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50 Cards in this Set
- Front
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A motivated seller in a seller's market is least likely to accept an offer contingent on the: a. buyer obtaining an 80% loan within 30 days. b. buyer's approval of the preliminary title report. c. sale of the buyer's current residence. d. results of a termite inspection. |
c. sale of the buyer's current residence. (The least favorable contingency to a seller in a seller's market is the sale of the buyer's home, which could create lengthy delays in the closing of the subject transaction. The alternatives are all common contingencies in a sale.) |
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The Federal Housing Administration (FHA) loan fee can be paid by the: a. Escrow officer. b. seller. c. buyer. d. Either b. or c. |
d. Either b. or c. (The Federal Housing Administration (FHA) loan fee can be paid by either the buyer or the seller. Market conditions and the agreement of the principals will dictate who pays.) |
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Which of the following is not considered to be a contract? a. A net listing. b. A mortgage. c. A deed. d. A land sales contract. |
c. A deed. (A deed is a written instrument which, when signed and delivered (executed), conveys title to real property from one person (grantor) to another (grantee). Listings are employment contracts. Mortgages are loan contracts. A land sales contract is a contract by name.) |
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Title VIII, also known as the Federal Fair Housing Act, refers to the: a. Civil Rights Act of 1968. b. Unruh Act. c. Civil Rights Act of 1964. d. Rumsford Act. |
a. Civil Rights Act of 1968. (Title VIII, also known as the Federal Fair Housing Act, concerns the 1968 Civil Rights Act. Answer selection C. Civil Rights Act of 1964 relates to voter rights. Answer selections B. Unruh Act and D. Rumford Act are California laws, not federal.) |
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An encroachment is: a. a fence built on an owner's property for security and privacy purposes. b. an improvement on real estate, such as a building, fence, driveway or tree, which extends onto a neighbor's real estate. c. a doctrine used by property owners to establish boundary lines. d. an exclusive right-to-use easement. |
b. an improvement on real estate, such as a building, fence, driveway or tree, which extends onto a neighbor's real estate.(Encroachment is an example of trespass.) |
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Broker Matthews took a 90-day exclusive agency listing to sell a property owned by Tyler. After 30 days without selling the property, Tyler sent Broker Matthews a letter cancelling the listing. One week later, Tyler enters into open listings with several other brokers. Two weeks later, one of the brokers sold the property. In this situation, Tyler: a. did not have the right to give open listings to the other brokers. b. had a right to relist the property and had the right to cancel Matthew's listing. c. owes the commission only to the broker who procured a buyer. d. is liable for payment of a commission to Matthews as well as to the selling broker. |
d. is liable for payment of a commission to Matthews as well as to the selling broker. (The open listing guaranteed payment to the procuring broker. The exclusive listing is a bilateral contract which cannot be voided unilaterally. Therefore, the seller owes a commission to both brokers.) |
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All of the following terminate an easement, except: a. merger of the tenements. b. release by the owner of the servient tenement. c. abandonment. d. destruction of the servient tenement. |
b. release by the owner of the servient tenement. (This is an EXCEPT question. The termination of an easement may occur for any of the reasons cited in the answer selections, except the release by the servient tenement. The servient tenement is the party burdened by the easement and they cannot unilaterally terminate the easement.) |
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The federal Loan Estimate is to be delivered to a borrower: a. within three business days of receipt of a consumer mortgage application. b. within three business days of closing. c. no more than one calendar day before the close of escrow. d. at least ten business days from the date of the loan commitment. |
a. within three business days of receipt of a consumer mortgage application. (The federal Loan Estimate disclosure needs to be delivered by the date of settlement and within three business days of the lender's receipt of a consumer mortgage application.) |
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The seller dies after an offer to purchase their property has been accepted. The seller's grandchild inherits the real estate. What happens to the sale? a. The offer is voidable. b. The grandchild is compelled to sell under the terms of the accepted offer. c. The offer is terminated. d. The grandchild may choose whether or not to honor the sale. |
b. The grandchild is compelled to sell under the terms of the accepted offer. (Once the offer is accepted and the buyer has been notified of the acceptance, the estate is required to honor the sale in the event the seller dies.) |
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One year after his real estate license expired, Claude renewed the license. Which of the following is a true statement? a. Claude can operate under a restricted license during his suspension. b. Claude has to retake the license examination. c. Until the license was renewed, Claude was not allowed to participate in anything that required a license. d. Claude is no longer eligible for a license. |
c. Until the license was renewed, Claude was not allowed to participate in anything that required a license. (Licensees are granted a two-year grace period in which to renew their license after it has expired. A fee for a late renewal is higher than an on-time renewal. However, a licensee may not act in any capacity requiring a license during the suspension period prior to renewal.) |
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The promissory note and mortgage are signed by: a. the mortgagee. b. the lender. c. the trustee. d. the mortgagor. |
d. the mortgagor. (Real estate mortgages are secured by property. Thus, the property owner (mortgagor) signs the promissory note and mortgage.) |
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Upon moving into the home he had just purchased, Lewis discovered his neighbor's garage encroached four feet over onto his property. lf a friendly settlement cannot be negotiated, a. the escrow company. b. the title company. c. the seller's agent for failure to disclose the encroachment. d. the neighbor since the encroachment is a trespass. |
d. the neighbor since the encroachment is a trespass.(Encroachment is a form of trespass. If a settlement cannot be reached between an owner and a neighbor who encroaches on their property, the owner is to sue the neighbor and allow the judicial system to resolve the matter. The escrow company and title company have no liability under normal conditions. The seller's agent is liable only if they knew or ought to have known the encroachment existed.) |
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A buyer of a single family residence (SFR) is entitled to certification for everything except: a. the home is in compliance with smoke detector laws. b. the home has properly functioning solar panels installed on the roof. c. the home is in compliance with carbon monoxide gas detector laws. d. the water heater is properly braced, anchored or strapped. |
b. the home has properly functioning solar panels installed on the roof. (Residential transfer requirements include compliance with smoke detector and carbon monoxide gas detector laws, as well as water heater bracing, anchoring or strapping.) |
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"Agency" includes relationships between licensed sales agents and their brokers as well as: a. escrow officers and real estate licensees. b. lenders and the agents who recommend them. c. finders and the brokers who employ them. d. real estate licensees and the Department of Real Estate (DRE). |
c. finders and the brokers who employ them. (Finders and brokers, as well as brokers and the public, are capable of being in agency relationships.) |
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All of the following items contained in a closing statement are generally prorated, except: a. property insurance. b. property taxes and assessments. c. impounds. d. delinquent interest. |
d. delinquent interest. (Delinquent interest is a seller expense and not prorated for the buyer.) |
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Roy, an inactive real estate salesperson, offers to assist Mel lease or purchase federal land for a fee. a. Roy can legally arrange a lease or sale for a fee since the land is federally owned. b. Roy must be a broker to perform these duties and collect a fee. c. Roy is subject to disciplinary action from the Department of Real Estate (DRE). d. Roy is committing a federal crime. |
b. Roy must be a broker to perform these duties and collect a fee. (This is a real estate licensing question. Recognize the need to have a license for most any activity involving a potential principal.) |
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Which of the following will have the least degree of influence on real estate in the future? a. The community's general plan. b. Regulation of the real estate industry. c. Demographics. d. Weather. |
d. Weather. (All of the answer selections will have an impact on the future real estate market, although weather exerts the least amount of direct influence.) |
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An appraiser notices an abandoned auto salvage yard on the adjoining lot of a property they are appraising. The appraiser should recommend which of the following? a. A toxic waste study. b. A zoning change for the property being appraised. c. A geological study of the surrounding area by a civil engineer. d. A land survey. |
a. A toxic waste study. (The nature of the adjoining auto salvage auto yard will lead the appraiser to recommend a toxic waste study. An auto salvage yard has the potential of emitting hazardous wastes into the neighboring property being appraised, and thus a toxic waste study is advisable.) |
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What type of depreciation is the most challenging to correct? a. Functional. b. Economic obsolescence. c. Physical. d. Wear and tear. |
b. Economic obsolescence. (Economic obsolescence is the most challenging type of depreciation to correct. Economic obsolescence exists off the property and it is out of the direct control of the property owner. Examples of economic obsolescence include reduced employment opportunities in the area or changed aircraft landing patterns at a local airport. Physical obsolescence and wear and tear are one and the same. Functional obsolescence often requires replacing outdated equipment.) |
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An offer based on a $300,000 loan assumption was made and accepted. During escrow, it was discovered the loan was for $290,000, not $300,000. What is the most probable outcome? a. The seller needs to accept the buyer's note of $10,000. b. The buyer needs to come up with $10,000 more in cash. c. The buyer can void the contract. d. The seller needs to reduce the price by $10,000. |
c. The buyer can void the contract. (This is an example of a contingency in an escrow. This contingency favored the buyer and allowed them to void the sale since the loan balance was not as previously stated.) |
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When is the usefulness of the appraisal cost approach the least appropriate? a. When appraising homes in a new subdivision. b. When appraising an old structure with many functional deficiencies. c. When appraising raw land intended for future construction. d. When appraising a mixed use property. |
b. When appraising an old structure with many functional deficiencies. (This is a LEAST question. The cost approach to appraisal is of least utility when appraising an old structure with numerous functional deficiencies. This is a result of the difficulty in accurately applying accrued depreciation for both age and functional issues. This is of little concern when appraising newer properties of any kind or estimating future costs for property development.) |
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A subdivider needs to give a copy of the final public report to a buyer and obtain a receipt from the buyer before entering into a binding contract. How long does the subdivider or their agent need to keep a copy of the receipt for the final public report? a. One Year. b. Three years. c. Five Years. d. Eight years. |
b. Three years. (The receipt for delivery of a subdivider's final public report needs to be kept by the developer for three years. This is the same record retention requirement that applies to all contracts and documents related to a real estate transaction held by a broker.) |
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An agency relationship created by an exclusive listing is classified as a(n): a. implied agency. b. ostensible agency. c. express agency. d. agency by necessity. |
c. express agency. (An express agency can be oral or written, but in either case is stated and mutually agreed to. An implied or ostensible agency is not stated orally or in writing. Therefore, a listing, whether open or exclusive, is an express agency.) |
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Based on recent comparable sales, an agent's opinion of a property's fair market value (FMV) is referred to as a(n): a. broker price opinion (BPO). b. comp. c. appraisal. d. home inspection report. |
a. broker price opinion (BPO). (The broker's price opinion (BPO) is based on comparable sales only.) |
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The right of possession and equitable title is held by the: a. vendee. b. vendor. c. trustee. d. trustor. |
a. vendee. (In most cases, the party name ending in "or" owns the real estate. In the instance of a land contract, the "ee" (vendee) is the buyer and therefore has possession and equitable title of a property, but not legal title.) |
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The capitalization method of the income approach determines: a. the value of a property based on its net operating income (NOI). b. the effective interest rate on the debt encumbering the property. c. the value of the property based on its gross operating income. d. the property owner's net worth. |
a. the value of a property based on its net operating income (NOI). (The capitalization method uses an income-producing property's net operating income (NOI). The gross rent multiplier (GRM) method uses the gross rent generated by an income producing property.) |
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The __________ contained in all purchase agreements, states the existence or nonexistence of each broker's fiduciary agency with the various parties to the transaction. a. agency confirmation provision b. broker liability agreement c. hold harmless agreement d. attorney fee provision |
a. agency confirmation provision (The agency confirmation provision contained in all purchase agreements states the existence and nonexistence of each broker's fiduciary duty owed to the parties of the transaction. The word “agency,” as appears in the question, is only present in answer choice A. Confirmation is the third step in the agency disclosure process: disclose, elect and confirm.) |
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A Vietnamese couple walks into a real estate office. The salesperson: a. has no obligation to show them homes in non-Asian neighborhoods. b. needs to show them a minimum of three homes in a primarily white neighborhood. c. does not need to provide any service to the prospects. d. needs to treat them like everyone else. |
d. needs to treat them like everyone else. (The public policy goal behind fair housing laws is that licensees treat everyone equally. Simply stated, it is a color blind philosophy.) |
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A plot plan is drawn by an architect to show: a. the materials the subcontractors used to construct the property. b. elevations and soil quality. c. when construction is scheduled to begin. d. the placement of construction and related land improvements. |
d. the placement of construction and related land improvements. (A plot plan shows where a building and other site improvements will be located. Alternatively, a plat map shows the shape and size of a parcel of land and how it relates to other parcels in the immediate area.) |
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The placement of a house upon the lot is referred to as its: a. preference. b. zoning classification. c. orientation. d. location. |
c. orientation. (The placement of a house on its lot is called its orientation. This is also used to describe a direction such as “oriented toward the southern exposure.” Other than location, the alternative answer selections can be easily eliminated.) |
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Under the Statute of Limitations, a buyer needs to bring a lawsuit for breach of written contract against a seller within: a. six months. b. three years. c. four years. d. five years. |
c. four years. (The Statute of Limitations allows a buyer four years to bring suit for a breach of written contract against a seller.) |
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A broker under an exclusive listing also holds an option to purchase the property. If the broker intends to exercise the option, the broker: a. has a conflict of interest which needs to be disclosed. b. needs to obtain the seller's approval of the broker's exercise of the purchase option in writing. c. needs to obtain the approval of the Department of Real Estate (DRE). d. needs to avoid receiving other offers before exercising the option.
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b. needs to obtain the seller's approval of the broker's exercise of the purchase option in writing. (An exclusive listing with an option to purchase may cause potential conflict of interest issues. Answer choices C and D can be easily eliminated as the CalBRE is not directly involved and the broker would breach their fiduciary duty if they avoid receiving offers. The difference between choices A and B is a matter of recognizing that choice A is possible, but not necessarily true. Alternatively, choice B is always the best course of action.) |
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Implied warranties are not included in a: a. quitclaim deed. b. warranty deed. c. gift deed. d. grant deed.
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a. quitclaim deed. (The quitclaim deed is the exception here. There are no guarantees or warranties with a quitclaim deed.) |
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Any broker negotiating a transaction as an agent for either party has a(n) ____________ to disclose title conditions affecting ownership or use of the property to both parties, not just their client. a. agency duty b. general duty c. fiduciary duty d. common law duty
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b. general duty (A fiduciary duty is owed only to a broker's client. However, the broker also owes a general duty to all parties to disclose any material facts about a property, such as title conditions affecting the property's use.) |
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Consider a prepaid rental listing service that intends to relocate. When is the listing service required to provide notice of the new address and telephone number to its clients? a. As soon as practicable after the listing service gets settled in its new location. b. No later than seven calendar days after the move has occurred. c. Before the move is to occur. d. 60 days prior to the move.
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c. Before the move is to occur. (The customers of a prepaid rental listing service need to be aware of the company's location at all times. Therefore, if they move, the company is required to inform customers and clients in advance of the move.) |
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A graduated payment adjustable mortgage (GPAM) provides for: a. deferment of certain payments on the principal during the early years of the loan. b. the loan to be renegotiated at a later date by the mutual agreement of the borrower and lender. c. the loan to have several short-term loans at various interest rates embedded within it. d. the carryback seller to receive part of the property's appreciated value as additional interest.
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a. deferment of certain payments on the principal during the early years of the loan. (The unique quality to a graduated payment adjustable mortgage (GPAM) is the fact that payments are increased periodically over the life of the loan, making it lower in the early years.) |
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The real estate loan that allows interest rates to increase or decrease depending on money market conditions is called a(n): a. interim loan. b. secured loan. c. adjustable interest rate loan. d. fluctuating market condition loan.
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c. adjustable interest rate loan. (An adjustable interest rate loan, also known as an adjustable rate mortgage (ARM), allows for interest rate fluctuations based on changes in an agreed to index.) |
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A licensed real estate salesperson is primarily responsible to: a. the buyer. b. the seller. c. the principal who pays their commission. d. their employing broker. |
d. their employing broker. (The salesperson is an employee of the broker and primarily responsible to the broker. The broker represents the principal.) |
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Which of the following does not create an agency relationship? a. Implication. b. Ratification. c. Express agreement. d. Coercion. |
d. Coercion. (Agency cannot be created through coercion. This question presents a good opportunity to recognize the different ways agency is created.) |
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Conrad wills the family estate to his first son Michael with the provision that if Michael were to divorce in the future, title will pass to Conrad’s second son, Bret. This is an example of a(n): a. covenant. b. restriction. c. condition precedent. d. condition subsequent. |
d. condition subsequent. (A future divorce is a condition subsequent. The two conditions – precedent and subsequent – refer to actions that alienate title. A condition precedent is how one gains title (unless and until completion of a specified act or event); a condition subsequent is how one loses title (the failure or non-performance of a condition).) |
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One year after the expiration of their real estate license, the licensee wishes to renew their license. Which of the following statements is not correct? a. They need to retake the state license examination. b. They are required to fulfill the continuing education (CE) requirements. c. The late renewal fee is higher than the on-time renewal fee. d. They have a two-year grace period in which to renew their license. |
a. They need to retake the state license examination. (Real estate licensees are granted a two-year grace period during which their license is suspended and they cannot conduct real estate-related activities. If they choose to renew their license during this time, they will need to complete the state-mandated continuing education and pay a higher late renewal fee.) |
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Who may withdraw money from a trust fund? a. Any person employed by the broker. b. Only salespeople in the broker's employ. c. A corporate director. d. Any authorized employee of the broker. |
d. Any authorized employee of the broker. (The broker is required to name the employee who is authorized to withdraw trust funds. The authorized party need not be licensed.) |
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On appraisals of older apartment buildings, a major problem in the cost method is: a. that construction methods and styles have changed. b. that construction materials have changed. c. the determination of accrued depreciation. d. the determination of rental revenue generated by the property. |
c. the determination of accrued depreciation. (The quantity of accrued depreciation becomes increasingly difficult as buildings get older, and causes the cost approach to lose its validity. Under the cost approach of appraisal, an appraiser arrives at a property's value based on the present cost of constructing the present improvements and acquisition of the land.) |
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The Agency Law Disclosure does not need to be made to all parties in which of the following transactions? a. The sale of a commercial building. b. The sale of vacant land. c. The sale of a residence. d. Leases for one year or less. |
d. Leases for one year or less. (The Agency Law Disclosure is not required for leases of one year or less.) |
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A preprinted disclaimer contained in the statutory Transfer Disclosure Statement (TDS) states the disclosures made by the seller on the form: a. may be relied on by a buyer as a warranty of the actual condition of the property. b. are not part of the terms of the purchase agreement. c. Both a. and b. d. Neither a. nor b. |
b. are not part of the terms of the purchase agreement. (The Transfer Disclosure Statement (TDS) and other disclosures are not part of the terms of the purchase agreement. The statutory language written into the boilerplate of the disclosure states that the disclosure is not a warranty of the property's actual condition, as it represents only what the seller knows and observes about the property's condition.) |
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The best guideline to determine whether an action is ethical can be found in: a. state legislation. b. the Business and Professions Code. c. the Preamble of the National Association of REALTORS®. d. what is in the best interest of the real estate licensee. |
b. the Business and Professions Code. (The Real Estate Law is found in the Business and Professions Code, which also covers the ethical practice of licensees.) |
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An unlicensed assistant can properly: a. show property to prospective buyers. b. enter into a listing agreement on behalf of their employing broker. c. discuss the terms and conditions of a possible sale. d. prepare a Competitive Market Analysis (CMA) for a prospect. |
d. prepare a Competitive Market Analysis (CMA) for a prospect. (An unlicensed assistant may create a Competitive Market Analysis (CMA) for a prospective client. An unlicensed assistant cannot do anything that requires a license, such as show property to prospective buyers, enter into a listing agreement on behalf of their employing broker or discuss the terms and conditions of a possible sale. An unlicensed assistant's work is clerical in nature.) |
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The commission of a leasing agent is generally based upon a percentage of: a. the total operating costs incurred running the property. b. the cash paid by a lessee at the time of signing the lease. c. the total rent collected by the lessor over the term of the lease. d. the prevailing commission rates commanded by similar brokers. |
c. the total rent collected by the lessor over the term of the lease. (A leasing agent generally receives a percentage of the total lease payment over the term of the lease as their fee.) |
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An easement that does not specify a location is: a. voidable. b. unenforceable. c. valid. d. void. |
c. valid. (An easement does not need to specify a location in order to be valid. For example, an easement in gross held by a utility company does not specify a location.) |
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When taking a listing, it is appropriate for the broker to: a. take the listing at whatever price the owner requires without discussion. b. raise the owner's asking price to include the commission and an additional amount for negotiation. c. take a listing at a price that is significantly higher than that suggested by a competitor. d. ask questions to determine the seller's reason for listing. |
d. ask questions to determine the seller's reason for listing. (Asking questions as to why the seller wants to list their property is always appropriate. The alternative answers will not serve the client well and do not fulfill the broker's fiduciary responsibility to their client.) |
