CA REAL ESTATE PRINCIPLES
COURSE (UNIT EXAMS) QUESTIONS
AND ANSWERS
An example of this type of leasehold estate is a month-to-month lease. ✅✅ANSW-Periodic estate
As part of his lease agreement with his landlord, Alex mows the grass around his apartment building
each week in return for a small reduction in rent. What is this an example of? ✅✅ANSW-
Covenant
Landlords may protect themselves from having to pay for damages to the property caused by the
tenant by collecting a security ______ from the tenant. ✅✅ANSW-Deposit
Tyra owns a nail salon that's located in a strip mall. Her rent every month includes $1,800 base rent
and 10% of her gross sales. What kind of lease does Tyra have? ✅✅ANSW-Percentage
With a triple net lease, the tenant pays ______ separately from the base rent. ✅✅ANSW-Taxes,
insurance, and maintenance
Raymond just started his clothing business in a high-traffic shopping center. This type of lease
agreement will require Raymond to pay the landlord rent based upon the percentage of the periodic
gross sales. This type of agreement is called a ______ lease agreement. ✅✅ANSW-Percentage
How does the "break-even point" relate to percentage leases? ✅✅ANSW-The landlord doesn't
charge a percentage of sales until the tenant's sales exceed a break-even point.
Which terms describes a lease that has been agreed to by both parties? ✅✅ANSW-Accepted
Which of these contract-specific requirements for a lease prohibits minors from entering into a lease
agreement? ✅✅ANSW-Legal capacity
Which of these statements about recording a lease is true? ✅✅ANSW-A tenant who lives in a
building that is being sold may want to have the lease filed as a public record.
,Which of these statements about leases is true? ✅✅ANSW-A lease must meet the essential
requirements of any contract to be enforceable.
What's the primary purpose of a CMA? ✅✅ANSW-To determine an appropriate listing price
range
Comparative market analysis is most effective when a licensee limits the data collection time frame
for sold properties. A CMA should look at properties that sold within ______. ✅✅ANSW-No later
than three to six months ago
Steve is preparing a comparative market analysis for the Joneses and has selected three comparable
properties. How many adjustments should Steve make to the Joneses' property? ✅✅ANSW-Zero
Which type of listing can help a real estate professional determine how quickly a home in a given
price range received an accepted offer? ✅✅ANSW-Pending
When you're putting together a listing presentation, which of these is a key point to address?
✅✅ANSW-Buyers won't pay more for a home than the market dictates.
When a property is overpriced, what happens? ✅✅ANSW-It may become stale on the market,
resulting in low-ball offers.
At a listing appointment, licensee Chet asks Sam, the seller, if his property is his own home or an
investment property. Why would Chet ask this? ✅✅ANSW-If the home is his own, he's likely to
be purchasing a new one, so Chet has a chance to land two transactions.
Getting the best price is always a factor for a seller, but the ______ at which it would actually sell
must be another consideration. ✅✅ANSW-Market price
What's the price at which a willing buyer and a willing seller would strike a deal given normal market
conditions? ✅✅ANSW-Market value
Joaquin is an appraiser. What purpose do Joaquin and other appraisers serve? ✅✅ANSW-
Determine a property's value
,Appraiser Jamie is looking past how a property is being used to determine a higher value. What is
Jamie determining? ✅✅ANSW-Highest and best use
What's the first step an appraiser will perform when conducting an appraisal? ✅✅ANSW-State
the problem.
Who typically performs an appraisal? ✅✅ANSW-Certified appraiser
The fewer properties on the market, the greater the scarcity. What's the effect on prices?
✅✅ANSW-Prices are pushed upward.
Appraiser John is determining how a property is being used to determine a more optimal function.
What is he determining? ✅✅ANSW-Highest and best use
______ is the principle that the more similar properties there are on the market, the lower the price
will be driven. ✅✅ANSW-Competition
To make valid computations of adjustments for the sales comparison approach to value, elements of
comparison must be applied in a specific order. Which one of these elements listed has the highest
priority? ✅✅ANSW-Conditions of sale
In the sales comparison approach, which of these are selected and evaluated both quantitatively and
qualitatively against the subject property? ✅✅ANSW-Comparables
A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?
✅✅ANSW-External depreciation
The economic principle of ______ says that when there are two houses in the same neighborhood
with the same size, appeal, and utility, the lower-priced one will tend to sell first. ✅✅ANSW-
Substitution
If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is
the cap rate? ✅✅ANSW-20%
, When you're using the sales comparison approach to value a property, which of the following is
considered a category of adjustment? ✅✅ANSW-Financing terms and cash equivalency
An investor is analyzing a three-unit property by looking at its ability to produce future income.
Which of the following would most likely be used to determine this value? ✅✅ANSW-Gross rent
multiplier
Which of the following terms may be defined as a form of depreciation or loss in value caused by
defects in design? ✅✅ANSW-Functional obsolescence
Which category of appraiser can appraise any real property without any limitations related to value
or complexity? ✅✅ANSW-Certified general appraiser
Which of these properties are exempt from the FIRREA federal appraisal guidelines? ✅✅ANSW-
Properties valued at $400,000 or less
Which of the following statements about appraisal activities is true? ✅✅ANSW-Appraisers'
activities are highly regulated, especially when a federally related transaction is involved.
What entity sets the standards for the appraisal report? ✅✅ANSW-USPAP
Which economic principle states that the value of property today is impacted by the current value of
the total expected future benefits? ✅✅ANSW-Anticipation
Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their
six-bedroom house. What two types of data will Boris gather? ✅✅ANSW-General and specific
While market value is an opinion of a property's worth on the fair market, which of the following
best describes market price? ✅✅ANSW-How much a buyer has paid and a seller has accepted for
the property.
John's home is up for sale. He originally bought it five years ago for $300,000. Its current value is
$350,000. His real estate agent notified him that a buyer just made an offer on his home for
COURSE (UNIT EXAMS) QUESTIONS
AND ANSWERS
An example of this type of leasehold estate is a month-to-month lease. ✅✅ANSW-Periodic estate
As part of his lease agreement with his landlord, Alex mows the grass around his apartment building
each week in return for a small reduction in rent. What is this an example of? ✅✅ANSW-
Covenant
Landlords may protect themselves from having to pay for damages to the property caused by the
tenant by collecting a security ______ from the tenant. ✅✅ANSW-Deposit
Tyra owns a nail salon that's located in a strip mall. Her rent every month includes $1,800 base rent
and 10% of her gross sales. What kind of lease does Tyra have? ✅✅ANSW-Percentage
With a triple net lease, the tenant pays ______ separately from the base rent. ✅✅ANSW-Taxes,
insurance, and maintenance
Raymond just started his clothing business in a high-traffic shopping center. This type of lease
agreement will require Raymond to pay the landlord rent based upon the percentage of the periodic
gross sales. This type of agreement is called a ______ lease agreement. ✅✅ANSW-Percentage
How does the "break-even point" relate to percentage leases? ✅✅ANSW-The landlord doesn't
charge a percentage of sales until the tenant's sales exceed a break-even point.
Which terms describes a lease that has been agreed to by both parties? ✅✅ANSW-Accepted
Which of these contract-specific requirements for a lease prohibits minors from entering into a lease
agreement? ✅✅ANSW-Legal capacity
Which of these statements about recording a lease is true? ✅✅ANSW-A tenant who lives in a
building that is being sold may want to have the lease filed as a public record.
,Which of these statements about leases is true? ✅✅ANSW-A lease must meet the essential
requirements of any contract to be enforceable.
What's the primary purpose of a CMA? ✅✅ANSW-To determine an appropriate listing price
range
Comparative market analysis is most effective when a licensee limits the data collection time frame
for sold properties. A CMA should look at properties that sold within ______. ✅✅ANSW-No later
than three to six months ago
Steve is preparing a comparative market analysis for the Joneses and has selected three comparable
properties. How many adjustments should Steve make to the Joneses' property? ✅✅ANSW-Zero
Which type of listing can help a real estate professional determine how quickly a home in a given
price range received an accepted offer? ✅✅ANSW-Pending
When you're putting together a listing presentation, which of these is a key point to address?
✅✅ANSW-Buyers won't pay more for a home than the market dictates.
When a property is overpriced, what happens? ✅✅ANSW-It may become stale on the market,
resulting in low-ball offers.
At a listing appointment, licensee Chet asks Sam, the seller, if his property is his own home or an
investment property. Why would Chet ask this? ✅✅ANSW-If the home is his own, he's likely to
be purchasing a new one, so Chet has a chance to land two transactions.
Getting the best price is always a factor for a seller, but the ______ at which it would actually sell
must be another consideration. ✅✅ANSW-Market price
What's the price at which a willing buyer and a willing seller would strike a deal given normal market
conditions? ✅✅ANSW-Market value
Joaquin is an appraiser. What purpose do Joaquin and other appraisers serve? ✅✅ANSW-
Determine a property's value
,Appraiser Jamie is looking past how a property is being used to determine a higher value. What is
Jamie determining? ✅✅ANSW-Highest and best use
What's the first step an appraiser will perform when conducting an appraisal? ✅✅ANSW-State
the problem.
Who typically performs an appraisal? ✅✅ANSW-Certified appraiser
The fewer properties on the market, the greater the scarcity. What's the effect on prices?
✅✅ANSW-Prices are pushed upward.
Appraiser John is determining how a property is being used to determine a more optimal function.
What is he determining? ✅✅ANSW-Highest and best use
______ is the principle that the more similar properties there are on the market, the lower the price
will be driven. ✅✅ANSW-Competition
To make valid computations of adjustments for the sales comparison approach to value, elements of
comparison must be applied in a specific order. Which one of these elements listed has the highest
priority? ✅✅ANSW-Conditions of sale
In the sales comparison approach, which of these are selected and evaluated both quantitatively and
qualitatively against the subject property? ✅✅ANSW-Comparables
A loss in value caused by an undesirable or hazardous influence offsite is which type of depreciation?
✅✅ANSW-External depreciation
The economic principle of ______ says that when there are two houses in the same neighborhood
with the same size, appeal, and utility, the lower-priced one will tend to sell first. ✅✅ANSW-
Substitution
If a property's income value is $200,000 and it's earning a net operating income of $40,000, what is
the cap rate? ✅✅ANSW-20%
, When you're using the sales comparison approach to value a property, which of the following is
considered a category of adjustment? ✅✅ANSW-Financing terms and cash equivalency
An investor is analyzing a three-unit property by looking at its ability to produce future income.
Which of the following would most likely be used to determine this value? ✅✅ANSW-Gross rent
multiplier
Which of the following terms may be defined as a form of depreciation or loss in value caused by
defects in design? ✅✅ANSW-Functional obsolescence
Which category of appraiser can appraise any real property without any limitations related to value
or complexity? ✅✅ANSW-Certified general appraiser
Which of these properties are exempt from the FIRREA federal appraisal guidelines? ✅✅ANSW-
Properties valued at $400,000 or less
Which of the following statements about appraisal activities is true? ✅✅ANSW-Appraisers'
activities are highly regulated, especially when a federally related transaction is involved.
What entity sets the standards for the appraisal report? ✅✅ANSW-USPAP
Which economic principle states that the value of property today is impacted by the current value of
the total expected future benefits? ✅✅ANSW-Anticipation
Boris is an appraiser working for the Smith family. They've hired him to perform an appraisal on their
six-bedroom house. What two types of data will Boris gather? ✅✅ANSW-General and specific
While market value is an opinion of a property's worth on the fair market, which of the following
best describes market price? ✅✅ANSW-How much a buyer has paid and a seller has accepted for
the property.
John's home is up for sale. He originally bought it five years ago for $300,000. Its current value is
$350,000. His real estate agent notified him that a buyer just made an offer on his home for
