THE CE SHOP PRACTICE TEST SC
REAL ESTATE
When performing a market analysis, given the adjusted sales prices of three
comparable, which comparable would you weigh most heavily?
-The one that had more upward adjustments than the others
-The one that required less adjustment
-The one with an adjusted sales price higher than the actual sales price
-The one with the adjusted sales price lower than the actual sales price - answer The
one that required less adjustment
**The comparable that required less adjustment overall (including both upward and
downward adjustments) will be the one most similar to the subject property. Therefore, it
would be weighed most heavily.
In South Carolina, the parties agree in the sales contract to a repair procedure unless
what document is attached?
-Amendment to Repair Procedure
-Due Diligence Addendum
-Seller Disclosure Statement
-Waiver of Repair Procedure - answerDue Diligence Addendum
Without a buyer agency agreement in place, which party does the agent who's assisting
the buyer represent?
-No one
-The agent
-The buyer
-The seller - answerThe seller
**If there is no agency agreement in place, the agent who's assisting the buyer
represents the seller.
If special assessments apply to a property involved in a South Carolina sales
transaction, who's responsible for paying the assessment?
-The brokers representing the buyer and seller
-The buyer, if the assessment is applied prior to closing
-The closing attorney
-The seller, if the assessment is applied prior to closing - answerThe seller, if the
assessment is applied prior to closing
**The sellers are responsible for paying any special assessments applied before
closing, and the buyers are responsible for any that are applied after closing.
,Mark is a seller who prepaid his property taxes. What happens to the amount he
prepaid and won't benefit from when he sells?
-He'll receive a credit at closing.
-He'll receive a debit at closing.
-The buyer must repay this amount when the next property taxes are due.
-The excess funds are deposited into the state's Widows and Orphans Fund. -
answerHe'll receive a credit at closing.
**Prepaid items are credited to the seller at closing. Accrued but not yet paid items are
credited to the buyer at closing.
Deducting the costs of maintaining and operating an income property provides a(n)
_______ that's attractive to many real estate investors.
-Credit boost
-Increase in equity
-Profit
-Tax shelter - answerTax shelter
**Operating expenses can be deducted from rental income, and therefore provide a tax
shelter that makes investing more attractive.
Hiram plans to do a 1031 tax-deferred exchange. He just sold his property. How many
days does he have to close on a new property?
-180
-30
-45
-60 - answer180
Denise is the listing agent on a property that's next to a lake. When advertising the
property for sale, she describes it as "waterfront." Is this okay?
-No, she didn't mention how much frontage the property has on the lake.
-No, the word "waterfront" is misleading.
-Yes, as long as she includes a photo.
-Yes, the house sits next to the lake. - answerYes, the house sits next to the lake.
**Using "waterfront" to describe this property is acceptable. Now, if the only water in
sight was a small man-made pond the sellers put in ... that'd be a different story.
Earnest money in South Carolina must be deposited using _________.
-Any legal tender
-Cash or money order
-Wired funds or a certified check
-Wired funds or a money order - answerAny legal tender
**Earnest money in South Carolina can be paid using a personal check, cash, or
through other means.
The IRS will only allow _______ of passive losses to be deducted against active taxable
income.
-2000
, -3000
-4000
-5000 - answer3000
**The IRS only allows $3,000 of passive losses to be deducted against active taxable
income.
What date is used for adjustments to closing costs between the parties to a South
Carolina sales contract?
-Buyer possession
-Closing date
-Earnest money receipt date
-Effective date of contract - answerClosing date
**All adjustments to closing costs are prorated as of date of closing.
Margo has found her dream house. It's listed at $370,000, and she plans to offer
$365,000. She has a letter from her lender stating that she's been pre-approved for a
maximum $375,000 loan. Why should she ask her lender to re-write the pre-approval
letter?
-By law, the letter can only note that she's been approved for the amount she's offering.
-By providing the letter with her maximum loan amount, Margo risks reducing her
negotiating ability.
-Pre-approval letters should only state that the buyer's income, assets, and liabilities
have been verified.
-The lender must issue a separate letter for each offer the buyer intends to make. -
answerBy providing the letter with her maximum loan amount, Margo risks reducing her
negotiating ability.
**If the sellers know that Margo has been approved for a loan amount higher than her
offer, they may be less willing to negotiate on price.
Which of the following could apply to closing costs for an investment property?
-Amortized over 17 years
-Amortized over the life of the loan
-Never deductible in the year they're paid
-Subtracted from the cost basis - answerAmortized over the life of the loan
**Closing costs are added to the cost basis, are sometimes deductible in the year paid,
and are often amortized over the life of the loan.
Which of the following may be the result of building delays on a new construction?
-A change in the price
-A delay in closing
-An increase in the number of construction defects
-An issue with the title - answerA delay in closing
**Because suppliers and subcontractors can cause building delays, closing dates may
be delayed.
You're describing sales volume to your neighbor. You say, "Sales volume is _______."
REAL ESTATE
When performing a market analysis, given the adjusted sales prices of three
comparable, which comparable would you weigh most heavily?
-The one that had more upward adjustments than the others
-The one that required less adjustment
-The one with an adjusted sales price higher than the actual sales price
-The one with the adjusted sales price lower than the actual sales price - answer The
one that required less adjustment
**The comparable that required less adjustment overall (including both upward and
downward adjustments) will be the one most similar to the subject property. Therefore, it
would be weighed most heavily.
In South Carolina, the parties agree in the sales contract to a repair procedure unless
what document is attached?
-Amendment to Repair Procedure
-Due Diligence Addendum
-Seller Disclosure Statement
-Waiver of Repair Procedure - answerDue Diligence Addendum
Without a buyer agency agreement in place, which party does the agent who's assisting
the buyer represent?
-No one
-The agent
-The buyer
-The seller - answerThe seller
**If there is no agency agreement in place, the agent who's assisting the buyer
represents the seller.
If special assessments apply to a property involved in a South Carolina sales
transaction, who's responsible for paying the assessment?
-The brokers representing the buyer and seller
-The buyer, if the assessment is applied prior to closing
-The closing attorney
-The seller, if the assessment is applied prior to closing - answerThe seller, if the
assessment is applied prior to closing
**The sellers are responsible for paying any special assessments applied before
closing, and the buyers are responsible for any that are applied after closing.
,Mark is a seller who prepaid his property taxes. What happens to the amount he
prepaid and won't benefit from when he sells?
-He'll receive a credit at closing.
-He'll receive a debit at closing.
-The buyer must repay this amount when the next property taxes are due.
-The excess funds are deposited into the state's Widows and Orphans Fund. -
answerHe'll receive a credit at closing.
**Prepaid items are credited to the seller at closing. Accrued but not yet paid items are
credited to the buyer at closing.
Deducting the costs of maintaining and operating an income property provides a(n)
_______ that's attractive to many real estate investors.
-Credit boost
-Increase in equity
-Profit
-Tax shelter - answerTax shelter
**Operating expenses can be deducted from rental income, and therefore provide a tax
shelter that makes investing more attractive.
Hiram plans to do a 1031 tax-deferred exchange. He just sold his property. How many
days does he have to close on a new property?
-180
-30
-45
-60 - answer180
Denise is the listing agent on a property that's next to a lake. When advertising the
property for sale, she describes it as "waterfront." Is this okay?
-No, she didn't mention how much frontage the property has on the lake.
-No, the word "waterfront" is misleading.
-Yes, as long as she includes a photo.
-Yes, the house sits next to the lake. - answerYes, the house sits next to the lake.
**Using "waterfront" to describe this property is acceptable. Now, if the only water in
sight was a small man-made pond the sellers put in ... that'd be a different story.
Earnest money in South Carolina must be deposited using _________.
-Any legal tender
-Cash or money order
-Wired funds or a certified check
-Wired funds or a money order - answerAny legal tender
**Earnest money in South Carolina can be paid using a personal check, cash, or
through other means.
The IRS will only allow _______ of passive losses to be deducted against active taxable
income.
-2000
, -3000
-4000
-5000 - answer3000
**The IRS only allows $3,000 of passive losses to be deducted against active taxable
income.
What date is used for adjustments to closing costs between the parties to a South
Carolina sales contract?
-Buyer possession
-Closing date
-Earnest money receipt date
-Effective date of contract - answerClosing date
**All adjustments to closing costs are prorated as of date of closing.
Margo has found her dream house. It's listed at $370,000, and she plans to offer
$365,000. She has a letter from her lender stating that she's been pre-approved for a
maximum $375,000 loan. Why should she ask her lender to re-write the pre-approval
letter?
-By law, the letter can only note that she's been approved for the amount she's offering.
-By providing the letter with her maximum loan amount, Margo risks reducing her
negotiating ability.
-Pre-approval letters should only state that the buyer's income, assets, and liabilities
have been verified.
-The lender must issue a separate letter for each offer the buyer intends to make. -
answerBy providing the letter with her maximum loan amount, Margo risks reducing her
negotiating ability.
**If the sellers know that Margo has been approved for a loan amount higher than her
offer, they may be less willing to negotiate on price.
Which of the following could apply to closing costs for an investment property?
-Amortized over 17 years
-Amortized over the life of the loan
-Never deductible in the year they're paid
-Subtracted from the cost basis - answerAmortized over the life of the loan
**Closing costs are added to the cost basis, are sometimes deductible in the year paid,
and are often amortized over the life of the loan.
Which of the following may be the result of building delays on a new construction?
-A change in the price
-A delay in closing
-An increase in the number of construction defects
-An issue with the title - answerA delay in closing
**Because suppliers and subcontractors can cause building delays, closing dates may
be delayed.
You're describing sales volume to your neighbor. You say, "Sales volume is _______."
