CA Real Estate Sales Practice Exam!

1. Three of the following real estate terms are closely associated. Which term does not belong with the group?

Heir

Executor

Sale

Will

The other terms listed refer to wills. The word sale has no relationship with these terms.

Explanation

The other terms listed refer to wills. The word sale has no relationship with these terms.

2. In real estate the word tenancy means:

Two or more people joined in an enterprise.

A mode of holding ownership

A tenacious person

A device

The word tenancy means a method or mode or means of holding ownership.

Explanation

The word tenancy means a method or mode or means of holding ownership.

3. Many organizations have developed over the years in the real estate appraisal field. Among them are the A.I.R.E.A and the S.R.E.A.. Which of the following is true relative to these two organization?

They are professional organizations of person who make residential appraisals

They are professional organizations founded in the 1930s

They are professional organizations that are international in scope

All of the above

All 3 choices are true statements regarding these professional organization.

Explanation

All 3 choices are true statements regarding these professional organization.

4. Which of the following would be apurtenant to land?

Anything acquired by legal right that is to be used with the land for its benefit

A right of way over another owner's adjoining land

Stock in a mutual water company

All of the above

All of the items listed are considered to be appurtenant to the land.

Explanation

All of the items listed are considered to be appurtenant to the land.

5. The statement, "The value of the best property in a neighborhood will be adversely affected by the presence of comparatively substandard property", relates to one of the basic principles of value known as the principle of:

Balance

Contribution

Regression

Anticipation

The statement of the question illustrates the principle of regression.

Explanation

The statement of the question illustrates the principle of regression.

6. An individual who receives $225 per month on a money market savings account that pays 7 1/2% per year has invested which of the following amounts?

$12,500

$27,000

$36,000

$48,000

$225 x 12 = $2,700 per year
$2,700 divided by 7.5% = $36,000

Explanation

$225 x 12 = $2,700 per year
$2,700 divided by 7.5% = $36,000

7. Three of the following real estate terms are closely associated. Which term does not belong to the group?

Easement

Lien

Judgement

Attachment

The terms "lien", "judgement", and "attachment" are all liens. An easement is not lien and does not belong to that group.

Explanation

The terms "lien", "judgement", and "attachment" are all liens. An easement is not lien and does not belong to that group.

8. A restrictive covenant contained in a deed which prohibits sale to persons of a particular race will:

Invalidate the conveyance

Have no effect in the conveyance and the covenant will be unenforceable

Create the power in the grantee to void the conveyance

Retain in the grantor the power to enforce the covenant

The racial restriction contained in deeds have been outlawed and are now illegal and unenforceable and would have no effect whatsoever.

Explanation

The racial restriction contained in deeds have been outlawed and are now illegal and unenforceable and would have no effect whatsoever.

9. A man willed his property to his favorite nephew John, and his wife Jane, giving them a 2/3 and 1/3 interest respectively with the right of survivorship. Title would be held by John and Jane as:

Joint Tenants

Community property

Tenants in Common

Tenancy in Partnership

Since John and Jane hold unequal interest they cannot take title as joint tenants nor as community property. Since they are not in business together, California Law allows only one other type and that would be the tenants in common. There would be no right of survivorship permitted in this instance.

Explanation

Since John and Jane hold unequal interest they cannot take title as joint tenants nor as community property. Since they are not in business together, California Law allows only one other type and that would be the tenants in common. There would be no right of survivorship permitted in this instance.

10. All of the following would have an effect on the final estimate of value when making an appraisal of an old single family residence except:

Purpose of the appraisal

Suitability of the residence to the site

Physical condition of the building

Original cost of the residence

Original cost has little or nothing to do with the value when applying the cost approach to an older structure.

Explanation

Original cost has little or nothing to do with the value when applying the cost approach to an older structure.

11. "The relationship between a thing desired and a potential purchaser" is a definition of:

Value

The "economic man"

"Utility" as used in a definition of value

Need

This is one of the definitions of value

Explanation

This is one of the definitions of value

12. When a husband and wife hold title to property in joint tenancy, the wife can will;

One half of the husband's share

One half of the entire property

One half of her share

None of the property

Anyone holding an interest in a property as a joint tenant cannot will any part of their share.

Explanation

Anyone holding an interest in a property as a joint tenant cannot will any part of their share.

13. You have agreed to lease a store building from the owner for a period of ten years at a total rental of $12,000.00 payable at the monthly rate of $100.00. $200.00 must be paid in advance which shall apply to the first and last month's rent. Considering the term agreed upon, it would be inappropriate to insert a clause in the terms of this lease covering which of the following?

Condemnation proceedings

Third party liability

Stock in a mutual water company

Escalation clause, tied to the cost of living index

Since the lease calls for a set amount of rent each month, as escalator clause would not be considered a part of the contract terms

Explanation

Since the lease calls for a set amount of rent each month, as escalator clause would not be considered a part of the contract terms

14. The process of expressing anticipated future benefits of ownership in dollars and discounting them to a present worth at a rate which is attracting purchase capital to similar investments is called:

Projection

Yield evaluation

Equity manipulation

Capitalization

The statement of the question is a means of describing the income approach which is used to establish the value of income property. It is also referred to as the capitalization approach.

Explanation

The statement of the question is a means of describing the income approach which is used to establish the value of income property. It is also referred to as the capitalization approach.

15. A joint tenancy estate:

Is a single estate

Is an estate in severalty

Involves real property only

Involves personal property only

It is a single estate because the joint tenants hold title as though they collectively constitute one person. Both real and personal could be held in joint tenancy.

Explanation

It is a single estate because the joint tenants hold title as though they collectively constitute one person. Both real and personal could be held in joint tenancy.

16. When real property is subleased, the interest held by the subleasor is commonly called:

A double lease

A freehold lease

An assignment

A sandwich lease

We have three parties involved in this contract. The owner, or Landlord, the tenant that occupies the premises and the sublessor who is in the middle of the two. That position is referred to as the sandwich lease.

Explanation

We have three parties involved in this contract. The owner, or Landlord, the tenant that occupies the premises and the sublessor who is in the middle of the two. That position is referred to as the sandwich lease.

17. If Allen owns a freehold estate, which of the following actions would cause his interest to be converted to a less-than-freehold estate?

A grant of the mineral and oil rights therein to a third party

A grant of an easement for right of a way over the land

A leasing of the land for agricultural purposes to a third party for a period of five years

None of the above

If Allen holds a freehold estate he is the title holder. Any of the actions listed in other choices above, will not remove his title to the estate and he retains his freehold estate.

Explanation

If Allen holds a freehold estate he is the title holder. Any of the actions listed in other choices above, will not remove his title to the estate and he retains his freehold estate.

18. A person working in real estate would know that the names "Inwood and Hoskold" would pertain to:

Estimating values

Private construction

Architectural design

A group of developers

Inwood and Hoskold were two men who developed special tables in the appraisal of income properties. They pertain to estimating values

Explanation

Inwood and Hoskold were two men who developed special tables in the appraisal of income properties. They pertain to estimating values

19. Protective covenants which place restrictions on grantees of lots in a new subdivision would probably be found in the:

Original deed held by the subdivider

Recorded declaration of the restrictions

Zoning codes

Subdivision Map

The original subdivider will generally create a number of protective covenants for buyers of the properties within the subdivision. There are too many of these to list in each deed so he will create a complete list and record that, and that is known as the declaration of restrictions.

Explanation

The original subdivider will generally create a number of protective covenants for buyers of the properties within the subdivision. There are too many of these to list in each deed so he will create a complete list and record that, and that is known as the declaration of restrictions.

20. Which of the following is the least important factor when appraising a site for commercial purpose?

Convenience of facility to shipping and labor sources

The community's purchasing power

Zoning regulations

Amenities

Amenities are pleasing features in or about the property. These are a major consideration in residential homes but would have little effect or influence on commercial sites.

Explanation

Amenities are pleasing features in or about the property. These are a major consideration in residential homes but would have little effect or influence on commercial sites.

21. Acme Finance Company hired an appraiser to appraise Mr. Thomas' property. As a matter of ethics the appraiser could discuss his findings with:

Acme Finance Company

Mr. Thomas

The listing broker

All of the above

The appraiser is only permitted to discuss his findings with the party that had originally hired him. In this case it would be the finance company.

Explanation

The appraiser is only permitted to discuss his findings with the party that had originally hired him. In this case it would be the finance company.

22. A seller took back a second trust deed and note in the amount of $11,400 payable $240 per month, including interest at 7% per annum. If interest on the note begins July 15 and the first payment is made on August 15, the amount of the first payment that is applied to the principal is:

$66.50

$79.80

$173.50

$240.00

$11,400 x 7% = $798 per year
$798 divided by 12 = $66.50 per month
$240 - $66.50 = $173.50

Explanation

$11,400 x 7% = $798 per year
$798 divided by 12 = $66.50 per month
$240 - $66.50 = $173.50

23. Austin deeded Shady Acres to Jones for the life of Baker. Under these circumstances:

Jones holds a life estate and Austin an estate in remainder

Jones holds a life estate and Austin an estate in reversion

Jones holds a fee simple estate and Baker a life estate

Baker holds a life estate and Jones an estate in remainder

Jones hold the life estate and since Austin was the original grantor and the property will apparently be returned to him, Austin holds the estate in remainder.

Explanation

Jones hold the life estate and since Austin was the original grantor and the property will apparently be returned to him, Austin holds the estate in remainder.

24. An appraiser using the cost method may use the unit cost per square foot or cost per cubic foot in this computations. On a unit cost basis:

A small house would cost less than a large house

A large house would cost more than a small house

A small house would cost more than a large house

The cost of a small house and a large house would be the same

There are always a number of sizeable start-up costs in the construction of a new home. When you expand the size of the home the additional cost is proportionately not as great. Consider this, small home would cost a great deal more by the square foot than a large home.

Explanation

There are always a number of sizeable start-up costs in the construction of a new home. When you expand the size of the home the additional cost is proportionately not as great. Consider this, small home would cost a great deal more by the square foot than a large home.

25. In correlating the value estimates that the appraiser has secured under each of the three approaches to value the appraiser:

Simply average his estimates

Assigns weigh to the individual estimates and then averages them

Does both "A" and "B"

Does none of the above

When correlating the value estimates, the appraiser takes all the facts and weighs them to see whether they are of value or of no use. He will use the important items and dismiss the rest. It is not an averaging process.

Explanation

When correlating the value estimates, the appraiser takes all the facts and weighs them to see whether they are of value or of no use. He will use the important items and dismiss the rest. It is not an averaging process.