Which term describes a property's decline in value because of external factors influencing a neighborhood?

a. Economic obsolescence

b. Diminishing returns

c. Filtering down

d. Economic Life

a. Economic obsolescence

The term brokerage means:

a. A real estate office

b. A loan office

c. To bring people together

d. A general real estate term used to describe offices where professionals work

c. To bring people together

Which one of the following is not a question a real estate agent can ask himself or herself in looking for a positive attitude?

a. Are you persistent?

b. Are you willing to chance failure by trying?

c. Are you happy with your current income?

d. Are you a problem solver?

c. Are you happy with your current income?

A successful agent will:

a. Actively research all hiring brokers before making a decision about where to work.

b. Maintain a positive outlook and attitude

c. Participate in all mandatory continuing education classes as well as any supplemental training provided by the broker

d. All of the above

d. All of the above

The late renewal period for a real estate licensee is:

a. 90 days

b. 1-year

c. 2-years

d. There is no late renewal period; all licensees must retake the state examination if they allow their license to expire

c. 2-years

Real estate agents must have a good understanding of which of the following aspects of the industry?

a. Escrow

b. Appraisal

c. Finance

d. All of the above

d. All of the above

Which is the best term to describe the economic condition of the real estate market place?

a. Supply and demand economics

b. Imperfect market

c. Buyers market

d. Sellers market

b. Imperfect market

A buyer looking for a new house, who is making sure to find the perfect home at the right price based on the home she grew up in, would be an example of which imperfect marketplace conditions?

a. Emotion

b. Differences between each home

c. Will-buy

d. Both A and C

d. Both A and C

A housing market where there are more homes for sale than interested buyers creates what?

a. A stratified market

b. A buyer's market

c. Both A and B

d. Neither A nor B

c. Both A and B

Which one of the following is not one of the four levels of real estate economics?

a. National

b. Local

c. City

d. Regional

b. Local

When goods are offered at a higher price, and fewer consumers purchase the goods or services, it is an example of what principle?

a. Law of demand

b. Law of supply

c. Equilibrium

d. Imperfect market

a. Law of demand

As consumers demand more of a specific product, what is the most logical action for the manufacturer to take?

a. Increase prices of the product

b. Decrease prices

c. Increase supply

d. None of the above

c. Increase supply

A trend where there are more homes on the market than people looking to buy is referred to as:

a. Buyer's market and / or inflation

b. Seller's market and / or inflation

c. Seller's market and / or deflation

d. Buyer's market and / or deflation

d. Buyer's market and / or deflation

Which of the following is not a component of the business cycle?

a. Recession

b. Depression

c. Interest rates

d. Recovery

c. Interest rates

A person who takes applications for empty space for rent and oversees a staff would best be described as:

a. Leasing agent

b. Property manager

c. Residential income property agent

d. Salaried assistant

a. Leasing agent

Which of the following is not a career path a real estate professional may choose?

a. Appraisal

b. Mobile home sales

c. Salaried assistant

d. Salaried broker

d. Salaried broker

The Internal Revenue Service classifies professionals as independent contractors if they meet which of the following requirements?

a. Work at a real estate brokerage

b. Receive compensation based on sales made, not hours worked

c. Both A and B

d. Neither A nor B

b. Receive compensation based on sales made, not hours worked

All of the following control factors are characteristic of an independent contractor working environment except:

a. The worker has the right to quit a job at any time, regardless of whether or not the task is finished

b. A person may work for more than one firm at a time

c. The worker will receive compensation in one lump sum

d. The worker must rent his or her own office space

a. The worker has the right to quit a job at any time, regardless of whether or not the task is finished

Generally a salesperson working for a broker at 100% commission can rely on the broker for:

a. A support staff

b. Administrative materials

c. A desk or space to rent

d. None of the above

c. A desk or space to rent

First time broker renewals require _____ hours of training, while all subsequent broker renewals require ______ hours of training.

a. 12, 45

b. 45, 45

c. 45, 90

d. None of the above

b. 45, 45

Agency is:

a. The office where your real estate broker works.

b. The relationship between you and your real estate agent.

c. The authority to act on another's behalf for a specific period of time.

d. The relationship between the buyer and seller.

c. The authority to act on another's behalf for a specific period of time.

The listing agreement is:

a. A binding contract

b. An employment contract between the broker and seller

c. A contract between the buyer and broker

d. All of the above

d. All of the above

Which of the following is not an element in a valid listing agreement?

a. Consideration

b. Competent parties

c. Written contracts

d. Due diligence

c. Written contracts

An agency agreement wherein the broker is the only agent who will list the property is defined as:

a. Open listing

b. Nonexclusive

c. Exclusive

d. Net listing

c. Exclusive

What is the most common type of listing agreement a broker will enter into?

a. Exclusive-authorization-and-right-to-sell

b. Net

c. Open

d. Exclusive-agency

a. Exclusive-authorization-and-right-to-sell

A listing where the broker is the only agent representing the property, but will only get paid if he, and not the property owner, sells the house is called:

a. Net

b. Exclusive-agency

c. Exclusive-authorization-and-right-to-sell

d. Option

b. Exclusive-agency

After a listing agreement has expired, is the broker entitled to any commission from the sale of the property?

a. If the broker provides the seller with the name of a prospective and eventual buyer within 3 days of the listing agreement's expiration

b. If the broker can produce evidence that he or she originally showed the property to the buyer during the life of the listing agreement, with the offer coming to the seller after the agreement's expiration.

c. No, after the listing agreement has expired, the broker is not entitled to any commission.

d. Both A and B

d. Both A and B

How long do exclusive-authorization-and-right-to-sell listings generally last?

a. 1-3 months

b. 3-6 months

c. 6-9 months

d. 9 months - 1 year

b. 3-6 months

Conducting a competitive market analysis is appropriate for which type of property?

a. Residential with 1-4 units

b. Residential with more than 4 units

c. Industrial

d. Commercial

a. Residential with 1-4 units

What is the furthest back in time that an agent will typically research when doing a competitive market analysis?

a. 1 month

b. 3 months

c. 6 months

d. 1 year

c. 6 months

The most useful information used in a competitive market analysis comes from which of the following reports?

a. On-market now

b. Reported-sold-prior-six-months

c. Reported-expired-prior-six-months

d. Professional appraisal

b. Reported-sold-prior-six-months

Which one of the following is not a method used by agents to find the value of property?

a. Income capitalization

b. Competitive market analysis

c. Cost

d. Original listing

d. Original listing

When servicing the listing, an agent will rely on his or her office for what type of support?

a. 30-day letter

b. Property inspections

c. Open houses

d. Soliciting neighbors for leads

a. 30-day letter

After an open house, an agent should take what steps?

a. Compile all names and contact information gathered into a database to call at a later time

b. Compile a list of any suggestions or feedback regarding the property that you received during the open house

c. Both A and B

d. Neither A nor B

c. Both A and B

In an agent's relationship with a third party, the agent is responsible for which of the following actions?

a. Full disclosure

b. Fair dealing

c. Good faith

d. All of the above

d. All of the above

In a non-exclusive listing arrangement the broker:

a. Gets a commission no matter who sells the property

b. The homeowner is not allowed to sell the property, only the broker or an agent of the broker

c. The listings are only valid for 30 days

d. The homeowner may employ several different brokers to sell the property

d. The homeowner may employ several different brokers to sell the property

An agent or broker may make which of the following suggestions to a homeowner in order to sell a property that has been on the market for a long time?

a. Lower the asking price

b. Make some cosmetic improvements to the inside of the house such as painting, or replace the carpet

c. Do some simple landscaping to improve "curb appeal"

d. All of the above

d. All of the above

The method of valuation most commonly used by agents when making an estimation of value:

a. Cost approach

b. Competitive market analysis

c. Income approach

d. Certified appraisal

b. Competitive market analysis

The most important thing an agent can do for a client while servicing a listing is:

a. Ask the neighbors for leads

b. Put a "For Sale" sign in the front yard

c. Have a clear communication regarding the process and progress

d. Create good information sheets for distribution

c. Have a clear communication regarding the process and progress

Capitalization rate, net income and operation expenses are most likely factored into what form of valuation?

a. Cost approach

b. Competitive market analysis

c. Income approach

d. Certified appraisal

c. Income approach

Finding sellers or buyers is called:

a. Marketing

b. Prospecting

c. Advertising

d. None of the above

b. Prospecting

Of the following methods, Ad Switches, Canvassing, Advertising, Open Houses, For Sale Signs and Window Advertising, which one of the following are considered viable sources to obtain listings?

a. Ad switches, Advertising, Open Houses and For Sale Signs

b. Ad switches, Advertising and Window Advertising

c. Canvassing, Advertising, Open Houses and For Sale Signs

d. All of the above

d. All of the above

On average, how much time will an agent spend obtaining listings?

a. 1/4

b. 3/4

c. 1/2

d. None of the above

b. 3/4

Which of the following is NOT a factor in choosing the most appropriate prospecting method?

a. Potential commission to the agent

b. Type of property

c. Neighborhood characteristics

d. Time period

a. Potential commission to the agent

Which of the following are different methods of prospecting?

a. Direct mailing, newspaper advertising, open houses

b. Door-to-door canvassing, open houses, personal letters

c. Direct mail, telephone canvassing, door-to-door canvassing

d. Personal letters, newspaper advertising, telephone canvassing

c. Direct mail, telephone canvassing, door-to-door canvassing

When conducting door-to-door canvassing it is important for you to remember to take with you:

a. Business cards

b. Briefcase

c. Tablet and pencil

d. Both A and C

d. Both A and C

In the event you are able to gain a listing from a phone canvassing conversation, why is it important for you to set up an appointment to view the home?

a. So you know if you will make enough commission from the listing?

b. To make sure the home is up to your broker's standards

c. To offer an estimation of value so the homeowner knows how much to ask for the home

d. To make an official appraisal of value for tax purposes

c. To offer an estimation of value so the homeowner knows how much to ask for the home

Personal letters are generally:

a. Addressed by hand

b. Sent to a small number of recipients

c. Have a call to action

d. All of the above

d. All of the above

As a successful agent, it is important for you to:

a. File all contacts exclusively in electronic format for the most efficient way to manage data

b. Use only a Rolodex so you can take your contact information with you where ever you need, simply and easily

c. Wait for your clients to contact you when they are ready to make a transaction - you don't want to bother them until they are ready to make a move

d. None of the above

d. None of the above

After you gain a referral from a current client, what is one of the most important things to do?

a. Wait for them to call you - you don't want to feel like you are pressuring them into any decisions

b. Follow up with them via a phone call

c. Ask your client to talk to them for on your behalf and get back to you

d. None of the above

b. Follow up with them via a phone call

Which of the following is not represented in institutional advertising?

a. The broker

b. The salesperson

c. The entire real estate firm

d. An individual listing

d. An individual listing

Which of the following would be considered a form of outdoor advertising?

a. Billboards

b. Window signs

c. Bus sign / placard

d. All of the above

d. All of the above

Which of the following are examples of direct mail?

a. Pamphlets, postcards and newsletters

b. Newsletters, brochures and postcards

c. Postcards, pamphlets and letters

d. Letters, newsletters and maps

c. Postcards, pamphlets and letters

What is a good way to track your advertisement's effectiveness?

a. Ask each respondent how he or she found your particular office

b. Utilize a promotional code in the ad

c. Use only one media vehicle per week, per advertisement, and assume that all responses are based on the current week's ad

d. Both A and B

b. Utilize a promotional code in the ad

Which of the following is not covered in the Civil Rights Act of 1968?

a. Gender

b. Religion

c. Sexual Orientation

d. Familial Status

c. Sexual Orientation

The practice of advertising a property which is not actually available is called:

a. Bait-and-switch advertising

b. Rescission advertising

c. Flip-flop advertising

d. Dummy advertising

a. Bait-and-switch advertising

Promotion is considered the same as:

a. Advertising

b. Prospecting

c. Neither A nor B

d. Both A and B

c. Neither A nor B

Of the following words, which is the most acceptable word to use in an advertisement for a new condominium?

a. Private

b. Security provided

c. Secure

d. Restricted

b. Security provided

Which of the following budgeting methods would most likely be used in a real estate firm?

a. Use a certain dollar figure per listing based on its commission potential.

b. Take a percentage of the gross income

c. Use the number of people on the sales staff, and make the budget based on a certain dollar figure per sales associate

d. Any of the above would be acceptable depending on the specific firm

d. Any of the above would be acceptable depending on the specific firm

What percentage of a firm's commissions is generally spent on promotion?

a. 5%

b. 1 1/2%

c. 0%

d. 7%

c. 0%

Floor time refers to:

a. The time an agent spends conducting an open house.

b. The time an agent spends during a transaction filling out paperwork and making sure all documents have been delivered to the appropriate parties

c. The time an agent spends in the office answering incoming phone calls

d. None of the above

c. The time an agent spends in the office answering incoming phone calls

Where are the most appropriate places for the first appointment to take place?

a. Your office or the potential client's house

b. Your office or the property in question

c. The potential client's house or the property in question

d. Your office or a public meeting area

a. Your office or the potential client's house

Which of the following methods is not an appropriate method to gain information regarding a reluctant caller?

a. Offer to research a property and call back with more details

b. Look up the caller on callsource.com while they are on the phone with you and begin using their personal information during the call

c. Offer to mail an information packet directly to them with more information and pictures of the property in question

d. Offer to email photos and more information to the prospective client, with additional information on switch properties

b. Look up the caller on callsource.com while they are on the phone with you and begin using their personal information during the call

During the qualifying process, what information should you learn from the buyer?

a. The client's needs and reasons for the purchase

b. The client's financial status

c. Both A and B

d. Neither A nor B

c. Both A and B

Which of the following is considered long-term debt?

a. Car note

b. Credit card balances

c. Student loans

d. All of the above

d. All of the above

An earnest money deposit is:

a. Deposited into the broker's trust account until the sellers have accepted the buyers offer

b. Held uncashed by the broker until the sellers have accepted the offer

c. Held uncashed by the sellers until they have made a decision to accept or reject the offer

d. Immediately deposited into escrow

b. Held uncashed by the broker until the sellers have accepted the offer

An offer made by a buyer to a seller may be:

a. Accepted

b. Rejected

c. Returned with a counteroffer

d. Any of the above

d. Any of the above

Which of the following is a good tactic to use when showing homes?

a. Explain to the buyer what each room could be used for, allowing him or her to visualize utilizing the living space

b. Highlight benefits of certain features which may be of specific interest to the buyer

c. Simply tell the buyer the specifics regarding the house, with a quick tour to keep the process moving forward, allowing the buyer to see as many properties as possible

d. Both A and B

d. Both A and B

Which of the following should you NEVER do when showing a property?

a. Begin showing the home to your client even if another agent is inside: as long as you are not in the same space or room, there is no problem

b. Ask your client to extinguish any cigarette, cigar or pipe

c. Leave your business card for the owner

d. All of the above

a. Begin showing the home to your client even if another agent is inside: as long as you are not in the same space or room, there is no problem

When gaining feedback from a client, which of the following methods are most helpful?

a. Using tie-downs

b. Asking the client's opinion of the property just shown

c. Asking the client to compare more than one property

d. All of the above

d. All of the above

Which of the following is NOT a good idea to do when showing a home?

a. Allow children to be part of the process by engaging them in a conversation or utilizing them as helpers

b. Allow the buyers privacy to discuss their thoughts

c. Interject your thoughts on the home, both positive and negative, while in the house

d. Solve any issues the buyer may have during the showing

c. Interject your thoughts on the home, both positive and negative, while in the house

When showing a "call first" property, when is it appropriate to show the home without calling first?

a. Never

b. On weekends

c. After the home has been on the market for at least 30 days

d. If the listing is one of your own

a. Never

Self-employed people usually

a. Have an easier time securing a loan because they can vouch for their own incomes

b. Have a harder time securing a loan because they are relying on stated income or must produce 2 years of tax returns

c. Will usually have a lower interest rate

d. None of the above

b. Have a harder time securing a loan because they are relying on stated income or must produce 2 years

An agent should see a buyer's objection as:

a. An oppurtunity to show the buyer other properties that may be more suited to his or her needs

b. An opportunity to answer more questions or expose more of the home's selling points

c. Hesitation and uncertainty, suggesting to the agent they seek different representation

d. Hesitation and uncertainty, suggesting to the agent they are not ready to make a purchase of this magnitude at this time

b. An opportunity to answer more questions or expose more of the home's selling points

If an agent knows of a problem or issue with a home, he or she should:

a. Ignore the issue; it might prevent the buyers from making an offer

b. Privately inform the sellers there is an issue, and make sure they take care of it

c. Not show that aspect of the home

d. Inform the buyers of the issue immediately and have a dialogue regarding what they think about the issue and how to overcome it

d. Inform the buyers of the issue immediately and have a dialogue regarding what they think about the issue and how to overcome it

Which of the following is not a category into which objections can be classified?

a. Procrastination

b. Price

c. Zoning

d. Bias

d. Bias

Buyers afraid of being tied down into a long-term commitment best demonstrate which category of objection?

a. Personal bias

b. Insecurity

c. Prejudice

d. Price

b. Insecurity

Which of the following is not an approach an agent can use to get the buyer to make an offer?

a. Minor Point Approach

b. Negative Yes Approach

c. Deal Breaker Approach

d. Scratch Pad Approach

c. Deal Breaker Approach

The process in which a buyer begins assigning rooms to certain functions, or visualizing how he or she might use the space is an indication he or she is ready to make an offer. This approach is referred to as:

a. Self Sale Approach

b. Affirmative Yes Approach

c. Question Approach

d. Minor Point Approach

a. Self Sale Approach

Systematically eliminating a buyer's objections regarding a property or the home buying process is called:

a. Question Approach

b. Negative Yes Approach

c. Minor Point Approach

d. Fatal Alternative Approach

b. Negative Yes Approach

Which of the following is true regarding the deposit receipt?

a. It is also called the purchase agreement

b. All California brokerage firms use one uniform version of the form

c. It acts as the escrow instructions

d. Both A and C

d. Both A and C

Which of the following is NOT a function of the deposit receipt?

a. Formal offer to purchase property

b. Binding contract

c. Negotiable instrument

d. Escrow instructions

c. Negotiable instrument

On a purchase agreement, what form of writing takes precedence over any/all others?

a. Printed writing already on the form

b. Typewritten instructions in blank areas

c. Handwritten instructions in blank areas, or over crossed out areas

d. None of the above

c. Handwritten instructions in blank areas, or over crossed out areas

Which of the following payment methods would be acceptable as a deposit on property?

a. Cash

b. Non-monetary consideration

c. Promissory note

d. All of the above are acceptable

d. All of the above are acceptable

Who is listed on the deposit receipt as "buyers"?

a. Everyone taking title to the property

b. Only the person making the offer

c. The person making the offer and the financial institution granting promissory note on the property

d. All people taking title to the property, and the financial institution granting the promissory note on the property

b. Only the person making the offer

An acceptable property description may be presented in which of the following ways?

a. Street address

b. Metes and Bounds

c. Block and lot

d. Any of the above

d. Any of the above

A financing contingency clause allows the buyer to back out of the contract if

a. He or she cannot secure financing

b. He or she finds a property he or she likes better

c. He or she decides not to move from his or her current home

d. None of the above; once the contract is signed, it is permanent

a. He or she cannot secure financing

When does escrow open?

a. When the escrow instructions are delivered to the escrow agent or company

b. When the seller accepts the buyer's offer

c. 15 days after the escrow instructions are received by the escrow agent of the escrow company

d. None of the above

b. When the seller accepts the buyer's offer

Liquidated damages specify the amount of money a seller will receive if the buyer should do what?

a. Not qualify for funding

b. Request to keep some of the seller's personal property as part of the sale of the home

c. Default on the contract

d. Any of the above

c. Default on the contract

A seller's personal property:

a. Is never part of the deposit receipt; it can be negotiated in a separate agreement or transaction

b. Is never part of the deposit receipt, and it is considered rude to request that the seller leave any of his or her belongings for the buyer in the transaction

c. Can be negotiated amongst the buyer and seller, and then included in the deposit receipt

d. Always stays with the home if it was specifically purchased for the house

c. Can be negotiated amongst the buyer and seller, and then included in the deposit receipt

Fixtures are treated as:

a. Personal property, and can be negotiated to stay with the property

b. Real property, are not negotiable, and will always be part of the property transaction

c. Neither real nor personal property: they are considered an attachement to the property and no negotiations are necessary. They automatically go with the sale of the home

d. None of the above

a. Personal property, and can be negotiated to stay with the property

Liens against the property are the responsibility of:

a. The seller always

b. The buyer

c. The person in possession of the property: the liens never attach to one specific person, only property and its owner at the time

d. None of the above

c. The person in possession of the property: the liens never attach to one specific person, only property and its owner at the time

Which of the following is not considered a special provision to the deposit receipt?

a. "As is" clause

b. Irrevocable order

c. Unordinary vesting

d. Uncashed checks

c. Unordinary vesting

A home may contain latent and patent defects. Of the two types of defects, which poses serious harm to the buyer?

a. Latent

b. Patent

c. Both A and B

d. Neither A nor B

a. Latent

A buyer offering a deposit with the request to hold the deposit check uncashed will negotiate with:

a. Licensee as to the time frame during which the check may be held

b. Seller, to see if he or she will accept this as part of the deposit receipt; if not, the seller may counteroffer with terms of his or her own

c. Neither the licensee nor the seller, this is not negotiable. The seller either accepts the offer as written with all disclosures or conditions, or rejects it

d. None of the above

b. Seller, to see if he or she will accept this as part of the deposit receipt; if not, the seller may counteroffer with terms of his or her own

What is the major hurdle in getting the seller to accept an offer on property?

a. Personal property negotiations

b. Buyer's request for the seller to repair small defects or make renovations

c. Buyer's request for the seller to pay inspection costs

d. Price

d. Price

Which of the following is not a step in the formal presentation of an offer to your client?

a. Review all appropriate documents

b. Prepare counteroffer form

c. Set up the interview

d. Overcome objections

b. Prepare counteroffer form

Who should participate in the meeting when you present the seller with the buyer's offer?

a. The listing agent

b. All sellers

c. All owners

d. All of the above

d. All of the above

In a counteroffer situation, what part of the original purchase offer will be rewritten and attached to the original offer?

a. The entire document

b. The first page

c. The second page

d. The third page

d. The third page

When presenting a counteroffer to the buyer, what tactics are helpful to get him or her to agree to the new terms?

a. Offer a competitive market analysis to show that the proposed price is fair

b. Highlight the portions of the original offer that the seller accepted

c. Highlight accepted terms of the original offer that were especially important to the buyer, such as items of personal property to be included in the contract, or a short escrow

d. All of the above

d. All of the above

Caveat emptor is:

a. Full disclosure

b. Buyer beware

c. A mandatory disclosure on property regarding title

d. None of the above

b. Buyer beware

An agent unknowingly using an old or retired disclosure form:

a. Is held liable for any damages the situation may cause

b. Is not held liable for any damages

c. May NOT be sued in a court of law

d. Can substitute a similar, nationally focused form

a. Is held liable for any damages the situation may cause

When must agency disclosure take place?

a. Prior to signing the deposit receipt

b. As soon as possible

c. Prior to accepting an offer

d. None of the above

b. As soon as possible

What are the three steps in agency disclosure?

a. Elect, Disclose, Determine

b. Disclose, Determine, Confirm

c. Disclose, Elect, Confirm

d. Elect, Confirm, Determine

c. Disclose, Elect, Confirm

Which of the following items is not discussed on the real estate transfer disclosure statement?

a. Neighborhood or neighbor concerns

b. Significant defects in the home

c. School district information

d. Problematic concerns with any amenities in the home

c. School district information

Fiduciary responsibility includes all of the following EXCEPT:

a. Full disclosure of all material facts

b. Loyalty

c. Withholding problems from any third party

d. Following through with the client's wishes or direction as long as it is lawful

c. Withholding problems from any third party

Which of the following is not considered a natural hazard and is not disclosed in a property transaction?

a. Wind

b. Fire

c. Flood

d. Earthquake

a. Wind

An agent is exempt from making a personal site inspection on a residential proprerty with 1-4 units when:

a. The property is being sold because of foreclosure

b. The property is being transferred between spouses or blood relatives

c. The property being sold requires a public report

d. All of the above

d. All of the above

When an agent makes an inspection disclosure, he or she must disclose any evidence of problems with:

a. Age of the appliances

b. Mold

c. Soil compaction

d. None of the above

b. Mold

Which booklet can a broker give to a buyer concerning lead-based paint and its hazards?

a. Protect Your Family From Lead In Your Home

b. Environmental Hazards: A Guide For Homeowners, Buyers, Landlords and Tenants

c. Neither A nor B

d. Both A and B

d. Both A and B

A disclosure must be made that a property is located near a licensed care facility when:

a. There are six or fewer residents in the care facility

b. There are more than six residents in the care facility

c. This disclosure never has to be made

d. This disclosure must always be made

b. There are more than six residents in the care facility

All of the following are considered environmental hazards that must be disclosed except:

a. Sick Building Syndrome

b. Military Ordinance Location

c. AIDS
d. Lead-based paint

c. AIDS

Which of the following must be disclosed regarding death on a property?

a. If the homeowner died of AIDS or AIDS-related causes

b. If the homeowner died of natural causes

c. If there was a suicide on the property 5 years before

d. If there was a murder on the property 2 years before

d. If there was a murder on the property 2 years before

A conditional public report allows a developer to:

a. Take deposits and reservations on property, but no contracts may be signed

b. Enter into a contractual agreement with a buyer, but escrow cannot be closed until the final public report has been issued

c. Operate unrestrictedly with buyers for six months, the length of a valid conditional public report

d. None of the above

b. Enter into a contractual agreement with a buyer, but escrow cannot be closed until the final public report has been issued

A public report regarding a subdivision will reveal:

a. The identity of the developer

b. The size of the property in question

c. Use restrictions of the property

d. All of the above

d. All of the above

All of the following are considered common interest subdivisions except:

a. Condominiums

b. Cooperatives

c. Duplexes

d. Community apartment projects

c. Duplexes

Bonds sold to help shift the cost of streets, sewers or other developmental items in a subdivision to the homeowners are called:

a. Mello-Roos bonds

b. New development bonds

c. Common interest bonds

d. Subdivision bonds

a. Mello-Roos bonds

The right of rescission allows the buyer of property:

a. An unlimited amount of time to change his or her mind and back out of a purchase contract

b. A small window of time, usually three to seven days, to back out of a purchase contract

c. An extended window of time to back out of a purchase contract if all the necessary disclosures are not made

d. Both B and C

d. Both B and C

Lenders are required to provide a potential borrower with a statement of why the borrower's loan application or credit application has been denied under which act?

a. Holden Act

b. Truth-in-Lending Act

c. Regulation Z

d. Equal Credit Opportunity Act

d. Equal Credit Opportunity Act

Which of the following is considered a mandatory disclosure?

a. Commissions

b. Sales Price

c. Common Interest Subdivision

d. All of the above

d. All of the above

A good purchase agreement is:

a. Very specific, with no room for interpretation

b. General, with a few specifications but room for interpretation to make changes as necessary

c. Vague, leaving the ability for either party to alter the contract as he or she sees fit

d. None of the above

a. Very specific, with no room for interpretation

An All Inclusive Trust Deed (AITD) is also called:

a. Second trust deed

b. Junior trust deed

c. Wrap around loan

d. Both A and B

c. Wrap around loan

Legal competency means:

a. The ability of a licensee to understand and pass the law portion of the state real estate exam

b. The ability of a licensee to draw up a good, valid contract and the wherewithal to explain this contract to the client

c. The ability of a licensee to testify in court in the event a contract should be disputed

d. All of the above

b. The ability of a licensee to draw up a good, valid contract and the wherewithal to explain this contract to the client

A licensee will usually consult what source when filling out a simple purchase agreement form?

a. An attorney to make sure everything is legal and correct

b. His or her broker for verification everything is correct as written

c. The California Association of Realtors to make sure all local laws are being followed as well as state laws

d. A checklist to make sure nothing has been overlooked

d. A checklist to make sure nothing has been overlooked

"Subject to" as used in a purchase agreement most nearly means:

a. Conditional on the seller's acceptance of the contract

b. Conditional on the buyer's ability to secure financing

c. Conditional on the seller's ability to produce a clear and transferable title

d. All of the above

d. All of the above

The prepayment penalty clause states:

a. There will be no penalty for paying the monthly payment due at the beginning of the month instead of at the end of the month

b. There will be no penalty for a late payment

c. There will be no penalty for making a larger payment than required

d. There will be no penalty for making a smaller payment than required

c. There will be no penalty for making a larger payment than required

The buyer can vest title as:

a. A corporation

b. A limited partnership

c. Joint tenancy

d. All of the above

d. All of the above

Who must carry flood insurance?

a. All buyers who have financed any part of a property

b. All buyers who have financed any part of a property located in a special floods hazard zone

c. Only those properties built before 1983 located in a special flood hazard zone

d. Only those properties built before 1978 located in a special flood hazard zone

b. All buyers who have financed any part of a property located in a special floods hazard zone

A special flood zone exists when there is?

a. A 1% chance the land will be flooded each year

b. A strong chance the land will be flooded once every 100 years

c. Both A and B

d. Neither A nor B

c. Both A and B

Who is responsible for disclosing to the buyer that the property they are interested in is located in a special studies zone?

a. Seller

b. Agent

c. Lending Institution

d. Both A and B

d. Both A and B

A special studies zone refers to what geological condition or natural occurence?

a. Earthquake fault displacement

b. High fire zone

c. Flood zone

d. Land located on top of a natural resource such as natural gas or oil

a. Earthquake fault displacement

Both the real estate agent and any cooperating brokers working on selling the property have a fiduciary responsibility to which party?

a. Seller

b. Buyer

c. Both A and B

d. Neither A nor B

a. Seller

Purchase agreements are usually contingent upon:

a. The buyer finding a loan with a predetermined maximum interest rate or less

b. The buyer finding a loan with a predetermined maximum monthly payment or less

c. The buyer finding a loan with a predetermined maximum loan charge or less

d. All of the above

d. All of the above

A property being sold "as is" requires:

a. No disclosure of any conditions or problems of which a seller is aware

b. Only disclosure on visible problems, but no disclosure necessary on conditions or problems not visible without a property inspection

c. Disclosure on all conditions and problems

d. Full inspections performed, and all reports delievered to the appropriate parties

c. Disclosure on all conditions and problems

A transfer disclosure statement is required when selling what type of property??

a. All privately owned residential properties

b. All residential property containing one to four living units

c. Residential property consisting of detached, single family homes only

d. On commercial property

b. All residential property containing one to four living units

Requiring payment in full on any outstanding balance of a loan for a property being sold is called:

a. Alquist Priollo

b. Caveat Emptor

c. Alienation

d. All Inclusive Trust Deed

c. Alienation

Property located within a special studies zone must be disclosed on which of the following documents?

a. Listing agreement

b. Deposit receipt

c. Escrow instructions

d. All of the above

d. All of the above

"Due on sale" clauses do what?

a. Protect a lender's interests

b. Maximize the lenders interest income

c. Cause the seller to loose money

d. Both A and B

d. Both A and B

The cause originating from a series of events that, without break in continuity, results in the prime object of an agent's employment producing a final buyer is called:

a. Procuring clause

b. "Subject to" clause

c. Alienation clause

d. As is clause

a. Procuring clause

A broker will have earned a commission when:

a. He or she finds a ready, willing and able buyer

b. He or she has brought the buyer and seller together and enabled them to enter into a binding contract

c. He or she has taken a listing agreement on a property

c. When escrow closes

b. He or she has brought the buyer and seller together and enabled them to enter into a binding contract

A loan generated from the Government National Mortgage Association (GNMA) or Ginnie Mae is considered to be:

a. Primary financing

b. Secondary financing

c. First trust deed

d. None of the above

b. Secondary financing

Primary financing refers to:

a. First trust deeds

b. Junior trust deeds

c. Any trust deed created from a financial institution

d. Any trust deed created by a government agency

a. First trust deeds

Money for mortgages and trust deeds come from two primary money market sources. These sources are:

a. Directly from an individual or institutions that have accumulated private funds they are willing to lend

b. Indirectly from a financial insitution that uses the deposits of its clients to lend money to other people for the purpose of buying a home

c. The government

d. Both A and B

d. Both A and B

Which of the following statements are true?

a. The money market is stable and unchanging; it will be the same today as it was 10 years ago, as it will be 10 years into the future

b. The money market is unstable and changes constantly. The supply of money today may not be the same as tomorrow

c. The money market is changing, buy slowly and changes generally take years to make

d. The money market can change, but is unlikely to change unless a major every occurs affecting our economy

b. The money market is unstable and changes constantly. The supply of money today may not be the same as tomorrow

Conforming loans:

a. Meet all Fannie Mae or Freddie Mac underwriting standards

b. Are not assumable

c. May be written for 15 or 30 years

d. All of the above are correct

d. All of the above are correct

Which of the following is not a government originated and controlled loan program?

a. Farmer Mac

b. Ginnie Mae

c. Freddie Mac

d. All of the above are correct

d. All of the above are correct

Lenders can be classified into which of the following groups?

a. Insitutional and commercial

b. Commercial and non-institutional

c. Institutional and non-institutional

c. Commercial and residential

c. Institutional and non-institutional

Commercial banks, savings associations, and life insurance companies are examples of which type of lender?

a. Insitutional lenders

b. Commercial lenders

c. Residential lenders

d. Non-institutional lenders

a. Insitutional lenders

Mortgage companies make loans based on:

a. Capital they borrow from commercial banks

b. Their own capital

c. Capital they borrow from clients

d. None of the above

b. Their own capital

Seller carryback financing is available in which of the following situations?

a. Only when the seller owns the home, free and clear of any loans or trust deeds

b. When the seller's trust deed or loan is transferable to another individual or individuals

c. When the buyer can only obtain primary financing, the seller can hold secondary financing

d. All of the above are correct

d. All of the above are correct

What is the maximum commission a loan broker could make on a 5-year first trust deed, under $30,000?

a. 3%

b. 5%

c. 10%

d. 15%

c. 10%

What is the maximum commission a loan broker could make on a 10-year second trust deed worth $45,000?

a. 15%

b. 10%

c. 5%

d. There is no maximum

d. There is no maximum

A cash loan, not an extension of credit, is known as:

a. Hard money loan

b. Secondary financing

c. Seller carryback

d. None of the above

a. Hard money loan

Shorter processing time, less red tape and more flexibility describes which type of loan?

a. Government backed loan

b. Conventional loan

c. Commercial laon

d. Insitutional loan

b. Conventional loan

Interest rates have what type of relationship to home sales?

a. Inverse relationship: when one increases, the other generally decreases

b. Direct correlation: both increase or decrease at the same time

c. There is no relationship; they are unrelated to each other

d. None of the above

a. Inverse relationship: when one increases, the other generally decreases

Lenders usually require what to secure the loan?

a. Down payment

b. Collateral

c. Purchase contract or deposit receipt

d. All of the above

b. Collateral

A loan where the interest rate changes periodically, usually in relation to an index, with payments going up or down accordingly, is called:

a. Fixed rate

b. All inclusive trust deed

c. Adjustable rate mortgage

d. Piggyback note

c. Adjustable rate mortgage

Which of the following is not a step in the financing process?

a. Servicing the loan

b. Approving and processing the loan

c. Qualifying the borrower

d. Qualifying the seller

d. Qualifying the seller

Qualifying the borrower usually involves the three "C's". Which of the following is correct?

a. Character

b. Capacity

c. Collateral

d. All of the above are correct

d. All of the above are correct

Servicing the loan refers to:

a. Closing escrow

b. Transferring all appropriate funds to all parties as specified in the loan

c. Record keeping of payments and loan status

d. None of the above

c. Record keeping of payments and loan status

Ad valorem means:

a. Full cash value

b. Property taxes

c. According to value

d. Percentage

c. According to value

When are property taxes due if the due date falls on a holiday or a weekend?

a. Property taxes are due on the same day, no matter if it is a holiday or weekend

b. They are due the day before the holiday or weekend

c. They are due on the next business day after the holiday or weekend

d. Either B or C

c. They are due on the next business day after the holiday or weekend

The difference between the seller's valuation on the sale of property and the new valuation based on the sales price of the property for tax purposes is covered in what?

a. Supplemental tax bill

b. Ad valorem

c. Escrow

d. Prorated value to be paid at the end of escrow

a. Supplemental tax bill

A typical California tax bill would include which of the following items?

a. A breakdown between land assessments and improvement assessments

b. Separate payment cards with the full tax value separated into two installments

c. Identifying parcel number

d. All of the above would appear on a tax bill

d. All of the above would appear on a tax bill

Proposition 60 allows for what persons to transfer the current factored base year value to a new residence within the same county?

a. Persons 55 years or older

b. Taxpayers who are severely or permanently disabled

c. A married couple where at least one spouse is 55 years or older

d. All of the above

d. All of the above

Proposition 90:

a. is basically the same as proposition 60

b. Allows for a transfer of the current factored base year value of property to another property

c. Allows for persons under 55 to transfer the current factored base year value of property to another property

d. Allows for corporations to transfer current factored base year value of property to another property

b. Allows for a transfer of the current factored base year value of property to another property

Proposition 13 allows the tax rate to be increased by what percentage each year?

a. 1%

b. 2%

c. 3%

d. 4%

b. 2%

The "original basis" of property refers to:

a. One time closing costs, or buying expenses

b. Purchase price

c. Original base year value

d. Both A and B

d. Both A and B

The depreciable basis:

a. Is based on the original purchase price

b. Is based on the improvements made to the property

c. Is based on the original purchase price minus the land value

d. None of the above

c. Is based on the original purchase price minus the land value

A 1031 exchange allows a homeowner to:

a. Defer tax liability

b. Have more money to invest in a new property

c. Avoid paying high income taxes on the sale of property

d. All of the above

d. All of the above

Under the like-kind rule:

a. Real property may be exchanged for personal property, but personal property may not be exchanged for real property

b. Personal property may be exchanged for real property, but real property may not be exchanged for personal property

c. Only real property may be exchanged for real property, and personal property exchanged for personal property

d. Any type of property may be exchanged for any other type of property with no limits or regulations

c. Only real property may be exchanged for real property, and personal property exchanged for personal property

Balancing of equities, or cash boot, may be which of the following?

a. Cash

b. Notes or trust deeds

c. Jewelry

d. All of the above

d. All of the above

Spreading the tax gain on property over two or more years is called:

a. Boot

b. Installment sale

c. Exchange

d. None of the above

b. Installment sale

A primary residence is considered to be:

a. A single-family home

b. Motor home

c. Trailer

d. Any of the above

d. Any of the above

A single person occupying his or her residence for at least two years may exclude how much money from any tax gain?

a. $100,000

b. $250,000

c. $500,000

d. $650,000

b. $250,000

A taxpayer may acquire a home through which of the following methods?

a. Gift

b. Inheritance

c. Purchasing an existing home or building a new home

d. All of the above

d. All of the above

For tax purposes, a homeowner may write off which of the following expenses?

a. Real estate taxes

b. Mortgage interest

c. Money paid into impound accounts

d. Both A and B

d. Both A and B

All of the following are considered home improvements except:

a. Carpeting

b. Room additions

c. Pools

d. Landscaping

a. Carpeting

A capital gain that a taxpayer may postpone is called:

a. Realized gain

b. Deferred gain

c. Recognized gain

d. Excluded gain

b. Deferred gain

All of the following are exempt from withholding except:

a. Property sold for less thatn $100,000

b. Property sold at a loss

c. Foreclosure sale

d. All the above are exempt from withholding

d. All the above are exempt from withholding

Title insurance protects the buyer from:

a. Encumbrances

b. The seller

c. The lender

d. None of the above

a. Encumbrances

A standard title insurance policy covers which of the following?

a. Forgery

b. Defects found in public records

c. Improperly delivered deeds

d. All of the above

d. All of the above

The extended title insurance policy covers all of the items covered in the standard policy, plus which additional items?

a. Defects known to the buyer

b. Changes in land use brought about by zoning ordinances

c. Unrecorded liens not known of by the policy holder

d. Defects and liens listed in the policy

b. Changes in land use brought about by zoning ordinances

What is required before a title insurance policy will be issued?

a. Preliminary title report

b. Official title report

c. Zoning report

d. Subdivision report

b. Official title report

The purpose of the escrow agent is to:

a. Distribute documents

b. Disburse money

c. Distribute

d. All of the above

d. All of the above

Who may be the escrow agent?

a. Real estate broker

b. Attorney

c. Buyer or seller

d. Both A and B

d. Both A and B

Which of the following is not a party to the escrow?

a. Broker

b. Lender

c. Buyer

d. Seller

a. Broker

What is a broker's function during the escrow?

a. Nothing, the broker is not a party to the escrow and serves no function during this process

b. Explain escrow procedures to the client

c. Monitor the escrow process to make sure there are no delays

d. Both B and C

d. Both B and C

Legally, the escrow agent may not do which of the following?

a. Hold money deposited by the either party until disbursed

b. Renegotiate any part of the escrow separately with only one party to the escrow

c. Act as a neutral party

d. Make sure escrow does not close with an unverified check

b. Renegotiate any part of the escrow separately with only one party to the escrow

What governs the escrow agency relationship?

a. Escrow agent

b. Broker

c. Purchase agreement / escrow instructions

d. State of California

c. Purchase agreement / escrow instructions

In the event escrow instructions have to be changed, what must happen?

a. A completely new set of escrow instructions must be written

b. Any changes in the current document may be initialed by both parties

c. An oral agreement must be made between both parties

d. None of the above

b. Any changes in the current document may be initialed by both parties

Which of the following is not required in order to be a licensed escrow officer?

a. Be financially solvent

b. Set up a trust fund for all money deposited into escrow

c. Be a member of the California Escrow Association

d. Furnish a surety bond for $10,000

c. Be a member of the California Escrow Association

Escrow is closed when:

a. The remainder of the purchase price has been produced

b. Deed has been signed

c. Broker authorizes the transaction

d. Both A and B

d. Both A and B

When are all funds in the escrow discursed?

a. On the day the deed is recorded

b. At the close of escrow

c. When all forms of payment have been verified

d. When the escrow officer releases the funds

 a. On the day the deed is recorded

Closing costs include all of the following except:

a. Title insurance

b. Broker's commission

c. Transfer tax

d. Recording documents

b. Broker's commission

Which of the following closing costs is not the responsibility of the seller?

a. Owners title policy

b. Recording the deed

c. Obtaining the reconveyance deed

d. Notary fees

b. Recording the deed

Which of the following closing costs is not the responsibility of the buyer?

a. Drawing up the deed

b. Loan origination fee

c. Appraisal fee

d. Notary fees

a. Drawing up the deed

What is the property tax year in California?

a. January 1 - December 31

b. March 1 - February 28

c. July 1 - June 30

d. November 1 - October 31

c. July 1 - June 30

Certain fees and costs will be prorated during escrow. Which of the following is not a prorated fee or cost?

a. Property taxes

b. Insurance

c. Rents

d. Utility bills

d. Utility bills

Several steps must be made to close escrow; which of the following is not a step taken at the close of escrow?

a. The buyer will move into the property

b. The escrow agent sends an original copy of the title policy to the buyer

c. The escrow officer sends the deed and deed of trust to the recorder's office to be recorded

d. The escrow agent sends the seller and buyer closing statements showing all disbursement of funds

a. The buyer will move into the property

Which of the following is not a type of property manager?

a. Residential manager

b. Estate manager

c. Individual property manager

d. Licensee/property manager

b. Estate manager

A successful residential manager will have all of the following skills except:

a. Ability to select residents based on their credit references and economic capability

b. Ability to show apartments, contact prospective tenants and close the rental of a unit

c. "Hands-off" managerial skills when dealing with maintenance and housekeeping, to let them accomplish all tasks as they see fit

d. Awareness of and sensitivity to all events occurring on the property

c. "Hands-off" managerial skills when dealing with maintenance and housekeeping, to let them accomplish all tasks as they see fit

A property manager's primary duty is:

a. Collecting rents

b. Purchasing supplies and equipment and paying for repairs

c. Keeping property records and preparing necessary reports

d. All of the above

d. All of the above

An analysis of the character of the immediate neighborhood, trends in population growth, economic level of neighborhood residents, condition of the housing market and current vacancy factors is used when:

a. Establishing rent schedules

b. Deciding to use a property manager for a small property

c. Determining the basic responsibilities of a property manager

d. Deciding contract terms for renters

a. Establishing rent schedules

Which of the following is not a type of property typically managed by a professional manager?

a. Airport

b. Apartment building

c. Private single-family home

d. Office building

c. Private single-family home

Which of the following properties are the most common of the properties subject to professional management?

a. Commercial properties

b. Residential properties

c. Mobile-home parks

d. Restaurants

b. Residential properties

A property manager specializing in park development, maintenance of public amenities, and approval of lease assignments on the sale of different units would most likely be a manager in a:

a. Mobile-home park

b. Office park

c. Condominium complex

d. None of the above

a. Mobile-home park

Which of the following tasks should not be done by computer?

a. Rent increase calendar

b. Rent receipts

c. Check writing

d. Reading blueprints

d. Reading blueprints

Which of the following is a leasehold estate?

a. Freehold estate

b. Joint tenancy

c. Tenancy-in-common

d. Estate from period to period

d. Estate from period to period

A lease where the tenant pays utilities, real estate taxes, maintenance, repairs and other special assessments in addition to the normal rent is called:

a. Gross lease

b. Net lease

c. Percentage lease

d. Either A or B

b. Net lease

A percentage lease would commonly be used with:

a. A business or retail complex

b. A residential complex

c. An industrial complex

d. Any of the above

a. A business or retail complex

A lease where the tenant takes possession of the unit legally, buy remains on the property after the lease has expired without the owner's permission, is called:

a. Estate from period to period

b. Estate at will

c. Estate at sufferance

d. Estate for years

c. Estate at sufferance

Which type of estate has no specified time limit?

a. Estate for years

b. Estate at will

c. Estate at sufferance

d. Estate from period to period

b. Estate at will

Which of the following is a valid reason to refuse a potential tenant's application for residency?

a. On the basis of age

b. One the basis of sex

c. On the basis of national origin

d. On the basis of credit history

d. On the basis of credit history

Which of the following is not specifically mentioned in the lease agreement?

a. Date the lease is valid

b. Inspection (by the tenant)

c. Age requirements

d. Pets 

c. Age requirements

The maximum security deposit a landlord may collect from a tenant for an unfurnished unit is:

a. One months' rent

b. Two months' rent

c. Three months' rent

d. Four months' rent

b. Two months' rent

Cleaning deposits are:

a. Commonly collected to make sure the unit will be cleaned when it is vacated

b. Illegal

c. Included in the security deposit

d. None of the above

b. Illegal

A landlord may enter the property in all of the following circumstances except:

a. To retrieve tools left there by the maintenance staff

b. In an emergency situation

c. If the tenant has abandoned the premises

d. Under a court order

a. To retrieve tools left there by the maintenance staff

Under the California Civil Code, a tenant is obligated to:

a. Keep the living unit clean and sanitary

b. Pay rent on time

c. Avoid defacing or damaging property

d. All of the above

d. All of the above

Which of the following is not a step in an unlawful detainer?

a. Tenant is given a verbal notice of past rent that is due

b. Tenant is served a three-day notice to quit the premises or pay rent

c. Landlord files an unlawful detainer against the tenant in a court of law

d. The sheriff sends the tenant an eviction notice

a. Tenant is given a verbal notice of past rent that is due

The word "ethics" derives from words meaning:

a. "Moral" and "character"

b. "Character" and "truth"

c. "Moral" and "truth"

d. All of the above

a. "Moral" and "character"

Ethics are based on:

a. Laws

b. Minimum standards

c. The golden rule

d. Acceptable behaviors

c. The golden rule

Which of the following is true?

a. Ethics change to accommodate current attitudes and perceptions

b. Laws change to accommodate current attitudes and perceptions

c. Both ethics and laws change to accommodate current attitudes and perceptions

d. Neither ethics or laws change to accommodate current attitudes and perceptions

b. Laws change to accommodate current attitudes and perceptions

What sometimes determines whether behavior is ethical?

a. Action

b. Reaction

c. Motive

d. All of the above

c. Motive

An ethical agent can measure his or her success in:

a. Referrals

b. Loyal clients

c. Dollars

d. Both A and B

d. Both A and B

Which of the following is the most ethical statement?

a. The end justifies the means

b. Do unto others as you would like them to do unto you

c. What will it do for me now

d. I'll do whatever it takes to make you happy

b. Do unto others as you would like them to do unto you

A legal act is always ethical while performing an illegal act will always be unethical

a. True

b. False

b. False

The "Suggestions for Professional Conduct in Sale, Lease, and Exchange Transactions" and "Suggestions for Professional Conduct When Negotiation or Arranging Loans Secured by Real Property or Sale of a Promissory Note Secured by Real Property" are enforced by:

a. The Real Estate Commissioner

b. The Department of Real Estate

c. The California judicial system

d. None of the above

d. None of the above

The United States Constitution is to law as ethics is to:

a. Declaration of Independence

b. State Constitutions

c. Bill of Rights

d. None of the above

a. Declaration of Independence

Civil rights acts and the Thirteenth and Fourteenth Amendments to the Constitution are considered:

a. Laws

b. Wording to promote fair treatment of all people

c. Ethical

d. All of the above

d. All of the above

Which of the following is not a protected class under the Civil Rights Act of 1968?

a. Sexual Orientation

b. National Origin

c. Race

d. Religion

a. Sexual Orientation

Which of the following words or phrases are considered acceptable in HUD?

a. Caucasian only

b. Kosher meals

c. No children

d. No women

b. Kosher meals

Which of the following is considered an exemption to the Civil Rights Act of 1968?

a. Owners of one to four residential units who occupy a unit and rent out the other three units without the help of an agent may discriminate on who they allow into their complex

b. Private clubs can discriminate preference to members when selling or leasing houses for noncommercial purposes

c. Religious groups can discriminate in providing nonprofit housing providing the religion is open to all groups of people

d. All of the above

d. All of the above

The Fair Housing Amendment in 1988 protected which classification or group of people?

a. Sexual orientation

b. Educational level

c. Familial status

d. Income status

c. Familial status

The Americans with Disabilities Act applies to all businesses employing:

a. Any number of employees

b. 10 or more employees

c. 15 or more employees

d. 20 or more employees

c. 15 or more employees

Under the Americans with Disabilities Act, a "place of public accommodation" refers to:

a. Shops

b. Offices

c. Commercial facilities

d. All of the above

d. All of the above

The Fair Housing Act is also known as:

a. The Unruh Act

b. ADA

c. The Rumford Act

d. None of the above

c. The Rumford Act

The California Business and Professional Code is:

a. Legally enforced

b. Not legally enforced, but a suggestion on how agents should act

c. Considered ethical

d. Both A and C

d. Both A and C

The Real Estate Commissioner's Rules and Regulations are enforced by:

a. The Real Estate Commissioner

b. The Department of Real Estate

c. The California judicial system

d. None of the above

a. The Real Estate Commissioner

Sexual harassment is defined by:

a. Law

b. Your intent

c. How others view your actions

d. None of the above

c. How others view your actions

The ratio of debt to current value is called:

a. Leverage

b. Cash flow

c. Liquidity

d. Appreciation

a. Leverage

Which of the following is not a benefit of investing in property?

a. Tax shelter

b. Hedge against inflation

c. Strength of the dollar

d. Interim use

c. Strength of the dollar

The amount the investor makes on the capital invested during the time the investment is held is called:

a. Cash flow

b. Yield

a. Appreciation

d. Leverage

b. Yield

Which of the following factors promote stability in real estate?

a. Favorable zoning

b. Proximity to shopping venues

c. Length of lease

d. All of the above

d. All of the above

Which of the following would be considered a disadvantage of investing in real estate?

a. Flexibility and control

b. Refinancing

c. Amenities

d. Management care

d. Management care

Which of the following is not a source of financing for an income property?

a. Commercial banks

b. Life insurance companies

c. Credit unions

d. Savings and loan associations

c. Credit unions

One-fourth of the entire debt of the United States is located in what region of the country?

a. Midwest

b. Pacific Coast

c. East Coast

d. South

b. Pacific Coast

The amount of financing available to an investor depends ultimately on what factor?

a. The source of financing

b. The investor's debt to asset ratio

c. The investor's down payment

d. All of the above

a. The source of financing

REIT stands for:

a. Real Estate Investment Theory

b. Real Estate Investment Time

c. Real Estate Investment Transfer

d. Real Estate Investment Trust

d. Real Estate Investment Trust

The amount of income an owner will receive from rents, before deductions for expenses and debt, is referred to as:

a. Gross operating income

b. Net operating income

c. Profit

d. Net profit

a. Gross operating income

Which of the following is not an operational expense?

a. Taxes

b. Interest

c. Insurance

d. Management

b. Interest

Total return refers to:

a. Adjusted gross spendable income

b. Principal payments for the entire year

c. Both A and B

d. Neither A nor B

c. Both A and B

Which of the following is not a valuation approach?

a. Market

b. Cost

c. Income

d. All are valuation approaches

d. All are valuation approaches

A capitalization rate is used in which valuation approach?

a. Income

b. Cost

c. Market

d. Both A and C

a. Income

As the capitalization rate increases, what happens to the value of the property?

a. Increases

b. Decreases

c. Stays the same

d. The capitalization rate does not have an effect on property value

b. Decreases

All of the following are characteristics of the rental market except:

a. Current vacancy rates

b. Income charateristics

c. Diminished capacity

d. Rent-income relationships

c. Diminished capacity

Which of the following is an example of syndication?

a. Limited partnership

b. Joint Tenancy

c. Corporation

d. All are forms of syndication

d. All are forms of syndication

"An association of individuals, formed for the purpose of conducting and carrying out some particular business transaction, ordinarily of a financial character, in which the members are mutually interested, formed for some temporary purpose, such as the organization of a real estate trust and the sale of shares to the public," describes what concept?

a. Syndication

b. Limited Partnership

c. Corporation

d. Brokerage

a. Syndication

Any person purchasing property in the United States from a foreign seller must withhold what percent of the price?

a. 5%

b. 10%

c. 15%

d. 20%

b. 10%

Which of the following is not an advantage of a limited partnership?

a. Partners are taxed as individuals

b. A majority vote can assign or remove the general partner

c. More leverage

d. All are advantages of a partnership

d. All are advantages of a partnership

In order to exchange property, the two properties must be:

a. Of equal value

b. In the same business, such as a hardware store exchanged for a hardware store

c. Like for like, meaning one productive use exchanged for another, such as an apartment building exchanged for a hardware store

d. Both A and C

d. Both A and C

To qualify for a tax-free exchange:

a. Boot may be used to make the values of the two properties equal

b. The exchange must be even; no other exchange is allowed to create equality in the transfer

c. Cash may be used to make the values of the two properties equal

d. Net mortgage relief may be received by the taxpayer claiming tax-free status

b. The exchange must be even; no other exchange is allowed to create equality in the transfer

The two parties in the exchange:

a. Must be related by blood or marriage

b. Cannot be related by blood or marriage

c. May be any persons, with equal property

d. May be any persons, with equal property, where both properties are located in the same county

b. Cannot be related by blood or marriage

In a tax-free exchange:

a. There is no tax on gains

b. Gains are taxed immediately

c. Gain is not taxed until the sale is final

d. None of the above

c. Gain is not taxed until the sale is final

Which of the following is a reason to do a tax-free exchange? 

a. To acquire property without using cash

b. Avoid depreciation. recapture for pre-1987 transactions

c. Allow taxpayers to dispose of unwanted property and immediately acquire a new one

d. All of the above

d. All of the above

The provisions for non-recognition of gains or losses are set out in:

a. The Commissioner's Code

b. Internal Revenue Code

c. Internal Revenue Service Code

d. All of the above

b. Internal Revenue Code

Which of the following is not a classification of property?

a. Commercial

b. Principal residence

c. Dealer

d. Trade or business

a. Commercial

Which type(s) of property qualify for the tax-free exchange?

a. Investment

b. Rental

c. Dealer

d. Both A and B

d. Both A and B

True or False: An apartment building may be classified as "like kind" and exchanged for vacant land for building a shopping center.

a. True

b. False

a. True

True or false: Real property cannot be exchanged for personal property

a. True

b. False

a. True

Personal property may be exchanged for personal property as long as:

a. The exchange is for less than $5,000

b. The exchange is for more than $5,000

c. The properties are of similar nature or class

d. Personal property is not a commodity allowed to be traded under a tax-free exchange

c. The properties are of similar nature or class

Net mortgage relief is:

a. Another term for a tax-free exchange

b. The difference between the loan given up and the new loan acquired

c. Taxable

d. None of the above

b. The difference between the loan given up and the new loan acquired

The adjusted basis for property received in an exchange can be found by adding which of the following items to the original basis?

a. Cash received

b. Depreciation allowance

c. Amortization and depletion taken

d. Special assessments

d. Special assessments

Different rules apply for different exchanges; however, every exchange required the parties to answer four basic questions. Which of the following is not a question to be answered in a tax-free exchange?

a. Questions dealing with realized gain

b. Questions dealing with the new basis of property acquired

c. Questions dealing with amortization

d. Questions dealing with postponed portion of gain

c. Questions dealing with amortization

True or false: Encumbrances or liens are listed on the exchange agreement form

a. True

b. False

a. True

The adjusted basis for the property received in an exchange can be found by subtracting which of the following items from the original basis?

a. Special assessments

b. Other property or boot paid

c. Reimbursed casualty loss

d. All of the above

c. Reimbursed casualty loss

A broker will act as a principal in what type of program?

a. Tax-free exchange

b. Trade-in

c. Both A and B

d. Neither A nor B

b. Trade-in

Which of the following is not a benefit for a broker participating in trade-ins?

a. Single commissions

b. Attract more sellers and buyer into the office

c. Affords the broker an opportunity to work with builders

d. Increases inventory

a. Single commissions

Which of the following is a trade-in program?

a. Straight trade

b. Guaranteed trade

c. Tax-deffered trade

d. Both A and B

d. Both A and B

An "outright exchange of properties" describes:

a. A straight trade

b. Guaranteed trade

c. Time-limit trade

d. None of the above

a. A straight trade

The sale of a business primarily involves the sale of:

a. Real property

b. Personal property

c. Goodwill

d. Both B and C

d. Both B and C

What is the final step in the sale of a business?

a. Closing statements and documents are delivered to the parties at the close of escrow

b. A bill of sale for all personal property is issued to the buyers

c. The lease is transferred to the new owners

d. A clearance receipt, Certificate of Payment of Sales and Tax Use, and a seller's permit for the new owner must be secured from the state Board of Equalization

a. Closing statements and documents are delivered to the parties at the close of escrow

The standard CAR listing agreement form used by brokers in the sale of a business is form:

a. SB-14

b. CA-14

c. BUS-14

d. There isn't such a form

d. There isn't such a form

Bulk transfers are covered in what document?

a. Commissioner's Code

b. Uniform Commercial Code

c. Individual state legislation

d. None of the above

b. Uniform Commercial Code

Bulk transfer laws protect: 

a. The seller of the business

b. The buyer of the business

c. The creditors of the seller

d. Both A and C

c. The creditors of the seller

Article 6 of the Uniform Commercial Code requires the transferee to give public notice to all creditors regarding the sale of a business at least:

a. 10 days prior to the sale

b. 12 days prior to the sale

c. 15 days prior to the sale

d. 17 days prior to the sale

b. 12 days prior to the sale

When a seller engages in a business where sales of a personal property at retail are made, he or she must secure a seller's permit obtained from:

a. State Board of Equalization

b. Real Estate Commissioner

c. Any broker

d. County Recorder's office

a. State Board of Equalization

All businesses must pay a 6% sales tax on all gross receipts. This amount is remitted to state and local agencies:

a. Quarterly

b. Bi-yearly

c. Once a year

d. None of the above

a. Quarterly

When selling a business, what is the most difficult item of value to measure?

a. Personal property

b. Fixtures

c. Goodwill

d. Used furniture

c. Goodwill

Goodwill is valued using which of the following methods of valuation?

a. Length of time the business has been in existence

b. Vehicle/customer traffic count

c. Present and future anticipated competition

d. All of the above

d. All of the above

Which of the following is not a category of insurance?

a. Fire and casualty

b. Life and disability

c. Government

d. Personal property

d. Personal property

Who issues or oversees the regulations governing insurance licensees?

a. Real estate commissioner

b. Insurance commissioner

c. Department of Business and Transportation

d. Both B and C

d. Both B and C

All of the following are aspects of government insurance except:

a. Federal Deposit Insurance Corporation

b. Federal Housing Administration

c. Social Security

d. Federal Emergency Aid

d. Federal Emergency Aid

Which of the following is not a type of property insurance?

a. Public liability

b. Wind insurance

c. Fire insurance

d. Home owners insurance

b. Wind insurance

All of the following are a function of a notary public except:

a. Applying and affixing his or her official signature and seal to insure as fully as possible that the original agreement cannot be altered in any way

b. Determining if the parties are truly who they claim to be

c. Certify that all documents have been accurately filled out

d. Obtaining the acknowledgement of the parties that they have signed the agreement or taking oath that they are aware of the contents of the agreement

c. Certify that all documents have been accurately filled out

What are the qualifications to become a public notary in California?

a. Be a California resident for at least 12 months prior to applying

b. Achieve a 75% on the notarial law exam, included in the application

c. Be a United States citizen

d. All of the above

d. All of the above

A real estate broker may not:

a. Be licensed as an escrow company

b. Be a licensed insurance agent

c. Be a property manager

d. All of the above

a. Be licensed as an escrow company