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About This Quiz
When people go into real estate, they often think about the end game: the big commission for selling a house! In reality, there is a lot more that goes into working in realty, which you will determine once you sign up for a real estate exam class. It is an intense time, and the exam is no joke!
Do you know what the Fair Housing Act states and what rules you have to follow because of it? Do you know what a mixed-use property is? Do you know when an agency has been created with a prospective seller? Do you know the difference between a broker and a salesperson?
That is just the tip of the iceberg, as there are so many details to learn when prepping for the real estate exam. Add in the fact that the exam is different for each state, as states have different rules and regulations to follow. If you are licensed in one state, that doesn't mean you will be licensed to sell in another state. That means going through the exam process all over again!
So, do you think you are ready and can pass this exam? Give it a go!
Which government entity was created to promote low-income housing?
Fannie Mae
FHA
Freddie Mac
Ginnie Mae
Ginnie Mae, or GNMA, was solely created to promote low-income housing.
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Tony has authorized Adam to transact real estate business on his behalf. Adam has what role in this situation?
A principal
A licensed salesperson
An agent
An agent is someone who transacts business or manages the tasks of another person. That person would be the principal (Tony), which is the party the agent represents and acts on behalf of.
A neutral party
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What kind of home would allow Brian to lower his income by deducting the mortgage interest after buying his first home?
Inactive
Active
Qualified
For mortgage interest deductions purposes, a qualified home is considered the primary or main home of the taxpayer.
Exempt
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One of your commercial tenants complains about a broken door lock. Fixing the lock is what type of maintenance?
Preventative maintenance
Scheduled maintenance
Corrective maintenance
Fixing something that is already malfunctioning is called corrective maintenance. Inspecting equipment and making repairs when necessary is called preventative maintenance.
Property maintenance
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For real estate purposes, "CO" stands for what?
Certificate of Occupancy
The certificate of occupancy is the document showing that the premises is approved and safe for occupancy. A CO is required if any building additions are done.
Code of Originality
Certificate of Order
Common Organs
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A grocery store has been doing business in a neighborhood for years, but a new zoning ordinance prohibits the sale of packaged foods. The grocery store is now an example of what?
Eminent domain
Illegal enterprise
Variance of the zoning laws
Nonconforming use
The grocery store was in compliance before the new code was established, so it can continue to operate under its present owners. If the store is ever sold, then the new owners must comply with the new zoning ordinance.
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Gene wants to turn 30 acres of land he owns in a residential area into a real estate complex with 50 single-family homes. What type of mortgage would allow him to pay it off as he sells each home?
Pledged Account
Open-End
Closed-End
Blanket
Real estate developers often use a commercial mortgage called a blanket mortgage to finance a project. For these types of mortgages, at least two parcels of property would be needed as collateral.
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What type of contract is a mortgage an example of?
Executed
Executory
An executory contract is a contract that has terms that will be completed at a later date, like a mortgage. An executed contract is a contract that has been fully performed.
Implied
Unilateral
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Any profit earned from the sale of real estate held for 3 years is called what?
Profit gains
Gross income
Short-term capital gains
Long-term capital gains
Profits from real estate are called capital gains. Profits on those assets that were owned for more than 12 months are called long-term capital gains.
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Three brokers (A, B and C) were contacted to try and sell an open listing of a warehouse. Who gets the commission if Broker A sells it?
Broker A
Since this is an open listing, whoever sells the warehouse gets the commission. That means Broker A gets the commission.
The brokers split the commission evenly.
The owner decides who gets the commission.
None of them get the commission.
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What is the reduction in value of a 75-year-old apartment building called?
External obsolescence
Depreciation
Depreciation is when a building loses value due to any cause, like deterioration, damage and normal wear and tear.
Environmental decrease
Functional obsolescence
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The runway from a new airport ends one mile from a house. Will the value of that house go down?
Yes, because of functional obsolescence.
There is economic obsolescence when factors come into play that are unrelated to the property itself and the owner has no control over it happening, and these factors diminish the property value.
No, as noise from aircraft passing overhead doesn't lower property values.
No, as it would increase the value since the property is so close to an airport.
Yes, because of economic obsolescence.
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Some people make biweekly mortgage payments, but what is the main advantage of this?
People with lower credit scores can get these.
Better interest rates
Easier for budgeting
Mortgage is paid off quicker.
If you are paying biweekly, that means you are making 26 payments in a 52-week year. Every two payments equals one monthly payment, so if you divide 26 by 2, it equals 13 monthly payments you would make in a 52-week period compared to 12 monthly payments in a year.
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Which of the following protected classes were not added with the 1988 Amendment to the Fair Housing Act?
Families
Persons with physical disabilities
Persons with mental disabilities
Elderly people
The 1988 Amendment added protected classes to the Fair Housing Act, like families and people with mental and physical disabilities. Elderly people were not added to the law, but senior citizen housing is exempt from the Fair Housing Act if it complies.
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Tina refused to have realtor Tyler list her home. She did agree to let him show the house to 3 potential buyers, so has an agency been created?
No, an agreement was not signed.
Yes, an agency by estoppel
An agency by estoppel is an implied agency, which is formed based on the words or actions of the agent and principal that show an intent to form the agency. Since Tina, the principal, didn't stop Tyler, the agent, from representing her interests, the agency was formed.
No, Tina never officially hired Tyler.
Yes, as an express agency
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How many square feet in an acre?
46, 530
30, 456
43,560
There are 43, 560 square feet in 1 acre. This is one of those fun "standard" measurements that makes real estate and surveying so challenging.
34, 560
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If a home’s appraised market value is $760,000 and the loan balance is $266,000, what is the loan-to-value ratio?
15%
25%
35%
The loan-to-value ratio is the ratio of the loan balance to the property value. To find this, you would divide the loan balance by the market value, so $266,000 / $760,000, which equals 0.35. That gives you a loan-to-value ratio of 35%.
45%
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For Truth in Lending, the primary purpose is what?
Disclose the true costs of obtaining credit.
Truth in lending helps do away with any deceptive financing tactics. It's also known as Regulation Z.
Find out the costs to close a transaction.
Disclose the true costs of an FHA loan.
To get a better interest rate for the lender
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Which of the following examples is not a mixed-use property?
A shopping mall with clothing and furniture stores
Mixed-use property is any type of property that combines different uses together, whether it be commercial, residential, cultural, entertainment and so on. The shopping mall with furniture and clothing stores have similar commercial uses, so no mixed use exists.
A restaurant on first floor and office space on second floor
A shipping warehouse adjoining an office suite center
A bookstore on first floor and apartments above it
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A number of mortgages were given out by a company with full intention of selling them as a whole to permanent investors. What is that temporary financing called?
Discounting
Package financing
Blanket Financing
Warehousing
Warehousing happens when banks and other lenders give out mortgage loans to consumers knowing they will quickly turn around and sell those loans on the secondary market.
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Which of the following would not be considered realty?
Land
Lumber
Bricks mortared together to form a wall
A growing tree
For it to be considered realty, it has to be the land or anything attached to it. The growing tree is something that can be removed from the property, so it isn't considered realty.
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To expand a public park, a city has to buy the land from private owners. They can obtain this land through a government power called what?
Condemnation
Public seizure
Appraisal
Eminent domain
Eminent domain is the government power allowing it to obtain private property for public use. When the property is actually taken, that is condemnation.
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An appraisal can be performed by who?
Real estate broker
Real estate agent
Real estate appraiser
A real estate appraiser is the only one who can prepare an official property appraisal. An agent and broker can prepare a Comparative Market Analysis (CMA) or Broker's Opinion of Value (BOV).
All of them
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A private owner can claim certain rights. What is this collection of rights called?
Bill of Rights
The fee simple system
Freehold estate
The bundle of rights
The bundle of rights contains all the rights one obtains with the ownership of real property. These rights would include the right to enter, lease, use, sell and give away the real estate or the right to do none of these things.
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Which of the following is not one of the three "C's" of underwriting?
Credit
Closing
Closing is not one of the three c's, as capacity is the cash reserve and debt ratio of borrower, collateral is the down payment and property type and credit is the credit check of the borrower.
Capacity
Collateral
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What is it called when someone owns property for an unknown amount of time?
A mortgage
A leasehold estate
A freehold estate
An estate is an interest in property that gives you the right to possess the land. A freehold estate is ownership of that property for an undetermined length of time and nonfreehold or leasehold estates have a determinable end.
A nonfreehold estate
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Why is underwriting needed?
To find out the appraisal value of the property.
To find the best interest rate for the mortgage.
To determine the risk of making the loan.
Mortgage lenders call this process underwriting. During this time, they look at the potential borrower's salary, credit history and other things to assess the risk of making the loan.
To determine how much the property is worth.
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For the Fair Housing Act, which would be a violation?
Not renovating second-floor apartments for handicapped residents.
Refusing to rent to someone because they don't meet financial qualifications
Not allowing a service dog in an apartment that doesn't allow pets
Even in apartment complexes that do not allow dogs, the Fair Housing laws allow handicapped individuals who need a service dog to have one. If the dog causes any damage to the apartment, the dog owner is responsible for those costs.
A private club that allows lodging and gives special treatment to members
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A contract has been made for Dawn to buy Kelly's home. What bank form shows that the necessary funds will be loaned to Dawn?
An assurance
Her approval letter
A promissory note
A commitment
A commitment is a document from the mortgage lender stating they will be loaning the money to the borrower. The promissory note is her promise to pay back the mortgage, and the letter of approval is a pre-approval.
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What legal claim gives you the right to land you have been using without the owner's knowledge for 30 years?
Voluntary alienation
Adverse possession
Every state has adverse possession laws, which have been on the books for a very long time. Basically, if a land owner shows no interest in the land and someone else has been using it as their own for a long period of time (7 to 40 years, depending on the state), then the person using the land has rights to the land.
Involuntary alienation
They have no claim to the land.
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The biggest risk with an open listing belongs to who?
The seller
The buyer
The agent
The seller only pays commission to the agent that sells the property. Since it is an open listing, the seller can use as many agents as they would like, so the agent could put in work and lose the sale (and commission) to another agent.
The bank
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Of the following, freehold estates include which one?
Estate for years
Estate from year to year
Life estates
Freehold estates have an undeterminable end, which a life estate would have. The others all have a determinable ending.
Tenancy at will
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Marshes, swamps and bogs can also be called what?
Sewers systems
Streams
Wetlands
Marshes, swamps and bogs are examples of wetlands, which are protected areas. They may serve as protection for storm and flood water, help control erosion and pollution and serve as sanctuaries for wildlife.
Wastewater systems
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What's another name for easement?
Right of way
Easement is a right to cross or otherwise use someone else's land for a specified purpose. This is considered nonpossessory interest in someone else's land.
Egress right
Common lien
Nonpossessory interest
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Susan was hired with limited authority to oversee an apartment complex, including supervising employees and maintenance. What would her job role be called?
Leasing Agent
Maintenance Supervisor
Property Manager
A property manager oversees the property on behalf of the owner. They typically would oversee employees and the maintenance of the property.
Managing Agent
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You Got:
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