THE CE SHOP PRACTICE TEST SC
REAL ESTATE EXAM QUESTIONS WITH
CORRECT ANSWERS
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 - Answer-Tax 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 - Answer-180
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. - Answer-Yes, 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 - Answer-Any 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 - Answer-3000
,**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 - Answer-Closing 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. -
Answer-By 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 - Answer-Amortized 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 - Answer-A 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 _______."
-The number of homes available
-The number of homes sold
-The number of homes with pending sales
, -The sales price average for homes in a given market - Answer-The number of homes
sold
**Most multiple listing systems provide monthly statistics on the number of houses sold.
This is the market's sales volume.
Price levels are an indicator of _______.
Demand
Inventory rates
New building permits
Supply - Answer-Demand
**Demand and price move together in the marketplace, so price levels are good
indicators of demand.
The risk that the required return on investor capital will not be met is called ______ risk.
Business
Capital
Financial
Leverage - Answer-Business
When contracted terms of a South Carolina transaction are scheduled to be completed
after closing, what happens when the transaction closes?
-The parties are still under obligation to satisfy the terms of the contract.
-The parties may not enforce any terms after closing.
-The parties must litigate to satisfy the terms.
-The terms are void. - Answer-The parties are still under obligation to satisfy the terms
of the contract.
**The Survival section of the sales contract says that if any contracted terms must be
performed after closing, they survive closing and remain binding upon the parties.
The __________ of real estate markets makes it impossible to generalize the impact
events in other areas will have on real estate values.
-Immobility
-Indestructibility
-Slowness of Response
-Uniqueness - Answer-Uniqueness
**This refers to uniqueness. Two identical houses on side-by-side lots have different
values.
From a real estate licensee's standpoint, what's the purpose of qualifying buyers before
working with them?
-To determine their financial wherewithal
-To determine their readiness to purchase and make sure they're not already working
with another agent
-To learn if you have things in common with them
-To pre-qualify them for a loan - Answer-To determine their readiness to purchase and
make sure they're not already working with another agent
REAL ESTATE EXAM QUESTIONS WITH
CORRECT ANSWERS
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 - Answer-Tax 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 - Answer-180
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. - Answer-Yes, 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 - Answer-Any 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 - Answer-3000
,**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 - Answer-Closing 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. -
Answer-By 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 - Answer-Amortized 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 - Answer-A 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 _______."
-The number of homes available
-The number of homes sold
-The number of homes with pending sales
, -The sales price average for homes in a given market - Answer-The number of homes
sold
**Most multiple listing systems provide monthly statistics on the number of houses sold.
This is the market's sales volume.
Price levels are an indicator of _______.
Demand
Inventory rates
New building permits
Supply - Answer-Demand
**Demand and price move together in the marketplace, so price levels are good
indicators of demand.
The risk that the required return on investor capital will not be met is called ______ risk.
Business
Capital
Financial
Leverage - Answer-Business
When contracted terms of a South Carolina transaction are scheduled to be completed
after closing, what happens when the transaction closes?
-The parties are still under obligation to satisfy the terms of the contract.
-The parties may not enforce any terms after closing.
-The parties must litigate to satisfy the terms.
-The terms are void. - Answer-The parties are still under obligation to satisfy the terms
of the contract.
**The Survival section of the sales contract says that if any contracted terms must be
performed after closing, they survive closing and remain binding upon the parties.
The __________ of real estate markets makes it impossible to generalize the impact
events in other areas will have on real estate values.
-Immobility
-Indestructibility
-Slowness of Response
-Uniqueness - Answer-Uniqueness
**This refers to uniqueness. Two identical houses on side-by-side lots have different
values.
From a real estate licensee's standpoint, what's the purpose of qualifying buyers before
working with them?
-To determine their financial wherewithal
-To determine their readiness to purchase and make sure they're not already working
with another agent
-To learn if you have things in common with them
-To pre-qualify them for a loan - Answer-To determine their readiness to purchase and
make sure they're not already working with another agent
