GOLD COAST 2019 PRACTICE EXAMS With Complete Solutions

Which statement provides the basic justification for zoning? A. There must be regulations in place to prevent pollution B. The government does not want to encourage land development C. The inappropriate use of one's property may affect the value of another D. Professional planners want to control development - ANSWER C. The inappropriate use of one's property may affect the value of another What is the rationale behind government planning of real estate development? A. To manage future real estate growth B. To encourage more landscaping C. To limit commercial areas D. To maintain the character of the community - ANSWER A. To manage future real estate growth In Florida which entity is primarily responsible for establishing and implementing the roles, processes, and powers of comprehensive planning and future development? A. Florida's governor B. Local government and planning agencies C. Regional planning councils D. State comprehensive planning administrators under the Florida department of economic opportunity - ANSWER B. Local government and planning agencies Which zoning classification typically includes single-family homes, small family structures, condominiums, and apartments? A. Commercial B. Residential C. Industrial D. Special use - ANSWER B. Residential Which statement best describes the master plan? A. It must be inflexible B. It is prepared by the state legislator C. It stops growth D. It serves as a guide for an area's future growth - ANSWER D. It serves as a guide for an area's future growth Which of the following would a church need in order to build in a residential neighborhood? A. Public zoning permit B. Special exception C. Variance D. Nonconforming use permit - ANSWER B. Special exception What is the purpose of the zoning board of adjustment? A. To settle monetary claims by property owners B. To grant variances and special exceptions C. To develop the comprehensive plan D. To determine infrastructure requirements - ANSWER B. To grant variances and special exceptions Which term is used to describe a property use that predates the current zoning ordinance but is allowed to exist for at least a period of time? A. Legally conforming B. Progressive C. Legally nonconforming D. Capitalized - ANSWER C. Legally nonconforming Which statement which best describes a Planned Unit Development (PUD)? A. A PUD offers fewer amenities than are possible with more traditional forms of zoning B. A PUD impacts the environment to a greater degree than most zoning classifications C. A PUD prohibits the use of zero lot line development D. A PUD is also called cluster zoning - ANSWER C. A PUD is also called cluster zoning Which statement is correct with respect to a Development of Regional Impact (DRI)? A. A DRI is defined as any development that substantially affects health, safety, or welfare of the citizens of more than one county B. The state of Florida as no authority concerning guidelines for development or review of a developments of regional impact C. The review process for a new DRI is concerned only with residential construction D. The federal government has no influence on local development - ANSWER A. A DRI is defined as any development that substantially affects health, safety or welfare of citizens of more than one county Adequate infrastructure available to support growth and development was mandated by Florida's Growth Management Act and is specified in which of the following? A. DRI reviews B. Concurrency rules C. County zoning ordinances D. Local building codes - ANSWER B. Concurrency rules What is the category of a business that meets payroll expense by using dollars a generated by persons who live in the immediate vicinity? A. Service B. Basic C. Export D. Regenerative - ANSWER A. Service Which of the following would be considered a basic industry when performing an economic base analysis. A. Florist shop B. Fire station C. University D. Movie theatre - ANSWER C. University With regard to residential properties located within a flood hazard Zone V, which statement is correct? A. Base-elevation requirements can be achieved by using fill dirt B. The structure use be on elevated construction C. Flood insurance is always required D. There is a 1 in 500 percent probability of a flood in any given year - ANSWER B. The structure must be on elevated construction Which standard or process establishes the minimum standards for design and construction of buildings or structures? A. Comprehensive planning D. DRI reviews C. Zoning D. Building codes - ANSWER D. Building codes To which organization is real estate tax most important? A. The federal government B. The state government C. The local government D. Local nonprofit organizations - ANSWER C. The local government What does the county property appraiser determine? A. Tax rate B. Market value C. Assessed value D. Just value - ANSWER C. Assessed value Which of the following statements best describes the Greenbelt laws? A. They limit the assessed value on agricultural land in or near urban areas B. They help to raise the tax base C. They provide for the best use of land D. They prevent land from being used for development - ANSWER A. They limit assessed value on agricultural land in or near urban areas What discount percentage is given to property owners who pay their real estate tax bill in November? A. 1% B. 2% C. 3% D. 4% - ANSWER D. 4% Which statement would be correct regarding a single homeowner who sold a principal residence and itemized deductions on his or her federal income tax return? A. Any capital gain realized from the sale is taxable at a reduced rate B. All capital gain would be subject to tax at the tax payer's marginal rate C. A loss of up to $3,000 on the sale may be deducted from adjusted income D. Up to $25,000 may be excluded from taxation if the taxpayer had occupied the residence for at least two of the past five years - ANSWER D. Up to $25,000 may be excluded from taxation if the taxpayer had occupied the residence for at least two of the past five years What must am individual do to qualify for a homestead tax exemption? A. Own the property B. Own and use the home as a primary residence C. File for a homestead tax exemption by March 31st D. Live in their principal residence for the entire year - ANSWER B. Own and use the home as a primary residence Complete this statement. In Florida, the owner of a homestead property located in outside of the city limits is required to pay property taxes levied ___________________? A. On the total assessed value of the property B. By the nearest city C. By the county and school board D. By the state of Florida - ANSWER C. By the county and school board Who can appraise property for purposes of taxation? A. The county property appraiser B. The local school board C. The city in which the property is located D. Special taxing districts - ANSWER A. The county property appraiser How is 10 mills expressed as a decimal? A. 1.00 B. .100 C. .010 D. .001 - ANSWER C. .010 Special assessments are used to pay for which of the following? A. School boards B. Sidewalks, sewers and other public improvements that benefit the property owner C. City services in excess of operating revenues D. New public structures, such as sport facilities - ANSWER B. Sidewalks, sewers, and other public improvements that benefit the property owner Complete this statement. If a property owner fails to pay property taxes, the resulting lien is _________? A. Held by the county until the certificate is sold B. Owned by the county property appraiser C. Foreclosed on by the sheriff D. Sold at public auction for the highest interest rate - ANSWER A. Held by the county until the certificate is sold According to Florida's Save amour Homes Act, the assessed value of homestead property cannot be increased in any one year by more than which of the following? A. The lesser of 3% or the CPI B. the greater of 3% or the CPI C. 10 mills D. An amount determined by the county property appraiser - ANSWER A. The lesser of 3% or the CPI Homeowners who file itemized tax returns are allowed deductions for which of the following items? A. Real estate taxes and repairs B. Hazard insurance and depreciation C. Real estate taxes and mortgage interest D. Mortgage interest and utilities - ANSWER C. Real estate taxes and mortgage interest Which statement is correct with respect to homeowner insurance coverage? A. All losses are covered B. Flood losses are limited to $25,000 C. Personal property is not covered D. Homeowners with multiple policies will not receive the full amount of their loss for each insurer - ANSWER D. Homeowners with multiple policies will not receive the full amount of their loss for each insurer Which statement best describes the interest that is payable on tax certificates? A. It is based on the lowest bid received B. It is never lower than 18% C. It is negotiable between property owner and bidder D. It is established by law - ANSWER A. It is based on the lowest bid received Why is the process of real estate investment analysis important to an investor? A. It helps an investor select properties that meet personal objectives B. It determines the amount of taxes due on income producing property C. It determines the exact cash flow from an investment property D. It makes possible the best use for a property based on zoning - ANSWER A. It helps an investor select properties that meet personal objectives Fixed expenses typically include which of the following? A. Real estate taxes and hazard insurance B. Management fees and depreciation C. Utilities and repairs D. Mortgage payments and income taxes - ANSWER A. Real estate taxes and hazard insurance Which of the following statements regarding reserves for replacements is correct? A. They are a cash expense B. They should not be considered in a residential income property C. They are used to pay for normal maintenance of the property D. They are a non cash expense that is used to replace short lived components that wear out from time to time - ANSWER D. They are a non cash expense that is used to replace short lived components that wear out from time to time What is the formula to determine the loan-to-value ratio? A. Loan multiplied by value B. Value divided by loan C. Loan divided by value D. Loan subtracted from value - ANSWER C. Loan divided by value What type of risk is caused by changes in general business conditions? A. Dynamic B. Equity C. Leverage D. Static - ANSWER A. Dynamic If an investor earns a lower rate of return on invested capital than the rate that is paid on borrowed funds, what type of leverage is Indicated? A. Positive B. Neutral C. Negative D. Cumbersome - ANSWER C. Negative What is the time period established by the IRS over which non residential investment real estate can be depreciated? A. 39 years B. 27.5 years C. 22 years D. 15 years - ANSWER A. 39 years All of the following items are relevant when estimating the value of a business except: A. Personal property owned B. Short-term liabilities C. Business goodwill D. Personal income taxes - ANSWER D. Personal income taxes Which document indicates the financial condition of a business as of a particular time? A. Operating statement B. Profit and loss statement C. Balance sheet D. Bank statement - ANSWER C. Balance sheet Which of the following statements best describes business brokerage? A. It should not be conducted by real estate licenses B. It cannot be conducted by real estate licensees C. It consists primarily of analyzing financial statements D. It would rarely involve security transactions - ANSWER C. It consists primarily of analyzing financial statements Real estate ,ice sees who are engaged in business brokerage might need to have a securities license if the transaction involves which of the following? A. Negotiation of a new mortgage loan B. An analysis of financial statements C. Renegotiation of a. Existing lease D. Transferring shares of stock or limited partnership interests - ANSWER D. Transferring shares of stock or limited partnership interests Under the Uniform Commercial Code, what is the document used to secure financing of personal property? A. Deed B. Bill of sale C. Security agreement D. Trust agreement - ANSWER C. Security agreement All of the following are considered business assets, except: A. Goodwill B. Notes payable C. Accounts receivable D. Furniture and equipment - ANSWER B. Notes payable Which document most closely resembles a deed? A. Bill of sale B. Security agreement C. Balance sheet D. Operating statement - ANSWER A. Bill of sale Which of the following is not considered an operating expense for appraisal of income tax purpose? A. Fixed expenses B. Variable expenses C. Reserve for replacements D. Annual debt service - ANSWER D. Annual debt service What type of value does an appraiser most commonly estimate? A. Book B. Market C. Insurable D. Condemnation - ANSWER B. Market How is investment value best defined? A. The value to an individual B. The highest price of a property would sell for in an open market C. The value based on the use of the property D. The minimum value of a business opportunity - ANSWER A. The value to an individual Which of the following conditions is necessary for the sales price of a property to equal its market value? A. The parties cannot be acting in their own self-interest B. The property would have to be exposed to the market for an unreasonably short time C. There can be no existing lines against the title D. The transaction must involve a willing and informed buyer and seller - ANSWER D. The transaction must involve a willing and informed buyer and seller What is market value? A. The amount a buyer is willing to pay B. The amount a seller is willing to accept C. The amount that should be paid D. The amount that wS previously paid - ANSWER C. The amount that should be paid How is a gross rent multiplier calculated? A. Multiply comparable property sales price by comparable property rent B. Divide comparable property sales price by comparable property rent C. Multiply comparable property sales price by subject property rent D. Divide comparable property sales price by subject property rent - ANSWER B. Divide comparable property sales price by comparable property rent Functional obsolescence includes which of the following? A. An over-improvement B. Broken windows C. A waste water treatment plant next to the subject property D. A property located in the glide path to an aiport - ANSWER A. An over-improvement Which appraisal approach would be given greater weight when appraising am apartment complex? A. Cost-depreciation B. Income approach C. Sales comparison D. Land residual - ANSWER B. Income approach Which appraisal approach is most suitable for estimating the value of a single-family property? A. Cost -depreciation B. Sales comparison C. Income approach D. Land residual - ANSWER B. Sales comparison What is the basis for the principle of substitution? A. An informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with the same or equal utility B. Properties will typically hold their value when properties in a neighborhood tend to be similar and conform to common standards C. Although a property may have multiple potential uses, one will be the highest and best use D. Smaller properties in a neighborhood of large properties will tend to increase in value, while larger properties in an area of smaller properties will tend to decrease in value over time - ANSWER A. An informed buyer will pay no more for a property than the cost of acquiring another equally desirable property with the same or equal utility All of the following methods may be used to estimate replacement/reproduction cost, except: A. Quantity survey B. Economic age-life C. Unit-in-place D. Comparative unit - ANSWER B. Economic age-life What estimate is a result of income divided by a capitalization rate? A. Market value B. The effective gross income C. Reproduction cost D. The amount of accrued depreciation - ANSWER A. Market value If income remains constant, and the capitalization rate is reduced, what is the effect on value? A. Insufficient information is provided to determine the effect B. The value decreases C. The value increases D. There is no effect on the value - ANSWER C. The value increases A new airport built in proximity to a residential neighborhood may cause properties to lose value due to which of the following? A. Physical deterioration B. External obsolescence C. Functional obsolescence D. Proximity obsolescence - ANSWER B. External obsolescence In the income approach, a capitalization rate can be derived from which of the following? A. Tables published nationally by appraisal organization B. Rate schedules maintained by lending institutions C. The interest rate paid on Treasury Bills D. The relationship between sales prices and the income of similar properties - ANSWER D. The relationship between sales prices and the income of similar properties When making adjustments based on the following information, what should be done with the $2,000? Comparable Sales Price = $40,000 Comparable Property = Two car garage Subject property = No garage Garage value = $2,000 A. It should be added to the price of the comparable property B. It should be added to the price of the subject property C. It should be subtracted from the price of the subject property D. It should be subtracted from the price of the comparable property - ANSWER D. It should be subtracted from the price of the comparable property Which of the following best describes the free enterprise system? A. A market system B. A centralized system C. A socialist system D. A communist system - ANSWER A. A market system All of the following statements apply to the real estate market, except: A. Situs value is value resulting from location B. Real estate is immobile C. Each parcel of real estate is unique D. The real estate market is National in nature - ANSWER D. The real estate market is National in nature How does the real estate market react to shifts in consumer demand? A. Rapidly B. Slowly C. Not at all D. Through changes in zoning laws - ANSWER B. Slowly Which of the following market factors will typically result in increased demand? A. A decrease in prices B. A decrease in income C. An increase in mortgage interest rates D. A decrease in population - ANSWER A. A decrease in prices In the real estate market, what is a developer considered to be? A. A lender B. A competitor C. A consumer D. A supplier - ANSWER A. A supplier The real estate market experiences changed and cycles. What is a term used to describe the phase of the market where there is not enough demand to meet the current over-supply of available housing units? A. An inflationary market B. A buyer's market C. A seller's market D. An expanding market - ANSWER B. A buyer's market Two factors that affect a real estate market are supply and demand, which of the following would be a good indicator of the measur snow supply versus demand? A. The population of the community B. Consumer preferences, such as number of bedrooms and bathrooms C. The asking price of a recently listed home in the community D. The vacancy rate within the community - ANSWER D. The vacancy rate within the community What is the correct order of the business cycle phases? A. Expansion, trough, peak, and contraction B. Peak, contraction, expansion, and trough C. Expansion, peak, contraction, and trough D. Peak, trough, expansion, and contraction - ANSWER C. Expansion, peak, contraction and trough In which conditions does market equilibrium theoretically exist? A. When supply exceeds demand B. When demand e creeds supply C. When costs and prices stabilize D. When supply and demand are in balance - ANSWER D. When supply and demand are in balance When estimating supply, it is not necessary to consider which of the following? A. Price B. Availability of materials C. Availability of skilled labors D. Availability of land - ANSWER A. Price It had been determined that the value of three lots, each having a value of $10,000 each, is $50,000 as a single tract parcel. Which concept does this illustrate? A. Attachment B. Parceling C. Plottage D. Appreciation - ANSWER C. Plottage Which of the following terms is used to describe the relatively new phenomenon in which small families move into older neighborhoods, renovate the properties, and displace poorer residents? A. Putrefaction B. Gentrification C. Stabilization D. Blockbusting - ANSWER B. Gentrification What is the correct order in which the criteria for estimating highest and best use a d should be considered? A. Physically possible, legally permissible, maximally productive, and economically feasible B. Legally permissible, economically feasible, maximally productive, and physically possible C. Economically feasible, legally permissible, physically possible, and maximally productive D. Legally permissible, physically possible, economically feasible, and maximally productive - ANSWER D. Legally permissible, physically possible, economically feasible, and maximally productive Which of the following might be indicated if a neighborhood appears to have an abundance of "For Sale" signs and an unusually high number if rentals available? A. Neighborhood growth is continuing B. A period of revitalization has begun C. The neighborhood has entered a period of stability D. Decline in the neighborhood may be indicated - ANSWER D. Decline in the neighborhood may be indicated Which external force that affects value is indicated by the number of vacancies in an area? A. Social B. Economic C. Governmental D. Environmental - ANSWER B. Economic What is the purpose of the closing statement? A. To summarize the financial aspects of a real estate transaction B. To determine the purchase price of the property C. To determine which party pays the brokerage commission D. To report income to the IRS - ANSWER A. To summarize the financial aspects of a real estate transaction Which entry would normally appear as a de it on the buyer's statement? A. First mortgage balance being assumed B. Intangible tax on a new mortgage C. Documentary stamps on the deed D. Impound account balance when a loan is being assumed - ANSWER B. Intangible tax on a new mortgage Which of the following statements best describes a single-entry item? A. It appears on both the buyer and the seller's statements B. It is not paid at closing C. It must be accounted for in the broker's statement D. It is always a credit - ANSWER C. It must be accounted for in the broker's statement Which entry would appear as a credit on the seller's closing statement? A. Documentary stamp tax on the deed B. Recording the mortgage C. Purchase price D. Abstract continuation - ANSWER C. Purchase price What document stipulates which party pays which expense in a closing? A. Listing agreement B. Purchase and sale contract C. Deed D. Mortgage - ANSWER B. Purchase and sale contract How is an earnest money deposit held in escrow reflected on the closing statement? A. Credit to the buyer B. Credit to the buyer C. Credit to both the buyer and the seller D. Credit to the seller - ANSWER A. Credit to the buyer In the absence of any agreement between the parties, who pays for the state documentary stamp tax on the deed? A. The attorney B. The broker C. The seller D. The buyer - ANSWER C. The seller I'm a residential transaction , how is the brokerage fee reflected on the closing statement? A. It must be accounted for in the broker's statement B. It does not appear in the broker's statement C. It is entered on the broker's statement as a credit D. It is entered on the broker's statement as a debit - ANSWER B. It does not appear in the broker's statement How is the amount of a new mortgage obtained by the buyer entered on the closing statement? A. Debit to the buyer B. Credit to the seller C. Credit to the buyer D. Debit to the seller - ANSWER C. Credit to the buyer How is the amount of a mortgage loans assumed at closing by the buyer entered on the closing statement? A. Double entry B. Single entry C. Credit to the seller D. Debit to the buyer - ANSWER A. Double entry Who is paid the balance due from the buyer that is shown on the closing statement? A. The seller B. The mortgagee C. The broker D. The closing agent - ANSWER D. The closing agent How are expenses that are paid to a third party entered on a closing statement? A. Double entries B. Credits C. Debits D. Prorations - ANSWER C. Debits Complete the statement. When determining probations on a closing, the day of the closing ________. A. Belongs to the closing agent B. Is determined by the agreement C. Is the responsibility of the seller D. Is charged to the buyer - ANSWER B. Is determined by the agreement Which statement about the broker's portion of the closing statement is true? A. All double entry items must appear there B. Total receipt, minus the binder deposit equal the grand total C. Receipts send disbursements must equal D. Total expenses, less the brokerage fee, equal the grand total - ANSWER C. Receipts and disbursements must equal Prior to deregulation of the banking industry in the 1980's, which institutions were dominant in providing funds for the purchase of single-family residences? A. Commercial banks B. Savings associations C. The FHA D. Mortgage loan originators - ANSWER B. Savings associations What is the major source of funds for large commercial real estate developments? A. Saving associations B. Commercial banks C. Life insurance companies D. Mutual savings banks - ANSWER C. Life insurance companies What will be the effect if the Federal Reserve Board decides to purchase government securities in the open market? A. The money supply will decrease and interests rates will increase B. The money supply will increase and interests rates will decrease C. The amount of money that member banks may use for loan purposes will be limited D. A tight money market will be created - ANSWER B. The money supply will increase and interests rates will decrease Which group of financial institutions traditionally preferred to make short-term loans for construction? A. Mutual savings banks B. Savings associations C. Life insurance companies using a mortgage broker D. Commercial banks - ANSWER D. Commercial banks Which of the following statements best describes the secondary mortgage market? A. It is the market where second mortgages are sold B. It is where loans originated in the primary markets are sold C. It is where loans made only by private parties are sold D. It is the market where second mortgages are originated - ANSWER B. It is where loans originated in the primary markets are sold How are mortgage loan originators usually compensated for their Services? A. Monthly loan service fee B. Salary C. Finder's fee or commission D. Share of the borrower's assets - ANSWER C. Finder's fee or commission With an adjustable rate mortgage, if a payment is not sufficient to cover the interest amount due, the unpaid interest amount may be added to the loan balance. What is the term used to describe this situation? A. Negative amortization B. Warehousing C. Indexing D. Predatory lending - ANSWER A. Negative amortization When does disintermediation occur? A. When deposits exceed the demand for loans B. When depositors withdraw their savings from depository institutions to invest in higher yield alternatives investments C. When the IRS taxes earnings of investments D. When the federal reserve board reduces the discount rate - ANSWER B. When depositors withdraw their savings from depository institutions to invest in higher yield alternatives investments Which clauses in a blanket mortgage allows for the release of a single parcel upon payment of a specified sum? A. Defeasance B. Acceleration C. Satisfaction D. Release - ANSWER D. Release Which of the following statements regarding types of mortgages loans is correct? A. Both the FHA and the VA make loans B. FHA loans are guaranteed C. The FHA insures loans. VA loans are guaranteed D. Conventional loans are insured by the govefnment - ANSWER C. The FHA insures loans. VA loans are guaranteed Interest rates for Federal Housing Administration mortgages are determined by which of the following? A. The market B. FHA C. The government D. Congress - ANSWER A. The market The Federal National Mortgage Association was originally formed to purchase what type of loans? A. Conventional B. FHA C. VA D. Deeds of trust - ANSWER B. FHA Gerri has a 15 year loan with monthly payments that remain the same amount for the entire loan period. Which type of mortgage repayment plan does Gerri have? A. Adjustable rate B. Indexed C. Partially amortized D. Level payment - ANSWER C. Partially amortized If a mortgage payment consists of interest only, what is the final payment (which includes the full amount borrowed) called? A. Monthly payment B. Balloon payment C. Amortized payment D. Term payment - ANSWER C. Amortized payment Lenders who make conventional loans where the buyer provides less than 20% down payment will normally require that the borrower pay which of the following? A. Up-Front mortgage insurance premium UFMIP payments B. Uninsured Primary Mortgage Insurance UPMI C. Mortgage insurance premiums MIP payments D. Private mortgage insurance PMI - ANSWER D. Private Mortgage Insurance PMI Which legal instrument evidences the debt and states the interest rate, term, payment requirement, and other information related to the loan? A. Promissory note B. Contract C. Lien