Real Estate Exam One

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    What is the best way to create an agency relationship?

    • By actions
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About This Quiz

Real Estate Exam One assesses knowledge crucial for real estate practice, focusing on title issues, financing challenges, broker requirements, and loan types. It prepares candidates for licensing, enhancing understanding of key real estate concepts.

Real Estate Exam One - Quiz

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  • 2. 

    Which of the following is acceptable response for the agent to seller who has indicated their home is not to be shown to sales of prospects who are memebers of the ethnic minority group?

    • I can show it to anyone I want

    • With this condition, we will get a better price and value won't drop

    • I cannot accept the listing for your property because of prohibited discrimination

    • With unacceptable terms, they won't be interested

    Correct Answer
    A. I cannot accept the listing for your property because of prohibited discrimination
    Explanation
    The correct answer is "I cannot accept the listing for your property because of prohibited discrimination." This response acknowledges that the seller's condition of not showing the home to prospects who are members of an ethnic minority group is discriminatory and goes against regulations. By refusing to accept the listing, the agent upholds their ethical responsibility to promote fair and equal treatment for all individuals.

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  • 3. 

    The appraisal of an income-producing property is made with an as of "given date" to indicate:

    • The Market conditions influencing the value of the property at the point in time

    • The effective age of the property

    • The date of inspection

    • The assessed value

    Correct Answer
    A. The Market conditions influencing the value of the property at the point in time
    Explanation
    The appraisal of an income-producing property is made with an as of "given date" to indicate the market conditions influencing the value of the property at that specific point in time. This means that the appraiser takes into account the economic factors, supply and demand, interest rates, and other market conditions that may affect the property's value on the given date. This helps provide an accurate and up-to-date assessment of the property's worth based on the current market conditions.

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  • 4. 

    A broker receives an offer from a buyer for a specific property. The deposit was in the form of a personal promissory note for $2,000 payable to seller in 60 days plus 10% interest. Which of the following is true?

    • The broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before seller accepts the offer

    • All deposits to purchase real estate must be in the form of personal check

    • Personal promissory note is acceptable if it is $1,000 or less

    • Personal promissory note are to risky and the broker may return the offer

    Correct Answer
    A. The broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before seller accepts the offer
    Explanation
    The correct answer is that the broker may accept the promissory note but must notify the seller that the deposit is in the form of a promissory note before the seller accepts the offer. This is because the offer includes a personal promissory note as a form of deposit, which is acceptable. However, the broker must inform the seller about the nature of the deposit before they accept the offer.

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  • 5. 

    When an agent is accused of “puffing,” the agent might have been guilty of which of the following?

    • Advising the real estate agent to elevate the price on the property to help the buyer with financing costs

    • Exaggerating the features of the property and/or neighborhood when showing the property to prospective buyers

    • Charging the seller higher cost in different neighborhoods

    • Convincing the buyer to make a lower offer

    Correct Answer
    A. Exaggerating the features of the property and/or neighborhood when showing the property to prospective buyers
    Explanation
    "Puffing" refers to the practice of exaggerating or making exaggerated claims about the features or qualities of a property or neighborhood in order to make it more appealing to potential buyers. This can be seen as a deceptive practice as it misrepresents the true nature of the property.

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  • 6. 

    Which of the following is the reason that a real estate agent must keep his principal informed of material facts concerning a pending real estate transaction?

    • When the agent is a fiduciary

    • When it's printed on the purchase agreement

    • When the agent concerned with the commission which seller is paying

    • When the broker works only for the seller

    Correct Answer
    A. When the agent is a fiduciary
    Explanation
    A fiduciary is a person who is entrusted with the responsibility to act in the best interest of another party. In the context of a real estate agent, being a fiduciary means that the agent has a legal and ethical obligation to prioritize the interests of their client, the principal. By keeping the principal informed of material facts concerning a pending real estate transaction, the agent ensures transparency and allows the principal to make informed decisions. This helps to maintain trust and fulfill the agent's fiduciary duty towards the principal.

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  • 7. 

    Broker Smith took a listing on commercial acreage and also received the right to purchase the property within 30 days.  On the 28th day of the listing, the broker decided to buy the property.  Before buying the property, he must:

    • Disclose any outstanding offers

    • Give the owner any material information

    • Obtain written consent from the owner which acknowledges any profit or anticipated profit

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    The broker must disclose any outstanding offers because it is important for the owner to be aware of any potential competing offers before making a decision. The broker must also give the owner any material information about the property that may affect their decision to sell. Lastly, the broker must obtain written consent from the owner, acknowledging any profit or anticipated profit that they may make from purchasing the property. These steps ensure transparency and protect the owner's interests.

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  • 8. 

    The mortgage insurance on a FHA loan: 

    • Protects the lender in the event of the trustor's death

    • Protects the borrower from a fire loss

    • Is paid by the lender

    • Protects the lender in the event of default

    Correct Answer
    A. Protects the lender in the event of default
    Explanation
    The mortgage insurance on a FHA loan protects the lender in the event of default. This means that if the borrower fails to make their mortgage payments and defaults on the loan, the lender will be protected and reimbursed for any losses incurred. Mortgage insurance helps mitigate the risk for lenders and allows them to provide loans to borrowers with lower down payments or less-than-perfect credit.

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  • 9. 

    Which of the following is considered real property?

    • Land and buildings

    • Artificial items which are immovable by law

    • Easements that convey rights of-way over adjoining land

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Real property refers to land and any permanent structures or improvements on it, such as buildings. It also includes artificial items that are immovable by law, meaning they are attached to the land and cannot be easily removed. Additionally, easements that convey rights of way over adjoining land are also considered real property. Therefore, all of the options listed - land and buildings, artificial items which are immovable by law, and easements that convey rights of way over adjoining land - are considered real property.

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  • 10. 

    The rights granted by an owner of real property to a telephone company for the purpose of erecting poles to support telephone wires over the property creates:

    • An encumbrance

    • Restriction

    • Specific lien

    • General lien

    Correct Answer
    A. An encumbrance
    Explanation
    The rights granted by an owner of real property to a telephone company for the purpose of erecting poles to support telephone wires over the property creates an encumbrance. An encumbrance refers to any claim, lien, or liability that affects the title or use of a property. In this case, the owner is granting the telephone company the right to use their property, which creates an encumbrance on the property as it limits the owner's full use and control over it.

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  • 11. 

    Under which of the following listings, a commission must be paid by owner even though he sells entirely through his own efforts:

    • Exclusive right to sell listing

    • Exclusive agency listing

    • Open listing

    • Net listing

    Correct Answer
    A. Exclusive right to sell listing
    Explanation
    In an exclusive right to sell listing, the owner agrees to work exclusively with one real estate agent who will be responsible for selling the property. Regardless of who finds the buyer, the owner is obligated to pay a commission to the agent. This means that even if the owner sells the property entirely on their own without any assistance from the agent, they still have to pay the agreed-upon commission.

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  • 12. 

    Of the following, which is the best definition of a balloon payment?

    • Late interest payments of a 30 year loan due at the end

    • An additional payment to avoid prepayment penalties

    • Principal payments

    • The require payment of the entire balance due

    Correct Answer
    A. The require payment of the entire balance due
    Explanation
    A balloon payment refers to the requirement of paying the entire balance due at once. This means that instead of making regular payments towards the loan, the borrower is obligated to make a large lump sum payment at the end of the loan term. This type of payment is often associated with loans that have lower monthly payments but a large final payment, which can be challenging for borrowers to afford.

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  • 13. 

    A Chicano prospective purchaser asks to be shown homes but does not specify that he wants to see homes located in a neighborhood where there are no Chicanos. How should a licensee decide what properties to show him?

    • The licensee may select homes for showing as he would for any other prospect

    • The licensee could assume that the prospective buyer is not interested in that neighborhood

    • The licensee may decided not to provide service to the buyer

    • Show him homes only in a Chicano neighborhood

    Correct Answer
    A. The licensee may select homes for showing as he would for any other prospect
    Explanation
    The correct answer suggests that the licensee should treat the Chicano prospective purchaser like any other prospect and select homes for showing based on their preferences and requirements, without making assumptions or discriminating based on their ethnicity.

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  • 14. 

    An easement could be created for what length of time:

    • Perpetual

    • For years

    • Lifetime

    • Any of the above

    Correct Answer
    A. Any of the above
    Explanation
    An easement could be created for any length of time, including perpetually, for a specific number of years, or for the duration of a person's lifetime. The creation of an easement is not limited to a specific time period and can be tailored to the needs and agreements of the parties involved.

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  • 15. 

    George Carson is selling time- shares in his Wildacre subdivision.  He mailed advertisements to 10,000 people offering them the chance to win a prize, but did not reveal that the person must visit Wildacre and listen to a sales presntation in order to be eligible.  All of the prize winners became the owners of Wildacre.  Is there anything wrong with this situation:

    • No; prizes may be offered at any presentations related to real estate

    • Yes; property owners are excluded

    • Yes; anyone offering prizes or gifts must reveal any requirements such as an attendance of a sales presentation

    • No; if winners become property owners at Wildacre

    Correct Answer
    A. Yes; anyone offering prizes or gifts must reveal any requirements such as an attendance of a sales presentation
    Explanation
    The answer is "Yes; anyone offering prizes or gifts must reveal any requirements such as an attendance of a sales presentation." This is because it is considered deceptive and unethical to withhold important information, such as the requirement to attend a sales presentation, when offering prizes or gifts. It is important for individuals to have all the necessary information before making a decision, and not revealing such requirements can be seen as misleading.

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  • 16. 

    Which of the following State Agencies is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, sex, national origin, or ancestry?

    • Department of Fair Employment and Housing Act

    • Discrimination Act

    • Department of Real Estate

    • Labor and Construction Department

    Correct Answer
    A. Department of Fair Employment and Housing Act
    Explanation
    The Department of Fair Employment and Housing Act is empowered to prevent acts of discrimination in housing accommodations in California because of race, color, sex, national origin, or ancestry.

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  • 17. 

    If a broker is an agent for a seller, he owes to the buyer:

    • A duty of fair and honest dealing

    • Same fiduciary obligation to the buyer as the seller

    • Questions from the buyer related to the sales price

    • Answer questions about the monthly payment

    Correct Answer
    A. A duty of fair and honest dealing
    Explanation
    As a broker who is an agent for a seller, he owes a duty of fair and honest dealing to the buyer. This means that the broker is obligated to act in good faith and provide accurate information to the buyer. The broker should not engage in any fraudulent or deceptive practices and should prioritize the buyer's interests while representing the seller. This duty ensures that the buyer is treated fairly and honestly throughout the transaction.

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  • 18. 

    If a real estate licensee misrepresents a property to a buyer while he is acting as an agent, he may subject himself to:

    • Disciplinary action by the licensing authority

    • Civil action

    • Criminal action

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    If a real estate licensee misrepresents a property to a buyer while acting as an agent, he can be subject to disciplinary action by the licensing authority, civil action, and criminal action. This means that the licensing authority can take action against the licensee, such as revoking their license or imposing fines. The buyer can also file a civil lawsuit against the licensee for any damages they may have suffered as a result of the misrepresentation. Additionally, the licensee may face criminal charges if their misrepresentation is deemed to be fraudulent or illegal. Therefore, all of the options mentioned (disciplinary action, civil action, and criminal action) are potential consequences for the licensee in this situation.

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  • 19. 

    When depreciation is taken on real property:

    • The basis is reduced

    • Value increase

    • Value is stable

    • Has no value

    Correct Answer
    A. The basis is reduced
    Explanation
    When depreciation is taken on real property, it means that the value of the property is being gradually reduced over time due to wear and tear or obsolescence. This reduction in value is reflected in the basis of the property, which is the original cost of the property for tax purposes. By taking depreciation, the basis of the property is reduced, which can have tax implications such as reducing the amount of taxable income or increasing the amount of deductible losses.

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  • 20. 

    Which of the following is the most difficult for the mortgage lender to evaluate?

    • The degree of risk

    • Credit of Borrower

    • Interest Return

    • Cost of Financing

    Correct Answer
    A. The degree of risk
    Explanation
    The degree of risk is the most difficult for the mortgage lender to evaluate because it involves predicting future events and uncertainties that can affect the borrower's ability to repay the loan. Factors such as changes in the borrower's financial situation, job stability, and market conditions can all contribute to the level of risk associated with the loan. Unlike creditworthiness, interest return, and cost of financing, which can be assessed based on historical data and financial indicators, the degree of risk requires a more complex analysis and subjective judgment.

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  • 21. 

    Carter bought 10 acres of vacant land for $20,000 per acre; making a cash down payment of $20,000 and executing a straight note and a blanket deed of trust for the balance. As a part of the note, the lender agreed that when Carter makes an additional payment of $20,000 on the principal, the trustee would issue a partial reconveyance for one acre. Carter has paid a total of $40,000 on the note and now owned two acres free and clear. The percentage of his equity in the encumbered property:

    • Is Variable

    • Has Decreased

    • Remains the same

    • Has Increase

    Correct Answer
    A. Has Increase
    Explanation
    Carter initially bought 10 acres of land for $20,000 per acre, making a total purchase price of $200,000. He made a down payment of $20,000, leaving a balance of $180,000. Carter then made an additional payment of $20,000 on the principal, reducing the balance to $160,000. In return, the trustee issued a partial reconveyance for one acre, leaving Carter with two acres free and clear. As a result, Carter's equity in the encumbered property has increased because he now owns two acres out of the original 10, whereas before he only owned one acre.

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  • 22. 

    When title is transferred, the grantee in the deed may have the title insured by a:

    • Title insurance policy

    • Hazard insurance

    • Homeowners insurance

    • Chain of title

    Correct Answer
    A. Title insurance policy
    Explanation
    When title is transferred, the grantee in the deed may choose to have the title insured by a title insurance policy. This policy provides protection to the grantee against any defects in the title that may arise after the transfer. It ensures that the grantee has clear ownership of the property and protects them from any potential legal issues or claims that may arise in the future. Hazard insurance, homeowners insurance, and chain of title are not related to insuring the title and do not provide the same level of protection.

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  • 23. 

    Which of the following phrases will best describe the nature of a broker’s duty to keep his principal informed?

    • Fiduciary obligation

    • Ethnical conduct

    • Good business practice

    • Responsibility

    Correct Answer
    A. Fiduciary obligation
    Explanation
    The phrase "fiduciary obligation" best describes the nature of a broker's duty to keep his principal informed. A fiduciary obligation refers to a legal or ethical duty to act in the best interest of another person or party. In the context of a broker, this means that they have a legal and ethical responsibility to provide accurate and timely information to their principal, ensuring that the principal is well-informed and making decisions that are in their best interest.

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  • 24. 

    Local government laws for the regulation and control of land-use include which of the following?

    • Building codes

    • Zoning ordinances

    • Subdivision ordinances

    • All of the above

    Correct Answer
    A. All of the above
    Explanation
    Local government laws for the regulation and control of land-use include building codes, zoning ordinances, and subdivision ordinances. Building codes set standards for the construction and maintenance of buildings to ensure safety and compliance with regulations. Zoning ordinances determine how land can be used in different areas, such as residential, commercial, or industrial. Subdivision ordinances regulate the division of land into smaller lots for development. Therefore, all of the options listed - building codes, zoning ordinances, and subdivision ordinances - are correct answers.

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  • 25. 

    A real estate salesman went into a neighborhood to obtain listings of residential property.  He made a presentation that the property value would be reduced by a decline int he quality of schools, and an increase in the crime rate because of the entry of minority groups into the neighborhood.  His action was:

    • Permissible as long as values do not decrease

    • No illegal as long as the statement is true

    • A disciplinary action

    • Unlawful only when the Real Estate commissioner finds out about the representation

    Correct Answer
    A. A disciplinary action
    Explanation
    The correct answer suggests that the real estate salesman's action is considered a disciplinary action. This implies that the salesman's behavior is not permissible and goes against professional ethical standards. Making statements that associate a decline in property value with the entry of minority groups is discriminatory and promotes prejudice. Such actions can lead to legal consequences and disciplinary measures taken by the relevant authorities.

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  • 26. 

    When the governmenatal body takes a private real property necessary for public use, the certain legal processes must be followed.  Takin a real property such as above is exercising the right of:

    • Eminent domain

    • Police Power

    • Escheat

    • Zoning Laws

    Correct Answer
    A. Eminent domain
    Explanation
    Eminent domain is the correct answer because it refers to the government's power to take private property for public use, as stated in the question. This power is typically exercised after following certain legal processes, as mentioned in the question. Police power refers to the government's authority to regulate and control the use of property for public health, safety, and welfare. Escheat refers to the transfer of property to the state when the owner dies without a will or legal heirs. Zoning laws refer to regulations that dictate how land can be used in specific areas.

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  • 27. 

    When an air conditioning unit has a higher energy efficiency ratio (EER), it means that:

    • The unit is more efficient

    • The unit is less efficient

    • The unit needs more electricity to operate

    • The unit needs less electricity to operate

    Correct Answer
    A. The unit is more efficient
    Explanation
    When an air conditioning unit has a higher energy efficiency ratio (EER), it means that the unit is more efficient. This means that the unit can provide the same cooling effect with less energy consumption compared to units with lower EER. In other words, it can cool a space effectively while using less electricity, resulting in lower energy bills and reduced environmental impact.

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  • 28. 

    A real estate broker sent all of his title business to a Title Company. In appreciation of the business, the title company paid the broker $10 for each transaction. According to the Real Estate Settlement Procedures Act, “RESPA,” this practice is:

    • Forbidden

    • Permissible

    • Acceptable if buyer and seller are told about it

    • Permissible if seller pays for the title services

    Correct Answer
    A. Forbidden
    Explanation
    According to the Real Estate Settlement Procedures Act (RESPA), it is forbidden for a title company to pay a real estate broker for each transaction. This act prohibits any form of kickbacks or referral fees in the real estate industry. Therefore, this practice is considered illegal and not permissible under RESPA regulations.

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  • 29. 

    A title was recorded for a parcel of real property vested in the name of Johan Wilson, a single woman.  After her marriage to William Roberts, she executed a deed to the property only in the name of Johan Roberts, a married woman.  The discrepancy in the grantor's name is.

    • Valid if William Roberts agrees to it

    • A defect on title that may cause title to be vested as tenants in common

    • Immaterial if the propety is properly describe

    • A defect which may cause a cloud on the title

    Correct Answer
    A. A defect which may cause a cloud on the title
    Explanation
    The discrepancy in the grantor's name is a defect which may cause a cloud on the title. This means that the difference in the name on the deed compared to the name on the recorded title could create uncertainty or doubt about the ownership of the property. It could potentially lead to legal issues and disputes regarding the validity of the deed and the rightful owner of the property.

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  • 30. 

    Broker Knot advertised in the newspaper that anyone who buys a property listed with the broker would receive a free microwave oven valued at $500. Such action is:

    • Illegal

    • Unethical

    • Legal, if provided full disclosure is made to all interested parties

    • No prices are allow in real estate transactions

    Correct Answer
    A. Legal, if provided full disclosure is made to all interested parties
    Explanation
    This action of offering a free microwave oven valued at $500 to anyone who buys a property listed with the broker is legal, as long as the broker provides full disclosure to all interested parties. This means that the broker must inform all potential buyers about the offer and its conditions, ensuring transparency in the transaction. As long as there is no deception or hidden information, this promotional offer is considered legal.

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  • 31. 

    A mortgage loan may be insured by:

    • Beneficiary

    • California Finance Act

    • FHA of private mortgage insurer

    • Borrower

    Correct Answer
    A. FHA of private mortgage insurer
    Explanation
    A mortgage loan may be insured by the FHA or a private mortgage insurer. The FHA (Federal Housing Administration) is a government agency that provides mortgage insurance to lenders, protecting them from losses in case the borrower defaults on the loan. Private mortgage insurers, on the other hand, are private companies that offer similar insurance products to lenders. Both types of insurance help to mitigate the risk for lenders and make it easier for borrowers to obtain a mortgage loan.

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  • 32. 

    A real estate licensee refers transactions to a specific escrow company, because the escrow company pays him a referral fee for each of such referral. Regarding this arrangement, which of the following is correct?

    • This arrangement is prohibited under real estate law

    • If the amount does not exceed $50, it is permissible

    • If all parties are informed, it is permissible

    • If the fee doesn’t increase the amount charged in the good faith estimate

    Correct Answer
    A. This arrangement is prohibited under real estate law
  • 33. 

    A person who wishes to purchase a home using the Cal-Vet program would send his application to:

    • Department of Real Estate

    • Real Estate Commissioner

    • Department of Veterans Affairs

    • Veterans Administration

    Correct Answer
    A. Department of Veterans Affairs
    Explanation
    The Cal-Vet program is a home loan program specifically designed for veterans. Therefore, it makes sense that the person who wishes to purchase a home using this program would send their application to the Department of Veterans Affairs, as they are the government agency responsible for administering veterans' benefits and services. The other options listed, such as the Department of Real Estate and the Real Estate Commissioner, are not relevant to the Cal-Vet program.

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  • 34. 

    Which of the following staements is most nearly true concerning the activities of mortgage companies?

    • They prefer to negotiate commercial loans

    • They are not regulated by the State

    • They prefer negotiating loans which are salable in the secondary market

    • They do not insure government loans

    Correct Answer
    A. They prefer negotiating loans which are salable in the secondary market
    Explanation
    Mortgage companies prefer negotiating loans that are salable in the secondary market because it allows them to sell the loans to investors, which helps them generate more funds for lending. This also reduces their risk as they can offload the loans to other parties. Additionally, loans that are salable in the secondary market often have more favorable terms and conditions, making them more attractive to mortgage companies.

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  • 35. 

    Which of the following is not a lien?

    • An encroachment

    • Mortgage

    • Trust deed

    • Property taxes

    Correct Answer
    A. An encroachment
    Explanation
    An encroachment is not a lien because it refers to a situation where a person or structure illegally intrudes or trespasses onto another person's property. It does not involve any legal claim or interest on the property. On the other hand, a lien is a legal claim or interest that a person or entity has on a property to secure the payment of a debt or obligation. Mortgages, trust deeds, and property taxes are all examples of liens as they involve legal claims or interests on the property.

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  • 36. 

    The maximum commission a broker may charge for the sale of residential property is:

    • Set by the Real Estate Code of Ethnics

    • Six percent of the sales price

    • Determined by the number of monthly sales

    • Determined by the broker’s contract with his principal

    Correct Answer
    A. Determined by the broker’s contract with his principal
    Explanation
    The correct answer is "Determined by the broker’s contract with his principal." The maximum commission that a broker can charge for the sale of residential property is not set by the Real Estate Code of Ethics or determined by the number of monthly sales. It is instead determined by the specific contract between the broker and their client, known as the principal. This means that the commission rate can vary depending on the agreement reached between the broker and the principal.

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  • 37. 

    When a legal description begins with the phrase, “Beginning at a point on the northerly edge of O Street, 100 feet east of the NE corner of the intersection of O and Seventh Street.” Which of the following methods of land description is being used?

    • Metes and Bounds

    • Township

    • Track map system

    • U.S. Government survey

    Correct Answer
    A. Metes and Bounds
    Explanation
    The legal description in the question is using the metes and bounds method. This method describes a piece of land by specifying its boundaries using distances and directions. In this case, the description starts at a specific point on the northerly edge of O Street and provides the distance and direction from the NE corner of the intersection of O and Seventh Street. This method is commonly used when describing irregularly shaped or smaller parcels of land.

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  • 38. 

    Mr. Brown hired an agent to purchase a home. The offer has a contingency; the offer was contingent upon the sale of Brown’s home. The offer made a counter offer accepting the Brown’s offer with the right to continue marketing the home for better offers and granting to Brown a right of first refusal to remove his contingency if a better offer comes in. Brown accepted the offer and immediately listed their home for sale. Shortly thereafter, the seller notified Brown that a better offer has been presented without any contingencies. What should the agent advise Brown to do?

    • Advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home

    • The agent may offer his advice the decision is on the buyer

    • Advise the buyer to remove the contingency immediately

    • Advise the buyers to rent the property first so they can purchase the home without selling their existing home first

    Correct Answer
    A. Advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home
    Explanation
    The agent should advise Brown of the advantages and disadvantages of removing the contingencies and buying the home before the sale of their existing home. This is because a better offer has been presented without any contingencies, which means that if Brown wants to secure the home, they may need to remove their contingency. However, the agent should also inform Brown of the potential risks and drawbacks of this decision, such as the financial burden of owning two homes simultaneously or the possibility of not being able to sell their existing home in a timely manner. Ultimately, the decision rests with the buyer, but it is important for them to be aware of all the pros and cons before making a choice.

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  • 39. 

    The term estoppel best describes:

    • Zoning changes

    • Construction codes

    • Tenants rights and landlord responsibilities

    • Eviction notice

    Correct Answer
    A. Tenants rights and landlord responsibilities
    Explanation
    Estoppel refers to a legal doctrine that prevents a person from asserting a right or claim that is contrary to their previous actions or statements. In the context of tenants' rights and landlord responsibilities, estoppel can be applied when a landlord has made certain promises or representations to a tenant, and the tenant has relied on those promises to their detriment. This doctrine prevents the landlord from going back on their word and allows the tenant to enforce their rights based on the landlord's previous actions or statements.

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  • 40. 

    A real estate broker who owned a large real estate firm operating under ABC Realty Co. listed a property for total of $40,000. The broker and many of his salespersons were all principals in an investment company operating under the name of Realty Investment Company. The investment company decided to purchase the property so the broker presented an all cash offer but did not disclose the buyer’s relationship. Under this circumstances:

    • The broker’s offer would be valid if he discloses the buyer’s relationship to the Escrow company.

    • The broker’s offer is a legal contract even though was all cash

    • The broker’s action was improper because he did not reveal the true identity of the purchaser

    • The broker’s action was proper since he was able to sell the property

    Correct Answer
    A. The broker’s action was improper because he did not reveal the true identity of the purchaser
    Explanation
    The broker's action was improper because he did not reveal the true identity of the purchaser. This is considered unethical as the broker and the salespersons were principals in the investment company that wanted to purchase the property. By not disclosing this relationship, the broker is not being transparent and is potentially taking advantage of their position to benefit themselves. It is important for the broker to disclose any conflicts of interest and ensure transparency in their dealings to maintain trust and integrity in the real estate industry.

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  • 41. 

    Purchasing a home with a lower down payment and longer repayment terms will generally:

    • Increase the total financing cost

    • Decrease the financing cost

    • No affect on financing cost

    • Affects the amortization process

    Correct Answer
    A. Increase the total financing cost
    Explanation
    Choosing to purchase a home with a lower down payment and longer repayment terms means that the borrower will be borrowing a larger amount of money and taking more time to pay it back. This results in an increase in the total financing cost because the borrower will be paying more interest over the extended repayment period. Therefore, the correct answer is that purchasing a home with a lower down payment and longer repayment terms will increase the total financing cost.

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  • 42. 

    Of the following types of deeds, which one would contain no warranties and expressed or implied:

    • A will deed

    • Grant deed

    • Warranty deed

    • Quitclaim deed

    Correct Answer
    A. Quitclaim deed
    Explanation
    A quitclaim deed would contain no warranties, whether expressed or implied. This type of deed is used to transfer any interest or claim that the grantor may have in the property, without making any guarantees about the title or condition of the property. Unlike other types of deeds, a quitclaim deed does not provide any protections or assurances to the grantee regarding the ownership or quality of the property. Therefore, it is the correct answer as it does not include any warranties.

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  • 43. 

    Leland uses an 8% capitalization rate for a 40-unit apartment building that generates $174,000 net income.  Which of the following is the most appropriate value of this property?

    • $1,400,000

    • $1,566,000

    • $2,175,000

    • $2,170,000

    Correct Answer
    A. $2,175,000
    Explanation
    $174,000 / .08 = $2,175,000

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  • 44. 

    A high price, high quality home surrounded by lower price, lower quality properties will suffer loss in value due to:

    • Stability

    • Conformity

    • Progression

    • Regression

    Correct Answer
    A. Regression
    Explanation
    Regression refers to the tendency for the value of a higher-priced, higher-quality property to be pulled down by the lower-priced, lower-quality properties in its surroundings. This can occur because potential buyers or investors may compare the property to its neighboring properties and deem it overpriced or less desirable in comparison. As a result, the higher-priced property may experience a decrease in value or demand, leading to a loss in value.

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  • 45. 

    A real estate broker presented an offer to seller which met the terms of the listing.  The offer was from a financially qualified black person.  Later, his salesperson presented the seller an offer that was at a lower price from white prospect.  The seller did not accept either offer, but instead, sold the property to a neighbor through the same salesperson.  The neighbor wanted to buy the property to prevent minority person moving into the neighborhood.  Which of the following parties has not violated the Civil Rights Act of 1968?

    • White prospect

    • Seller

    • Salesperson

    • Both salesperson and seller

    Correct Answer
    A. White prospect
    Explanation
    The white prospect has not violated the Civil Rights Act of 1968. The act prohibits discrimination based on race in the sale of housing. In this scenario, the white prospect simply made a lower offer, which is not a violation of the act. The seller, salesperson, and the neighbor who bought the property to prevent a minority person from moving in could potentially be in violation of the act, as their actions may be seen as discriminatory.

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  • 46. 

    Under the Subdivision Map Act, the subdivision reports must be filed with the:

    • County Assessor's Office

    • Real Estate Commissioner

    • Department of Construction Subdivision

    • City or County where the land is located

    Correct Answer
    A. City or County where the land is located
    Explanation
    Under the Subdivision Map Act, the subdivision reports must be filed with the City or County where the land is located. This is because the City or County is responsible for overseeing land use and development within their jurisdiction. By filing the subdivision reports with the City or County, it ensures that the local government has the necessary information to review and approve the proposed subdivision, ensuring compliance with zoning regulations and other applicable laws. The City or County can then make informed decisions regarding the development of the land and ensure that it is done in a way that is consistent with the community's goals and objectives.

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  • 47. 

    If roof slopes on all four sides, it is called a

    • Hip Roof

    • Gable Roof

    • Grabble Roof

    • Solar Roof

    Correct Answer
    A. Hip Roof
    Explanation
    A hip roof is a type of roof that slopes on all four sides. It is characterized by its symmetrical shape and gentle slopes, which meet at a ridge at the top. This design provides stability, durability, and better resistance to strong winds. The hip roof also allows for efficient drainage of rainwater.

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  • 48. 

    A broker was able to make a sale to an interested buyer based on false information which seller provided to the broker. The broker acted in good faith and in a reasonable manner in relying on the false information. Thereafter, the buyer rescinded the contract because of the fraud. Given these circumstances, the broker is normally entitled to:

    • A full commission and indemnity for any loss caused by related legal action by the defrauded buyer against the broker

    • Only expenses related to property advertising

    • Half commission

    • No commission

    Correct Answer
    A. A full commission and indemnity for any loss caused by related legal action by the defrauded buyer against the broker
    Explanation
    In this scenario, the broker acted in good faith and relied on false information provided by the seller. The buyer rescinded the contract due to fraud. Despite the fraud, the broker is entitled to a full commission because they acted in a reasonable manner and made the sale based on the information they had at the time. Additionally, the broker is entitled to indemnity for any loss caused by legal action taken by the defrauded buyer against the broker.

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  • 49. 

    An agency relationship may be terminated by:

    • Lis pendis

    • Completion

    • Estoppel

    • Tour de force

    Correct Answer
    A. Completion
    Explanation
    Completion refers to the fulfillment or accomplishment of a task or agreement. In the context of an agency relationship, completion can refer to the successful completion of the tasks or objectives outlined in the agency agreement. Once the tasks or objectives are completed, the agency relationship may come to an end. This can happen when the agent has successfully carried out their duties or when the agreed-upon time period for the agency relationship has expired.

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Quiz Review Timeline (Updated): Mar 20, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 20, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 06, 2011
    Quiz Created by
    Slynch1783
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