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IA Real Estate Test Prep > Key Points > Flashcards

Key Points Flashcards

1
Q

The business of bringing people together in a real estate transaction

A

Real Estate Brokerage

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2
Q

real estate broker

A

a person or company licensed to buy, sell, exchange, or lease real property for others for compensation

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3
Q

real estate salesperson (sales associate)

A

who conducts brokerage activities on behalf of the broker.

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4
Q

Abstract Of Title

A

The condensed history of the recorded ownership of a particular parcel of real estate

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5
Q

An individual or business entity licensed to perform services of real estate for others for compensation.

A

Broker

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6
Q

An individual who is qualified to be issued a broker’s license but who operates as a sales associate in the employ of another.

A

Broker Associate

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7
Q

Let the buyer beware!

A

Caveat Emptor

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8
Q

Anything of value or a valuable consideration, directly or indirectly paid, promised, or expected to be paid or received.

A

Compensation

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9
Q

A privilege granted by the state to operate as areal estate broker, broker associate, or sales associate

A

License

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10
Q

An act of corruption, vileness, or moral depravity: a disgraceful action or deed.

A

Moral Turpitude

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11
Q

A transactional agreement between Florida and another state that provides for the two state to recognize each other’s real estate license education.

A

Mutual Recognition Agreement

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12
Q

A pleading of no contest by a defendant; a plea in a criminal action not admitting guilt but subjecting the defendant to punishment as if it were a guilty plea.

A

Nolo Contendere

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13
Q

An unlicensed entity that sells, exchanges, or leases its own property.

A

Owner-Developer

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14
Q

Requiring no further proof; acceptable on the face of.

A

Prima Facie Evidence

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15
Q

Real estate activities involving compensation for performing the activities for another.

A

Real Estate Services

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16
Q

The practice of mutual exchanges of privileges. Some states have reciprocal arrangements for recognizing and granting licenses to licensed real estate professionals from other states.

A

Reciprocity

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17
Q

Authorization by the state to place an applicant on the register (record) of officially recognized individuals and businesses.

A

Registration

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18
Q

A licensed individual who, for compensation, is employed by a broker or owner-developer.

A

Sales Associate

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19
Q
  1. A license sales associate may operate
    a. for any registered broker.
    b. for the broker registered as the sales associate’s employer.
    c. independently
    d. as a broker associate.
A

B

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20
Q
  1. A sales associate applicant is NOT required to disclose which information on the license application?
    a. Convicted of a crime
    b. Proof of U.S. Citizenship
    c. Maiden name, if applicable.
    d. Found guilty of conduct that would have resulted in disciplinary action if the applicant had been licensed to practice real estate.
A

B

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21
Q
  1. A sales associate sells real estate for a real estate brokerage company. He also works as a sales associate for another real estate brokerage company.
    a. The sales associate is in violation
    b. The sales associate may work for both companies as long as he registers both employers with the IREC.
    c. This is legal as long as he only works part-time for each company
    d. The sales associate must be a broker associate for this to be legal.
A

A

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22
Q
  1. What is the Latin term for a plea of “no contest”?
    a. Prima Facie
    b. Caveat Emptor
    c. Writ of mandamus
    d. Nolo contendere
A

D

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23
Q
  1. A women helped her father sell some property he owned. The daughter is not a real estate licensee. Her father was grateful for his daughter’s assistance, but the daughter declined any compensation for assisting her father. Which statement is TRUE?
    a. This was an unlicensed real estate activity, and both the daughter and her father could be prosecuted.
    b. The daughter is legally allowed to sell her father’s real estate and be compensated for it because she is a family member.
    c. This was a legal arrangement because the daughter did not receive compensation for performing real estate services.
    d. The daughter can be fined by the IREC for performing real estate services with out a license.
A

C

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24
Q
  1. Services of real estate do NOT include
    a. advertising rental property lists.
    b. appraising real property.
    c. selling cemetery lots for compensation.
    d. conducting an auction of real property.
A

C

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25
Q

Property zoned as such, consisting of more than ten acres.

A

Agricultural

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26
Q

The process of developing and communicating an opinion of a property’s value as of a certain date.

A

Appraisal

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27
Q

An informal estimate of market value performed by a real estate licensee for the seller to assist in arriving at an appropriate listing price, or if working with the buyer, an informal estimate of market value to assist the buyer in arriving at an appropriate offering price.

A

Comparative market analysis (CMA)

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28
Q

Professionals who analyze existing or potential real estate problems and recommend a course of action.

A

Counselors

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29
Q

An offer of land for some public use

A

Dedication

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30
Q

Provision placed in deeds to control future uses of property.

A

Deed restrictions

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31
Q

Is what a sales associate does for buyers and sellers after the sale. Is important to all aspects of the sales in real estate because it results in a good reputation, future referrals, and word-of-mouth advertising.

A

Follow-up

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32
Q

An arrangement among members of a real estate board or exchange that allows each member broker to share listings with other members so that greater exposure is obtained and a greater chance of sale will result.

A

MLS

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33
Q

The leasing, marketing, managing and overall maintenance of property for others.

A

Property management

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34
Q

A part of the real estate business that is concerned with bringing together buyers and sellers and owners and renters and completing a real estate transaction.

A

Real estate brokerage

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35
Q

A commercial activity in which the sale, purchase, leasing, rental, exchange, or management of real property is conducted by qualified and licensed parties acting either for themselves or for others for compensation.

A

Real estate business

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36
Q

A real estate broker who is a member of a local board of REALTORS and is affiliated with the state association and the National Association of REALTORS ( not synonymous with “real estate agent”).

A

REALTOR

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37
Q

Defined as real estate of four or fewer residential units, vacant land zoned for four or fewer residential units, or agricultural property of ten or fewer acres.

A

Residential

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38
Q

Conditions placed by developers that affect how the land can be used in an entire subdivision.

A

Restrictive covenants

39
Q

A plan of tract of land subdivided into lots and showing required or planned amenities.

A

Subdivision plat map

40
Q
  • A set of guidelines (standards of practice) to follow when providing appraisal services.
A

Uniform Standards of Professional Appraisal Practice - USPAP

41
Q

Today a real estate licensee is paid to handle other people’s properties because the licensee is a professional who provides specialized service and expertise in at least five areas.

A

Knowledge of Details of property transfer.

Knowledge of market conditions.

Knowledge of how to market real estate or businesses.

Knowledge of how to analyze buyer’s needs.

Knowledge of the laws that pertain to real estate.

42
Q

Real estate sales associates involved in sales and leasing often specialize in any of the five major sales specialties.

A

Residential Commercial Industrial Agricultural Businesses BRICA - Acronym

43
Q

Involves dividing larger parcels of land into lots, constructing roads and other off-site improvements, and then constructing buildings on the developed lots.

A

Development and Construction

44
Q

The role of government

A

The real estate business is regulated or influenced by the federal, state, and local governments.

45
Q
  1. ) Developer Bob acquires a tract of land that he divides into 25 homes sites. Prior to marketing the homes sites, Bob must submit the subdivision plat to the
    a. Department of Housing and Urban Development.
    b. Local government planning agency.
    c. Iowa Real Estate Commission.
    d. Local building code enforcement.
A

B

46
Q
  1. ) The term follow-up refers to
    a. returning calls in a timely manner.
    b. completing instructions given by one’s broker.
    c. following through on listing calls made to “for sale by owners.”
    d. what a sales associate does for buyers and sellers after a sale.
A

D

47
Q
  1. ) The field of property management has experienced growth and specialization primarily because of
    a. the deregulation of the real estate industry.
    b. the increase in the number of licensees specializing in property management.
    c. the increase in the number of absentee owners.
    d. higher construction costs that have caused an increase in the number of renters.
A

C

48
Q
  1. ) Appraising is considered to be
    a. an art.
    b. a science.
    c. a precise determination of value.
    d. purely mathematical with no room for personal judgement.
A

A

49
Q
  1. ) When a developer makes lots available for custom building in a newly developed subdivision, the overall purpose of restrictive covenants is to ensure that cutome-built homes will
    a. not conflict with local zoning ordinances.
    b. not exceed the minimum square footage requirements.
    c. conform to standard building codes.
    d. not decrease the value of neighboring properties.
A

D

50
Q
  1. ) The real estate activity that is devoted to leasing, managing, marketing and overall maintenance of property for others is referred to as
    a. commercial sales.
    b. property management.
    c. counseling.
    d. rental agents.
A

B

51
Q
  1. ) Which type of construction involves building to a buyer’s specifications.
    a. Tract homes.
    b. Spec homes.
    c. Custom homes.
    d. Model homes.
A

C

52
Q
  1. ) The term dedication as it applies to the development and construction refers to
    a. a gift of land by the owner to the local government for a public use.
    b. the builder’s careful attention to construction details.
    c. recording subdivision plat map in the public records.
    d. preparing raw land for site improvements.
A

A

53
Q
  1. ) Sales associate Harry recently began working at All Action Realty. All Action is not a member of the local association of REALTORS. Can Harry join the association?
    a. Yes, Harry can join any association of REALTORS as an independent member.
    b. No, Harry can not join the association unless All Action Realty joins the association.
    c. Yes, Harry may join the association. However, Harry cannot use the MLS.
    d. Yes, Harry can join the association, but he will be charged a nonmember office surcharge.
A

B

54
Q
  1. ) Residential real estate is defined as
    a. property zoned agricultural land of more than ten acres.
    b. five or more residential units.
    c. Land designated by zoning ordinances as “residential”. May be vacant or improved.
    d. all of the real estate described above.
A

C

55
Q
  1. ) The real estate profession requires
    a. skill and experience in real estate values, specialized service, and expertise.
    b. only the ability to list property.
    c. expertise in all types of real estate.
    d. that licensees also act as mortgage brokers from time to time.
A

A

56
Q

A defect plainly visible or as would be discovered by the exercise of ordinary care. In a legal description it is one which cannot be corrected on its face, and a new description must be used

A

PATENT DEFECT

57
Q

A seller has listed a property under an exclusive agency listing with a broker. If the seller sells the property personally during the term of the listing to someone who learns about the property through the seller, the seller will owe the broker
A) the full commission.
B) only reimbursement for the broker’s costs.
C) a partial commission.
D) no commission.

A

D) no commission.

In an exclusive agency listing, if the property is sold by the seller the brokerage will receive no commission. Only the exclusive right-to-sell listing earns the listing broker any commission if someone else sells the property during the term of the agreement.

58
Q

A person who has complete control of a parcel of real estate is said to own a

A

fee simple estate.

59
Q

Mortgagee title insurance policies protect
A) buyers and lenders.
B) buyers.
C) sellers.
D) lenders.

A

D) lenders.

60
Q

A purchaser buys a home using a mortgage loan from a local lender. The lender promptly recorded the mortgage. Three years later, the homeowner needs additional cash, so he places a second mortgage with a different lender. Based on these facts, which statement is TRUE?
A) The new lender cannot hold a security interest in the property already held as collateral by the original lender.
B) Because it is older, the loan from the original lender is subject to the loan from the new lender, which assumes priority in time.
C) The loan from the original lender is a subordination loan.
D) The loan from the original lender has priority over the loan made three years later with the new lender.

A

D) The loan from the original lender has priority over the loan made three years later with the new lender.

61
Q

Under the federal Fair Housing Act, it is illegal to discriminate because of a person
A) marital status.
B) having been convicted of distributing a controlled substance.
C) having AIDS.
D) having a history of dangerous behavior.

A

C) having AIDS.

People with AIDS are protected under the disability provision of the Fair Housing Act. Fair housing laws do not prohibit discrimination in housing because of a person’s marital status. Owners may refuse to sell or rent to persons who have a history of dangerous behavior or drug convictions as fair housing laws do not protect such behavior.

62
Q

Capitalization is a mathematical process by which annual net operating income is used to
A) establish depreciation.
B) determine replacement cost.
C) establish effective gross income.
D) estimate present value.

A

C) establish effective gross income.

63
Q

converts the net operating income (NOI) into an indication of value in the income approach to determine the current or present market value.

A

Capitalization

64
Q

Under which of the following listing agreements can owners of listed property sell the property on their own without having to pay the listing broker a commission?
A) Open listing and exclusive agency listing
B) Exclusive agency listing only
C) Exclusive right-to-sell listing and exclusive agency listing
D) Open listing only

A

A) Open listing and exclusive agency listing

65
Q

In an open listing, the seller retains the right to employ any number of brokers to sell the property. In an open listing, the seller is obligated to pay the listing broker a commission

A

only if the listing broker is the procuring cause of the sale

66
Q

In an exclusive agency listing, one brokerage is authorized to act as the exclusive agent of the principal. However, the seller retains -

A

the right to sell the property without obligation to the brokerage

67
Q

Information that is important to buyers that could change their decision to purchase a property is known as a

A

material fact.

68
Q

A principal broker has hired three new salespeople all with new licenses. In working with the new people the principal broker’s most important obligation is to make sure the new salespeople are
A) mentored.
B) supervised.
C) given a regular schedule.
D) trained.

A

B) supervised.

69
Q

Normally, a deed will be considered valid even if
A) the grantor is not a legal entity.
B) the grantor did not deliver the deed.
C) signed by the attorney-in-fact of the grantor.
D) the grantor is a minor.

A

C) signed by the attorney-in-fact of the grantor

The attorney-in-fact must act under a power of attorney, the specific written authority to execute and sign for another person. A valid deed requires that the grantor be a legal entity and deliver the deed to the grantee. A minor is not considered legally competent to sign a deed as a grantor.

70
Q

The law of agency is a common-law concept. As common-law, it is

A

part of a body of law established by tradition and court decisions.

71
Q

OST states require a property condition disclosure in a residential transaction. The statement is completed by the
A) broker.
B) property inspector.
C) seller.
D) seller and salesperson or broker.

A

C) seller.

72
Q

A contract entered into while someone is under duress is considered to be

A

Voidable

73
Q

Reconciliation is an appraisal term used to describe
A) an average of real estate values for properties similar to the subject property.
B) the appraiser’s determination of a property’s highest value.
C) the method used to determine the most appropriate capitalization rate for a property.
D) the appraiser’s analysis and weighing of the findings of all three appraisal approaches.

A

D) the appraiser’s analysis and weighing of the findings of all three appraisal approaches.

74
Q

A listing agent is frustrated that a property has been on the market for over two months, and the agent wants to sell the home quickly. The listing agent shares with a non-represented buyer that the home has been on the market for a long time, so the seller would welcome any offer on the home. The buyer makes an offer at a price lower than he had expected to offer. Has the agent violated any duties to the seller?
A) Yes, the agent has violated his fiduciary duty because license law prohibits any discussion of how long a property has been on the market.
B) No, because the agent has served the seller’s interest by producing a ready, willing, and able buyer.
C) Yes, the agent has violated his fiduciary duty by disclosing a fact that could benefit the buyer.
D) No, because the agent is not required to disclose that information to any party in the transaction.

A

C) Yes, the agent has violated his fiduciary duty by disclosing a fact that could benefit the buyer.

75
Q

While notarizing is NOT required to create a valid deed, the primary purpose of acknowledgement in this use is to
A) guarantee a marketable title.
B) convey title to the grantee.
C) verify that the deed was signed without duress.
D) ensure the identity of the grantee.

A

C) verify that the deed was signed without duress.

76
Q

A property was listed for $450,000. A buyer’s offer of 95% of the list price was accepted. He had a 20% down payment and secured a 30-year fixed rate loan at 6.75% interest. How much interest will he pay the first month of the loan?

A

$1,923.75

tep 1, determine the sales price $450,000 × 95% (.95) = $427,500. Step 2, determine the loan amount $427,500 × .80 = $342,000. Step 3, determine the annual interest $342,000 × 6.75% (.0675) = $23,085 ÷ 12 = $1,923.75 monthly interest.

77
Q

A mechanic’s lien would be properly classified as a(n)

A

specific lien.

78
Q

General real estate property taxes levied for the operation of the government are called
A) ad valorem taxes.
B) improvement taxes.
C) special assessment taxes.
D) special taxes.

A

A) ad valorem taxes.

79
Q

The provision in a mortgage or deed of trust that permits the lender upon the default of the borrower to proceed to a foreclosure sale without a court action is the
A) hypothecation.
B) power-of-sale clause.
C) acceleration clause.
D) alienation clause.

A

B) power-of-sale clause.

80
Q

The entity most likely to use a 1031 tax-deferred exchange would be
A) an owner selling her primary home.
B) any owner selling a primary home.
C) a lender using federal financing.
D) an investor selling income property.

A

D) an investor selling income property.

81
Q

1031 tax deferred exchanges maybe used only in the sale of

A

investment property

82
Q

Which of the following is TRUE of condominium ownership?
A) The common elements cannot be sold separately.
B) The association pays the unit real estate taxes.
C) The ownership of a unit cannot be willed.
D) The ownership of a unit cannot be mortgaged.

A

B) The association pays the unit real estate taxes.

83
Q

In order for a deed to be valid, the
A) deed must be recorded.
B) grantor must be legally competent.
C) grantee must sign the deed.
D) grantee must be legally competent.

A

B) grantor must be legally competent.

84
Q

Last night, a fire destroyed an apartment building. Are the tenants required to honor the remaining term of the lease?

A

No, because a lease is terminated by destruction of the property.

85
Q

A homeowner received estimates that ranged between $20,000 and $25,000 for repairing damage caused by water leaking into the basement. The owner couldn’t afford the repairs, so he constructed a false floor over the entire basement and installed carpet over the floor to conceal the damage. When he listed the house, he did not disclose the leak or the damage to the basement on the property disclosure form. The basement damage is an example of a
A) patent defect, and the brokerage firm may be liable for not discovering the false floor and the damage.
B) latent defect, and the listing brokerage firm is not liable for not discovering the false floor over the damage.
C) patent defect, and the brokerage firm is not liable for not discovering the false floor and the damage.
D) latent defect, and the listing brokerage firm may be liable for not discovering the false floor over the damage.

A

B) latent defect, and the listing brokerage firm is not liable for not discovering the false floor over the damage.

86
Q

A broker was told by her principal not to advertise her property in a certain newspaper, which was out of the area. The broker complied because he
A) is allowed to advertise only in local newspapers.
B) must obey the lawful instructions of her principal.
C) had never advertised in that newspaper anyway.
D) was not intending to advertise the property at all.

A

B) must obey the lawful instructions of her principal.

87
Q

A broker deposits earnest money into the company operations account. This action is

A

commingling of funds and is illegal.

88
Q

To create an executory contract, the offeree must accept the offer
A) without any changes to the offer.
B) only after it has been approved by an attorney.
C) within twenty-four hours of receiving the offer.
D) before the end of the business day of receiving it.

A

A) without any changes to the offer.

89
Q

When the buyer is in default and the seller keeps the earnest money, the contract MOST likely provided for
A) executed damages.
B) specific performance.
C) liquidated damages.
D) actual damages.

A

C) liquidated damages.

90
Q

To create joint tenancy in the ownership of real estate, there must be unities of
A) possession, interest, time, and title.
B) grantees, ownership, claim of right, and possession.
C) title, interest, encumbrance, and survivorship.
D) ownership, possession, heirs, and title.

A

A) possession, interest, time, and title.

91
Q

A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of a
A) structural defect.
B) latent defect.
C environmental defect.
D) patent defect.

A

D) patent defect.

92
Q

An appraiser has been employed to estimate the market value of a parcel of vacant land. The resulting appraisal report would NOT include reference to the
A) most probable price the parcel will bring.
B) listed price of the parcel.
C) physical dimensions of the parcel.
D) highest and best use of the parcel.

A

D) highest and best use of the parcel.

93
Q

An appraiser asked to estimate the value of an existing strip shopping center would probably give the MOST weight to which approach to value?
A) Cost approach
B) Sales comparison approach
C) Gross rent multiplier method
D) Income approach

A

D) Income approach

IA Real Estate Test Prep (53 decks)

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