1. Maximizing income and maintaining property value are the general goals of what aspect of the real estate business?

(A) Appraising

(B) Brokerage and sales

(C) Property management

(D) Property inspection

2. When managing risk, transferring it usually means

(A) making the property manager responsible.

(B) making the owner responsible.

(C) complying with all local laws so that the municipality is responsible.

(D) purchasing insurance.

3. What type of insurance would usually pay a financial claim for injury by a person who falls on the icy sidewalk in front of a building?

(A) Liability

(B) Errors and omissions

(C) Casualty

(D) Fire and hazard

4. Although a property management agreement can be for any length of time, the generally recommended minimum is

(A) six months.

(B) one year.

(C) two years.

(D) no minimum.

5. An agent who represents someone in a group of activities such as a property manager is considered what type of agent?

(A) Special

(B) General

(C) Universal

(D) Individual

6. In general, which of the following is not an agent’s duty to a customer?

(A) Confidentiality

(B) Honest and fair dealing

(C) Disclosure of material facts

(D) Reasonable care

7. Which of the following is true?

(A) A latent defect is always a material defect.

(B) A latent defect is never a material defect.

(C) A latent defect always affects a buyer’s decision.

(D) A material defect may affect the buyer’s decision.

8. Seller Sam agrees to allow Broker Betty to keep anything she makes above the $250,000 Sam wants for his house. This is an example of

(A) an open price listing.

(B) a violation of accounting.

(C) a net listing.

(D) an auction listing.

9. A seller can be

(A) a principal only.

(B) a principal but not a client.

(C) a principal, a client, but not a customer.

(D) a principal, a client, and a customer.

10. A buyer wants to be represented by only one broker and understands that the broker will spend time and money working for him. He agrees that it is only fair that the broker be compensated even if he, the buyer, finds a house on his own. The buyer signs

(A) an open buyer agency agreement.

(B) a buyer agent guaranteed compensation agreement.

(C) exclusive agency buyer agency agreement.

(D) exclusive buyer agency agreement.

11. Disclosure as part of an agent’s fiduciary duties mean

(A) full disclosure of all facts to buyer and seller equally.

(B) disclosure of latent defects to the seller only.

(C) disclosure of all material facts to the client.

(D) disclosure of all pertinent information to the client.

12. A seller’s agent earns her commission when

(A) she is the procuring cause of the transaction.

(B) produces a ready, willing, and able buyer.

(C) there is a meeting of the minds.

(D) all of the above.

13. There are no exceptions to the

(A) 1866 Civil Rights Act.

(B) 1968 Fair Housing Act.

(C) Community Development Act of 1974.

(D) Fair Housing Amendments Act of 1988.

14. A landlord requires a higher security deposit from families with children than those without children. According to Federal Law this is

(A) not discriminatory.

(B) not discriminatory if there are more than two children.

(C) discriminatory in all cases.

(D) not discriminatory if the owner only rents one single-family house.

15. “There are a lot of children in this neighborhood” said by a real estate agent to a buyer

(A) is acceptable if there are a lot of children in the neighborhood.

(B) is acceptable steering since people want to know about the demographics in a neighborhood.

(C) is considered steering and is therefore illegal.

(D) is not steering because it’s stating a fact.

16. A real estate agent

(A) is subject to all fair housing laws with no exceptions.

(B) can assist clients with legal exceptions to fair housing laws.

(C) cannot use federal exceptions but can use local state exceptions.

(D) can only use the exception to the 1866 Civil Rights Act.

17. “This apartment/house is not available”

(A) is permitted as a polite way to avoid renting to an African American couple.

(B) is a good way to avoid discriminatory advertising as an exception to fair housing law to the owner of four or more single-family houses.

(C) is permitted if the apartment has already been rented.

(D) is never permitted because a reason for not renting always has to be provided.

18. The fact that you could own an office building but rent it to someone else is explained

(A) by the theory of prior possession.

(B) by the bundle of rights theory.

(C) by the theory of eminent domain.

(D) by the unlimited estates theory.

19. When using the term estate with respect to property rights, it

(A) refers only to ownership of a large piece of property.

(B) refers only to ownership through inheritance.

(C) refers only to purchased property.

(D) does not necessarily refer to ownership.

20. Which of the following is not considered an estate with limitations?

(A) Fee simple absolute

(B) Fee simple defeasible

(C) Fee simple qualified

(D) Fee simple determinable

21. The right of a husband to a portion of his wife’s property is called

(A) community property or curtesy.

(B) community property or dower.

(C) dower or curtesy.

(D) community property and homestead.

22. The best definition of tenancy is

(A) being a residential apartment renter.

(B) being a property owner.

(C) being a commercial property renter.

(D) having an interest in real estate.

23. Property inherited by one spouse under community property law

(A) is considered community property.

(B) is considered separate property.

(C) may only be sold by joint action of both spouses.

(D) becomes community property after five years.

24. Which of the following is not a unity required in joint tenancy?

(A) Unity of trust

(B) Unity of time

(C) Unity of title

(D) Unity of possession

25. In a condominium you generally own your unit

(A) as a tenant in common.

(B) as a tenant in severalty.

(C) as a joint tenant.

(D) under a proprietary lease.

26. A subdivision is zoned for one acre lots. The town agrees to allow the developer to build all the houses on quarter-acre lots and leave the remaining land in open space. The developer is likely being subject to

(A) density zoning.

(B) limited zoning.

(C) a special permit.

(D) cluster zoning.

27. When a property owner sues the government because an action it has taken reduced the owner’s property value, she will claim what as a basis for her lawsuit?

(A) Escheat

(B) Eminent domain

(C) Due process

(D) Inverse condemnation

28. An owner who fails to exercise his right of legal actions against his neighbor for violating a deed restriction, and then loses that right because he failed to exercise it in a timely fashion, has fallen victim to the doctrine of

(A) prior authority.

(B) laches.

(C) escheat.

(D) adverse possession.

29. Property owner A has a driveway easement across property owner B’s property. Property owner A eventually buys property owner B’s property. The easement

(A) continues despite the joining of the two properties.

(B) is considered abandoned.

(C) continues by prescription.

(D) disappears by merger.

30. A shared driveway is usually a case of

(A) easement in gross.

(B) easement appurtenant.

(C) easement by prescription.

(D) easement by necessity.

31. A judgment lien is

(A) specific and voluntary.

(B) specific and involuntary.

(C) general and voluntary.

(D) general and involuntary.

32. The dominant tenement in an easement situation

(A) is the one who benefits from the easement.

(B) is the one who gives the easement.

(C) can be either party.

(D) does not exist in an easement in gross.

33. Demographics is the study of

(A) job growth.

(B) topography.

(C) earthquake activity.

(D) population characteristics.

34. Title to property is actually conveyed by

(A) deed.

(B) contract.

(C) title insurance.

(D) acknowledgement.

35. The words “to have and to hold” are typical of

(A) the words in the sales contract.

(B) the words in the habendum clause of the deed.

(C) the words in the acknowledgement.

(D) the consideration clause.

36. The words “for love and affection” in the deed usually mean

(A) the property is part of an estate.

(B) the property is jointly owned by a husband and wife.

(C) the property is a gift.

(D) the property is to be retained in a life estate.

37. What kind of deed has most likely been executed when Person A conveys his property to Person B to hold as security for a loan made by Person C to Person A?

(A) Quitclaim

(B) Bargain and sale with no covenants

(C) General warranty

(D) Deed in trust

38. A legal description of property is any description

(A) that can locate the property for the U.S. postal service.

(B) that can locate the property for tax purposes.

(C) that can be used in a deed.

(D) that can clearly identify the location of property in the community.

39. In the government survey system

(A) a township has 36 sections.

(B) a section has 36 townships.

(C) a quadrangle has 36 sections.

(D) a township has 36 quadrangles.

40. What do surveyors use to measure elevations?

(A) Datums

(B) Benchmarks

(C) A and B

(D) Neither A nor B

41. In the proration process a credit for an item can be owed

(A) to the buyer only.

(B) to the seller only.

(C) to the buyer and seller.

(D) to the buyer or seller.

42. RESPA is monitored by

(A) the Department of Commerce.

(B) the Department of Justice.

(C) the local Department of State.

(D) the Department of Housing and Urban Development.

43. The estate of a person who dies without a will is usually divided according to state laws of

(A) infestation.

(B) testation.

(C) probate.

(D) descent.

44. An owner of property in common with others who wants to divide the property against the will of the other owners would file a suit to

(A) divide the property.

(B) partition the property.

(C) dissolve the tenancy in common.

(D) create a joint tenancy.

45. The sudden loss of land through natural forces is called

(A) erosion.

(B) declination.

(C) accretion.

(D) avulsion.

46. A contract formed by the actions of two parties is

(A) express unilateral.

(B) express bilateral.

(C) implied unilateral.

(D) implied bilateral.

47. An unenforceable contract where the parties choose to honor the agreement is said to be

(A) valid in law.

(B) unvoided.

(C) enduring between the parties.

(D) valid as between the parties.

48. A person two weeks under the legal age of consent signing a contract is likely to create a situation known as a

(A) void contract.

(B) unenforceable contract.

(C) fraudulent contract.

(D) voidable contract.

49. A real estate sales contract is usually

(A) an express bilateral contract.

(B) an express unilateral contract.

(C) an implied bilateral contract.

(D) an implied unilateral contract.

50. Person A makes an agreement to let his neighbor (Person B) buy Person A’s house at a certain price within the next six months if Person B wants to. What kind of agreement have they reached?

(A) Express bilateral

(B) Express unilateral

(C) Implied bilateral

(D) Implied unilateral

51. What does the landlord own in a lease situation?

(A) A leasehold interest

(B) A leased fee interest

(C) A reversionary interest

(D) B and C

52. A month to month tenancy is an example of

(A) a tenancy at will.

(B) a periodic tenancy.

(C) a tenancy at sufferance.

(D) an estate for years.

53. Generally a lease longer than a year has to be in writing according to

(A) the Statute of Frauds.

(B) the Uniform Residential Landlord and Tenant Act.

(C) the Uniform Commercial Code.

(D) the State Real Estate Commission.

54. In which of the following might it be said that no actual tenancy exists?

(A) Tenancy at will

(B) Periodic estate

(C) Estate for years

(D) Tenancy at sufferance

55. The federal agency responsible for most environment rules and regulations is

(A) HUD.

(B) CERCLA.

(C) HTMA.

(D) EPA.

56. Innocent land owner status was established by

(A) the Comprehensive Environmental Response, Compensation, and Liability Act.

(B) the Superfund Amendment and Reauthorization Act.

(C) the Environmental Assessment Act.

(D) the Landowner Liability Release Act.

57. Development of a management plan for a contaminated site too large to remove would fall under which phase of environmental assessment?

(A) 1

(B) 2

(C) 3

(D) 4

58. A colorless, odorless, hazardous gas originating from rocks under the earth would most likely describe

(A) carbon monoxide.

(B) radon.

(C) chlorofluorocarbons.

(D) electromagnetic fields.

59. The number of bedrooms most likely determines

(A) whether or not you can connect to the public sewer system.

(B) whether or not you can use well water.

(C) the size of your septic system.

(D) the amount of sanitary waste the house produces.

60. In an estate appraisal for tax purposes, what date is used as the appraisal or valuation date?

(A) Date the appraisal is ordered

(B) Date the person died

(C) Date set by probate court

(D) Any time within the calendar year of the death

61. All other things being equal, what characteristic of real estate makes location the most important value factor?

(A) The federal government’s policy of encouraging home ownership

(B) Ready access to mortgage money in certain communities

(C) The dependence on the automobile

(D) The immobility of real estate

62. A real estate broker who obtains special permission from the town to use part of his house as a real estate office may have his house appraised for

(A) value in use.

(B) market value.

(C) assessed value.

(D) all of the above.

63. A surplus of condominiums in a town may be the result of the principle of

(A) balance.

(B) conformity.

(C) competition.

(D) substitution.

64. A man wants to buy a warehouse and convert it into a movie theater. What types of value will he most likely want to know?

(A) Assessed and market

(B) Investment and assessed

(C) Market and value in use

(D) Investment and market

65. House A is worth $300,000 and is surrounded by $500,000 homes. In a neighborhood of homes similar to House A, it would be worth $250,000. This is an example of

(A) conformity.

(B) competition.

(C) progression.

(D) regression.

66. Curable deterioration

(A) can be fixed.

(B) is just a paper loss.

(C) costs more to fix than it’s worth.

(D) costs less to fix than the value it adds to the property.

67. Which one of the following is not a method by which to estimate a property’s value?

(A) Capitalize the net income

(B) Multiply the gross rent by a multiplier

(C) Compare the values of several similar properties

(D) Estimate the cost to replace the building

68. The formula for estimating a property’s value by comparing similar properties and making adjustments is

(A) comparable better, add the adjustment to the comparable.

(B) comparable worse, subtract the adjustment from the comparable.

(C) comparable better, subtract the adjustment from the comparable.

(D) comparable worse, add the adjustment to the subject.

69. Who does what with respect to mortgages?

(A) Mortgage broker lends money.

(B) Mortgage banker arranges loans.

(C) Real estate broker and mortgage broker arrange loans.

(D) Mortgage banker lends money, mortgage broker arranges loans.

70. Why is the person lending the money called the mortgagee and not the mortgagor?

(A) Because they receive the mortgage payments.

(B) Because the mortgage industry language evolved that way.

(C) Because the borrower gives the mortgage to the lender.

(D) Not correct. The lender is called the mortgagor because he gives the mortgage to the borrower.

71. The clause that enables the lender to declare that the entire balance of the loan is due is called the

(A) acceleration clause.

(B) due on sale clause.

(C) forfeiture clause.

(D) lien clause.

72. Which of these does not insure mortgage loans?

(A) The Veterans Administration

(B) The Federal Housing Administration

(C) Private insurers

(D) The Government National Mortgage Association

73. The Certificate of Reasonable Value is a requirement of what type of loan?

(A) VA

(B) FHA

(C) Credit union

(D) Jumbo

74. The difference between a property’s value and the debt on the property is a good definition of

(A) the loan to value ratio.

(B) equity.

(C) investment value.

(D) A and B, but not C.

75. What type of loan is expected to convert to a conventional mortgage in a relatively short time?

(A) Construction loan

(B) Home equity loan

(C) Package loan

(D) Reverse mortgage

76. An index is a feature of what type of mortgage loan?

(A) Adjustable rate mortgage loan

(B) Reverse mortgage loan

(C) Package loan

(D) Jumbo loan

77. In a 30-year amortized mortgage loan, the interest for the third year is calculated by multiplying the interest rate by

(A) the original amount of the loan.

(B) the original amount of the loan and dividing by 30.

(C) the original amount of the loan and dividing by 27.

(D) the unpaid balance of the loan.

78. A feature of the growing equity mortgage is

(A) that the interest rate starts low and steadily increases.

(B) that the principal payments increase over time.

(C) that the principal payments decrease over time.

(D) that the interest rate decreases over time allowing more rapid payoff.

79. An interest-only loan is called

(A) an adjustable rate loan.

(B) a blanket loan.

(C) a straight loan.

(D) a reverse loan.

80. The formula for calculating a tax rate is

(A) municipality budget / (divided by) total assessed valuation.

(B) total assessed valuation / (divided by) municipality budget.

(C) total assessed valuation × assessment ratio.

(D) total assessed valuation × equalization rate x municipality budget.

81. If there are three towns in a county, each using different assessment ratios, what does the county need to do to make the assessments and the taxes fair to each taxpayer?

(A) Reassess all the properties in the county.

(B) Make the towns reassess all the properties in each town.

(C) Equalize the assessed values using an equalization rate.

(D) Nothing because assessments are up to each town.

82. If you multiply the market value by the assessment ratio, you get

(A) the tax rate.

(B) the assessed value.

(C) the equalization rate.

(D) the total municipal budget.

83. Market value × tax rate = taxes due under what circumstances?

(A) Always

(B) Never

(C) When the assessment ratio is 50 percent

(D) When the assessment ratio is 100 percent

84. The assessment ratio can be calculated by

(A) dividing the assessed value by the market value.

(B) dividing the market value by the assessed value.

(C) multiplying the equalization rate by the market value.

(D) dividing the assessed value by the equalization rate.

85. Which of the following would not be considered a liquid investment?

(A) Bank certificate of deposit

(B) Stocks

(C) Real estate

(D) Savings accounts

86. A group of investors wanting to invest in real estate could legally form

(A) a syndicate and a corporation.

(B) a partnership and a corporation.

(C) a syndicate but not a corporation.

(D) a corporation but not a syndicate.

87. The use of borrowed money to invest in real estate is called

(A) leverage.

(B) syndication.

(C) selling shares.

(D) investment trust.

88. Joe buys an investment property and three years later sells it for enough profit to buy two buildings. Five years later he refinances one building and buys two more. His actions may be described as

(A) leveraging.

(B) pyramiding.

(C) capitalizing.

(D) depreciating.

89. A real estate investment that works like a stock market investment is probably

(A) an equity trust.

(B) a mortgage trust.

(C) a combination trust.

(D) any of the above.

90. Which is not one of the benefits of investing in real estate?

(A) Tends to keep pace with inflation

(B) Favorable tax treatment

(C) Non-liquid, making it a stable investment

(D) Annual returns on one’s investment

91. A property is assessed at $225,000. What is the equalized value if the equalization rate is 2.35?

(A) $528,750

(B) $95,745

(C) $957,447

(D) $52,875

92. What is the principal balance of a $100,000, 30-year amortized mortgage loan at 6 percent interest after the first monthly payment of $600?

(A) $99,400

(B) $99,500

(C) $99,700

(D) $99,900

93. The taxes on a property are $3,575. The tax rate is $30 per $1,000. The assessment ratio is 70 percent. What is the market value of the property?

(A) $107,250

(B) $153,214

(C) $162,765

(D) $170, 238

94. If the net operating income of a commercial building is $156,000, and the capitalization rate is 12 percent, what is the value of the building?

(A) $1,872,000

(B) $1,300,000

(C) $1,560,000

(D) $15,600,000

95. A building has a potential gross income of $350,000, a vacancy and collection loss of 5 percent, and total expenses of $140,000. What is the effective gross income?

(A) $192,500

(B) $210,000

(C) $217,000

(D) $332,500

96. A comparable that sold for $280,000 has a fourth bedroom valued at $20,000 that is not present in the subject. You think the subject might be worth about $290,000. What is the indicated value of the subject?

(A) $260,000

(B) $270,000

(C) $290,000

(D) $300,000

97. A house sells for $480,000 with a commission rate of 4 percent. The listing salesperson receives 40 percent of the listing side commission, which is 50 percent of the total commission. How much does the listing broker receive after paying the salesperson?

(A) $3,840

(B) $4,800

(C) $5,760

(D) $9,600

98. Taxes for the year of $3,600 are paid in arrears on January 1 for the previous year. The sale of the property closed on September 23. Use 12 months, 30 days per month, and the buyer owns the property on the day of closing — now prorate the taxes.

(A) $2,620 debit to buyer and $2,620 credit to seller

(B) $2,620 debit to seller and $2,620 credit to buyer

(C) $3,600 credit to buyer and $3,600 debit to seller

(D) $3,600 credit to buyer and $2,620 debit to seller

99. If effective gross income is $180,000, the vacancy and collection loss is 7 percent, and expenses are $73,000, what is the net operating income?

(A) $167,400

(B) $107,000

(C) $99,510

(D) $94,400

100. If a building sells for $1,200,000 and has a net operating income of $130,000, what is the capitalization rate?

(A) 9.23 percent

(B) 11 percent

(C) 12 percent

(D) 12.34 percent