NATIONAL REAL ESTATE EXAM PRACTICE TEST

A bank refuses to issue mortgages to a historically Black part of town. This practice is: - answer-redlining, and it's illegal A buyer offers additional consideration to add a 10-day option period to the sales contract. During this period, the buyer can:* - answer-terminate the contract for any reason A buyer representation agreement establishes an agency relationship between a buyer and a: - answer-broker A Christian organization owns a fourplex. It wants to rent to only Christian tenants. Under the federal Fair Housing Act, is this legal? - answer-Yes. Religious organizations which rent to tenants for residential purposes are exempt from the Fair Housing Act A contract can still be valid even if it lacks: - answer-earnest money A contract is not considered valid unless consideration is involved. This is due to the idea that a person: - answer-CANNOT do something of value without receiving something in turn A credit to the seller has what effect on charges made to the parties involved in the transaction? - answer-increases the amount the seller receives at closing A debit to the buyer has what effect on charges made to the parties involved in the transaction? - answer-increases the amount due from the buyer at closing A homeowner sells her primary residential home and realizes a profit of $185,000. How much tax will this homeowner pay on the capital gains? - answer-None. Homeowners are exempt from capital gains up to $250,000 per person every two years. A married couple bought a home ten years ago for $400,000. Their neighborhood has rapidly grown in popularity, and they were able to sell their home this year for $950,000. How much of that money will they be required to pay capital gains tax on? - answer-$50,000 A metes and bounds legal description always returns to: - answer-the point of beginning A new $350,000 home is being built in a neighborhood of mostly $200,000 homes. Although the home has many updates and is in better condition than the surrounding houses, its value is significantly less than the price. Which principle of appraisal can explain this? - answer-principle of regression A new contract substituting the obligations of an original contract is a(n): - answer-novation A potentially valid contract in which at least one party has the option to rescind is described as: - answer-voidable A property manager's PRIMARY responsibility to the owner is to: - answer-realize the highest return possible and maximize the owner's return on that investment A property manager's PRIMARY responsibility to the owner is to: - answer-realize the highest return possible and maximize the owner's return on that investment A property owner has the right to tell other people that they cannot trespass on their property. What is this right called? - answer-right of exclusion A square bedroom measures 10 feet by 10 feet. What is the area of the room? - answer-100 square feet A valid sales contract stipulates that the seller must repair a hole in the roof before closing day. The seller failed to do so, which makes the seller guilty of: - answer-breach of contract All federally related loan programs require a property to have which of these? - answer-an appraisal Allie cannot depreciate her investment property for a tax deduction. What kind of property is it? - answer-undeveloped land An agent should present all offers to their client UNLESS:* - answer-the client explicitly instructs the agent not to present any offers below a certain amount in writing An alienation clause would require a borrower to: - answer-pay the mortgage debt in its entirety upon the property being sold An appraisal is required for all: - answer-federally related loan programs An appraisal report is a report from a: - answer-licensed appraiser that sums up a property's market value based on collected data An example of a voidable contract is a contract that: - answer-is made with one party who is not competent An executory contract is a contract that: - answer-has not yet been fully performed An investor has purchased a one-family home that they plan to rent as an investment. Which of these statements accurately describes how it can be depreciated? - answer-It can be depreciated over 27.5 years. An unmarried Texas couple purchased real estate together. How would the deed identify how they hold their interests if they specify they want them passed to the survivor in case of death? - answer-joint tenancy with rights of survivorship Arturo is buying a house for $400,000. He will be making a down payment of 5%. He already submitted a check for $2,000 as earnest money, which will be applied to the purchase. How much will Arturo need to pay on closing day? - answer-$18,000 Asbestos, an environmental hazard, is a mineral that has been used for many years as: - answer-insulation Ben manages an apartment complex that has an effective gross income of $100,000. Operating expenses were $60,000. What is the net operating income of the property? - answer-$40,000 Both parties involved in an agency agreement agree to end the agreement early. What is this called? - answer-mutual rescission Brenda and her husband are interested in buying a house that was constructed in 1971 that has all the original paint, windows, and flooring. What is required from the listing agent in this situation?* - answer-The agent needs to furnish the buyers with a pamphlet approved by the EPA concerning lead based paint prior to closing. Burt is buying a house for $100,000 and is making a 20% down payment. He is paying a 1-point origination fee to a mortgage lender, $500 for a new survey, and $800 for an environmental report. Based on this, before any prorations, how much cash will Burt have to bring to the closing? - answer-$22,100 CERCLA was passed in 1980 to: - answer-establish a Superfund to clean up uncontrolled hazardous waste sites and to respond to spills Condemnation is the act of seizing private property from citizens. What gives the government the right to do this? - answer-eminent domain Darla is suing Arlo for specific performance. If she is successful, what will happen? - answer-Arlo will be required to perform according to the terms of the contract. Darleene is looking at an investment property. The annual net operating income (NOI) of the property is $310,000. If the capitalization rate for this class of property in this area is currently 9%, what is the total value of this property? - answer-$3,444,444.44 Deanna wants to sue her real estate agent, but finds out that she has no legal recourse because too many years have passed since the offending incident. What is this an example of? - answer-statute of limitations Emmy just bought a house. To purchase the house, she got a loan for $300,000 with 4 discount points. How much did she pay for the discount points? - answer-$12,000 Erin pays a flat fee every month to rent her apartment. Her landlord pays for the property's maintenance, security, taxes, utilities, and all other operating expenses. What kind of lease is this? - answer-gross lease Flood damage is covered by: - answer-flood insurance policies only For a listing agreement to be enforceable in court, it MUST be: - answer-in writing Hans bought an investment property for $5,250,000. The NOI of this property is $367,500. At what cap rate did he purchase this property? - answer-7% How can homeowners get insurance coverage in case of a flood? - answer-Take our a specific flood insurance policy. How does errors and omissions insurance (E&O) affect the defendants in fair housing cases?* - answer-E&O may not cover any defense for a fair housing violation. How long after an incident does a victim of housing discrimination have to file a complaint with HUD? - answer-one year How many parties are required to perform in a bilateral contract? - answer-two If a borrower is behind on payments, the acceleration clause gives the lender the ability to: - answer-call the entire loan balance due immediately If a buyer makes a 15% down payment and obtains a $120,000 mortgage, what is the sales price of the property? - answer-$141,176 If a contract specifies a legal land description, it is most likely a(n): - answer-listing agreement If two parties to a contract both promise to perform the actions specified in the contract, we describe the contract as: - answer-bilateral In a fixed-rate mortgage that is fully amortized, the total amount of interest to be paid is: - answer-predetermined In a verbal agreement, Jesse said that he would sell his house to Giorgio for $200,000. Jesse later decided that he would like to keep his house instead. Giorgio can't enforce their verbal contract because it did not meet which of these requirements for validity? - answer-statute of frauds In general, a broker is responsible for: - answer-their own actions and the actions of agents they supervise In most cases, broker compensation, as a percentage of home price, falls somewhere between: - answer-5-7%