California Real Estate Practice: Multiple Choice Questions and Answers, Exams of Advanced Education

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California Real Estate Practice - Questions

And Answers (Solved)

(1) 1. The real estate marketplace could BEST be described as being

A. homogeneous B. stratified C. perfect D. uninfluenced by emotion - B. stratified (based on price)

(1) 2. Most real estate agents are primarily engaged in which area of activity

A. residential property B. raw land and lots C. commercial property D. development - A. residential property

(1) 3. The IRS will treat real estate salespeople as independent contractors if 3 criteria are met. Which is not a criteria

A. The salesperson's reimbursement is solely based on sales, not hours worked B. The salesperson represents himself as an independent contractor when dealing with third parties C. There is a written contract stating that the salesperson will be treated as an independent contractor for tax purposes D. The salesperson is licensed as a real estate agent - B. The salesperson represents himself as an independent contractor when dealing with third parties ( merely representing oneself as an independent contractor would be a violation of disclosure requirements and is not considered to be an IRS criteria)

(1) 4. A broker ordinarily would be liable to salespeople for

A. unemployment compensation B. workers' compensation C. Social Security contributions D. none of these - B. workers' compensation (for work related injuries)

(1) 5. In choosing a broker, a new licensee should be LEAST interested in an office that

A. has a high percentage of successful people B. has a good library of books, tapes, and videos for training C. offers 100% commission D. is a member of a local multiple listing service - C. offers 100% commission (new licensees should remember training is more important than commission split)

(1) 6. The BEST way to learn is to

A. listen to what others say B. read instructional material C. watch what others do D. use the ideas you observe or read about - D. use the ideas you observe or read about (by using ideas, they become yours)

(1) 7. Which of the following statements is true about role-playing

A. Role-playing situations are limited only by our own imagination B. Role-playing can be verbalized or nonverbalized C. Role-playing exercises can involve more than one person D. All of these - D. All of these

(1) 8. Which statement is an example of a specific goal

A. I will work harder next week B. I will improve my listing presentation C. I will make 10 calls tomorrow on for-sale-by-owner ads and schedule three property showings by Sunday D. I will learn by observing successful agents - C. I will make 10 calls tomorrow on for-sale- by-owner ads and schedule 3 property showings by Sunday ( exact goals are measurable )

(1) 9. All of the following will aid you in goal achievement EXCEPT

A. that goals should be attainable B. that goals should be based on what you really want C. that goals should be kept to yourself because they are personal D. that goals should be exact so that you can measure their attainment - C. that goals should be kept to yourself because they are personal (goals should be shared so you are accountable for making them. when no one knows the goals, it is easier to abandon them)

(1) 10. Proper daily planning means that you should endeavor to

A. reduce "D" Time activities B. increase "A" Time activities C. place more emphasis on probabilities than on possibilities D. accomplish all of these - D. accomplish all of these

(2) 1. Three brokers agreed that they would not let a fourth broker show any of their listings. This action would be regarded as

A. a group boycott B. price-fixing

A. the broker considered the unit too small for the family B. there were no other children in the development C. the development has an age exemption because all occupants are 55 years of age or older D. 70% of the units are occupied by elderly - C. the development has an age exemption because all occupants are 55 years of age or older

(2) 8. A landlord can properly refuse to accept an applicant because the applicant

A. has a guide dog and the apartment is on the fourth floor B. is a single but obviously pregnant woman C. appears to be gay and the landlord is afraid of catching AIDS D. None of these - D. None of these

(2) 9. The state act that specifically prohibits discrimination in business establishments is the

A. Unruh Act B. Rumford Act C. Holden Act D. Civil Rights Act of 1968 - A. Unruh Act

(2) 10. Which of the following actions dealing in trust funds would be a violation of the law

A. Giving trust funds received to a principal B. Placing depository trust funds directly into escrow C. Placing trust funds in a trust account D. Placing trust funds in the personal care of a bonded employee - D. Placing trust funds in the personal care of a bonded employee

(3) 1. Which of the following statements regarding an agent's duty in a real estate transaction is TRUE

A. An agent has a fiduciary duty to the principal B. An agent must disclose any known detrimental information to a buyer, even when the agent represents the seller C. Any material facts the agent becomes aware of must be disclosed to the principal D. All of these - D. All of these

(3) 2. Which of the following statements regarding agency disclosure is TRUE

A. An agent need not provide a seller of a commercial building with an agency disclosure B. The listing agent cannot elect to be only a buyer's agent C. Both of these are true D. Neither of these is true - B. The listing agent cannot elect to be only a buyer's agent

(3) 3. Which of the following statements regarding agency disclosure is TRUE

A. The confirmation of agency must be in writing B. The three steps of the disclosure process are disclose, elect, confirm C. The selling agent must confirm the agency before the buyer makes an offer D. All of these are true - D. All of these are true

(3) 4. Which seller(s) must provide a Real Estate Transfer Disclosure Statement

A. The seller of a lot B. The seller of a 4-unit apartment building C. The seller of a 16-unit apartment building D. All of these - B. The seller of a 4-unit apartment building

(3) 5. Under Easton, an agent's duty of inspection and disclosure covers

A. all types of property B. accessible and inaccessible areas C. a visual inspection and known or should be known defects D. none of these - C. a visual inspection and known or should be known defects

(3) 6. Which statement regarding earthquake safety disclosure is TRUE

A. It applies to 1-4 unit residential properties B. It applies only to homes built before 1930 C. The buyer can waive her right to a hazard report D. Delivery of a copy of The Homeowner's Guide to Earthquake Safety is evidenced by an affidavit from the agent - A. It applies to 1-4 unit residential properties

(3) 7. The buyers sign that they have received a booklet relating to

A. environmental hazards B. floods, tornados, and earthquake C. foreclosure rights D. rescission rights - A. environmental hazards

(3) 8. Brownfields is a term related to

A. insect infestation B. soil contamination C. undeveloped acreage D. seller financing - B. soil contamination

(3) 9. The purpose of the Subdivided Lands Law is to

A. prohibit premature subdivisions B. set minimal physical standards

D. All of these - D. All of these

(4) 6. Legal notices provide good leads for listings. Which is NOT a legal notice

A. Eviction B. Foreclosure C. Probate D. Vacancy - D. Vacancy

(4) 7. Which would be an indication that an owner might be interested in selling an income property

A. A high vacancy rate B. Tenant evictions C. Code violations D. All of these - D. All of these

(4) 8. Endless chain refers to

A. the long term effects of advertising B. obtaining additional prospects from every lead C. the fact that your buyer will eventually become a seller D. the fact that most buyers are sellers and sellers are buyers - B. obtaining additional prospects from every lead

(4) 9. The term "farming" as used in real estate refers to

A. determining what your market area will be B. operation by season, such as a listing season, open house season, selling season, and so forth C. specialization in a particular field of real estate activity D. working or prospecting a geographic area or special interest area for buyers and sellers - D. working or prospecting a geographic area or special interest area for buyers and sellers

(4) 10. An example of a nongeographic farm would be specialization in

A. mobile homes B. income property C. lots D. any of these - D. any of these

(5) 1. A CMA is BEST described as

A. a formal appraisal B. the cooperative marketing approach of multiple listings C. a reflection of the reality of the marketplace

D. the comparative mortgage analysis performed by agents in advising buyers as to lender and loan type - C. a reflection of the reality of the marketplace

(5) 2. In making your recommendation of the list price for a single family home, the MOST important portion of the analysis deals with

A. list prices of the homes on the market now B. list prices of homes where the listings have expired C. prices of comparable properties that sold D. possible rental income - C. prices of comparable properties that sold

(5) 3. You should realize that for data to be used on a CMA,

A. the older the data, the less reliable they are B. sales sales prices that seem unusually high or low are often the result of market imperfections C. both of these are true D. both of these are false - C. both of these are true

(5) 4. Owners must be made to realize that

A. the higher they price their home over fair market value, the longer it will take to sell B. the higher they price their home over fair market value, the lower the likelihood of a sale during the listing period C. both of these are true D. both of these are false - C. both of these are true

(5) 5. A recommended list price below the CMA indicates as the likely sale range is in an owner's best interest when

A. a seller's market exists B. the seller must get the highest net C. the seller must sell quickly D. the seller is not strongly motivated to sell - C. the seller must sell quickly

(5) 6. What a seller receives in hand from a sale is the

A. gross sale price B. net sale price C. net profit D. seller's net proceeds - D. seller's net proceeds

(5) 7. The principle reason owners try to sell their homes without an agent is

A. to have a quick sale B. to save the commission

A. Nonresidential property B. An open listing C. An exclusive-agency listing D. An exclusive-right-to-sell listing - B. An open listing

(6) 4. A listing under which the owner can sell the listed property without payment of a commission but the agent is nevertheless an exclusive agent is a(n)

A. open listing B. exclusive-right-to-sell listing C. exclusive-agency listing D. net listing - C. exclusive-agency listing

(6) 5. An agent who did not obtain a purchase offer but who initiated an uninterrupted chain of events that led to a sale would be considered the

A. agent of record B. procuring cause C. exclusive agent D. cooperating broker - A. agent of record

(6) 6. An exclusive-right-to-sell listing likely includes

A. an agency relationship disclosure B. an attorney fee provision C. an arbitration agreement D. all of the above - D. all of the above

(6) 7. All of the following statements regarding an exclusive-right-to-sell listing are true EXCEPT

A. escrow does have to close for an agent to be entitled to a commission B. it must have a termination date for the agent to be able to collect a commission C. the agent must give the owner a copy of the listing when the owner signs D. the agent is precluded from working with other agents to sell the property - D. the agent is precluded from working with other agents to sell the property

(6) 8. The type of listing that has the greatest likelihood of resulting in a sale would be a(n)

A. open listing B. exclusive-agency listing C. exclusive-right-to-sell listing D. reduced-fee listing - C. exclusive-right-to-sell listing

(6) 9. An owner tells you that Agent Jones told her she could get far more for her home than your CMA indicates. What is your BEST response

A. "Many unethical agents will promise the moon to get listings and then fail to perform" B. "I am willing to take the listing at that price, but if we don't attract buyers we will reevaluate the price" C. "I don't believe it. No agent who knows the market would set a price that high" D. "I think my comparative market analysis covers all recent comparables and clearly shows the market value. May I please look at the comparative market analysis that Agent Jones prepared for you?" - D. "I think my comparative analysis covers all recent comparables and clearly shows the market value. May I please look at the comparative market analysis that Agent Jones prepared for you?"

(6) 10. By taking a listing at a low fee that will result in a less than normal fee for any cooperating broker, you are benefiting

A. your office B. a selling office C. the owner D. none of the above - D. none of the above

(7) 1. The reason that an expired listing was not extended with the original listing office MOST likely is dissatisfaction with

A. the commission percentage B. communications C. price D. the length of listing - B. communications

(7) 2. Agent advice to owners on showing their home would NOT include

A. instructions to be present so they can volunteer information B. cleaning instructions C. landscaping instructions D. repair instructions - A. instructions to be present so they can volunteer information

(7) 3. When there has been little, if any, interest in a property, the listing salesperson should

A. convey this information B. tell the owner the property is priced 10% too high C. wait until there is something good to report D. tell the owner you are expecting an offer - A. convey this information

(7) 4. The Equator Platform is a system for

(8) 1. The AIDA approach does NOT include

A. attention B. demand C. interest D. action - B. demand

(8) 2. Personal advertising includes

A. name tags B. blog websites C. car signs D. all of these - D. all of these

(8) 3. What does the term logo refer to

A. Your firm name B. An identifying design or symbol C. Length of gross opportunity, which refers to the time span of attention generated by an ad D. - B. An identifying design or symbol

(8) 4. Blind ads are ads that fail to include

A. a price B. the address of property C. broker identification D. property specifics - C. broker identification

(8) 5. The MOST cost-effective advertising medium for selling a home likely would be

A. television B. the internet C. classified newspaper ads D. billboards - B. the internet

(8) 6. Classified ads are different from most other forms of real estate advertising because they are

A. actually sought ought by the reader B. infective for expensive homes C. less reader-selective than other printed ads D. unemotional - A. actually sought ought by the reader

(8) 7. Real estate professionals know that ads that tell about the problems of a property are

A. a waste of advertising dollars B. likely to give a firm a bad name C. unlikely to attract any calls D. none of these - D. none of these. Ads that tell about the problems of the property are often very effective, attracting bargain hunters, flippers, and do it yourself buyers.

(8) 8. An advertiser with an extremely low advertising budget would most likely avoid

A. press releases B. For Sale signs C. billboards D. the internet - C. billboards

(8) 9. Which statement is FALSE about display ads?

A. Readers' eyes tend to move from upper left to lower right B. One large picture is generally more effective than several smaller ones C. Short words are easier to read than long words D. Capital letters are easier to read than lowercase letters - D. Capital letters are easier to read than lowercase letters

(8) 10. In preparing display ads, a good advertiser should

A. eliminate as much white space in the ad as possible for maximum effect B. use different logos in different ads to avoid repetition C. use no more than two typefaces in an ad D. avoid using a serif typeface in the text - C. use no more than two typefaces in an ad

(9) 1. Callers from a For Sale sign are likely to be

A. satisfied with the area B. looking for a more expensive home C. satisfied with the general exterior appearance D. both a and co - D. both a and c

(9) 2. If we compare callers from classified ads with those from For Sale signs, in general,

A. callers from signs are more likely to end up buying homes that cost less than the home they called about B. looking for a more expensive home C. satisfied with the general exterior appearance D. both a and c - D. both a and c

(9) 3. Real estate professionals should

C. leave front door unlocked at showing D. do all of these - D. do all of these

(9) 10. If another agent is showing a home when you arrive for a showing, what should you do

A. Bring your prospects in and let them know you are competing with other buyers for the house B. Cross the house off your showing list until you are sure it has not been sold C. Wait inconspicuously until the other agent completes his or her showing and leaves D. Tell your clients that you are certain that the other prospects are buyers so they had better act fast - C. Wait inconspicuously until the other agent completes his or her showing and leaves

(10) 1. A good salesperson

A. uses technical terms whenever possible to impress buyers B. speaks fast so she can reach the closing C. approaches every customer in the same way D. does none of these - D. does none of these. He never uses technical terms to impress buyers, speaks fast so he can reach the closing, or approaches every customer the same way.

(10) 2. A salesperson appeals to buying motives. Which of the following is a buying motive

A. Love of family B. Comfort and convenience C. Security D. All of these - D. All of these

(10) 3. Disadvantages of home ownership include

A. increase in expenses B. risk C. lack of liquidity D. All of these - D. All of these

(10) 4. Buying signals might include a buyer's

A. whispering with a spouse B. pacing off a room C. seeming reluctant to leave a property D. doing all of these - D. doing all of these

(10) 5. A prospective buyers says, "The price is too high." The BEST response is

A. "I think the price is fair." B. "Why don't you offer less?" C. "The comparable sales don't bear that out." D. "Why do you feel that the price is too high?" - D. "Why do you feel that the price is too high?"

(10) 6. A professional salesperson knows that

A. telling is more effective than asking B. appealing to emotions should be avoided C. in dealing with a cautious buyer, you should be assertive and push for a decision D. none of these apply - D. none of these apply

(10) 7. When you ask prospective buyers if they prefer June 1, July 1, or August 1 for possession, what type of closing technique are you using

A. inducement B. positive choice C. fear of loss D. narrative close - B. positive choice

(10) 8. The paragraph in the purchase contract in which the buyer indicates an intention to occupy the property (applies to 1-4 unit residential properties) is important because it relates to

A. liquidated damages B. vesting of title C. smoke detectors D. home protection plan - A. liquidated damages

(10) 9. Who can modify an accepted offer to purchase

A. The selling broker B. The listing broker C. The listing broker and the seller D. The buyer and the seller by mutual agreement - D. The buyer and the seller by mutual agreement

(10) 10. In making a property inspection, the inspector hired by the buyer negligently damaged the air-conditioning unit. Who is responsible for the damage based on the California Residential Purchase Agreement and Joint Escrow Instructions

A. The seller B. The buyer C. The buyer's agent D. The seller's agent - B. The buyer

B. If the counteroffer is not accepted, the owner has the option of accepting the original offer C. A counteroffer turns the original offeree (the owner) into an offeror D. Both a and c - B. If the counteroffer is not accepted, the owner has the option of accepting the original offer

(11) 7. You should be particularly wary if an offer is received on your listing that contains the word(s)

A. "subordination" B. "transfer disclosure" C. "time is of the essence" D. "liquidated damages' - A. "subordination"

(11) 8. Rent skimming is

A. charging minorities an exorbitant rent B. a property manager's failure to disclose all rents received C. a buyer's failure to apply rents to loans that are assumed D. a tenant making monthly rent payments every 40 days - C. a buyer's failure to apply rents to loans that are assumed

(11) 9. After two months, you receive an offer on one of your listings. Although for less than the listing amount, the offer is certainly reasonably based on the CMA. You should recommend to the owners that

A. they counter offer at a price halfway between list price and the offer to split the difference B. the offer be rejected so that the offeror will raise the offer to the list price C. they let the offer period expire without taking any action to make the offeror anxious D. they accept the offer - D. they accept the offer

(11) 10. After an offer is accepted, the listing agent should

A. keep track of escrow progress B. make certain all papers are signed by the parties C. make certain that conditions are being met D. do all of these - D. do all of these

(12) 1. A loan covering more than one property would be a

A. compound loan B. blanket encumbrance C. subordinated loan D. reverse mortgage - B. blanket encumbrance

(12) 2. What type of mortgage has compound interest

A. reverse mortgage B. renegotiable rate mortgage C. adjustable rate mortgage D. straight mortgage - A. reverse mortgage

(12) 3. The difference between the interest rate of an index and the rate charged by a lender under an adjustable rate mortgage is known as the

A. discount B. gap C. margin D. cap - C. margin

(12) 4. A lender who believes interest rates will be rising significantly will be LEAST interested in

A. a hybrid mortgage B. a 30 year fixed rate mortgage C. a 15 year fixed rate mortgage D. an adjustable rate mortgage - B. a 30 year fixed rate mortgage

(12) 5. A danger that an adjustable rate mortgage poses to a buyer is

A. higher payments if interest rates increase B. a longer payment period if interest rates increase C. that the margin will increase D. none of these - A. higher payments if interest rates increase

(12) 6. An adjustable rate loan index is 6% at the time a loan is made. The margin for the loan is 2 1/2 %. With a lifetime 5% lifetime cap, the highest the interest rate could go is

A. 6% B. 8 1/2% C. 11% D. 13 1/2% - D. 13 1/2%

(12) 7. A convertible ARM is a loan that can be changed to

A. a shorter term loan B. a fixed rate loan C. another property D. another borrower - B. a fixed rate loan

(12) 8. A buyer intends to sell a house within two years. The buyer would prefer