Real Estate Quiz 6

Question 1

Which of the following is not a requirement of a valid mortgage?
Select one:
a. Recording 
b. In writing 
c. Legal description 
d. Terms of the debt

Answer 1

Terms of the debt

Question 2

An apartment building was purchased for $450,000 in January 2006 that includes all closing costs. In 2008 the property's net operating income is $50,000, operating expenses are $30,000 which includes $3,000 of reserves. Annual debt service is $35,000, of which $28,000 is interest and annual depreciation is $18,000. The property sold for $720,000 in December 2009 and the owner is in a 28% tax bracket. What is the taxpayer's annual taxable income?
Select one:
a. $0 
b. $4,000 
c. $7,000 
d. $15,000

Answer 2

$7,000

Question 3

Which of the following is not a step in the sales-comparison approach?
Select one:
a. Adjustment process
b. Measure the amount of accrued depreciation
c. Data collection
d. Reconciliation

Answer 3

Measure the amount of accrued depreciation

Question 4

A rental house has been sold with the day of closing scheduled for May 12th. Total rent collected on the first is $760. If the day of closing belong to the buyer, how will the rent pro-ration be handled?
Select one:
a. $490.32 debit to seller, $490.32 credit to buyer
b. $269.68 debit to seller, $490.32 credit to buyer
c. $490.32 credit to seller, $490.32 debit to buyer
d. $269.68 credit to seller, $269.68 debit to buyer

Answer 4

490.32 debit to seller, $490.32 credit to buyer

Question 5

The planning commission has authority over all of the following except:
Select one:
a. Placement and approval of billboards
b. Approving ad valorem tax increases
c. Approving a site plan for a property owner
d. Approving a subdivision plat for a developer

Answer 5

Approving ad valorem tax increases

Question 6

Which of the following listings must be in writing?
Select one:
a. Exclusive right of sale
b. Exclusive listing
c. Open listing
d. All must be in writing under the Statute of Frauds

Answer 6

Exclusive right of sale

Question 7

According to IRS guidelines, commercial real estate is depreciated over how many years?
Select one:
a. 41 
b. 39 
c. 27.5 
d. 5

Answer 7

39

Question 8

Which of the following is considered the most important financial statement when valuing a business based on income?
Select one:
a. Adjusted income statement 
b. Pro forma income statement 
c. Adjusted balance sheet 
d. Profit and loss statement

Answer 8

Pro forma income statement

Question 9

Broker Sally is managing a small tri-plex for Don. As part of the management contract, Don has requested that Sally not rent to families who have children under ten years of age. Which of the following best applies to Sally’s situation?
Select one:
a. This is a legal request since Don owns fewer than four units
b. This is an illegal request since Sally holds a real estate license
c. This is a legal request as long as Sally makes the units available to children ten years of age or older
d. This is an illegal request since Don cannot discriminate because of familial status when rent his tri-plex

Answer 9

This is an illegal request since Sally holds a real estate license

Question 10

An appraiser evaluates a restaurant on a lakeside property. She believes that, although it is presently being utilized as a restaurant, the most profitable use of the structure would be as a law office. She is evaluating this property according to its:
Select one:
a. Highest and best use as though vacant
b. Maximum potential value
c. Investment value
d. Highest and best use as improved

Answer 10

Highest and best use as improved