Real Esate National Guide

NATIONAL FINAL REVIEW
1. Which of the following is NOT one of the objectives of the Federal Reserve System?
1. To counteract inflationary and deflationary trends
2. To control the secondary mortgage market
3. To create a favorable economic climate
4. To maintain sound credit conditions
2. A tenant enters into a two-year oral lease. According to the Statue of Frauds in most states the contract is
1. unenforceable
2. illegal
3. valid
4. voidable
3. A fee simple holder of a parcel of real estate grants a life estate to her daughter and stipulates that upon the
daughter's death the property will pass to her grandson. The second estate is called a(n)
1. estate at sufferance
2. legal life estate
3. remainder estate
4. reversionary estate
4. A property buyer obtains a term loan to finance the purchase. Which of the following is TRUE regarding the buyer’s
loan?
1. The balance will be amortized over the life of the loan
2. All of the interest is paid at the end of the loan period
3. The entire loan principal is due at the end of the loan period
4. The loan payments include both interest and principal
5. Types of title evidence include all of the following EXCEPT

1. abstract of title with lawyer’s opinion
2. Torrens systems
3. certificate of title
4. general warranty deed
6. A borrower has a mortgage loan that requires monthly payments of $936.25 for ten years and a final payment of
$36,287. This type of loan is best described as a
1. graduated payment loan
2. balloon loan
3. reverse annuity loan
4. blanket loan
7. Brokers should deposit all earnest money checks they receive into an escrow account or trust account to prevent
being accused of
1. antitrust violation
2. embezzlement
3. misrepresentation
4. commingling

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8. In performing an appraisal of real estate, the appraiser

1. establishes the cost of the property
2. estimates the property’s market value
3. determines the property’s final selling price
4. sets the market value of the property
9. Local zoning ordinances are used to regulate all of the following EXCEPT
1. rules for conducting open houses
2. allowable uses for buildings
3. the height of buildings
4. the density of the population
10. After paying the broker’s fee of 6%, a seller wants to net $180,000 from the sale of his house. What must the property
sell for to satisfy both the broker and the seller?
1. $180,000
2. $190,800
3. $191,489
4. $196,000
11. Hostile, visible, exclusive, and continuous use of another person’s land for a prescribed period of time is called
1. voluntary alienation
2. escheat
3. eminent domain
4. adverse possession
12. A property owner constructed a commercial building on the property. Three years later an ordinance was passed
prohibiting commercial buildings in the owner’s area. In this situation
1. the building is a nonconforming use
2. the building is a zoning violation
3. the building will have to be torn down
4. the building will come under eminent domain
13. The owner of a parcel of land holds an easement right over an adjoining parcel of land. The parcel of land on which the
easement runs is referred to as the
1. servient tenement
2. dominant tenement
3. condemnation tenement
4. compliant tenement
14. What is the amount of real estate tax due on a condominium with a market value of $140,000 if it is assessed at 30%
of market value, has an equalizer of 1.5, and a tax rate of $5 per $100 of assessed value?
1. $2,100
2. $3,150
3. $7,000
4. $10,500

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15. Which of the following expenses is usually NOT prorated between the buyer and seller?
1. Title fees
2. Prepaid rents
3. Utility charges
4. Real estate taxes
16. A property owner subdivided a piece of property, selling the front half and retaining the back half. The back half of the
property retained by the owner does not have access to any roads. The type of easement the courts might grant in
this situation is an
1. easement in gross
2. easement by necessity
3. easement by prescription
4. easement for possession
17. A property owner defaulted on a mortgage and the lender foreclosed on the property. The property sold at the
foreclosure sale for less than the loan balance.To recover the remainder of the money the lender may
1. sue for damages
2. obtain a deficiency judgment
3. sue for specific performance
4. bring a quiet title lawsuit
18. On Wednesday, Sam offers to sell his house to Beth for $320,000. On Sunday, Beth makes a counteroffer of
$310,000. On Friday, Beth withdraws the counteroffer of $310,000 and accepts Sam’s offer of $320,000. In this
situation there is
1. a valid agreement since Beth accepted the terms of Sam’s original offer
2. no valid agreement because Beth’s offer was made on a Sunday
3. no valid agreement because Beth’s counteroffer ended Sam’s offer
4. no valid agreement because Sam’s offer was accepted too late
19. A homebuyer obtains a loan to finance the purchase of the house as well as personal property. This type of loan is
called a
1. graduated payment loan
2. package loan
3. blanket loan
4. wraparound loan
20. Which of the following is a requirement for a valid deed?

1. A description of how the broker’s commission is to be determined
2. A granting clause
3. Recording of the deed in the public records
4. A clause prohibiting discrimination
21. An investor purchased a building for $360,000 by paying 10% down and financing the rest of the purchase price. The
lender charged two points as a loan origination fee. How much was the investor charged for the fee?
1. $720
2. $6,480
3. $7,200
4. $64,800

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22. A 55% / 45% commission split is agreed to by a selling and listing broker. They then split their share of the
commission evenly with their salespeople. If a house sells for $290,000 and the commission rate is 6%, how much
commission will the selling salesperson receive?
1. $17,400
2. $9,570
3. $4,785
4. $4,307
23. A requirement for obtaining title to property under the concept of adverse possession is that the party taking
possession must compensate the owner. use of the property must be hidden. the party must take possession
continuously for a period of time prescribed by law. the possession must be with the owner’s consent.
1. the party taking possession must compensate the owner
2. use of the property must be hidden
3. the party must take possession continuously for a period of time prescribed by law
4. the possession must be with the owner’s consent
24. Using the income approach, what is the value of an apartment building if it has gross income of $60,000, operating
expenses of $10,000 and a capitalization rate of 8 percent? $600,000 $625,000 $666,666 $777,777
1. $600,000
2. $625,000
3. $666,666
4. $777,777
25. One of the provisions of the Truth in Lending Act allows for a cooling off period in which the loan can be rescinded.
The rescission provision would apply to which of the following loans?
1. loan to construct a residence
2. loan to purchase a residence
3. business loan
4. consumer loan
26. Title to property is transferred by a deed when the deed is

1. delivered and accepted by the grantee
2. dated
3. signed by the grantor
4. recorded in the public records
27. A property sold for $240,000 and the broker earned a 5½% commission on the sale. What was the amount of the
commission?
1. $1,320
2. $12,000
3. $12,480
4. $13,200
28. What government agency insures deposits in banks and savings institutions?
1. FHA
2. GNMA
3. FDIC
4. FNMA

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29. A broker and seller enter into a listing agreement. Under the terms of the listing, the seller will receive $180,000 from
the sale with any sales proceeds over that amount going to the broker. This type of listing is called a(n)
1. gross listing
2. net listing
3. multiple listings
4. open listing
30. A homeowner wishes to make an improvement to the property that does not comply with the local zoning ordinances.
The property owner should request
1. a nonconforming use
2. a variance
3. an amendment
4. condemnation proceedings
31. What is the cost of installing a fence around a rectangular shaped lot if the cost of the fence is $3.25 per linear foot
and the lot is 80-feet wide and 120-feet deep?
1. $210
2. $650
3. $1,300
4. $31,200
32. The 1866 Civil Rights Act prohibits discrimination in all housing based on a person’s
1. national origin
2. religion
3. race
4. national origin, race, and religion
33. A couple purchases a cooperative apartment unit. In this situation the couple will
1. receive a deed for their unit
2. receive a separate real estate tax bill for their unit
3. become stockholders in a corporation
4. need to take out a mortgage loan on their unit
34. The property in a real estate sales transaction has a 450-gallon heating oil tank that is one-quarter full. The current
cost of oil is $2.25 per gallon. What is the appropriate entry to be made at closing?
1. Credit the buyer $253.13
2. Credit the seller $253.13
3. Debit the buyer $1,012.50
4. Debit the seller $1,012.50
35. The amount at which a willing and informed seller would sell and a willing and informed buyer would buy is called a
property’s
1. assessed value
2. market value
3. equalized value
4. book value

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36. The number of discount points charged by the lender to the buyers or sellers in a real estate transaction are set by
1. the lender
2. the FHA
3. government regulations
4. federal usury laws
37. Which of the following statements best describes the income approach to value?
1. It is used more frequently than the market data approach
2. It is the most common method used to appraise single-family residences
3. It is best suited for appraising vacant land
4. It estimates an investment property’s value based on its return
38. The difference between a specific and general lien is that

1. a general lien covers all of a debtor’s property while a specific lien covers a specific property
2. a general lien is against only personal property while a specific lien is against real property
3. a specific lien is held by one party while a general lien can be held by several parties
4. There is no difference between a specific and a general lien
39. Which of the following best describes steering?

1. Illegally setting commission rates
2. Refusing to make loans to persons living in certain areas
3. Another term for panic peddling
4. Leading prospective buyers to or away from certain areas
40. At the closing for the sale of a home, the lender requires the buyer to place a sum of money into an impound (also
called escrow or reserve) account. The purpose of this money is most likely for
1. loan processing fees
2. discount points
3. title insurance fees
4. payment of future real estate taxes or property insurance
41. A seller has received an offer to purchase her house from a prospective buyer. The seller will still be able to accept
the offer if
1. another offer is received from a third party
2. the offer is withdrawn by the buyer before it is accepted
3. the seller makes a counteroffer
4. the time period stated in the offer expires
42. Broken windows, potholes in the driveway, and peeling paint are examples of
1. physical curable depreciation
2. functional curable depreciation
3. economic obsolescence
4. incurable physical depreciation
43. An appraiser preparing a competitive market analysis has information on comparable property that is similar to the
subject property except that the subject property is 15 years old and has four bedrooms while the comparable
property is 5 years old and has two bedrooms. In this situation, the appraiser should adjust the
1. sales price of the comparable property up for the age and down for the number of bedrooms
2. sales price of the comparable property down for the age and up for the number of bedrooms
3. Value of the subject property up for the age and down for the number of bedrooms
4. value of the subject property down for the age and up for the number of bedrooms

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44. Which of the following is TRUE regarding owners holding title to real estate by joint tenancy?
1. They have the right of survivorship
2. They are limited to a maximum of three people in the joint tenancy
3. They can hold different percentages of ownership
4. Additional joint owners can be added later
45. A couple purchased a house for $250,000, making a down payment of $50,000. The buyers assumed the existing
mortgage of $180,000 and financed the remaining $20,000 through a mortgage given to them by the seller. The
$20,000 mortgage is called a
1. blanket mortgage
2. purchase money mortgage
3. wraparound mortgage
4. balloon mortgage
46. An appraiser uses a capitalization rate in determining a property’s value when using the income approach. The rate
represents the
1. rate that would most likely be used to determine the property’s real estate taxes
2. rate of return the owner could expect from the property
3. rate used by the insurance company to calculate the insurance premium on the property
4. expected annual increase in the property’s value
47. In return for $2,000, a seller gives a prospective buyer an option to purchase the seller’s property. In this situation the
1. buyer does not have to purchase the property in the option period
2. buyer receives a refund of the $2,000 if the property is not purchased
3. seller can withdraw the option to purchase if notice is given to the buyer
4. buyer must purchase the property some time during the option period
48. An appraiser estimating the value of a house with outmoded bathroom fixtures must take into consideration
1. external obsolescence
2. curable physical deterioration
3. incurable physical deterioration
4. functional obsolescence
49. A real estate broker earned a sales commission of $13,440 which was a rate of 6%. What was the selling price of the
property?
1. $142,978
2. $159,574
3. $224,000
4. $250,000
50. Which of the following government agencies is involved in regulating the country’s money supply?
1. The Federal Housing Administration
2. The Federal Reserve System
3. The Federal National Mortgage Association
4. The Government National Mortgage Association
51. An investor who bought residential property would base the depreciable life of the property on
1. 30 years
2. 27½ years
3. 31½ years
4. the physical condition of the property

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52. Under the TRID rules, a creditor is required to provide to an applicant for a real estate loan a copy of a(n).
1. deed
2. loan estimate form
3. amortization schedule
4. closing statement
53. Which of the following can be determined by inspection of the property?

1. An easement in gross
2. An encroachment
3. A mechanic’s lien
4. An easement appurtenant
54. When an appraiser estimates the value of a property using the cost approach, the appraiser should
1. adjust the original cost of the property for inflation
2. estimate the replacement cost of the property’s improvements
3. determine the sales price of similar properties
4. deduct for the value of the land
55. How many acres are there in the NW ½ of the SE ¼ and the SW ¼ of the NE ¼ of a section?
1. 5 acres
2. 40 acres
3. 80 acres
4. 120 acres
56. If real estate taxes are paid in arrears, what would the appropriate entries be on the closing statement?
1. A debit to the seller and credit to the buyer
2. A credit to the seller and debit to the buyer
3. A debit to both the seller and the buyer
4. A credit to both the seller and the buyer
57. Two parties, Anne and Bob, own a parcel of real estate as joint tenants. Bob sells his interest in the property to
George. What is the relationship between Anne and George?
1. Anne and George are joint tenants
2. Anne and George are tenants in common
3. Anne and George are tenants by the entirety
4. Anne and Bob are still joint tenants since Bob would be prohibited from selling his interest
58. Economic (external) obsolescence would best be described by which of the following?
1. A severely leaking roof
2. Outmoded plumbing fixtures
3. An office building with numerous large pillars supporting the ceiling
4. A residence located next to a large noisy factory
59. Which of the following documents would include an acceleration clause?

1. Mortgage
2. Note
3. Lis pendens
4. Listing

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60. A property manager works in the best interests of

1. tenants in the building
2. the building’s leasing agent
3. the building’s owner
4. the bank holding a loan on the building
61. The annual tax on a property is $6,000 the tax rate is $3 per $100 of assessed value and the property sold for the
amount of its assessed value. What was the selling price of the property?
1. $ 6,180
2. $ 63,000
3. $ 180,000
4. $ 200,000
62. The law that requires finance charges to be stated as an annual percentage rate is called
1. the Truth in Lending Act
2. the Equal Credit Opportunity Act
3. the Real Estate Settlement Procedures Act
4. usury laws
63. What type of lease requires the lessee to pay for the taxes, insurance, and maintenance on the property in addition to
a rental payment?
1. Gross lease
2. Net lease
3. Percentage lease
4. Indexed lease
64. A buyer purchases a home under an installment sales contract. Until the buyer has completed making payments to
the seller the buyer
1. has actual title to the property
2. is not responsible for the property’s real estate taxes
3. has an equitable ownership interest in the property
4. cannot occupy the property
65. The clause in a mortgage that gives the lender the right to consider the entire balance due if there is a default in any
payment is called a(n)
1. statutory redemption clause
2. prepayment penalty clause
3. defeasance clause
4. acceleration clause
66. The clause in a mortgage requiring the loan to be paid in full if the property is sold is called
1. acceleration clause
2. alienation clause
3. defeasance clause
4. habendum clause
67. To be valid, a deed must be signed by which of the following?

1. The grantor and the grantee
2. Two witnesses
3. The grantee
4. The grantor

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68. In which of the approaches to estimating value would an appraiser use accrued depreciation?
1. Sales comparison approach
2. Income approach
3. Cost approach
4. Gross rent multiplier approach
69. If a tenant’s lease is breached because the landlord has allowed the unit in an apartment building to become
uninhabitable, which of the following would probably occur?
1. Tenancy at sufferance
2. A suit for possession
3. Constructive eviction
4. A holdover tenancy
70. The deed that would contain the most covenants or guarantees is a
2. quitclaim deed
3. trust deed
4. special warranty deed
71. A homeowner has made the final mortgage loan payment to the bank. To ensure the bank’s mortgage lien has been
released, the homeowner should get a
1. lis pendens
2. mortgage estoppel
3. mortgage novation
4. satisfaction of mortgage
72. A prospective buyer delivers a written offer to purchase and gives an earnest money deposit to the listing broker. The
offer indicates the seller has five days to accept. Two days later, before the seller has accepted, the prospective
buyer notifies the broker that the offer is being withdrawn and demands that the deposit be returned. In this situation
the prospective buyer
1. cannot withdraw the offer until after the five-day period is over
2. can withdraw the offer but cannot recover the earnest money
3. which is now owed to the broker as a commission. can withdraw the offer but cannot recover the earnest money,
which now belongs to the seller
4. can withdraw the offer and recover the earnest money
73. A seller has a listing agreement with Sell Easy Real Estate Company. Best Buy Real Estate Company obtains a buyer
for the house. If the seller owes a commission to Best Buy and not to Sell Easy, what type of listing agreement must
the seller have had with Sell Easy?
1. An open listing
2. An exclusive agency listing
3. An exclusive right to sell listing
4. A net listing
74. A rectangular parcel of land is 130 feet deep and 25 yards wide. How many square feet does it contain?
1. 3,250 sq. ft.
2. 9,100 sq. ft.
3. 9,750 sq. ft.
4. 13,000 sq. ft.

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75. A grantor conveying title wishes to guarantee only that the property was not encumbered during the time the grantor
held title, except for encumbrances noted in the deed. The type of deed used by the grantor is a
2. special warranty deed
3. quitclaim deed
4. trust deed
76. A tenant has negotiated a net lease with the property owner. Under the terms of the lease, the tenant would probably
be responsible to pay which of the following expenses?
1. Mortgage expense
2. Depreciation expense
3. Maintenance expense
4. Property owner’s income taxes
77. A salesperson earned $45,000 in commissions, which was 15% of the commissions earned by the office last year.
How much was the total amount of commissions earned by the office last year?
1. $ 52,941
2. $ 300,000
3. $ 675,000
4. $ 3,000,000
78. Of the following real estate documents, which would LEAST likely be recorded in the public records?
1. Long-term lease
2. Mortgage lien
3. Purchase contract
4. General warranty deed
79. Which of the following activities would NOT be a violation of antitrust laws?
1. Agreeing with other real estate companies in the area to divide the market based on the location of their offices
2. Agreeing with other real estate companies in the area on a commission schedule
3. Agreeing with other real estate companies in the area to divide the market based on the value of homes
4. Salespeople in a real estate office dividing the area among themselves for soliciting listings
80. If an apartment building has 6 vacancies among its 150 units, the building’s vacancy rate is
1. 2%
2. 4%
3. 6%
4. 15%
81. A point of reference used to establish elevations above sea level is a

1. datum
2. monument
3. point of reference
4. correction line

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81. The buyer and broker enter into an agreement in which the buyer is legally bound to compensate the agent whenever
the buyer purchases a property of the type described in the contract, regardless of who locates the property. This type
of agreement is called a(n)
1. exclusive buyer agency agreement
2. non-exclusive buyer agreement
3. exclusive-agency buyer agreement
4. open buyer agency agreement
82. A short sale is a sale of real estate in which

1. multiple levels of approvals and conditions are usually not required
2. a borrower’s credit score is not affected
3. the sale proceeds usually exceed the balance owed on the property's loan
4. the sale will leave a deficiency balance
83. The right to possess, enjoy, exclude, and sell real property are included in the definition of
1. improvements
2. land
3. fixtures
4. real estate
84. If the deed of a property refers to littoral water rights, the property must be located next to
1. a pond
2. the ocean
3. a creek
4. a small river
85. An owner is entitled to all land that accumulates from the natural depositing of soil by the action of water. The deposits
of the additional soil are called
1. alluvion
2. accession
3. avulsion
4. erosion
86. The physical characteristic of real estate that every parcel of land is unique is called
1. scarcity
2. nonhomogeneity
3. immobility
4. situs
87. Annual crops that are considered personal property are called
1. fructus naturals
2. alluvion
3. emblements
4. fixtures
88. The method of creating a legal description that uses the terms sections, range lines. and townships is called
1. government survey
2. metes and bounds
3. lot-and-block survey
4. datum survey

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90. What best describes the type of agency that is created by the conduct or actions of the parties is a(n)
1. dual agency
2. expressed agency
3. exclusive agency
4. implied agency
91. The type of listing agreement that allows the seller to have similar agreements with more than one brokerage company
while retaining the right to sell the property by himself without owing a commission is called a(n)
1. net listing
2. open listing
3. exclusive agency listing
4. multiple listing
92. While showing a home to a prospective buyer, the sales agent exaggerates the property’s benefits. This conduct is
1. misrepresentation of the property and is illegal
2. a common selling tactic and is legal
3. puffing and is legal
4. a ministerial act and is illegal
93. The term caveat emptor means

1. the buyer should be aware of problems with the property
2. prior decisions by the court will apply in the future
3. the seller should be aware of problems with the property
4. the property is being bought in “as is” condition
94. If a broker deposits an earnest money check in his business checking account, he may be guilty of
1. misrepresentation
2. fraud
3. conversion
4. commingling
95. In a community property state, property owned by a spouse prior to the start of the marriage is referred to as
1. community property
2. separate property
3. dower property
4. adverse property
96. A business structure formed by a group of investors in which one investor is personally liable for its operations and
the other investors can only lose the amount they have invested is best described as a
1. general partnership
2. joint partnership
3. limited partnership
4. common partnership
97. If an event occurred on or near a property that gave it an undesirable reputation, the property is considered
1. stigmatized property
2. hazardous property
3. polluted property
4. nonconforming property

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98. The 1968 Federal Fair Housing Act does NOT apply to what type of property?
1. single-family homes
2. condominiums
3. four-unit apartment buildings
4. commercial property
99. The lead-based paint disclosure form must be provided to potential buyers and tenants if the property was built before
1. 1968
2. 1978
3. 1988
4. 2000
100. If a listing has expired, how many months may the agents in the listing office call the seller who is on the do-not-call
list?
1. 6 months
2. 12 months
3. 18 months
4. 24 months

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ANSWER KEY

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1. Which of the following is NOT one of the objectives of the Federal Reserve System?
The FED focuses on the economy and not the mortgage market.
2. A tenant enters into a two-year oral lease. According to the Statue of Fraud in most states the contract is
Contracts not to be performed within one year must be in writing or they are considered unenforceable.
3. A fee simple holder of a parcel of real estate grants a life estate to her daughter and stipulates that upon the daughter's
death the property will pass to her grandson. The second estate is called a(n)
Since the estate will pass to the grandson after the life estate has ended, the grandson has a remainder estate.
4. A property buyer obtains a term loan to finance the purchase. Which of the following is TRUE regarding the buyer’s loan?
The borrower’s payments in a term loan are only for the interest while the entire loan principal is due at the end of the loan.
5. Types of title evidence include all of the following EXCEPT
A deed is used to convey any ownership the grantor has in the property but does not provide evidence that the grantor
actually holds title.
6. A borrower has a mortgage loan that requires monthly payments of $936.25 for ten years and a final payment of $36,287.
This type of loan is best described as a
A balloon loan is not fully amortized and requires a large final payment to pay off the loan.
7. Brokers should deposit all earnest money checks they receive into an escrow account or trust account to prevent being
accused of
Commingling is mixing the broker’s personal money with money belonging to clients.
8. In performing an appraisal of real estate, the appraiser
An appraiser estimates a property’s market value, but the market actually sets the value.

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9.Local zoning ordinances are used to regulate all of the following EXCEPT
Zoning ordinances are an example of local government’s police power and do regulate real estate but not the real estate
business.
10. After paying the broker’s fee of 6%, a seller wants to net $180,000 from the sale of his house. What must the property
sell for to satisfy both the broker and the seller?
$180,000 / .94 = $191,489.36
11. Hostile, visible, exclusive, and continuous use of another person’s land for a prescribed period of time is called
These are the characteristics of adverse possession, which is acquiring title to property by using it without the owner’s
consent.
12.A property owner constructed a commercial building on the property. Three years later an ordinance was passed
prohibiting commercial buildings in the owner’s area. In this situation
Since the building’s use existed before the zoning law was changed, it will probably continue to exist as a nonconforming
use.
13. The owner of a parcel of land holds an easement right over an adjoining parcel of land. The parcel of land on which the
easement runs is referred to as the
A parcel of land on which an easement runs is called the servient tenement.
14. What is the amount of real estate tax due on a condominium with a market value of $140,000 if it is assessed at 30% of
market value, has an equalizer of 1.5, and a tax rate of $5 per $100 of assessed value?
$140,000 × .3 = $42,000. $42,000 × 1.5 = $63,000. $63,000 × .05 = $3,150.
15. Which of the following expenses is usually NOT prorated between the buyer and seller?
Title fees are paid by either the buyer or seller and are not prorated between them.
16. A property owner subdivided a piece of property, selling the front half and retaining the back half. The back half of the
property retained by the owner does not have access to any roads. The type of easement the courts might grant in this
situation is an
An easement by necessity is created when a property is landlocked. The owner has the right of ingress and egress to the
property.

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17.A property owner defaulted on a mortgage and the lender foreclosed on the property. The property sold at the foreclosure
sale for less than the loan balance. To recover the remainder of the money the lender may
A deficiency judgment would result in a general lien on the debtor’s property, possibly allowing the lender to recover the
remaining amount owed.
18. On Wednesday, Sam offers to sell his house to Beth for $320,000. On Sunday, Beth makes a counteroffer of $310,000.
On Friday, Beth withdraws the counteroffer of $310,000 and accepts Sam’s offer of $320,000. In this situation there is
A counteroffer ends an original offer. When B made the counteroffer it ended S’s original offer and could no longer be
accepted.
19. A homebuyer obtains a loan to finance the purchase of the house as well as personal property. This type of loan is
called a
A package loan is used to finance both real and personal property.
20. Which of the following is a requirement for a valid deed?
A deed needs a granting clause to identify the intention of the grantor to transfer title and the type of ownership being
transferred.
21. An investor purchased a building for $360,000 by paying 10% down and financing the rest of the purchase price. The
lender charged two points as a loan origination fee. How much was the investor charged for the fee?
$360,000 × .9 = $324,000 loan amount. $324,000 × .02 = $6,480.
22. A 55% / 45% commission split is agreed to by a selling and listing broker. They then split their share of the commission
evenly with their salespeople. If a house sells for $290,000 and the commission rate is 6%, how much commission will the
selling salesperson receive?
$290,000 × .06 = $17,400. $17,400 × .55 = $9,570. $9,570 × .5 = $4,785.
23.A requirement for obtaining title to property under the concept of adverse possession is that
Adverse possession is taking possession of the property and using it without the owner’s consent for the time period
stated by law.
24. Using the income approach, what is the value of an apartment building if it has a gross income of $60,000, operating
expenses of $10,000, and a capitalization rate of 8 percent?
$60,000 – $10,000 = $50,000 net income. $50,000 / .08 = $625,000.

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25.One of the provisions of the Truth in Lending Act allows for a cooling off period in which the loan can be rescinded. The
rescission provision would apply to which of the following loans?
The right of rescission does not apply to loans for the purchase or construction of a residence and business loans are not
covered under the act.
26. Title to property is transferred by a deed when the deed is
Title to the property is transferred when the deed is delivered and accepted.
27. A property sold for $240,000 and the broker earned a 5½% commission on the sale. What was the amount of the
commission?
$240,000 × .055 = $13,200
28. What government agency insures deposits in banks and savings institutions?
The FDIC insures deposits in both banks and savings institutions.
29. A broker and seller enter into a listing agreement. Under the terms of the listing, the seller will receive $180,000 from
the sale with any sales proceeds over that amount going to the broker. This type of listing is called a(n)
In a net listing, the seller receives a predetermined amount from the sales proceeds and the broker receives anything over
that amount.
30. A homeowner wishes to make an improvement to the property that does not comply with the local zoning ordinances.
The property owner should request
A variance is an exception to the variance laws.
31. What is the cost of installing a fence around a rectangular shaped lot if the cost of the fence is $3.25 per linear foot and
the lot is 80-feet wide and 120-feet deep?
80 + 80 + 120 + 120 = 400 ft. 400 ft × $3.25 = $1,300.
32. The 1866 Civil Rights Act prohibits discrimination in all housing based on a person’s
The only protected class under the law is race.
33. A couple purchases a cooperative apartment unit. In this situation the couple will
A cooperative building is owned by a corporation, and purchasers receive shares in the corporation.

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34. The property in a real estate sales transaction has a 450-gallon heating oil tank that is one-quarter full. The current cost
of oil is $2.25 per gallon. What is the appropriate entry to be made at closing?
450 × .25 × $2.25 = $253.13. Since the fuel has been paid for, the seller should be credited.
35. The amount at which a willing and informed seller would sell and a willing and informed buyer would buy is called a
property’s
Appraisers typically estimate a property’s market value, which is the amount a willing buyer and seller would agree to if well
informed.
36. The number of discount points charged by the lender to the buyers or sellers in a real estate transaction are set by
The amount of discount points is set by the lender.
37. Which of the following statements best describes the income approach to value?
The income approach uses a property’s rate of return and net income to estimate its value.
38. The difference between a specific and general lien is that
A general lien covers all of a debtor’s property, while a specific lien covers a specific property.
39. Which of the following best describes steering?
Steering is leading prospective buyers to or away from certain areas based on their race, color, national origin, or some
other reason aside from their personal preferences.
40. At the closing for the sale of a home, the lender requires the buyer to place a sum of money into an impound (also
called escrow or reserve) account. The purpose of this money is most likely for
Reserve accounts are used by the lender to pay real estate taxes or insurance on the property.
41. A seller has received an offer to purchase her house from a prospective buyer. The seller will still be able to accept the
offer if
Receipt of another offer from a third party does not end the original buyer’s offer. In this situation, the seller now has a
choice of offers to accept.
42. Broken windows, potholes in the driveway, and peeling paint are examples of
Curable physical depreciation is normal wear and tear on a property that is cost-justified to fix.

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43.An appraiser preparing a competitive market analysis has information on comparable property that is similar to the
subject property except that the subject property is 15 years old and has four bedrooms while the comparable property is 5
years old and has two bedrooms. In this situation, the appraiser should adjust the
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The sales price of comparable properties must be adjusted down for features that are better than the subject property and
up for features inferior to the subject property.
44. Which of the following is TRUE regarding owners holding title to real estate by joint tenancy?
Joint tenancy has the right of survivorship. Because it requires the four unities, all tenants are equal owners and adding
additional tenants would end the original tenancy.
45. A couple purchased a house for $250,000, making a down payment of $50,000. The buyers assumed the existing
mortgage of $180,000 and financed the remaining $20,000 through a mortgage given to them by the seller. The $20,000
mortgage is called a
A purchase mortgage is a loan made by the seller to help finance the purchase of the property.
46. An appraiser uses a capitalization rate in determining a property’s value when using the income approach. The rate
represents the
The capitalization rate represents the return the investor expects from the property.
47. In return for $2,000, a seller gives a prospective buyer an option to purchase the seller’s property. In this situation theB
An option gives the buyer the right to purchase but is not required to purchase.
48. An appraiser estimating the value of a house with outmoded bathroom fixtures must take into consideration
Functional obsolescence pertains to outmoded features of a property.
49. A real estate broker earned a sales commission of $13,440 which was a rate of 6%. What was the selling price of the
property?
The sales price = commission / rate; $13,440 / .06 = $224,000
50. Which of the following government agencies is involved in regulating the country’s money supply?
The FED regulates the money supply through the use of discount and reserve rate changes and its open market activity.
51. An investor who bought residential property would base the depreciable life of the property on
The IRS tax rules generally require residential property to be depreciated over 27 ½ years.

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52. Under the TRID rules, a creditor is required to provide to an applicant for a real estate loan a copy of a(n)
One of the requirements of the TRID Rules is that the loan applicant (consumer) must be given a Loan Estimate From
disclosing information about the loan.
53. Which of the following can be determined by inspection of the property?
Encroachments are physical intrusions on the land.
54. When an appraiser estimates the value of a property using the cost approach, the appraiser should
The replacement cost of the property’s improvements are added to the land value in estimating value using the cost
approach.
55. How many acres are there in the NW ½ of the SE ¼ and the SW ¼ of the NE ¼ of a section?
(640 acres / 2 / 4 = 80 acres) (640 acres / 4 / 4 = 40 acres) 80 + 40 = 120 acres
56. A Since the expense has been incurred by the seller but not paid, the seller should be debited and the buyer credited.
Since the expense has been incurred by the seller but not paid, the seller should be debited and the buyer credited.
57. Two parties, Anne and Bob, own a parcel of real estate as joint tenants. Bob sells his interest in the property to George.
What is the relationship between Anne and George?
The original joint tenancy was destroyed when one of the tenants sold his or her interest.
58. Economic (external) obsolescence would best be described by which of the following?
Economic (also external) obsolescence refers to factors external to the subject property.
59. Which of the following documents would include an acceleration clause?
An acceleration clause allows the lender to foreclose on the property if the mortgage terms are not met by the borrower.

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60. A property manager works in the best interests of
The property manager’s primary responsibility is to work in the best interests of the property owner.
61. The annual tax on a property is $6,000 the tax rate is $3 per $100 of assessed value and the property sold for the
amount of its assessed value. What was the selling price of the property?
4
Annual tax / tax rate = selling price; $6,000 / .03 = $200,000
62. The law that requires finance charges to be stated as an annual percentage rate is called
The Truth in Lending Act (also called Reg Z) requires various disclosures to the borrower by the lender. These include
disclosing the annual percentage rate (APR).
63. What type of lease requires the lessee to pay for the taxes, insurance, and maintenance on the property in addition to a
rental payment?
Net leases require the payment of some or all of the property’s expenses in addition to a fixed rental rate.
64. A buyer purchases a home under an installment sales contract. Until the buyer has completed making payments to the
seller the buyer
While the seller holds actual title, the law recognizes that the buyer has some ownership interest (equitable title) in the
property.
65. The clause in a mortgage that gives the lender the right to consider the entire balance due if there is a default in any
payment is called a(n)
The acceleration clause allows the lender the right to accelerate all the loan’s payments and call the loan if the borrower
defaults on any payment.
66. The clause in a mortgage requiring the loan to be paid in full if the property is sold is called
The alienation clause is also called a “due on sale clause.”
67. To be valid, a deed must be signed by which of the following?
Only the grantor’s signature is required to make a deed valid.

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68. In which of the approaches to estimating value would an appraiser use accrued depreciation?
Depreciation is used in the cost approach.
69. If a tenant’s lease is breached because the landlord has allowed the unit in an apartment building to become
uninhabitable, which of the following would probably occur?
Constructive eviction occurs when the tenant is forced out of the premises because it has become uninhabitable.
70. The deed that would contain the most covenants or guarantees is a
A general warranty deed typically includes up to five covenants or guarantees.
71. A homeowner has made the final mortgage loan payment to the bank. To ensure the bank’s mortgage lien has been
released, the homeowner should get a
A satisfaction of mortgage should be recorded to provide evidence that the lender’s mortgage claim has ended.
72. A prospective buyer delivers a written offer to purchase and gives an earnest money deposit to the listing broker. The
offer indicates the seller has five days to accept. Two days later, before the seller has accepted, the prospective buyer
notifies the broker that the offer is being withdrawn and demands that the deposit be returned. In this situation the
prospective buyer
An offer can be withdrawn before it is accepted.
73. A seller has a listing agreement with Sell Easy Real Estate Company. Best Buy Real Estate Company obtains a buyer
for the house. If the seller owes a commission to Best Buy and not to Sell Easy, what type of listing agreement must the
seller have had with Sell Easy?
Since the seller only owed a commission to the company who actually sold the house, it was an open listing.
74. A rectangular parcel of land is 130 feet deep and 25 yards wide. How many square feet does it contain?
25 yards × 3 = 75 feet; 130 feet × 75 feet = 9,750 sq. ft.
75. A grantor conveying title wishes to guarantee only that the property was not encumbered during the time the grantor
held title, except for encumbrances noted in the deed. The type of deed used by the grantor is a
A special warranty deed limits guarantees to those encumbered during the time the grantor held title.

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76. A tenant has negotiated a net lease with the property owner. Under the terms of the lease, the tenant would probably be
responsible to pay which of the following expenses?
The maintenance expense on the property is usually the responsibility of the property owner and not the tenant.
77. A salesperson earned $45,000 in commissions, which was 15% of the commissions earned by the office last year. How
much was the total amount of commissions earned by the office last year?
$45,000 / .15 = $ 300,000
78. Of the following real estate documents, which would LEAST likely be recorded in the public records?
A purchase contract would probably not be recorded since it is typically a short period of time between the signing of the
contract and the closing and does not create any ownership interest in the property.
79. Which of the following activities would NOT be a violation of antitrust laws?
It is illegal for real estate companies to set standard fees or allocate the market since these actions restrain a free market.
However, the consumer’s relationship is with the broker, and salespeople within an office may allocate the market.
80. If an apartment building has 6 vacancies among its 150 units, the building’s vacancy rate is
6 / 150 = 4%
81. A point of reference used to establish elevations above sea level is a
A datum is a reference point used to measure elevations. Local datums are established across the country.
82. The buyer and broker enter into an agreement in which the buyer is legally bound to compensate the agent whenever
the buyer purchases a property of the type described in the contract, regardless of who locates the property. This type of
agreement is called a(n)
Under an exclusive buyer agency agreement, also called an exclusive right to represent, the broker may earn a
commission from the buyer even if the buyer purchases a house without the assistance of the broker.
83. A short sale is a sale of real estate in which
Often the owner/borrower is behind on the loan payments and wishes to avoid foreclosure by accepting an offer from a
buyer that is less than the loan amount. If the lender agrees to accept less than loan balance from the sale, it is referred to
as a short sale.

25
84. The right to possess, enjoy, exclude, and sell real property are included in the definition of
The definition of real estate includes the bundle of legal rights. 85.
85. If the deed of a property refers to littoral water rights, the property must be located next to
Littoral rights refer to properties that border large, navigable bodies of water.
86. An owner is entitled to all land that accumulates from the natural depositing of soil by the action of water. The deposits
of the additional soil are called
The deposits of soil by the natural actions of water are called alluvion.
87. The physical characteristic of real estate that every parcel of land is unique is called
Nonhomogeneity means every parcel of real estate is unique or heterogeneous.
88. Annual crops that are considered personal property are called
Emblements, or fructus industriales, are cultivated annual crops and are considered personal property.
89. The method of creating a legal description that uses the terms sections, range lines. and townships is called
The government or rectangular survey system uses terms such as sections, range lines, and townships.
90. What best describes the type of agency that is created by the conduct or actions of the parties is a(n)
An implied agency is created by the actions or conduct of the parties.
91. The type of listing agreement that allows the seller to have similar agreements with more than one brokerage company
while retaining the right to sell the property by himself without owing a commission is called a(n)
An open listing allows the seller to hire more than one broker as opposed to an exclusive listing agreement. Also, no
commission is owed if the seller finds a buyer.
92. While showing a home to a prospective buyer, the sales agent exaggerates the property’s benefits. This conduct is
Puffing is exaggerating a property’s benefits and, while discouraged by the industry’s ethical standards, is legal.

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93. The term caveat emptor means
Caveat emptor means “buyer beware”. The buyer is responsible for finding problems with the property. This concept used
to be common when deciding lawsuits but today buyers have stronger rights regarding property defects.
94. If a broker deposits an earnest money check in his business checking account, he may be guilty of
Commingling is mixing earnest money, which belongs to the parties in the transaction, with the broker’s own money.
Conversion occurs if the broker inappropriately uses the money.
95. In a community property state, property owned by a spouse prior to the start of the marriage is referred to as
Property owned by a spouse before the marriage is separate property. Property acquired during the marriage is community
property.
96. A business structure formed by a group of investors in which one investor is personally liable for its operations and the
other investors can only lose the amount they have invested is best described as a
In a limited partnership, the general partner(s) have unlimited liability and the limited partners only have liability up to the
amount of their investment.
97. If an event occurred on or near a property that gave it an undesirable reputation, the property is considered
Property that has an undesirable reputation because of an event is considered stigmatized property.
98. The 1968 Federal Fair Housing Act does NOT apply to what type of property?
The 1968 Federal Fair Housing Act applies to residential one-to-four unit property and not commercial property.
99. The lead-based paint disclosure form must be provided to potential buyers and tenants if the property was built before
The lead-based paint disclosure form must be provided to potential buyers and tenants if the property was built before 1978.
100. If a listing has expired, how many months may the agents in the listing office call the seller who is on the do-not-call
list?
Because there was a prior business relationship, the agents in the listing office may call the seller who is on the do-not-call
list for up to 18 months.

27

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NATIONAL FINAL REVIEW

5. Types of title evidence include all of the following EXCEPT

NATIONAL FINAL REVIEW

8. In performing an appraisal of real estate, the appraiser

NATIONAL FINAL REVIEW

20. Which of the following is a requirement for a valid deed?

NATIONAL FINAL REVIEW

26. Title to property is transferred by a deed when the deed is

NATIONAL FINAL REVIEW

NATIONAL FINAL REVIEW

38. The difference between a specific and general lien is that

39. Which of the following best describes steering?

NATIONAL FINAL REVIEW

NATIONAL FINAL REVIEW

53. Which of the following can be determined by inspection of the property?

59. Which of the following documents would include an acceleration clause?

NATIONAL FINAL REVIEW

60. A property manager works in the best interests of

67. To be valid, a deed must be signed by which of the following?

NATIONAL FINAL REVIEW

NATIONAL FINAL REVIEW

81. A point of reference used to establish elevations above sea level is a

NATIONAL FINAL REVIEW

82. A short sale is a sale of real estate in which

NATIONAL FINAL REVIEW

93. The term caveat emptor means

NATIONAL FINAL REVIEW

NATIONAL FINAL REVIEW

NATIONAL FINAL REVIEW

5. Types of title evidence include all of the following EXCEPT

actually holds title.

This type of loan is best described as a

8. In performing an appraisal of real estate, the appraiser

NATIONAL FINAL REVIEW

sell for to satisfy both the broker and the seller?

$180,000 / .94 = $191,489.36

prohibiting commercial buildings in the owner’s area. In this situation

easement runs is referred to as the

A parcel of land on which an easement runs is called the servient tenement.

$140,000 × .3 = $42,000. $42,000 × 1.5 = $63,000. $63,000 × .05 = $3,150.

NATIONAL FINAL REVIEW

remaining amount owed.

A package loan is used to finance both real and personal property.

20. Which of the following is a requirement for a valid deed?

$360,000 × .9 = $324,000 loan amount. $324,000 × .02 = $6,480.

selling salesperson receive?

$290,000 × .06 = $17,400. $17,400 × .55 = $9,570. $9,570 × .5 = $4,785.

expenses of $10,000, and a capitalization rate of 8 percent?

$60,000 – $10,000 = $50,000 net income. $50,000 / .08 = $625,000.

NATIONAL FINAL REVIEW

rescission provision would apply to which of the following loans?

covered under the act.

26. Title to property is transferred by a deed when the deed is

$240,000 × .055 = $13,200

The FDIC insures deposits in both banks and savings institutions.

The property owner should request

A variance is an exception to the variance laws.

the lot is 80-feet wide and 120-feet deep?

80 + 80 + 120 + 120 = 400 ft. 400 ft × $3.25 = $1,300.

The only protected class under the law is race.

NATIONAL FINAL REVIEW

The amount of discount points is set by the lender.

38. The difference between a specific and general lien is that

39. Which of the following best describes steering?