PSI NATIONAL REAL ESTATE FINAL EXAM ACTUAL
QUESTIONS AND ANSWERS GRADED A+
✔✔The sellers have agreed to give the buyer a carpet allowance to replace the family
room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard
for pad and installation. If the family room is 22'6"x 15', how much will it cost the sellers
(to the nearest cent)? - ✔✔$935.63
✔✔The Department of Housing and Urban Development estimates that most private
homes built before 1978 contain potentially dangerous levels of lead. Because of this,
some Federal agencies, such as FHA, - ✔✔require the buyer to acknowledge
disclosure of the presence of any known lead paint
✔✔A tenant rented an apartment, signing a 15-month lease. After the lease expired, the
tenant paid 1 month's rent and got a receipt. What kind of leasehold goes the tenant
have? - ✔✔Holdover tenancy
✔✔How does a creditor who has obtained a judgment get satisfaction against a debtor
who will not pay? - ✔✔Writ of execution
✔✔Timeshare ownership programs MOST often use which of the following ownership
forms? - ✔✔tenancy in common
✔✔In every real estate transaction, a legal description of the real estate MUST appear
in the transaction documents. What kind of legal description should be used in MOST
transactions? - ✔✔the same one used in prior transfers of the parcel, verified by a
surveyor
✔✔A landowner wishes to build a neighborhood grocery store on a busy street in an
area zoned for residential use. Which of the following would MOST likely be used to
obtain permission for this store? - ✔✔Conditional use permit or zoning varience
✔✔An environmental impact statement typically describes the effects of a proposed
project on factors such as - ✔✔public health and safety
✔✔Although states make specific laws governing water rights and the rights in land that
borders water, most states generally follow one of two basic doctrines regarding water
rights. Either riparian and littoral rights are automatically conveyed with property, or all
water rights are controlled by the state under the doctrine or prior appropriation. The
doctrine of prior appropriation is MOST likely to be followed in states where - ✔✔water
is scarce
,✔✔When more than one approach to value is applied to a property and different
indications of value are produced, how should the final estimate of value be
determined? - ✔✔Reconciliation
✔✔When preparing a market data estimate of value, which of the following categories
of adjustment is essential? - ✔✔1. the date of sale of the comparables
2. the amount of square footage
3. the location of the property
✔✔If all other factors are equal, in which location is a parking lot likely to bring the
highest sales - ✔✔business district zoned for a six-story office building
✔✔Parcels A, B, and C are located side by side and owned by three different owners. A
is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A
developer believes that if all three can be purchased, the larger parcel would be worth
$85,000. By assembling these under one owner they would be worth $22,000 more
than their individual values. This demonstrates which principle of value? - ✔✔plottage
✔✔A loan which requires the borrower to pay interest only until the maturity date (or
due date), and then pay the entire principal on the maturity date, is called a - ✔✔term
loan
✔✔The real estate licensee who accepts an undisclosed fee for referring a buyer to a
specific title company may be in violation of - ✔✔RESPA
✔✔Which of the following events would AUTOMATICALLY cancel a listing agreement?
- ✔✔property owners death
✔✔Another term for the owner of a property listed with your firm is the - ✔✔client
✔✔A contract has been drawn which obliges the sellers to convey title to their land to
the buyers if the buyers come up with $22,000 on or before December 31. This is called
- ✔✔an option contract
✔✔An agreement to purchase that has NOT yet closed is - ✔✔an executory contract
✔✔An amount of money, agreed to in writing by buyer and seller, that will serve as full
compensation if one party does not live up to a sales contract is called - ✔✔liquidated
damages
✔✔For Federal income tax purposes, which of the following are costs of
homeownership that may be deducted from gross income? - ✔✔Mortgage loan interest,
local property taxes, mortgage loan origination fees
,✔✔When someone has living heirs but dies without leaving a will, the estate is
distributed according to the - ✔✔statue of descent
✔✔The Civil Rights Act of 1866 prohibits any type of discrimination based on - ✔✔race
✔✔An agent shows a home to a couple and mentions that it has a lovely fireplace in the
living room. After buying the home, the buyers and agent discover that the brick
fireplace is just a decorative fireplace and is not "wood burning." Which of the following
would BEST protect the agent from financial loss? - ✔✔E&O coverage
✔✔The sellers have agreed to give the buyers an allowance of $16.95 per square yard
to retile the kitchen. If the kitchen is 10 feet x 14 feet, how much will it cost the sellers
(to the nearest dollar)? - ✔✔$264
✔✔A couple bought a rental house for $195,000. Its assessed value was $180,000. If
the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the
lender will REQUIRE for taxes? Round to the nearest cent - ✔✔$225.00
✔✔The economic characteristics of land are - ✔✔scarcity, location, and durability
✔✔A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT
want to make the permission permanent in case he dislikes others who might move next
door in the future. What should he give his neighbor? - ✔✔A license
✔✔Which of these Federal laws regulates the advertisement of a lender's credit terms
(rates, payment, etc.)? - ✔✔Regulation Z
✔✔Which of the following may be considered prima facie evidence of discrimination by
a broker? - ✔✔Failure to display the equal housing opportunity poster at the broker's
place of business
✔✔An agency relationship based on a formal agreement between the parties, either
written or
verbal, is - ✔✔express agency
✔✔An agency relationship based on the actions of the parties is - ✔✔implied agency
✔✔An agent has a fiduciary relationship with the - ✔✔client or principle
✔✔The type of agency that exists between the real estate agent and his client is usually
- ✔✔special agency
, ✔✔In Louisiana, the law states that, unless there is a written agreement to the contrary,
the agent represents - ✔✔the person he is with
✔✔Representing two principals to a transaction without the knowledge and consent of
both is - ✔✔undisclosed dual agency
✔✔What is grounds for termination of an agency relationship - ✔✔1. mutual agreement
2. destruction or condemnation of the property
3. death or incapacity of either party
✔✔An agency relationship in which the agent is given an interest in the subject of the
agency, such as the property being sold is called - ✔✔agency coupled with an interest
✔✔An example of price fixing would be - ✔✔two brokers agreeing to set the same fee
structure.
✔✔An agent representing both the buyer and seller in a transaction with the written
consent - ✔✔a disclosed dual agent.
✔✔An agent for a seller must disclose his agency relationship to the buyer when? -
✔✔at the first substantive contact
✔✔The person who is represented by the licensee is the - ✔✔principle
✔✔A vendor wants to give you, the agent, a gift for services. What should you do? -
✔✔Tell your broker
✔✔Once a seller accepts a ready, willing, and able buyer, the agent is entitled to a
commission
because of the principle of - ✔✔procuring cause
✔✔A buyer makes an offer on a house. Before the listing agent has had a chance to
present the offer to the seller, a better offer comes in. What should the agent do with the
first offer - ✔✔present it along with the second offer
✔✔When an agent should have known that a statement about a material fact was false,
this is called: - ✔✔negligent misrepresentation
✔✔There are three basic types of buyer agency agreements. In which type is the agent
guaranteed a commission regardless of who sells the property? - ✔✔exclusive buyer
agency
✔✔The intentional misrepresentation of a material fact is: - ✔✔fraud
QUESTIONS AND ANSWERS GRADED A+
✔✔The sellers have agreed to give the buyer a carpet allowance to replace the family
room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard
for pad and installation. If the family room is 22'6"x 15', how much will it cost the sellers
(to the nearest cent)? - ✔✔$935.63
✔✔The Department of Housing and Urban Development estimates that most private
homes built before 1978 contain potentially dangerous levels of lead. Because of this,
some Federal agencies, such as FHA, - ✔✔require the buyer to acknowledge
disclosure of the presence of any known lead paint
✔✔A tenant rented an apartment, signing a 15-month lease. After the lease expired, the
tenant paid 1 month's rent and got a receipt. What kind of leasehold goes the tenant
have? - ✔✔Holdover tenancy
✔✔How does a creditor who has obtained a judgment get satisfaction against a debtor
who will not pay? - ✔✔Writ of execution
✔✔Timeshare ownership programs MOST often use which of the following ownership
forms? - ✔✔tenancy in common
✔✔In every real estate transaction, a legal description of the real estate MUST appear
in the transaction documents. What kind of legal description should be used in MOST
transactions? - ✔✔the same one used in prior transfers of the parcel, verified by a
surveyor
✔✔A landowner wishes to build a neighborhood grocery store on a busy street in an
area zoned for residential use. Which of the following would MOST likely be used to
obtain permission for this store? - ✔✔Conditional use permit or zoning varience
✔✔An environmental impact statement typically describes the effects of a proposed
project on factors such as - ✔✔public health and safety
✔✔Although states make specific laws governing water rights and the rights in land that
borders water, most states generally follow one of two basic doctrines regarding water
rights. Either riparian and littoral rights are automatically conveyed with property, or all
water rights are controlled by the state under the doctrine or prior appropriation. The
doctrine of prior appropriation is MOST likely to be followed in states where - ✔✔water
is scarce
,✔✔When more than one approach to value is applied to a property and different
indications of value are produced, how should the final estimate of value be
determined? - ✔✔Reconciliation
✔✔When preparing a market data estimate of value, which of the following categories
of adjustment is essential? - ✔✔1. the date of sale of the comparables
2. the amount of square footage
3. the location of the property
✔✔If all other factors are equal, in which location is a parking lot likely to bring the
highest sales - ✔✔business district zoned for a six-story office building
✔✔Parcels A, B, and C are located side by side and owned by three different owners. A
is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A
developer believes that if all three can be purchased, the larger parcel would be worth
$85,000. By assembling these under one owner they would be worth $22,000 more
than their individual values. This demonstrates which principle of value? - ✔✔plottage
✔✔A loan which requires the borrower to pay interest only until the maturity date (or
due date), and then pay the entire principal on the maturity date, is called a - ✔✔term
loan
✔✔The real estate licensee who accepts an undisclosed fee for referring a buyer to a
specific title company may be in violation of - ✔✔RESPA
✔✔Which of the following events would AUTOMATICALLY cancel a listing agreement?
- ✔✔property owners death
✔✔Another term for the owner of a property listed with your firm is the - ✔✔client
✔✔A contract has been drawn which obliges the sellers to convey title to their land to
the buyers if the buyers come up with $22,000 on or before December 31. This is called
- ✔✔an option contract
✔✔An agreement to purchase that has NOT yet closed is - ✔✔an executory contract
✔✔An amount of money, agreed to in writing by buyer and seller, that will serve as full
compensation if one party does not live up to a sales contract is called - ✔✔liquidated
damages
✔✔For Federal income tax purposes, which of the following are costs of
homeownership that may be deducted from gross income? - ✔✔Mortgage loan interest,
local property taxes, mortgage loan origination fees
,✔✔When someone has living heirs but dies without leaving a will, the estate is
distributed according to the - ✔✔statue of descent
✔✔The Civil Rights Act of 1866 prohibits any type of discrimination based on - ✔✔race
✔✔An agent shows a home to a couple and mentions that it has a lovely fireplace in the
living room. After buying the home, the buyers and agent discover that the brick
fireplace is just a decorative fireplace and is not "wood burning." Which of the following
would BEST protect the agent from financial loss? - ✔✔E&O coverage
✔✔The sellers have agreed to give the buyers an allowance of $16.95 per square yard
to retile the kitchen. If the kitchen is 10 feet x 14 feet, how much will it cost the sellers
(to the nearest dollar)? - ✔✔$264
✔✔A couple bought a rental house for $195,000. Its assessed value was $180,000. If
the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the
lender will REQUIRE for taxes? Round to the nearest cent - ✔✔$225.00
✔✔The economic characteristics of land are - ✔✔scarcity, location, and durability
✔✔A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT
want to make the permission permanent in case he dislikes others who might move next
door in the future. What should he give his neighbor? - ✔✔A license
✔✔Which of these Federal laws regulates the advertisement of a lender's credit terms
(rates, payment, etc.)? - ✔✔Regulation Z
✔✔Which of the following may be considered prima facie evidence of discrimination by
a broker? - ✔✔Failure to display the equal housing opportunity poster at the broker's
place of business
✔✔An agency relationship based on a formal agreement between the parties, either
written or
verbal, is - ✔✔express agency
✔✔An agency relationship based on the actions of the parties is - ✔✔implied agency
✔✔An agent has a fiduciary relationship with the - ✔✔client or principle
✔✔The type of agency that exists between the real estate agent and his client is usually
- ✔✔special agency
, ✔✔In Louisiana, the law states that, unless there is a written agreement to the contrary,
the agent represents - ✔✔the person he is with
✔✔Representing two principals to a transaction without the knowledge and consent of
both is - ✔✔undisclosed dual agency
✔✔What is grounds for termination of an agency relationship - ✔✔1. mutual agreement
2. destruction or condemnation of the property
3. death or incapacity of either party
✔✔An agency relationship in which the agent is given an interest in the subject of the
agency, such as the property being sold is called - ✔✔agency coupled with an interest
✔✔An example of price fixing would be - ✔✔two brokers agreeing to set the same fee
structure.
✔✔An agent representing both the buyer and seller in a transaction with the written
consent - ✔✔a disclosed dual agent.
✔✔An agent for a seller must disclose his agency relationship to the buyer when? -
✔✔at the first substantive contact
✔✔The person who is represented by the licensee is the - ✔✔principle
✔✔A vendor wants to give you, the agent, a gift for services. What should you do? -
✔✔Tell your broker
✔✔Once a seller accepts a ready, willing, and able buyer, the agent is entitled to a
commission
because of the principle of - ✔✔procuring cause
✔✔A buyer makes an offer on a house. Before the listing agent has had a chance to
present the offer to the seller, a better offer comes in. What should the agent do with the
first offer - ✔✔present it along with the second offer
✔✔When an agent should have known that a statement about a material fact was false,
this is called: - ✔✔negligent misrepresentation
✔✔There are three basic types of buyer agency agreements. In which type is the agent
guaranteed a commission regardless of who sells the property? - ✔✔exclusive buyer
agency
✔✔The intentional misrepresentation of a material fact is: - ✔✔fraud
