NATIONAL REAL ESTATE LICENSURE
1. Regarding the need for consent for a contract to be valid, which of the following exists
when an act of persuasion overcomes another person's freewill and judgment?
Innocent misrepresentation
Undue influence
Fraud
Duress: Undue influence
Undue influence occurs when persuasion overcomes another person's free will andjudgment.
Duress occurs when a threat is involved.
2. Homes in a new home development have been built with a floor plan that doesn't appeal
to today's buyers. In a cost approach valuation of the houses,what sort of depreciation will the
appraiser apply?
Functional obsolescence
External depreciation
Physical depreciation
None. Depreciation doesn't apply to new buildings.: Functional obsolescence
Burt's investment is experiencing functional obsolescence, a form of depreciation orloss in
value caused by defects in design, such as an atypical floor plan.
3. To make valid computations of adjustments for the sales comparison approach to value,
elements of comparison must be applied in a specific order.Which one of these elements listed
has the highest priority?
Location
Market conditions
Conditions of sale
Physical characteristics: Conditions of sale
The elements appraisers consider in the sales comparison approach are applied ina specific
order: financing terms and cash equivalency, conditions of sale, market conditions at the time
of contract and closing, location, and physical characteristics.
4. Insurance claims might not appear on a CLUE report for a property if theclaims were
made more than years ago.
10
Nine
,Seven
Four: Seven
5. Two years ago, Amelia purchased a commercial building for $619,000. It was in great
shape, so she didn't need to make any renovations. She will usestraight-line depreciation to
determine the amount of depreciation she can take each year. What is the total amount of
depreciation Amelia has accountedfor including last year and this year?
Can't be determined with the information given.
$31,743.58
$15,871.79
$7,935.90: $31,743.58
Straight-line depreciation for a commercial building means that you should divide the
building's basis ($619,000) by 39 years. The yearly depreciation is $15,871.79,and you'd
multiply this by two to get the two-year depreciation total.
6. A gives the purchaser the right to possess the property at giventimes for a
given duration but doesn't convey ownership.
Cooperative membership
Condominium ownership
Timeshare use
Timeshare estate: Timeshare use
A timeshare use gives the purchaser the right to possess the property at given times for a given
duration, but it doesn't convey ownership. This is contrasted with atimeshare estate, which does
convey ownership.
7. Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some
additional financing. To which type of lending institution mighthe prefer to go?
A savings and loan
A credit union
A commercial bank
Investment group: Investment group
Many investment groups lend specifically to other investors who want to avoidconventional
financing.
8. About 50% of the borrowers in Neighborhood One are Hispanic, while only4% in
Neighborhood Two are Hispanic. The median home price in both neigh-borhoods is the same.
However, statistics show that there is a significantly greater percentage of minority and low-
income borrows who were denied financing for loans on properties in Neighborhood Two and
,were offered lowerrates to live in Neighborhood One. What act is intended to prevent this type
ofpotentially discriminatory lending pattern?
Equal Credit Opportunity Act
Community Credit Act Consumer Credit Protection Act
Home Mortgage Disclosure Act: Home Mortgage Disclosure Act
The Home Mortgage Disclosure Act requires many financial institutions to publiclydisclose
information about mortgages, allowing public officials to make informed policy decisions and
revealing potentially discriminatory lending patterns.
9. What's the term for a lender refusing to lend in a specific area, often basedon the area's
minority make-up?
Gerrymandering
Steering
Redlining
Blockbusting: Redlining
When lenders determine where they will lend based on a neighborhood's racial orother
protected class status, it's redlining, and it's illegal.
10. Woody has a lease with an option to buy on his penthouse apartment. Eachmonth, 20% of
his lease payment goes toward .
Maintenance and utilities
A down payment toward the purchase price
Property taxes
The option fee: A down payment toward the purchase price
The option fee is typically a one-time fee that the buyer will forfeit if the right to purchase
isn't exercised. If a portion of the monthly rent is set aside, it's usuallyapplied toward the
property's purchase price.
11. Hernando, a real estate attorney, is preparing an option contract for his client, Wilma.
Hernando asks Wilma what she and the seller have agreed uponfor the option period. Wilma
said the seller was leaving that up to her, and she wanted to get Hernando's opinion. What
should Hernando put into the contract for the option period?
"Indefinite"
"Six months"
"Negotiable"
"N/A": "Six months"
, The typical option period is often six months. Option periods cannot be "forever," oreven
extended indefinitely. A definite period of time should be stated.
12. The Siegels are purchasing a commercial investment property and plan touse straight-line
depreciation on their financial statements and tax calculations. Which of the following would
NOT be included in the Siegel's depreciation basis calculations?
The price that they paid for the property, minus any land costs
The loan origination and lender fees that they paid at closing
The prorated property taxes that they paid at closing
The cost of the electrical system upgrades they did after purchase: The pro-rated property
taxes that they paid at closing
Depreciation basis is composed of the sales price plus any acquisition costs and capital
improvements. The loan origination fee is an acquisition cost, and the elec-trical system
upgrades are capital improvements.
13. Jennifer is the owner of the single-family residence in which she resides.How long can
she take to depreciate her property?
Zero years (personal residences cannot be depreciated)39 years
Indefinitely
27.5 years: Zero years (personal residences cannot be depreciated)
Depreciation is limited to investment properties—you can't depreciate a personal residence or
vacation home.
14. Carol is performing a market analysis, and is working with three compara- ble properties to
her subject property. How does she account for differences between the subject property and
comparable?
-If the subject property has a valuable feature lacking in the comparable property, she subtracts
this value from the comparable property's sales price.
-If the subject property has a valuable feature lacking in the comparableproperty, she adds this
value to the comparable property's sales price.
1. Regarding the need for consent for a contract to be valid, which of the following exists
when an act of persuasion overcomes another person's freewill and judgment?
Innocent misrepresentation
Undue influence
Fraud
Duress: Undue influence
Undue influence occurs when persuasion overcomes another person's free will andjudgment.
Duress occurs when a threat is involved.
2. Homes in a new home development have been built with a floor plan that doesn't appeal
to today's buyers. In a cost approach valuation of the houses,what sort of depreciation will the
appraiser apply?
Functional obsolescence
External depreciation
Physical depreciation
None. Depreciation doesn't apply to new buildings.: Functional obsolescence
Burt's investment is experiencing functional obsolescence, a form of depreciation orloss in
value caused by defects in design, such as an atypical floor plan.
3. To make valid computations of adjustments for the sales comparison approach to value,
elements of comparison must be applied in a specific order.Which one of these elements listed
has the highest priority?
Location
Market conditions
Conditions of sale
Physical characteristics: Conditions of sale
The elements appraisers consider in the sales comparison approach are applied ina specific
order: financing terms and cash equivalency, conditions of sale, market conditions at the time
of contract and closing, location, and physical characteristics.
4. Insurance claims might not appear on a CLUE report for a property if theclaims were
made more than years ago.
10
Nine
,Seven
Four: Seven
5. Two years ago, Amelia purchased a commercial building for $619,000. It was in great
shape, so she didn't need to make any renovations. She will usestraight-line depreciation to
determine the amount of depreciation she can take each year. What is the total amount of
depreciation Amelia has accountedfor including last year and this year?
Can't be determined with the information given.
$31,743.58
$15,871.79
$7,935.90: $31,743.58
Straight-line depreciation for a commercial building means that you should divide the
building's basis ($619,000) by 39 years. The yearly depreciation is $15,871.79,and you'd
multiply this by two to get the two-year depreciation total.
6. A gives the purchaser the right to possess the property at giventimes for a
given duration but doesn't convey ownership.
Cooperative membership
Condominium ownership
Timeshare use
Timeshare estate: Timeshare use
A timeshare use gives the purchaser the right to possess the property at given times for a given
duration, but it doesn't convey ownership. This is contrasted with atimeshare estate, which does
convey ownership.
7. Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some
additional financing. To which type of lending institution mighthe prefer to go?
A savings and loan
A credit union
A commercial bank
Investment group: Investment group
Many investment groups lend specifically to other investors who want to avoidconventional
financing.
8. About 50% of the borrowers in Neighborhood One are Hispanic, while only4% in
Neighborhood Two are Hispanic. The median home price in both neigh-borhoods is the same.
However, statistics show that there is a significantly greater percentage of minority and low-
income borrows who were denied financing for loans on properties in Neighborhood Two and
,were offered lowerrates to live in Neighborhood One. What act is intended to prevent this type
ofpotentially discriminatory lending pattern?
Equal Credit Opportunity Act
Community Credit Act Consumer Credit Protection Act
Home Mortgage Disclosure Act: Home Mortgage Disclosure Act
The Home Mortgage Disclosure Act requires many financial institutions to publiclydisclose
information about mortgages, allowing public officials to make informed policy decisions and
revealing potentially discriminatory lending patterns.
9. What's the term for a lender refusing to lend in a specific area, often basedon the area's
minority make-up?
Gerrymandering
Steering
Redlining
Blockbusting: Redlining
When lenders determine where they will lend based on a neighborhood's racial orother
protected class status, it's redlining, and it's illegal.
10. Woody has a lease with an option to buy on his penthouse apartment. Eachmonth, 20% of
his lease payment goes toward .
Maintenance and utilities
A down payment toward the purchase price
Property taxes
The option fee: A down payment toward the purchase price
The option fee is typically a one-time fee that the buyer will forfeit if the right to purchase
isn't exercised. If a portion of the monthly rent is set aside, it's usuallyapplied toward the
property's purchase price.
11. Hernando, a real estate attorney, is preparing an option contract for his client, Wilma.
Hernando asks Wilma what she and the seller have agreed uponfor the option period. Wilma
said the seller was leaving that up to her, and she wanted to get Hernando's opinion. What
should Hernando put into the contract for the option period?
"Indefinite"
"Six months"
"Negotiable"
"N/A": "Six months"
, The typical option period is often six months. Option periods cannot be "forever," oreven
extended indefinitely. A definite period of time should be stated.
12. The Siegels are purchasing a commercial investment property and plan touse straight-line
depreciation on their financial statements and tax calculations. Which of the following would
NOT be included in the Siegel's depreciation basis calculations?
The price that they paid for the property, minus any land costs
The loan origination and lender fees that they paid at closing
The prorated property taxes that they paid at closing
The cost of the electrical system upgrades they did after purchase: The pro-rated property
taxes that they paid at closing
Depreciation basis is composed of the sales price plus any acquisition costs and capital
improvements. The loan origination fee is an acquisition cost, and the elec-trical system
upgrades are capital improvements.
13. Jennifer is the owner of the single-family residence in which she resides.How long can
she take to depreciate her property?
Zero years (personal residences cannot be depreciated)39 years
Indefinitely
27.5 years: Zero years (personal residences cannot be depreciated)
Depreciation is limited to investment properties—you can't depreciate a personal residence or
vacation home.
14. Carol is performing a market analysis, and is working with three compara- ble properties to
her subject property. How does she account for differences between the subject property and
comparable?
-If the subject property has a valuable feature lacking in the comparable property, she subtracts
this value from the comparable property's sales price.
-If the subject property has a valuable feature lacking in the comparableproperty, she adds this
value to the comparable property's sales price.
