Real Estate Practice Exam

Flashcard maker : Lily Taylor
The list of potential clients that an agent contacts on a regular basis
a. is considered his or her “sphere of influence”

b. always belongs to his or her broker

c. is technically considered harassment

d. is a waste of time

Errors and Omissions insurance is meant to protect whom from liability
a. Brokers

b. Agents

c. Both a and b

d. Neither a nor b

A salesperson who receives all (or nearly all) of the commission earned from a real estate transaction:
a. has a 100% commission arrangement with his or her broker

b. has a 50/50 commission contract

c. is breaking real estate law

d. none of the above

A salesperson who is actively engaged in professional real estate activities must be employed by:
a. the state of California

b. a licensed real estate broker

c. another real estate licensee with at least 5 years experience

d. none of the above

A person whose physical conduct is not subject to the control of another, and who sells results rather than time, is:
an independent contractor
Soliciting potential clients by telephoning people you don’t know is called
cold calling
A certification for construction products, such as windows, paints, and adhesives, attesting that the products were manufactured and can be used with minimal impact on the environment, is known as a(n):
Gold Seal
An open house is a prospecting tool for finding
Buyers and sellers
Sources of listings may also include
forclosures
When writing effective ads, the formula “AIDA” refers to
attention interest desire action
Rules for regulating real estate advertising under the truth in lending act are covered by
Regulation Z
FSBO refers to
for sale by owner
Brokers should examine the call log book regularly to determine
the impact of any advertising campaign
The bulk of the typical residential broker’s advertising budget is spent on
newspaper ads
The type of listing in which the owners would be obligated to pay a commission to the broker even if the owners sell the property themselves during the listed period is
an exclusive right to sell listing
the amount of commission payable to a real estate broker is ordinarily based on
agreement of the parties
to earn a commission, a broker must product a buyer who is
ready, willing and able
if an owner enters into an exclusive agency listing and thereafter sells the property through his or her own efforts
the broker is entitled to his or her full commission, plus damages
the type of listing that is most likely to give rise to charges of misrepresentation or fraud is the
net listing
how a house looks to a psserby when compared to the rest of the neighborhood is called
curb appeal
in order for agents to gain access to the house, keys are often kept
in a lockbox
a packet of forms an agent provides to the seller when taking a listing is called
seller’s disclosure packet
in a listing agreement, handwritten or typed-in instructions
are given precedence over preprinted instructions
To earn the commission guaranteed by a safety clause, the original listing broker must provide the seller with a list of prospects who were shown or made offers on the property within
2 calendar days of the expiration of the original listing
copies of the listing agreement must be given to the signing parties
at the time signatures are obtained
which of the following (seller’s) listing forms does the buyer also receive a copy of?
Seller’s affidavit of nonforeign status
The form that is often referred to as “FIRPTA” is the
Seller’s affidavit of nonforeign status and/or California withholding exemption
The amount of cash equivalent that is most likely to be paid for a property on a given date in a fair and reasonable open market sale is called
market value
The term CMA refers to
comparative market analysis
most property owners move on an average of every
6 to 8 years
Economic obsolescence is
loss of value due to conditions outside the property itself (external)
advantages to home ownership include
appreciation, tax benefits, equity buildup
When selling real estate, the MOST effective form of communication is:
direct contact (face to face)
an incoming call register is a useful tool for
record keeping, controlling ad revenue and expenses, and following up on inquiries
the time assigned to individual agents to answer the company telephone is called
floortime
character, capacity and capital are called the three C’s of
credit
the most commonly used purchase contract in California is the
California residential purchase agreement and Joint escrow instructions form
if there is a contradiction in the purchase agreement form:
the handwritten or typed-in words supersede the printed words
Liquidated damages are:
paid for not fulfilling a clause or condition in the contract, and agreed to in advance and stated in the contract
Under the buyer occupancy section of the purchase contract, the term CE +3 means:
the buyer will take possession 3 days after the close of escrow
which of the following is TRUE concerning wood destroying pest inspections
All of the following: Section A1 indicates which party will pay for termite inspection, section A1 covers accessible areas of the main building and attached structures, and termite clearance is usually a lender’s requirement
The seller must provide the buyer with a Lead-based paint notice as an attachment to the purchase contract if the residential property was constructed
prior to 1978
Seller’s disclosures must be approved as soon as possible
by buyers, to insure a binding contract
which of the following forms details the total cost of the purchase, including monthly payments?
estimated buyer’s costs
Which of the following is true concerning the buyer’s request for repairs?
all of the following: the buyer’s request is really a wish list, the seller may choose to do all, some, or none of the repairs, the buyer can remove request and submit a new one
If there are more than two counter offers, an agent/broker should:
start from scratch and rewrite the contract
Which of the following is TRUE concerning the buyer’s affidavit?
All of the following: It involves the foreign investment in real property tax act (FIRPTA), it involves property for use as a residence, it involves property with a sales price that does not exceed $300,000
The verification of property condition is filled out
during the final walk-through
The buyer’s inspection waiver:
can be added to the original purchase contract should the buyer choose not to get a physical inspection AND is not recommended by brokers
The terms mortgagee and mortgagor refer to:
mortgages only
In a trust deed, the party who is lending the money is called the:
beneficiary
The compensation for processing the loan and setting it up on the books, which is based on the loan amount is
a loan origination fee
The term APR refers to
annual percentage rate
A charge to the borrower for paying off all or part of a loan balance before the due date:
is called a prepayment penalty
Lenders refer to a borrower with a low FICO score and a limited ability to cover family living expenses as a:
subprime borrower
The term PMI refers to
private mortgage insurance
An escrow holder can be
all of the following: a corporation, an attorney, a real estate broker acting as the agent in a transaction
Which of the following is NOT one of the three requirements for a valid escrow?
Legal advice
In northern California, the majority of escrows are handled by
independent escrow companies
Death does not cancel escrow because
it is binding on the heirs (estate), and because of the prior agreed-to contract
the two rules of proration in an escrow include
the date the item is paid, and the date escrow closes
a report showing the condition of title before a sale or loan transaction is called the:
preliminary title report
which of the following is a lender’s EXTENDED coverage policy?
ALTA
An ad valorem tax is a tax that is charged
in proration to the value of the property
the county officer who collects real property taxes is the
county tax collector
The rollback of California property tax to 1% of the selling price, plus 2% cumulative interest every year thereafter, was mandated by
proposition 13
“No darn fooling around” is a method for remebering
important property tax dates
Which of the following property is tax exempt in California?
National and state parks AND property owned by non-profit organizations
The improvement Bond act of 1915:
All of the following: Is a special assessment tax, finances street and highway improvements, is based on the frontage of property facing the improved street
The tax that requires taxpayers who make above a certain amount of gross income to figure their taxes twice is called:
Alternative minimum tax (AMT)
The liquidity of an income property is determined by:
the amount of time necessary to turn the property into cash
In California, an apartment complex with 16 or more units:
must have an on-site property manager
Which of the following lenders makes the majority of their funds available for short-term, high-interest loans like credit cars and automobile loans?
Commercial banks
Which of the following operating expenditures is NOT one of the terms included in the acronym MITUM?
Interest
Operating expenses that do not vary depending on the occupancy of the property are
fixed expenses
An item that has a life span less than the expected life of the property is called a
short-lived component
The higher the gross multiplier:
the higher the price
A seller of a business agrees not to open another business establishment similar to that being sold for six months, such an agreement is called a
covenant not to compete
What agency regulates the issuance of liquor licenses in California?
California Department of Alcoholic Beverage Control (ABC)
A real estate broker who wants to include negotiation of loans for prospective borrowers and the sale of trust deeds secured by real property will need:
a real property security dealer’s endorsement
The interstate land sales full disclosure act
covers the sale or lease of subdivisions with 25 or more lots AND requires a permit called a property report from the Dept. of housing and urban development
The body of law referred to as the UCC is the:
Uniform Commercial Code
The housing financial discrimination act of 1977 prohibits:
Redlining
Lenders who charge an additional processing fee to non-english speaking applicants because of the cost of hiring bilingual employees:
are guilty of practicing discrimination
A resident manager
all of the following: lives on the property, may also be referred to as an on-site manager, may also be referred to as a building superintendent.
A CCRM designation stands for
California certified residential manager
What type of lease calls for an additional percentage of the lessee’s gross business income above the minimum fixed rent?
percentage lease
A person who is paid to exercise control over the assets of a common interest development is a:
managing agent
By California law, no governmental agency can adopt any rent control restrictions on:
nonresidential property
A good reason for a real estate licensee to become an assistant is:
shyness and lack of experience
Which of the following statements is generally considered correct concerning brokerage firms that hire real estate assistants?
Agents who hire assistants list more properties than those who don’t AND agents who hire assistants sell more properties than those who don’t
An assistant working as an independent contractor may be expected to:
Pay his or her own taxes
Which of the following would normally be found in a shared document file?
All of the following: sellers information, all disclosures, buyer’s information.
Real estate assistants who choose to become notary publics must
maintain an official record called a notary journal
The main purpose of the DRE is to
protect the public
police power provisions are laws created to benefit
health, safety and morals
a real estate salesperson’s license is valid for
four years
the real estate commissioner has the right to:
all of the following: revoke a license, restrict a license, suspend a license
A broker who falsely gives the impression that he or she is the owner of a property for sale is guilty of:
blind advertising
To be called a “REALTOR” a licensee must be
a member of the national association of REALTORS (NAR)

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