Principles of Real Estate Exam
Questions with Answers
Which agency is charged with enforcing fair housing laws and holding all parties accountable for
compliance with these laws and regulations? - ✔✔Office of Fair Housing and Equal Opportunity
The cost of a parcel of land is 50 cents per square foot. Candace wants to purchase one acre.
How much will this cost? - ✔✔$21,780
The power of ______ was commonly used by community redevelopment agencies (CRAs) to
acquire blighted properties. - ✔✔Eminent domain
All lenders have different underwriting standards, but traditionally, the housing debt-to-income
ratio has been ______%, with a total debt-to-income ratio of ______ %. - ✔✔25 to 28; 33 to 36
Although 25% to 28%, and 33% to 36% are often used, the qualifying mortgage rules set total
debt-to-income ratio at no more than 43%. While this may seem generous, it's a hard and fast
percentage that allows for little lender discretion.
Bradley is a real estate licensee acting as a finder for Emma. What happens if he performs
duties beyond just introducing the buyer and seller, such as negotiating a deal? - ✔✔An agency
relationship is created. Bradley can face disciplinary action if an agency is formed without
proper agency disclosures.
How long does a subdivision developer have to respond to a D&R order if they wish to contest
it? - ✔✔A developer has 30 days to make a written request for a hearing to contest the order.
Which type of subdivision is defined as parcels of land that purchasers own individually, with no
commonly owned areas? - ✔✔Any subdivision that is sold with no common areas and is smaller
than 160 acres is considered to be a standard subdivision. Lots can be fully or only partially
improved, but must at least have utilities installed.
,Foundation walls are often constructed out of which of the following? - ✔✔Poured concrete,
bricks, or concrete blocks
Which of the following statements best describes a real estate partnership? - ✔✔A brokerage
owned by at least two people
Where would you likely find loose-fill insulation? - ✔✔Attic Floor
A real estate transaction has a closing date of May 20. The seller, who's responsible for closing
costs up to but not including the day of settlement, has already paid annual property taxes of
$1,949. Using calendar year proration, the seller will be ______ on the closing statement (round
to the nearest dollar). - ✔✔Credited $1,207
What happens when an appraiser determines a property's value to be less than the pre-
approved loan amount? - ✔✔Most buyers will have an appraisal contingency, so they can back
out and receive a refund of their earnest money.
You're working with a client, Donny, who's found his dream home in the neighborhood where
he grew up. Unfortunately, the title search finds some issues and the title company refuses to
issue a policy. Donny still wants to go forward with the purchase, and since he's paying cash, he
doesn't have to worry about obstacles from a lender. In California, what is one thing that has to
happen in this situation? - ✔✔Donny must receive written notice that no title insurance will be
provided.
Sam and Bridget are cousins who jointly own property. They are both named on the deed, they
received title at the same time, they have the right of survivorship, and they each have equal
interest and undivided rights of possession. What type of ownership do they have? - ✔✔Joint
tenancy
What must a developer selling lots to a subdivision in another state do in addition to registering
the project with the BRE? - ✔✔They must have a disclaimer that the property has not been
examined the BRE on all marketing and sales materials.
, Jerry's client Carla has successfully closed on the purchase of a home. The deed shows she's
taken sole ownership of the property. Which of these actions is necessary before the escrow
agent can have the deed recorded? - ✔✔The grantor's signature must be acknowledged.
Beneficiary interest in land that's part of a land trust is considered ______. - ✔✔Personal
Property
A discount point equals 1% of the _______. - ✔✔Discount points are charged by the lender to
loan money at a given interest rate. A point is 1% of the loan amount.
The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home
loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal
balance of $349,000? - ✔✔Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get
the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960
÷ $349,000 = .0629, or 6.29%.
A plat book can be defined as ______. - ✔✔A public record of subdivision plats held at the
county clerk's office
Which option describes a real property tax lien? - ✔✔Specific and involuntary
Early in its history, the Federal Housing Administration officially supported keeping
"incompatible" racial groups out of the newly developed white suburbs. This practice is known
as ______. - ✔✔Redling
Ownership officially transfers when the grantor delivers the deed to the grantee, but recording
provides constructive notice that Conrad owns the property, thereby permitting anyone who
does a public records search to see the ownership information. - ✔✔Conrad just closed on the
house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?
Questions with Answers
Which agency is charged with enforcing fair housing laws and holding all parties accountable for
compliance with these laws and regulations? - ✔✔Office of Fair Housing and Equal Opportunity
The cost of a parcel of land is 50 cents per square foot. Candace wants to purchase one acre.
How much will this cost? - ✔✔$21,780
The power of ______ was commonly used by community redevelopment agencies (CRAs) to
acquire blighted properties. - ✔✔Eminent domain
All lenders have different underwriting standards, but traditionally, the housing debt-to-income
ratio has been ______%, with a total debt-to-income ratio of ______ %. - ✔✔25 to 28; 33 to 36
Although 25% to 28%, and 33% to 36% are often used, the qualifying mortgage rules set total
debt-to-income ratio at no more than 43%. While this may seem generous, it's a hard and fast
percentage that allows for little lender discretion.
Bradley is a real estate licensee acting as a finder for Emma. What happens if he performs
duties beyond just introducing the buyer and seller, such as negotiating a deal? - ✔✔An agency
relationship is created. Bradley can face disciplinary action if an agency is formed without
proper agency disclosures.
How long does a subdivision developer have to respond to a D&R order if they wish to contest
it? - ✔✔A developer has 30 days to make a written request for a hearing to contest the order.
Which type of subdivision is defined as parcels of land that purchasers own individually, with no
commonly owned areas? - ✔✔Any subdivision that is sold with no common areas and is smaller
than 160 acres is considered to be a standard subdivision. Lots can be fully or only partially
improved, but must at least have utilities installed.
,Foundation walls are often constructed out of which of the following? - ✔✔Poured concrete,
bricks, or concrete blocks
Which of the following statements best describes a real estate partnership? - ✔✔A brokerage
owned by at least two people
Where would you likely find loose-fill insulation? - ✔✔Attic Floor
A real estate transaction has a closing date of May 20. The seller, who's responsible for closing
costs up to but not including the day of settlement, has already paid annual property taxes of
$1,949. Using calendar year proration, the seller will be ______ on the closing statement (round
to the nearest dollar). - ✔✔Credited $1,207
What happens when an appraiser determines a property's value to be less than the pre-
approved loan amount? - ✔✔Most buyers will have an appraisal contingency, so they can back
out and receive a refund of their earnest money.
You're working with a client, Donny, who's found his dream home in the neighborhood where
he grew up. Unfortunately, the title search finds some issues and the title company refuses to
issue a policy. Donny still wants to go forward with the purchase, and since he's paying cash, he
doesn't have to worry about obstacles from a lender. In California, what is one thing that has to
happen in this situation? - ✔✔Donny must receive written notice that no title insurance will be
provided.
Sam and Bridget are cousins who jointly own property. They are both named on the deed, they
received title at the same time, they have the right of survivorship, and they each have equal
interest and undivided rights of possession. What type of ownership do they have? - ✔✔Joint
tenancy
What must a developer selling lots to a subdivision in another state do in addition to registering
the project with the BRE? - ✔✔They must have a disclaimer that the property has not been
examined the BRE on all marketing and sales materials.
, Jerry's client Carla has successfully closed on the purchase of a home. The deed shows she's
taken sole ownership of the property. Which of these actions is necessary before the escrow
agent can have the deed recorded? - ✔✔The grantor's signature must be acknowledged.
Beneficiary interest in land that's part of a land trust is considered ______. - ✔✔Personal
Property
A discount point equals 1% of the _______. - ✔✔Discount points are charged by the lender to
loan money at a given interest rate. A point is 1% of the loan amount.
The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home
loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal
balance of $349,000? - ✔✔Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get
the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960
÷ $349,000 = .0629, or 6.29%.
A plat book can be defined as ______. - ✔✔A public record of subdivision plats held at the
county clerk's office
Which option describes a real property tax lien? - ✔✔Specific and involuntary
Early in its history, the Federal Housing Administration officially supported keeping
"incompatible" racial groups out of the newly developed white suburbs. This practice is known
as ______. - ✔✔Redling
Ownership officially transfers when the grantor delivers the deed to the grantee, but recording
provides constructive notice that Conrad owns the property, thereby permitting anyone who
does a public records search to see the ownership information. - ✔✔Conrad just closed on the
house he's buying to fix up. Why should he follow up to be sure the deed has been recorded?
