California Real Estate Exam Multiple Choice Questions Flashcards

California Real Estate Exam Multiple Choice Questions Flashcards If an appraiser were called upon to evaluate a public building, which had unique and distinctive architecture, he would employ which of the following methods of valuation?a. Replacement (cost approach)b. Comparisonc.Capitalizationd. None of the above

• Replacement (cost approach)Since there is no income

for capitalization and no means for comparing sales, replacement cost is the only approach available.In determining the value of a property, an appraiser would

use the:a. cost approach.b. market approach.c. income

approach.d. any or all of the above.

• any or all of the above.Appraisers use all three

approaches to determine value.A property sells for $121,000. The purchaser gives $10,000 down payment, agrees to place an additional $5,000 down, and ta ke over an existing VA first loan of $100,000, with the remainder to be in the form of a 2nd note and trust deed. For these cond itions, how much would the documentary tax stamps be?a. $1.10b. $5.50c. $133.10d.

$23.10

• $23.10Do NOT pay on old existing loan being taken

over. Therefore, ($121,000 - 100,000) ÷ 1,000 x ($1.10) = 21.0 x $1.10 = $23.10.

An appraiser's definition of "Value" would be:a. present

worth of all rights to future benefits arising out of ownership.b. the ability of one commodity to command other commodities in exchange. c. relationship between the thing desired and the potential purchaser.d. all of the above.

• all of the above.These are elements of value.

An owner has been found guilty of discrimination under the Health and Safety Code. What action can the aggrieved party take?a. May purchase the property in question, if still availableb. May purchase another like property, if the original property is not availablec. May be awarded $500 in damages if neither a nor b availabled. All of the above

• All of the above

Which of the following statements will INCORRECTLY complete this phrase? A subdivider who is not a licensee of

the DRE:a. may not sell or offer for sale any lots in a

subdivision prior to issuance of the Commissioner's Public Report.b. may sell all lots in a subdivision himself.c. may make any improvements on the land prior to receiving the public report.d. may employ licensed real estate salespeople to sell lots in a subdivision.

• may employ licensed real estate salespeople to sell lots

in a subdivision.Only a broker can hire or employ salespeople to sell real estate. The subdivider would have to employ a broker , who in turn would hire salespeople.Which of the following abbreviations is associated with the FHA?a. NARb. CPMc. MIP/MMId. MBA

• MIP/MMIMIP - Mortgage Insurance Premium/Mutual

Mortgage Insurance.An apartment house offered single garages. When a new unit was built nearby, offering double garages, the tenants

all moved into the newer units. This is an example of:a.

physical deterioration.b. economic obsolescence.c. social

obsolescence.d. functional obsolescence.

• functional obsolescence.Refers to "outdated" condition.

Capitalization is a process by which an appraiser:a.

converts income into value.b. determines depreciation.c.establishes cost.d. finds gross income.

• converts income into value.When he ascertains the true

net income for investment, an appraiser uses the "capitalization approach" to estimate value.

An owner acquires title to additional land on his river-front property when the river shifts its course. This is acquiring

by:a. acclamation.b. accession.c. abstraction.d. alienation.

• accession.Accession - addition to property through

efforts of man or by natural forces. Accretion - Accession to property through natural forces, for example, alluvium.Alluvium - Gradual increase of the earth on ocean front or bank of stream resulting from action of water.When computing the net income of an office building, an appraiser would consider, as a management expense, which of the following?a. Salary paid to a managerb. The owner acting as his own managerc. A tenant performing as manager in lieu of rentald. All of the foregoing

• All of the foregoingCalculation of net income for

properties requires an assessment of management fees, regardless of the manner in which the service is performed.Three general partners borrowed money and agreed to be liable for the repayment, either individually or collectively.

They signed the security instrument:a. jointly.b.

singularly.c. jointly and collectively.d. jointly and severally.

• jointly and severally.They are jointly (collectively) and

severally (individually) responsible.Which of the following would NOT be included in an "eminent domain" situation?a. Condemnation proceedingsb. Fair considerationc. For public goodd.Zoning regulations

• Zoning regulationsThis provision will assure the buyers

that their money is safe, until such time the developer can get a release on the parcel of land involved with their purchase. Otherwise, without such "partial" release, no transfer of title could occur on various purchase s until the encumbrance on the entire parcel developed was paid in full.Which of the following lenders would NOT be approved (respectively) by VA or FHA?a. Federal bankb. Institutional lenderc. Insurance companyd. Private lender

• Private lenderVA and FHA do NOT guarantee or insure

loans made by private lenders.There are three methods normally used in the evaluation of real property. However, one of these might prove more effective and accurate than the others, depending on the type of property being appraised. For example, the comparison approach would be the most desirable choice

in the appraisal of:a. so-called amenity properties.b. service

properties.c. industrial properties.d. apartment properties.

• so-called amenity properties.Because of the appeal of

amenities and of the effect of emotional factors related to single-family residences, the best basis for the analysis of current market value is by means of comparison.

A corporation "seal" evidences the:a. authority of persons

using the "seal."b. rights and privileges of recipient of document with "seal."c. proof of office of the presidency.d.none of above.

• authority of persons using the "seal."

An "agreement in a deed" would best match up with:a.

option.b. prescription.c. covenant.d. subrogation.

• covenant.

Which of the following would NOT be eligible for filing a mechanic's lien?a. Architectb. Handyman, if more than 75 days has elapsed since recording of notice of completionc.Subcontractor, if a notice of completion has been recorded within the past 29 daysd. None of the above

• Handyman, if more than 75 days has elapsed since

recording of notice of completionFollowing recordation of a notice of completion, a general contractor has 60 days to file; a subcontractor has 30 days . "b" has exceeded allowed time and therefore is ineligible to file. "c" must hurry, for he has only one day left.On FHA and VA loans, the lender is allowed to charge the borrower a fee (percentage of the loan) as an initial service

fee. This is generally referred to as a(n):a. subordination

fee.b. accommodation fee.c. acceleration fee.d. origination fee.

• origination fee.