Real Estate Test Questions

Question 1

1. What economic factors affect the real estate market as well as other goods and services?

Answer 1

• Supply and demand
• Pricing
• Costs incurred in bringing the properties to market
• Value aspects of desire, usefulness, scarcity and ability to pay

Question 2

1. How are properties affected by the local economy?

Answer 2

If the economy picks up, sales increase. If it slows, sales decrease.

Question 3

1. List three kinds of property in the real estate market.

Answer 3

Any three of these six: industrial, commercial, agricultural, special purpose, recreational, investment

Question 4

1. Jim has decided that he will learn all he can about the new subdivisions at the west end of town. Jim has decided to specialize in what area of real estate?

Answer 4

Geography

Question 5

From whom may a salesperson receive compensation for performed activities?

Answer 5

ONLY from the employing broker

Question 6

What is the major difference between an employee and an independent contractor?

Answer 6

The issue of control – A broker can control the what and the how of an employee. A broker can control the what, but not the how of an independent contractor.

Question 7

What kinds of insurance do brokers normally require of their employees?

Answer 7

High limits of automobile insurance with the broker named as an insured.
Errors and omissions insurance.

Question 8

What should a licensee’s written employment agreement contain?

Answer 8

Each person’s responsibilities to the other
The broker’s supervision
The licensee’s duties
The licensee’s compensation program

Question 9

Give an example of a specific short-term goal.

Answer 9

Anything specific and measurable such as:
I will schedule 2 practice listing presentations with an experienced co-worker next week.
I will attend the 2-hour seminar about using e-mail that the local board is sponsoring on Friday morning.

Question 10

What do you need to remember about making phone calls to potential clients?

Answer 10

Check into and follow the National Do Not Call guidelines.

Question 11

What is meant by the term “sphere of influence”?

Answer 11

People that you know or have known that could be potential clients – family, friends, former co-workers, church associates, etc.

Question 12

What are members of NAR required to do?

Answer 12

Attend mandatory ethics training every four years.

Question 13

Alice has decided that she will specialize in selling farm land. Which area of specialization would she fall into?

a) Geography
b) Type of property
c) Business type
d) Type of client

Answer 13

b) Type of property

Question 14

Which of these statements is true?

a) Salesperson Harry can solicit his own listings.
b) Salesperson Julie can receive her commission from the cooperating broker in her latest transaction.
c) Salespersons must perform all of their activities on behalf of their employing broker.
d) Broker Tom has only limited responsibility for the actions of his licensees.

Answer 14

c) Salespersons must perform all of their activities on behalf of their employing broker.

Question 15

Which of the following circumstances would concern you about working for Broker John?

a) John offers weekly training seminars.
b) There are several successful agents at John’s office.
c) John’s office has a selection of books, CDs and tapes for agent use.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.

Answer 15

d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.

Question 16

Which of the following statements is not true?

a) A broker may require licensees to carry high levels of automobile insurance.
b) It’s a good idea for brokers to carry workers’ compensation coverage.
c) A broker is not responsible for the acts of independent contractors.
d) Employee status versus independent contractor status is an IRS issue.

Answer 16

c) A broker is not responsible for the acts of independent contractors.

Question 17

Which of the following would be an example of a licensee specializing in business type?

a) Jim specializes in clients who want to buy restaurants.
b) Alice knows everything about the exclusive east side neighborhoods.
c) Tom specializes in options.
d) Chris is a buyer’s agent.

Answer 17

a) Jim specializes in clients who want to buy restaurants.

Question 18

Broker Alice has hired several independent contractors in her firm. Which of the these activities does she have control over?

a) What the licensees wear.
b) What percent of commission the licensees can charge.
c) How much time the licensees must spend in the office.
d) Whether or not the licensees attend staff meetings.

Answer 18

b) What percent of commission the licensees can charge.

Question 19

All of the following are true statements about goals except which one?

a) Goals should be measurable.
b) It’s easier to prioritize your tasks if your goals are in writing.
c) Once you set a goal you should never change it.
d) Goals must be realistic if you hope to accomplish them.

Answer 19

c) Once you set a goal you should never change it.

Question 20

Which of the following is NOT a condition of the safe harbor test?

a) Person must be properly licensed.
b) Gross income must be based on production.
c) Clearly written contractor agreement must exist.
d) Gross income must be based on hours worked.

Answer 20

d) Gross income must be based on hours worked.

Question 21

Which of the following is not a national estate trade organization?

a) NAR
b) CAR
c) NAREB
d) AREAA

Answer 21

b) CAR

Question 22

1. A shopping center would be primarily categorized as what type of property?
   a) Residential
   b) Agricultural
   c) Investment
   d) Commercial

Answer 22

d) Commercial

Question 23

Why is it important for licensees to understand the Americans with Disabilities Act?

Answer 23

Brokers must evaluate whether they need to make physical changes to their office space to comply with the law.
Licensees should inform their commercial and investor clients of the need to have their leases professionally evaluated and their offices inspected for compliance.

Question 24

Alex Jones owns a duplex and lives in one unit. He refuses to rent the other unit to families with children. What would you say about Alex’s actions?

Answer 24

Alex is within the guidelines of the Fair Housing Act since he is the owner of a dwelling that has fewer than four units, one of which is owner-occupied.

Question 25

If a person feels like he or she has been discriminated against, how long does that person have to file a complaint?

Answer 25

With HUD – within one year of the alleged act. In state or federal court – within two years of the alleged act.

Question 26

Salesperson Sally tells her senior citizen buyers that the home they want to view is located in a neighborhood with several small children and loud teenagers. She tells them they would not be comfortable in this home and she shows them a list of homes in other neighborhoods she thinks would be more appropriate. What would you say about Sally’s behavior?

Answer 26

Sally is guilty of steering, which is prohibited by Fair Housing laws.

Question 27

Which California fair housing law(s) apply to financial institutions?

Answer 27

Both the Unruh Civil Rights Act and the Holden Act.

Question 28

Define panic selling.

Answer 28

Panic selling is soliciting a listing or inducing someone to sell by telling him or her that persons of a certain protected class are moving into the neighborhood.

Question 29

Broker Sam receives a deposit check from a client, along with the purchase contract. How long does he have to deposit it into his trust account?

Answer 29

Sam has three business days to deposit the check, unless the buyer authorizes him to hold the uncashed check until the offer is accepted.

Question 30

How much of his own money can broker Jake keep in a trust account and not be considered guilty of commingling?

Answer 30

Up to $200 to use for service fees on the account

Question 31

Which of the following is not a source of information for professional ethics codes? a) State laws b) Licensing regulations c) Real estate associations d) Real estate schools

Answer 31

d) Real estate schools

Question 32

A broker induces an owner to sell by telling him that Hispanics are moving into the neighborhood. This broker is guilty of what prohibited activity? a) Redlining b) Panic selling c) Steering d) Misrepresentation

Answer 32

b) Panic selling

Question 33

If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint? a) 30 days b) 90 days c) 1 year d) 2 years

Answer 33

c) 1 year

Question 34

Which Fair Housing Law added sex to the list of protected classes? a) Housing and Community Development Act b) Title VIII of the Civil Rights Act of 1968 c) Jones v. Mayer d) Fair Housing Amendments Act

Answer 34

a) Housing and Community Development Act

Question 35

How long must trust account records be kept? a) 1 year b) 2 years c) 3 years d) 5 years

Answer 35

c) 3 years

Question 36

Which of these is not an exemption to fair housing law? a) Senior housing for residents 62 or older b) A religious organization providing housing to members only c) The sale of a single-family home by an owner who owns five residences d) Rental of a unit in an owner-occupied four-family flat

Answer 36

c) The sale of a single-family home by an owner who owns five residences

Question 37

A person who believes he or she has been discriminated against has how long from the time of the alleged violation to file a suit in a state or federal court? a) 6 months b) 12 months c) 18 months d) 24 months

Answer 37

d) 24 months

Question 38

Which California Fair Housing law provides protection from discrimination by business establishments? a) Rumford Fair Housing Act b) Unruh Civil Rights Act c) Holden Act d) Fair Employment and Housing Act

Answer 38

b) Unruh Civil Rights Act

Question 39

If a broker receives a deposit check with a purchase contract, which of these is he not allowed to do? a) Deposit it directly into escrow. b) Give it to the principal. c) Deposit into the brokerage business account. d) Hold it with the buyer's permission until the contract is accepted.

Answer 39

c) Deposit into the brokerage business account.

Question 40

Which is not a true statement about the Americans with Disabilities Act? a) A broker might need to change the layout of the office to make the aisles wider for clients in wheelchairs. b) A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities. c) An apartment manager might be required to allow a tenant with a disability to widen a doorway. d) A shopping center might have to remodel their public restrooms.

Answer 40

b) A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities.

Question 41

When is an agency relationship created?

Answer 41

An agency relationship is created when a person (the principal) delegates to another person (an agent) the right to act on his or her behalf in business transactions with third parties.

Question 42

What exception exists to the duty of obedience when working with a client?

Answer 42

An agent is not bound by the duty of if the principal’s directions are not legal.

Question 43

An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?

Answer 43

Confidentiality. This duty extends beyond the termination of the relationship. No personal information gained during the term of the agreement can ever be disclosed to another party.

Question 44

Amanda calls broker Tim to schedule a showing of one of his listings. Amanda loves the home and wants to make an offer. What should Tim do next?

Answer 44

Tim must disclose to Amanda his agency relationship with the seller and get her written permission for a dual agency arrangement. He must also inform the seller of his agency relationship with Amanda and get the seller’s written permission for the dual agency arrangement. If both parties agree to dual agency, they can proceed. If not, Amanda will have to find other representation.

Question 45

When must a licensee provide an agency disclosure to a prospective client?

Answer 45

The listing agent must provide the disclosure to the seller prior to securing the listing agreement. The selling agent must provide the disclosure to the seller “as soon as practicable” prior to presenting a purchaseoffer. The selling agent must provide the disclosure to the buyer“as soon as practicable” prior to the execution of the buyer’s offer to purchase.

Question 46

What is the Real Estate Transfer Disclosure Statement and who is responsible for providing it?

Answer 46

It is a statement that describes the condition of the property in detail. The seller must complete it, sign it and provide it to the buyer, but there is a section on page three of the form that the seller’s agent (if there is one) must complete and sign.

Question 47

Agent Jim needs to do a visual inspection of his listing. What kinds of things should he be looking for?

Answer 47

Structural defects, deterioration, water damage and insect damage.

Question 48

Why should agent Grace give her client a Combined Hazards Book?

Answer 48

This book contains three booklets which meet the seller’s and agent’s requirements for disclosure of earthquake hazards, lead-based paint and other environmental hazards.

Question 49

What required disclosure is a result of Megan’s Law?

Answer 49

California requires that every sales contract or lease contain a notice which states that information about sex offenders registered under Megan’s Law is available to the public on an Internet web site maintained by the Department of Justice.

Question 50

Which disclosures are NOT required to be made when selling residential property?

Answer 50

Natural deaths, unnatural deaths occurring more than three years prior to the sale and information about residents having AIDS or dying from AIDS.

Question 51

What is a public report and when must it be provided?

Answer 51

A public report is a statement from the Department of Real Estate that discloses to prospective buyers pertinent facts about a subdivision. Purchasers must sign a receipt indicating that they have received and accepted the report before they enter into the purchase transaction.

Question 52

What does the Real Estate Settlement Procedures Act require of lenders?

Answer 52

That they provide a good faith estimate of closing costs within three days of the loan application; that they let the borrower know in writing if they expect someone else to service the loan; that they give the HUD-1 Settlement Statement to the buyer at or before settlement and allow the borrower to inspect the statement one business day before closing.

Question 53

Which of the following types of agency is not allowed in California? a) Dual agency b) Buyer's agency c) Subagency d) Designated agency

Answer 53

d) Designated agency

Question 54

The principles of an agency relationship include all of these factors except which one? a) Mutual consent b) Authorization c) Compensation d) Fiduciary duties

Answer 54

c) Compensation

Question 55

Which of the following is not a fiduciary duty an agent owes to his or her principal? a) Loyalty b) Confidentiality c) Accountability d) Blind obedience

Answer 55

d) Blind obedience

Question 56

Agent Paul is bound to inform his client of all facts that might affect the client's interests -- both what Paul knows and what he should have known." Which of these situations would not be something Paul "should know"? a) There is a crack in the basement wall. b) The owner of the property is HIV positive. c) The air conditioner does not work. d) The casement windows have broken seals."

Answer 56

b) The owner of the property is HIV positive.

Question 57

When must a listing agent present the Disclosure Regarding Real Estate Agency Relationships to the seller? a) Prior to bringing an offer to purchase. b) Prior to accepting the listing. c) As soon as possible. d) Prior to conducting any showings.

Answer 57

b) Prior to accepting the listing.

Question 58

Which disclosure form gives detailed information about the property's condition? a) Real Estate Transfer Disclosure Statement b) Agency Disclosure c) Natural Hazard Disclosure Statement d) Mello-Roos Report

Answer 58

a) Real Estate Transfer Disclosure Statement

Question 59

If an agent does not comply with the requirement of conducting a visual inspection of a property, how long after possession does the buyer have to file a suit? a) 6 months b) 12 months c) 24 months d) 36 months

Answer 59

c) 24 months

Question 60

Which booklet is not part of the Combined Hazards Book? a) The Residential Environmental Hazards Guide b) Protect Your Family From Lead In Your Home c) The Homeowners Guide to Earthquake Safety d) Consumer Guide to Disclosure for Buyers

Answer 60

d) Consumer Guide to Disclosure for Buyers

Question 61

Timeshare buyers have the right to rescind a transaction within what timeframe after signing the purchase contract? a) 1 day b) 3 days c) 7 days d) Never

Answer 61

c) 7 days

Question 62

Which disclosure is required by the Real Estate Settlement Procedures Act? a) Good faith estimate b) Finance charges and annual percentage rate c) Transfer of the loan collection d) Rights regarding discrimination

Answer 62

a) Good faith estimate

Question 63

What do you need to check if you want to conduct a door-to-door canvass in a neighborhood?

Answer 63

To see if door-to-door solicitation is allowed and if it requires a permit.

Question 64

Name one advantage and one disadvantage of telephone contacts. (See answers on screens 6 and 7.)

Answer 64

Advantage – Can make several calls in a relatively short period of time. Disadvantage – Many homeowners are turned off by phone solicitations and may hang up quickly.

Question 65

What is a good approach to use when contacting the owner of an expired listing?

Answer 65

Find out why the listing did not sell and approach the owners with a plan that will address that issue and correct it for a successful sale.

Question 66

What are the major areas of newspaper leads?

Answer 66

FSBO ads Rental ads Special announcements Legal notices

Question 67

What kind of newspaper ad could you place to solicit a listing?

Answer 67

An ad that is looking for a specific kind of home for one of your buyer clients.

Question 68

List four sections of an Internet website that might be of particular appeal to prospective buyers.

Answer 68

Your current listings List of services you offer specifically for buyers, such as help in finding a lender Information on current interest rates Mortgage loan calculator (See screen 26 for other correct answers.)

Question 69

How can a builder help you generate leads?

Answer 69

Builders can refer to you their customers who need to sell their current homes.

Question 70

Why is it important to have a written prospecting plan?

Answer 70

It will keep you on track and provide a guideline for deciding what parts of the plan need to be changed or expanded.

Question 71

Which of the following statements is not true? a) Retired persons are a good source of neighborhood information. b) You can use a reverse telephone directory to get the names of residents. c) Knocking on doors never requires special permits. d) Visiting a neighborhood with a co-worker could make you feel more comfortable.

Answer 71

c) Knocking on doors never requires special permits.

Question 72

Prospecting: a) Only needs to be done periodically. b) Is critical to your success in real estate. c) Is helpful but not necessary. d) Is best left to experienced brokers.

Answer 72

b) Is critical to your success in real estate.

Question 73

Which of the following is a good direct mail technique? a) Use windowed envelopes. b) Send colored self-fold flyers. c) Print postage labels from your computer. d) Hand address the envelopes.

Answer 73

d) Hand address the envelopes.

Question 74

Which of the following is not a probable reason for a listing to expire without selling? a) No open houses b) Needs repair c) Not properly priced d) Not marketed correctly

Answer 74

a) No open houses

Question 75

All of the following are good newspaper sections to read for prospecting except which? a) Obituary column b) Classified rental ads c) Business section d) Special announcements

Answer 75

c) Business section

Question 76

Developing a prospecting plan is similar to: a) Establishing goals. b) Developing an earnings statement. c) Setting a training schedule. d) Writing a meeting agenda.

Answer 76

a) Establishing goals.

Question 77

Which of the following is not a legal notice that can provide a listing lead? a) Death notice b) Vacancy c) Divorce d) Tax delinquency

Answer 77

b) Vacancy

Question 78

Which of these Internet pages might not be of particular interest to sellers? a) Staging a home b) Inspection tips c) List of properties for sale d) List of sold homes

Answer 78

c) List of properties for sale

Question 79

How might probate information help in prospecting? a) Gives the names of lawyers who might require property assistance. b) Allows the agent to determine community market trends. c) Shows property addresses that should be excluded from prospecting. d) Provides the names of individuals who may want to sell inherited property.

Answer 79

d) Provides the names of individuals who may want to sell inherited property.

Question 80

All of these are true of prospecting except: a) It can provide a steady stream of future clients. b) It helps to identify buyer and seller needs. c) It keeps your name in front of potential buyers and sellers. d) It guarantees sales.

Answer 80

d) It guarantees sales.

Question 81

Your listing presentation manual should be made up of two sections that address what issues?

Answer 81

Why the person should enter into a listing agreement. | Why the listing agreement should be with you and your company.

Question 82

What is the main reason sellers choose to sell their property without an agent’s help?

Answer 82

They think they will save money by not having to pay a large commission.

Question 83

Name three benefits of listing a home with an agent that you could share with sellers. (These or other choices from screen 17.)

Answer 83

Advice on getting the home ready for sale. Advertising and promotion activities paid for by agents. Qualification of all prospective buyers.

Question 84

What is an important issue for potential buyer clients to understand?

Answer 84

How the buyer’s agent gets paid his or her fee.

Question 85

What is a competitive market analysis?

Answer 85

A comparison of properties that are similar to the seller’s property in location, size, style, age and amenities

Question 86

When looking at homes currently for sale, what is important for a prospective seller to know about asking price?

Answer 86

Asking price is not always a good indicator of the actual selling price of a property.

Question 87

When preparing a competitive market analysis, what categories of homes should an agent research?

Answer 87

Properties currently for sale Recently sold properties Expired properties not sold

Question 88

What is a good method for estimating what a seller will net from the sale of the property?

Answer 88

Obtain and complete the Estimated Seller’s Proceeds form, which estimates all of the costs involved in the sale and subtracts that amount from the estimated selling price.

Question 89

A competitive market analysis is an attempt to: a) Find things in the home a seller needs to repair. b) Establish a home's fair market value. c) Discover why some homes haven't sold. d) Convince a seller to list with you.

Answer 89

b) Establish a home's fair market value.

Question 90

What form can an agent use to show a seller what he or she will net on the sale of the property? a) Statement of Closing Costs b) Competitive Market Analysis c) Sale Price Disclosure d) Estimated Seller Proceeds

Answer 90

d) Estimated Seller Proceeds

Question 91

Which of the following is not a true statement? a) Buyers looking at FSBO homes are usually looking for a bargain. b) FSBO sellers believe they will save money if they sell themselves. c) FSBO sellers who list with an agent will pay their own advertising costs. d) Buyers of FSBO homes are usually the ones who save money.

Answer 91

c) FSBO sellers who list with an agent will pay their own advertising costs.

Question 92

How many properties should be included for comparison in a competitive market analysis? a) Two properties in each category b) Five current listings -- three recently sold and two expired c) A minimum of three properties in the recently sold category d) Twelve properties total

Answer 92

c) A minimum of three properties in the recently sold category

Question 93

A listing presentation can be compared to: a) A training session b) An employment interview c) A practice closing d) A sure sale

Answer 93

b) An employment interview

Question 94

All of the following are benefits of listing with an agent except which? a) Preparation of an appraisal of the property b) Help during escrow c) Qualification of buyers d) Help with required forms and disclosures

Answer 94

a) Preparation of an appraisal of the property

Question 95

A competitive market analysis contains information about all of the following items except which? a) Currently listed homes b) Recently sold homes c) Recently remodeled homes d) Similar expired listings that didn't sell

Answer 95

c) Recently remodeled homes

Question 96

Which of the following items would not usually be included in a presentation manual for buyers? a) Information on the firm's services b) The agent's resume c) Press releases about the company d) A list of former client references

Answer 96

d) A list of former client references

Question 97

A presentation manual: a) Should be professionally produced. b) Can be used in place of a verbal presentation. c) Is not necessary if the verbal presentation is strong. d) Lends good visual support to what the agent is saying.

Answer 97

d) Lends good visual support to what the agent is saying.

Question 98

Which of the following will give you comparative market data the fastest? a) Multiple listing service b) County records c) Company files d) Title companies

Answer 98

a) Multiple listing service

Question 99

What is an important thing to remember about listing agreements?

Answer 99

They must be in writing to be enforceable.

Question 100

Describe an open listing.

Answer 100

An open listing is a non-exclusive listing that allows a seller or buyer to engage a number of different brokers to sell or help purchase property. The broker who brings the buyer or finds the suitable property gets the commission. If the owner sells the property or the buyer finds his or her own property, no commission is owed to any broker.

Question 101

What is the major difference between an exclusive-authorization-and-right-to-sell listing and an exclusive-agency listing?

Answer 101

With exclusive-right-to-sell, the broker has the exclusive right to market the property and receive a commission regardless of who procures the buyer. With exclusive agency, the owner retains the right to find a buyer and sell the property and owe the exclusive broker no commission.

Question 102

What is the agreement that a broker can enter into with a buyer?

Answer 102

Exclusive-Authorization-to-Acquire-Property agreement authorizes the broker to work as the agent for the buyer rather than the seller.

Question 103

What does the safety clause in the listing agreement do?

Answer 103

Allows the broker to receive a commission under certain conditions if he or she sells the property within a specified number of days after the listing contract expires.

Question 104

What does the security and insurance clause of the listing agreement address?

Answer 104

This section states that the broker is not responsible for loss or damage to the property, even with a lockbox present. The seller must take steps to safeguard any valuables and obtain insurance to cover the risks.

Question 105

What does the paragraph in the listing agreement titled “Entire Contract” deal with?

Answer 105

This paragraph states that the agreement supersedes all previous discussions, negotiations and agreements between the seller and the broker. Therefore, anything that is not written into the agreement is not part of the agreement.

Question 106

What does the Water Heater Statement of Compliance address?

Answer 106

It’s a mandatory seller disclosure dealing with the law requiring water heaters to be strapped, braced or anchored to resist earthquake motion.

Question 107

6. All of the following are valid listing agreements. Which one is illegal in many states? a) Exclusive agency. b) Open. c) Exclusive-right-to-sell. d) Net.

Answer 107

d) Net.

Question 108

6. Which kind of listing gives one broker the right to sell, but allows the owner to sell the property and not owe a commission to the broker? a) Non-exclusive agency b) Exclusive agency c) Exclusive-right-to-sell d) Net

Answer 108

b) Exclusive agency

Question 109

6. The Lead-Based Paint Disclosure is required for homes built: a) Before 1978 b) Before 1976 c) After 1980 d) After 1975

Answer 109

a) Before 1978

Question 110

6. Which is true of an exclusive-authorization-to-acquire-property agreement? a) The buyer must pay the broker a commission. b) The broker will owe fiduciary responsibilities to the seller as well as the buyer. c) It must specify a definite termination date. d) Commission is never involved.

Answer 110

c) It must specify a definite termination date.

Question 111

6. Which of the following forms is non-standard and should be prepared by a broker to give to sellers? a) Natural Hazards Disclosure b) Water Heater Compliance c) Estimated Seller's Proceeds d) Defective Furnaces in California

Answer 111

d) Defective Furnaces in California

Question 112

6. An agent must give a copy of the listing agreement to the sellers: a) At the time the agent presents an offer. b) At the time the agreement is signed. c) When the seller pays commission. d) After the agent has had time to make copies at the office.

Answer 112

b) At the time the agreement is signed.

Question 113

6. When the broker and seller agree that the broker can receive commission for a specified number of days after the listing expires if selling to a named" party on a list

Answer 113

it's referred to by what term? a) Security clause b) Non-penalty clause c) Safety clause d) Effective period"

Question 114

6. In the listing agreement, a seller can choose to decline/disapprove all but which of the following items? a) Sign in yard b) Broker compensation to other brokers c) Posting to MLS d) Lockbox AAQ

Answer 114

b) Broker compensation to other brokers

Question 115

6. Which of the following statements is not true about a net listing? a) Sets a limit on the commission a broker can earn. b) Is generally viewed as unprofessional. c) Is illegal in many states. d) Allows a broker to have as a commission anything above the minimum the seller sets.

Answer 115

a) Sets a limit on the commission a broker can earn.

Question 116

6. Which of these documents is for sellers only and not for buyers? a) Smoke Detector Statement of Compliance b) Real Estate Transfer Disclosure c) Residential Listing Agreement d) Seller’s Affidavit of Nonforeign Status and/or California Withholding Exemption

Answer 116

c) Residential Listing Agreement

Question 117

7. What is the primary criticism that sellers have about their agents?

Answer 117

Lack of communication.

Question 118

7. When you meet with your sellers after you obtain the listing, what is one of the first things you should share with them to get them involved in the process?

Answer 118

It’s important and helpful to give the sellers written homeowner tips for improving the cosmetic aspects of both the interior and exterior of their property.

Question 119

7. What kinds of things should you include in a weekly activity report?

Answer 119

* Number of inquiries on the property that week * Number of showings * Advertising done that week * Open houses held * Number of open house visitors * Comments made by other agents or prospective buyers

Question 120

7. How can you prepare your sellers for receiving offers?

Answer 120

Share a blank copy of the purchase agreementwith them and go over each of the paragraphs on the form. Also talk to them about the possibility of getting a quick offer and the consequences that could result from the tendency to reject such an offer.

Question 121

7. Name four traditional marketing tools that you should use with every listing you get.

Answer 121

For Sale sign Photos Classified ads Fliers Lockboxes and MLS listings are also critical, but can only be used with seller permission.

Question 122

7. What are some important tips for home tours?

Answer 122

* Sellers should not be at home. * Have some light refreshments for the agents. * Play soft mood music. * Give each agent a property flier. * Have agents fill out a short evaluation of the home.

Question 123

7. In addition to agent and MLS home tours, what are some other ancillary tools you can use?

Answer 123

Neighborhood canvass letter Agent open house Public open house

Question 124

7. What should you keep in mind when developing your marketing plans?

Answer 124

Each plan should be client-specific – that is, have some standard tasks, but also some activities that are customized to the particular sellers.

Question 125

7. Which of the following actions by an agent would most probably upset the sellers? a) Conducting an agent open house. b) Sending a weekly activity report. c) Sharing all visitor comments two weeks before the listing ends. d) Placing a classified ad in the weekend paper.

Answer 125

c) Sharing all visitor comments two weeks before the listing ends.

Question 126

7. All of these items are important to include on your weekly activity report except which? a) Number of calls that week b) Agent comments about the property c) Classified ads placed on the property d) Number of hits on the company website

Answer 126

d) Number of hits on the company website

Question 127

7. Which of these forms is not filled out by the seller? a) Smoke Detector Compliance b) Modification of Terms c) Transfer Disclosure Statement d) Water Heater Compliance

Answer 127

b) Modification of Terms

Question 128

7. All of these statements are true except which one? a) Virtual tours are an expensive marketing tool to use. b) An agent should print off a copy of the listing on the company's Internet site to send to the sellers. c) Participation in the MLS increases a licensee's inventory. d) Property evaluations from other agents have valuable information for sellers.

Answer 128

a) Virtual tours are an expensive marketing tool to use.

Question 129

7. If there is no interest in the property on a given week, the agent should: a) Skip the activity report for that week. b) Share that information with the sellers. c) Tell the sellers you expect an offer to be coming soon. d) Tell the sellers it's time to reevaluate the price.

Answer 129

b) Share that information with the sellers.

Question 130

7. All of these activities are appropriate to do within the first few days of obtaining a listing except which? a) Give the sellers a copy of some homeowner's tips. b) Discuss modifying the listing price. c) Explain your marketing plan to the sellers. d) Have the broker send a thank you for listing" letter to the sellers."

Answer 130

b) Discuss modifying the listing price.

Question 131

7. Which of these marketing tools is not considered a traditional tool? a) Flier b) Classified ad c) Photos d) Video tour

Answer 131

d) Video tour

Question 132

7. You should try to attach a rider strip to your For Sale sign that has: a) Your home telephone number. b) Your GRI designation. c) Your cell phone number. d) Your fax number.

Answer 132

c) Your cell phone number.

Question 133

7. Which of these is not a helpful homeowner tip? a) Display lots of family photos to impress potential buyers. b) De-clutter your garage and basement. c) Bake muffins or cinnamon rolls to create a homey" feel. d) Make sure all light bulbs and lamps are working and are bright."

Answer 133

a) Display lots of family photos to impress potential buyers.

Question 134

7. If someone shows up at the sellers' door unexpectedly to see the home, the sellers should: a) Tell them to call your office. b) Invite them in and show them around. c) Take their names and call your office. d) Ask them to leave.

Answer 134

c) Take their names and call your office.

Question 135

8. Name and define the two forms of advertising.

Answer 135

Institutional advertising attempts to establish a positive image of the company, its services and its reputation in the minds of the public. Product advertising is directed toward the particular properties a company has for sale.

Question 136

8. Explain the method used to write good advertising.

Answer 136

The AIDA standard says that if you want your ads to get results, they must capture the reader’s Attention, arouse Interest in your product, create a Desire for the product and then prompt the reader to Action.

Question 137

8. What is important to remember about capturing the reader’s attention?

Answer 137

This is the most critical step. If you don’t capture the attention, you can’t deliver the message.

Question 138

8. What do many firms do to avoid confusion with their advertising plan?

Answer 138

Many firms choose to have a single person in the office in charge of watching advertising costs, controlling volume, scheduling the advertising that meets the objectives, compiling advertising data and evaluating the effectiveness of the ads placed.

Question 139

8. What kind of ad is illegal in California?

Answer 139

Blind ads that do not identify the advertiser as a broker are illegal.

Question 140

8. What is the difference between classified ads and display ads?

Answer 140

Classified ads are inexpensive, contain words only and are printed in the classified section of the paper. Display ads are expensive, can contain words, pictures and graphics and are printed outside the classified section of the paper.

Question 141

8. Why is television becoming a more common advertising venue?

Answer 141

Many cable stations now run “community bulletin boards” that advertise items for sale, including real estate. Also, “home showcase” programs are becoming more common on the cable networks.

Question 142

8. What kind of advertising does the Truth in Lending Act prohibit?

Answer 142

Bait-and-switch advertising

Question 143

8. The cost of doing direct mail advertising depends on all of these things except which? a) How you target your audience b) The frequency of the mailings c) The number of pieces you send d) The date of the mailing

Answer 143

d) The date of the mailing

Question 144

8. Which kind of advertising aims at increasing sales by informing the public of a company's capabilities? a) Operational b) Institutional c) Product d) Classified

Answer 144

b) Institutional

Question 145

8. An unlicensed person who advertises as if he or she were a real estate broker: a) Is subject to a $1,000 fine. b) Can serve up to a year in prison. c) Has no legal issues to deal with. d) Can be fined up to $10,000.

Answer 145

d) Can be fined up to $10,000.

Question 146

8. Which of these is a free form of advertising? a) Shopping guides b) Telephone directory c) Press release d) Blind ad

Answer 146

c) Press release

Question 147

8. Which of these statements is not true? a) Radio advertising is not as effective as other methods because listeners can be distracted by their activities and not hear the ads. b) Newsletters can be a very effective advertising forum for niche marketers. c) Advertising in the telephone directory is cost effective because the directories can reach every home in the marketing area. d) Magazine ads are significantly more expensive than newspaper ads.

Answer 147

a) Radio advertising is not as effective as other methods because listeners can be distracted by their activities and not hear the ads.

Question 148

8. All of these would be effective at capturing a reader's attention except which? a) Use as little white space as possible. b) Use a question as a headline. c) Use available color. d) Make the headline bold and all caps.

Answer 148

a) Use as little white space as possible.

Question 149

8. Which of these is not a tool to help evaluate advertising effectiveness? a) Telephone log b) Code in a print ad c) Advertising budget d) Designated telephone number

Answer 149

c) Advertising budget

Question 150

8. Which of these words or phrases might be considered discriminatory when used in advertising? a) No smoking b) Couples only c) Handicap accessible d) Kids welcome

Answer 150

b) Couples only

Question 151

8. Which of these is not an AIDA characteristic? a) Interest b) Attention c) Desire d) Activity

Answer 151

d) Activity

Question 152

8. What kind of ad usually combines both institutional and product advertising? a) Classified b) Display c) Press release d) Classified-display

Answer 152

b) Display

Question 153

9. What is the most important factor for a prospective homebuyer to consider in the decision to purchase?

Answer 153

Affordability

Question 154

9. What is floor time and why is it important?

Answer 154

Floor time consists of periods when agents can take inquiries. When a licensee is on floor duty, any new caller who does not ask for a specific agent by name becomes that licensee’s prospect. Floor time is particularly important for licensees who are trying to build a client base.

Question 155

9. When handling a telephone inquiry, why should you limit the amount of information you give out about the property?

Answer 155

The less information you give, the less chance the caller will find a reason to eliminate the property and the better chance you’ll have of getting an appointment to show it.

Question 156

9. Agent Greg receives a call about one of his firm’s ads. He succeeds in setting up an appointment to meet with the caller. What approach can Greg use to discourage the person from calling other agents?

Answer 156

Greg should suggest that the caller go through the ads and circle any and all other properties of interest. Then he should ask the caller to bring the paper to the meeting so that he can look up information about all the circled properties.

Question 157

9. What four categories of information are important for you to collect from your prospects?

Answer 157

Demographics Current information Needs and wants Financial information

Question 158

9. Define “qualifying the buyer.”

Answer 158

The process of correlating the buyer’s needs and wants with his or her actual financial capacity to buy.

Question 159

9. What should you do before you show any properties?

Answer 159

Prepare by determining your approach and then making notes about the specific features you want to showcase at each property.

Question 160

9. What is an important technique that allows buyers to see themselves in the home?

Answer 160

Asking who, what, where and how questions for each room and feature of the home.

Question 161

9. Most buyers who see a newspaper ad that interests them: a) Drive by the property. b) Call your office. c) Check out your Internet site. d) Visit your office.

Answer 161

b) Call your office.

Question 162

9. Which of these is not a good technique to get the name of a caller who is reluctant to give you that information? a) Offer to mail the caller a set of fliers on interesting properties. b) Ask the caller if he or she would like to receive e-mails on newly listed properties. c) Offer to show the caller a newly-listed, not-yet-advertised property, even if one doesn't exist. d) Offer to call the prospect when new listings that meet his or her criteria come on the market.

Answer 162

c) Offer to show the caller a newly-listed, not-yet-advertised property, even if one doesn't exist.

Question 163

9. Prospects Jim and Linda arrive with agent Bill at the first showing. When Bill pulls in front of the home, Linda decides immediately that she doesn't want to see the inside. What should you do? a) Tell Linda that the sellers will be very disappointed if they cancel the appointment. b) Launch into your list of the home's special features and hope she changes her mind. c) Emphasize that this home is a great buy and it would be a shame for them to dismiss it without looking first. d) Call the sellers immediately and let them know you won't be coming by.

Answer 163

d) Call the sellers immediately and let them know you won't be coming by.

Question 164

9. Which of the following is not an advantage of home ownership? a) Increase in property value b) Increase in equity c) Repairs and maintenance d) Tax deductions

Answer 164

c) Repairs and maintenance

Question 165

9. A buyer calls your office to inquire about a property he saw advertised. He sounds really excited about this property. Where is it that he likely found out the property was for sale? a) On the Internet b) In a classified ad c) From the For Sale sign d) From a direct mail flier

Answer 165

a) On the Internet

Question 166

9. Which of the following would be the least desirable phone handling technique? a) Answer a question with a question when possible. b) Give as much detailed information about the property as you can. c) Ask the caller when" not "if" he or she wants to see the property. d) Arrange to meet the prospect at your office."

Answer 166

b) Give as much detailed information about the property as you can.

Question 167

9. All of these questions could help you determine a prospect's capacity to make a purchase except which one? a) How much do you have in your savings account? b) Have you been pre-qualified or pre-approved by a lender yet? c) Do you need the equity from your current home for the new home purchase? d) Where do you and your spouse work?

Answer 167

a) How much do you have in your savings account?

Question 168

9. A reference list of alternative comparable properties is sometimes referred to as the: a) Cheat sheet. b) Telephone answering register. c) Switch sheet. d) Alternative list.

Answer 168

c) Switch sheet.

Question 169

9. Which of these statements is not true about qualifying buyers? a) You'll know how much house they can afford. b) Lenders are in the best position to qualify buyers. c) Sellers are apt to choose qualified buyers over ones who have not been qualified. d) Collecting information and pre-qualifying buyers yourself is the easiest and best approach.

Answer 169

d) Collecting information and pre-qualifying buyers yourself is the easiest and best approach.

Question 170

9. Sara just bought her first new home. She put 20% down and got a mortgage for the remainder. The difference between what Sara owes and what her home is worth is known as what? a) Principal b) Capital gain c) Replacement cost d) Equity

Answer 170

d) Equity

Question 171

10. What are the five aspects that are involved in any selling approach?

Answer 171

``` Knowing your product. Communicating information effectively. Establishing rapport with the buyer. Identifying and handling objections. Asking for the sale. ```

Question 172

10. When establishing rapport, what’s one of the best ways to get to know your buyers?

Answer 172

Ask open-ended questions to get buyers talking about their needs, wants and desires.

Question 173

10. What signals do buyers use to indicate they may be willing to make a purchase?

Answer 173

Buying signals include actions, words and body language.

Question 174

10. What’s a bonus closing and what’s important to keep in mind about this technique?

Answer 174

A bonus closing offers an inducement for the sale, usually in the form of something the seller will include in the sale. An agent should use this close carefully and always be sure to have the seller’s approval beforehand.

Question 175

10. Why is it important for the buyers to indicate whether or not they intend to occupy the property?

Answer 175

It can have an affect on such items as loan qualification, rates and terms.

Question 176

10. What’s important to know about the Liquidated Damages paragraph?

Answer 176

This paragraph must be initialed by both parties for it to apply.

Question 177

10. What happens if the parties do not initial the section of dispute resolution that deals with binding arbitration?

Answer 177

If they don’t initial it, binding arbitration will not be part of the agreement and they could choose to settle a dispute in court.

Question 178

10. Which section of the purchase agreement does not apply directly to the buyers and sellers?

Answer 178

There is a final section where the escrow holder acknowledges receipt of the contract and agrees to act as the escrow holder in the transaction.

Question 179

10. Which of these is not an important aspect of selling? a) Establishing buyer rapport b) Knowing your inventory c) Giving buyers your opinion of what works best for them d) Handling objections

Answer 179

c) Giving buyers your opinion of what works best for them

Question 180

10. Offering a buyer more than one option and having him or her choose is using what kind of closing technique? a) Bonus b) Alternative c) Ownership d) Standing-Room-Only

Answer 180

b) Alternative

Question 181

10. All of the following are good approaches for handling objections except which? a) View an objection as the buyer's request for more information. b) Use the yes-but" technique to handle the objection. c) Ask the buyer more questions. d) Tell the buyer it's not an issue."

Answer 181

d) Tell the buyer it's not an issue.

Question 182

10. Which paragraph of the purchase agreement must be initialed by both buyers and sellers for it to apply? a) Dispute resolution by mediation b) Removal of contingencies c) Liquidated damages d) Buyer indemnity and seller protection

Answer 182

c) Liquidated damages

Question 183

10. What would be the least effective way to get to know your buyers' needs? a) Ask closed-ended questions. b) Listen carefully to everything your prospects say and repeat some specifics back at appropriate times so that they know you have heard what they said. c) Watch actions and body language. d) Ask open-ended questions.

Answer 183

a) Ask closed-ended questions.

Question 184

10. What does the paragraph on repairs state? a) The buyer must make all repairs. b) If checked, the seller can complete repairs after closing. c) The seller can do all repairs himself. d) All repairs must be in compliance with existing building codes.

Answer 184

d) All repairs must be in compliance with existing building codes.

Question 185

10. Agent Jim tells his buyers that the seller will leave the riding lawn mower if the buyers make an offer now. What kind of closing technique is Jim using? a) Assumptive b) Alternative c) Bonus d) Ownership

Answer 185

c) Bonus

Question 186

10. Which paragraph of the purchase agreement states that if the buyer defaults after acceptance, he or she may be liable for the broker's commission? a) Terms and conditions of offer b) Broker compensation from buyer c) Dispute resolution d) Liquidated damages

Answer 186

a) Terms and conditions of offer

Question 187

10. Which of these is an emotional reason that buyers buy property? a) Tax advantages b) Status c) Investment d) Schools

Answer 187

b) Status

Question 188

10. All of these might be a buying signal except which? a) Taking room measurements. b) Asking about a possession date. c) Moving closer to the agent to get a better look. d) Walking through the home quickly.

Answer 188

d) Walking through the home quickly.

Question 189

11. When preparing to present an offer to the sellers, what kinds of supporting information can be helpful?

Answer 189

A new Estimate of Sellers’ Proceeds, using the current offering price as the basis and an updated competitive market analysis, would be helpful.

Question 190

11. What is important to remember about multiple offers?

Answer 190

All multiple offers must be presented at the same time; if you know of an offer that is coming in, you must tell the sellers at the time you present the current offer; if you know of any verbal offers, share that information with the sellers also.

Question 191

11. When making your presentation, what topics should you cover?

Answer 191

The history of the listing activities, information about the buyers and then the offer itself.

Question 192

11. Why is it important to talk to the sellers about the buyers?

Answer 192

This is an opportunity to assure the sellers that these buyers will appreciate and care for the home.

Question 193

11. What actions can the sellers take regarding the purchase offer?

Answer 193

They can accept it outright, reject it totally, or submit a counteroffer.

Question 194

11. What is important for the sellers to know about a counteroffer?

Answer 194

It’s important that sellers realize that a counteroffer is actually a rejection of the original offer, and by submitting one, they are giving the buyers an easy out if they want one.

Question 195

11. Ben and Blanche receive a $200,000 offer on their home which is listed at $208,000. They were counting on a full-price offer and are very disappointed. What approach can their agent take to change the sellers’ perception of the offer?

Answer 195

The agent can tell Ben and Blanche that the $200,000 offer represents 96% of their asking price. This takes a positive view of the price. The agent should point out that price is only one aspect of the offer and then go on to discuss the other terms of the agreement that may appeal to the sellers.

Question 196

11. When does a purchase offer become a legal contract?

Answer 196

When the party who made the offer is notified of its acceptance. Notification is the delivery of a signed copy of the acceptance to the offeror.

Question 197

11. Which of these statements about counteroffers is not true? a) A counteroffer represents a rejection of an offer. b) A counteroffer by a seller to a buyer turns the seller from offeree to offeror. c) A counteroffer can give the buyers an out" if they want one. d) If the buyer rejects the first counteroffer

Answer 197

the seller can accept the first offer."

Question 198

11. Jake has received two offers on one of his listings. The home is listed at $210,000. One offer is for $208,000; the other is for $200,000. What should Jake do? a) Present the $208,000 offer today and wait for a response from the sellers before he presents the other offer. b) Present the $200,000 first and recommend rejection. Then present the $208,000 offer. c) Present the $208,000 offer and the $200,000 offer together at the same presentation meeting. d) Hold both offers because he heard that a full-price offer is on its way.

Answer 198

c) Present the $208,000 offer and the $200,000 offer together at the same presentation meeting.

Question 199

11. Once an offer has been accepted, the agent should do all of the following except which? a) Make sure all required disclosures have been done. b) Attend the final walkthrough. c) Be sure all requested inspections have been ordered. d) Meet with the buyers' lender to ensure they're getting a good deal.

Answer 199

d) Meet with the buyers' lender to ensure they're getting a good deal.

Question 200

11. Most sellers object to offers based on: a) Closing issues b) Offering price c) Financing issues d) Contingencies

Answer 200

b) Offering price

Question 201

11. When presenting information about the buyers to the sellers, which piece of information might not be useful in helping the sellers make a decision? a) The buyers' family is pressuring them to purchase this home. b) The buyers have been pre-qualified by a lender. c) The buyers are interested in another property. d) The buyers love the landscaping improvements the sellers have made.

Answer 201

a) The buyers' family is pressuring them to purchase this home.

Question 202

11. When you receive an offer on a listing for less than asking price, you should not: a) Study the other terms of the offer so that you can maximize the offer's benefits and minimize the lower price. b) Set up a face-to-face meeting with the sellers as soon as possible. c) Prepare additional documentation to take to the presentation. d) Give the sellers the price over the phone so that they can think about it before you meet with them.

Answer 202

d) Give the sellers the price over the phone so that they can think about it before you meet with them.

Question 203

11. Which of these is not a good thing to do when writing a counteroffer? a) Fill out a separate, numbered counteroffer form. b) Rewrite whole paragraphs to ensure clarity. c) Date and attach supporting documents. d) Exert pressure on the sellers for changes you think are important.

Answer 203

d) Exert pressure on the sellers for changes you think are important.

Question 204

11. Who typically presents an offer to the sellers? a) Selling broker b) Listing agent c) Listing broker and selling broker d) Selling agent

Answer 204

b) Listing agent

Question 205

11. Which of these is not a true statement? a) A purchase offer is a binding contract between the buyer, the seller and their agents. b) If a seller changes the terms of the offer to purchase, he has created a counteroffer. c) An offer or counteroffer can be withdrawn at any time before it has been accepted. d) Once the offer or counteroffer is accepted and the offeror has been notified, a legal contract is formed.

Answer 205

a) A purchase offer is a binding contract between the buyer, the seller and their agents.

Question 206

11. When you believe an offer is both fair and reasonable but it does not meet the sellers' asking price, you should: a) Make no recommendations and let the sellers decide on their own. b) Recommend a counteroffer back to list price. c) Work toward acceptance. d) Recommend that the seller delay response to make the buyer nervous and then submit a counteroffer.

Answer 206

c) Work toward acceptance.

Question 207

12. How much is the loan origination fee and what does it cover?

Answer 207

The loan origination fee is typically 1% of the loan amount. It covers the lender’s cost for generating the loan.

Question 208

12. What kind of problem can result from a straight loan?

Answer 208

A straight loan is an interest-only loan. If the property doesn’t appreciate in value over time, the borrower could end up with less in proceeds on the sale than what he needs to pay off the loan.

Question 209

12. What kinds of limits are placed on the interest rate in an adjustable rate mortgage??

Answer 209

Interest rate caps limit the amount of interest the borrower can be charged. Periodic caps limit the amount the rate can change at any one time. Overall (or aggregate) caps limit the amount the interest can increase over the life of the loan.

Question 210

12. Describe a reverse annuity mortgage.

Answer 210

With this type of mortgage, the lender makes payments to the borrower. Popular among senior citizens who are on fixed incomes and would like to benefit from their home’s equity without having to sell

Question 211

12. Define the term loan-to-value ratio.

Answer 211

The term loan-to-value ratio means the ratio of debt to the value of the property. If the loan-to-value ratio is low, the borrower is paying a higher down payment on the property If the loan-to-value ratio is high, the borrower is making a low down payment.

Question 212

12. When is a lender required to terminate a borrower’s private mortgage insurance?

Answer 212

After the borrower has accumulated 22% of equity in the property and is current with the loan payments.

Question 213

12. What is the difference between an FHA loan and a VA loan?

Answer 213

FHA insures loans and VA guarantees them.

Question 214

12. What is the major difference between a CalVet loan and other loans?

Answer 214

Unlike other loans, the CalVet loan is actually a land contract. When a veteran is approved for a CalVet loan, the state purchases the property and resells it to the veteran using a contract of sale. The state retains the title to the property until the loan is paid off, after which California will issue a grant deed to transfer legal title to the veteran.

Question 215

12. Define a purchase money mortgage.

Answer 215

With a purchase money mortgage, the buyer borrows from the seller in addition to the lender. This is sometimes done when a buyer cannot qualify for a bank loan for the full amount; so the seller “takes back” a portion of the purchase price as a second mortgage. A purchase money mortgage can also be a first mortgage.

Question 216

12. What’s the difference between a lease purchase and a lease option?

Answer 216

In a lease purchase arrangement, a tenant enters into two agreements simultaneously – an agreement to purchase and a lease. A lease option is a clause in a lease that gives the tenant the right to purchase the property under specific conditions – usually at a predetermined price and within a set period of time.

Question 217

12. Greg and Joyce purchased a home from the builder who offered to pay $5,000 at closing as an incentive to get them to buy. What kind of mortgage might they get?

Answer 217

A buydown mortgage.

Question 218

12. What are grant programs typically used for?

Answer 218

Down payment assistance.

Question 219

12. A blanket mortgage: a) Covers more than one piece of property. b) Entails entering into two agreements simultaneously. c) Is subordinate to a first mortgage. d) Reduces the monthly payment for a borrower during the initial years.

Answer 219

a) Covers more than one piece of property.

Question 220

12. Which loan covers the period of time between the end of one mortgage and the beginning of another? a) Construction b) Wraparound c) Open-end d) Bridge

Answer 220

d) Bridge

Question 221

12. In which of the following types of loans is the payment allocated only to interest? a) Straight b) Balloon c) Amortized d) Adjustable rate

Answer 221

a) Straight

Question 222

12. Which of these statements is true about a CalVet loan? a) Loan terms are from 15 to 25 years. b) If the loan is VA guaranteed, no down payment is required. c) There is a 6-month pre-payment penalty for paying off the loan early. d) Interest rates are typically fixed rate.

Answer 222

b) If the loan is VA guaranteed, no down payment is required.

Question 223

12. Lenders can charge all of the following except which fee when a borrower gets a loan? a) Loan origination fee b) Points c) Survey fee d) Discount points

Answer 223

c) Survey fee

Question 224

12. Which statement is true? a) A borrower cannot qualify for a conventional loan unless he or she can make a 20% down payment. b) Private mortgage insurance is available for FHA loans. c) A borrower can request the cancellation of PMI payments when the equity reaches 20% of the appraised value. d) A lender can continue to collect PMI payments until the homeowner's equity reaches 25%.

Answer 224

c) A borrower can request the cancellation of PMI payments when the equity reaches 20% of the appraised value.

Question 225

12. Which of the following is not true about reverse annuity mortgages? a) The lender makes payments to the borrower. b) This mortgage type is popular among the elderly. c) The borrower pays a fixed rate of interest. d) The loan must be repaid before the borrower's death.

Answer 225

d) The loan must be repaid before the borrower's death.

Question 226

12. Which of these is also called a contract for deed? a) Purchase money mortgage b) Lease purchase c) Second mortgage d) Installment land sales contract

Answer 226

d) Installment land sales contract

Question 227

12. A growing equity mortgage: a) Is an adjustable rate loan. b) Allows quick repayment of the loan through accelerated payments. c) Includes a margin. d) Has a payment cap.

Answer 227

b) Allows quick repayment of the loan through accelerated payments.

Question 228

12. Which of the following is a low loan-to-value ratio? a) Jake is getting a VA loan with no down payment. b) Sandy and Bill are putting 30% down on their home purchase. c) Alice is getting a conventional loan and making a 15% down payment. d) Tim and Gail have qualified for an FHA loan.

Answer 228

b) Sandy and Bill are putting 30% down on their home purchase.

Question 229

12. Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points? a) $680 b) $1,360 c) $2,040 d) $2,720

Answer 229

c) $2,040

Question 230

13. What is the role of the Fed?

Answer 230

To stabilize the economy through the judicious handling of the money supply and credit available in the US.

Question 231

13. Explain the difference between the primary and secondary mortgage markets.

Answer 231

The primary market lends money directly. | The secondary market buys, sells and trades loans.

Question 232

13. Explain the difference between the primary and secondary mortgage markets.

Answer 232

The primary market lends money directly. The secondary market buys, sells and trades loans. 3. Differentiate between mortgage brokers and mortgage bankers. Mortgage bankers originate loans. Mortgage brokers act as middlemen to bring borrowers and lenders together.

Question 233

13. What do Fannie Mae and Ginne Mae do that Freddie Mac does not?

Answer 233

Guarantee payment of mortgages.

Question 234

13. If lenders intend to sell mortgages in the secondary market, what must they do?

Answer 234

Use the standardized procedures – called uniform procedures – outlined in the Fannie Mae and Freddie Mac forms.

Question 235

13. List the steps of underwriting.

Answer 235

Qualify the buyer. Qualify the property. Decide yes or no to the loan.

Question 236

13. What makes up a mortgage?

Answer 236

A mortgage has two parts: debt and security for the debt.

Question 237

13. What actions does a lender take to sell a mortgage in the secondary market?

Answer 237

The original lender signs the note over to a third party investor or other mortgage company and then executes a document called an assignment of mortgage.

Question 238

13. What is the basic purpose of Truth in Lending - Regulation Z?

Answer 238

Give buyers information about the true cost of obtaining credit, so that borrowers can compare the costs of various lenders.

Question 239

13. What is the right to rescind and what is not covered by this rule?

Answer 239

The borrower has a right to cancel the transaction by notifying the lender within three days. This does not apply to residential first mortgage loans.

Question 240

13. What are the penalties for violating Regulation Z?

Answer 240

Twice the amount of the finance charge or a minimum of $100, up to a maximum of $1,000. Also court costs, attorney fees and actual damages. Willful violation of regulation Z is a misdemeanor that is punishable by a fine of up to $5,000 or one year in prison, or both.

Question 241

13. What does ECOA prohibit?

Answer 241

Discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency on public assistance

Question 242

13. All of the following are primary mortgage market lenders except which? a) Investment groups b) Credit unions c) Mortgage brokers d) Holding warehouse agencies

Answer 242

d) Holding warehouse agencies

Question 243

13. ECOA requires that a lender send a denial notice within: a) 30 days b) 60 days c) 90 days d) 120 days

Answer 243

a) 30 days

Question 244

13. Regulation Z applies to: a) $35,000 farm loan b) $50,000 restaurant loan c) $75,000 condominium loan d) $85,000 warehouse loan

Answer 244

c) $75,000 condominium loan

Question 245

13. When a lender is evaluating a buyer's ability to repay a loan, the lender looks at all of these items except which one? a) Educational history b) Past credit history c) Present employment status d) Liabilities

Answer 245

a) Educational history

Question 246

13. Who is FNMA? a) Fannie Mae b) Ginnie Mae c) Fannie Mac d) Freddie Mac

Answer 246

a) Fannie Mae

Question 247

13. Which of the following statements is not true about the Federal Reserve? a) Regulates reserve requirements for all institutions that offer checking accounts. b) Supervises the Truth in Lending Act. c) Supervises the Federal Housing Authority. d) Engages in open market operations.

Answer 247

c) Supervises the Federal Housing Authority.

Question 248

13. Fannie Mae does all of the following activities except which? a) Buys conventional, FHA and VA loans. b) Buys pools of mortgages in exchange for mortgage-backed securities. c) Guarantees payment of all interest and principal on mortgage-backed securities. d) Administers special assistance programs.

Answer 248

d) Administers special assistance programs.

Question 249

13. RESPA applies to: a) Second mortgage on a time-share b) First mortgage on a single-family home c) Primary mortgage on an office building d) Settlement charges on a shopping center

Answer 249

b) First mortgage on a single-family home

Question 250

13. Which statement is not true? a) Mortgage brokers do not lend money. b) Mortgage bankers bring borrowers and lenders together. c) Mortgage bankers are a large source of residential loans in California. d) Mortgage bankers originate loans.

Answer 250

b) Mortgage bankers bring borrowers and lenders together.

Question 251

13. The amount of debt, time and method of payment, interest rate and other loan terms are part of the: a) Mortgage b) Promissory note c) Contract for deed d) Purchase agreement

Answer 251

b) Promissory note

Question 252

13. The maximum commission amount a mortgage loan broker can charge on a second mortgage loan of 3 years for $18,000 is what? a) $900.00 b) $1,500.00 c) $1,800.00 d) $2,700.00

Answer 252

d) $2,700.00

Question 253

13. California law requires that a licensee acting as a loan broker keep the Mortgage Loan Disclosure Statement on file for how long? a) 1 year b) 2 years c) 3 years d) 4 years

Answer 253

c) 3 years

Question 254

14. What is escrow?

Answer 254

The process in which a disinterested third party holds all money and documents relating to a transaction until all of the terms and conditions of the escrow instructions have been satisfied.

Question 255

14. Who needs title insurance and why?

Answer 255

Both the buyer and the lender need title insurance. Insurance for the buyer ensures a clear title and protects his or her investment. Insurance for the lender protects the lender’s interest in the property.

Question 256

14. What is the difference between CLTA and ALTA policies? How does ALTA-R differ from ALTA?

Answer 256

CLTA is the basic standard policy and ALTA provides extended coverage. ALTA includes a survey and ALTA-R does not.

Question 257

14. What items are not covered by any title insurance policy?

Answer 257

Defects known to the insured but not disclosed to the title insurer. Government zoning regulations.

Question 258

14. What is the Uniform Settlement Statement?

Answer 258

A RESPA-required form that details the costs that the buyer and seller will pay at closing.

Question 259

14. What is the ultimate result of using the HUD Form-1 statement?

Answer 259

The buyer will see the actual debits and credits for the purchase and know exactly how much money to bring to closing. The seller will know exactly how much he or she will receive at closing.

Question 260

14. If an item is paid for in advance by the seller, how will it be handled on the settlement statement?

Answer 260

The buyer will receive a debit and the seller will receive a credit.

Question 261

14. What do you call those items that have been incurred by the seller but not paid, and how will they be handled on the settlement statement?

Answer 261

These items are paid in arrears. The buyer will get a credit and the seller will get a debit.

Question 262

14. Accepting referral fees: a) Is common business practice. b) Could be a violation of state licensing laws. c) Is forbidden under any circumstances. d) Is permissible in amounts under $50.

Answer 262

b) Could be a violation of state licensing laws.

Question 263

14. Which of the following is not an item that a buyer usually pays at closing? a) Fee for clearing the title b) Mortgage recording fee c) Homeowner's insurance d) ALTA policy

Answer 263

a) Fee for clearing the title

Question 264

14. Who is responsible for ordering the preliminary title report? a) Buyer b) Escrow officer c) Seller d) Real estate salesperson

Answer 264

b) Escrow officer

Question 265

14. Which of the following statements is NOT true regarding a broker acting as an escrow agent? a) Under no circumstances may a broker advertise that he or she conducts escrows. b) A broker cannot use the word escrow" in a fictitious name. c) The broker must conduct the escrow personally and not delegate any escrow activities. d) Written escrow instructions must include a statement with the broker's name

Answer 265

indicating he or she is a licensed real estate agent."

Question 266

14. Which of these individuals could not act as an escrow agent without an escrow license? a) Attorney b) Banker c) Broker d) Real estate salesperson

Answer 266

d) Real estate salesperson

Question 267

14. RESPA gives the buyer the right to review the completed settlement statement how long before closing? a) Two calendar days b) One business week c) One calendar week d) One business day

Answer 267

d) One business day

Question 268

14. Proof of ownership of a property is called: a) Marketable title b) Abstract of title c) Evidence of title d) Title commitment

Answer 268

c) Evidence of title

Question 269

14. Which item is not covered by CLTA, ALTA or ALTA-R insurance policies? a) Claims of persons in possession of the property b) Mining claims c) Zoning ordinances d) Unrecorded federal real estate liens

Answer 269

c) Zoning ordinances

Question 270

14. RESPA applies to all of the following EXCEPT which? a) Condominium purchase b) Seller-financed loan c) Loan involving a second mortgage d) Federally-insured loan

Answer 270

b) Seller-financed loan

Question 271

14. Which statement is not true about opening escrows? a) The escrow holder will need information about the broker's commission. b) The escrow holder will use the purchase agreement as the basis for writing the escrow instructions. c) The buyer's and seller's agents will sign the escrow instructions. d) Once escrow instructions are signed, changes can only be made with the written agreement of all parties.

Answer 271

c) The buyer's and seller's agents will sign the escrow instructions.

Question 272

15. What is important to know about unlicensed real estate assistants?

Answer 272

Unlicensed assistants can perform a variety of activities to assist real estate licensees in transactions. However, they may not perform any activity which requires a real estate license.

Question 273

15. What types of office administration tasks are important for a licensed assistant to perform?

Answer 273

A good filing system is critical and should include cross-referencing and indexing components.

Question 274

15. In what three ways can an assistant aid an agent with appointments?

Answer 274

Act as an “appointment reminder.” Compile files with the appropriate blank documents for the agent to take to listing and selling appointments. Meet with appraisers or inspectors as the agent’s representative.

Question 275

15. Why is coordinating escrow so important and how can an assistant help?

Answer 275

The escrow process can make or break a sale. An assistant can talk to the escrow officer to find out what documents have been returned, what documents are outstanding, if all contingencies have been removed and if all conditions have been met.

Question 276

15. Which of the following would not be a reason to choose to be an assistant? a) To gain self-confidence b) To learn more about the real estate business c) To have a stable, steady income d) To make more money than a real estate agent

Answer 276

d) To make more money than a real estate agent

Question 277

15. What is a good method for an assistant to keep track of the various types of files a real estate broker must have? a) An ABC filing system b) A master transaction file c) A hybrid filing system d) A cross-referencing system

Answer 277

d) A cross-referencing system

Question 278

15. Janet is an unlicensed assistant. She can do all of the following except which? a) Prepare a listing contract. b) File a listing contract. c) Gather listing forms for her employer. d) Prepare color flyers on listings.

Answer 278

a) Prepare a listing contract.

Question 279

15. Gail is a licensed real estate assistant. Which of the following activities would she not be authorized to perform? a) Discuss a contract with a buyer. b) Conduct an open house on her own. c) Write and sign commission checks to salespersons. d) Meet with an inspector at a listing.

Answer 279

c) Write and sign commission checks to salespersons.

Question 280

15. Which statement is not true? a) Sending cards and newsletters is a good way to keep in contact with clients and prospects. b) An assistant should never be left with the task of taking photos of a new listing. c) An assistant can keep track of the progress of activities during escrow. d) In most situations, an assistant should not have the responsibility of in-person contact with clients.

Answer 280

b) An assistant should never be left with the task of taking photos of a new listing.

Question 281

15. Assistants who are asked to be available for tasks in the field rather than in the office are referred to as: a) Part-time workers b) Field staff c) On-call assistants d) Commission-only assistants

Answer 281

c) On-call assistants

Question 282

15. Which of these items on a resume accompanying an application for an assistant's position should be kept brief? a) Interests b) Technical skills c) People skills d) Education

Answer 282

a) Interests

Question 283

15. A real estate assistant: a) Must have a real estate license. b) Needs a license to perform activities that are not strictly administrative in nature. c) Can perform some real estate activities without a license. d) Must have an assistant license.

Answer 283

b) Needs a license to perform activities that are not strictly administrative in nature.

Question 284

15. Which statement is true about a real estate assistant? a) Does not need to be familiar with office policy. b) Must be a full-time employee. c) May be an independent contractor. d) Must start out as a part-time employee.

Answer 284

c) May be an independent contractor.

Question 285

15. Assistants who are hired to work part time: a) Work 12-15 hours per week. b) Get salary plus benefits. c) Usually get a percentage of the commission in addition to a salary. d) Should get workmen's compensation.

Answer 285

d) Should get workmen's compensation.

Question 286

16. When is real property reassessed?

Answer 286

Real property is reassessed every time it is transferred.

Question 287

16. What does Proposition 58 state?

Answer 287

Proposition 58 allows the transfer of property from one spouse to another or to children without triggering a reassessment.

Question 288

16. For whom do property tax exemptions exist and for how much?

Answer 288

There is a homeowner’s exemption for $7,000 against the assessed value and a veteran’s exemption for $4,000 against the assessed value.

Question 289

16. Explain the documentary transfer tax.

Answer 289

The California tax laws allow a county or city to adopt a documentary transfer tax to apply to the transfer of properties located in the county. The tax is computed on the total price paid for the property, less any assumed loans. The tax is computed at the rate of 55 cents for each $500 of consideration or fraction thereof.

Question 290

16. Under what circumstances can a loss on the sale of a personal residence be deducted from income taxes?

Answer 290

Normally, under no circumstances. But if the property is converted to an income-producing rental, then a loss on the subsequent sale could be deducted.

Question 291

16. What items can an owner of an income-producing property deduct that an owner of a personal residence cannot?

Answer 291

Operating expenses and depreciation.

Question 292

16. What are the capital gains exclusions associated with the sale of a personal residence?

Answer 292

A single seller can exclude up to $250,000 of gain and a couple can exclude up to $500,000.

Question 293

16. What is important for a broker to remember about the Foreign Investment in Real Property Tax Act?

Answer 293

The buyer is responsible for withholding 10% of the sales price if the seller is a foreigner and the home is priced over $300,000. If the money is not withheld, the buyer and broker are equally responsible and the broker could end up paying the entire unpaid taxes due.

Question 294

16. When is real property reassessed?

Answer 294

Real property is reassessed every time it is transferred.

Question 295

16. What does Proposition 58 state?

Answer 295

Proposition 58 allows the transfer of property from one spouse to another or to children without triggering a reassessment.

Question 296

16. For whom do property tax exemptions exist and for how much?

Answer 296

There is a homeowner’s exemption for $7,000 against the assessed value and a veteran’s exemption for $4,000 against the assessed value.

Question 297

16. Explain the documentary transfer tax.

Answer 297

The California tax laws allow a county or city to adopt a documentary transfer tax to apply to the transfer of properties located in the county. The tax is computed on the total price paid for the property, less any assumed loans. The tax is computed at the rate of 55 cents for each $500 of consideration or fraction thereof.

Question 298

16. Under what circumstances can a loss on the sale of a personal residence be deducted from income taxes?

Answer 298

Normally, under no circumstances. But if the property is converted to an income-producing rental, then a loss on the subsequent sale could be deducted.

Question 299

16. What items can an owner of an income-producing property deduct that an owner of a personal residence cannot?

Answer 299

Operating expenses and depreciation.

Question 300

16. What are the capital gains exclusions associated with the sale of a personal residence?

Answer 300

A single seller can exclude up to $250,000 of gain and a couple can exclude up to $500,000.

Question 301

16. What is important for a broker to remember about the Foreign Investment in Real Property Tax Act?

Answer 301

The buyer is responsible for withholding 10% of the sales price if the seller is a foreigner and the home is priced over $300,000. If the money is not withheld, the buyer and broker are equally responsible and the broker could end up paying the entire unpaid taxes due.

Question 302

16. How long must buyers and brokers keep the documentation on a foreign sale? a) 2 years b) 3 years c) 4 years d) 5 years

Answer 302

d) 5 years

Question 303

16. Homeowners can deduct all but which of the following from their income taxes? a) Mortgage interest b) Depreciation c) Prepayment penalties d) Property taxes

Answer 303

b) Depreciation

Question 304

16. According to FIRPTA, what percent would a buyer need to withhold when purchasing a $200,000 home from a foreigner? a) 0% b) 3% c) 3.30% d) 10%

Answer 304

a) 0%

Question 305

16. When a person acquires new property, which is true? a) The owner has 30 days to notify the county assessor. b) The seller must file a bill of sale with the county clerk. c) The owner has 45 days to pay the new property taxes. d) The owner has 45 days to file a change in ownership statement.

Answer 305

d) The owner has 45 days to file a change in ownership statement.

Question 306

16. Mike bought his home last year for $150,000. His property taxes would be assessed at: a) $1,000 b) $1,500 c) $2,250 d) $3,000

Answer 306

b) $1,500

Question 307

16. How can a seller lessen the tax impact of selling a home for enough profit that he or she will be boosted to a much higher tax bracket? a) There is nothing that can offset this problem. b) Do a tax-free exchange instead. c) Participate in a tax shelter program. d) Do an installment sale.

Answer 307

d) Do an installment sale.

Question 308

16. When is the first installment of property taxes due? a) First of February b) Tenth of April c) First of November d) Tenth of December

Answer 308

c) First of November

Question 309

16. Bill and Brenda bought their home for $150,000. They made $50,000 of improvements. They sold the home for $450,000 and paid $30,000 in selling expenses, including the broker's commission. On what amount will they pay capital gains tax? a) $0 b) $220,000 c) $250,000 d) $300,000

Answer 309

a) $0

Question 310

16. A totally disabled veteran could be eligible for a property tax exemption of up to what amount? a) $50,000 b) $100,000 c) $150,000 d) $200,000

Answer 310

c) $150,000

Question 311

16. Which proposition limited the maximum amount of tax on real property? a) Proposition 13 b) Proposition 58 c) Proposition 60 d) Proposition 90

Answer 311

a) Proposition 13

Question 312

17. What are the three important considerations for a good property investment?

Answer 312

The property must meet the investor’s objectives. The investor must have the financial ability to handle the costs involved. The investor must examine the economic soundness of the investment.

Question 313

17. What are some tax benefits associated with investing?

Answer 313

Tax shelters, deferral of capital gains through a 1031 exchange, installment sale.

Question 314

17. How could refinancing be an investment benefit?

Answer 314

Refinancing one property can free up funds to purchase another income property. The proceeds from the refinancing would be tax free and the interest on the new loan for the second property will be fully tax deductible.

Question 315

17. How is property management seen as a risk to investing?

Answer 315

Most investors are not property managers. They don’t have the time, skill or even the desire to manage the property on their own. If they don’t hire a professional property manager, there could be real problems keeping the investment profitable.

Question 316

17. How do life insurance companies get involved in the investment market?

Answer 316

Life insurance companies like to invest in large commercial projects like shopping malls. Since they do not have a restricted geographical lending area, they have no problem lending on projects that are distant from their home offices.

Question 317

17. How does a limited partnership differ from a general partnership?

Answer 317

A limited partnership has one general partner who has unlimited personal liability for the group’s debts and obligations, while the other partners are liable only up to the limits of their capital investment. In a general partnership, all partners have unlimited personal liability for the debts and obligations of the partnership.

Question 318

17. What does the net operating income of a property represent?

Answer 318

This figure represents the amount of income available as a return to the investor.

Question 319

17. When studying the characteristics of an area in which an investment property is located, what factors should the investor look at carefully?

Answer 319

Population, rental trends and projected demand for units in the area.

Question 320

17. What are the three important considerations for a good property investment?

Answer 320

The property must meet the investor’s objectives. The investor must have the financial ability to handle the costs involved. The investor must examine the economic soundness of the investment.

Question 321

17. What are some tax benefits associated with investing?

Answer 321

Tax shelters, deferral of capital gains through a 1031 exchange, installment sale.

Question 322

17. How could refinancing be an investment benefit?

Answer 322

Refinancing one property can free up funds to purchase another income property. The proceeds from the refinancing would be tax free and the interest on the new loan for the second property will be fully tax deductible.

Question 323

17. How is property management seen as a risk to investing?

Answer 323

Most investors are not property managers. They don’t have the time, skill or even the desire to manage the property on their own. If they don’t hire a professional property manager, there could be real problems keeping the investment profitable.

Question 324

17. How do life insurance companies get involved in the investment market?

Answer 324

Life insurance companies like to invest in large commercial projects like shopping malls. Since they do not have a restricted geographical lending area, they have no problem lending on projects that are distant from their home offices.

Question 325

17. How does a limited partnership differ from a general partnership?

Answer 325

A limited partnership has one general partner who has unlimited personal liability for the group’s debts and obligations, while the other partners are liable only up to the limits of their capital investment. In a general partnership, all partners have unlimited personal liability for the debts and obligations of the partnership.

Question 326

17. What does the net operating income of a property represent?

Answer 326

This figure represents the amount of income available as a return to the investor.

Question 327

17. When studying the characteristics of an area in which an investment property is located, what factors should the investor look at carefully?

Answer 327

Population, rental trends and projected demand for units in the area.

Question 328

17. What is the foremost reason people invest in property? a) To save on taxes b) To make money c) To plan for retirement d) To have a second home to enjoy

Answer 328

b) To make money

Question 329

17. Which lender typically deals in interim financing? a) Commercial bank b) Life insurance company c) Syndicate d) Real estate trust

Answer 329

a) Commercial bank

Question 330

17. Which figure represents the amount of income available as a return to an investor? a) Net operating income b) Potential gross income c) Adjusted gross spendable income d) Effective gross income

Answer 330

a) Net operating income

Question 331

17. When all members have unlimited liability for debts and obligations of the group, the organization is a: a) Limited Partnership b) Corporation c) General Partnership d) Syndicate

Answer 331

c) General Partnership

Question 332

17. Which of the following is not a possible benefit of investing in real property? a) Tax shelter b) Liquidity c) Income d) Stability

Answer 332

b) Liquidity

Question 333

17. Examining the economic soundness of a property means looking at all of the following except which? a) Zoning issues b) Community growth trends c) Refinancing d) Income projections of the property

Answer 333

c) Refinancing

Question 334

17. Which statement is not true about a Real Estate Investment Trust? a) Sells ownership shares. b) Receives special tax considerations. c) Offers high yields to customers. d) Easy to qualify for.

Answer 334

d) Easy to qualify for.

Question 335

17. An association of two or more people who combine financial resources to achieve investment objectives is: a) Not allowed in California. b) A syndicate. c) Made up of wealthy individuals. d) A group of brokers.

Answer 335

b) A syndicate.

Question 336

17. Which of these lenders would be most likely to finance a large shopping mall? a) Commercial bank b) Seller c) Savings and loan association d) Life insurance company

Answer 336

d) Life insurance company

Question 337

17. Which of the following is a possible benefit of investing in real property? a) Capital outlay b) Financing c) Appreciation d) Property management

Answer 337

c) Appreciation

Question 338

18. What is goodwill as it relates to a business?

Answer 338

Goodwill is an intangible asset that results from the reputation of the business. It is defined as the expectation that the public will continue to do business at the establishment.

Question 339

18. List the three Institute of Real Estate Management property management designations.

Answer 339

Certified Property Manager© (CPM©) for individuals meeting a certain level of education and experience. Accredited Residential Manager© (ARM©) for resident managers. Accredited Management Organization© (AMO©) for companies who employ at least one CPM.

Question 340

18. What are the three general responsibilities of a property manager?

Answer 340

Renting the units promptly at the highest market rent possible. Keeping operational and other costs within budget. Preserving and enhancing the physical value and prestige of the property.

Question 341

18. Describe how a property manager can receive his or her fees.

Answer 341

A property manager’s fees can be a flat monthly amount, a percentage of the gross rents collected or a combination of the two. In addition to the fees collected on rentals, a property manager can receive additional compensation for renewing leases and for supervising major repairs or alterations.

Question 342

18. What should a good management contract contain?

Answer 342

- Terms and period of the contract. - Policies pertaining to the management of the premises. - Management fees. - Authority and powers given by the owner to the manager.

Question 343

18. Which type of leasehold estate is commonly referred to as a periodic tenancy?

Answer 343

Estate from period to period.

Question 344

18. Define a gross lease.

Answer 344

The tenant pays a fixed rent and the owner pays the taxes, insurance and other normal ownership expenses.

Question 345

18. Under what conditions may a landlord enter a tenant’s property?

Answer 345

Only when one of the following conditions exists: - An emergency requires the landlord to enter. - The tenant gives consent to enter. - The landlord enters during normal business hours and only after giving 24 hours notice to either make repairs or to show the property to prospective tenants, purchasers or contractors. - The tenant has abandoned or surrendered the property. - The landlord has a court order allowing the entry.

Question 346

18. California allows a property manager to charge a non-refundable screening fee of how much? a) $15 b) $20 c) $25 d) $30

Answer 346

d) $30

Question 347

18. Which document shows the assets and liabilities of a business? a) Bill of sale b) Balance sheet c) Profit and loss statement d) Purchase contract

Answer 347

b) Balance sheet

Question 348

18. How often can a tenant call his or her own professional to make repairs and then deduct the amount from the next month's rent? a) Never b) Once every 3 months c) Once a year d) Twice in a 12-month period

Answer 348

d) Twice in a 12-month period

Question 349

18. When a tenant agrees to pay all taxes, insurance, maintenance and repairs, that tenant has what kind of lease? a) Gross b) Percentage c) Net d) Graduated

Answer 349

c) Net

Question 350

18. When setting up a rent schedule, a property manager should analyze all but which of the following? a) Neighborhood amenities b) Community growth c) Area vacancy rates d) New home sales

Answer 350

d) New home sales

Question 351

18. What kind of lease contains a recapture clause? a) Percentage b) Net c) Gross d) Graduated

Answer 351

a) Percentage

Question 352

18. The IREM designation reserved for individuals who meet a certain level of education and experience is: a) CPM b) ARM c) CPR d) AMO

Answer 352

a) CPM

Question 353

18. Which of the following represents an intangible business asset? a) Equipment b) Inventory c) Goodwill d) Fixtures

Answer 353

c) Goodwill

Question 354

18. A lease that has no time limit is an: a) Estate for years b) Estate at will c) Estate from period to period d) Estate at sufferance

Answer 354

b) Estate at will

Question 355

18. When can a landlord enter a tenant's property to make repairs or show it? a) Only after receiving the tenant's consent. b) During business hours and only after giving the tenant 24 hours notice. c) Anytime he or she chooses. d) Only with a court order.

Answer 355

b) During business hours and only after giving the tenant 24 hours notice.