The CE Shop Principles of Real Estate ||
exam questions and answers
Ricardo has left a gift of real property in his will to his son, Juan. Ricardo is the
________________________ and Juan is the ______________. - ANSWERS
Devisor , devisee
Which factor influences property value and addresses questions such as, "What's
the market like?" and "Are there more buyers than sellers, or vice versa?" -
ANSWERS Demand
What percentage of loss would the seller have if he paid $18,000 for a vacant lot,
built a home on the lot that cost $145,000, and then sold the property for
$153,000? Round your answer to the nearest percent. - ANSWERS 6%
Add the cost of the lot and the cost of the house together to get the total cost
($163,000). Next, subtract the sales price from the total cost to get the amount of
loss ($10,000) he took. Finally, divide the total cost by the loss amount ($10,000 ÷
$163,000).
Which of these properties are exempt from the FIRREA federal appraisal
guidelines? - ANSWERS Properties valued at $400,000 or less
What's a quiet title action? - ANSWERS An action to locate and notify all who may
have some claim on the title, and determine the validity of all claims
, The closing funds may be in the form of ______ at closing. - ANSWERS A cashier's
check
Who is the lessee in a lease agreement? - ANSWERS Tenant
Which term is defined as land that is built up by water depositing sand, silt, or
gravel? - ANSWERS Accretion
When presenting a CMA, if you take the time to explain the CMA process, help
the prospective sellers understand what's behind the numbers, and ultimately
leave the decision of the list price up to them, what characteristic have you
demonstrated? - ANSWERS Effective communication
Effective communication - ANSWERS Low-rise
What percentage of profit would the seller make if he paid $18,000 for a vacant
lot, built a home on the lot that cost $145,000, and then sold the property for
$200,599? Round your answer to the nearest percent. - ANSWERS 23%
Add the costs of the lot and the house together to get the total cost ($163,000).
Next, subtract the sales price from the total cost to get the amount of profit
($37,599). Finally, divide the total cost by the profit amount ($37,599 ÷ $163,000).
What takes precedence over a deceased person's wishes to grant his property at
death, even if those wishes are specified in the decedent's will? - ANSWERS
Operation of law
, Which veteran loan program offers qualified veterans help with repairs on their
current home? - ANSWERS Veterans Home Improvement Program
Loans for ______ purposes don't require TILA disclosure. - ANSWERS Business
The tenant is the ______ in a lease agreement. - ANSWERS Lessee
Anita's property appraised at $370,000. It is assessed at 40% of appraised value,
and the tax rate is 80 mills. What are Anita's semi-annual property taxes? -
ANSWERS Divide mills by 1,000 (80 ÷ 1,000 = .08). Assessed value is 40% of
appraised value, so multiply .4 by $370,000 = $148,000. Multiply this by the mill
rate (.08) to get annual taxes of $11,840. Divide this by two to get semi-annual
property taxes of $5,920.
What might Trina's mother have bequeathed to Trina? - ANSWERS Her jewelry
and fine china
At closing, who pays for and receives clear title for the property being
purchased? - ANSWERS Buyer
Which type of RD loan program provides eligible applicants with the option to
build, rehab, improve, or even relocate a dwelling in an eligible rural area? -
ANSWERS Single Family Housing Guaranteed Loan Program
You are in the middle of a house sale with someone claiming power of attorney
for the property owner. What must be done before the deed can be executed? -
ANSWERS Power of attorney must be filed on record in the county where the
property is located.
, Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some
additional financing. To which type of lending institution might he prefer to go? -
ANSWERS An investment group
The doctrine of "use it or lose it" is known as the doctrine of ______. - ANSWERS
Laches
Which document is used to establish proof of ownership and to transfer the title?
- ANSWERS Deed
A property is generating $100,000 in income and has expenses of $25,000. The
investor pays $3,000 toward mortgage principal each year and $32,000 toward
interest, plus another $4,000 in income taxes. What is the before-tax cash flow? -
ANSWERS $40,000
To arrive at before-tax cash flow, you subtract from income ($100,000) expenses
($25,000) and debt service ($3,000 + $32,000 = $35,000). So $25,000 + $35,000 =
$60,000. Then $100,000 - $60,000 = $40,000. You don't subtract income taxes of
$4,000.
What is dynamic risk? - ANSWERS An uninsurable business risk resulting from
economic, tax, and market changes
With the cost approach to value, what is the replacement cost? - ANSWERS Cost
to build a functionally equivalent improvement
exam questions and answers
Ricardo has left a gift of real property in his will to his son, Juan. Ricardo is the
________________________ and Juan is the ______________. - ANSWERS
Devisor , devisee
Which factor influences property value and addresses questions such as, "What's
the market like?" and "Are there more buyers than sellers, or vice versa?" -
ANSWERS Demand
What percentage of loss would the seller have if he paid $18,000 for a vacant lot,
built a home on the lot that cost $145,000, and then sold the property for
$153,000? Round your answer to the nearest percent. - ANSWERS 6%
Add the cost of the lot and the cost of the house together to get the total cost
($163,000). Next, subtract the sales price from the total cost to get the amount of
loss ($10,000) he took. Finally, divide the total cost by the loss amount ($10,000 ÷
$163,000).
Which of these properties are exempt from the FIRREA federal appraisal
guidelines? - ANSWERS Properties valued at $400,000 or less
What's a quiet title action? - ANSWERS An action to locate and notify all who may
have some claim on the title, and determine the validity of all claims
, The closing funds may be in the form of ______ at closing. - ANSWERS A cashier's
check
Who is the lessee in a lease agreement? - ANSWERS Tenant
Which term is defined as land that is built up by water depositing sand, silt, or
gravel? - ANSWERS Accretion
When presenting a CMA, if you take the time to explain the CMA process, help
the prospective sellers understand what's behind the numbers, and ultimately
leave the decision of the list price up to them, what characteristic have you
demonstrated? - ANSWERS Effective communication
Effective communication - ANSWERS Low-rise
What percentage of profit would the seller make if he paid $18,000 for a vacant
lot, built a home on the lot that cost $145,000, and then sold the property for
$200,599? Round your answer to the nearest percent. - ANSWERS 23%
Add the costs of the lot and the house together to get the total cost ($163,000).
Next, subtract the sales price from the total cost to get the amount of profit
($37,599). Finally, divide the total cost by the profit amount ($37,599 ÷ $163,000).
What takes precedence over a deceased person's wishes to grant his property at
death, even if those wishes are specified in the decedent's will? - ANSWERS
Operation of law
, Which veteran loan program offers qualified veterans help with repairs on their
current home? - ANSWERS Veterans Home Improvement Program
Loans for ______ purposes don't require TILA disclosure. - ANSWERS Business
The tenant is the ______ in a lease agreement. - ANSWERS Lessee
Anita's property appraised at $370,000. It is assessed at 40% of appraised value,
and the tax rate is 80 mills. What are Anita's semi-annual property taxes? -
ANSWERS Divide mills by 1,000 (80 ÷ 1,000 = .08). Assessed value is 40% of
appraised value, so multiply .4 by $370,000 = $148,000. Multiply this by the mill
rate (.08) to get annual taxes of $11,840. Divide this by two to get semi-annual
property taxes of $5,920.
What might Trina's mother have bequeathed to Trina? - ANSWERS Her jewelry
and fine china
At closing, who pays for and receives clear title for the property being
purchased? - ANSWERS Buyer
Which type of RD loan program provides eligible applicants with the option to
build, rehab, improve, or even relocate a dwelling in an eligible rural area? -
ANSWERS Single Family Housing Guaranteed Loan Program
You are in the middle of a house sale with someone claiming power of attorney
for the property owner. What must be done before the deed can be executed? -
ANSWERS Power of attorney must be filed on record in the county where the
property is located.
, Noah owns an LLC that buys and sells stocks on the NASDAQ 100. He needs some
additional financing. To which type of lending institution might he prefer to go? -
ANSWERS An investment group
The doctrine of "use it or lose it" is known as the doctrine of ______. - ANSWERS
Laches
Which document is used to establish proof of ownership and to transfer the title?
- ANSWERS Deed
A property is generating $100,000 in income and has expenses of $25,000. The
investor pays $3,000 toward mortgage principal each year and $32,000 toward
interest, plus another $4,000 in income taxes. What is the before-tax cash flow? -
ANSWERS $40,000
To arrive at before-tax cash flow, you subtract from income ($100,000) expenses
($25,000) and debt service ($3,000 + $32,000 = $35,000). So $25,000 + $35,000 =
$60,000. Then $100,000 - $60,000 = $40,000. You don't subtract income taxes of
$4,000.
What is dynamic risk? - ANSWERS An uninsurable business risk resulting from
economic, tax, and market changes
With the cost approach to value, what is the replacement cost? - ANSWERS Cost
to build a functionally equivalent improvement
