National Real Estate Exam: Pearson Vue Flashcards

National Real Estate Exam: Pearson Vue Flashcards

Why is a wraparound mortgage loan potentially interesting to a home seller as an investment?A. it is a senior loan that can be easily subordinated for additional debtB. A wraparound lender can profit when the interest rate of a wraparound exceeds that of the underlying mortgageC. the underlying loan is retired earlyD. The second mortgage borrower may make payments directly to the first mortgage lander A wraparound lender can profit when the interest rate of a wraparound exceeds that of the underlying mortgage One difference between a cooperative estate and a

condominium estate is that:A. a condo owner owns a unit

of air space whereas the coop owner owns a proprietary leaseB. a condo sale adversely affects the other unitsC. the coop owner owns stock and a freehold estate interest whereas the condo owner simply a proprietary leaseD. the condo owner owns the common elements and the airspace whereas the coop owner only owns the apartment a condo owner owns a unit of air space whereas the coop owner owns a proprietary lease A county or municipal authority usually grants a certificate

of occupancy for new construction only after:A. all

contractors' work has been inspectedB. all work has been completed for at least 60 daysC. the construction conforms to building codesD. the tax assessor has valued the improvement the construction conforms to building codes Which of the following provides the strongest evidence of marketable title?A. a general warranty deedB. a title certificateC. title insuranceD. an attorney's opinion title insurance

In the income capitalization approach, an appraiser:A.

estimates gross income and multiplies times the gross income multiplierB. estimates affective income, subtracts tax, and applies a capitalization rateC. estimates net income and applies a capitalization rate to itD. estimates potential income and applies a capitalization rate to it estimates net income and applies a capitalization rate to it real estate contracts that are not personal service contractsA. may be assignedB. are not assignableC. must be in writingD. are exempt from statute of frauds may be assigned Which of the following is true with respect to real property taxation by the federal government?A. it imposes ad valorem taxes and capital gain taxB. it may not impose property taxes or tax liensC. there are no federal ad valorem taxes on real propertyD. it imposes ad valorem tax, but not capital gain tax there are no federal ad valorem taxes on real property

Maria acquires a property from her uncle Alfonso. When Maria dies, the estate will pass to Alfonso's other niece Serena. The type of estate that Maria has in the property

is:A. conventional life estateB. legal life estateC. fee simple

defeasible estateD. tenancy by the entireties conventional life estate Cash flow is a measure of how much pre tax or after tax cash an investment property generates. To derive cash

flow it is necessary to exclude:A. cost recover expenseB.

interest expenseC. loan principal paymentsD. net operating income cost recover expense Which of the following characterizes metes and bounds descriptions?A. they use medians and base linesB. they identify a closed area, beginning and ending at the same pointC. they use lot and block numbersD. they incorporate elevation into the descriptions they identify a closed area, beginning and ending at the same point What is a lien theory state in contrast to a title theory state?A.a state in which liens are given priority over other encumbrancesB. a state in which a mortgagor retains title to the property when a mortgage lien is createdC. a state in which the holder of a mortgage lien is receives total to the mortgaged property until the debt is satisfiedD. a state in which liens must be recorded to be enforceable a state in which a mortgagor retains title to the property when a mortgage lien is created Agent Bob who works for Broker Bill, obtains an owner listing to lease a building. Bill's other agent, Sue, locates a

tenant for Bob's listing. Broker Bill in this instance is:A. an

implied agentB. a dual agentC. a single agentD. a subagent a dual agent With various types of junior liens, the order of payment

priority is generally established according to:A. the date of

recordationB. what form of tax is in questionC. the order of disbursementD. whether the lien was subordinated the date of recordation Which of the following is true of a loan with negative amortization?A. the interest rate on the loan increases as the principal balance decreasesB. payments are not sufficient to retire the loanC. the loan balance is diminishing, or going negativeD. additional interest is being added to the monthly payment payments are not sufficient to retire the loan Which if the following must be in writing to be enforceable?A. a parol contractB. a six-month leaseC. a two year leaseD. an executory contract a two year lease The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor

currently in practice. This is an example of:A. collusionB.

price fixingC. allocation of marketsD. steering collusion

A transaction facilitator in a residential transaction

represents:A. the sellerB. the buyerC. both seller and

buyerD. neither seller nor buyer neither seller nor buyer Which of the following items would affect a homeowner's adjusted base?A. installing a higher capacity AC and purifying systemB. replacing a washing machineC.stripping and staining hardwood floorsD. replacing a broken picture window installing a higher capacity AC and purifying system The method for deriving an investor's return on investment, or ROI, is byA. dividing net operating expenses by cash flowB. multiplying the required yield times after tax cash flowC. dividing net income by the price paid for the propertyD. multiplying cash flow times the price paid for the property dividing net income by the price paid for the property A property owner has an easement appurtenant on her property. One day the property is sold to another party who is opposed to the easement. Following the closing, this

particular form of easement:A. terminatesB. transfers with

the propertyC. transfers with the owner to a new propertyD.becomes a license on the property transfers with the property Which of the following is true of an option-to-buy agreement?A. the potential buyer, the optionee, is obligated to buy the property once the option agreement is completedB. the optionor must perform if the optionee takes the option, but the optionee is is under no obligation to do soC. the contract can be executed at no cost to the optioneeD. it is a bilateral agreement the optionor must perform if the optionee takes the option, but the optionee is is under no obligation to do so A principal instructs an agent to inform minority buyers that the property for lease was just leased an hour ago and is no longer available. The agents refuses to comply. In this case,A. the agent should exercise caution until the listing expires, then decline to renew itB. the principal has proposed an illegal act, which should not be obeyedC. the agent is liable for breaching listing termsD. the agent may sue the principal for discrimination and misrepresentation the principal has proposed an illegal act, which should not be obeyed What is the essential purpose of legal descriptions of property?A. to create a consistent, unchanging standard for uniquely locating a propertyB. to enable courts and attorneys to calculate property size accuratelyC. to comply with common law for Real propertyD. to eliminate cumbersome metes and bounds descriptions to create a consistent, unchanging standard for uniquely locating a property

Ner operating income is equal to:A. potential income minus

expenses minus debt serviceB. effective gross income minus potential incomeC. potential gross income minus vacancy and credit loss, minus expensesD. effective gross

income minus vacancy and credit loss potential gross income minus vacancy and credit loss, minus expenses A lease automatically terminates under which of the following circumstances?A. the tenant fails to pay rentB.