Practice Exam: PrepAgent.com Flashcards
You are preparing a competitive market analysis on a vacant lot that you home to list for sale. Which of the following approaches to value will be used in the development of the estimated value?
a. cost approach
b. gross rent multiplier
c. income approach
d. sales comparison approach
d. sales comparison approach
Which of the following comparable would be the most helpful in appraising a home?
a. a similar home sold for nonpayment of taxes
b. a similar property sold under duress
c. a similar home sold by a motivated seller to a motivated buyer
d. a similar home sold by an unwilling seller to an unsure buyer
c. a similar home sold by a motivated seller to a motivated buyer
The period over which a property may be profitably utilized is called its:
a. economic life
b. amortized life
c. income life
d. net life
a. economic life
Wear and tear to the load bearing members of a building would be classified as:
a. functional obsolescence-curable
b. physical deterioration-curable
c. functional obsolecsene-incurable
d. physical deterioration-incurable
d. physical deterioration-incurable
While the economy is experiencing inflation, interest rates:
a. drop and housing prices rise
b. rise and housing prices drop
c. rise and housing prices rise
d. none of the above
c. rise and housing prices rise
When using the market-data approach to appraise a single-family home, recent sales are compared to the subject property as to
a. capitalization rates
b. exterior features only
c. the entires property
c. rental income
c. the entires property
A real estate commission is usually based on the
a. listing price
b. selling price
c. down payment
d. loan amount
b. selling price
The increase of value with the passage of time describes
a. appreciation
b. “return on” investment
c. “return of” investment
d. depreciation
a. appreciation
Which of the following statements does NOT correctly describe fiduciary?
a. a fiduciary owes loyalty to the principal
b. a fiduciary must conform to the principal’s legal instructions
c. a fiduciary is an agent
d. a fiduciary is a neutral third party
d. a fiduciary is a neutral third party
A broker secured a buer for his principal and the seller accepted the offer presented through the broker. Under which type of listing would the broker not receive a commission from the principal?
a. net listing
b. open listing
c. exclusive listing
d. exclusive authorization and right to sell listing
a. net listing
Mr. Seller signs an open listing on his home with five different brokers. In this case
a. each broker has an opportunity to earn the entire commission
b. the brokers will split the commission five ways regardless of who sells it
c. the owner must pay a full commission to all five brokers when it sells
d. the owner must pay the first broker to take the listing no matter who sells it
a. each broker has an opportunity to earn the entire commission
Regarding a promissory note
a. a promissory note secures the dee of trust
b. the deed of trust secures the promissory note
c. the promissory note is not part of the deed of trust
d. the grant deed secures the promissory note
b. the deed of trust secures the promissory note
Most real estate contracts contain preprinted clauses or spaces for information to be added in writing. In the interpretation of succession contracts
a. printed parts take precedence over the written parts
b. the written parts and the printed parts are give equal consideration
c. the written parts take precedence over the printed parts
d. no changes or amendments to the printed clauses are permitted by law
c. the written parts take precedence over the printed parts
A parcel of vacant land is listed for $100,000, requiring 20% down with the seller to carry back the balance. The broker brings in a full-price cash offer, but the owner refuses. The broker is entitled to
a. half of the commission
b. the full commission
c. a commission as a percent of the down payment
d. nothing
d. nothing
Under a lease, the leasehold interest lies in the
a. lessor
b. lessee
c. landlord
d. beneficiary
b. lessee
Which of the following requires real estate listings to be in writing
a. Real Estate Law
b. Statute of Frauds
c. CAR
d. none of the above
b. Statute of Frauds
All of the following listing require that the broker e the “procuring cause” of the sale if he/she is to be entitled to a commission, EXCEPT
a. exclusive listing
b. open listing
c. exclusive right to sell listing
d. none of the above
c. exclusive right to sell listing
As it relates to the field of real estate, the legal term “theft” would include all of the following EXCEPT
a. entering into a home that is listed on the market and taking valuable items of personal property that belong to the owners
b. defrauding clients by siphoning funds from a broker
c. defrauding lenders by signing another person
d. defrauding investors by creating phony trust deeds and notes, selling them, and using the proceeds for the broker
c. defrauding lenders by signing another person
Mr. Owner enters into an exclusive listing with Broker X. One week later, Broker X brings in a full price offer, but Mr. Owner refuses the offer. Seeking an action of Specific Performance would be an option for
a. the buyer
b. the broker
c. both the buyer and the broker
d. neither the buyer nor the broker
d. neither the buyer nor the broker
Broker Jones takes and exclusive listing on a property owned by three different people. Broker Jones takes the listing contract to each of their places of business to get it signed. Broker Jones must
a. give a copy to the fist owner who signs only
b. give a copy to each owner when he/she signs
c. give one copy to any of the three owners
d. get them together in one place to sign at the same time
b. give a copy to each owner when he/she signs
A tenant signs a lease that stipulates that the lessee pays the property tax. This lease is probably a
a. standard lease
b. sandwich lease
c. net lease
d. reverse lease
c. net lease
Which of the following can be recorded?
a. an Exclusive Authorization and Right to Sell Listing
b. an Exclusive Agency listing
c. contracts of sale
d. all of the above
c. contracts of sale
A broker brought in an offer but the listing agreement did not include an authorization to accept a deposit. Which of the following is correct?
a. the authorization is implied
b. the broker cannot accept the deposit
c. if the broker accepts the deposit, he/she would do so as the agent of the buyer
d. none of the above
c. if the broker accepts the deposit, he/she would do so as the agent of the buyer
Consideration may be
a. money
b. work
c. a promise
d. all of the above
d. all of the above
Four months ago, a seller entered into a legal binding written contract to sell his property. Later, the seller refused to complete the transaction since he felt the value of the property would increase in the near future. Under these circumstances, the Statute of Limitations could affect the rights of the buyer to prevail in a civil action due to a break of the written contract within
a. 90 days
b. one year
c. two years
d. four years
d. four years
Salesperson Beth told an offer to purchase from her buyer to Broker SMith’s office to present it. The offer included a $1,000 promissory note from the buyer as the earnest money deposit. Broker Smith should do which one of the following upon receipt of the offer
a. Tell Beth she wasted her time and that he cannot accept the offer without cash or a check for the deposit
b. Tell Beth the note is not good enough because it did not come with a deed
c. Tell Beth she should have called him first as not to waste her time, so he could call his seller to see if they would consider an offer with a promissory note
d. Tell Beth that a promissory note is just as good as cash or a check or the deposit and present the offer to his seller
d. Tell Beth that a promissory note is just as good as cash or a check or the deposit and present the offer to his seller
Which of the following would not be a valid reason for the seller to terminate a listing?
a. the broker
b. the seller declared bankruptcy
c. the broker was declared mentally incompetent prior to the listing
d. the broker was declared mentally incompetent after the signing of the listing
b. the seller declared bankruptcy
During the term of an exclusive authorization and right to sell listing, the broker has his license revoked by the Bureau of Real Estate. To prove that he is entitled to a commission, he must prove all of the following EXCEPT
a. he was licensed at the time the commission was earned
b. the buyer and seller agreed to the sale during the listing term
c. the broker was the procuring cause of the sale
d. the listing was a legal binding agreement
c. the broker was the procuring cause of the sale
You enter into a contract with a person not knowing he was judicially declared incompetent. The incompetence of one of the parties to this agreement would make the contract
a. void
b. voidable
c. enforceable
d. valid
a. void
A listing agreement is
a. a promise for a promise
b. a bilateral contract
c. an employment contract
d. all of the above
d. all of the above
The subjective value of a property is the
a. exchange value
b. market value
c. use value to the owner
d. lender’s value
c. use value to the owner
The immediate surroundings of real estate is important because
a. nice neighbors add value
b. property in an unattractive neighborhood won’t sell
c. real estate is immobile
d. none of the above
c. real estate is immobile
Two different properties are located side-by-side in the same neighborhood. They were both built by the same contractor, at the same time, for the same cost, are maintained the same, and contain the same square footage. If one property is worth less that the other, it would be due to
a. functional obsolescence
b. economic obsolescence
c. deferred maintenance
d. physical deterioration
a. functional obsolescence
A flight pattern to a nearby airport was changed so that planes pass over a single-family residential neighborhood. Any loss in value to these properties would be attributed to
a. economic obsolescence
b. functional obsolescence
c. physical obsolescence
d. all of the above
a. economic obsolescence
An agency relationship can be created by all of the following, EXCEPT
a. principal’s agreement
b. implication of the law
c. oral agreement
d. agent volunteers
d. agent volunteers
The measurement or length of road that abuts a thoroughfare is referred to as
a. front foot
b. frontage
c. width
d. the side of the parcel
b. frontage
An appraiser would most likely use a depth table when confronted with a valuation problem involving
a. capitalization of net income
b. a sinking fund
c. commercial property
d. residential property
c. commercial property
Which of the following represents the minimum time period for an exclusive right to sell listing on real property?
a. 30 days
b. 90 dyas
c. 6 months
d. whatever time period is agreed to by seller and broker
d. whatever time period is agreed to by seller and broker
All of the following are essential to the creation of an agency relationship EXCEPT
a. competent parties
b. agreement to pay consideration
c. agreement between principal and agent
d. fiduciary relationship
b. agreement to pay consideration
An appraiser is appraising a property which is next door to an abandoned gas station. The appraiser should recommend a
a. soil engineering study
b. toxic waste study
c. seismic study
d. all of the above
b. toxic waste study
The income approach would NOT be used when appeasing
a. commercial retail property
b. residences in a subdivision
c. industrial building
d. neighborhood shopping centers
b. residences in a subdivision
Property that is very seldom sold would be appraised by which of the following appraisal techniques?
a. market date approach
b. cost approach
c. capitalization approach
d. Hoskold of Inwood method
b. cost approach
To arrive at a capitalization rate in the appraisal of an income producing property, no provisions should be made for
a. manager’s salary
b. “return of” the investment
c. federal income taxes
d. all of the above
c. federal income taxes
In order for demand to be effective, it must be implemented by
a. amenities
b. location
c. highest and best use
d. purchasing power
d. purchasing power
An exclusive listing contains a provision for termination upon the owner giving the broker 24 hours’ notice.
a. This provision has no effect
b. This provision makes the contract void at its inception.
c. This is proper as long as it states 24 hours or more
d. The broker may be subject to disciplinary action.
d. The broker may be subject to disciplinary action.
A property with great amenity value would best be appraised by using the
a. reproduction cost method
b. comparison method
c. capitalization method
d. replacement cost method
b. comparison method
When an appraiser uses the term “adjusted sales prices” when describing comparable, he/she is referring to
a. sales price less concessions
b. sales price plus adjustments for inflation
c. sales price plus or minus adjustments for specific characteristics
d. all of the above
c. sales price plus or minus adjustments for specific characteristics
Insurance companies not willing to deal directly with borrowers, usually pay a loan servicing and preparation fee and make real estate mortgage loans to purchase indirectly through
a. Freddie Mac
b. mortgage companies
c. FHA of VA
d. savings and loan associations
b. mortgage companies
Which would be considered economic obsolescence?
a. poor architectural design
b. blighted neighborhood
c. termite damage
d. deferred maintenance
b. blighted neighborhood
Given the subjective nature of market value, the listing price is most likely
a. the lower end of the market value
b. the average market value
c. the higher end of market value
d. not related to market value
c. the higher end of market value
