PA Real Estate Exam (Test Questions from
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Terms in this set (168)
What type of insurance policy must A) The answer is FLOOD. Flood insurance is always
always be purchased separately and a separate policy and only covers damage due to
not as part of a homeowners' policy? flooding. The Federal Emergency Management
A)Flood Agency (FEMA) administers the National Flood
B)Liability Insurance Program (NFIP).
C)Earthquake
D)Falling objects
A building that is remodeled into A) The answer is A CONVERTED-USE PROPERTY.
residential units and no longer used Factories, office buildings, hotels, schools,
for the purpose for which it was churches, and other structures that have been
originally built is converted to residential use are classified as
A)a modular home. converted-use properties.
B)a converted-use property.
C)a planned unit development.
D)an example of urban
homesteading.
,Each room of a house was C) The answer is MODULAR. Modular homes, often
preassembled at a factory, driven to called prefabricated homes, are becoming popular
the building site on a truck, and then choices because they cost less and can be built
lowered onto its foundation by a and assembled more quickly than traditional stick-
crane. Later, workers finished the built homes.
structure and connected plumbing
and wiring before the owners moved
in. Which term BEST describes this
type of home?
A)Converted
B)Mobile
C)Manufactured
D)Modular
When a person buys a house using a C) The answer is EQUITY. The difference between
mortgage loan, the difference the amount owed on the property and the current
between the amount owed on the market value of the property represents the equity
property and what it is worth in the property.
represents the homeowner's
A)capital gain.
B)tax basis.
C)equity.
D)replacement cost.
,The most common homeowners' C) The answer is THEFT AND VANDALISM. Basic
policy is the basic policy that covers homeowners' insurance policies cover damage as a
result of fire or lightning, glass breakage, windstorm
A)freezing of plumbing and heating or hail, explosion, vandalism and malicious mischief,
systems. theft, and others. The policies never cover flooding,
B)falling objects. which is always a separate policy.
C)theft and vandalism.
D)flooding.
For the past two years, a couple has C) The answer is 0 PERCENT. To encourage
been renting the house they homeownership, some homesellers are exempt
purchased 25 years for $75,000 ago from the capital gains tax as follows: up to
to a tenant. They are now ready to $250,000 gain is protected for single homeowners
sell that home for $250,000. When and up to $500,000 for married filing jointly. With
they sell their house, how much of only a few exceptions, homeowners/homesellers
the capital gain will be taxable? must have owned and occupied their home for two
of the previous five years.
A)40 percent
B)100 percent
C)0 percent
D)50 percent
The object of planned unit A) The answer is MERGE DIVERSE LAND USES IN
developments is to ONE SELF-CONTAINED DEVELOPMENT. Planned
unit developments (PUDs) are governed by special
A)merge diverse land uses in one zoning ordinances and merge diverse land uses
self-contained development. such as housing, recreation, and commercial into
B)encourage separation of housing one self-contained development. This permits
and commercial units. maximum use of open space by reducing lot sizes
C)minimize open space by enlarging and street areas.
lot sizes and street areas.
D)avoid the use of community
associations.
, Real estate markets are local due to C) The answer is IMMOBILITY AND UNIQUENESS.
the physical characteristic of Two characteristics of real estate, uniqueness and
immobility, require that real estate markets remain
A)government controls and fiscal local: uniqueness means that that no two parcels of
policies. real estate are ever exactly alike, and immobility
B)labor force and construction costs. refers to the fact that property cannot be relocated
C)immobility and uniqueness. to satisfy demand where supply is low. Buyers
D)population. cannot relocate to areas with greater supply.
Historically, lenders require that C) The answer is 28 PERCENT OF GROSS INCOME.
housing costs cannot exceed Historically, lenders preferred that the monthly cost
of buying and maintaining a home—mortgage
A)25 percent of net income. payments, both principal and interest, plus taxes
B)36 percent of net income. and insurance impounds—could not exceed 28
C)28 percent of gross income. percent of gross income (i.e., pretax monthly
D)20 percent of gross income. income).
In the event that a homeowner's A) The answer is THE TOTAL REPLACEMENT COST.
insurance policy provides coverage An owner who has maintained insurance equal to a
for at least 80 percent of the full specified percentage (usually 80 percent) of the
replacement cost of the dwelling, the replacement cost new (excluding the cost of land)
loss of the residence will be settled may make a claim for the full cost of the repair or
for replacement of the damaged property without
deduction for depreciation.
A)the total replacement cost.
B)either the actual cash value or the
prorated repair cost.
C)the market value of the property
less the land value.
D)the lowest repaid bid.
Temple Course) latest update | instant download
Save
Terms in this set (168)
What type of insurance policy must A) The answer is FLOOD. Flood insurance is always
always be purchased separately and a separate policy and only covers damage due to
not as part of a homeowners' policy? flooding. The Federal Emergency Management
A)Flood Agency (FEMA) administers the National Flood
B)Liability Insurance Program (NFIP).
C)Earthquake
D)Falling objects
A building that is remodeled into A) The answer is A CONVERTED-USE PROPERTY.
residential units and no longer used Factories, office buildings, hotels, schools,
for the purpose for which it was churches, and other structures that have been
originally built is converted to residential use are classified as
A)a modular home. converted-use properties.
B)a converted-use property.
C)a planned unit development.
D)an example of urban
homesteading.
,Each room of a house was C) The answer is MODULAR. Modular homes, often
preassembled at a factory, driven to called prefabricated homes, are becoming popular
the building site on a truck, and then choices because they cost less and can be built
lowered onto its foundation by a and assembled more quickly than traditional stick-
crane. Later, workers finished the built homes.
structure and connected plumbing
and wiring before the owners moved
in. Which term BEST describes this
type of home?
A)Converted
B)Mobile
C)Manufactured
D)Modular
When a person buys a house using a C) The answer is EQUITY. The difference between
mortgage loan, the difference the amount owed on the property and the current
between the amount owed on the market value of the property represents the equity
property and what it is worth in the property.
represents the homeowner's
A)capital gain.
B)tax basis.
C)equity.
D)replacement cost.
,The most common homeowners' C) The answer is THEFT AND VANDALISM. Basic
policy is the basic policy that covers homeowners' insurance policies cover damage as a
result of fire or lightning, glass breakage, windstorm
A)freezing of plumbing and heating or hail, explosion, vandalism and malicious mischief,
systems. theft, and others. The policies never cover flooding,
B)falling objects. which is always a separate policy.
C)theft and vandalism.
D)flooding.
For the past two years, a couple has C) The answer is 0 PERCENT. To encourage
been renting the house they homeownership, some homesellers are exempt
purchased 25 years for $75,000 ago from the capital gains tax as follows: up to
to a tenant. They are now ready to $250,000 gain is protected for single homeowners
sell that home for $250,000. When and up to $500,000 for married filing jointly. With
they sell their house, how much of only a few exceptions, homeowners/homesellers
the capital gain will be taxable? must have owned and occupied their home for two
of the previous five years.
A)40 percent
B)100 percent
C)0 percent
D)50 percent
The object of planned unit A) The answer is MERGE DIVERSE LAND USES IN
developments is to ONE SELF-CONTAINED DEVELOPMENT. Planned
unit developments (PUDs) are governed by special
A)merge diverse land uses in one zoning ordinances and merge diverse land uses
self-contained development. such as housing, recreation, and commercial into
B)encourage separation of housing one self-contained development. This permits
and commercial units. maximum use of open space by reducing lot sizes
C)minimize open space by enlarging and street areas.
lot sizes and street areas.
D)avoid the use of community
associations.
, Real estate markets are local due to C) The answer is IMMOBILITY AND UNIQUENESS.
the physical characteristic of Two characteristics of real estate, uniqueness and
immobility, require that real estate markets remain
A)government controls and fiscal local: uniqueness means that that no two parcels of
policies. real estate are ever exactly alike, and immobility
B)labor force and construction costs. refers to the fact that property cannot be relocated
C)immobility and uniqueness. to satisfy demand where supply is low. Buyers
D)population. cannot relocate to areas with greater supply.
Historically, lenders require that C) The answer is 28 PERCENT OF GROSS INCOME.
housing costs cannot exceed Historically, lenders preferred that the monthly cost
of buying and maintaining a home—mortgage
A)25 percent of net income. payments, both principal and interest, plus taxes
B)36 percent of net income. and insurance impounds—could not exceed 28
C)28 percent of gross income. percent of gross income (i.e., pretax monthly
D)20 percent of gross income. income).
In the event that a homeowner's A) The answer is THE TOTAL REPLACEMENT COST.
insurance policy provides coverage An owner who has maintained insurance equal to a
for at least 80 percent of the full specified percentage (usually 80 percent) of the
replacement cost of the dwelling, the replacement cost new (excluding the cost of land)
loss of the residence will be settled may make a claim for the full cost of the repair or
for replacement of the damaged property without
deduction for depreciation.
A)the total replacement cost.
B)either the actual cash value or the
prorated repair cost.
C)the market value of the property
less the land value.
D)the lowest repaid bid.
