Real Estate Practice Exam Questions Flashcards

Real Estate Practice Exam Questions Flashcards

• Earnest money deposit is a credit to whom to the buyer
• What is the first step in the appraisal process?Indicate objective of appraisal
• What is a characteristic of a VA Mortgage? Must sign an affidavit saying that they intend to occupy the

property.

• Purchase money order is a debit to the... Debit to the SELLER (It's a loan in which the seller

provides financing to help buyer)

• Capitalization definition...the process of determining the present value of a property

from it's future income.

• What is the formula for the Gross Rent Multiplier?SALE PRICE divided by MONTHLY RENT
• Characteristics of sale and leaseback... buyer becomes lessor
• Reconciliation definition...the process of comparing the property values derived from

different approaches to value, selecting the most suitable approach for the particular property being appraised and coming to a final conclusion of value.

• What is the source of money for an FHA loan? A qualified lending institution
• Redlining definition...the unlawful practice of refusing real estate related

business services based on location of a person's real

property. ie: lending institutions or insurance companies

• What is a mortgage that encumbers several parcels of

land?Blanket Mortgage

• What represents dual agency?1 broker with listing agreement and buying agreement
• What is an example of functional obsolescence? bathroom
• What is a shares appreciation mortgage? The lender receives a share of capital gain at time of sale.
• Regulation Z requires lenders to...inform borrowers of HOME MORTGAGE LOANS of closing

cost

• What is true about the contract rules regarding printed

form sales agreement?Handwritten words take precedent over printed words

• What is a mortgage that will not fully amortize the loan?Balloon Mortgage
• Transfer tax is typically paid by for by whom?Buyer and seller
• In a comparison between a land contract and a

purchase money mortgage which is true?Both represent forms of finacing

• Loan origination fee is a debit to whom? buyer
• What is homeowners insurance?Insurance to protect owners from fires and other etc.
• What is private mortgage insurance?It protects the lender if their is default
• The main factor a property manager should use to

evaluate a prospective tenant is can they make monthly rent payments on time.

• What is a fair housing exemption? (OLD PERSON

COMMUNITY SCENERIO)

Familial Status

• What is not an example of a real estate business

violation of the antitrust laws?opening offices in new locations

• Exclusive Right to Sell Listing definition... A type of listing to list and sell real estate property in which

the seller employs one broker but that broker earns a commission "no matter who sells the property including the owner"

• What should you do about material defect disclosures?inform the buyer and seller
• Who does a selling salesperson represent under buyer

agency?Buyer

• All are federal income tax deductions for a homeowner

except...property management

• What is the role of a mortgage broker? To find mortgage lenders for borrowers.
• Convert 3 mills to a decimal.003
• What is the PA law that prohibits discrimination in

housing?PA Human Relations Act

• Can a salesperson give legal advice? No, not unless they are an attorney.
• Blockbusting definition...An illegal real estate practice caused by inciting fear and

panic selling by suggesting that persons of minority background are or may be moving into an area or that the majority of residents are moving out of an area.

• The mortgage amount relative to the property price is

called...Loan to Value

• Assemblage definition...consolidating two separate lots into one.
• Equity definition...the value of real estate above any debt on that property.
• Disclosure requirements to a seller under a listing

agreement force brokers to disclose info except...the buyer had AIDS

• All are examples of fiduciary responsibilities under a

single agency listing agreement except.. .negotiate lowest price.

• Determine the value by the Income Approach formulaNET INCOME divided by RATE OF CAPITALIZATION
• Special agency listing definition... n/a
• Brokerage definition...the business practice of bringing together the parties in a

practice.

• What would not be a depreciation of value? Unimproved land
• What is an example of external depreciation? Nearby property that suffers from lack of maintenance and

is negatively affecting the sellers property.

• Special agent definition...the type of agency in which the principal authorizes the

agent to represent the agent in "one specific transaction or business activity"

• What is a mortgage that includes both real and

personal property?Package Mortgage

• Fiduciary responsibility in a property management

contract is to the lessor

• Is special price setting allowed for certain categories of

people?No it's illegal

• What does the C stand for in the fiduciary ditiesCare and confidentiality
• What is the most reliable method of appraisal for

residential real estate?Sales comparison approach

• What is a characteristic of negative amortization?They are commonly found on Adjustable Rate Mortgages

(ARM)

• Who determines the commission in a listing contract?An agreement between the owner and broker
• What is a type of depreciation that is not curable?external depreciation
• Entitlement to commission when transaction is not

consummated.Except when listing broker does not disclose information

• What type of property would be most appropriate to use

the cost approach method?25 year old church

• What has the greatest effect on real estate value?Demand of people and location
• What is a way of termination a listing agreement?Bankruptcy Court
• All are typical duties of a property manager with the

exception of...Investing profits

• Physical deterioration...associated with normal wear and tear.
• Balloon Mortgage definition...A mortgage with a balloon payment
• When is the consumer notice given?At the first discussion of needs and motivation.
• Obligations of an owner in a listing agreement if he

refused to sell when presented with a full offer...He is liable for broker compensation

• What is the purpose of RESPA?to to provide disclosure of closing cost info.
• Which is not used to determine cost approach to

estimate value?-Quantity Survey Method-Unit-in-Place Method-Square Foot Method-Gross Rent Multiplier Method Gross Rent Multiplier Method

• Net listing definition...a type of listing in which a seller desires to sell real property

and receive a guaranteed amount of money for the sale, so that the broker's commission is any sale price amount of money over and above the guaranteed price to the seller.

• Is undisclosed dual agency allowable by law? No, you can lose your license.
• What are the conditions to when an agreement of sale

becomes a binding contract?When the buyer accepts the offer and the seller is notified.

• What is the max profit a married couple can take on

capital gain?500k

• The following are examples of agricultural property

except...government owned rural land

• All are examples of single agency disclosures with the

exception of revealing the owner will except less.

• What are two examples of special use property? schools and cemetary
• Definition of appraisal...supportable estimate of value
• Typically who pays for title insurance? Buyer
• What is the transfer tax charged by the state of PA?1% of the sales price
• An example of an item that is prorated at settlement

is...Rental Income

• What is a broker's obligation to a buyer without buyer

agency?Give the agreement of sale

• Who is considered the lender in a purchase money

mortgage?Seller

• What rules require fair housing laws to be in a listing

contract?PA Human Relations Act

• Sale and leaseback definition...a combination real estate transaction where there is both a

sale of real property by an owner and then an immediate lease on the same property giving the seller the right to remain in the same property that was just sold.

• Principal definition...a consumer of real estate services who has entered into an

agency relationship with a broker or another licensee employed by a broker.

• All are characterisitics of a contract for a deed except...the buyer receives title when the contract is signed.
• Proper listing price of the property... based on seller
• All are examples of real estate except... factories

What is steering?the unlawful act of keeping a buyer away from certain communities or guiding them to purchase in certain communities.

• Paid tax is a credit to whom?Credit to the Seller
• What is the salespersons obligation to a buyer under

single agency listing?Inform the buyer

• Selling agent represents who in a single agency listing

agreement? (Scenario Question) Dangerfield represents Crawford

• Who are the parties in a listing agreement? owner and listing broker.
• What is prorated by day on a HUD 1?Interest on an assumed mortgage
• The following are typical property management

operation expenses except...ceiling replacement