1. The value of a property purchased for investment purposes is usually:
A. Based on the capitalization of future net income;
B. Determined by a gross multiplier factor;
C. Proportional to the structural soundness of the building;
D. Inversely proportional to the remaining economic life of the building.
2. Agent Brown is appraising real property by estimating the quantity, quality and durability of its net income expectancy. This procedure in the appraisal process is called:
A. Marginal utility analysis;
B. Q-Q-D survey;
C. Market data approach;
D. Capitalization of income.
3. Which of the following conditions would not cause a building to be declared substandard?
A. There is dampness in the habitable rooms;
B. The electrical wiring does not comply with present code, but it did when it was installed and it is now safe and is working properly;
C. There is no heating;
D. There is defective weather protection on the outside of the building.
4. Whenever possible, an appraiser would estimate the value of land on the basis of:
A. The original purchase price plus the cost of making off-site and on-site improvements;
B. The size, location and utility;
C. The original cost plus the expense of making it usable;
D. The selling prices of comparable sites.
5. The one particular area that appraisers find most difficult to measure accurately is:
A. Replacement cost new;
B. Cost data;
C. Accrued depreciation;
D. Capitalized income.
6. The age of a house can be determined most accurately by inspecting which of the following;
A. Physical condition of the house;
B. Architectural style of the house;
C. Tax assessor's records;
D. Recorded subdivision map.
7. Restoring a property to a satisfactory condition without changing the plan, form, or style of the building is known as:
8. The type of depreciation which is socially oriented and from which we derive the saying "more buildings are torn down than fall down," would be known as;
A. Functional obsolescence;
B. Economic obsolescence;
C. Physical deterioration;
D. Deferred maintenance.
9. An elevation sheet which is used in a subdivision shows which of the following:
A. Topography of the land including slope, elevation of the site, streets, sidewalks, and curbs;
B. Drawings of the front and side views of the finished homes;
C. An interior of the homes showing framing and structure of the homes;
D. An aerial view of the site.
10. Soil pipe is commonly used in:
A. Cold water lines;
B. Gas lines;
C. Irrigation lines;
D. Sewer lines.
11. When changes are made in the plan, form, or the styling of a residence in order to correct functional obsolescence or economic obsolescence, this is termed:
12. Which of the following normally installs conduit:
13. Which of the following are benefits of ownership as contemplated by the "bundle of rights" theory:
A. To use or refrain from using the property with absolute power;
B. To acquire by escheat, adverse possession, or eminent domain;
C. To use, lease, and dispose of the property subject to burdens of taxation and possible claims of others;
D. None of the above are true statements.
14. Property is:
A. Personal, if it is a fixture;
B. Real if it is an estate;
C. Personal if it is other than real;
D. All of the above.
15. Which of the following would be considered real property:
A. Crops before harvest;
B. Fruit that has not been picked, but which has been sold under contract;
C. Stock in a mutual water company;
D. Minerals which have been mined.
16. Personal property is easily distinguished from real property by its:
A. Lower unit value;
B. Multiplicity of use;
D. Greater variety.
17. Mortgages and trust deeds are considered to be
A. Estates in land;
B. Personal property exclusively;
C. Chattels real;
D. None of the above.
1. The prospective purchaser may withdraw the offer at any time before the seller's acceptance of an offer has been communicated to the prospective purchaser:
A. Unless the offer states that it is irrevocable;
B. Provided the offer is not supported by a deposit;
C. Provided the offeree has breached the offer;
D. For any reason.
2. A broker's ad in a loan newspaper says that if a buyer or seller will bring this ad to his office and either list or buy a property through him, that he will give that person $50. Which of the following is true:
A. The broker cannot give $50 to the buyer or seller;
B. The broker cannot give $50 to the buyer;
C. This would violate the real estate law because he would be compensating unlicensed persons for performing real estate acts;
D. The broker can give $50 to the buyer or seller.
3. A federal income tax advantage could be gained from:
A. A deduction for depreciation on income property;
B. An installment sale;
C. A tax-free exchange;
D. Any of the above.
4. The most essential element to the creation of an enforceable broker-principal relationship in matters affecting any right, title, or interest in real property is a:
A written employment contract;
B broker's written authority to accept a deposit
C. written offer to purchase
D. bilateral agreement as to the legal rate of consideration.
5. The state Board of Equalization:
A. Equalizes the flow of mortgage money throughout California;
B. Appraises all public utility properties for tax assessment;
C. Appraises all real property where a liquor license is located;
D. Is the Board to which one appeals in case of excessive tax assessment on his property.
6. A listing agreement is:
A. A promise for a promise;
B. A bilateral contract;
C. An employment contract;
D. All of the above.
7. In housing construction, a joist is a:
8. The Subdivision Map Act requires:
A. Delivery of a copy of the Real Estate Commissioner's public report to all prospective purchasers;
B. The subdivider to prepare a tentative map and file it with the city or county;
C. Insertion of release clauses in all blanket mortgages covering subdivision property;
D. Submission of proposed sales contracts for subdivision lots that a local governing agency had approved.
9. In order to be entitled to a commission, a broker must show that he/she was the procuring cause of the sale under all of the following types of listings, except:
A. Exclusive agency;
B. Exclusive authorization and right to sell;
C. Open listing;
D. Nonexclusive listing.
10. Enforcement of sanitation requirements in connection with the sewage disposal from subdivisions is usually the responsibility of the local:
A. Health officer;
B. Plumbing inspector;
C. Building inspector;
D. Public works director.
11. When the deposit receipt on the sale of a house states that the property is being sold "as is," it:
A. Also requires a real estate transfer disclosure statement;
B. Provides that the buyer should beware;
C. Means that nothing is warranted;
D. Does not require a real estate transfer disclosure statement.
12. What is the highest construction member of a frame house:
B. Ridge board;
C. Collar beam;
13. All of the following are sufficient to convey an interest in real property, except:
A. Agreement of sale;
B. Bill of sale;
14. Under the Uniform Commercial Code, the proper document to use in mortgaging articles of personal property is a:
A. Chattel mortgage;
B. Financing statement;
C. Security agreement;
D. Bill of sale.
15. Potential buyer Marshall seeks to purchase a home in a new subdivision. A licensee assists Marshall in securing a loan for such purpose from a savings and loan association, explaining to Marshall the loan processing costs that will be involved at closing. Under these conditions, when the loan is arranged, a copy of the HUD Booklet, "Settlement Costs and You":
A. need not be provided to Marshall if the procedures and costs of the loan have been adequately explained;
B. Must be provided immediately by the licensee;
C. Must be provided to Marshall within one week;
D. Must be provided to Marshall by the lender within three days of the loan application.
16. None of the following would automatically terminate an offer to buy real property except:
A. Revocation of the offer by the offeree;
B. Rejection of the offer by the offeror;
C. An inquiry by the offeree as to whether the offeror will accept different terms;
D. Rejection of the offer by the offeree.
17. In a real estate purchase contract, the liquidated damages clause is initialed and the buyer defaults. The deposit will be:
A. No more than 3% of the selling price or the amount of deposit, whichever is less;
B. Used to pay any escrow expenses and the balance returned to the buyer;
C. Divided equally between the seller and the listing agent;
D. Given to the seller when escrow in opened.
18. How many feet are on one side of a section:
19. Carter purchased a parcel of real property for $200,000, paying 25% cash and 75% in a purchase-money mortgage. Over a ten-year period, the property doubled in value. Exclusive of equity buildup, Carter's original cash investment is now worth:
20. In the capitalization method of appraising, the most difficult step is to:
A. Establish the gross income;
B. Establish the effective gross income;
C. Establish the net income;
D. Select a capitalization rate.
21. The Internal Revenue Service would define the marginal tax rate as:
A. The tax rate which is used for the next dollar of taxable income earned;
B. The 15% tax rate;
C. The tax rate used for your state income taxes;
D. None of the above.
22. A man borrowed $2,500 on a straight note. In eight months, he paid $150. What was the interest rate:
D. None of the above.
23. A square parcel of land, 1,780 feet long and 1,780 feet wide, will be most nearly equal in size to:
A. 73 acres;
B. 65 acres;
C. 43 acres;
D. 27 acres.
24. Which of the following is the largest parcel of land:
A. 10% of a township;
B. 2 sections;
C. 2 miles square;
D. 5,280 feet x 10,560 feet.
25. Which of the following is the largest in area:
A. 4,047 square yards;
B. 1 acre;
C. 196 foot square;
D. 41,640 square feet.
Congratulations, you passed the quiz with a score of 100%!
1. If a person owns two personal residences and sells one and buys another one under conditions that comply with the gain deferral rules, which of the following is true?
A. The person must sell both residences in order to qualify for deferral;
B. Only the residence that has the greater value can use the deferral rules;
C. Deferral of the gain can only be done on the principal place of residence;
D. Deferral of the gain can be used for either residence.
2. Which of the following appraisal reports would be the most comprehensive and complete:
3. All of the following would be considered essential to making an appraisal of old family residences, except:
A. Purpose of the appraisal;
B. Suitability of the residence to the site;
C. Physical condition of the building;
D. Original cost of the residence.
4. Which of the following would not be considered one of the great special forces influencing value:
A. Social ideals and standards;
B. Private restrictions;
C. Economic adjustments;
D. Government regulations.
5. In analyzing a parcel of vacant land to estimate its value, what is the first thing necessary to determine:
A. Price at which it should be listed;
B. Price at which it was purchased;
C. Highest and best use of the land;
D. Prices of comparable properties.
6. The basis of the market data approach to appraising is found in:
A. The principle of change;
B. The principle of substitution;
C. The principle of conformity;
D. The principle of anticipation.
7. An appraiser is appraising a two-year-old, single-family, owner-occupied home in a good neighborhood. If he is trying to determine the sales price, which of the following would normally be given the greatest weight:
A. Determining the value received from direct use of the property by the owner-occupant;
B. Determining the present cost to replace the dwelling, plus the depreciation to date and the land value;
C. Capitalizing the rental income from an apartment property that is comparable, using the capitalization rate that is common in the neighborhood;
D. Carefully comparing the property with similar properties that have sold recently in the neighborhood.
8. When appraising amenity-type properties, the method generally used is know as:
A. Risk rating method;
B. Replacement cost;
C. Market comparison;
D. Capitalization of income.
9. The income approach would not be used when appraising:
A. Commercial retail properties;
B. Residences in new subdivisions;
C. Industrial buildings on long-term lease;
D. Neighborhood shopping centers.
10. The maximum potential income which any income-producing property is capable of generating is known as:
A. Gross scheduled income;
B. Gross effective income;
C. Net operating income;
D. Net spendable income.
11. Which of the following is not a proper charge in determining net income for capitalization purposes;
A. Vacancy and collection losses;
B. Maintenance expenses;
C. Management agent's fees;
D. Mortgage interest.
12. Wolfman is considering a extensive modernization program for an older apartment building which she owns. Her decision should give most emphasis to:
A. The cost involved;
B. The history of vacancy;
C. The potential increase in real property taxes;
D. Net effect on the net income.
13. Larson's property has a fair market value of $39,000 and is currently renting for $300 per month. Gilman's property, which is located in the same neighborhood, is more expensive, and therefore, will rent for $345 per month. Using the same percentage rate of return as Larson's property, what is the value of Gilman's property:
14. When comparing the physical and the economic life of an improvement, the economic life usually is:
C. The same;
D. Shorter or longer, depending on the type of improvement.
15. Mr. Smith, who owns an apartment, sustained a $3,000 operational loss for the tax year. For income tax purposes, he may:
A. Deduct only $1,000 of the loss on his income tax return;
B. Offset the loss against any capital gains;
C. Deduct the full amount from his ordinary income;
D. Deduct only one-half of the loss from his ordinary income.
16. When trying to determine the amount of economic obsolescence suffered by a commercial property, the answer to which of the following questions would be of most benefit:
A. Can a building be operated efficiently?
B. Are the tenants in the neighborhood prospering;
C. Should a fire escape be installed;
D. Is the rental schedule of the building equitably charged to the tenants?
17. Which of the following would be contained in a plot map:
A. Thickness of exterior walls;
B. Concrete foundation;
C. Location of the improvement on the lot and relationship to surrounding features;
D. All of the above.
18. The effectiveness of insulation is referred to as its "R-value." The R stands for:
A. Required minimums;
B. Resistance to heat flow;
C. Replacement values;
D. None of the above.
19. According to income tax laws, which of the following is true about depreciation of land?
A. Land has a residual value but improvements do not;
B. The ACRS method of depreciation can be used when depreciating land;
C. Land is considered to be 25% of the total value and is depreciated;
D. Land is not depreciated.
20. An offer to purchase real estate could be terminated in all of the following ways, except:
A A conditional acceptance of the offer by the offeree;
B Failure to communicate notice of revocation before the other party has communicated his acceptance;
C Death or insanity of the offeror or offeree;
D Failure to accept the offer within the prescribed period of time.
21. A deposit receipt said, "Seller to provide and pay for a structural pest control inspection report on improvements and pay for corrective work, if any." The broker must be certain that the buyer receives a copy of the structural pest control report:
A. Within 10 days of opening escrow;
B. Within 5 working days of the date of the termite report;
C. As soon as practicable before close of escrow;
D. None of the above.
22. When a trust deed is sold, the parties often use an escrow in order to:
A. Obey the civil code;
B. Be a witness for the transaction;
C. Make sure that the conditions and terms are met prior to the closing of the transaction;
D. Provide a legal recourse against the escrow company for the two parties involved.
23. When a licensee is the buyer's agent, the licensee will tell others:
A. As soon as possible;
B. After the offer has been presented and accepted;
C. When the loan is funded;
D. After the licensee receives his commission.
24. An offer on listed property was accepted and the acceptance was communicated to the buyer. However, before going to escrow, the seller found a buyer who was willing to pay all cash and notified the broker that the original deal was rescinded:
A The buyer must be refunded the amount of the deposit, but he has no further claim or right against the seller;
B The broker would not be entitled to compensation since escrow had not opened and the transaction had not closed;
C The broker has good legal basis for a commission claim;
D The broker could probably void the transaction which the seller made with the all-cash buyer.
25. Of the following, which best defines a fee simple estate?
A Title in owner without limitations;
B Estate for years;
C Life estate;
D Most interest one can hold in land.
Congratulations, you passed the quiz with a score of 80%!
1. Which of the following type of transactions would most frequently allows the real estate agent to collect a commission from more than one party:
A Long-term open-end listings;
B Business opportunity sales;
C Short term leases;
D "Tax-Free" exchanges.
2. Which of the following statements is true with respect to options: An option is:
A Valid without consideration;
B Valid if the consideration is exactly $10, but not delivered;
C Valid if consideration is delivered, even if it is less than $10;
D Not valid if the delivered consideration is less than $10.
3. Concerning option contracts, which of the following statements is most incorrect:
A If the optionee does not exercise the option right, the optionee loses the option money that was given the optionor for the right to purchase during the option period;
B If the optionee decides to buy the property, it will be necessary to enter into a separate sales contract before the expiration of the option in order for the two parties to be legally bound;
C The optionee must give the optionor some amount of valuable consideration;
D Separate from the purchase of real property owned by a business, an option may be used to buy the business separate from the property.
4. In which of the following contracts does one of the parties agree not to revoke an offer for a certain period of time?
A An exchange listing;
B An option;
C A ratification;
D An exclusive right to sell listing.
5. When a broker sells a property on which he holds an option, he must inform the buyer that he is acting as:
A An optionor;
B A grantor;
C An agent;
D A principal.
6. A contract is best defined as:
A a deliberate agreement between two or more persons to perform or abstain from an act;
B a deliberate agreement between two competent persons to perform or abstain from a legal act;
C a deliberate agreement, based upon a legal consideration, between two or more parties who have legal capacity, to perform or abstain from doing a legal act;
D a deliberate agreement, based upon a legal consideration between two or more parties, to perform or abstain from doing an act.
7. If a contract is considered voidable, it is:
C Valid until voided;
D None of the above.
8. An executed contract is a contract:
A Completed and fully performed by both parties;
B Under the jurisdiction of the probate court;
C Signed, notarized, and recorded;
D That requires a novation.
9. Which of the following is required for a valid contract:
A Legal capacity;
C Lawful object;
D All of the above.
10. Joanie James, a minor wanted to hire Broker Stone to assist in a real estate transaction. Legally, a broker may not be employed by a minor, because the minor:
A Is legally incapable of appointing an agent;
B Is prohibited by law from making any contract relating to real property under any conditions;
C May disaffirm contracts within a 25-year period;
D Is considered incapable of making adult decisions and the broker breaches fiduciary responsibility in representing the minor.
11. All of the following are essential elements of every valid contract, except:
A A meeting of the minds;
B Adequate capability of parties;
C A legal act;
D The payment of money.
12. A voidable contract is a contract that:
A Was valid at the time that it was signed, but for some reason cannot be proved or sued upon by either or both parties;
B Contains all of the legal essentials that are required for its existence;
C Has no legal effect because it really is not a contract;
D Is valid and enforceable on its face, but it may be rejected by one of the parties.
13. In order for an agreement for a transfer of real property to be binding on the buyer and seller, it must:
A Contain an offer and an acceptance;
B Contain an acknowledgment;
C Be recorded;
D All of the above.
14. Swenson, a 16-year old divorcee, went to Broker Cook trying to list Swenson's portion of community real property. Broker Cook can legally:
A Accept the listing provided the commission is approved by a court of competent jurisdiction;
B Accept the listing and agree to sell according to the instructions of Swenson;
C Not accept the listing unless Swenson is declare emancipated by a court of competent jurisdiction;
D Not accept the listing until Swenson has reached the age of 18.
15. At what minimum age is a single person who has not had any court of guardianship intervention legally capable of entering into an enforceable real estate contract:
A 16 years;
B 18 years;
C 19 years;
D 21 years.
16. Michaels, who is a 15-year-old and an emancipated minor, wants to sell a parcel of land and has submitted documentation of emancipation to the listing broker. After the broker finds a buyer, he should submit the documentation to the:
A Escrow company;
B Title insurer;
C Buyer's lender;
17. Actual fraud has been described as:
A The suppression of that which is true by a person who has knowledge or belief of the fact;
B The intentional and successful circumventing or cheating or another person;
C A promise which has been made without any intention of performing it;
D All of the above.
18. Sometimes in a bilateral contract, the offeror gives a promise expecting a return promise from the offeree. When the return promise is given, each promise is:
A Part performance;
B Consideration for the contract;
C An option to perform;
D A subrogation.
19. In order for a contract to be valid, it must have consideration. "Valuable consideration" may be:
A Anything which the parties deem to be of value;
B $1 or more;
C The performing of services by one or both parties;
D Any of the above.
20. An agreement for the transfer of real estate, in order to be binding on buyer and seller, must:
A Contain an acknowledgment of the signature of the buyer;
B Be submitted to the county recorder of the county in which the property is located;
C Contain an offer and acceptance;
D All of the above.
21. When a contract has been rescinded, it means that it has been:
22. Sampson offered to fully perform his part of a purchase contract. This would be described as:
23. A remedy in court compelling a vendor to execute a deed in pursuance of a valid written contract is known as:
A Specific performance;
D Equity of redemption.
24. Assume a broker took an open listing. He then made an oral agreement with another broker to share the commission on the commission on the property. The second broker procured an offer resulting in the sale of the property. The first broker refused to share his commission on the sale:
A He need not share the commission, as it was an it was an open listing;
B He need not share the commission, because of the Statute of Frauds;
C The second broker would stand a good chance of winning a court suit for his share of the commission;
D The second broker could sue the seller for his share of the commission.
25. A seller sued a broker for failing to disclose a material fact to him. In defense, the broker proved that his listing contract with the seller was oral. Under these circumstances:
A The defense is a bar to the lawsuit because of the Statute of Frauds;
B The Statute of Frauds does not apply because the transaction was completed;
C The defense is not a bar to the lawsuit because it is not applicable to the issue of the case;
D The defense does bar the lawsuit unless the seller can show actual damages exceeding $100.