COLIBRI NJ REAL ESTATE PRACTICE EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS | ALREADY GRADED A+RECENT VERSION

COLIBRI NJ REAL ESTATE PRACTICE EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS | ALREADY GRADED A+RECENT VERSION 1. Joe Alpha of ABC Real Estate Corp. has been very successful in buying houses, fixing them up, and reselling them. He put an advertisement in the local newspaper seeking investors to help him purchase property and pay for renovations, promising an excellent return on investment when the properties sold. Do you think that Joe needs a securities broker-dealer license? - answer No 2. Ellie is very regimented. She likes to be in the office by 8 a.m. and be home by 5:30 p.m. She likes that same precision in her monthly budget—she wants to know what's coming in and how much she can expect to put into her IRA. She is a good candidate for a career in real estate sales. - answer False 3. Phil, a real estate licensee, considers going to work for JJ Realty. Broker Jana James offers him a 60%-40% split on commission. If JJ Realty takes in $5,000 total commission on Phil's first sale, what is Phil's split? - answer $3,000 4. A real estate licensee is more likely to be an employee of his broker. - answer False 5. If a broker supervises the real estate activities of an associated licensee, that licensee CANNOT be considered an independent contractor. - answer False 6. A real estate licensee who is an independent contractor is paid based on successful real estate transactions, not on hours worked. - answer True 7. Generically speaking, a person who, for a fee, sells, lists, leases, exchanges, negotiates, or otherwise deals in the real estate of others or represents publicly that they do so. - answer Broker 8. A business that serves as an intermediary between buyers and sellers and/or lessees and lessors of real estate. - answer Brokerage 9. Insurance that protects real estate licensees from liability due to mistakes or negligence. It does not cover claims related to fraud or discrimination. - answer Errors and Omissions Insurance (E&O) 10. Under common law, a person who contracts to do a job for another but maintains control over how the task will be carried out, rather than following detailed instructions. - answer Independent Contractor 11. A person licensed under state law to practice real estate. - answer Licensee 12. Any real estate licensee who is a member of the National Association of REALTORS® (NAR) and his or her affiliated state/local boards. Only members may use the term REALTOR® as it's a registered trademark of NAR. - answer REALTOR® 13. Generically speaking, a real estate licensee agent who is associated with a broker and as such may perform most of the acts a broker can on behalf of the broker. Also called Sales Associate. - answer Salesperson 14. A real estate licensee who is treated as an independent contractor for tax purposes when specified conditions are met: proper licensing; compensation based on sales; and services performed under a written contract. - answer Statutory Nonemployee 15. In which field do the majority of new licensees begin their work? - answer Residential Sales 16. Which is NOT an advantage to a career in real estate sales? - answer the option to double commission percentages during slow months 17. Licensee Louie has worked for Rick, the broker at ABC Realty, for 20 years. Louie has been accused of negligence for not disclosing a material fact to a buyer. Which statement is TRUE? - answer Rick can be held liable for Louie's misconduct. 18. At the end of the year, what tax form will an independent contractor receive to document their income? - answer 1099-MISC 19. Who could a real estate licensee represent in a real estate transaction? Select all correct responses. - answer Buyers Landlords Sellers Tenants 20. Steven just successfully finished his required real estate prelicensing course. Which statement is TRUE? - answer Once he joins the NAR, he can call himself a REALTOR®. 21. In order to be considered an independent contractor, a licensee's compensation must be - answer based on sales produced, not hours worked. 22. For a real estate licensee, which is NOT a characteristic that indicates they are an independent contractor? - answer The licensee must be paid for hours spent in the brokerage office. 23. What are the tasks for which a property manager is typically responsible? Select all correct responses. - answer Collecting Rents Leasing Units Maintaining Tenant Relationships Managing the Maintenance and Repair of the Building 24. The theory of supply and demand states that when supply exceeds demand, prices will fall. - answer True 25. Real estate cycles tend to lag somewhat behind general business cycles in response to supply and demand. - answer True 26. As the supply of homes in the area rises, what would you expect to happen to home prices in the short term? - answer Home prices will fall slightly from their high points. 27. When Widget moves out, what type of market is Big City likely to experience? - answer Buyer's Market 28. Cost inflation can affect new home prices as builders pass along their higher costs for labor and materials. - answer True 29. Higher taxes tend to encourage spending and investing. - answer False 30. P-E-G-S - answer Physical Economic Government Social 31. A situation in the housing market when there are many homes available for sale, but few buyers. - answer Buyer's Market 32. The interest rate that people or businesses must pay to use another's money for their own purposes. - answer Cost of Money 33. The main business or industry in an area that supports and sustains the community. - answer Economic Base 34. An increase in the cost of goods or services or too many people wanting too few goods. - answer Inflation 35. A characteristic of real property; each piece of land, each building, and each house is a unique piece of real estate. Also called Uniqueness or Heterogeneity. - answer Non-Homogeneity 36. General swings in real estate activity, resulting in increasing or decreasing activity and property values, during different phases of the cycle. - answer Real Estate Cycles 37. A physical characteristic of real property that says there is a limited supply of real estate; the perceived supply of a good or service relative to the demand for the item. - answer Scarcity 38. A situation in the housing market when a large number of buyers are looking for houses in an area of limited availability. - answer Seller's Market 39. An economic principle that says that for all products, goods, and services when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise. - answer Supply and Demand 40. These associates take and approve loan applications, appraise properties, assess risk. They can find jobs with savings and loan associations, mutual savings banks, commercial banks, mortgage companies, endowments, and government agencies. - answer Real Estate Finance 41. People in this field use rigorous appraisal methods to evaluate property for financial institutions, developers, property managers, or government agencies. - answer Real Estate Appraisal 42. These professionals purchase large tracts of land at a low cost per acre, then subdivide and improve it with streets, sewers, and utilities so it can be resold at a higher cost per front foot (for lots) or per square foot (for buildings). - answer Real Estate Development 43. People in this area of real estate build homes on contract or speculation. They might choose to sell, appraise, manage, or help buyers finance the property. - answer Real Estate Property Construction 44. This is a growing field. More and more brokers, banks, and lawyers are getting into this service area as profit margins are shrinking elsewhere. Jobs can include title researcher, escrow agent, and title insurance overseer. - answer Real Estate Title Work 45. There are numerous national, state, and local trade associations that work to educate, lobby, support members, and manage public relations. - answer Real Estate Trade Association Work 46. Continuing education is part of maintaining a real estate license. Educators have ample opportunities to teach these courses. - answer Real Estate Education. 47. This work can be for the FHA, VA, Fannie Mae, Ginnie Mae, Freddie Mac, and HUD and for state and county work, such as urban planning. - answer Real Estate Government Work 48. include single-family residential properties, multi-family properties (from a double to a large apartment building), condominiums, or cooperatives. Specialized residential properties can include converted-use property, manufactured housing, and timeshares. - answer Residential properties 49. include offices, stores, hotels, and other buildings. Those dealing in commercial properties are usually involved not only in sales and other aspects of brokerage, but also in leasing and leasebacks, property management, and even construction or financing. - answer Commercial properties 50. include land and structures involved in the production, distribution, and storage of tangible economic goods. - answer Industrial properties 51. include selling farms or selling large areas to subdivide and develop. - answer Farm and vacant land 52. This varies by agency and can include filling out forms and contracts, closing a sale, selling your services, and attracting new listings. - answer Training 53. These are the tools (websites, email, online forms), advertising, and staff support that help you do your job. Many brokerages supply these things as part of your agreement with them; some charge a nominal fee; others require you to provide them yourself. - answer Brokerage Services 54. Payment comes from the broker, not from the buyer or seller. You may split the compensation (50%-50% or some other percentage) or get 100%. The amount you pay for brokerage services is often impacted by how much commission you receive. (More commission, the more you will have to pay for services.) - answer Compensation 55. You can be an independent contractor (which the IRS calls a statutory nonemployee) or an employee. Independent contractors have to do more administrative tasks, such as pay quarterly taxes. - answer Relationship 56. What purpose does the Superfund serve? - answer It allows the EPA to clean up abandoned waste sites and requires the responsible party to cover the costs of doing so The Clean Water Act deals with water quality. The Clean Air Act prevents air pollution. The Lead-Based Paint Hazard Reduction Act prevents lead poisoning. The Superfund allows the EPA to clean up such sites and compels responsible parties to perform clean ups or reimburse the government for EPA clean ups. 57. A broker has a policy that agents will not be dual agents in in-company transactions or when the agents sell their own listings. Which would a potential buyer be to the listing agent if the buyer wants to buy the agent's listing? - answer customer A dual agent is a broker or salesperson who represents both buyer and seller. A client is a party represented by a broker. An agent is someone a client hires to represent them like a broker. The customer is the party in the transaction that is not represented.