Test Bank Questions and Answers for the California Real Estate Sales Person Exam – 2022/2023.

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Test Bank Questions and Answers for the California Real Estate Sales Person Exam – 2022/2023. Broker A receives two offers on Seller B's house, which is listed for sale at $250,000. The first off... er is for all cash at $200,000. The second offer is for 20% down with 80% financing for the full price. What should the broker do with respect to both offers? CORRECT ANS- Present both offers to the seller as soon as possible. The two primary documents dealing with payment of a loan are the mortgage or deed of trust and a CORRECT ANS- promissory note. The term that best describes a continuous urban corridor joining at least two cities is CORRECT ANS- megalopolis. The term real property can also be described as CORRECT ANS- the bundle of rights. The rights of a landowner to a river bordering her property are known as CORRECT ANS- riparian rights. In the case of a transfer of ownership of a piece of real estate, a fixture is normally CORRECT ANS- assumed to be included in the transfer. A tenant who operates a jewelry store wants to take his jewelry cases with him at the expiration of the lease. What is the best solution? CORRECT ANS- He may take the cases if removal will not cause substantial damage. A legal description of property is not adequate unless CORRECT ANS- land boundaries are defined. The lot and block system of property description is not also known as the CORRECT ANS- rectangular survey system. What best describes the interests of the holder of a life estate? CORRECT ANS- possession, use, and ownership How many acres does a section of land contain? CORRECT ANS- 640 acres The requirement that multiple owners take title to property at the same time is a characteristic of CORRECT ANS- joint tenancy. The type of ownership that provides the most complete bundle of rights is CORRECT ANS- fee simple absolute. Which are most similar to each other with respect to inheriting property? CORRECT ANS- joint tenancy and community property with right of survivorship (both allow for reversion to remaining owners) A statement of the goals and policies regarding growth of a community is a good definition of the CORRECT ANS- general plan. The primary difference between a common interest subdivision and a standard subdivision is CORRECT ANS- ownership of common areas. Which of the following is a generic term for a group of people joining together to invest in real estate? CORRECT ANS- syndicate The proper way for a landowner who has physical difficulty in developing his property to get relief is to obtain a CORRECT ANS- variance. When is a landowner entitled to compensation for a change in zoning? CORRECT ANS- when the landowner is denied all practical economic use of the property At which lot does the Subdivided Lands Law take effect? CORRECT ANS- the fifth lot The state has enacted legislation providing special consideration or control for development of CORRECT ANS- rangeland, earthquake areas & coastal areas The land that benefits from an easement is referred to as the CORRECT ANS- dominant tenement. All liens are encumbrances. All encumbrances are CORRECT ANS- limitations. A deed restriction prohibiting the sale of property to certain ethnic groups CORRECT ANS- is illegal and unenforceable. A mechanic's lien creates CORRECT ANS- a cloud on title. A private deed restriction that places a restraint on alienation CORRECT ANS- is void, restricts the sale of property and is unenforceable. An easement is an encumbrance CORRECT ANS- always. The seller of a one-family house is required to disclose to buyers CORRECT ANS- the structural and mechanical condition of the property. The process by which eminent domain occurs is called CORRECT ANS- police power. An agent represents a CORRECT ANS- principal. Which of the following types of easement does not run with the land? CORRECT ANS- the electric company's easement to cross over your land with their power lines What is another term for an agent entrusted to act on someone's behalf? CORRECT ANS- fiduciary The agent who brings a ready, willing, and able buyer to a seller is commonly called the CORRECT ANS- procuring cause. Broker A agrees to represent Seller B in the sale of her house. Seller B agrees to pay Broker A a commission if he successfully sells the house. What do we know for certain based on these facts? CORRECT ANS- A bilateral express contract exists between Broker A and Seller B Broker A has a listing agreement to sell Seller B's house. Broker A brings an offer to Seller B on behalf of Buyer C. Seller B rejects the offer and a week later attempts to negotiate directly with Buyer C. Seller B has violated CORRECT ANS- the duty of care. Seller A wants to walk away with $200,000 after the sale of her house and all expenses are paid. She agrees that Broker B can keep, as his fee, anything he gets above that. What type of agreement have they made? CORRECT ANS- a net listing Seller A has signed a listing agreement with Broker B. Without the assistance of Broker B, Seller A sells her property and under the terms of the listing agreement owes no commission to Broker B. What type of listing agreement did Seller A sign? CORRECT ANS- an exclusive agency listing A cooperating broker may represent CORRECT ANS- the buyer or the seller or the listing broker This is not a type of listing agreement? CORRECT ANS- multiple listing Broker A has a listing to market Seller B's house. He also has a buyer's agency agreement to find a house for Buyer C. If Buyer C becomes interested in Seller B's house what might the danger be, if any, to Broker A? CORRECT ANS- the creation of a dual agency (this can be taken care of by disclosing to both parties) Who of the following owes fiduciary responsibility to the buyer? CORRECT ANS- the buyer's agent A broker hired to sell a house is considered a CORRECT ANS- special agent. A real estate salesperson is always considered an CORRECT ANS- employee. Seller A wants to get the broadest exposure for the sale of her house but does not want to pay a commission if she sells the house herself. What type of listing will she try to establish? CORRECT ANS- open listing All agency agreements for the sale of property must be in writing except creation of an agency by CORRECT ANS- there are no exceptions. The most profitable single use that will generate the highest value for a piece of property is called it's CORRECT ANS- highest and best use. Broker A agrees in writing to keep details of Seller B's property in his files but indicated that he will not actively market it. Seller B agrees to pay Broker A a commission if he finds a buyer. This agreement would best be described as CORRECT ANS- express unilateral. Which of the following is not a characteristic of value? CORRECT ANS- change An uncashed deposit check usually may be held and not deposited by the broker for how many days before an offer is accepted? CORRECT ANS- until the offer is accepted Two lots, each valued at $50,000, when combined have a value of $125,000. What term best describes this added value? CORRECT ANS- plottage What is deducted from potential gross income to arrive at an effective gross income? CORRECT ANS- vacancy and collection loss In the income approach to estimating value, another term for the capitalization rate is CORRECT ANS- rate of return. In appraising a property, the process by which dissimilarities are accounted for in comparing a subject property and a comparable property is called CORRECT ANS- making adjustments. An appraisal may have more than one date on it. The date of the value estimate is the CORRECT ANS- effective date. What is an example of functional obsolescence? CORRECT ANS- having to get to a bedroom by going through another bedroom If you assume that depreciation occurs at an even rate, what method of calculating depreciation would you be using? CORRECT ANS- economic age life method A parking lot in a downtown area being developed with office buildings is most likely CORRECT ANS- an interim use of the property. Potential gross income of an investment property is the same as CORRECT ANS- market rent plus other building income. The gross rent multiplier approach is a useful income approach in appraising CORRECT ANS- single-family homes. Which approach to valuation estimates land and building value separately? CORRECT ANS- cost approach In order to arrive at a final value estimate after applying all three approaches to value, which of the following will an appraiser do? CORRECT ANS- Reconcile the three values. What type of value is the term advalorem most closely associated with? CORRECT ANS- assessed value Rising mortgage interest rates will tend to CORRECT ANS- lower property values. What activities of the Federal Reserve System is likely to have the most direct effect on the rates charged for consumer credit? CORRECT ANS- adjusting the discount rate Appraisers paid on the basis of a percentage of the value of a property are CORRECT ANS- in violation of appraisal ethical standards. A person wanting to buy a $200,000 home by putting down $40,000 in cash and borrowing $160,000 is making use of what financial concept? CORRECT ANS- leverage "An improvement to a property is worth the value it adds, if any, to the whole property, not its individual cost or value" is a good definition of the principle of CORRECT ANS- contribution. A buyer purchases a $275,000 house with $60,000 down and a mortgage loan of $215,000. In order to secure a preferred interest rate, the borrower must pay the bank 1 point. How much will this charge be? CORRECT ANS- $2,150 (a point is 1% of a loan) After 1989, who insured deposits in all federally chartered banks? CORRECT ANS- FDIC The process by which a mortgage loan is paid off in equal payments consisting of principal and interest is called CORRECT ANS- amortization. The difference between the value of a property and all debts attributed to it" is a good definition of CORRECT ANS- equity. The object of creating a negotiable instrument is to CORRECT ANS- allow a note to be transferred. The terms and conditions of the promise to pay back money borrowed to buy a house is found in the CORRECT ANS- promissory note. A home buyer borrows $280,000 to purchase a home for 30 years at an interest rate of 7%. How much interest will he pay the first year on the loan? CORRECT ANS- $19,600 (Total amount borrowed x 0.07 or 280,000 x 0.07 = 19,600) What does a discount point do to the effective yield that a lender gets from a mortgage loan? CORRECT ANS- It raises it. A mortgage lender requires a borrower to make monthly payments, in addition to the mortgage payments, to a special account to cover taxes and hazard insurance costs for the property. This type of account is commonly called CORRECT ANS- an impound account. California law protects homeowners when the sale of the property cannot cover the outstanding mortgage balance CORRECT ANS- only on the original purchase mortgage loan. Equity is most accurately defined as CORRECT ANS- the value of the house minus all liens and encumbrances. A purchaser wants to buy a house that costs $330,000. The bank is offering a mortgage loan at a loan-to-value ratio of 80%. How much will the purchaser need for a down payment? CORRECT ANS- $66,000 (Loan to Value Ratio Bank Loans 80% 20% Down 330,000 x 0.20= 66,000) The law that controls advertising of real estate loans is CORRECT ANS- Regulation Z What don't VA and FHA loan programs in California do? CORRECT ANS- Money is not lent directly by these agencies. The interest rate charged by the Federal Reserve System to borrow money is called the CORRECT ANS- discount rate. Which type of mortgage loan typically results in negative amortization? CORRECT ANS- graduated payment A types of purchase financing that allows the seller to take immediate possession of the property but delays transfer of title is CORRECT ANS- a land contract, a contract for deed, an installment sales contract. Buyer A pays $300,000 for a house putting down $60,000 and borrowing $240,000. The house appreciates 25% during the years he owns it. When he sells the house, what is his profit? CORRECT ANS- $75,000 (300,000 x 0.25 = 75,000) A testator who dies testate has no need of CORRECT ANS- the laws of intestate succession. Whose signature must be on a deed to make it valid? CORRECT ANS- the grantor Which of the following is not a duty of an escrow agent? CORRECT ANS- to conduct an independent investigation of the transaction Which of the following is true? CORRECT ANS- All accretions are accessions. Extra protection for title problems on property conveyed by a warranty deed is provided by CORRECT ANS- title insurance. Builder A turns over the streets in his new subdivision to the town. He does this by CORRECT ANS- statutory dedication. The creation of escrow is conditional on CORRECT ANS- execution of a binding contract. (Escrow is created when a binding contract is signed & conditional delivery of documents is agreed to) The process by which payments such as taxes are allocated at closing is called CORRECT ANS- proration. What is true regarding title insurance policy coverage for changes in land use as a result of zoning changes? CORRECT ANS- It is not covered by either ALTA or CLTA extended coverage policy. (Zoning Changes are not covered by either policy) A seller has paid taxes of $2,400 in advance on July 1 for the following year. He closes sale of the property on November 1. Who owes how much to whom? CORRECT ANS- The buyer owes the seller $1,400. The term advalorem usually is associated with CORRECT ANS- property taxes. The opposite of marketabletitle can best be expressed as CORRECT ANS- cloud on title. Assuming that the current assessed value of a property after all exemptions have been applied is $55,000, what is the annual tax on that property? CORRECT ANS- $550 (The statutory property tax rate is 1% 55,000 x 0.01 = $550) The act that extended antidiscrimination protection to business establishments is the CORRECT ANS- Unruh Civil Rights Act. A mobile home advertisement must be withdrawn within how many hours of the home being taken off the market? CORRECT ANS- 48 hours What is the term used to describe the depositing of a client's funds into the broker's personal or business account? CORRECT ANS- commingling The California law that specifically prohibits redlining is the CORRECT ANS- Housing Financial Discrimination Act. What is the most desirable form of deposit from a seller's point of view? CORRECT ANS- an immediately negotiable check Blind ads for real estate are permitted CORRECT ANS- for no properties. A broker must maintain records of a transaction for how many years from the date of closing? CORRECT ANS- 3 years Which of the following activities could be performed by an unlicensed assistant? CORRECT ANS- creating sales brochures A broker who employs salespeople as independent contractors rather than employees has CORRECT ANS- the same amount of supervisory responsibility. Real estate law in California is administered by the CORRECT ANS- Department of Real Estate. A salesperson collects a commission directly from a homeowner after selling her house. Which of the following is true? CORRECT ANS- The salesperson has violated the law. A violation of the Real Estate Law could result in all of the following penalties except CORRECT ANS- a term of not more than one year in jail. Payments for a financial injury sustained by a person as a result of the fraudulent practices of a real estate broker would be made from the CORRECT ANS- California Real Estate Recovery Fund. When must a real estate salesperson be licensed in order to receive a commission? CORRECT ANS- at the time of the transaction An unpaid child support obligation will result in what type of license being issued to a real estate salesperson applicant? CORRECT ANS- a 150-day temporary license Which of the following statements is true? CORRECT ANS- The state of California has no official code of real estate ethics Which of the following is not exempt from requiring a real estate license? CORRECT ANS- a corporation providing real estate sales. A real estate brokerage corporation must have a corporation license Informed consent to practice dual agency is CORRECT ANS- required by both California law and the National Association of Realtors code of Ethics How long does an applicant have from the time of passing the license exam to obtain his salesperson license? CORRECT ANS- one year Commercial property owners may require a maximum of CORRECT ANS- There is no maximum. Which of the following is true? CORRECT ANS- All salespeople must work for brokers. The grace period during which an expired license may be renewed simply by paying a renewal fee is CORRECT ANS- two years, and the agent cannot practice during that time. The agent conducting the mandatory physical inspection of the property certifies the completion of the inspection in CORRECT ANS- the Real Estate Transfer Disclosure Statement. Public improvements such as sidewalks may be paid for by CORRECT ANS- ad valorem taxes, Mello-Roos Community Facilities Act bonds and special assessments. Within what time frame must a legal action be filed as a result of information in a property transfer disclosure statement? CORRECT ANS- three years Broker A is selling property to Buyer B. In which, if any, of the following situations would Broker A have to disclose his interest? CORRECT ANS- Broker A's brother-in-law owns the property, Broker A owns the property and Corporation C owns the property and Broker A is part owner of the corporation. Buyer A is interested in purchasing a property from an estate. He asks the broker how the previous owner died. The owner died 18 months ago by suicide. The broker CORRECT ANS- must answer the question honestly. The Real Estate Recovery Account is funded from CORRECT ANS- real estate license fees. Seller disclosure of a dwelling's physical condition is required of CORRECT ANS- mobile homes. A house is being sold by a real estate broker on behalf of a homeowner. The basement leaks every time there's more than an inch of rain. The house is on a substandard-size lot, which will require a zoning variance to make any additions. The school district is rated in the bottom half of all districts in the state. And the furnace is 20 years old. Which of the following statements is least likely to be considered fraudulent misrepresentation? CORRECT ANS- This house is in a great school district. A member of the National Association of Realtors is known as a CORRECT ANS- Realtor. Houses built after 1980 and sold with the assistance of a broker will require all of the following except CORRECT ANS- a lead-paint hazard disclosure (cut off date for lead paint disclosure is for houses built before 1978). The Homeowner's Guide to Earthquake Safety must be provided to purchasers of one-to four-family homes built prior to CORRECT ANS- January 1, 1960. With respect to disclosure, state responsibility areas deal with CORRECT ANS- fire hazard. For disclosure purposes, a material fact effecting property value would include all but which of the following? CORRECT ANS- the presence of a significant minority population in the community Ordnance location disclosure deals with the CORRECT ANS- possibility of live ammunition from military installations in the area. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>CONTINUES................... [Show More]

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