. Bill of sale
d. New contract
1029) Which of the following agreement terms is typically a standard part of the sales contract?
a. Buyer’s option to purchase a home warranty
b. Selection of a closing agent
c. Specific closing instructions
d. Transfer of warranty on built-in appliances and HVAC systems
1030) If you’re working with a seller client who’s agreed to pay for the cost of a home warranty during negotiations, do you need to add an additional provision to the sales contract?
a. No, because purchase of a home warranty is always part of the sales contract.
b. No, because the cost of a home warranty is irrelevant to the sale.
c. Yes, because home warranties are never included in the sales contract.
d. Yes, unless it’s already included in the contract.
1031) The sales contract between buyer Milton and seller Tom has been signed. Whose responsibility is it to keep track of all of the buyer contingency deadlines?
a. Milton and his agent
b. Milton and Tom
c. Tom
d. Tom and Tom’s agent
1032) When Dashiell received the purchase offer for his bungalow, he was surprised to see a page added to the contract requesting that an attorney review the contract. What is Dashiell looking at?
a. Addendum
b. Amendment
c. Annotation
d. Appendix
1033) The appraisal on Jean’s property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?
a. Addendum
b. Amendment
c. Annotation
d. Appendix
1034) Licensee Gwen and her buyer client Marcus are writing up an offer on Clayton’s property. Gwen will need to use an additional provision in the offer. Which of the following reasons for using an additional provision apply?
a. Clayton is selling the property as is with no repairs.
b. Marcus is afraid that the property won’t appraise.
c. Marcus is requesting that all mechanical system and appliance warranties transfer to him.
d. Marcus is using a VA loan to purchase the property.
1035) Glynnis is ready to close on her new house, but her agent told her that they have to wait for the homeowner to fix the electrical box as agreed. What clause in her contract allowed her to request the repair?
a. Appraisal contingency
b. Financing contingency
c. Home sale contingency
d. Inspection contingency
1036) You’re a broker in California and need an easy reference for disclosure applicability for various properties. Which form would meet your needs?
a. The Option to Disclose
b. The sales contract
c. The Sales Disclosure Chart from C.A.R.
d. The Signatory Addendum
1037) Which of the following statements about the number of contingencies in a sales contract is true?
a. Every sales contract should contain a minimum of three contingencies.
b. The inclusion of numerous contingencies makes it less likely that the buyer’s offer will be accepted.
c. The more contingencies, the better from the seller’s perspective.
d. The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.
1038) Which of the following is true about disclosures in California?
a. Agency disclosure forms should only be provided to clients.
b. Certain transactions are subject to separate disclosure requirements.
c. Only statewide disclosure forms may be used
d. Sales transactions rarely involve disclosures.
1039) Kermit has a single-family home. April has a five-plex. Will the same disclosure forms apply?
a. No, because a five-plex is a commercial, non-residential property
b. No; the agency disclosure form does not apply to the five-plex
c. Yes, because disclosure forms are uniform among property types
d. Yes, because they are both residences
1040) Sanjeev leases a house from Clara, and the lease has an option contract attached that permits Sanjeev to buy the house if he chooses to exercise the option within three years. How large does the option fee need to be in order to be legally binding?
a. 10% of the purchase price
b. 1% of the purchase price
c. Any amount agreed to by the parties
d. At least $1,000
1041) ______ is an offer to purchase a specific piece of real estate that does not obligate the offeror to buy it.
a. A buyer agency contract
b. A listing contract
c. An option contract
d. A sales contract
1042) Ezra’s lease on his condo includes an option to purchase. He told his landlord, Sherm, that he’s ready to purchase the condo, and they’ve negotiated a purchase price and closing date. What kind of contract is this?
a. Bilateral
b. Executed
c. Unilateral
d. Voidable
1043) What is an option?
a. A bilateral agreement
b. An offer to purchase a property, and an acceptance
c. An offer to sell a property, and a willing buyer
d. A unilateral contract
1044) Rose, represented by Sandy, and Tina, represented by Julie, entered into a sales contract for Rose to purchase Tina’s home. Rose intended to ask Tina to repair the water heater, but the inspection deadline came and went. Now Rose has to buy the property as-is. Whose responsibility was is it to keep track of all buyer contingency deadlines?
a. Julie
b. Rose
c. Rose and Sandy
d. Sandy and Julie
1045) Prior to the end of the option period, Dwayne withdraws his offer to sell his property to Melissa. Dwayne is in breach of contract. Melissa still wants the property and will sue for ______.
a. Criminal intent
b. Fraud
c. Monetary damages
d. Specific performance
1046) If there are two parties to an option contract, how many parties have the right to exercise the option?
a. None; it automatically comes into play at the end of the option period
b. One
c. Three: the optioner, the optionee, and the referee
d. Two
1047) Which one of the following elements does a valid option contract contain?
a. A list of the optionee’s financing options
b. An opt-out option for the optionor should the optionor be offered a better deal during the option period
c. A statement by the optionee of why the optionee wants to purchase the land
d. The sales price of the property or the way in which the price will be determined
1048) Andrew and Roberta have signed an agreement that gives Andrew the right to buy Roberta’s condo for $200,000, if he chooses to do so, up until April 2, 2018. What is this agreement called?
a. A bilateral contract
b. A lease
c. An option
d. A purchase and sale agreement
1049) Armand and Cécile recently purchased property from Eggbert. An option contract for the land was sold with the property. A few days after buying the land, Armand and Cécile receive a call from Juliette, the optionee on the option contract. Juliette wants to exercise her option and purchase the property. Which statement about this situation is true?
a. Armand and Cécile are bound to the terms of the option contract and must sell the property to Juliette.
b. Armand and Cécile had no right to purchase the property in the first place because it was under option.
c. Armand and Cécile may legally terminate the contract.
d. Eggbert is still the optionor of the contract and is now in breach of contract.
1050) Gloria has an option to purchase the cottage she leases from her landlord. She can exercise the option within the next two years. To gain that right, Gloria paid the landlord $5,000. This is called ______.
a. A deposit
b. A down payment
c. An option fee
d. Earnest money
1051) Margo is the potential buyer of the property in an option contract. Margo is the ______.
a. Optee
b. Opter
c. Optionee
d. Optionor
1052) Grant owns a property that’s subject to an option contract. Grant is the ______.
a. Optee
b. Opter
c. Optionee
d. Optionor
1053) Which of these statements accurately describes the purpose of a real estate option agreement?
a. Creates the option to buy a property in the future, within a specific time frame and at a particular price
b. Obligates the buyer to enter into a purchase agreement by a specific date
c. Provides a lessee, or renter, with the option to purchase the rented property at any time during the tenancy
d. Used by an investor to open a stock options account with an investment broker
1054) The C.A.R. Option Agreement form is designed to be used as an amendment to which two types of contracts?
a. Amendments and addenda
b. Disclosures and settlement statements
c. Environmental assessments and surveys
d. Leases and purchase agreements
1055) Cynthia loves her apartment and would like to have the option to buy it once her lease is up. Who is the best person to help Cynthia prepare a lease option?
a. A real estate attorney
b. A real estate investor
c. A real estate licensee
d. Her landlord
1056) Hernando, a real estate attorney, is preparing an option contract for his client, Wilma. Hernando asks Wilma what she and the seller have agreed upon for the option period. Wilma said the seller was leaving that up to her, and she wanted to get Hernando’s opinion. What should Hernando put into the contract for the option period?
a. “Indefinite”
b. “N/A”
c. “Negotiable”
d. “Six months”
1057) Which one of the following statements about the option period for a valid option contract is true?
a. If the contract doesn’t state the length of the option period, a court will require the optionor to make the option period for a “reasonable time.”
b. The contract doesn’t have to specify a specific length of time for the option period.
c. The optionee must purchase the property within the option period stated in the contract.
d. The optionor may sell the property to someone else during the option period.
1058) Who can enforce an option contract?
a. Either the optionor or the optionee
b. Only the court
c. Only the optionee
d. Only the optionor
1059) Wallace is beside himself. He spent the last five months raising enough money to purchase the property that he has an option on, and now, a month before the end of his option period, the seller refuses to sell him the property. The seller’s actions are ______.
a. A breach of contract
b. Justified because the option period is nearly at an end
c. Not very nice, but legal
d. Within his rights as the owner of the property
1060) To comply with the statute of frauds, an option contract must be ______.
a. In writing and signed by the optionee
b. In writing and signed by the optionor
c. In writing and witnessed by an attorney
d. On file at the local courthouse
1061) Chevy is an optionee. What’s his sole responsibility?
a. Exercise the option.
b. Make an offer.
c. Make monthly payments.
d. Pay the option fee.
1062) With an option contract, which of the following constitutes a breach of contract?
a. The optionee enters into a sales contract on another property with a different seller.
b. The optionee opts not to purchase the property.
c. The optionor sells a different piece of property to a different optionee.
d. The optionor sells the property without the option contract to someone other than the optionee.
1063) Why does the closing agent review the purchase contract?
a. To check for contract errors
b. To ensure that all contract signatures are in place
c. To ensure that both parties are protected by clauses in the contract
d. To gather closing-related information agreed to in the contract
1064) Who grants title to the property being sold and receives payment?
a. Attorney
b. Broker
c. Buyer
d. Seller
1065) At closing, who pays for and receives clear title for the property being purchased?
a. Attorney
b. Broker
c. Buyer
d. Seller
1066) Whose responsibility is it to determine escrow instructions in California?
a. The buyer and seller
b. The escrow agent
c. The real estate agent for the buyer
d. The real estate agent for the seller
1067) Which option is defined as a neutral third party holding a thing of value on behalf of one party to a transaction for the benefit of the other party?
a. De facto instructions
b. Escrow
c. Interpleader
d. Principal
1068) Who usually represents the lender at a closing?
a. Broker for the buyer
b. Broker for the seller
c. Lender’s attorney
d. Title insurance representative
1069) When does the seller’s broker receive commission?
a. After signing the representation agreement
b. After the buyer puts an offer down on a property
c. At or just after the closing
d. At the final walk-through of a property
1070) At the closing table, who examines all documents for buyers and represents their best interests?
a. Buyer’s attorney
b. Escrow agent
c. Lender’s attorney
d. Title insurance representative
1071) Karen and Vince have provided Ginger with their clear, unambiguous instructions for the sale and transfer of real property. What is another term for this?
a. Creating escrow
b. Real estate contract
c. Sales contract
d. Unilateral agreement
1072) How are closings typically conducted?
a. In person or through escrow
b. Over Skype
c. Over the phone
d. Via email correspondence
1073) Prior to signing the closing documents, what should the parties have already done?
a. Assured themselves that the conditions and contingencies of the purchase agreement have been met.
b. Moved locations.
c. Paid the balance of the purchase price to the seller.
d. Paid the title representative for the closing.
1074) Which option is defined as “the written conditions for delivery of the instruments of an escrow from one party to another”?
a. Escrow
b. Escrow instructions
c. Interpleader
d. Principals
1075) When are the mortgage loan commitment and title insurance contract signed?
a. At the closing
b. The day after closing on the property to ensure proper transfer of title
c. The day prior to closing
d. Weeks prior to closing
1076) Your client just accepted an offer from a buyer for a property in northern California. What information will NOT be provided to the escrow agent as part of the escrow instructions?
a. Buyer’s loan commitment
b. Date of possession
c. Purchase price
d. Title insurance policy number
1077) Who closes on the cooperative brokerage agreement?
a. The agents for the buyer and seller
b. The buyer and the title insurance representative
c. The lender’s attorney and the seller’s agent brokerage
d. The seller and the seller’s agent
1078) Who delivers the evidence of a clear title at the closing?
a. Buyer
b. Lender’s attorney
c. Licensee representing the buyer
d. Title insurance representative
1079) When does the buyer’s agent, attorney, or lender contact the buyer to tell them the exact amount to bring to closing?
a. After receiving title
b. At the closing
c. The day of signing, or just prior to it
d. The week prior to closing
1080) What’s true about an escrow closing?
a. All settlement services are handled by a closing agent.
b. All settlement services are handled by the listing agent.
c. The buyer and seller must be present.
d. The buyer’s and the seller’s attorneys must be present.
1081) What is the requirement for escrow instructions provided by principals to a transaction in California, regardless of the location within the state?
a. The instructions must be clear and unambiguous.
b. The instructions must be issued bilaterally.
c. The instructions must be issued unilaterally.
d. The instructions must be signed by all parties and their agents, if represented.
1082) Which statement is true regarding how a face-to-face closing is conducted?
a. All parties are present and physically meet to sign and exchange documents.
b. It’s conducted by an escrow agent, and only one party is present at a time.
c. It’s conducted by a neutral third party who holds the funds, and the buyer and seller don’t meet.
d. The seller signs her documents separately from the buyer, and the closing is conducted by an escrow agent.
1083) Corinne, an escrow agent, is preparing for the Thomas/Trenton closing in four days. Which of these documents will Corinne prepare?
a. She’ll prepare a seller net sheet to disclose the seller’s net profit on the sale.
b. Working with the lender, she’ll prepare the Loan Estimate, which details the costs the buyer and seller will pay at closing.
c. Working with the lender, she’ll prepare the settlement statement, which details the costs the buyer and seller will have at closing.
d. Working with the title company attorney, she’ll prepare the preliminary title commitment.
1084) You’re working with a new buyer, Caleb, who is nervous about the earnest money you’ve placed in escrow on his behalf. What can you tell Caleb to reassure him?
a. Escrow can’t disburse the money without your signature
b. Escrow is bonded
c. Escrow is FDIC insured.
d. My company will cover any losses
1085) Which type of contract allows a buyer to legally possess the property after all of the terms and conditions have been met?
a. Compensation agreement
b. Listing agreement
c. Mortgage loan commitment
d. Sale agreement
1086) Which of the following actions occurs prior to closing?
a. A number of contracts are signed by the parties in attendance at the closing, such as the sale agreement, the mortgage loan commitment, and the title insurance contract.
b. The buyer obtains a binder for insurance coverage on the new home.
c. The buyer’s check is given to the seller.
d. The seller is paid the balance of the purchase price.
1087) When is the seller paid the full amount of the purchase price for the property?
a. After acceptance of the down payment or earnest money offer
b. At the closing
c. The day after transferring title to the buyer
d. The day prior to the closing
1088) Mark is offering to purchase Sarah’s house. They agree, and open an escrow account together. Mark and Sarah would be considered what to the escrow?
a. Bilaterals
b. Escrow agent/holder
c. Interpleaders
d. Principals
1089) Which type of closing is conducted with a neutral third party holding the funds, and the buyer and seller may never meet?
a. Escrow closing
b. Face-to-face closing
c. Internet closing
d. No-show closing
1090) Who at the closing table examines all documents for buyers or sellers and represents their best interests?
a. Buyer’s or seller’s attorney
b. Escrow agent
c. Lender’s attorney
d. Title insurance representative
1091) In a face-to-face closing, who meets with whom?
a. Buyer and seller meet with one another
b. Buyer meets with buyer’s agent and lender only
c. Buyer meets with buyer’s agent only
d. Closing agent meets with one party or the other
1092) Who closes on the mortgage loan commitment at closing?
a. The buyer and the lender’s attorney
b. The buyer and the seller
c. The buyer and the title insurance rep
d. The lender’s attorney and the broker for the buyer
1093) Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement?
a. The broker
b. The buyer
c. The closing agent
d. The seller
1094) Which term is defined as an escrow agent’s imperative to remain a neutral third party to any transaction?
a. Impartiality
b. Interpleader
c. Limited agency
d. Material facts
1095) How may escrow be terminated?
a. Through default by the buyer
b. Through default by the buyer or failure of the seller to meet a condition
c. Through written instructions by the listing agent
d. Through written instructions signed by the parties
1096) What type of relationship does an escrow agent have with the parties to a transaction?
a. Impartial
b. Interpleader
c. Material
d. Universal agency
1097) To whom may an escrow agent provide advice?
a. A buyer and seller in the transaction, equally
b. A buyer in the transaction
c. A seller in the transaction
d. Neither a buyer nor a seller in the transaction
1098) What is an interpleader action?
a. A case between family members who are dividing property
b. A legal action to settle an escrow dispute in court
c. A property purchase plead to the courts for a ruling
d. Introduction of a neutral third party to negotiate a transaction
1099) Jackie, a buyer, phoned Al, her escrow agent, about her transaction. He provided her some much-needed advice about contractual terms. Is this allowed?
a. No, because escrow agents must remain neutral
b. No, because escrow agents work for sellers
c. Only if Jackie is not represented by a real estate agent
d. Yes; this is part of an escrow agent’s role
1100) Shelly is an escrow agent in a transaction in which Bill is buying Jose’s property. Who does Shelly represent?
a. Bill and Jose
b. Bill only
c. Jose only
d. Neither Bill nor Jose
1101) In a California real estate transaction, which of these individuals would require a license to act as the escrow agent?
a. Barbara, an associate broker who works for Zack
b. Lulu, a real estate salesperson representing the buyer
c. Nadia, an attorney engaged by buyer Lulu
d. Zack, a real estate broker representing the seller
1102) As which type of property ownership has a buyer vested his title if he is the only owner of the property?
a. Community property
b. Estate in severalty
c. Joint tenancy
d. Tenancy in common
1103) Which term is defined as a legal action used to force a resolution to a dispute between escrow principals through the court?
a. Impartiality
b. Interpleader
c. Limited agency
d. Material facts
1104) Which individual has a limited agency relationship with both a buyer and seller in a real estate transaction?
a. Cooperating broker (buyer’s agent)
b. Escrow agent
c. Lender’s attorney
d. Listing/seller’s agent
1105) What may an escrow agent disclose to outside parties to a transaction as a limited agent to both parties to a transaction?
a. Nothing
b. The closing date of the escrow
c. The conditions of the escrow
d. The purchase price of the property
1106) How may a buyer’s title be vested through escrow?
a. As a cash reconciliation
b. As an estate in severalty or co-ownership
c. As an interpleader
d. As an officiate of the state
1107) Which term is defined as any new or detrimental information that would impact a principal’s decision to go through with the transaction?
a. Impartiality
b. Interpleader
c. Limited agency
d. Material fact
1108) Which of these individuals is responsible for holding a California buyer’s down payment funds until the transaction closes?
a. The buyer’s attorney
b. The buyer’s real estate agent
c. The escrow agent
d. The seller’s real estate agent
1109) Which of the following is a responsibility of an escrow agent?
a. Disbursement of funds, according to the seller’s wishes
b. Disbursement of instruments of title, according to the buyer’s wishes
c. Proper recordkeeping
d. Provide the parties with sound legal advice
1110) At the start of the escrow process, the escrow agent delivers the ______ from the title insurance company to the buyer for review.
a. Deed
b. Escrow instructions
c. Preliminary report
d. Title insurance policy
1111) Sasha accepted an offer on her duplex. The purchase price will be enough to cover the principal remaining on her existing mortgage, plus make her a tidy profit. Which individual is responsible for contacting Sasha’s lender to establish the payoff amount for her loan?
a. Sasha
b. Sasha’s attorney
c. Sasha’s real estate agent
d. The escrow agent
1112) Chance is the buyer’s agent on a transaction that has just closed. How will he typically be paid?
a. At closing, by cashier’s check from the buyer
b. At closing, by cashier’s check from the seller
c. By the buyer directly, or, if there is a cooperative compensation in place, by the seller directly
d. His brokerage will receive a commission check from the escrow agent; his broker will compensate Chance according to the terms of their agreement
1113) What’s one of the things a licensee must do in order to prepare a client for closing?
a. Explain who will be at the closing and what to expect.
b. Perform a home inspection.
c. Provide an abstract of title.
d. Provide the Loan Estimate.
1114) What should be done if a buyer notes any issues during the final walk-through before closing?
a. Contact the seller’s agent immediately to resolve the issue before closing.
b. Handle the issue on closing day.
c. Note these issues in the closing statement and move on.
d. Wait until after the closing to bring up any issues found in the final walk-through with the seller directly.
1115) Which type of insurance must a buyer obtain if a mortgage is involved?
a. Auto insurance
b. Homeowners fire and hazard insurance
c. Life and casualty insurance
d. Medical insurance
1116) Whose responsibility is it to review the preliminary title report?
a. The buyer and the buyer’s agent
b. The lender
c. The title insurance representative
d. The transaction coordinator for the lender
1117) Who is responsible for requesting a loan payoff statement before closing?
a. The buyer
b. The lender
c. The seller
d. The title insurance representative
1118) Who reviews the loan estimate?
a. The buyer
b. The lender
c. The seller
d. The title insurance rep
1119) Which option is an item on the buyer’s checklist to do before closing on a home?
a. Complete loan application
b. Give an affidavit of title to the title insurance company
c. Make all requested repairs to the property
d. Request a loan payoff statement
1120) How will the buyer or seller know where and when the closing is being held?
a. Their agents will inform them of the date once it’s set.
b. The lender will inform them according to MDIA rules and regulations.
c. The seller will set the time and date and is responsible for notifying all parties.
d. The title insurance company will inform them of a date once the title search is complete.
1121) How do licensees obtain their commission?
a. By providing the affidavit of title at the closing
b. By providing the escrow or closing agent with a broker statement that shows how much each broker should receive
c. By receiving a check directly from their client
d. By recording the deed in the public records
1122) How is the broker’s commission usually paid out?
a. All brokers are paid through the joint fund held by the buyer’s lender representative.
b. Each agent is paid separately with their own commission statement at the time of the closing from their clients directly.
c. Each participating brokerage is cut a check according to escrow instructions. Each agent is then paid through their brokerage.
d. The buyer’s agent is the only party involved who gets a commission check.
1123) Who is responsible for obtaining a home inspection?
a. The buyer
b. The lender
c. The seller
d. The title insurance company
1124) Who does a pre-closing final walk-through of a property?
a. The buyer and the buyer’s agent
b. The lender
c. The seller and the seller’s agent
d. The title insurance representative
1125) Who is responsible for reviewing the Closing Disclosure before closing?
a. The buyer and the lender’s attorney
b. The buyer and the seller
c. The buyer only
d. The seller only
1126) Who’s responsible for verifying that a client knows what documentation to bring to closing?
a. The client
b. The lender
c. The licensee who’s representing the client
d. The title insurance representative
1127) What’s part of the licensee’s role in the closing process?
a. Nothing
b. Paying the closing fees
c. Preparing clients for closing
d. Preparing the closing documents
1128) Who is responsible for obtaining evidence of title and title insurance?
a. The buyer
b. The lender
c. The seller
d. Title insurance representative
1129) Who’s generally responsible for ordering and reviewing a survey of the property?
a. The buyer
b. The lender
c. The seller
d. The title insurance representative
1130) When the property is financed, who is named as an additional insured entity on the homeowner’s insurance policy?
a. Buyer’s agent
b. Buyer’s attorney
c. Lender
d. Title insurance company
1131) Prior to the closing, one final inspection should take place. What is this inspection generally called?
a. Loan commitment
b. Secondary home inspection
c. Title commitment
d. Walk-through
1132) Who is responsible making all home repairs and meeting other terms of the sales agreement regarding the home?
a. The broker for the buyer
b. The buyer
c. The lender’s attorney
d. The seller
1133) Who is responsible for paying for homeowners insurance?
a. The buyer
b. The lender
c. The seller
d. The title insurance representative
1134) Who is responsible for obtaining an appraisal?
a. The buyer
b. The buyer’s agent
c. The lender’s attorney
d. The seller
1135) Who is responsible for providing the title insurance company with an affidavit of title?
a. The buyer
b. The lender
c. The seller
d. The title insurance rep
1136) Which type of manager lives on site?
a. Individual building manager
b. Individual property manager
c. Owner
d. Resident manager
1137) The Costa-Hawkins Rental Housing Act allows owners to raise the rent when a tenant moves out, even in areas subject to local ordinances. This is known as:
a. Exemptions
b. Market correction
c. Rent control
d. Vacancy decontrol
1138) To be an effective property manager, a licensee must be familiar with a variety of ______.
a. Agency disclosures
b. Employment contracts
c. Independent contractor agreements
d. Lease agreements
1139) California law requires owners of rental buildings with 16 or more units to hire a property manager. What is this type of property manager called?
a. Individual building manager
b. Investor
c. Owner
d. Resident manager
1140) Professional organizations, such as the ______________________, provide education and networking opportunities for members.
a. Accredited Management Organization
b. Certified Property Manager
c. Certified Residential Management Company
d. Institute of Real Estate Management
1141) Which of the following professional certifications for property managers applies to an individual?
a. Accredited Management Organization
b. Certified Property Manager
c. Certified Residential Management Company
d. Institute of Real Estate Management
1142) To check the creditworthiness of a prospective tenant, the lease application typically requests ______.
a. A credit score
b. A resume
c. Educational background
d. Permission to run a credit report
1143) As a property manager, Ross, is hired by rental property owners and has responsibilities to ___________________.
a. Both the owners and the tenants
b. The owners only
c. The state of California only
d. The tenants only resident manager
1144) Which of the following rental properties may be subject to local rent control ordinances?
a. Condo
b. Multi-unit building
c. New construction
d. Single-family home
1145) Under the Costa-Hawkins Rental Act, rental units built after 1995 are __________________ local rent control ordinances.
a. Allowed to be regulated by
b. Exempt from
c. Subject to
d. The primary focus of
1146) The property manager, hired by the owner to oversee daily operations of rental property, is responsible ___________________
a. To both the owner and the tenants
b. To the local rent control board
c. To the owner only
d. To the tenants only
1147) ______ managers live in and manage apartment buildings.
a. Community
b. Concierge
c. House
d. Resident
1148) A tenant has just voluntarily moved out of a rental unit in a multi-unit apartment building in a California city without local rent control ordinances. How much can the owner raise the rent before signing a lease with a new tenant?
a. The owner may raise the rate to any desired level.
b. The owner may raise the rent, but not higher than market rate for the area.
c. The owner may raise the rent by no more than 10% above the previous tenant’s rate.
d. The owner may raise the rent by up to 5% plus the cost of living.
1149) California law requires that any adverse action taken against the consumer that is based on the credit report be ______________________.
a. Disclosed to the consumer in writing
b. Reported to a credit reporting agency
c. Reported to a state website
d. Reported to the IRS
1150) A property manager has just met with Lena, who is interested in renting a vacant unit. What’s the best way for the property manager to determine how reliable Lena will be with rent?
a. Ask Lena what her credit score is.
b. Decide that because Lena was on time and professionally dressed, she will be good for her rent.
c. Get permission in writing from Lena to run a credit report.
d. Wait and see if the check for her security deposit is good.
1151) Which of the following professional certifications for property managers applies to a firm?
a. Accredited Management Organization
b. Certified Property Managers
c. Certified Support Specialist
d. Master Property Manager
1152) Investing in capital improvements to a property is one way to stall _______.
a. Cash flow
b. Competition
c. Obsolescence
d. Vacancy
1153) As part of preparing a marketing plan for a landlord client, property manager Michelle has gathered information from numerous sources. Which of the following is likely to be most useful to her as she determines whether rent in the building she manages is in line with the competition?
a. Complete rent roll from the building she manages
b. GIS data showing access points to bike lanes and public transportation
c. List of all maintenance and repairs completed in the building for the last 18 months
d. Results from millennial marketing survey showing advertising media preferences
1154) Reporting on local economic and other trends and activities will help you and the property owner plan and set goals. Which of the following trends would have the most negative impact on your property’s vacancy rates?
a. A local university is opening a branch campus in your neighborhood.
b. Mortgage interest rates have risen drastically.
c. One of your closest competitors has just finished a complete renovation of its property.
d. Two major area employers are hiring.
1155) What kind of budget serves two primary purposes: to help property managers maximize profitability and to avoid unforeseen major expenses?
a. Cash reserve
b. Expense
c. Operating
d. Stabilized
1156) The property management proposal includes information such as ______.
a. Details about the property manager’s personal interests and hobbies
b. Details about the property manager’s qualifications
c. Personal information about the property manager’s family
d. The benefits and bonuses the owner will give the property manager in return for services rendered
1157) The owner’s covenants section of the property management agreement between manager Fred Baines and owner Lilian James contains three key pieces of information. First, Fred is named as the person responsible for managing the building. Secondly, Lillian is identified as the property’s legal owner. What’s the third key piece of information?
a. That Fred is indemnified from any illegal acts of the tenants
b. The duration of the contract and its start and end dates
c. The fact that the owner is not facing foreclosure
d. The fee that Lillian will pay Fred for his property management services
1158) To calculate anticipated annual rent for a property, a property manager should take into account two primary factors, which are ______.
a. The market average rental rate and the number of tenants
b. The number of units and the market average rental rate
c. The owner’s net income goal and the operating expenses
d. The per-unit rate and the occupancy/vacancy situation
1159) The role of a property manager is to support the objectives and goals of the _______.
a. Lessee
b. Property owner
c. Tenant
d. Tenant association
1160) The financial reports you’ve prepared over the past several months indicate a gradual increase in the number and cost of maintenance calls. What does this most likely indicate to your owner?
a. Current tenants are being too hard on the property.
b. Maintenance staff salaries are too high.
c. More staff is needed to field maintenance requests.
d. Preventive maintenance tasks may need to be increased.
1161) When Saundra Neill signed a property management agreement with Henderson Properties, Inc., she made sure the agreement stated explicitly that Henderson owned each property she would be managing. In which section of the agreement would she find this verification?
a. Description of duties
b. Insurance provision
c. Owner’s covenants
d. Signature of the parties
1162) Property manager Dawson was reviewing a property management agreement and was happy to learn that he would be indemnified for any losses due to tenant negligence. Where is this likely found in the property management agreement?
a. Description of duties
b. Insurance provision
c. Owner’s covenants
d. Signature of the parties
1163) What section of the property management agreement states that the owner actually owns the property, and it’s not facing foreclosure?
a. Compensation
b. Description of duties
c. Owner’s covenants
d. Signature of the parties
1164) What legally binding document should give details about the reports a property manager will provide for a property owner?
a. Employee policies and procedures manual
b. Lease agreements
c. Property management agreement
d. Property management proposal
1165) In property management, what’s the legal and binding contract that spells out the duties for both the property manager and property owner?
a. Power of attorney
b. Property management agreement
c. Property management proposal
d. Service contract
1166) Which of the following information in a report would NOT help your owner assess whether your rental rates are competitive?
a. The number of occupants in each of your units
b. The number of unit applications accepted in the past six months
c. The number of vacancies in the property
d. The vacancy rate of your property compared to a similar, nearby property
1167) 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?
a. Capital reserve
b. Operating budget
c. Stabilized
d. Variable
1168) The property management ______ cements the relationship between the property manager and the owner.
i. Addendum
b. Agreement
c. Lease
d. Waiver
1169) What relationship is established by the property management agreement between the property manager and the owner?
a. The agency relationship
b. The landlord-tenant relationship
c. The owner relationship
d. The service relationship
1170) Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates?
a. To assess the adequacy of tenant income screening processes
b. To assess your ability to manage tenant relations
c. To determine if rental rates are too high compared to your competitors’ rates
d. To forecast the amount of effort that will be required to collect the late rents
1171) To develop a marketing plan for the property owner, the property manager should ______.
a. Compare the competition to the rates, condition, amenities, and location of the owner’s property
b. Ignore the property’s vacancy rate
c. Rely on the owner to do all of the market research
d. Take an existing marketing plan from an old property and modify it slightly
1172) Who are the parties to a property management agreement?
a. Brokerage and tenant
b. Owner and property manager
c. Owner and tenant
d. Property manager and tenant
1173) A property owner wants to know whether or not he should expect to invest capital funds into major repairs for the property. What part of the property management plan should he refer to for this information?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1174) As a property manager for several residential landlords, Tomas must provide critical reports to each of the property owners for whom he works. Which of the following information points needs to be updated and issued monthly?
a. Fair market value of each property
b. Income and expenses for each property
c. Number of vacation days taken by property employees
d. The number of days a tenant is late when paying rent
1175) Which type of analysis performed by a property manager includes a look at the properties within the market area that will be competing for tenants?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1176) Harrison owns a shopping center that had significant retail client turnover in the past couple of years. He’s asked the property manager, Prasad, to revamp the marketing plan to try to eliminate turnover. Prasad completed the market analysis; what step should he undertake next?
a. Build an advertising campaign.
b. Create a marketing message.
c. Ensure that rents are appropriate.
d. Identify appropriate retail targets.
1177) Like other agreements, the property management agreement details the terms of “employment” between the ______ and the ______.
a. Landlord; tenant
b. Owner; tenant
c. Property manager; owner
d. Tenant; property manager
1178) Forecasting the income and expenses that we can reasonably expect to bring in and pay out over a short term results in a budget that’s every property manager’s dream. That budget is ______.
a. A capital reserve
b. An expense
c. Historical
d. Stabilized
1179) Which type of analysis performed by a property manager is similar to a highest and best use analysis that an appraiser would use?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1180) The property manager’s primary responsibility to an owner is to ______.
a. Achieve the highest possible return on the owner’s investment
b. Achieve the lowest possible vacancy rate
c. Provide all required reports
d. Supervise maintenance and repair tasks
1181) Which of the following would property managers be expected to personally do as part of their assigned duties?
a. Budget preparation and oversight
b. Employee supervision
c. Overnight care of tenant pets
d. Property maintenance
1182) The section of a property management plan that is likely to include demographic information about potential tenants is the _______ analysis.
a. Competitive
b. Demographic
c. Market
d. Property
1183) Which of the following belongs in a property management plan?
a. Disclosures
b. Property condition
c. Property tax
d. Utility analysis
1184) Which type of analysis that a property manager performs includes a discussion of the property’s current condition and recommendations to stall or reverse obsolescence?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1185) Julian is glad that the property owner at the townhouse community he manages established a substantial capital reserve budget for unexpected expenses, like the new roofs needed after a hail storm. What are these types of expenses called?
a. Fixed
b. Operating
c. Stable
d. Variable
1186) All the following reports may be your responsibility as a property manager EXCEPT ______.
a. Monthly and annual financial reports
b. Neighborhood sales
c. Tenant rolls
d. Vacancy report
1187) A property manager has just started working for a new property owner who owns a small apartment building. The property manager learns that construction of a large apartment complex has been approved one block away from his client’s apartment building. What type of analysis would include this information?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1188) Which type of analysis that a property manager performs includes a review of the demographic, geographic, and governmental environment in which the property is located?
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
1189) The list of reports that a property manager would provide to the owner would likely include which of the following?
a. Age and occupation of all tenants
b. Credit scores for all tenants
c. Interior photos of the property
d. Rental contracts, including expiration dates
1190) The owner’s covenants and an insurance provision are included in which of the following documents?
a. Listing agreement
b. Property management agreement
c. Property management proposal
d. Property management waiver
1191) The property management agreement cements what relationship between the property manager and the owner?
a. The agency relationship
b. The landlord-tenant relationship
c. The owner relationship
d. The service relationship
1192) The owner of an apartment building with four units charges $1,000/month for each unit. What is the gross potential rental income for one year?
a. $24,000
b. $3,000
c. $36,000
d. $48,000
1193) What is the ROI for this scenario? An investor pays $80,000 cash toward the purchase price, finances the rest, and has a cash flow of $11,000 after repairs and debt services.
a. 107.3%
b. 13.75%
c. $69,000
d. 7.3%
1194) The owner of a duplex charges $2,000 per month for each unit. Over the last 12 months, one half of the property was vacant for six months. What was the owner’s effective gross income for this 12-month period?
a. $24,000
b. $3,000
c. $36,000
d. $48,000
1195) ROI = ______ / initial cash investment
a. Cash flow
b. Effective operating income
c. Gross operating income
d. Principal payment and interest
1196) An investor is thinking about buying a $200,000 commercial property. She has $100,000 saved up for a down payment and wants to finance the remaining $100,000. Annual cash flow is projected to be $13,000. What is the potential return on investment?
a. $113,000
b. 13%
c. 26%
d. 87%
1197) Net operating income ‒ ______ = cash flow
a. Debt services
b. Mortgage rate
c. Operating expenses
d. Vacancies and credit loss
1198) Coin-operated laundry equipment, vending machines, and late fees are all examples of ______.
a. Miscellaneous income
b. Operating income
c. Property income
d. Side income
1199) What do you divide cash flow by to determine the return on investment?
a. Debt service
b. Initial cash investment
c. Mortgage balance
d. Principal payment and interest
1200) Gross potential rental income ‒ ______ = effective gross income
a. Expense reimbursements
b. Late rent
c. Net operating income
d. Vacancies and credit loss
1201) If a cash investment of $100,000 results in a 25% ROI, what was the amount of cash flow?
a. 125%
b. $25,000
c. $50,000
d. $75,000
1202) Income from a vending machine on a rental property is an example of what?
a. Miscellaneous income
b. Operating income
c. Property income
d. Side income
1203) A property has a gross effective income of $50,000 and costs $60,000 to maintain. What is the net operating income for this property?
a. -$10,000
b. $10,000
c. $50,000
d. $60,000
1204) A property has a gross effective income of $500,000 and costs $50,000 to maintain. What is the net operating income for this property?
a. 10%
b. $400,000
c. $450,000
d. $50,000
1205) This is the value a buyer and a seller agree upon.
a. Assessed value
b. Investment value
c. List price
d. Market value
1206) The amount of money that remains after debt service is subtracted from net operating income equals what?
a. Bottom line
b. Cash flow
c. Effective gross income
d. Net gross income
1207) A potential investor has inherited $250,000 and wants to use that as a down payment on an investment property. What additional information do you need to calculate ROI for each potential investment?
a. Initial cash investment
b. Mortgage rate
c. Principal payment and interest
d. Projected cash flow
1208) Costs associated with running and maintaining a property are called ______.
a. Landlord expenses
b. Operating expenses
c. Profit loss
d. Property expenses
1209) Property expense reimbursements are paid to the ______.
a. Landlord
b. Property manager
c. Property owner
d. Tenant
1210) The list price is the price for which the ________ has agreed to sell a property.
a. Broker
b. Buyer
c. Owner
d. Property manager
1211) Actual gross potential income is offset by ______.
a. Capital improvements
b. Cash flow
c. Operating expenses
d. Vacancy and credit loss
1212) Which of these has a negative impact on the property owner’s cash flow?
a. Debt service
b. Expense reimbursements
c. Gross reimbursements
d. Miscellaneous income
1213) An investor is thinking about buying a $500,000 house to use as a rental property. She has $100,000 saved up for a down payment and will mortgage the remaining $400,000. The annual cash flow is projected to be $25,000. What is the potential return on investment?
a. 25%
b. $25,000
c. 4%
d. 5%
1214) Applying a capitalization rate to the net operating income is one way to determine the ___________ value.
a. Assessed
b. Depreciated
c. Investment
d. Market
1215) Effective gross income ‒ ______ = net operating income
a. Debt services
b. Mortgage payments
c. Operating expenses
d. Vacancies and credit loss
1216) When this value is negative, it is a sign that the investment property cannot bring in enough money to cover its costs to maintain.
a. Mortgage rate
b. Net operating income
c. Operating expenses
d. Vacancies and credit loss
1217) A property manager has accounted for all sources of income on a rental property and needs one more piece of information to determine the effective gross income. What information is needed?
a. Expense reimbursements
b. Net operating income
c. Operating expenses
d. Vacancies and credit loss
1218) This is the value used by government tax assessment offices.
a. Assessed value
b. Investment value
c. List price
d. Market value
1219) The ______ affects a property’s income tax basis.
a. Assessed value
b. Depreciated value
c. Investment value
d. Market value
1220) This term refers to the amount of income that remains after miscellaneous expenses and expense reimbursements are added to gross potential rental income, then vacancies and credit loss are subtracted.
a. Cash flow
b. Effective gross income
c. Net operating income
d. Operating expenses
1221) Calculating the return on investment can be a part of determining a property’s ______.
a. Assessed value
b. Investment value
c. List price
d. Market value
1222) Which of these has a positive impact on the property owner’s cash flow?
a. Debt service
b. Expense reimbursements
c. Operating expenses
d. Vacancy
1223) A new commercial property owner plans to charge $1,000/month for each unit. There are six units. What is the gross potential rental income for one year?
a. $36,000
b. $48,000
c. $50,000
d. $72,000
1224) Should the broker end up in litigation, any trust funds not safely tucked away in a trust account could be ______.
a. Disbursed
b. Eliminated
c. Frozen
d. Reallocated
1225) A good way to remember what qualifies as non-trust funds is to ask whether or not the funds have been ______ to you to secure a real estate transaction.
a. Bequeathed
b. Entrusted
c. Loaned
d. Signed over
1226) The funds placed in trust accounts are insured by the ______.
a. AARP
b. FDIC
c. NAIC
d. WNBA
1227) Frances collected an earnest money check from her client, but didn’t have an opportunity to deliver it to the escrow agent before close of business on Friday. For safekeeping, she deposited it into her personal checking account over the weekend and wrote the escrow agent a new check on Monday morning. Which of these statements is true?
a. Frances is guilty of commingling.
b. Frances is guilty of commingling and conversion.
c. Frances is guilty of conversion.
d. Frances is guilty of fraud.
1228) Moneys given for purchase deposits are ______.
a. Commission
b. Non-trust funds
c. Revenue
d. Trust funds
1229) Do non-trust funds need to be deposited into trust accounts?
a. It varies from broker to broker.
b. No, that would be commingling.
c. They may but don’t have to be.
d. Yes, so the funds have FDIC coverage.
1230) Which of these is an example of conversion of funds?
a. Marcus converted a CD to cash and deposited it in the firm’s operating account.
b. Monica used funds from the firm’s trust account to pay her firm’s rent.
c. Soo Min transferred funds from her firm’s trust account to the closing company’s trust account in time for settlement.
d. Tristan deposited a client’s earnest money check into the firm’s operating account.
1231) What do the commissioner’s regulations and the Business and Professions Code have to say about trust fund account handling?
a. Any interest earned must be turned over to the client
b. If kept in a general business account, they must be labeled “trust fund”
c. Nothing; this is a matter for the state’s attorney general
d. They must be kept in a neutral escrow or trust fund account
1232) What are the requirements for trust funds?
a. They may be placed in a neutral escrow account or a firm’s general account that is interest bearing, with the interest paid to the client.
b. They must be placed in a trust fund bank account or a neutral escrow account.
c. They must be placed in either a neutral escrow account or a firm’s general business account.
d. They must be placed in either a trust fund bank account or a firm’s general business account.
1233) What are trust funds?
a. Commission money the licensee has earned
b. Money belonging to others held for a specific purpose in the course of a real estate transaction
c. Money given as a gift to the broker
d. Rent received from a broker-owned property
1234) Should a client incur financial hardship because of the misuse of trust funds, the broker could be held ______.
a. Blameless
b. In contempt
c. Liable
d. Uninsurable
1235) General business funds should never be deposited into ______ unless the amount of money is nominal and is being used to pay administrative fees.
a. An interest-bearing account
b. A non-interest-bearing account
c. A state account
d. A trust fund account
1236) FDIC insurance covers every owner of funds deposited into a trust account, up to __________each.
a. $150,000
b. $25,000
c. $250,000
d. $400,000
1237) Jerry, a licensee, received a commission check. Where should he deposit those funds?
a. In his own private account
b. In the broker’s business account
c. In the firm’s neutral escrow account
d. In the trust account
1238) Holding non-trust funds doesn’t create ______ responsibility to other parties unless the non-trust funds are commingled with trust funds.
a. Actuarial
b. Fiduciary
c. Legal
d. Moral
1239) Depositing trust funds into a trust account provides protection for those funds should the broker or licensee be faced with ______.
a. Accidents, death, or litigation
b. Only a debilitating accident
c. Only death
d. Only litigation
1240) Once handed over, trust funds belong to the ______ until the transaction for which they were designated has been completed, or they’re disbursed according to the agreement between the parties.
a. Bank
b. Broker
c. Licensee
d. Party who submitted them
1241) Non-trust funds, as long as they’re not commingled with trust funds, are not bound by _______.
a. Banking regulations
b. International trade rules
c. Real estate laws
d. State laws
1242) Which of the following is the most severe potential consequence of failing to comply with regulations for the handling of trust funds?
a. Liability for damages to the client
b. License revocation
c. License revocation and financial liability for damages incurred by the client
d. License suspension
1243) If trust funds aren’t placed in a trust fund bank account, where should they go instead?
a. To an escrow account
b. To the broker’s business bank account
c. To the licensee’s personal bank account
d. To the petty cash box in the broker’s office
1244) Even the most honest broker can make a mistake from time to time. Keeping trust funds in ___________ diminishes the possibility of accidental misuse of trust funds.
a. Personal accounts
b. Private brokerage accounts
c. Swiss bank accounts
d. Trust accounts
1245) Your broker has received an earnest money check from you for a transaction. Where should this check be deposited?
a. In an interest-bearing account
b. In a trust fund account or neutral escrow
c. In the firm’s general business account, with a ledger entry for the client’s name, labeled “trust fund”
d. In the firm’s safe or safety deposit box until closing
1246) ______ is an example of non-trust funds.
a. A check given as earnest money on a purchase contract
b. A personal note thanking a licensee for her assistance
c. A security deposit given to a property manager
d. Rent received from a broker or licensee-owned property
1247) What is commingling?
a. A blend of different types of non-trust funds
b. A social gathering
c. Combining different types of trust funds
d. Mixing personal and trust funds
1248) Trust funds have better protection when deposited into trust accounts because they are ______.
a. In an interest-bearing account
b. Insured by the banking industry
c. Insured by the depositor’s private insurance
d. Protected from seizure
1249) Randy, a broker, regularly places his client’s trust funds in the firm’s general business account, noting “trust fund” on the ledger. What is the problem with this approach?
a. They must be placed in an interest-bearing account.
b. They must be placed in a trust fund bank account or neutral escrow.
c. They must go into a separate general business account.
d. They should not be marked “trust fund.”
1250) Which of the following is the most severe potential consequence of failing to comply with regulations for the handling of trust funds?
a. Liability for damages to the client
b. License revocation
c. License revocation and financial liability for damages incurred by the client
d. License suspension
1251) Even the most honest broker can make a mistake from time to time. Keeping trust funds in ___________ diminishes the possibility of accidental misuse of trust funds.
a. Personal accounts
b. Private brokerage accounts
c. Swiss bank accounts
d. Trust accounts
1252) Xavier deposited a $3,000 earnest money check into his personal account for safekeeping while he was on vacation. The balance in his account when he left on vacation was $4,200, and when he returned, it was $2,800. He withdrew enough funds from his savings account to cover the earnest money check and delivered the funds to the escrow agent. Which statement best represents Xavier’s issue?
a. Xavier is guilty of commingling and conversion.
b. Xavier is guilty of commingling only.
c. Xavier is guilty of conversion only.
d. Xavier is guilty of theft.
1253) Should a client incur financial hardship because of the misuse of trust funds, the broker could be held ______.
a. Blameless
b. In contempt
c. Liable
d. Uninsurable
1254) Do non-trust funds need to be deposited into trust accounts?
a. It varies from broker to broker.
b. No, that would be commingling.
c. They may but don’t have to be.
d. Yes, so the funds have FDIC coverage.
1255) Which of the following are considered trust funds?
a. Cash, checks, and other items of value
b. Cash only
c. Checks and cash only
d. General operating funds only
1256) BRE form 4522 must be used in conjunction with which other BRE form?
a. 4523
b. 4524
c. 4525
d. 4526
1257) Which of the following are acceptable types of record keeping for trust funds as specified by the California real estate commissioner’s regulations?
a. Both columnar records and records other than columnar as described in the commissioner’s regulations
b. collection of receipts and notes
c. Columnar records only
d. Only records other than columnar, as described in the commissioner’s regulations
1258) One of the most important parts of a broker’s job is keeping track of trust funds received and disbursed. This requires accurate __________ be maintained at all times.
a. Filing cabinets
b. Office hours
c. Records
d. Staffing
1259) Who in a brokerage is ultimately responsible for reconciling trust fund account records?
a. The broker
b. The firm’s attorney
c. The firm’s CPA
d. The office administrator
1260) Keeping precise records gives the broker the means to provide ______reports to clients.
a. Accurate
b. Annual
c. Billing
d. Sales
1261) Broker Betsy is recording her receipt of funds from a client. She’ll hold these funds until the vendor she hires to paint her client’s house sends her an invoice. Where does she record the deposit?
a. In the brokerage checking account register
b. In the client beneficiary account journal
c. In the trust account deposit ledger
d. In the trust account journal and the client’s beneficiary ledger
1262) A broker is required to keep a __________ to keep track of all beneficiary accounts.
a. Beneficiary ledger
b. Checkbook
c. General accounting book
d. Rent roll
1263) BRE Form 4523 is used to keep a separate record for every ___________________.
a. Cash or check
b. Deposit or withdrawal
c. Disbursement or cancelled check
d. Transaction or beneficiary
1264) The California real estate commissioner’s regulations stipulate that any method chosen for trust fund recordkeeping must be in accordance with _________________.
a. Federal law
b. Generally accepted accounting practices
c. IRS tax code
d. U.S. banking regulations
1265) Jebediah is a California broker who’s setting up his system for trust fund record keeping. Which of these options is NOT acceptable to the DRE?
a. Columnar (paper-based) system of ledgers and journals
b. Commercially available accounting software system
c. Custom accounting application he pays a vendor to develop according to guidelines issued by the DRE
d. Paper-based system using a checkbook register balanced against the monthly bank statement
1266) Trust fund account records must be kept in line with general accounting principles and must include, at minimum, _______.
a. A beneficiary ledger
b. A beneficiary ledger and journal
c. A cash ledger
d. A cash ledger, a journal, and a beneficiary ledger
1267) Does the BRE require the use of columnar records?
a. It varies from broker to broker
b. It varies from county to county
c. No
d. Yes
1268) When a brokerage has a large number of transactions, accurate records help the broker remember how much ________ is held for each client.
a. Insurance
b. Interest
c. Money
d. Regard
1269) Either __________ recorded or computer-generated records are acceptable, under Commissioner’s regulations.
a. Automatically
b. Erroneously
c. Manually
d. Tape
1270) You’re a California broker. That means you must reconcile your trust fund accounts ____________.
a. Monthly
b. Quarterly
c. Weekly
d. Yearly
1271) Marsha is a broker and uses columnar records for her trust accounts. She uses BRE form 4523 to keep track of each beneficiary or transaction. What other form is she required to use in conjunction with 4523?
a. 4522
b. 4523
c. 4524
d. 4525
1272) Which type of accounting record shows a chronological record of all the deposits to and disbursements from the trust account?
a. Broker’s ledger
b. Cash journal
c. Time ledger
d. Trust account journal
1273) Brokers must keep a __________ to record transaction details as they occur.
a. Checkbook
b. Credit ledger
c. Debit ledger
d. Journal
1274) What is the purpose of BRE form 4522?
a. To record all non-trust fund activity
b. To record all transactions or account beneficiaries
c. To record all trust funds received and paid out
d. To record personal income
1275) Marsha’s brokerage is due for an audit from BRE. She doesn’t worry, though, because she has _____________.
a. Accurate records
b. A smart accountant
c. Audit insurance
d. Friends at BRE
1276) Helen is a California broker who keeps a trust account for her brokerage. Each month she reviews the trust account records provided to her by her accountant. Which of these records would NOT be part of her review of proper trust fund handling?
a. All beneficiary journals
b. All beneficiary ledgers
c. The cash ledger
d. The trust account journal
1277) The suggested form for tracking incoming and outgoing trust funds from a trust fund bank account is BRE form _______.
a. 4522
b. 4523
c. 4524
d. 4533
1278) The purpose of ______ is to balance the trust account and ensure that all funds deposited or disbursed are properly recorded.
a. Bank statement review
b. Escrow closing
c. General accounting principle
d. Trust fund reconciliation
1279) How often should accounting records for trust fund accounts be reconciled?
a. Annually
b. Monthly
c. Periodically
d. Weekly
1280) In California, a brokerage’s listing agreements, deposit receipts, canceled checks, and trust records are all ______.
a. Documents that must be stored electronically
b. Documents that must be submitted to the DRE
c. Records that must be held for at least three years
d. Records that must be provided to clients upon request
1281) What types of records must a California brokerage retain for at least three years?
a. Documents related to real estate activities that require a license
b. Documents that are handled by the brokerage but not provided to an escrow agent
c. Only trust account records
d. Specific records the DRE has listed as being related to client funds
1282) Because of the extreme importance of proper trust fund handling and recordkeeping, the _____________ conducts routine audits of brokers.
a. Attorney general
b. California Department of Real Estate Commissioner
c. County auditor panel
d. State Supreme Court
1283) Which entity carries out audits and examinations?
a. The California Department of Real Estate Commissioner
b. The Central Intelligence Agency
c. The Federal Bureau of Investigation
d. The Internal Revenue Service
1284) The _____________ requires brokers to maintain proper documentation for all transactions connected to their real estate business.
a. California Department of Real Estate
b. Federal Bureau of Investigation
c. Internal Revenue Service
d. National Association of REALTORS®
1285) Section 10148 of the California Business and Professions Code requires records pertaining to real estate transactions be held for ________ years.
a. Five
b. Four
c. Three
d. Two
1286) Section 10148 of the ______ states that all records related to real estate transactions should be kept for a period of three years.
a. Business and Professions Code
b. Commissioner’s Regulations
c. IRS Tax Code
d. National Association of REALTORS® handbook
1287) Which entity provides oversight for real estate transactions and regulations, including recordkeeping?
a. Attorney general’s office
b. California Department of Real Estate
c. Generally Accepted Accounting Society
d. Trust Fund Bureau
1288) The California DRE is performing a routine audit of Gold Standard Brokerage, Inc. Broker Chip is sweating bullets since he knows they’re likely to find some of his creative accounting involving the brokerage trust fund. Why is Chip nervous?
a. He is afraid the DRE will think he’s been embezzling funds, when he’s only been moving the funds to get the most bang for his clients’ bucks.
b. He knows he’ll have to fire most of his associated licensees in order to hide his own activities from the DRE audit.
c. He needs to put back some funds he borrowed from the trust account before the DRE sees that they’re missing.
d. He’s likely to face serious disciplinary action when the audit uncovers his inappropriate handling of trust funds.
1289) Where trust funds are involved, ___________ is required.
a. Commingling
b. Conversion
c. Documentation
d. Earned interest
1290) California licensee Renee makes sure she follows the DRE requirements when she prepares listing agreements and purchase agreements by ______.
a. Destroying all documents carrying a client signature in a manner approved by DRE
b. Giving a copy of the agreement to her client after it’s signed
c. Maintaining the documents in the brokerage files for at least five years from the closing date
d. Sending a copy of the agreement to DRE
1291) How often are audits conducted on brokerage firm trust account records?
a. At least annually
b. Monthly
c. Quarterly
d. Routinely
1292) Who’s responsible for paying appraisal and credit report fees?
a. The buyer
b. The lender
c. The seller
d. The title company
1293) The seller net sheet is _______ of closing costs.
a. A bank-prepared estimate
b. A final accounting
c. A legally binding estimate
d. An estimate
1294) Who’s responsible for paying for recording documents to clear all defects from the title?
a. The buyer
b. The lender
c. The seller
d. The title company
1295) What can listing agents prepare for their clients to give them unofficial estimates of all closing costs?
a. Brokerage escrow estimate
b. Good Faith Estimate
c. Loan Estimate
d. Seller net sheet
1296) On the closing statement, what’s the term for an amount that shows up in the party’s favor?
a. Balance
b. Credit
c. Debit
d. Mortgage
1297) What does RESPA stand for?
a. Real Estate Seller Prohibition Act
b. Real Estate Settlement Procedures Act
c. Real Estate Society Protection Act
d. Real Estate Standard Protection Act
1298) According to RESPA, what must the lender give to the borrower at either the time of loan application or within three days following application?
a. Closing Disclosure
b. Freddie Mac borrower disclosure
c. Loan Estimate
d. TIL statement
1299) Which two items will appear on a closing disclosure?
a. Credits and debits
b. Repair invoices and seller credits
c. Seller net and buyer net
d. Title liens and buyer inspection items
1300) Who’s responsible for any tax reserves required to pay property taxes?
a. The buyer
b. The closing agent
c. The lender
d. The seller
1301) According to RESPA, what must the lender give to the borrower in the days immediately prior to settlement?
a. Closing Disclosure
b. Freddie Mac borrower disclosure
c. Loan Estimate
d. TIL Statement
1302) Which act ensures a buyer in a residential transaction that’s financed by a federally related mortgage loan has knowledge of all settlement costs?
a. Civil Settlements Act
b. Dodd-Frank Act
c. RELA
d. RESPA
1303) Seller Martin is looking at his Closing Disclosure. Which one of the following items is he likely to see?
a. Debits
b. Listing price
c. Seller net amount
d. Title liens
1304) ESPA prohibits kickbacks between which parties?
a. Construction contractors
b. Fellow agents
c. Referral parties
d. Settlement service providers
1305) Which document is signed and agreed to at closing and reconciles what the final financial obligations are for both the buyer and seller?
a. Affidavit of title
b. Closing disclosure
c. Sales agreement
d. Title insurance policy
1306) When the buyer and seller both have costs to pay, which form shows who pays what?
a. Closing statement
b. Home inspection report
c. Loan Estimate
d. Purchase contract
1307) Which act prohibits the payment of kickbacks from settlement service providers?
a. MDIA
b. RELA
c. RESPA
d. SEQRA
1308) Which of the following is provided at the time of a buyer’s offer and shows what the seller’s proceeds will be if the seller accepts the offer?
a. Closing Disclosure
b. Credit
c. Debit
d. Seller net sheet
1309) Which document provides an estimate of the costs a buyer is likely to pay at settlement before the closing?
a. Abstract of title
b. Closing Estimate
c. Loan Estimate
d. Sales agreement
1310) What’s the term for a charge that either party has to pay at closing?
a. Balance
b. Credit
c. Debit
d. Mortgage
1311) Who usually pays the broker commission?
a. The buyer
b. The lender
c. The seller
d. The title company
1312) Which type of federally related lending transaction is covered under RESPA?
a. Foreclosure
b. Industrial property loans
c. Mortgages and home equity credit lines
d. Retail property loans
1313) The state of California charges ______ as a deed transfer tax on all real estate transactions, in addition to local charges.
a. $1.10 per $1,000 of value
b. 1/8th%
c. 5%
d. Up to 10%
1314) Why do lenders require a borrower to establish and maintain a reserve fund?
a. To cover the closing costs and pay the broker’s commission
b. To make money off of the buyer’s money for a year
c. To pay any property taxes in case the borrower misses a payment
d. To pay for any miscellaneous charges accrued during the loan application and approval process
1315) Which of the following is a way in which property taxes could impact your clients?
a. A sale in the area may prompt a reassessment, impacting new buyers.
b. Neighbors may be jealous about favorable tax rates.
c. Tax abatements could harm buyers financially.
d. Tax refunds are not possible if property tax deductions are taken.
1316) Juan purchased a property for $420,000 and financed $336,000 of it. The assessed value of the property is $387,000. The property appraisal came in at $432,000. Which of these amounts is used in calculating the property tax?
a. $336,000
b. $387,000
c. $420,000
d. $432,000
1317) Does the sale of land that includes a permanent structure require notification of the Internal Revenue Service through Form 1099-S?
a. No
b. Only if the structure is commercial
c. Only if the structure is residential
d. Yes
1318) What must be reported to the Internal Revenue Service on Form 1099-S after a real estate closing?
a. Record of title transfer at the county clerk’s office
b. Sale price of the property and the date of closing
c. The date of the home inspection
d. The loan approval disclosure statement
1319) What steps can the real estate professional take to assist buyers with property taxes?
a. Calculate the tax ramifications of property tax deductions.
b. Disclose to buyers that a sale may prompt a reassessment.
c. Offer low-interest loans.
d. Tell buyers that property taxes aren’t important.
1320) On a closing statement, ______ goes in the seller’s credit column and the buyer’s debit column.
a. Loan fees
b. Prepaids
c. Taxes
d. Utility costs
1321) Who generally takes responsibility for reporting required information on Form 1099-S after a real estate closing?
a. The buyer’s agent
b. The closing agent
c. The seller
d. The seller’s agent
1322) Danette hasn’t paid the first quarter water bill on her property. It was due on April 1. She’s closing with the buyer, Jason, on April 1. What type of expense is this and how will it appear on the settlement statement?
a. This is an accrued expense, and will appear as a buyer debit and a seller credit.
b. This is an accrued expense, and will appear as a seller debit and a buyer credit.
c. This is a prepaid expense, and will appear as a buyer debit and a seller credit.
d. This is a prepaid expense, and will appear as a seller debit and a buyer credit.
1323) How are mortgage interest, taxes, insurance, and other similar expenses prorated?
a. The buyer typically pays the costs on the day of closing.
b. These are usually prorated based on a 360-day statutory year (30 days × 12 months).
c. These cannot be prorated. They must be prepaid.
d. The seller typically pays the costs on the day of closing.
1324) Which one of the following characteristics makes property taxes a reliable target for taxation?
a. They don’t hold their value.
b. They have a high compliance rate.
c. They have high collection costs.
d. They’re easy to conceal.
1325) Property taxes generate approximately ______ of local government revenue.
a. Half
b. One quarter
c. One tenth
d. One third
1326) Who’s responsible for disclosing the property taxes to the buyer?
a. The lender
b. The licensee
c. The seller
d. The title insurance company
1327) What’s a typical prepaid item that goes into a seller’s credit column and a buyer’s debit column on a closing statement?
a. Broker fees
b. Loan fees
c. Property taxes
d. Recording fees
1328) What information is provided to the IRS on Form 1099-S after a real estate closing?
a. Address or legal description of the property
b. Seller’s closing costs
c. Social Security numbers of all buyers, sellers, and their agents
d. The loan approval disclosure statement
1329) How are accrued real estate taxes that have been assessed but not yet due handled in a real estate transaction?
a. The assessment amount is split evenly between the buyer and seller and is paid on the day of closing.
b. The buyer is responsible for all taxes accrued in the year of purchase, and will pay the tax bill when due.
c. The tax bill will be prorated to the day of closing.
d. Typically, the seller pays the full assessed tax for the year on the day of closing.
1330) Nonny is purchasing a rental property where the tenants pay month-to-month rent. Which of the following is the most likely way for the rent to be prorated?
a. Nonny will begin to receive prorated rents starting on the first of the month following the closing date.
b. Nonny will receive all rents collected as of the first of the month in which the closing is held, even if closing is on the last day of that month.
c. Nonny will receive full rents for tenants whose leases expire within one month of the closing date, and prorated rents as of the day of closing for other tenants.
d. Nonny will receive prorated rents beginning the day of closing.
1331) What should a real estate professional do regarding property taxes?
a. Advise clients when it’s time to protest an assessment.
b. Attend all property tax review board hearings.
c. Check the title report for property tax liens.
d. Offer zero-interest loans to homeowners who are delinquent on property taxes.
1332) Which of the following is a typical accrued adjustment?
a. Heating oil in the tank
b. Prepaid taxes
c. Unpaid real estate taxes
d. Utilities billed and paid in advance
1333) The income from what reliable source benefits the entire community by funding essential services and public works?
a. Fundraisers
b. Private donations
c. Property taxes
d. Special assessments
1334) According to custom, who pays the costs on the day of closing for property taxes, utilities, etc.?
a. The buyer
b. The buyer and seller split these costs.
c. The seller
d. Typically, the broker pays the costs on the day of closing.
1335) Corrine is selling her home in a short sale transaction. What’s her likely situation?
a. She got a promotion.
b. She has a balloon payment coming up that she can’t pay.
c. She took a second job.
d. She was married.
1336) Which of these statements about the homeowner’s right of redemption is true?
a. Homeowner right of redemption applies to foreclosures, short sales, and REOs.
b. Only foreclosures are subject to homeowner’s redemption rights.
c. Right of redemption timelines are longer for foreclosures than they are for short sales.
d. Rights of redemption window with REOs may have expired.
1337) Which of the following is a possible title issue with a real estate-owned transaction?
a. Evictions of existing tenants
b. Foreclosure process delays
c. Internal audit delays
d. Unpaid liens against the title
1338) Which of these lenders would be least likely to approve a short sale?
a. Conventional lenders
b. Credit unions
c. First loan lenders
d. Junior lenders
1339) Which option is a sale that occurs through an administrator or executor of a will with court supervision?
a. Foreclosure
b. Probate
c. REO
d. Short sale
1340) What’s it called when the market value of a property that’s for sale is less than what’s owed on the mortgage by the seller?
a. Foreclosure
b. Granted release sale
c. REO
d. Short sale
1341) While any distressed property can have title transfer issues, why is an REO less likely to be subject to unpaid tax liens?
a. Buyers who purchase REO properties are required to include back property taxes in their purchase.
b. County and local governments are required to abate unpaid property taxes on REOs.
c. Lenders have already forced homeowners to pay unpaid property taxes during the foreclosure process.
d. Lenders want REO properties to sell quickly, so they’re likely to have resolved unpaid tax lien issues.
1342) What course of action should you take when a client is presented with an and/or assigns contract?
a. Advise your client to seek legal advice
b. Immediately accept the offer
c. Inform your supervising broker
d. Reject the offer without presenting it to your client
1343) A lender initiated a(n) ______ action against a borrower to recover money owed on the mortgage.
a. Bankruptcy
b. Eviction
c. Foreclosure
d. Lien
1344) Kristin has been unable to make her mortgage payments. Her property went to auction but the lender didn’t accept the high bid. What stage of the foreclosure process is this property now in?
a. Eviction
b. Foreclosure
c. Pre-foreclosure
d. Real estate-owned
1345) You’re working with buyers who are interested in trying to get a bargain in the form of a foreclosure. What should you tell them?
a. Buyers should take special care to ensure that any title issues are addressed.
b. Foreclosures are likely to have irreparable title issues.
c. Foreclosures have no more title issues than standard sale properties.
d. Title insurance firms won’t issue policies on foreclosures.
1346) What action could temporarily stop a foreclosure?
a. The borrower abandons the property.
b. The borrower declares bankruptcy.
c. The borrower remains on the property.
d. The borrower uses his right of redemption. he offer without presenting it to your client
1347) Who has final authority to approve a probate sale?
a. The broker
b. The buyer
c. The court
d. The seller
1348) Why might a buyer get a great deal on a real estate-owned property?
a. Federal regulations require that REOs be sold below market value.
b. Lenders and their shareholders don’t like to keep properties on their books longer than necessary.
c. There are no agent commissions to pay for REO transactions.
d. There are special government financing programs for purchasing REOs.
1349) Why is a foreclosure more likely to have title issues than a non-foreclosure?
a. Borrowers who are in foreclosure are permitted to acquire unrecorded liens.
b. Borrowers who can’t afford loan payments may have taken out other loans against the property.
c. Lenders are permitted to place secondary liens on property that’s entering the foreclosure process.
d. Lenders don’t take appropriate precautions to maintain clear title.
1350) A lender initiated a foreclosure action against a borrower. What purpose is this action intended to serve?
a. Demonstrate to the court that it’s following due process.
b. Provide a paper trail by which to sue the borrower.
c. Punish the borrower for failure to pay what’s owed.
d. Sell the property to recover monies owed.
1351) What type of contract allows the individual acting as buyer to assign the contract and terms of the sale to a third party, usually for a profit?
a. And/or assigns
b. Discharged
c. Reformation
d. Rescission
1352) Anika is short selling her home. This means ______.
a. It’s off season, and a buyer’s market
b. She’s selling it as a For Sale by Owner
c. The sale will happen quickly
d. The sale won’t bring in enough to pay off her loan
1353) Why do short sales usually occur?
a. Inventory is low.
b. The market is hot.
c. The owner needs a quick sale.
d. The seller is experiencing financial hardship.
1354) Carly’s closing on an REO property was suddenly delayed due to an internal audit. What does this mean?
a. Carly’s lender decided to further audit her loan application materials.
b. The banking association is auditing the lender’s foreclosure files.
c. The federal government is auditing the lender’s foreclosure process.
d. The lender has requested a title audit to ensure that the foreclosure was properly handled.
1355) When a lender sells a property at auction due to the borrower’s default on the mortgage, it’s called a ______.
a. Foreclosure
b. Granted release sale
c. REO
d. Short sale
1356) What does an REO on a lender’s assets mean?
a. The lender has agreements with real estate listing agents.
b. The lender owns real estate after a foreclosure sale.
c. The lender prepares property management agreements.
d. The lender received proceeds from a foreclosure sale.
1357) Farquhar bought a house at a foreclosure auction. A few weeks later, he was notified that he couldn’t take possession of or title to the property. What likely happened?
a. The lender received another offer higher than the one Farquhar made at the auction.
b. The lender revised the previous owners’ loan and permitted them to remain in the property.
c. The other lien holders protested the auction sale, so the lender retained the property.
d. The previous owners redeemed the property by paying all mortgage payments and fees.
1358) Under what circumstances may the executor of an estate sell a property that belongs to the estate?
a. If a creditor’s demand letter has been received
b. Never
c. Only if the offer is a fair market value
d. Only with court approval
1359) Doug is selling his home by a short sale. What likely happened recently in Doug’s life?
a. He declared bankruptcy.
b. He got married.
c. He lost his job.
d. He was foreclosed upon.
1360) Which one of these is a potential title issue with a foreclosure?
a. Clouds on title
b. Delays due to internal title audit
c. Homeowner’s right of equitable redemption
d. Lengthy closing process
1361) Which of these is a reason for a foreclosure?
a. The bank desires ownership of the home.
b. The borrower defaults on the mortgage loan.
c. The borrower pays too much on the mortgage loan.
d. The property being sold is near a golf course.
1362) What’s a typical reason that a seller might opt for a short sale?
a. Desire to move to a house down the street
b. Job loss or other financial problems
c. New job in another part of the country
d. Raise at work
1363) What’s one reason that buyers might need additional cash at closing for a short sale?
a. Interest rates are higher for short sale transactions.
b. Mortgage origination fees are higher for short sale transactions.
c. Short sales don’t clear liens from the title, so buyers may have to pay debts at closing.
d. Short sales include a commission premium for the listing agent.
1364) Quad City National Bank has several REO properties on its books. Why does the bank own these properties?
a. Quad City is in the process of foreclosing on these homes.
b. The bank purchased the properties as investments.
c. The bank purchased these properties from owners who were in foreclosure.
d. The properties went through the foreclosure process and didn’t sell at auction.
1365) Melissa hasn’t paid her mortgage in months. What action can the lender take to recover monies owed?
a. Bankruptcy
b. Condemnation
c. Foreclosure
d. Short sale
1366) What is the risk of accepting a contract with an and/or assigns clause?
a. The brokerage fee may double
b. The buyer may back out if another buyer can’t be found
c. The buyer may sell to a minority
d. The new buyer might pay more money
1367) Which of these actions would cause a property to become an REO?
a. A rental property was deemed not up to code, and was sold to a developer.
b. The bank doesn’t get an acceptable bid at a foreclosure sale and takes ownership of the property.
c. The lender stops waiting for payments and forces the sale of the property.
d. Under duress, the borrower short sells the property.
1368) Brandy is going to purchase a strip mall. She is trying to determine exactly how much to borrow for this purchase. She understands that the more she borrows, the greater her risk. What type of risk is she evaluating?
a. Business risk
b. Capital risk
c. Dynamic risk
d. Financial risk
1369) Amy owns a salon and spa. She’s leasing a prime piece of real estate in which she’s installing salon chairs, counters, massage tables, spray tan vestibules, washers, and dryers. What are these items considered?
a. Extravagant
b. Real property
c. Trade fixtures
d. Unnecessary
1370) In terms of investment, liquidity means an investment ______.
a. Can easily be converted to cash
b. Can’t be sold
c. Is a cash cow
d. Will experience ebbs and flows in value
1371) Joaquim analyzed a potential opportunity and determined that if he invested $250,000 in the commercial property, he’d likely see a return of 12% on this investment. After several years, Joaquim is seeing a measly 2% return. What type of risk did he fall victim to?
a. Business risk
b. Capital risk
c. Financial risk
d. Leverage risk
1372) The use of one investment to finance another is called _______.
a. Blockbusting
b. Churning
c. Equity build-up
d. Pyramiding
1373) What is dynamic risk?
a. An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism
b. An uninsurable business risk resulting from economic, tax, and market changes
c. The risk that an investor cannot secure financing at an affordable rate
d. The risk that is directly related to leverage
1374) What’s the amount of money you have now called?
a. An investment
b. Future value
c. Present value
d. Principal
1375) The idea that $100 gains or loses value over time is called what?
a. Deflation
b. Inflation
c. Stagflation
d. Time value of money
1376) What type of real estate investment must distribute 95% of its income to beneficiaries?
a. Real estate investment trust
b. Real estate mortgage investment conduit
c. Real estate syndicate
d. Real estate trust
1377) The risk that the required return on investor capital will not be met is called ______ risk.
a. Business
b. Capital
c. Financial
d. Leverage
1378) Joanie sees herself as a mover and shaker, a leader, someone who jumps in and gets things done. She likes to be involved and in charge. When she decides to start investing in real estate, which of these choices is she most likely to select as her investment vehicle?
a. A multi-family residential income property
b. A real estate investment trust
c. A real estate mortgage investment conduit
d. A real estate syndicate membership
1379) Economic, tax, and market changes are types of _______ risk.
a. Capital
b. Dynamic
c. Environmental
d. Static
1380) The risk that an investor cannot secure financing at an affordable rate is called ______ risk.
a. Business
b. Capital
c. Financial
d. Leverage
1381) Which of the following is the best example of investment leverage?
a. Buying multiple properties at once
b. Buying properties on a systematic basis
c. Financing most of an investment and putting very little cash in
d. Paying all cash for an investment to avoid interest payments
1382) What are the two types of real estate investment trusts?
a. Debit and credit
b. Mortgage and equity
c. Mortgage and lease
d. Residential and commercial
1383) A group of investors bought property and developed a movie production studio. After a few years in business, the state passed regulations limiting the amount of tax incentives it would offer film studios shooting movies in the state. This move caused several companies to move their shooting to other states, jeopardizing the investors’ ability to earn the return they were expecting. What type of risk is this?
a. Capital
b. Dynamic
c. Environmental
d. Static
1384) Inga recently came into some money and is thinking of getting into real estate investments, but she doesn’t have a lot of experience with either real estate or investment strategies. Which of these properties would be her best bet?
a. A 100-unit apartment complex near where she lives
b. A neighborhood strip mall
c. An office building downtown with space for three tenants
d. Single-family residential as a rental property
1385) David owns a commercial building. He’d like to raise some capital for another project, so he sells the property to Gabby (an investor), then leases the space from Gabby. What type of arrangement is this?
a. Ground lease
b. Percentage lease
c. Sale leaseback
d. Subordinate lease
1386) The risk that is directly related to leverage is called ______ risk.
a. Business
b. Capital
c. Financial
d. Leverage
1387) What is capital risk?
a. The risk that an investor cannot secure financing at an affordable rate
b. The risk that is directly related to leverage
c. The risk that the property has a bad location
d. The risk that the required return on investor capital will not be met
1388) What is static risk?
a. An insurable business risk that includes insuring for accident liability, fire, theft, and vandalism
b. An uninsurable business risk resulting from economic, tax, and market changes
c. The risk that an investor cannot secure financing at an affordable rate
d. The risk that is directly related to leverage
1389) Bridget has an investment portfolio that includes an equity REIT. Which of these is most likely to be part of the REIT’s investment?
a. Mortgages secured by commercial properties
b. Mortgages secured by residential properties
c. Retail shopping centers
d. Undeveloped land parcels
1390) What type of lease gives the lender the power to evict tenants when a building owner doesn’t make the mortgage payments?
a. Ground lease
b. Percentage lease
c. Sale leaseback
d. Subordinate lease
1391) Which type of business risk is uninsurable?
a. Capital
b. Dynamic
c. Financial
d. Static
1392) The idea that money gains or loses value over time describes which concept?
a. Inflation
b. Interest
c. Time is money
d. Time value of money
1393) What’s another term for a trade fixture?
a. Appliance
b. Chattel
c. Corporeal
d. Dowry
1394) What type of real estate investment may meet the definition of being a security and must adhere to the rules and regulations of the Securities and Exchange Commission?
a. Real estate investment trust
b. Real estate mortgage investment conduit
c. Real estate syndicate
d. Real estate trust
1395) What is business risk?
a. The risk that an investor cannot secure financing at an affordable rate
b. The risk that is directly related to leverage
c. The risk that the property has a bad location
d. The risk that the required return on investor capital will not be met
1396) Accident liability, fire, theft, and vandalism are types of _______ risk.
a. Capital
b. Dynamic
c. Environmental
d. Static
1397) Which type of business risk is insurable?
a. Capital
b. Dynamic
c. Financial
d. Static
1398) Jason is planning to invest in a new commercial development. He’d like to invest $400,000 and secure another $100,000 through financing. After shopping around, Jason could not find financing at an affordable rate. Of what type of risk is Jason the victim?
a. Business risk
b. Capital risk
c. Financial risk
d. Leverage risk
1399) Which of these is a dynamic risk?
a. An accident involving a company delivery driver
b. Fire damaging the building
c. Market change
d. Theft of business equipment
1400) Dynamic and static risk are considered ________ risks.
a. Business
b. Capital
c. Financial
d. Insurance
1401) One advantage residential properties have for investors over commercial properties is that residential properties _______.
a. Are larger properties
b. Are relatively liquid
c. Are relatively rare, so tenants compete for available units
d. Require a larger down payment, so there is less to finance
1402) What is financial risk?
a. The risk that an investor cannot secure financing at an affordable rate
b. The risk that is directly related to leverage
c. The risk that the property has a bad location
d. The risk that the required return on investor capital will not be met
1403) What phrase describes the amount that today’s dollars grows to over time?
a. An investment
b. Future value
c. Present value
d. Principal
1404) Which of these should tenants keep in mind regarding trade fixtures?
a. Installation and removal should not cause damage to the property.
b. The tenant bears no responsibility for removing trade fixtures.
c. The tenant bears no responsibility when installing trade fixtures.
d. They become property of the landlord once installed.
1405) Brandon recently purchased an old warehouse building. This building will serve as a hub for local deliveries of fruits and vegetables within the state. During its first week in operation, one of the delivery drivers was involved in an accident that spilled coconuts all over the road and shut down the interstate for hours. What type of risk is this?
a. Capital
b. Dynamic
c. Environmental
d. Static
1406) What is the best definition for “the time value of money”?
a. It’s not wise to sell your time for money.
b. Money gains or loses value over time.
c. Money increases in value over time.
d. Time is money.
1407) What type of real estate investment is similar to collateralized mortgage obligations (CMOs)?
a. Real estate investment trust
b. Real estate mortgage investment conduit
c. Real estate syndicate
d. Real estate trust
1408) Which of these is generally a commercial property manager’s responsibility, but not a residential property manager’s responsibility?
a. Collecting rent
b. Evicting tenants
c. Negotiating leases
d. Overseeing maintenance
1409) Which of the following statements is true of financing a commercial property purchase?
a. A commercial property cannot be financed with a residential loan.
b. Commercial mortgages are easier to obtain than residential loans.
c. Commercial mortgages cannot be obtained through banks or credit unions.
d. Commercial mortgages have longer payback periods than residential mortgages.
1410) Stacy owns a strip mall with four units. She requires each tenant to sign one of these, which gives the lender the power to evict the tenant in the event Stacy does not make her mortgage payments.
a. Ground lease
b. Percentage lease
c. Sale leaseback
d. Subordinate lease
1411) What does a mortgage real estate investment trust invest in?
a. Lease contracts
b. Personal property
c. Real estate debt
d. Real estate property
1412) Which of these is a static risk?
a. A decline in economic conditions in the area
b. Change in tax code
c. Fire damaging the building
d. Market change
1413) A steel plant is an example of which commercial property category?
a. Leisure
b. Manufacturing
c. Retail
d. Sporting
1414) Which of the following best describes a mixed-use property?
a. A book store with a coffee shop in it
b. A building with commercial below and residential above
c. A halfway house
d. One that melds classic design with modern design
1415) Which of the following is one of the primary reasons that developers like to invest in unimproved land?
a. It looks good to top investors to have a portfolio of unimproved land.
b. It’s easier to build on a blank canvas than it is to retrofit existing infrastructure.
c. It’s profitable immediately.
d. Structures are already erected on the land, limiting the development that needs to be done.
1416) Which of these is NOT considered a residential property?
a. A condominium unit
b. A hotel with fewer than 20 rooms
c. A single-family home used for rental income
d. A triplex
1417) Which of the following belongs in the commercial category referred to as retail?
a. A gift shop in a shopping center
b. A hotel
c. A manufacturing plant
d. A warehouse
1418) Which of the following is an example of a residential property?
a. Condo
b. Hotel
c. Motel
d. Office building
1419) Blane owns a barbershop. He polls his customers and learns that they tend to come from less than a mile away. That’s probably because Blane’s store is in which type of location?
a. Factory outlet mall
b. Neighborhood center
c. Regional shopping center
d. Strip mall
1420) Which of the following describes a high-rise building?
a. 10-15 stories tall
b. 40 or more stories tall
c. Always equipped with elevators
d. Multi-family residential
1421) A duplex is what type of property?
a. Commercial
b. Leisure
c. Residential
d. Single-family residential
1422) Greg tries hard to reduce his carbon footprint, so he doesn’t own a car. He’s able to do all his shopping at stores on the same street where he lives, and takes a convenient train to his office for work. What type of community does Greg likely live in?
a. Gated single-family
b. Mixed-use with transit-oriented design
c. Multiple-zoned with transit restrictions
d. Neighborhood strip mall
1423) Congratulations! The crowd funding worked. Now you can start manufacturing your own line of yoga clothing. But first, you need a location to do all of that sewing. Which building would you select?
a. Heavy industrial
b. Light manufacturing
c. Residential
d. Retail outlet
1424) Why are residential properties popular with investors?
a. Because they’re rare, and therefore valuable.
b. They need somewhere to live.
c. They’re always in demand.
d. They require no down payment.
1425) What is meant by unimproved land, which investors call “dead money”?
a. A brownfield
b. A property in need of repair
c. A property that is vacant with no buildings
d. A property with a building that has not been remodeled
1426) Which of the following is a benefit of unimproved land?
a. All of the plumbing and electrical are already there.
b. Existing structures are usually ready to be torn down.
c. Existing structures usually don’t require improvement.
d. If land is scarce, it can be valuable.
1427) Sharilyn’s business and adjacent businesses are arranged in a neat row. Customers enjoy the open-air walkways when they visit her business and others. In which commercial space is Sharilyn’s business likely located?
a. Office building
b. Office park
c. Regional shopping center
d. Strip mall
1428) Anthony lives in a two-story apartment building. What type of building is this?
a. Commercial
b. Freehold
c. Low-rise
d. Retail
1429) In which commercial category are raw materials converted into useful objects?
a. Healthcare
b. Leisure
c. Manufacturing
d. Retail
1430) How many floors could a mid-rise office building have?
a. 15
b. Eight
c. Eleven
d. Three
1431) Augustine wants to move to a different area of town. He doesn’t have a car; he prefers to walk or take public transportation everywhere. He’s looking for housing near the subway. Communities designed and developed around access to public transportation are known as what?
a. DOT
b. FOD
c. NOD
d. TOD
1432) Are hotels and motels considered residential properties?
a. No, hotels and motels are considered commercial properties.
b. No, hotels and motels are considered retail property types.
c. Yes, they are always considered residential property types.
d. Yes, when there are residential units within the hotel or motel.
1433) Which of the following is an example of a leisure property?
a. Factory outlet
b. Motel
c. Retail store
d. Shopping mall
1434) If you’re staying at a motel, what’s one advantage you have over your friend, who’s staying at a hotel?
a. Closer to parking
b. More amenities
c. Nothing
d. Rooms open to interior of the building
1435) What is the definition of “before-tax cash flow”?
a. Cash flow after property taxes are considered.
b. Cash flow before property taxes are considered.
c. Cash flow before taking income taxes into account.
d. Cash flow taking income taxes into account.
1436) The sales price, acquisition costs, and capital improvement costs (such as renovations or additions) of a property combine to make up what?
a. Appraisal value
b. Basis
c. Debt coverage
d. Market value
1437) Gary, your investor client, has an annual net income of $50,000. His annual debt service is $12,500. What is his debt coverage ratio?
a. .004
b. 0.25
c. 1.4
d. 4.0
1438) What “quick and dirty” investment formula seeks to achieve a percentage of gross monthly rental income as compared to purchase price?
a. 2%
b. 5%
c. 50%
d. 70%
1439) You know a property’s effective gross income and its operating expenses. How would you calculate the net operating income?
a. Add income to tax deductions.
b. Multiply annual return by .05 of the property’s value.
c. Multiply monthly income by 12.
d. Subtract operating expenses from effective gross income.
1440) Which one of the following statements about investors and tax depreciation is true?
a. Depreciation is not limited to investment properties.
b. Investors are not allowed to take a business deduction for annual depreciation.
c. Investors can depreciate an appreciating asset.
d. Most investors try to avoid depreciation.
1441) Tyrell and Barb bought a commercial investment property in 2009 during the real estate market downturn. Through what year will they be able to depreciate the investment?
a. 2019
b. 2029
c. 2039
d. 2048
1442) Maya owns a small graphics shop and is meeting with her tax professional to review the year’s receipts and other tax documentation. Her tax advisor lets her know that she has an appreciating asset, which makes Maya very happy! Which of the following is Maya’s appreciating asset?
a. Her new 3-D printer
b. The digital printing press that she bought six months ago
c. The retail addition she put onto the building she already owned
d. The van she’ll use for trade show setups
1443) Jennifer is the owner of the single-family residence in which she resides. How long can she take to depreciate her property?
a. 27.5 years
b. 39 years
c. Indefinitely
d. Zero years (personal residences cannot be depreciated)
1444) What’s the definition of “potential gross income”?
a. After-tax income
b. Before-tax income
c. Income received after expenses are deducted
d. Income that a property could bring if fully leased
1445) Income that a property could bring in if it were leased at full capacity is ______.
a. An operating statement
b. Effective gross income
c. Net operating income
d. Potential gross income
1446) A property has 10 units and is 90% occupied. Rent is $500 per month. Total vacancy and collection loss equals 10%. What’s the potential gross income?
a. $4,500
b. $5,000
c. $54,000
d. $60,000
1447) What does “cash-on-cash return” mean?
a. A comparison of before-tax cash flow to cash invested
b. Making money hand over fist
c. Net income after taxes are deducted
d. Trading international currency
1448) Your client, Gabriel, has invested in a rental property. He looks at his property’s operating statement, tweaks the numbers based on his knowledge of the market, and re-works the statement. Gabriel has created ______.
a. A debt service statement
b. A gross income statement
c. An operating income statement
d. A pro-forma statement
1449) Which of the following do investors like to avoid?
a. High tax liabilities
b. Long-term appreciation
c. Positive cash flow
d. Tax write-offs
1450) Your client Joseph has a commercial income-producing property. How long does he depreciate this property?
a. 27.5 years
b. 39 years
c. Indefinitely
d. Zero years (commercial properties cannot be depreciated) n she’ll use for trade show setups
1451) 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?
a. The cost of the electrical system upgrades they did after purchase
b. The cost of the title insurance for the property
c. The loan origination and lender fees that they paid at closing
d. The price that they paid for the property, minus any land costs
1452) A property is generating $100,000 in income and has expenses of $25,000. The investor pays $3,000 toward mortgage principal each year and $32,000 toward interest, plus another $4,000 in income taxes. What is the before-tax cash flow?
a. $36,000
b. $40,000
c. $45,000
d. $50,000
1453) Malcolm purchased an old convenience store, and after renovations will open a small vegan grocery. He paid $517,000, of which $417,000 was for the building, and renovations cost him $107,000. What does the amount $524,000 represent?
a. Cash position
b. Depreciable basis
c. Income baseline
d. Investment basis
1454) Why is 2.5 a better debt service ratio than 1.8?
a. A debt coverage ration of less than two indicates negative cash flow.
b. A debt service ratio of 1.8 indicates that there is only enough income available to pay 80% of the annual mortgage payments
c. Lenders won’t consider debt coverage rations of less than 2.0.
d. The higher the debt service ratio, the more income the investor will have to cover the debt, and therefore, the less risk.
1455) A comparison of before-tax cash flow to cash invested is known as ______.
a. After-tax cash flow
b. Cash-on-cash return
c. Income rate value
d. Return on investment
1456) If a property has a potential gross income of $50,000, a vacancy and collection loss of 10%, and taxes are another 10%, what’s the effective gross income?
a. $40,000
b. $45,000
c. $50,000
d. $55,000
1457) “Effective gross income” most closely means ______.
a. Income after losses from vacancies and credit losses are deducted from potential gross income
b. Income after operating expenses are deducted
c. Income after taxes are deducted
d. Income that a property could bring if it were leased at full capacity
1458) To arrive at annual debt service cost, divide ______ by the debt coverage ratio.
a. Annual NOI
b. Loan factor
c. Maximum equity
d. Maximum loan
1459) What does “after tax cash flow” mean?
a. Cash flow after considering income taxes
b. Tax basis after deductions are applied
c. Tax refund
d. Tax windfall
1460) In investments, each type of depreciation is defined by a particular event. Which of the following best describes a depreciation type and an event it’s tied to?
a. Economic depreciation and cost recovery
b. Economic depreciation and physical deterioration
c. Operating depreciation and taxing authority
d. Tax depreciation
1461) Which one of the following is a description of economic depreciation?
a. Investors can take a business deduction for annual depreciation.
b. The asset is worth less because the economy took a downturn.
c. The asset is worth more because of capital improvements.
d. The owner/investor is making less income from the property than previously. and physical deterioration
1462) What does the quick and dirty 70% formula mean to investors?
a. That 70% of renters will leave in the first two years
b. That 70% of their income will go toward expenses
c. The purchase price shouldn’t be more than 70% of the repaired value
d. They must receive 70% return on their investment
1463) “Income received before expenses are deducted” is the definition of ______.
a. Effective gross income
b. Gross income
c. Net income
d. Taxes
1464) Which of the following are the dimensions required for a handicap-accessible parking space?
a. 12 feet wide by 12 feet long
b. 12 feet wide by 18 feet long
c. Nine feet wide by 12 feet long
d. Nine feet wide by 18 feet long
1465) Which of the following are the dimensions required for a van-accessible parking space?
a. 12 feet wide by 12 feet long
b. 12 feet wide by 18 feet long
c. Nine feet wide by 12 feet long
d. Nine feet wide by 18 feet long
1466) When considering the rentable square footage of a building, what’s known as the “loss factor”?
a. Bathrooms and hallways
b. Stairwells and lobbies
c. The difference between usable square footage and rentable square footage
d. Vacant units
1467) Rhonda purchased an existing pet store in her neighborhood, and she’s so excited! Her animal-loving aunt is thrilled for Rhonda but disappointed that she won’t be able to visit the store in her wheelchair, as the aisles are narrow and there isn’t enough room to move around. What is true about Rhonda’s responsibilities to her aunt and other people with disabilities?
a. At a minimum, Rhonda is required to add an accessible bathroom.
b. At a minimum, Rhonda is required to add an accessible entrance to the building.
c. Because Rhonda purchased a retail business, she must meet the same ADA requirements as new construction buildings.
d. Since Rhonda purchased an existing building and business, the ADA requirements aren’t as strict as with new construction and vary by building.
1468) Who is responsible for ensuring accessibility requirements for a commercial property are met?
a. Property inspectors only
b. Property managers only
c. Property owners and property managers
d. Property owners only
1469) When modifying commercial buildings to meet accessibility requirements, owners should focus their attention on these four areas: ______, access to goods and services, access to restrooms, and any other necessary measures, such as access to public amenities.
a. Installing more restrooms
b. Moving all of their operations to the first floor
c. Posting detailed floor plans by elevators and stairways
d. Providing an accessible approach and entrance
1470) Which of the following acts requires commercial buildings to be accessible to disabled individuals, such as those who use wheelchairs?
a. Americans with Disabilities Act
b. Fair Housing Act
c. Housing and Economic Recovery Act
d. Real Estate Settlement Procedures Act
1471) What is meant by “usable” square footage?
a. The area occupied by the tenant
b. The building’s area that is used by the greatest number of people
c. The carpetable area
d. The tenant’s area plus halls, bathrooms and other common areas
1472) When modifying commercial buildings to meet accessibility requirements, owners should focus their attention on these four areas: accessible approach and entrance, access to goods and services, ______, and any other necessary measures, such as access to public amenities.
a. Access to restrooms
b. Carpeted halls and stairways
c. Improved acoustics
d. Sufficient cooling and heating
1473) A parking structure has 1,510 total parking spaces. How many of these spaces must be accessible?
a. 20
b. 22
c. 25
d. 30
1474) An area 60 inches wide and located adjacent to accessible parking spaces is called a(n) ________.
a. Access aisle
b. Clearance
c. Hallway
d. Ramp
1475) Per accessibility requirements, what is a doorway’s minimum width?
a. 32 inches
b. 36 inches
c. 42 inches
d. 48 inches
1476) A parking structure has 150 total spaces. How many of these spaces must be accessible?
a. Five
b. Four
c. Seven
d. Six
1477) What is the minimum width of ramps on accessible routes?
a. 32 inches
b. 36 inches
c. 42 inches
d. 48 inches
1478) What is the minimum width of hallways on accessible routes?
a. 32 inches
b. 36 inches
c. 42 inches
d. 48 inches
1479) A parking lot has 35 total spaces. How many of these spaces must be accessible?
a. Four
b. One
c. Three
d. Two
1480) Parking facilities must have accessible parking. Depending on the number of accessible spaces, some of these must be van-accessible. How many van-accessible spaces are required?
a. One in every eight parking spaces
b. One in every four parking spaces
c. One in every six parking spaces
d. One in every two parking spaces
1481) At least how many routes in a new commercial building must be accessible?
a. All routes
b. One
c. Two
d. Zero
1482) A parking structure has 350 total spaces. How many of these spaces must be accessible?
a. 10
b. Eight
c. Four
d. Two
1483) A parking lot has 20 total spaces. How many of these spaces must be accessible?
a. Four
b. One
c. Three
d. Two
1484) Virginia is finally living her dream—she bought a coffeehouse in a charming college town. After she closed on it, her attorney sat down with her to discuss various business licensing and legal requirements she’ll have to meet. Virginia was surprised to learn that her five-table establishment is affected by the Americans with Disabilities Act. What must be true about the coffeehouse?
a. It includes at least 400 square feet of public space.
b. It’s a commercial enterprise that’s open to the public.
c. It sits in a city center.
d. It was built after 1978.
1485) A parking lot has 550 total spaces. How many of these spaces must be accessible?
a. 10
b. 11
c. 20
d. Nine
1486) What is the minimum size that the International Symbol of Accessibility (ISA) logo painted on the accessible spot must be?
a. 12 inches by 12 inches
b. 24 inches by 24 inches
c. 36 inches by 36 inches
d. 48 inches by 48 inches
1487) Accessible parking spaces must have an access aisle. What is the minimum width of this aisle?
a. 36 inches
b. 42 inches
c. 48 inches
d. 60 inches
1488) Which type of facility may require a higher number of accessible spaces than other commercial spaces?
a. Apartment complex
b. Physical therapy facility
c. Shopping mall
d. Sports arena
1489) The NAR Code of Ethics includes which protected classes in its definition of discriminatory behavior?
a. National origin and religion only
b. Race and color only
c. Race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity
d. Sex, age, and marital status only
1490) Landon is the listing agent for Maury’s property. Maury is moving out of state for a new job, so the house will be vacant for some time, depending on how long it takes to sell. Maury is pretty adamant about not having a sign in his yard, especially after he moves. Landon follows Maury’s wishes, but a month after Maury moved, there hasn’t been any movement on the property. Landon places a sign in the yard, hoping it will drum up some interest. Is this okay?
a. No, Landon shouldn’t place a sign on Maury’s property without Maury’s written permission.
b. No, Maury’s neighbors might tattle.
c. Yes, as the listing agent, Landon has the right to place a sign on the properties he has listed.
d. Yes, since Maury has moved, Landon can make decisions related to the property.
1491) According to the NAR Code of Ethics, which statement most accurately describes a licensee’s responsibility related to written offers on a listing?
a. A licensee is only required to present formal written offers that are equal to or more than the listing price.
b. A licensee is only required to present formal written offers within a certain range of the listing price of the property.
c. All formal written offers the licensee receives must be presented to the owner unless the owner has accepted a previous offer.
d. All formal written offers the licensee receives must be presented to the owner until closing or execution of a lease unless the client waives this obligation in writing.
1492) What is the difference between ethics and the law?
a. Ethics are about personal values, and the law is just about the rules. Both are legally enforceable.
b. Ethics are personal values and the law is society’s values, but they are both legally enforceable.
c. Laws are legally enforceable. Ethics aren’t legally enforceable until they become law.
d. There is no difference.
1493) Nancy just hired her sister, real estate licensee Grace, to list her property. Jason schedules a showing for his client, who’s interested in Nancy’s property. What needs to take place?
a. Grace doesn’t need to do anything special, since she doesn’t own the property.
b. Grace must terminate her contract with Nancy, since she can’t represent a family member.
c. Grace needs to disclose in writing to Jason and his client that the property is owned by a family member.
d. Grace needs to keep the fact that the property is owned by her sister confidential.
1494) What actions can licensees take related to signs?
a. They can only place signs on property they own.
b. They can place signs on an owner’s property with the owner’s written consent.
c. They can place signs on properties for which they are the listing agent, with or without the owner’s permission.
d. They can’t place signs anywhere.
1495) What types of laws does the corporations code contain?
a. It does not contain laws
b. Laws related to real property contracts, such as contract of sale or land installment contracts
c. Laws related to theft and other crimes
d. Laws related to the sale of securities
1496) Charles, a real estate professional, has just finished touring a property he’d like to list for sale. When talking with the owner about the property and comparing it to other properties recently sold in the area, he tells the owner he appraises the property at a value of $350,000. What, if anything, did Charles do wrong?
a. He inspected the property.
b. He offered an opinion about the value of the property.
c. He referred to his opinion on the value of the property as an appraisal.
d. He talked to the owner without having a listing agreement in place.
1497) According to Article 7 of the NAR Code of Ethics, which of these statements is most accurate when accepting compensation from parties to a transaction?
a. A licensee shall not accept compensation directly from more than one party to a transaction.
b. A licensee shall not accept compensation from anyone regardless of consent.
c. A licensee shall not accept compensation from more than one party to a transaction without consent from the client.
d. A licensee shall not accept compensation from more than one party to a transaction without the full knowledge and consent of all parties.
1498) What must a licensee do regarding property the licensee holds directly or indirectly if it becomes the subject of a real estate transaction?
a. Disclose the interest to all parties to the transaction.
b. Offer cooperating broker compensation.
c. Offer the property for sale within the firm before offering it to the general public.
d. Reduce the commission by half.
1499) What is a code of ethics?
a. Guidelines for conduct
b. Laws that licensees must abide by
c. Rules used by law enforcement officers
d. Something licensees don’t need to worry about unless they join the NAR
1500) What types of laws does the civil code contain?
a. It does not contain laws
b. Laws related to real property contracts, such as contract of sale or land installment contracts
c. Laws related to theft and other crimes
d. Laws related to the sale of securities
1501) Ideally, what guides real estate licensees’ behavior?
a. Ethics and compensation
b. Laws and compensation
c. Laws and ethics
d. Motives and ethics
1502) What must a licensee do when preparing a CMA for a consumer?
a. Have an appraiser sign off on the price before it’s presented.
b. Hire a home inspector to physically inspect the property.
c. Hire an appraiser to value the property.
d. Make a statement that the opinion isn’t an appraisal.
1503) Jasmine is in the market for a new property for her, her partner, and their young child. Tanner is Jasmine’s agent and has shown her several properties. Even though several properties meet the criteria his client is seeking, Tanner has intentionally weeded out properties close to the local college campus, because he doesn’t think the location would be suitable for a family with young children. What, if anything, has Tanner done wrong?
a. Tanner has discriminated against Jasmine using familial status as a reason for not showing her properties.
b. Tanner hasn’t involved Jasmine’s partner in the search process.
c. Tanner hasn’t received upfront payment for his services.
d. Tanner is acting within his expertise as Jasmine’s agent.
1504) Brandon is the listing agent for Jane’s property. After a couple of weeks on the market, two formal written offers come through. One is for well below the listing price, and another is a bit closer, but still under the list price. What should Brandon do with the offers?
a. Present both offers to Jane.
b. Present the higher offer to Jane, but not the lower offer.
c. Present the lower offer to Jane, but not the higher offer.
d. Respond to the buying agents and tell them to submit new offers closer to the listing price.
1505) Samantha is a real estate licensee. She’s showing her client a property. The client asks about some spots on the ceiling and wonders if they’re an indication of a roof leak. What should Samantha do?
a. Climb on the roof and perform an inspection.
b. Hire a home inspector to physically inspect the property.
c. Suggest that her client contact a roofing expert to make a determination.
d. Tell her client that the spots indicate a roof leak.
1506) In which of these situations does the licensee have a disclosable ownership interest in the property?
a. Carson represents both the buyer and the seller in a transactions.
b. Kennedy is representing his LLC in the purchase of a commercial building.
c. Rebecca is listing her neighbor’s vacation home.
d. Roger is listing a property that he sold to the current owner eight years ago.
1507) Ricky is working for Matt, a buyer client, who is interested in a property at which the listing agent offers compensation to cooperating agents. The listing agent has offered Ricky or any cooperating agent additional compensation if the transaction closes within 40 days. Is this ethical?
a. No, it’s never ethical for a licensee to accept compensation from more than one party.
b. Yes, but only if all of the involved parties have full knowledge and provide consent.
c. Yes, but only if the Matt has full knowledge of the compensation arrangement and provides consent.
d. Yes, licensees can receive compensation from multiple parties in the transaction.
1508) Which of the following actions is against the NAR Code of Ethics?
a. Including the brokerage name and main phone number, in addition to a licensee’s own name and phone number on an advertisement
b. Making a reasonable effort to ensure all parties to a written agreement have a copy of the agreement
c. Preparing a written agreement that accurately states a purchase price
d. Preparing a written agreement that falsely states a purchase price
1509) What types of laws does the penal code contain?
a. It does not contain laws
b. Laws related to real property contracts, such as contract of sale or land installment contracts
c. Laws related to theft and other crimes
d. Laws related to the sale of securities
1510) According to the NAR Code of Ethics, what responsibility do licensees have related to material facts?
a. Accept all client statements concerning the property as material fact.
b. Make a reasonable effort to ascertain all material facts concerning each property for which an agency is accepted.
c. Make extraordinary efforts to ascertain all material facts concerning each property for which an agency is accepted.
d. They don’t have any responsibilities related to material facts.
1511) Daniel has several properties listed around town. He receives a call from a prospective buyer who is very interested in one of the properties and wants to schedule a showing. What should Daniel do?
a. Assume the buyer understands that Daniel is the seller’s agent.
b. Disclose his agency relationship with the seller to the prospective buyer.
c. Refer any questions about the property to the seller.
d. Schedule the showing.
1512) Regarding documentation, which of the following actions can help a licensee avoid being accused of unauthorized practice of law?
a. Disclosing in writing to all parties in a transaction that the licensee isn’t a licensed attorney, so there’s no licensee liability
b. Having a designated broker review and notarize all completed contracts
c. Having a designated broker write all contracts from scratch to make them specific to each transaction
d. Using approved fill-in-the-blank forms
1513) Darcy and her buyer client Josh are reviewing Josh’s offer before they submit it to the seller. Which one of these actions may Darcy take without potentially crossing into the unauthorized practice of law?
a. Draft her own offer form.
b. Strike through any paragraphs Josh doesn’t like, even the ones required by federal or state law.
c. Tell Josh that hiring an attorney to review the contract would be a waste of money since Darcy is perfectly qualified to explain the legal ramifications of the contract terms.
d. Use standard, approved language in contingencies, addenda, and additional provision areas.
1514) While working with a buyer client, the licensee filled in the blanks on the purchase agreement, drafted an early occupancy addendum, and assured his buyer that she was “fully protected” and would get her earnest money back if the sale didn’t close. He encouraged her to hire an attorney to review the contract and addendum, and then invoiced her for a nominal $15 fee to prepare transaction documents. Which of the following tasks was the licensee legally permitted to do?
a. Charge a fee for preparing legal documents
b. Draft the early occupancy addendum
c. Fill in the contract blanks
d. Interpret the contract provisions regarding the buyer’s full protection and getting her earnest money returned
1515) What’s an agent’s responsibility related to home inspections?
a. To encourage buyers to waive an inspection
b. To hire an inspector for the buyers
c. To perform them
d. To recommend a buyer have a professional inspection performed
1516) What is a licensee’s responsibility related to the paperwork in a real estate transaction?
a. Make sure all parties have copies of the paperwork and that it’s retained for the statutory period.
b. Make three copies of all documents.
c. Secure paperwork in the broker’s vehicle.
d. Shred documents once the transaction is complete.
1517) When must an agent disclose an agency relationship to an unrepresented transaction party?
a. At closing
b. At first substantive contact
c. Relationships don’t need to be disclosed
d. When asked about the relationship
1518) Which of the following is considered unauthorized practice of law?
a. Explaining a clause in a contract to a client
b. Interpreting the legal consequences of a client’s actions
c. Using existing forms an attorney has reviewed
d. Using standard language for addenda
1519) In addition to serving as the listing agent for several clients, your own house is also on the market. You receive a call from another licensee who wants to show her buyer client your house. What must you immediately disclose to the buyer’s agent and buyer?
a. The house may have been an orphanage 80 years ago.
b. You’d sell for far lower than the current asking price.
c. You own the property.
d. Your housemate had swine flu last month.
1520) You’re walking through a property with a new seller client. The seller tells you that the property is serviced by the public sewer system, but when walking up the drive you noticed the access hatch for a septic system. What should you do?
a. Believe the homeowner when he says the property is on public sewer, because he’d know best.
b. Hire a private investigator to look into it.
c. Inquire about the homeowner’s claim to ensure the property really is on public sewer.
d. Terminate the listing, as the homeowner is obviously not being truthful.
1521) Chester is moving on up! He and his wife are ready to sell their condo and purchase a new place. Chester is a real estate licensee and will list the property himself. What must Chester disclose to prospective buyers?
a. Chester doesn’t need to disclose anything to buyers.
b. He owns the property.
c. The sellers are eager to sell.
d. The sellers will not accept any offers below $300,000.
1522) Real estate licensee William is preparing a sale agreement that will include an unusual circumstance. What’s his best course of action?
a. Consult an attorney.
b. Create his own forms.
c. Use an existing form and write an addendum that covers the unusual circumstance.
d. Use existing forms but modify the language to address the unusual circumstance.
1523) A property is listed as having four bedrooms and two-and-a-half bathrooms. However, when showing your buyer clients the property, you only count three bedrooms. As their agent, what should you do as part of your due diligence?
a. Call the police.
b. Demand the homeowner build another bedroom.
c. Ignore the discrepancy.
d. Investigate this discrepancy.
1524) Unauthorized practice of law and acting outside the scope of one’s expertise are similar issues. Which of the following circumstances specifically relates to the unauthorized practice of law?
a. Predicting a specific tax increase or decrease
b. Predicting the return on investment for a rental property
c. Recommending specific investments
d. Writing contract addenda or additional provisions that cover unfamiliar circumstances
1525) Susan is a real estate licensee. Her mother is moving to a facility for active seniors and has asked Susan to sell her home. What information does Susan need to disclose to prospective buyers?
a. She is related to the seller (her mother).
b. Susan doesn’t need to disclose any of these things.
c. Susan’s father passed away in the house.
d. The seller is moving to a senior living facility.
1526) Roberto, a licensee, filled in the blanks on a standard form used in his brokerage firm. Is this okay?
a. No, because he’s not an attorney, he shouldn’t prepare contracts.
b. No, he should have his client complete any forms.
c. Yes, licensees can use standard forms provided by the brokerage or approved by an attorney.
d. Yes, real estate licensees may draft contracts and fill in blanks on existing contracts.
1527) Bethenney is Jason’s agent. Jason made an offer on a property and wrote an earnest money check, which he gave to Bethenney. What should Bethenney do with the check?
a. Cash the check and give half to her broker.
b. Follow brokerage procedure for handling monies entrusted to agents by clients.
c. Give it back to Jason to deposit in his bank.
d. Go on a shopping spree.
1528) Nicholas is working with a buyer client who wants a special clause added to his purchase contract. How should Nicholas handle this?
a. Ask the client to draft the clause, then insert it into the contract.
b. Draft the clause himself and have the client run it by his attorney.
c. Instruct the client to hire an attorney to draft the clause.
d. Tell the client that he doesn’t need that particular contract clause.
1529) Which of the following actions concerning tenant rights should real estate licensees take?
a. Advise landlords on their legal rights and responsibilities to tenants under the law.
b. Advise tenants on their legal rights and responsibilities under the law.
c. Ignore tenants’ legal rights.
d. Learn and understand tenants’ legal rights.
1530) Which of these actions is allowed and helps the licensee to avoid illegally practicing law?
a. Advising a landlord client of his legal rights and responsibilities
b. Charging a $10 scrivener’s fee for preparing transaction documents
c. Filling in blanks on an association-approved purchase contract
d. Striking provisions in a contract that don’t apply to a transaction
1531) A buyer client is preparing an offer on a property. He wants to make sure his offer stands out above all others and is accepted, so he discusses waiving the inspection contingency. What should the agent do?
a. Encourage the buyer to get an inspection, and if he still wants to waive it, put it in writing that you advised against waiving the inspection and have him sign.
b. Follow the buyer’s wishes without question.
c. Ignore the buyer’s request to waive the inspection.
d. Personally perform an inspection.
1532) Which of the following actions is representative of an agent’s due diligence and ethical behavior?
a. A buyer client wants to waive an inspection. The agent follows the request without question.
b. An agent deposits a buyer client’s earnest money check into her personal bank account.
c. An agent notices a discrepancy between what the homeowner says and what the property shows, so he ignores it.
d. An agent notices a discrepancy between what the homeowner says and what the property shows, so he investigates.
1533) Which of the following statements is true of a material fact?
a. A material fact is known only to real estate licensees.
b. A material fact is only related to the condition of a property.
c. A material fact need not be disclosed to all parties.
d. A material fact would cause a reasonable person to either act or not act, if that fact were known.
1534) What is misrepresentation?
a. An inadvertent misstatement of fact only
b. An intentional misstatement of fact only
c. An intentional or inadvertent misstatement of fact
d. A statement of opinion or exaggeration that’s generally understood to not be a statement of fact
1535) Which of the following is true of the harm caused to a person relying on false information?
a. The harm can be physical or monetary.
b. The harm must be monetary.
c. The harm must be physical.
d. The monetary harm must exceed a specific dollar threshold.
1536) Which of the following is true about positive misrepresentation?
a. A principal was harmed by the misstatement.
b. The misstatement ended in a positive outcome.
c. The misstatement wasn’t relied upon.
d. The person making the misstatement did not know it was false.
1537) Erica describes the condo she’s listed as being “the best unit in the building.” What’s this an example of?
a. Intentional fraud
b. Lying
c. Positive misrepresentation
d. Puffery
1538) Kennedy lists Heather’s home. He noticed evidence of termites, and asked Heather about it. She said a pest control company solved the problem. What can Kennedy do to reduce the risk of misrepresentation?
a. Ask for the pest control company report from Heather.
b. Defer questions to Heather.
c. List it the property as free of pests.
d. She has done everything she needs to do.
1539) Which of the following is true about inadvertent misrepresentation?
a. A false statement was made.
b. No harm was done to anyone.
c. The person hearing the false statement did not rely upon it.
d. The person making the false statement knew it was false.
1540) You’re the listing agent on a property, and you have a potential buyer who can’t see the property until next week. A buyer’s agent shows the property to another prospective buyer, who makes an offer. Which action best demonstrates good faith to your seller client?
a. Hold on to the offer until after your buyer sees the property.
b. Present the offer to the seller and tell him you have another potential buyer who wants to see the property next week.
c. Present the offer to the seller right away and don’t mention the other potential buyer.
d. Tell the buyer’s agent that the sellers aren’t reviewing offers until next week.
1541) One element of misrepresentation is when ______.
a. No one relied on the false statement
b. The false statement caused harm to the person who relied upon it
c. The false statement did not cause harm to the person who relied upon it
d. The person relying on the false information knew it to be false
1542) Edna is a listing agent on a property and has received two offers: one at list price and one slightly below. The offer that’s slightly below list price is from a buyer Edna’s cousin represents. What should Edna do?
a. Edna should only present the offer from her cousin’s client so her client isn’t tempted to take the higher offer.
b. Edna should present all offers, discuss the facts of each, and disclose that her cousin represents one of the buyers.
c. Edna should present both offers but encourage her seller to consider the higher one.
d. Edna should present both offers but encourage her seller to consider the lower one.
1543) You make a listing presentation to a client, then learn she’s meeting with a few more licensees before deciding which licensee gets her listing. You know these competitors. Which action best demonstrates good faith?
a. You contact the other licensees to try to convince them not to work with the seller.
b. You tell the seller all of the dirt you have on the other licensees.
c. You tell the seller you hope she’ll decide to work with you.
d. You walk away from the listing.
1544) Which of these describes self-dealing?
a. A licensee lists her own property and informs all parties that she’s licensed.
b. A licensee sells a property but forgets some of the paperwork.
c. A licensee sells a property with the understanding that she will make all pertinent decisions on her client’s behalf.
d. A licensee sells her own property without informing all parties that she’s licensed.
1545) Isabelle just took on a new listing, in which the owner is selling because a new freeway is being built right behind the house. The owner is concerned about the noise and other activity the freeway will bring, but doesn’t want prospective buyers to know this. Which action best demonstrates good faith in this scenario?
a. Isabelle decides not to take the listing, since the property will be impossible to sell.
b. Isabelle takes the listing and, per her client’s instructions, doesn’t tell prospective buyers about the planned road construction.
c. Isabelle takes the listing, tells the seller she won’t discuss the new freeway, then discloses this fact to prospective buyers, since it’s material to the property.
d. Isabelle tells the owner that this is a material fact related to the property that must be disclosed to prospective buyers, or Isabelle will not take the listing.
1546) While showing a property to your buyer client, you notice that new carpet was recently installed in the basement, and new paneling has been tacked to the walls. You know this is often something sellers do when they want to cover up evidence of water damage. You are ethically obligated to ______.
a. Point this out to your buyer client, and suggest she have an inspector look into this if she’s interested in the property
b. Point this out to your buyer; inform her that the sellers are clearly hiding water damage, and tell your client that if the sellers are lying about this you cannot guess what else they’re lying about
c. Report the sellers’ agent to the local board and file an ethics complaint
d. Report the sellers to the local board and file an ethics complaint against them
1547) Which of the following isn’t an element of intentional misrepresentation?
a. When it includes a false action or statement.
b. When it’s a key piece to the purchase of a property.
c. When it’s committed against a buyer by an agent.
d. When it’s witnessed or validated by multiple people.
1548) Which of these is an example of a material fact?
a. The fact doesn’t influence the value of the property.
b. The fact would not have resulted in a different outcome.
c. The seller would have accepted an offer regardless of the fact.
d. The seller would not have accepted an offer had he or she known the fact.
1549) Monica is acting as a listing agent for her friend, Brian. She and Brian met when they both began attending a support group for those living with HIV. Which of the following best represents an action Monica should take?
a. Monica cannot tell others about Brian’s HIV status.
b. Monica should not be the listing agent for her friend.
c. Monica should purchase Brian’s property.
d. Monica should tell all prospective buyers that the seller has HIV.
1550) Which of the following is NOT a characteristic of intentional misrepresentation?
a. The fact that the person who falsely represented the material fact was aware of its falsity
b. The false statement or representation of a material fact
c. The person who falsely represented the material fact did it innocently
d. The person who relied on the false information is harmed
1551) Broker Joseph tells his clients that the property they’re interested in purchasing is zoned as residential, even though he knows it’s zoned as commercial. This violation is an example of ______.
a. Contractual interference
b. Failing to disclose an agency relationship
c. Misrepresenting or omitting
d. Performing services that qualify as practice of law
1552) Which of the following is an element of positive misrepresentation?
a. The false statement caused harm to the person who relied upon it.
b. The false statement was not relied upon.
c. The person making the false statement didn’t know it was false.
d. The person relying on the false information believes it to be false.
1553) Lenny is the listing agent for a property built in 1901. Old homes are very desirable in this area, and Lenny is expecting a fair amount of interest and multiple offers at the planned open house. Which action best demonstrates good faith to his seller client in this scenario?
a. Lenny presents all formal written offers as they come in, discussing the merits and drawbacks of each, but ultimately lets the owner decide what action to take.
b. Lenny presents only the best offer to the owner.
c. Lenny reviews the offers that have come in and presents the top candidates to the owner.
d. Lenny waits a week after the open house before presenting offers to let as many offers come in as possible.
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1) Net operating income ‒ debt services = ______
a. Cash flow
b. Effective operating income
c. Operating expenses
d. Vacancies and credit loss
2) What responsibilities does a real estate professional have regarding property taxes?
a. Assist with paying property taxes at closing
b. Determine whether property taxes have been correctly assessed
c. Testify at property tax hearings
d. Understand how property taxes are calculated and disclose to buyers what their property taxes will be based on true taxes, not assessed value nor taxes after exemptions are taken
3) Which of these is the better debt service ratio?
a. 1.3
b. 1.8
c. 2.25
d. .25
4) As a licensee representing investor clients, your marketing strategy should be determined by ______.
a. Anticipated commission
b. Demographics
c. Long-term profits
d. Property type and the client’s investment strategy
5) Which IRS forms are independent contractors and employees required to complete?
a. Independent contractors fill out W-4s, and employees fill out W-2s.
b. Independent contractors fill out W-4s, and employees fill out W-9s.
c. Independent contractors fill out W-9s, and employees fill out W-2s.
d. Independent contractors fill out W-9s, and employees fill out W-4s.
6) Recording a document makes it a matter of ______.
a. Closing
b. Conveyance
c. Fact
d. Public record
7) Whose responsibility is it to keep track of all buyer contingency deadlines and ensure they’re not missed?
a. The buyer
b. The buyer and the buyer’s agent
c. The seller
d. The seller and the seller’s agent
8) California law requires a notice about compensation to the broker in the listing agreement. What does that notice need to communicate?
a. That it is fixed by law
b. That it is non-negotiable
c. That net listings are illegal
d. The amount or rate of the commission is not fixed by law.
9) You haven’t been paid your commission on a transaction that closed nine months ago. The commission was paid to your broker, but you haven’t received your compensation. What remedy is available?
a. Nothing, the statute of limitations has passed
b. Take the broker to court over non-payment of your commission
c. Take the buyer to court over non-payment of your commission
d. Take the seller to court over non-payment of your commission
10) What is a real estate investment trust (REIT)?
a. A company that owns, and usually operates, income-producing real estate
b. An entity used to pool mortgage loans and issue mortgage-backed securities
c. An organization that manages income-producing real estate properties
d. An organization with many investors who jointly participate in a real estate investment
11) Bert is an investor who doesn’t actually buy properties. Rather, he finds deals and “assigns” them to others for a fee. Bert is obviously ______.
a. A flipper
b. A foreign investor
c. A wholesaler
d. Operating illegally
12) A ______ is a worker who’s classified by the common understanding of the profession. An example would be a food server.
a. Common law employee
b. Independent contractor
c. Statutory employee
d. Statutory non-employee
13) What’s the term for an addition to a sales agreement form that can be added before it is signed without changing any of the other terms that have already been agreed upon?
a. Addendum
b. Amendment
c. Annexation
d. Appurtenance
14) What should you do if your buyer client, Steve, says he doesn’t want to have a professional inspection?
a. Ask Steve to sign a waiver
b. Hire an inspector yourself
c. Perform the inspection yourself
d. Refuse to work with Steve
15) A set of guidelines for the ethical conduct of real estate licensees is called a ______.
a. Code of ethics
b. Contract
c. Option
d. Rule book
16) Danielle is a new licensee. She is also newly engaged with a two carat diamond ring and diamond tennis bracelet she can’t wait to show off to clients. Her sponsoring broker, Tom, has provided her with a list of things she should avoid in social media postings. The list includes wearing expensive jewelry in photos she posts of herself on social media. Why is that?
a. It could make her a target for criminals.
b. It portrays the firm’s clients in a poor light.
c. It will be bad publicity.
d. It will make the other salespeople angry.
17) During the closing, whose job is it to deliver the title commitment after ensuring the title is marketable and without defect?
a. The lender’s attorney
b. The seller
c. The seller’s agent
d. The title company representative
18) Which photograph of a home for sale should not be published for public viewing?
a. An exterior photo showcasing the pool and outdoor kitchen/bar area
b. A photo of the billiards room that reveals the owner’s collection of antique guns
c. A photo of the master bathroom that also shows the photographer’s arm reflected in the mirror
d. A wide-angle photo of the renovated kitchen that makes the area look larger than it really is
19) Why is it so important to be able to properly identify trust funds?
a. In order to earn interest while they are deposited.
b. So they don’t get lost.
c. So you know what you’re talking about at meetings.
d. They must be handled differently than non-trust funds.
20) Which of the following best defines a stigmatized property?
a. A home that has specific architectural elements
b. A home that is smaller than what is typical in a neighborhood
c. A property in a run-down neighborhood
d. A property that has been psychologically rather than physically impacted by an event
21) Advance fee agreements in California need to be approved by which regulatory body?
a. Department of Finance
b. Department of Real Estate
c. Managing Brokers
d. Office of Real Estate Appraisers
22) Gross potential rental income ‒ vacancies and credit loss = ______
a. Effective gross income
b. Expense reimbursements
c. Late rent
d. Net operating income
23) How does the income from property taxes benefit the community?
a. It’s used to build high-end housing.
b. It’s used to build new shopping malls.
c. It’s used to determine property tax increases.
d. It’s used to fund essential services and public works.
24) Which of the following describes how a property manager would calculate anticipated annual rental income for a budget?
a. Take the average market rental rate, multiply by the number of units, and subtract operating expenses.
b. Take the owner’s income goals and subtract operating expenses.
c. Take the per-unit rate, and multiply by the number units, then by the number of occupied months in the year, taking into account the previous year’s occupancy/vacancy rates.
d. Take the previous year’s income and add 10% for appreciation.
25) Who is responsible for ordering an appraisal, completing the loan application, ordering a home inspection, and obtaining homeowners insurance before closing?
a. The buyer
b. The lender
c. The seller
d. The title insurance company
26) The _____________ section of the purchase agreement you reviewed is not for the buyer to fill out. It is where the seller indicates whether the offer is accepted or countered.
a. Acceptance of Offer
b. Accepted or Countered
c. Expiration of Offer
d. Terms and Conditions
27) Who is responsible for paying state and local transfer taxes in California?
a. Both the buyer and seller are jointly responsible
b. The buyer only
c. The lender
d. The seller only
28) The Philberts just bought a home for its market value of $340,000. How will Proposition 13 affect their property taxes?
a. Their property tax is limited to 1% of the property’s value as of February 28, 1975.
b. The property’s value as of the date of sale becomes the base value, and they’ll pay a maximum of 1% of that value as property tax. The property’s assessed value can’t go up more than 2% each year thereafter, until they sell or improve it.
c. They’ll pay no more than 1% of the property’s market value each year as property tax.
d. They’ll pay property tax of one percent of the property’s market value the first year, and that tax will increase by 2% each year thereafter until they sell or improve the property.
29) What minority group is expected to significantly improve homeownership rates in the next decade?
a. Asian
b. Black
c. Hispanic
d. Native American
30) Which form is used to report a real estate transaction to the Internal Revenue Service?
a. Form 1099-S
b. Inspection Report
c. Settlement Statement
d. Uniform Settlement Statement HUD-Form 1
31) _______ includes a review of the demographic, geographic, and governmental environment in which a rental property is located.
a. A competitive analysis
b. A market analysis
c. An analysis of alternatives
d. A property analysis
32) “Safety first” means that it becomes second nature to consider the ______ before doing anything—even marketing yourself.
a. Benefits
b. Commission check
c. Economy
d. Risks
33) What type of client should you ask about experience, strategies, and their team?
a. Home buyer
b. Home seller
c. Investor
d. Time-share purchaser
34) What information can potential criminals use to find you or know when you are home?
a. Your list of contacts
b. Your location information
c. Your privacy tools
d. Your profile photo
35) When you create fictitious scenarios of danger and determine strategies to get out, talk your way out, or fight back for each one, you are ________.
a. Being silly
b. Imagining things that will never happen
c. Practicing strategies for getting to safety
d. Wasting your valuable time
36) Cash flow / initial cash investment = ______
a. Effective operating income
b. Profit
c. Return on cash flow
d. Return on investment
37) In order to protect your personal safety, which of the following should you avoid posting on social media?
a. Photos of a home’s selling features.
b. Photos that are professional and understated.
c. You are alone at an open house.
d. You have a great listing.
38) The portion of the property management plan that discusses the property’s current condition and recommendations to stall or reverse obsolescence is called the _______.
a. Analysis of alternatives
b. Competitive analysis
c. Market analysis
d. Property analysis
39) For safety reasons, you should not allow strangers to see ______.
a. Your Agent of the Month award
b. Your car keys
c. Your cell phone
d. Your family photos
40) It is a bad idea to include information about your loved ones and pets in your personal marketing because it is a safety risk to ______.
a. Your business associates
b. Your community
c. Your loved ones
d. Your reputation
41) Which term is used for the individual who conducts the closing?
a. Buyer’s agent
b. Closing agent
c. Lender’s attorney
d. Seller’s agent
42) Which of the following is true about personal safety in the office?
a. Clients/customers should not be left unsupervised in the office.
b. It’s okay to leave client paperwork out in the open.
c. It’s okay to share personal information about your family.
d. You should proudly display photos of your family.
43) When showing a home, which of the following is something you should do?
a. Carry a fully charged cell phone.
b. Enter the room first.
c. Wear high-heeled shoes.
d. Wear uncomfortable clothing.
44) When a real estate transaction closes, who is typically responsible for paying escrow fees in California?
a. Both the buyer and seller are jointly responsible
b. The buyer only
c. The lender
d. The seller only
45) Which of the following is a good example of how to identify your clients?
a. Asking them their name
b. Asking them their name and address
c. Having them complete a survey about their housing needs
d. Taking a copy of their driver’s license
46) How can mobile applications assist you with personal safety?
a. Disarming dangerous criminals
b. Ensuring you never encounter a dangerous person
c. Identifying a client’s intentions with one button press
d. Recording conversations, calling for help, and relaying your location
47) Property owners must account for the costs of maintaining and running a property, which are called ______.
a. Landlord expenses
b. Operating expenses
c. Profit loss
d. Property expenses
48) When a buyer and a seller agree upon a price, they are determining the ______________.
a. Assessed value
b. Investment value
c. List price
d. Market value
49) Performing an Internet search on your name can help you to do what?
a. Be the most popular person in your peer group
b. Protect your reputation
c. Ruin your reputation
d. See what others are posting about themselves
50) Why is it so important to be able to identify non-trust funds?
a. For the purpose of avoiding commingling of trust and non-trust funds as well as not violating established legal procedures and standards
b. Only to make your boss happy
c. So your clients will believe you know what you are talking about
d. To avoid violating FDIC rules regarding trust funds
51) The price an owner offers to sell a property for is called the __________.
a. Depreciated value
b. List price
c. Market price
d. Property value
52) Investors are generally interested in the _________________.
a. Assessed value
b. Investment value
c. List price
d. Market value
53) Under what circumstances would a residential transaction require the seller to provide a prospective buyer with a Residential Earthquake Hazards Report?
a. All residential transactions require this disclosure
b. If the home were built prior to 1960
c. If the property is located within an earthquake hazard zone
d. When there is also disclosure of unpermitted construction on the property
54) Which of the following real estate transactions requires use of the Real Estate Transfer Disclosure Statement?
a. 20-unit apartment building
b. Foreclosure transfer
c. Industrial property
d. Single-family residence
55) Which of these situations do licensees commonly encounter when working with sellers?
a. Sellers who are eager to reduce the price of their home when the market dictates
b. Sellers who are unwilling to recognize the market value of their home
c. Sellers who believe they’ll get better service by paying a higher commission
d. Sellers who refuse to negotiate with buyers
56) When must two licensees, each representing different parties in a transaction, have a dual agency disclosure signed?
a. Never
b. When both licensees are related
c. When both licensees work for the same broker
d. When the parties to the transaction are related
57) Who should take responsibility for completing the seller’s information section of the Real Estate Transfer Disclosure Statement?
a. Home inspector
b. Seller
c. Seller and seller’s agent
d. Seller’s attorney
58) When it comes to investment risk, usually the ______ the risk, the greater the potential return.
a. Greater
b. Lower
c. More liquid
d. Safer
59) In the Offer section of the sample purchase agreement, the amount the buyer is offering is referred to as the ______________________.
a. List price
b. Offer
c. Purchase price
d. Sales price
60) Which option defines a probate sale?
a. Occurs after the owner defaults on a loan
b. Occurs utilizing an administrator or executor of a will with court supervision
c. Occurs when a homeowner seeks only what is owed on their mortgage and enough to cover closing costs
d. Occurs when the property is bank-owned
61) If you’re not using columnar records, what are the minimum requirements for recordkeeping related to trust funds?
a. Bank statement, cash ledger, interest statement
b. Beneficiary ledger, profit and loss statement, journal
c. Copies of deposit slips, journal, bank statement
d. Journal, cash ledger, beneficiary ledger
62) Residential property that is owner-occupied qualifies for an exemption of how much?
a. $10,000
b. 100% of the base value, since it is rare for owners to occupy their owned property
c. $500
d. $7,000
63) Of the following, which duty may an escrow agent perform?
a. Ask the courts to resolve a dispute between the parties
b. Audit the buyer’s financial statements
c. Disburse funds, according to the seller’s wishes
d. Provide legal advice to the parties
64) A property has an annual before-tax cash flow of $100,000 and income taxes of $12,000. The investor has $2 million invested in this property. What is the investor’s cash-on-cash return?
a. 12%
b. 18%
c. 25%
d. 5%
65) Amy is explaining the “broker and seller’s duties” section of a listing agreement to a new client. Which of these would be an accurate statement to make?
a. The broker and seller each have a duty to disclose material facts
b. The extent of the broker’s duties depends on the type of listing agreement.
c. The seller and broker will take turns showing the property to potential buyers.
d. The seller and the broker agree to exercise reasonable effort and cooperation in the sale of the property.
66) Vacancy decontrol means that when a tenant moves out, the owner may ______.
a. Apply for an exemption from rent control
b. Convert the unit to a condo
c. Not raise the rent
d. Raise the rent to the market rate
67) How does home ownership contribute to stronger communities?
a. Home owners do not move frequently.
b. Home owners have more wealth.
c. Home owners have steady jobs.
d. Home owners spend more money.
68) When marketing a property for an investor, your marketing strategy will largely depend on property type and ______.
a. Amenities
b. Investment strategy
c. Neighborhood
d. Value
69) –00cceshopp00final2—
70) Chance and Lucky have an option agreement between them in which no consideration is provided. Is this enforceable?
a. No
b. Only for option periods of less than six months in length
c. Only if the sales price is clearly stated
d. Yes, as long as the option is executed by the required deadline
71) A buyer defaults on the purchase of a $500,000 single dwelling residential property after putting down a $25,000 deposit. What is the maximum amount of liquidated damages that may be awarded to the seller?
a. $15,000
b. $2,500
c. $25,000
d. $3,000
72) You’re working with a real estate investor. Why might you ask the following question: What’s your end goal?
a. Financing for investors can be problematic for a number of reasons.
b. It will help you determine an investor’s readiness to buy if the investor already has general contractors, lenders, property managers, accountants, etc. lined up.
c. The best investors are often those who have the most business skills.
d. This helps you determine the kind of properties and deals they may be interested in and the type of services they may want from you.
73) You’re working with an investor who wants you to find properties in disrepair so he can quickly make repairs and sell the property for a profit. This is ______.
a. A buy-and-hold strategy
b. A legal flipping strategy
c. An illegal flipping strategy
d. A wholesaler strategy
74) California Code requires a real estate agent participating in a residential transaction to perform a ______ of the property.
a. Expert visual inspection
b. Professional home inspection
c. Reasonably competent and diligent visual inspection
d. Thorough physical inspection
75) What’s the definition of a closing in its simplest form?
a. The buyer makes an offer on the property.
b. The buyer receives title to the property, and the seller receives consideration for it.
c. The lender approves the loan application.
d. The seller signs a contract to hire a broker.
76) Why would parties use an escrow company to assist in a transfer of real property?
a. It protects each party’s interests.
b. It’s free.
c. It’s required by law.
d. It’s required by the lender.
77) The inspection turned up some repair issues that the seller is unwilling to make, and the buyer is unwilling to take on. The buyer wants to cancel. What portion of the sample purchase agreement you reviewed gives the buyer this right?
a. The Agency section
b. The Inspection Contingency section
c. The List Price section
d. The Offer section
78) Which codes must real estate licensees in California obey?
a. Civil and corporations code only
b. Penal and civil code only
c. Penal, civil, and corporations code
d. Penal code only
79) Household income, race, and ______ are the primary predictors of homeownership.
a. Age
b. Education
c. Family size
d. Location
80) XYZ Realty was fined after being found guilty of violating antitrust law. Which of these activities performed by the firm is the likely violation?
a. Developing a market niche in rural properties
b. Refusing to buy services from a vendor because of shoddy business practices
c. Requiring a consumer to use a specific mortgage company
d. Requiring all buyers who work with its company to be pre-qualified
81) Which type of buyer tends to rely on knowledge from previous homebuying experiences, and is often looking for a better location or a home with more space?
a. First-time buyer
b. Retiree
c. Trade-down buyer
d. Trade-up buyer
82) Which of the following statements is true of real estate commissions and fees?
a. Both commissions and fees are set by law.
b. Neither commissions nor fees are set by law.
c. Only commission rates are set by law. Fees are not.
d. Only fees are set by law. Commission rates are not.
83) Roberta is an investor who likes to invest for appreciation potential and tax write-offs. What’s her investment strategy?
a. Buy and hold
b. Fix and flip
c. Lease option
d. Wholesale
84) Which of the following would federal fair housing laws prohibit?
a. A 49-year-old, single woman describing herself as such in an advertisement for a roommate
b. An ad stating families with small children need not apply
c. Evicting a tenant who sells drugs from the property
d. Refusing to rent a property to smokers
85) By what yardstick does the property manager set rental rates in order to yield a good return for the property owner?
a. Highest rate
b. Highest rate the market will bear
c. Lowest rate
d. State mandated rate
86) What is a real estate mortgage investment conduit (REMIC)?
a. A company that owns, and usually operates, income-producing real estate
b. An entity used to pool mortgage loans and issue mortgage-backed securities
c. An organization that manages income-producing real estate properties.
d. An organization with many investors who jointly participate in a real estate investment
87) Who has an obligation to record on the TDS material facts discovered as part of a required visual inspection?
a. Both seller’s agent and buyer’s agent
b. Buyer’s agent
c. Home inspector
d. Seller’s agent
88) What is self dealing?
a. Having undisclosed personal interest in a transaction
b. Insinuating your interest into a contract
c. Profiting from the purchase of a property
d. Profiting from the sale of a property
89) Alexander just listed his first condo. Last week, he helped a client close on a duplex, and the week before that, he sold a nice ranch to a retired couple. Of the six primary categories of real estate, what type of properties does Alexander handle?
a. Industrial
b. Leisure
c. Residential
d. Retail
90) What would you likely find on a rent roll?
a. A list of all of the current tenants and how much trouble they are
b. A list of current tenants, when their leases are up, and how much each tenant is paying for rent
c. The credit score of each tenant and when their lease is up
d. The type of unit and the tenant’s credit score
91) Why is it important for the licensee to be able to distinguish between trust funds and non-trust funds?
a. Because they must be handled differently
b. In case the client asks the licensee to explain
c. To be able to claim the appropriate expenses on taxes
d. To stay in compliance with banking regulations
92) At a business meeting attended by the heads of the top brokerages in town, the keynote speaker discussed a minimum listing fee. Of what is this an example?
a. Group boycotting
b. Market allocation
c. Price fixing
d. Tie-in arrangements
93) California law and the California _______________ set the Business and Profession Code and the commissioner’s regulations, respectively.
a. Consumer Protection Task Force
b. Department of Internal Affairs
c. State real estate commissioner
d. Supreme Court
94) When a business that held a seller’s permit is being sold, who may be held responsible for any outstanding use tax at the time of sale?
a. The broker
b. The buyer
c. The licensee
d. The seller
95) If you want to capitalize on the time value of money concept, you should ______.
a. Hire an accountant
b. Invest money where it will earn interest
c. Put your money in a safe deposit box
d. Shelter your money from taxes by not investing it
96) Something that can cause a snag at the closing itself is ____________.
a. The buyer neglects to bring a cashier’s check
b. The inspection turns up an issue
c. The property does not appraise
d. The seller forgets the keys
97) Your buyer clients have found their dream home, which they will be financing with ABC Lending. What should they include with their offer?
a. A letter describing their family’s lineage
b. A loan commitment
c. A pre-approval letter from ABC Lending
d. Cash (no checks)
98) What does an and/or assigns clause allow a buyer to do?
a. Assign a new purchase price to the property at a later date, pending an inspection
b. Assign a new real estate broker, in spite of an existing agency agreement
c. Assign an unknown third party to take over the terms of the sales contract
d. Attach or assign additional addenda
99) Let’s say you have an investor with an NOI of $40,000 and a debt service of $30,000. What is your investor’s debt service ratio?
a. $10,000
b. 1.25
c. 1.33
d. .25
100) Under what circumstances would undisclosed dual agency be appropriate?
a. Never
b. When acting as a subagent
c. When representing the buyer
d. When representing the seller and assisting a first-time home buyer
101) California has a ______ approach when it comes to the seller’s requirements to inform the buyer about material facts regarding a property.
a. Caveat emptor
b. Formulaic
c. Full disclosure
d. Quid pro quo
102) Investor Shawn likes to get properties for far below asking price. What might he offer the seller to sweeten the deal?
a. A blueprint of plans to develop the property
b. A hardship letter
c. A quick close
d. A trade-up
103) Which of the following statements is true regarding the booklet Residential Environmental Hazards: A Guide for Homeowners, Buyers, Landlords, and Tenants?
a. If the booklet is provided, the seller and seller’s agent must still provide disclosures regarding specific environmental hazards that affect the property
b. Providing this booklet to the buyer is a requirement in all residential sales in California
c. The booklet can be used in place of the Natural Hazards Disclosure
d. The booklet informs people of how home wastes affect the environment
104) Jarod, your investor client, offers to purchase a property as-is, and even though you cautioned him against it, he’s also waived the inspection. Why would he do this?
a. He intends to live there
b. He’s a naive investor
c. He’s making a low-ball offer
d. The property is in poor condition
105) What is the simplest disposition of an outstanding property tax obligation?
a. To get a waiver for the debt
b. To ignore the debt and hope it gets forgotten
c. To make arrangements to pay the debt
d. To sell the property
106) What’s true about the Mello-Roos assessment in California?
a. Buyers of a property in a Community Facilities District will pay an additional transfer tax to fund general improvements in the community.
b. It’s a separate ad valorem property tax.
c. It’s levied on all property in California.
d. Sellers of a property subject to Mello-Roos assessments must disclose this fact to buyers.
107) Which of these sentences accurately describes the purpose of the Exclusive Residential Listing Agreement?
a. Defines the broker’s and buyer’s duties, and the terms of the listing.
b. Establishes an agency relationship between a broker, seller, and a buyer.
c. Specifies the net amount of income a seller will earn from the sale of a property.
d. Spells out the broker’s and seller’s duties, and the terms of the listing.
108) Which of these statements best describes one of the purposes of including a section about the “entire agreement” in the residential listing agreement?
a. Both parties are required to read the entire agreement.
b. Each term must be valid, or the entire agreement will be voided.
c. Every term in the listing agreement must be initialed to be valid.
d. Everything the parties are contracting to is in the listing agreement.
109) Maria received a call from an unrepresented buyer regarding her new listing. At what point must she have the buyer sign an agency disclosure?
a. Before answering any of the buyer’s questions
b. Before closing
c. Before entering into an agency relationship with the buyer
d. Before speaking with the buyer
110) Carolyn represents John in the sale of his home. Which listing agreement clause would authorize and obligate her to distribute the listing to other brokers?
a. Broadcast clause
b. Broker extension clause
c. Marketability clause
d. Multiple listing service (MLS) clause
111) One quick and dirty investment formula figures that operating expenses are generally ______ percent of rental income.
a. 10
b. 12
c. 25
d. 50
112) May a buyer’s agent change the cooperative agent fee in an offer to a seller?
a. No, because agents may not make changes to contracts—this would be practicing law without a license.
b. No, because that would be interfering with the contract between the seller and listing agent.
c. Yes, because commission rates are always negotiable.
d. Yes, because this is a non-material item to the contract.
113) Barb deposited her client’s down payment funds into her broker’s business account, intending to remove it the next day and deposit it into the client’s trust account. This is an example of ______.
a. Bookkeeping
b. Commingling
c. Conversion
d. Positive stewardship
114) How should the parties to a contract meet their timing obligations?
a. They should ask for extensions whenever possible.
b. They should not unduly delay so that closing occurs on schedule.
c. They should wait until just before the deadline to complete the required action.
d. They should work rapidly and try to close early if possible, even if it means missing a few steps.
115) Rachel has met a prospective investor client, Jill. She asks Jill, “Who’s on your team?” Why might she ask that question?
a. Financing for investors can be problematic for a number of reasons.
b. It will help her determine Jill’s readiness to buy.
c. She wants to make sure the investor isn’t already working with another licensee.
d. The best investors are often those who have the most business skills.
116) The buyer has backed out of the transaction and the seller instructs escrow to disburse earnest money to the seller. Under what circumstances may escrow do this?
a. If both parties agree in writing
b. If the buyer is foreign
c. If the listing agent provides an Affidavit of Disbursement
d. If the seller provides this request in writing
117) You represent a seller who has provided advance consent to dual agency. A buyer you show the property to decides to write an offer, and asks you to write the offer. You say, “Fine, but in order to do that, you will need to sign permission for dual agency. Here is the form. Sign here.” The buyer signs, and you proceed. Did you miss any steps?
a. No, buyer signatures are sufficient if you have advance consent from the seller.
b. No, you have not missed any steps.
c. Yes, you must explain what dual agency means to the buyer before the buyer signs.
d. Yes, you must obtain broker’s permission.
118) Norris is marketing a commercial space to investors. He’ll want to provide this information, especially ______.
a. Cash flow analysis and projections
b. Estimate for rehabbing the property
c. Former list price vs. sale price
d. Recent upgrades
119) Which type of development centers around proximity to public transportation?
a. Eco-Green
b. Increased-density
c. Multi-family housing
d. Transit-oriented community
120) Who can obtain a copy of a CLUE report for a given property?
a. The buyer
b. The lender
c. The listing agent
d. The property owner
121) What is pyramiding?
a. Leasing a property to multiple tenants at the same time
b. The increase in value of the property beyond what the investor originally invested as a down payment
c. The purchase of multiple properties to increase an investor’s overall holdings
d. The use of one investment to finance another
122) What type of arrangement is it when a building owner sells the building then leases the space from that buyer?
a. Ground lease
b. Percentage lease
c. Sale leaseback
d. Subordinate lease
123) When prospecting and soliciting for new business, licensees should be familiar with which federal acts?
a. Do Not Call Implementation Act, CAN-SPAM Act, and Junk Fax Prevention Act
b. Do Not Call Implementation Act, Sherman Act, and Unfair Trade Practices Act
c. Human Relations Act, Fair Housing Act, and Americans with Disabilities Act
d. Sherman Act, Clayton Act, and Unfair Trade Practices Act
124) What is the primary reason for reconciling accounting records?
a. To be able to answer questions about the brokerage firm’s financial health
b. To keep things in order in case of an audit, and to be able to answer specific questions about transactions or beneficiaries.
c. To make sure beneficiaries are submitting all monies per contract provisions
d. To send the reconciliation statement to the commission in order to avoid an audit
125) What is a benefit assessment?
a. An all-purpose general special assessment
b. An assessment that benefits a special population, such as the homeless
c. A special assessment used for improvements in emergency services, lighting, transit, and flood control
d. A special assessment used for improvements to county landfill sites
126) Chastity specializes in working with investors. Why might she attend a tax foreclosure auctions?
a. To get property leads
b. To increase her hourly billings
c. To meet other licensees
d. To network
–Random-part2-practice—
1) Erica presented an offer to her seller client, and after a bit of negotiating with the buyer and buyer’s agent, the offer was accepted. Which one of these activities will Erica be taking care of at this point in the sales process?
2) The duty of honesty to your customer trumps your duty of confidentiality to your client.
3) Your buyer clients Jen and Tony really like the patio set and bedroom furniture in the house you’ve just shown them. Because the market is hot, what would you advise they do?
4) The maximum annual tax on real property Proposition 13 sets is capped at 1% of the property’s market value each year.
5) A property’s base value can increase by as much as 2% each year under Proposition 13.
6) An addition, such as a garage, will result in a change in the base year for the entire property.
7) It’s possible for a property to have two different base value years.
8) Prohibits monopolies and actions that cause an unreasonable restraint of trade
9) They’re guilty, so what do we need to prove? It’s all a matter of per se. What does per se mean?
10) How is procuring cause related to a protection clause?
11) What’s an REO property?
12) What should you make sure your clients understand about the scope of the preliminary title report?
13) Protects the buyer’s earnest money in the event the buyer is unable to obtain financing.
14) If the property does not appraise at or more than the sales price, the buyer can terminate.
15) The buyer has made the offer to purchase based on the buyer’s current property selling.
16) With an appraisal contingency, the buyer can use the fact that the property hasn’t appraised to terminate and receive a refund of the earnest money.
17) Sellers are often reluctant to accept offers contingent on the sale of another property, and when they do, they usually reserve the right to market and show the property to other buyers.
18) In an offer that’s contingent on the sale of the buyer’s current home, even if their home doesn’t sell by the agreed-upon deadline, the buyer has the option to remove the contingency and proceed with the sale.
19) Can you define an option contract?
20) At what point does an option contract become binding for both parties?
21) Who can enforce an option contract—the optionee or the optionor?
22) The option agreement is designed to be used with a purchase agreement or a lease agreement.
23) What document should detail the typical reports a property manager needs to provide for a property owner?
24) Which of these refers to the agreed-upon price between a buyer and a seller?
25) The maximum amount of income a property can generate from all sources when fully occupied and when rents are fully collected
26) Income received when tenants pay for some or all of the property’s operating expenses
27) Actual gross potential income is offset by this, which occurs when units are not rented or tenants do not pay their full obligation
28) What information is a property owner likely to gather from the effective gross income?
29) The Business and Professions Code requires that transactional records be kept for how long?
30) Janice wants to sell her townhome, and her neighbor is considering purchasing it from her. While she’s waiting to find out if her neighbor is serious, she wants to market it and receive the best representation possible. What type of listing agreement will save Janice the cost of a commission if her neighbor does ultimately decide to buy Janice’s townhome?
31) A good question to ask an investor to determine the type of services they may want from you is:
32) Sometimes, the __________ of the property can have the burden of being responsible for paying sales tax.
33) It’s the licensee’s responsibility to know how and when taxes and real estate ___________.
34) An agent stating that property is “guaranteed to increase in value over the next five years” is an example of ___________.
35) Also included in Prop 13 is a maximum ______ % annual inflation factor, based on the Consumer Price Index (CPI).
36) Just because several brokerages have the same commission rates, it doesn’t mean a price fixing violation is occurring. What must exist for a violation to occur?
37) What responsibilities do licensees have regarding contingencies in a real estate transaction?
38) Although an independent contractor, this worker is defined as an employee by statute for certain employment tax purposes. An example would be a food delivery driver who is paid on commission.
39) Having information about clients you’re meeting allows them to be identified and tracked down in case something goes wrong. This is why you should do what?
40) When might an additional provision be needed in an agreement of sale?
41) In an option contract, prior to the optionee exercising the option to buy, which parties are bound to carry out their contractual obligations?
42) When is the mortgage loan commitment or title insurance contract signed?
43) Which of the following actions occurs prior to a closing?
44) Whose responsibility is it to determine instructions?
45) How do you find the Return on Investment (ROI) ?
46) According to the California real estate commissioner’s regulations, how many types of recordkeeping are acceptable for trust funds?
47) What is a convertible mortgage?
48) What does an equity Real Estate Investment Trust invest in?
49) What is basis?
50) Which of the following is an unauthorized practice of law?
51) Which of the following types of training/course might be one that the Missouri Real Estate Commission would consider for a core course requirement to fulfill the CE requirements for real estate licensees?
52) How often must a Maryland licensee check the license status of a general contractor if recommending the service provider to a potential buyer?
53) During a residential transaction, when must an Illinois seller’s agent deliver a completed Residential Real Property Disclosure Report to a buyer?
54) n accordance with the Illinois Real Estate License Act, sponsoring brokers must keep copies of all disclosures on file for ____________________.
55) Charlie, who owns and leases out a commercial building, pays taxes, maintenance, and insurance on the building. What type of lease agreement does Charlie have with his tenants?
56) Which of the following is one benefit to business owners for leasing instead of buying real estate for their business?
57) Damien was representing a commercial property owner. Which one of the following duties can the owner expect Damien to perform on the property owner’s behalf?
58) Farm families financing the purchase of properties in rural areas may be able to obtain financing through this government agency if they meet certain criteria, such as income requirements.
59) what’s one benefit of a rural development loan?
60) What entity services rural development loans?
61) what attracts borrowers to adjustable rate mortgages?
62) Manuel is selling his home to Selena. He has an existing loan that he’ll continue to make payments on, and he’s extending credit to Selena for the balance of the purchase price. She will make monthly payments to him. What type of financing are the parties using in this transaction?
63) After switching careers, Alice just graduated from culinary school and is looking to purchase a house. Until she gets her feet wet with her new job, she knows the cost of living with her mortgage is going to be tight. Which mortgage might help her manage her expenses each month?
64) What type of arrangement allows the buyer to retain title to the property but places a security interest in the property on behalf of the seller?
65) Walt and Ginger were informed by their landlord that their option to purchase the bungalow they’re renting has just been terminated. Which of the following things that can occur is likely to terminate an option to purchase?
66) Margaret isn’t ready to buy Jill’s property, but she pays Jill a fee that guarantees she’ll be notified if another buyer appears. If another buyer does make an offer, Margaret has the opportunity to purchase at the price and terms of the offer. Margaret has a(n) ______ on Jill’s property.
67) Edna leased her house to Joan with a right of first refusal. Edna’s cousin, who knows that she needs liquid assets, just offered her $250,000 for the house. What does Joan have to do if she wants to buy the house?
68) the ueta makes it legal and binding for contracts to be
69) Both parties have to sign the agreement in order to demonstrate that ________.
70) You’re talking to a co-worker at lunch and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation?
71) Your neighbor hires a middle school student to mow his lawn every two weeks. He draws up a written contract in which he clearly outlines the student’s mowing responsibilities and the payment the student will receive in return. Which of the following is true in this situation?
72) 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?
73) Sylvia, who’s 15 years old, and her neighbor Marge, who’s 24, agree that Sylvia will babysit Marge’s toddler for the summer for $10 an hour. What type of contract is this?
74) Kenneth entered into a contract to sell his home to Valerie, who put down a $5,000 earnest money deposit. At the last minute, Valerie backed out of the deal and Kenneth kept the earnest deposit. This is an example of ______.
75) What happens to the company license if the qualifying broker dies or becomes incapacitated?
76) Julie is working with buyer clients and has prepared an estimated closing statement. Which of the following statements is true?
77) Buyer Susie’s a little nervous about the $20,000 earnest money check she just deposited with the title company. When should she expect to see this money applied toward her purchase of the property?
78) Which of these is a recommended strategy for a real estate professional who wants to avoid being asked to violate fair housing laws?
79) Renae moved to the U.S. from Nigeria and became a citizen. Which act specifically provides Renae with the right to buy, sell, convey, inherit, and possess property?
80) Ramon and Bill are victims of fair housing discrimination. Which of the following must have occurred if their landlord violated specific terms of the Fair Housing Act?
81) Cambridge Apartments provides an open parking lot for its residents. There is adequate parking, and all spaces are available on a “first-come, first-served” basis. Alton has MS and uses a motorized wheelchair. Must Cambridge reserve a parking place specifically for Alton if he requests?
82) Which statement related to reasonable accommodation for an assistance animal is true?
83) What must occur to effect a transfer of title?
84) A real estate licensee must conduct marketing campaigns in a way that ______.
85) The property management _______ provides detailed information about the rental property, such as market analysis, competitive analysis, and property analysis.
86) Rick is representing Jules, a seller, who wants to know if he has to disclose his leaking roof to buyers. Rick says yes, since the problem constitutes _______.
87) The purpose of the Truth in Lending Act (TILA) is to ______.
88) Adella received money for her down payment in the form of a tax credit on her federal tax return. This tax credit is known as a __________________________.
89) Subdivision regulations imposed by developers in an effort to maintain control of the development of the subdivision are an example of ______.
90) Deed restrictions imposed by a developer who wants to maintain specific standards in a subdivision under development are often called _______.
91) Personal property includes which of the following?
92) Ron’s company leased a building so that they could build an escape room experience. After operating for two years, their attendance (and thus their profits) started to drop significantly, so they decided it was time to close the location. When they started taking down the installation, they realized that some of the structures they built will damage the walls if they try to remove them. Which of these is true about these trade fixtures?
93) Agent Terry meets a potential seller, Cate, who’s unhappy with her agent. “Break your contract with your agent,” Terry says, “and I’ll work hard for you.” Less than a week after Cate breaks with her agent and signs with Terry, he puts her house on the MLS and puts a for sale sign on her property with her permission. The two of them arrange an open house. Did Terry break any rules?
94) Jerrold reviews the floor plan of the Knoxville house he’s going to sell. It’s 3,800 square feet. In his advertising, he bumps that number up to 4,000 square feet to better justify its asking price. What has Jerrold done?
95) Patty is writing an online ad for several condos she’s selling. “More than 3,000 square feet!” she writes. She’s pretty sure that this is the average size of the condos. She included her brokerage firm and her license status on the advertisement, as well. How did Patty do?
96) What information does the Loan Estimate NOT provide to buyers under required disclosures law?
97) Sam’s kids talked him into putting up the basketball hoop that their grandparents got them for Christmas. On a quiet Saturday afternoon, Sam is busy nailing the backboard to the front of their garage facing the street when one of the officers of the homeowners association walks by. “I’m so sorry,” she says, “but you’ll have to take that down. Basketball hoops in direct view of the street are prohibited.” What is in place in Sam’s subdivision that would prohibit this?
98) Which department typically decides which development projects require a permit or approval?
99) What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways?
100) Bonnie is calculating the square footage of a listing. The upper level of the home is 450 square feet. The main floor is 1,200 square feet, including an unfinished laundry area that’s 225 square feet. The 1,200-square-foot basement is finished. Bonnie’s MLS system disregards below-grade square footage. What square footage will Bonnie mention in her MLS listing and marketing materials?
101) Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid?
102) Steve is preparing a market analysis for the Joneses and has selected three comparable properties. What’s the maximum number of adjustments Steve should make to the Joneses’ property?
103) Which statement regarding fee simple defeasible estates is true?
104) Which of these is an example of antitrust violations common to real estate?
105) In marketing her new listing, Alice asks the photographer to “touch-up” the photos of the house so that the old roof and siding look as though they are new. Which statement about this is true?
106) Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure?
107) Trina is a licensee at Midtown Homes. Which of these factors indicates that she’s classified as an employee?
108) Jordan works as a property manager for several residential property owners. When she receives security deposits from tenants, how long does she have to deposit them into an escrow account?
109) A mortgage is a legally binding document that creates a lien on a piece of property and gives the lender the right to foreclose on the property if the borrower defaults. Who or what entity is considered the mortgagee?
110) How are fines assessed for violations of the CAN-SPAM Act?
111) When is a cease and desist order effective?
112) In contract law, undue influence differs from duress in that duress includes ______.
113) Nellie and Victor own a suburban ranch home and fell behind on paying their property taxes when Victor lost his job last year. Victor is working again, but they still haven’t saved enough to pay their back taxes. They’re worried that the county may begin foreclosure proceedings. What type of lien is this?
114) Why did the implementation of TRID impact closing dates?
115) Your neighbors build a high-quality addition to their home, increasing its value compared to your own home’s value. Because of this, you notice a bump in your property value. Which economic principle is at work here?
116) What’s the relationship between TILA, RESPA, and TRID?
117) Sandra and Dwight are neighbors who share a common driveway, but the driveway is on Dwight’s property. What kind of ownership rights does Dwight have of the driveway?
118) Which of the following is most likely to have an extremely negative effect on the time and cost of a development project?
119) Agency may be legally terminated in which of the following ways?
120) Chris is in the process of purchasing a property with 20 acres of farmland in a rural area of the state. Assuming his income meets the criteria of the program, what type of loan may Chris find the most desirable?
121) Monica received a promotion at work that requires her to relocate. Because of the timing of her promotion, she’ll need to buy a new house in her new city before her current one is sold. So, she won’t have any equity from her current home to make a down payment on the new house. What loan option would allow her to make the purchase before selling the old house?
122) The Amarals are purchasing the house of their dreams and have plans to stay in it for at least the next three decades while they pay back their conventional 30-year loan. Their primary focus, over the life of the loan, is to reduce their payments as much as possible. What is something that could help them achieve this?
123) How might the lengthy purchase process for a short sale or foreclosure impact a buyer’s financing?
124) How many parties does a deed of trust involve?
125) Philip owns land in a state where growing marijuana is illegal. He wants to set up a small marijuana growing operation and export to states where marijuana has been legalized. He asks his attorney about the possibility. “No,” his attorney explains. “It’s not possible. Although you own the property outright, the right of ______ only allows you to manage the property in ways that are legal in this jurisdiction.
126) Which one of the following could be a clue that a property was formerly a waste disposal site?
127) What’s another term for deed in lieu of foreclosure?
128) A License holder may have more than one claim against hom. However, payments made from the Real Estate Education, Research, and Recovery Fund on behalf of the license holder must not exceed what amount?
129) Amy plans to open a brokerage. What might make her select a franchise?
130) What’s one of the main differences between a traditional mortgage loan and an interim loan?
131) Which section of the Exclusive Buyer Brokerage Agreement allows for an addendum to cover any special situations not outlines in the agreement?
132) Jeremy has just finished completing his loan application and has gathered supporting documentation needed to determine whether the application will be approved. Which of these titles best describe who Jeremy is?
133) A contract in which only one party is bound is __________________.
134) Bernie works for Quckwell Lending and accesses several lenders to find a loan product that works best for his clients. What is Bernie?
135) Which title search method only goes back as far as when the last title search performed, and assumes the last search was done accurately, legally, and that any issues were resolved?
136) Which of these would be considered a special circumstance that may require prior approval from a third party before a listing agreement can go into effect?
137) What is the assessed value of a property with a fair market value of $249,500?
138) Rhonda is interested in putting money toward a timeshare estate, which would allow her to use a condominium for two weeks each year. Timeshare estates _____________.
139) What doe each component of the 80/10/10 ratio represent in a split-or piggyback-loan?
140) As a(n) ___________ property manager, you spend most of your time on maintenance, landscaping, security issues, and enforcing HOA regulations.
141) When is transfer tax payable?
142) As a licensee, what should you do as soon as it’s known that closing will be delayed?
143) What does the claims for loss statement in a title policy say?
144) How can lapsed homeowners insurance lead to default of the mortgage loan?
145) Kristin wants to buy her listing. What must she do to be on the up and up?
146) What type of zoning is used to separate one type of property of another use?
147) Which of the following options describes a method by which licensee can determine an appropriate listing price range?
148) Rachel and Nick are selling their home. Before the property is sold, a title search is conducted to determine if there are any _________________.
149) Fiona signed an agreement to either buy or not buy Nick’s vacant lost for $310,000 by a specific date. What’s the agreement called?
150) A complaint was filed against Bard, a licensee. A hearing was help, and GREC issued a/an _______________________, which resulted in a small fine and the requirement for Barb to take some additional education.
151) What actions are taken to account for the release of gases produced by decomposing trash in a decommissioned landfill?
152) What’s a computerized loan origination system?
153) When assessing a contract, the assignor ensure that __________ is not prohibited in the purchase contract.
154) Marcy listed her property with Jennings Homes in March. The market is slow, and Marcy’s property isn’t in great condition, though she’s sure she can get top dollar for it because of its location. Her agent encourages her to either reduce the price or fix the property up, but she refuses. Both Marcy and her agent are frustrated. What’s the best options for both of them?
155) Milton, a broker, agrees to sell his sister’s house. She needs to receive at least $200,000 and offers Milton a deal: If he sells the house for $205,000, he can keep anything over $205,000. So he lists the house at $220,000-he wants to make some money, too. If it sells at this price, he gets $15,000. What type of agreement is this?
156) What’s a listing agent’s primary duty to a seller?
157) Monica, who’s selling her home to Ethan, promises in writing to have a licensed professional repair the home’s leaky roof. After closing, Ethan discovers that the roof was poorly patched by the homeowner and leaks whenever it rains heavily. Under the statute of limitations, of Ethan wishes to sue Monica, he must do so within _____ of the contract breach.
158) Which type of estate is a life estate?
159) What occurs when a landlord has a tenant removed from the premise through a suit for possession?
160) Stanley is having second thoughts about taking her neighbor to court over a written agreement they have concerning who pays the rent on a storage unit that they share, because it’s used to store stolen merchandise. Stanley doesn’t think they contract will stand up in court. What type of contract does Stanley have?
161) What’s the difference between an exclusive right-to-sell and exclusive agency agreement?
162) What’s the legal process used to determine a will’s validity and to ensure that the will accurately reflects the deceased person’s wishes?
163) When Polly the puppy escaped her fenced-in yard, her owner, Jane, posted a reward for her safe return. What type of contract was Jane creating?
164) One of the risks of buying a condominium is that _________________.
165) Which of the following agencies is responsible for regulating the Equal Credit Opportunity Act?
166) Whose responsibility is it to notify GREC of a licensee’s transfer?
167) Cecil is a licensee who wants to purchase a home listed by the brokerage where he;s affiliated. What must he do?
168) Jillian has a loan-to-value ratio of 90/10. This means __________.
169) What effect will a property utility have on the value if it’s currently uninhabitable?
170) What’s the Mortgage Electronic Registration Systems, Inc (MERS)?
171) Which of the following is the probable sales price of a property if the property were sold under normal market conditions?
172) What’s a lease?
173) What is the purpose of a lender’s title policy?
174) You make an investment with other real estate investors. Because of the profit-oriented nature, and the fact that the profit depends solely on the management effort of others, this is likely what?
175) A VA Loan…..
176) _________________ occurs when the parties meet all terms of the contract
177) For what reason do borrowers commonly seek the assistance of individual private lenders?
178) ______________________ are artificial attachments to land that include items such as fencing, buildings, and walkways
179) Which of the following best describe what Ginnie Mae does in the secondary mortgage market?
180) How long can a broker wait after non-payment of a commission to record a lien against a commercial property?
181) SRT Mortgage has a borrower who has fallen behind on her mortgage. Rather than go through a foreclosure, the borrower is attempting to sell the property. An offer come in for less than the borrower’s loan balance and closing costs, but for more than what the lender feels it’d get at a foreclosure sale, so it approves the purchase. What is this an example of?
182) What are the rights and privilege’s granted with a fee simple estate commonly called?
183) When evaluating the income listen on a loan application, what will the lender consider?
184) Which of the following options can a real estate licensee provide?
185) Bianca wants to buy a cooperative, but she’s unsure that she can afford it. With a cooperative, her share of mortgage interest and real estate taxes will be
186) If a property owner owns more than 10 units, security deposits must be kept
187) What is one reason that carbon monoxide could be called a sneaky toxin?
188) Local real estate developments, such as a new subdivision, will likely impact ______ the most.
189) A duplex produces a monthly gross rental income of $1,800. The GRM an appraiser extracts from the local market is 125. Calculate the property’s estimated value.
190) Real estate, plus all of the interest, benefits, and rights included in ownership, is also known as ______.
191) What’s typically used to prove there are no encroachments on the property?
192) When people are treated differently because they have an accent, were born in another country, or are married to someone from a specific part of the world, this falls under discrimination based on ______.
193) Real property rights include ______.
194) What does the income approach to value rely on when valuing single-family and two- to four-unit properties?
195) A wet environment with little air circulation can ______.
196) An ______ is an addition to an existing sales contract and can be added without changing other terms already agreed upon in the contract.
197) Agatha has helped her client, Rufus, complete the ______, which documents Rufus’s purchase offer to the seller for the property he is interested in buying.
198) Amy has entered into a specialty contract (also known as a contract under seal) with another party. In Maryland, if Amy discovers that there has been a contract breach, how long does she have to sue the other party?
199) Which of the following provides everything a lender wants to know to value the property as collateral for a loan?
200) Jenny and her friend, Kali, go out to lunch. Afterward, they pay the bill. Their agreement to pay for the food they were served is what type of contract?
201) For income-producing properties, how is rent prorated at closing?
202) Janine wants to meet with her potential buyer clients face-to-face in her office. What’s her reason for doing this?
203) Which term refers to a permitted deviation from land use for a purpose that, under the current zoning restrictions, is prohibited and causes the property owner unnecessary hardship?
204) What’s the term used in real estate to describe when personal property is attached to real property, thereby making it a fixture?
205) Which of the following will appear on the closing statement?
206) Down the Road Brokerage has an in-house transaction situation and has appointed one of its licensees to represent the buyer client and one to represent the seller client. The two licensees are acting as what type of agents?
207) Archie signs a contract to buy Pam’s home. The deal eventually closes, but Pam fails to hand over the home’s keys to Archie. A week passes, and Archie files a lawsuit in an attempt to force Pam to give him the keys. This is an example of ________.
208) A licensee stating, “This is a dream home with the best views in town,” is an example of ______.
209) Federal and state fair housing laws prohibit activities that are ___________________.
210) What happens when a married couple who own a property as tenants by the entirety divorce?
211) The mishandling of escrow funds can result in _____________________.
212) Five siblings enter into a contract to buy a vacation property. The siblings get into a dispute, resulting in two of them backing out of the deal. This leads to a termination of the original contract. Three of the siblings then enter into a new contract to buy the property. This is an example of ________.
213) Manny has a client who wants to purchase a commercial building. Manny doesn’t have any experience negotiating commercial purchases. Which action should Manny take to demonstrate his good faith and most ethical behavior toward his client?
214) Which of the following is true about market allocation?
215) A buyer representation agreement is similar to which document used when representing a seller?
216) What’s a promissory note?
217) Which agency enforces fair housing laws?
218) Which of these items go in the seller’s credit column and the buyer’s debit column?
219) When must the consent for dual agency be reaffirmed by the parties to the transaction?
220) Which of the following is true about depreciation schedules?
221) Regardless of whether a seller elects to complete the property condition disclosure or disclaimer, what must the seller disclose?
222) What’s the amount a lender charges for the use of its money?
223) Joe and Emma Parsons begin informally working with their neighbor, Kyle, a real estate licensee, to find a bigger house. The parties have not signed any agreements or discussed the arrangements. This is an example of a (n) __________ agency agreement.
224) What type of listing agreement offers the most protection to the broker?
225) Can a seller withdraw a listing before the broker spends time and money?
226) The seller cannot cancel a listing with a broker once the broker has…..
227) In addition to showing the property, locating a buyer/tenant, communicating terms, promoting features and terms, and assisting in negotiations, what other responsibility does a listing agent have once the listing agreement has been signed?
228) The listing agent must ________________________ of items in the listing agreement
229) If a listing agent fails to verify that the parties who have signed the listing agreement are the actual persons who hold the title to the property, he/she may increase……
230) Who enforces the National Do Not Call Registry?
231) Are brokerage companies required to have a Do Not Call policy (even if they do not engage in cold calling)
232) How often must a brokerage company update their Do Not Call list?
233) What is the penalty for calling someone on the Do Not Call Registry?
234) Which of the following would NOT terminate a listing?
235) When a property is sold by a licensee other than the listing broker, who would the seller pay the commission to in an exclusive right to sell listing?
236) The difference between an exclusive agency and an exclusive right to sell listing is
237) What is the primary purpose of a listing agreement?
238) What is the key job of the agent?
239) Which of the following is not in violation of the CAN-SPAM Act?
240) How frequently must companies access and update the Do-Not-Call Registry?
241) The CAN-SPAM Act is federal regulation governing
242) Which of the following are the marketing responsibilities of the seller?
243) An arrangement in which brokers pool their listings and all commissions are then divided between the listing broker and the selling broker is called what?
244) What is an “extender clause”?
245) Which of the following is a feature of an open listing?
246) The failure to perform provisions of a contract without a legal excuse is known as what?
247) An agency could be terminated by all EXCEPT which of these circumstances?
248) How long does a buyer have to cancel a contract if they decide not to complete the purchase of a timeshare?
249) Where is a complaint against a licensee filed?
250) Which of the following is a difference between a limited service agent and an independent contractor?
251) Two designated agents, Mitch and Mickey, represent the buyer and seller in a single transaction, respectively. What else do you know about the agency situation?
252) What type of agency exists when a buyer’s agent is also the listing agent for the same property?
253) Rick, a builder, is using two properties as collateral for a loan. This is an example of a(n) ______ loan.
254) A duplex produces a month gross rental income of $1,800. The GRM an appraiser extracts from the local market is 125. Calculate the property’s estimated value.
255) Fiona and her husband, Ed, have just entered their first-ever agency agreement with their new agent, Ken. The couple is a little nervous, but they like the idea that they have something in writing that explains both their agent’s responsibilities and what they’re expected to do as part of the relationship agreement. Life is good. What type of agency exists between Ken and his clients.
256) Under which type of buyer agency agreement does a buyer receive the most representation from a single agent?
257) Which of these items go into the seller’s credit column and the buyers debit column?
258) Which of the following financing types involved the sale of personal property with the real property?
259) Gertie and Frank both have alzheimer’s disease. They fall in love in a disabled home and get married by signing a marriage certificate. This is an example of a _________ contract.
260) You have found the perfect home for Lucy and she is ready to make an offer. The Home was built in 1938. Who is responsible for scheduling & paying for the home’s lead inspection?
261) With which type of commercial lease does the tenant pay some or all expenses?
262) What type of listing agreement will offer most service by their listing agent and still give them this option?
263) In which of the following situations can an agent represent a customer in a real estate purchase?
264) The cost approach to finding an appraised value measures _________.
265) The earth’s surface, extending downward to the center of the earth and upward to infinity, including permanently-attatched natural objects is called ________.
266) Ownership is a right in the bundle of rights. Which of the following is considered a from of ownership?
267) Which of these may be covered by a builder-backed home warranty?
268) Jay’s new loan to purchase a property includes the sellers existing mortgage. This type of loan is called a _______ loan.
269) Lacey is preparing a sales contract for her buyer clients, and it’s time to fill in the amount of earnest money they’re going to offer. Which of the following statements is true regarding who determines the earnest money amount?
270) Cracks, holes, or rotten areas on a soffit are common _________ issues.
271) The Equal Credit Opportunity Act (ECOA) is also known as ________.
272) What’s a land contract?
273) Which of the following is true about VA loans?
274) Kris has made an offer on Lincolin’s townhome. However, she’s offered no earnest money. If lincoln accepts her offer, is it binding?
275) Sheila and Vickie are sisters who enter into a contract to buy a vacation property. The sisters get into a dispute, and Vickie no longer wants any part of the deal. However, Sheila talks her younger brother Joe into replacing Vickie on the contract. Vickie agrees to the substitution. This is an example of __________.
276) The landlord generally pays taxes, maintenance, and insurance with which type of lease?
277) For an antitrust violation to occur, which element must be present?
278) Substitution of an original party to a contract with a new party, or substitution of an original contract with a new contract.
279) What is the ratio of annual before-tax cash flow to the amount of cash a consumer has invested called?
280) If there are questions regarding the exact property description, which of the following is recommended?
281) Jasper has a new listing, and he appoints Esther as his sub-agent. Esther brings Julie, a buyer customer, to the transaction, and Julie buys Jasper’s listing. What’s true about the agency relationships in this situation?
282) Which of the following is true regarding an appraiser’s three approaches to value?
283) Kat is an investor and uses an FHA loan to purchase a duplex. She never occupies the property but instead rents it out. This is ______.
284) Which of the following is a contract between a seller and a buyer to transfer title to real property?
285) Which municipal agency grants special use permits?
286) How is general property tax calculated?
287) Tax assessors determine property values for each property within the assessor’s taxing unit. Which of the following is a taxing unit?
288) Your investor client has asked you to place a low-ball offer on his behalf. How might you convince a seller to accept?
289) Compared to working without a buyer agency agreement, a buyer who works under a buyer agency ____________.
a. Receives a higher level of service
290) Which of these is a written description of a blueprint?
291) Investors come in all shapes and sizes. Some may only be looking for someone to find them deals. Others may want someone to show properties and submit offers. What question should you ask to determine what type of investor you’re working with?
292) You’re working with buyers who have found their dream home, but it’s almost more than they can afford. When the appraisal comes in, it’s lower than the agreed-upon sales price. Now what?
293) Let’s say you have an investor with an NOI (net operating income) of $40,000 and a debt service of $30,000. What is your investor’s debt service ratio?
294) Why is a building’s “envelope” an important consideration in energy efficiency?
295) Regulating and protecting places and objects that have special character, historical, and aesthetic interest, is the responsibility of which municipal agency?
296) If the builder or owner of a new condominium building wants to change the price of all of the units, or all the two-bedroom units, what must the builder/owner do?
297) Which of the following is not an encumbrance, but a temporary right to enter the land or use property belonging to another for a specific purpose?
298) Which of the following is a written outline of the sales transaction often referred to as an offer to purchase or a purchase offer?
299) Energy efficient windows, weather stripping and ___________ are areas homeowners should consider when trying to eliminate heat loss/gain.
300) Doris needs to renew her real estate license for the first time, and she’s already completed 20.5 hours of continuing education. How many additional hours of CE does she need to complete?
301) DOS Regulation 175.23 requires brokers to maintain ______ for a period of ______, including the amount of commission paid for each transaction.
302) The duty of confidentiality survives agency unless the former client is found guilty of fraud or ______.
303) A seller you’re working with still owes $50,000 on his mortgage but wants to net $20,000 after the mortgage and 7% commission are paid. What is the minimum for which the house must sell?
304) Which of the following is a percentage of market value and is the amount of property value to which the tax rate is applied?
305) You have a client who has an investment property valued at $400,000. Annual cap rates are 8%. What can your client expect in net operating income?
306) Which document allows a prospective buyer the right to reserve a specific unit, which may or may not be under construction?
307) What is one drawback of sub-agency from a listing broker’s standpoint?
308) Ralph is a borrower obtaining an FHA loan from Happy Bank to finance his mortgage. Who is the mortgagor in this scenario?
309) PITI stands for principal, interest, taxes, and _____.
310) Which approach to value used by appraisers relies on the sales price of comparable properties to help determine the adjusted market price?
311) Some sensitive individuals can end up in the hospital because of chemicals used in carpet and other manufacturing materials used in remodeling or new construction. What’s the cause of this danger?
312) New licensee Cara wants to avoid accidentally engaging in unauthorized practice of law when she’s helping clients fill in contracts. What’s the best way for her to do this?
313) Which of the following is a true statement about cooperatives?
314) A ______ is the component of a septic system that is generally made of gravel or sand and naturally filters wastewater.
315) Janice is a listing agent assisting the Chens with the sale of their home. What is one of Janice’s duties?
316) Which of the following statements is true regarding federal fair housing law?
317) Real estate licensees currently enjoy the unique privilege of retaining their independent contractor status for IRS purposes, despite the fact that ____________.
318) For a taxpayer wanting to use a Small Claims Assessment Review (SCAR), which of the following is true?
319) Maury, a landlord, has decided to sell Elm Street Apartments. As you know, sale of the property does not affect the lease of the tenant. What are Maury’s legal obligations to the current tenants?
320) For which of the following properties is the cost approach most likely to be used?
321) Which of the following is a potential drawback to a real property exchange?
322) What generally happens when a tenant moves out of a rent-controlled apartment?
323) Chris used the VA guaranteed loan program to purchase a home five years ago. He now wants to sell that house and buy a new one. Is Chris allowed to use the VA loan program a second time?
324) If an agency policy indicates that licensees will have traditional buyer or seller agency relationships with their clients, the agency relationship is with ________.
325) What does a firewall do?
326) As an insurer’s condition for issuing an errors and omissions policy, what should brokers be prepared to do?
327) Dean is an experienced licensee whose career has focused on such things as mineral, oil, gas, and water rights, and hunting and gaming licenses. Based on this, you can deduce that Dean’s real estate niche is in which of the following?
328) Adam has been showing condos to his childhood friend Steve, even though Steve hasn’t signed an agency agreement. Unbeknownst to Adam, Steve contacted the listing agent for a condo he liked and told him he wanted to submit an offer. The listing agent wrote it up, the seller accepted the offer, and Steve became the proud owner of a new condo. Is Adam owed a commission?
329) Agent Magda’s new clients are clutter bugs. Before she photographs their home, Magda should:
330) The purpose of the employee and independent contractor agreements is to _________________.
331) The sellers in a transaction ask to have an extra week after the scheduled closing date to stay in the home. How is this handled on TAR form RF 401 Purchase and Sale Agreement?
332) The listing broker’s compensation can be either a percentage of the sales price, or what?
333) ______ occurs when the parties can’t legally or practically do what they’ve agreed upon due to circumstances beyond their control.
334) Investors call investing in this type of property “dead money.”
335) Risk is an inherent part of real estate activities. this is why________ is recommended for all licensees
336) According to the NAR Code of Ethics and Standards of Practice preamble, “REALTORS® should recognize that the interests of the nation and its citizens require the ______.”
337) An _____ ____ may be for any amount agreed to by the parties.
338) Complaint forms submitted to TREC must be filled out completely and include supporting documentation. What will happen next?
339) The legal concept of parens patriae gives which state position the authority to sue on behalf of citizens?
340) In counties governed by the Uniform Residential Landlord and Tenant Act (URLTA), which of the four types of lease termination would result in the landlord needing a court order to take action against the tenant?
341) What would make a ‘Choose Your Neighbor’ letter an allowable form of advertising a property for sale?
342) How do license laws promote professional competence?
343) Why must a seller disclose the presence of an underground storage tank?
344) All of the following would impact list price EXCEPT ________.
345) Prior to closing on the property, Monica substituted her daughter’s name, Melanie, as the buyer. Although Melanie is now listed as the buyer, Monica isn’t released from her contractual obligations. What is this scenario an example of?
346) What’s the purpose of the buyer pre-qualification letter?
347) Where can a licensee report an antitrust violation?
348) Wayne is a licensee and would like to update his advertising. What must he be sure to include on any advertising?
349) Before you sign an exclusive right to sell agreement with a seller, what must you do?
350) Alice has signed a back-up contract with Harry, the seller. Upon what does their agreement depend?
351) Using the term REALTOR® when not authorized to do so is an example of ________.
352) Which document provides details about the costs of the transaction and is provided to borrowers no fewer than three days prior to closing?
353) Kelsey and Jerrod have a housing ratio of 30% and a total debt obligation of 41%. Their credit score is 640. Do they meet the underwriting requirements for an FHA loan?
354) Bart is an independent contractor. That means that his managing broker, Lee, has the right to ______.
355) The risk identification process for a brokerage firm involves identifying what?
356) Often, errors and omissions insurance providers will require a brokerage to have ______.
357) Brian has just finished completing his loan application and has gathered supporting documentation needed to determine whether the application will be approved. Which of these parties best describes who Brian is?
358) For which of the following acts might a broker be subject to disciplinary action?
359) On Thursday, Angie decided to accept Harry’s counteroffer for the purchase of his house. She signed the counteroffer and placed it in the mail. On Friday, Harry decided that he had asked too low a price for the house, so he faxed Angie stating that the counteroffer was withdrawn. On Saturday, Harry received Angie’s acceptance in the mail. Under the mailbox rule, which of the following is true?
360) All of these are typical tasks that an unlicensed real estate assistant may do, except:
361) Which of these factors would tend to lower overall property values most in a single-family residential neighborhood?
362) One of the legal obligations of a seller’s agent is providing a copy of the seller’s transfer disclosure statement to:
363) Which California law prohibits discrimination by business establishments in general?
364) Which of the following actions by a broker would be illegal under the federal Fair Housing Act?
365) Once a listing agreement has been signed:
366) A buyer makes and signs a written offer. The seller writes in one small change to the offer and signs it. This document is known as:
367) To successfully sue a seller for a commission owed, a broker who worked under a nonexclusive listing must be able to prove that she was:
368) An apartment rental application contains a question about marital status. This question is:
369) A seller has accepted another offer, but your client doesn’t want to give up. Even now, she can submit an offer to the seller, called a:
370) When an agent is preparing a competitive market analysis, the adjusted sales price of a comparable property:
371) The buyer receives the transfer disclosure statement in the mail. How many days does she have in which to rescind the purchase agreement?
372) Which of these is a fundamental difference between the natural hazard disclosure statement and the real property transfer disclosure statement?
373) A buyer submitted an offer with a deposit on a property on June 1. The offer included the condition that it must be accepted within 48 hours. The sellers were out of town, however, and could not be contacted until June 6. At that point, the sellers eagerly signed and returned the purchase agreement; but now the buyer says he does not want the property any longer and is demanding the return of his deposit. A court would rule that:
374) A listing agreement with a property description that is not a complete legal description:
375) Most listing contracts authorize a broker to:
376) Which of the following methods of advertising is legal?
377) An agent is preparing a CMA and evaluating possible comparable sales. Which of the following characteristics would most likely make a property unsuitable for use as a comparable?
378) What is the minimum time limit for employment in an exclusive listing agreement?
379) The buyer’s offer states that the deposit check will be held by the broker uncashed until the seller has accepted the offer. The broker may comply with these instructions:
380) A real estate agent who is acting as a buyer’s agent:
381) Which kind of listing agreement requires the seller to pay a commission to her broker if the property is sold, unless the seller sells the property herself?
382) A real estate salesperson is often approached by home buyers of a particular race. His usual practice is to show them homes in neighborhoods where most of the residents are the same race as the buyers. He avoids showing these buyers properties in integrated areas. This is called:
383) Broker Ray is closely acquainted with the Subdivision Heights neighborhood in his town. Over the years, Ray has made it a practice to contact homeowners in person and also to send them quarterly mailings. This method of finding listings is known as:
384) A homeowner preparing his home for sale should do all of the following, except:
385) Which of the following does California law require a real estate agent to do in a residential transaction?
386) In order to be enforceable, an exclusive listing must be signed by:
387) A broker, in dealing with the public, may not:
388) If a seller uses an open listing, she may employ several brokers:
389) A prospective buyer has submitted an offer to Broker Randolph that meets the asking price. As Randolph is on his way out of the office to present the offer to the seller, one of Randolph’s salespersons brings in another offer on the same property that is for $5,000 less. Randolph should:
390) Which of the following is equivalent to value in exchange?
391) Two types of value that are often contrasted are subjective value and:
392) A licensee acting as a finder (or middleman) won’t owe agency duties to either party, as long as:
393) Which of the following would be considered a design deficiency in newer, high-end construction?
394) Which of these is not a way in which an agency can be created?
395) Two properties, each worth $50,000, are combined into one larger parcel that has a value of $120,000. This increase in value is called:
396) A salesperson shows his broker an offer for one of his listings that has a good faith deposit in the form of a promissory note. The broker should tell the salesperson that:
397) An agency relationship is best created through:
398) Before making a listing presentation, an agent should:
399) The seller’s agent is most likely to be liable for damages to a buyer if she:
400) The best indication of a property’s value comes from:
401) According to the Americans With Disabilities Act:
402) After several months of trying to sell a property, the seller’s agent decided to purchase it herself. She must:
403) When does an offer to purchase become a binding contract?
404) A seller’s agent intends to give part of his commission to the buyer. The agent:
405) A listing broker presents his client with a full-price offer from a ready, willing, and able buyer. The seller refuses the offer and tells the broker it’s because the buyer is black. The buyer makes an offer on another property. Which of these steps could the broker take?
406) When performing a competitive market analysis, agents typically make numerous adjustments to the comparables’ prices. This is because:
407) Young buyers with limited funds are typically:
408) Agent Mary notices that a competitor’s listing is about to expire. She should:
409) Two brokers in a small community felt that another local broker was unethical and dishonest. They agreed not to send him any referral business, and they encouraged other area brokers to follow their lead. They could be accused of:
410) Which of the following can be affected by conditions of sale?
411) Your buyer client, Percy, needs to obtain financing to buy his dream house. What’s his first step?
412) A sloping hearth is a common _____ issue.
413) In what type of market is pricing a home below market value an especially good strategy?
414) In a real estate transaction in which you represent the seller, your duty to other parties is ______________________.
415) The Costa-Hawkins Rental Housing Act…
416) Shawna is reviewing Brian’s loan application. She needs to verify the assets he’s claimed, specifically his bank account balances. Which form should she have him complete?
417) Real property ownership may offer significant tax advantages. Which one of the following is a potential advantage?
418) What’s the primary difference between reproduction cost and replacement cost?
419) When a lender charges a borrower more than the highest allowable interest rate, it is called
420) How many days do purchasers have from the date they signed a contract to notify the seller their intent to cancel the contract?
421) Which of the following statements may be true of self-employed individuals seeking to obtain a home loan?
422) In the event a broker-in-charge becomes medically incapacitated or dies, an associated licensee may be permitted to act as the broker-in-charge for up to?
423) Katherine purchased a home in South Carolina for $415,000. What’s the county portion of the deed recording fee for this transaction?
424) Glenda is engaged as a seller’s agent. Gary, the seller, hasn’t consented to dual agency. A prospective buyer would like Glenda’s assistance in drafting an offer to present to Gary. Can Glenda do this?
425) Is there ever a situations where it is legal to receive compensation?
426) Who is the person in charge of carrying out the terms of the trust
427) The trustee is the person in charge of carrying out the terms of the trust
428) Certain properties are exempt from fair housing law requirements. Which of the following properties is NOT exempt?
429) When a property owner intentionally transfers property to another party, it’s called voluntary alienation.
430) When operating under a power of attorney concerning the transfer of real property, who may sign as the grantor?
431) What’s another term for voluntary conveyance?
432) In a real estate transaction, whom may a licensee represent?
433) Which entity has the authority to represent the state and citizens of the state in antitrust cases?
434) Percy and Maxwell have formed a team within their real estate brokerage firm. They’ve been tossing around some different names to use. Which of these would be permitted?
435) Which of the following describes commingling?
436) For a deed to be valid, which two elements are required?
437) Shelley is selling her condo in the city and moving to a house in the suburbs. Her agent gave her a list of things she must do to prepare for the sale, including completing the residential property disclosure statement. When should this statement be provided to buyers?
438) You’re working with a couple who state they definitely must sell at a price of $275,000. They’re more concerned about getting that price than the amount of commission they’ll pay, and they say you can keep any amount the sale brings in that’s more than $275,000. What type of listing is this?
439) The enforcement of antitrust laws, investigation into possible violations, and subsequent prosecution of violations are handled by the __________.
440) The lender, the loan applicant, and the _______ all complete parts of the request for verification of deposit form.
441) There are many versions of property management agreements, although all management agreements should include _______.
442) The purpose of the ______ is to promote fairness and transparency for mortgages and other financial products and services through education, enforcement, and research.
443) Which of the following, based on the abstract of title, is used to create the title commitment before title insurance is issued?
444) Which type of appraisals may only be done by certified general appraisers?
445) What type of agreement opens the door to possible dual agency situations, since it creates an agency relationship between a buyer and all affiliates of a brokerage?
446) Which of the following is true regarding the definition of agency?
447) Jared, a seller, has found his own buyer and wants to terminate his exclusive right-to-sell listing agreement with Sue, his listing broker. Can he do so without penalty?
448) Kristin has been unable to make her mortgage payments. Her property went to auction, but the lender didn’t accept the high bid. What stage of the foreclosure process is this property now in?
449) Which of the following is the most common type of buyer representation agreement?
450) You’ve just signed a listing with a new seller client. What’s true about electronic delivery of written notice or contract forms to your seller?
451) Your buyers love the 1891 Victorian they have under contract, but they want to get both the water and the paint tested as soon as possible. What are they testing for in both water and paint?
452) Which of these is a NOT a reason why agency disclosure is mandated?
453) After a life estate holder dies and ownership rights have either reverted to the original owner or have been transferred to a remainderman, with what type of estate is the property held?
454) What’s the relationship between the Loan Estimate and the Closing Disclosure?
455) Which of the following is a legitimate and legal way that an exclusive right-to-sell listing agreement may terminate without the seller owing a commission?
456) Which group ensures that community growth is controlled and orderly?
457) Derrick was thrilled to find out that the land he purchased includes several small caves. He’s been spelunking for about three years and looks forward to exploring the caves on weekends. Which real property right allows him to do so?
458) When assigning a contract, what should the assignor ensure is permitted in the purchase contract?
459) Remembering the acronym PITI can help borrowers recall what makes up their __________
460) Which type of buyer tends to look for a home with less space, with a similar or better. quality of living?
461) Stan wants Vince to list his house. What does Stan need to do to have Vince represent him in all marketing and negotiation tasks?
462) In a deed, this person is referred to as “the party of the second part.”
463) A VA loan __________.
464) What’s used to calculate the housing debt-to-income ratio and total-debt-to-income ratio?
465) Broker Alex learns that his friend Joann is frustrated with the broker who listed her home. Alex encourages Joann to break her existing agency agreement and sign with him instead. This violation is an example of ____________.
466) An organization with many investors who jointly participate in a real estate investment and must adhere to the rules and regulations of the Securities and Exchange Commission is a _____________.
467) A seller would like to be represented by you, and only you. What type of agency do you recommend?
468) Sherman owes $225,000 on his home. It’s currently worth $240,000. How much equity does Sherman have in his home?
469) Roger just discovered that his loan includes a hidden balloon payment, so now he must ___________.
470) If the monthly property tax rate is $74.15 and the closing is on April 30, what will the seller owe at closing? Assume a statutory calendar and that the seller hasn’t made any payments. Round to the nearest cent.
471) Which document given before closing provides an estimate of the costs a buyer is likely to pay at a settlement?
472) The earth’s surface, extending downward to the center of the earth and upward to infinity, including permanently-attached natural objects, is called ____________.
473) You’re obligated to preserve all the confidential information you receive from a seller client. This obligation ___________
474) What is the definition of an appraisal?
475) Jasmine has signed a lease that details what she can and can’t do on the property. If she wants to refer back to her lease, where would she look for this information?
476) Mary Lou owns property in a rural part of the state. She was recently approached by a representative of a company that would like to drill for oil on a piece of her property. What type of lease is the representative likely discussing with Mary Lou?
477) Which of the following property managers must have a license?
478) Your clients, Charles and Jane Bingley, are first time homebuyers who don’t have a 20% down payment. What would be the best thing for you to tell them?
479) A period of stagnation in real estate when no one is buying and no one is selling is known as ______________.
480) Your assistant, Brady, often answers clients questions about offers and negotiation. What do we know about Brady?
481) What are the two categories of comparison when evaluating comparable to a subject property in the market comparison approach?
482) A home sells for $225,000. Per the listing agreement, the total commission is 7% of the sales price. After half of that goes to the buyer’s agent’s managing broker Devin, the other half of it goes to Sheila, the buyer’s agent. But the seller’s agent, Kiko, also has an agreement with her brokerage for a 70/30 split, with the “70” going to her. How much is Kiko’s commission?
483) Which clause is used in a security instrument to protect the original note holder if the security instrument is sold and the borrower subsequently defaults?
484) Which of the following options describes a method by which a licensee can determine an appropriate listing price rage?
485) What’s the purpose of the Intestate Land Sales Full Disclosure Act?
486) When preparing the sales contract, when is it acceptable for a licensee who is not an attorney to offer legal advice to the client?
487) A(n) __________ is a set of guidelines for ethical conduct
488) Barney defaulted on his mortgage, and his lender is preparing to foreclose. Which type of foreclosure is typically used when a mortgage is used as the security instrument?
489) Homeowners can take several actions related to pest infestations, but which of the following actions should bereft to licensed pest management professionals?
490) Lease types, space planning, area design, and building layout are especially important for a property manager who’s working with a __________.
491) What important seller responsibility is documented in the listing agreement?
492) What regulations or regulatory authority identifies sites that have hazardous substances, and requires the responsible parties to clean them up?
493) What type of agency agreement creates a relationship between a buyer and a single licensee rather than between a buyer and a brokerage?
494) With which approach to value doe the appraiser analyze a property’s ability to earn future income?
495) Which of the following careers in real estate requires extensive experience in real estate investment and sales?
496) Switches that are warm to the touch, damaged panels, and lights that dim or flicker when other appliances are in use can be signs of what sort of problem?
497) Which statement best describes the method used to reconcile the value found for a property from the tree appraisal approaches?
498) Loans available through the Farm Service Agency have which of the following characteristics?
499) Which federal lending act was introduced to combat lending discrimination in law-and moderate-income neighborhoods?
500) Marvin purchase the right to use a resort unit for two weeks every year, although he doesn’t own the property itself. What kind of timeshare is this?
501) How is the Supreme Court case of Brown vs. Board of Education significant in the way fair housing laws are implemented today?
502) In the sales comparison approach, the appropriateness of the various comparable sales in relationship to the subject is considered in a process known as ________, where certain factors may be given more weight.
503) What’s the deprecation schedule for a residential income-producing property?
504) The _______ isn’t used in states that were part of the original 13 colonies, or in Texas, West Virginia, and Kentucky.
505) Marco is anxious to buy a home and is willing to waive the appraisal contingency. Do you still need to provide him with a Buyer’s Inspection Advisory?
506) What, according to RESPA, must the lender give to the borrower disclosing whether or not they intend to transfer the loan to another lender?
507) At which point in the process does scheduling a photographer take place?
508) Mello-Roos was enacted in 1982 to provide for non-specific _____________ improvements.
509) Why should a buyer ask the type and age of heating and cooling systems?
510) Matt’s sellers have a very valuable collection of artwork displayed in their home. It perfectly showcases various rooms in the home. What advice should Matt provide to his sellers when preparing to sell the home?
511) Which of the following is a common chimney or fireplace problem?
512) Real estate is a _____________, unlike stocks or bonds.
513) Net operating income ‒ ______________ = cash flow
514) This generation was born between the mid 1920s and mid 1940s. Only 55% of those in this generation financed their purchase, which is a far cry from today’s actions.
515) Gross potential rental income ‒ ______________ = effective gross income
516) Which of the following statements about the signed sales contract is true?
517) What’s it called when a property is owned by the bank after failing to receive an acceptable bid at foreclosure?
518) Net operating income can be found in the _____________ statement that the property manager puts together for the property owner.
519) Three categories exist for this classification of a worker, who is defined in statute under tax law as an independent contractor and not an employee: direct seller, licensed real estate agent, and a certain companion sitter. This worker’s status is ________.
520) A complaint was filed against Barb, a licensee. A hearing was held, and GREC issued a/an __________, which resulted in a small fine and the requirement for Barb to take some additional education.
521) Which of the following is the property of the broker even if secured by the licensee, as provided for in the independent contractor agreement?
522) Which of the following best describes what Ginnie Mae does in the secondary mortgage market?
523) Gia is acting as a seller agent. Which of these is a duty she must perform?
524) A home sells for $225,000. Per the listing agreement, the agent is paid 7% of the sales price, with half of that amount paid to the buyer’s agent. The seller’s agent also has an agreement with her brokerage for a 70/30 split. How much is the agent’s commission?
525) In a condominium building, what pays for the exterior maintenance, insurance and payroll for building personnel, and interior maintenance, trash pick-up, landscaping and snow removal, and building insurance?
526) What does each component of the 80/10/10 ratio represent in a split—or piggyback—loan?
527) Who’s responsible for testing private wells for water safety?
528) The exemption to the Fair Housing Act that would normally apply is moot when a real estate agent represents _______.
529) Brenda and Joe have 20% cash to put down toward the purchase of their home, and they have great credit. What might be their best option for getting a traditional mortgage loan?
530) If you engage in commingling, what have you done?
531) A buyer is purchasing a property with a fair market value of $94,675, which has an assessed value of $37,870. If the mill rate is 30, what will the buyer likely pay annually in taxes?
532) Which of these would likely be covered by a builder’s home warranty?
533) Sally prefers the predictability of a mortgage payment that doesn’t change during the repayment. Which type of loan offers this feature?
534) Ed Smith is a sole proprietor using the trade name “Ed Knows Real Estate.” Under what name may Ed legally conduct business?
535) What are the loans the Federal Home Loan Bank makes to member banks called?
536) Jemma’s name, address, and license status appear on all forms of advertising, whether she is making the advertisement herself or not. Why would her information appear on advertisements, even when she didn’t specifically place the ad?
537) Bambi is buying a property as in a land sales contract. Due to her financial interest in the property, she retains equitable title, while the seller retains _______.
538) Which of the following is true of retainer fees?
539) What’s Fannie Mae’s mission?
540) A property that’s been converted to natural gas may actually have which issue?
541) The Uniform Vendor and Purchaser Risk Act specifies the rights and duties that apply when a property is _________________.
542) Jenny and Sam are engaged to be married. Any real estate either owns at the time of marriage will remain that person’s property in severalty, while any property attained after the wedding belongs to both of them equally. This describes what type of ownership?
543) What is an acceleration clause in a mortgage?
544) When using the market comparison approach, the comparable property’s relationship to the subject property is a process known as __________.
545) Maria, a qualifying broker, established a new trust account at her firm. By law, within how many days does she have to notify the commission that she established a new trust account?
546) When reviewing her mortgage documents, Reva learns that should she miss scheduled payments, fail to pay property taxes, or allow the property to fall into disrepair, she may be in ______.
547) Rachel and Nick are selling their home. Before the property is sold, a title search is conducted to determine if there are any ______.
548) A landlord discovers that his married tenants are expecting their first child. He wouldn’t have rented to the couple had he known they were going to have children, so he serves them with an eviction notice and tells them they must be out in 30 days. The landlord is guilty of ______.
549) What’s the broadest estate a person can have in real estate?
550) When is a title search conducted?
551) If you work for a property management company that manages property for more than one owner, what must you have in order to collect rent and perform other real estate functions?
552) What is a tax levy?
553) For safety reasons, you should not allow strangers to see_____________.
554) What are the two primary differences between the security deed and the deed of trust?
555) What type of taxation does a limited liability company enjoy?
556) A contract in which only one party is bound is ______.
557) How can lapsed homeowner’s insurance lead to default of the mortgage loan?
558) Elisa and Simone signed an agreement to list Simone’s house for sale. After the contract was signed, Simone lost her job, and her father, George, offered to help Simone out by paying Elisa’s commission. The buyer’s agent, Carl, also reduced his commission by a quarter percent to help Simone out. Who is Elisa’s client?
559) Raul has his broker’s license and has been appointed by the governor to serve as a GREC member. Which of the following criteria made him eligible to be a broker member of the commission?
560) _________ is when one party didn’t meet the terms of the contract in the specified time frame, and is now being required to do exactly what was agreed to in the contract.
561) In addition to being properly executed (signed), what’s another requirement for recording a document?
562) Edwin has been a successful real estate professional for many years. After starting off listing residential and commercial properties, Edwin now lists properties that involve light and heavy manufacturing, warehousing, and distribution. Of the six categories of real estate, what types of properties does Edwin handle?
563) A buyer’s offer calls you with a great offer for your seller client. What is the best next step?
564) The ECOA Valuations Rule requires disclosure of valuation data to the buyers who pay for the appraisal. Which of the following is included in the new rule?
565) Which of the following is a non-ownership interest in land by someone other than the owner that gives that person the right to access or use the property?
566) What is the purpose of the agency disclosure?
567) What went into effect in 2009 as an addendum to carbon monoxide regulations?
568) Which of the following is true about easements appurtenant?
569) When assessing taxes, the percentage of market value (or full market value) is called
570) Your builder client, Jeffrey, is building a subdivision. HUD require his walkways to be built ___________.
571) When may informed consent for dual agency be obtained?
572) Which of the following is the term used for the authorization for how tax funds are spent and collected?
573) Phil, who is a wholesaler, is ready to sell a property. What will his sales strategy be?
574) Which agency upholds federal, state and local public health laws, regulating drinking water safety, septic system approval and certain waste water treatment approval?
575) A lease with option to buy is a good home buying solution for some buyers. Which of these statements about a lease with option to buy is FALSE?
576) What does liability insurance cover?
577) If step one for the borrower is a pre-qualification letter and step two is applying for the loan, what’s step three?
578) When a borrower first obtains a mortgage, which portion of PITI receives most of the mortgage payment?
579) Which of the following describes a claim or charge against a property by someone other than the property’s owner?
580) To have a clear idea of what you want to achieve in a transaction, what should you focus on?
581) To compute the tax rate, each taxing authority takes the total funds required for the upcoming fiscal year and ____________________.
582) CCIM, SIOR, CPM, BOMA and ISCS are accreditation programs for licensees who represent ______ investors.
583) ______ conveys the emotional content of words. Angry, disrespectful, or inappropriate words directed at you may be indicators of a threat.
584) Mary Jane owns a building in which electrical service is supplied to the entire building through a utility-owned meter, and the cost of the service is shared among the building’s tenants. What type of system does she have?
585) What’s the intent of the expense stop in a lease escalation clause?
586) Which of the following is the first wooden member of the structure from the ground up that is used as the nailing surface for the floor system?
587) Broker Alex learns that his friend Joann is frustrated with the broker who listed her home. Alex encourages Joann to break her existing agency agreement and sign with him instead. This violation is an example of ______.
588) Under what circumstances is the seller obligated to pay the listing agent a commission if the agent is working under an exclusive agency agreement?
589) Which individual takes a look at a potential borrower’s application and verifies things like their employment and financial information, then analyzes their credit report as well as the appraisal report on the property?
590) When a buyer purchases a cooperative unit to live in, what types of shares are owned?
591) The components that make up a borrower’s mortgage payment can best be remembered using which acronym?
592) Which of the following is paid in cash (or check) up-front by the buyer?
593) Who should ensure that all deadlines are met, all contingencies are cleared, and all paperwork is fully executed and delivered before closing?
594) This homeowners policy, commonly known as rental insurance, provides coverage to tenants for the loss of personal property.
595) The sponsor of a condominium project must submit the offering plan to the Attorney General for approval. The sponsor also appoints the board of mangers as well as the managing agent for the condominium owners. At what point must the sponsor relinquish control of the board of managers?