PSI Real Estate Exam (Salesperson 1) Questions and Answers (Graded A)

Which of the following would NOT be considered real property? - Answer- 2 A leasehold estate The servient estate in an easement appurtenant is the property - Answer- on which the easement is placed Which of the following statements concerning encumbrances is NOT true? - Answer- 2 All encumbrances are liens. Which of the following is NOT a specific lien? - Answer- 1 State inheritance taxes. You have entered into a lease that requires you to pay 20 percent of the owner's expenses. Your lease would be an example of a - Answer- 2 net lease. If a husband and wife own an apartment building and the husband owns an undivided three-fourths interest and the wife owns a one-fourth interest, what type of tenancy exists? - Answer- 3. Tenancy in common The highest form of ownership interest a person may hold in real estate is - Answer- 2. Fee simple Two unrelated people own a three-unit apartment building as tenants in common. One wants to sell but the other does not. Which of the following statements describes the legal rights of the party who wants to sell? - Answer- 1. The party may request a court to partition the building. Your aunt died intestate and you inherited her house. The way in which you acquired the title to her house is by - Answer- 2. descent. 10. Which of the following statements does NOT correctly describe a legal life estate? - Answer- 1. During his or her life estate the life tenant is generally answerable to the holder of the future interest. 11. Which of the following is NOT a leasehold estate? - Answer- 3. Time-share estate You are married and own a house under a form of ownership that prohibits you from selling it without the signature of your spouse. Your form of ownership is LEAST likely to be: - Answer- 1. in severalty. A state wants to build a publicly owned convention center to attract private development in its largest city. Can the state use eminent domain to acquire the land? - Answer- Yes, if just compensation is paid to the owners of the land. Which of the following grants zoning authority to municipal governments? - Answer- 2. State enabling acts The city in which you live has a zoning ordinance. The basis for the city to have such an ordinance is - Answer- 3. police power Which of the following terms are NOT related? - Answer- 4. police power-deed restriction Strict liability under Superfund means that - Answer- 2. the owner is responsible to the injured party without excuse. Which of the following does NOT correctly describe how real estate licensees should handle the possibility of hazardous substances on a property being sold? - Answer- Licensees should not disclose the problem because it might harm the seller. Sources of groundwater contamination do NOT include - Answer- 4. radon. Your neighbor has given you revocable permission to go hunting on his farm. You have a(n) - Answer- 3. license. A claim based on adverse possession of property must NOT be - Answer- 4. secretive. A man gives his friend the right to go hunting on his property for just one day. This is an example of - Answer- 1. a license. A person who receives real property by will is called a - Answer- 2. devisee. Riparian rights would exist in a - Answer- 4. cooperative on a river. A developer was able to buy two adjoining single-family lots for $20,000 each. He combined the lots into one parcel with a value of $90,000. The developer's action reflects the process of - Answer- 4. plottage. A restaurant opened in a neighborhood and was enjoying substantial profits. Within a year another restaurant was built across the street and resulted in the first restaurant losing, in the next year, 30 percent of its profits. This is an example of the principle of - Answer- 1. competition. A meatpacking plant has just been built one block from your house. The strong odors are lowering property values in your neighborhood. The loss in value would be classified as - Answer- 4. external obsolescence. In the appraisal of a public building, an appraiser would use the - Answer- 1. cost approach. A four-bedroom house with one bathroom would be an example of - Answer- 2. functional obsolescence. Which of the following is NOT a stage in the appraisal process? - Answer- 2. Analyze the tax consequences of the property owner An appraiser uses the cost approach in appraising a home. The appraiser should NOT use which of the following types of information? - Answer- 3. Depreciation of land A house that is the least expensive in its neighborhood has nevertheless grown significantly in value over the years because of an increasing number of larger, more expensive houses being built nearby. This growth in value is an example of the principle of - Answer- 3. progression You are Preparing a competitive market analysis on a house that you hope to list for sale. Which of the following approaches to value will be used in the development of the estimated value? - Answer- 4. Sales comparison approach A competitive market analysis reflects the use of the - Answer- 3. sales-comparison approach. Bank A holds a lien on a home on which Bank B already had a lien. The lenders subsequently entered into an agreement in which Bank A moved into a first lien position. This is an example of a(n) - Answer- 4. subordination agreement. If the Federal Reserve Board raises its discount rate, which of the following is likely to occur? - Answer- 4. Interest rates will decline. You have a mortgage in which you make the same payment each month for principal and interest, with the principal payment increasing and the interest payment decreasing from month-to-month. This is called a(n) - Answer- 1. amortized mortgage. Which agency is involved in purchasing government-related loans? - Answer- 2. Ginnie Mae Which of the following agencies is NOT included in the secondary mortgage market? - Answer- 1. FHA 40. All loans subject to the Real Estate Settlement Procedures Act (RESPA) require lenders to - Answer- 3. deliver a Uniform Settlement Statement (HUD-1) form to both buyer and seller. You mortgaged your property and just made the final payment. Recording which of the following documents will provide notice that the mortgage lien has been removed? - Answer- 2. Satisfaction of mortgage When a loan is subject to the provisions of the Real Estate Settlement Procedures Act (RESPA), which of the following elements of a real estate transaction need NOT observe RESPA guidelines? - Answer- 1. The commission structure for licensees Regulation Z of the Truth-in-Lending Act provides which of the following penalties for licensees who willfully fail to comply with its advertising guidelines for real estate financing? - Answer- 3. Fines and/or imprisonment Salesperson A for broker B has listed a home. Salesperson C for broker D is acting as a buyer's agent and trying to sell the same home to his buyer. Salesperson C is primarily responsible to - Answer- 4. broker D. In MOST states, the listing broker has a fiduciary duty with - Answer- 3. the client. A broker was employed by an owner to sell her home. Which of the following statements does NOT correctly describe the broker's relationship to the owner? - Answer- 4. The broker is a general agent. You are a licensee holding an open house on one of your listings. An old friend sees the sign and stops in, and ultimately asks you to write an offer to purchase. At this point, without any discussion about agency, which of the following statements about agency is correct? - Answer- 1. Your friend is your customer. You listed a home that was subsequently shown by six cooperating outside brokers. How many seller-agency relationships are involved in this transaction? - Answer- 1. One A salesperson listed a home for sale and transferred to another brokerage firm two weeks later. Which of the following statements describes the status of the listing? - Answer- 4. The listing will stay with the former broker of the salesperson. A salesperson presented an offer that was accepted and received an earnest money payment for $2,000. The salesperson should - Answer- 2. give the earnest money to his broker. You are working as a buyer's broker for a client. Which of the following would NOT describe your role as a buyer's broker? - Answer- 1. You should show the buyer properties only in which your commission is protected. According to the law of agency, a real estate broker does NOT owe the principal the duty of - Answer- 4. offering legal advice. A broker acting as the agent of a seller - Answer- 3. must report all offers to the principal unless instructed otherwise. A broker listed a residential property under a valid written listing agreement. After the sale was completed, the owner refused to pay the broker's fee. Which of the following can the broker do? - Answer- 1. She can take the seller to court and sue for the commission. Commissions and fees paid by the seller to a listing agency are determined by - Answer- 2. negotiations between the seller and the listing licensee. A listing broker is MOST likely to have earned a commission from a principal when which of the following events occur? - Answer- 4- A "ready, willing, and able buyer" signs a noncontingent or cash offer that meets the terms of the listing contract. A broker listed an owner's home and later received an offer from another licensee that met all of the listing terms and conditions. After considering the offer, the owner informed the broker that the owner no longer wished to sell, and asked to be released from the listing agreement immediately. Which of the following is a TRUE statement about the broker's position in this situation? - Answer- 3. The broker may succeed in collecting an earned commission from the owner. On July 1 an owner and a salesperson entered into a six-month exclusive-right-to-On July 1 an owner and a salesperson entered into a six-month exclusive-right-to-On July 1 an owner and a salesperson entered into a six-month exclusive-right-to-sell agreement for a residential property. On July 15 the owner rejected a low offer and fired the listing agent. On August 1 there was a house fire that required extensive kitchen repairs. On September 12 the owner entered into another exclusive-right-to-sell agreement with a salesperson from a different agency. On January 1 the property was still unsold. On which date was the first listing agreement MOST likely to terminate and why?sell agreement for a residential property. On July 15 the owner rejected a low offer and fired the listing agent. On August 1 there was a house fire that required extensive kitchen repairs. On September 12 the owner entered into another exclusive-right-to-sell agreement with a salesperson from a different agency. On January 1 the property was still unsold. On which date was the first listing agreement MOST likely to terminate and why?sell agreement for a residential property. On July 15 the owner rejected a low offer and fired the listing agent. On August 1 there was a house fire that required extensive kitchen repairs. On September 12 the owner entered into another exclusive-right-to-sell agreement with a salesperson from a different agency. On January 1 the property was still unsold. On which date was the first listing agreement MOST likely to terminate and why? - Answer- 3. September 12, because the owner breached the first listing agreement by signing a second An option, prior to being exercised, is an example of - Answer- 2. a unilateral contract Which of the following is a similarity between an exclusive-right-to-sell listing and an exclusive-agency listing? - Answer- 2. Both give the responsibility of representing the seller to just one broker. A buyer has entered into an agency agreement with more than one buyer's agent but only owes compensation to the one who puts an actual transaction together. This arrangement is known as a(n) - Answer- 4. nonexclusive agency agreement. Which of the following types of clauses governs the right of a listing broker to collect a commission from an owner who waits until the listing period expires and then personally contracts to sell the property to a party the broker had shown the property to during the listing period? - Answer- 2. Protection You wrote an offer on a house for $214,000. The seller gave you a counteroffer for $218,000. The seller may withdraw the counteroffer any time - Answer- 2. prior to the buyer's acceptance. You signed a lease for one year and took possession of an apartment When the lease expired, you continued to live in the apartment without the owner's consent. Your tenancy would be considered to be a(n) - Answer- 4. tenancy at sufferance. A commercial lease that allows rent to be increased or decreased periodically based on changes in economic indicators is a(n) - Answer- 4. index lease. In theory, which of the following types of deeds gives a property buyer the MOST protection against problems that may arise with the title? - Answer- 4. General warranty You have entered into an installment land contract for the sale of your home. Which of the following is NOT correct - Answer- 3. The buyer will hold legal title during Ae term of the contract. Personal property is generally conveyed bv a - Answer- 1. bill of sale. The movement of land caused by an earthquake would be an example of - Answer- 2. avulsion. When property transfers from one party to another, recording the deed provides what is called - Answer- 4. constructive notice. The IRS has how many requirements for establishing an independent contractor status? - Answer- 3. Three Brokers who violate the Sherman Antitrust Act may be punished by a maximum fine o - Answer- 4. $100,000. Which of the following is NOT a violation of antitrust laws? - Answer- 4. A broker refuses to cooperate with a flat-fee broker. The Civil Rights Act of 1866 prohibits discrimination based on - Answer- 3. race. Broker X is showing buyer Y, an Asian. homes only in Asian neighborhoods. The broker may be guilty of - Answer- 4. Steering Which of the following is NOT a category protected by federal fair housing laws against discrimination in housing? - Answer- 3. Sexual orientation You sign an agreement to purchase a home. The contract requires that the seller replace the damaged living room carpet. The carpet you have chosen costs $16.95 per square yard plus $4.50 per square yard for installation. If the living room dimensions are as illustrated in Figure 15.1. how much will the seller have to pay for the job? - Answer- Math ? Licensed or certified appraisers performing federally related transactions must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). A federally related transaction is any transaction with a value greater than - Answer- 4. $250,000 90. A farmer was unable to secure credit from other sources, so he probably got a mortgage loan from which of the following? - Answer- 3. Farm Service Agency 91, A and B, a married couple, bought a principal residence in 1991 for $200,000. They sold the property in 1999 with a capital gain of $150,000. Capital gains tax on their profit will be - Answer- 1. nothing. 92. If a buyer puts 20% down and borrows $200,000, what is the purchase price of her new home? - Answer- 4. $250,000 93. Which of the following home-related expenses would NOT generally be tax deductible for a homeowner? - Answer- 2. Penalties for late payment of real estate taxes 94- Which of the following types of loans would be considered conventional? - Answer- 1. A privately insured loan 95. Which of the following is NOT an agency that purchases loans on the secondary mortgage market? - Answer- 1. FDIC 96. A margin is added to an index to determine the interest rate in which of the following types of mortgage? - Answer- 1. Adjustable rate. 97. Which of the following statements would NOT be a material fact to be disclosed by a seller's agent? - Answer- 3. Buyer's ability to make a lower offer 98. Under the new capital gains tax law, a single person may take up to $250,000 in capital gains tax-free on the sale of a home if that person has lived in the house for at least - Answer- 2. two of the past five years. 99. Losing a right to the court's injunction by inaction is an example of the doctrine of - Answer- 4. laches. 100. A gave B a deed with no express or implied warranty. The deed was MOST likely a - Answer- 4. quitclaim deed.