PENNSYLVANIA REAL ESTATE SALESPERSON LICENSING EXAM 2024 | ACCURATE CURRENTLY TESTING QUE, Exercises of Nursing

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PENNSYLVANIA REAL ESTATE SALESPERSON LICENSING

EXAM 2024 | ACCURATE CURRENTLY TESTING QUESTIONS

WITH DETAILED ANSWERS AND A STUDY GUIDE | EXPERT

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1. An _______ contract is one that unduly favors the party with the superior bargaining power:**
   • A) Equal
   • B) Dual
   • C) Reasonable
   • D) Unconscionable Correct Answer: D) Unconscionable**
   • Rationale: An unconscionable contract is so one-sided and unfair that it benefits the party with more power, making it unenforceable in court due to its oppressive terms.
2. A property has a gross income multiplier of 14, and value of $800,000. What is its annual income?
   • A) $50,
   • B) $57,
   • C) $66,
   • D) $11,200,
   • Correct Answer: B) $57,143
   • Rationale: Annual income is calculated by dividing the property's value by the gross income multiplier: $800,000 / 14 = $57,143.
3. Which of the following wills may be considered INVALID?
   • A) A will written by someone only 23
   • B) A will NOT signed
   • C) A will that is indicated to be a "last will and testament"
   • D) A will completed voluntarily
   • Correct Answer: B) A will NOT signed

• Rationale: For a will to be valid, it must be signed by the testator and usually witnessed. A will that is not signed is not legally enforceable.

4. Which principle is used with the Sales Comparison Approach?

• A) Substitution
• B) Anticipation
• C) Contribution
• D) Assemblage
• Correct Answer: A) Substitution
• Rationale: The Sales Comparison Approach relies on the principle of substitution, which means that a buyer will not pay more for a property than the cost of an equally desirable alternative.

5. What is a disadvantage of real estate investments?

• A) Very low risk
• B) It is NOT highly liquid
• C) Cost of improvements may be depreciated or deducted over an arbitrary period of time
• D) Real estate has shown above-average rate of return
• Correct Answer: B) It is NOT highly liquid
• Rationale: Real estate investments are not easily converted into cash quickly without a significant loss in value, making them relatively illiquid.

6. Licensee Alex only represents the buyer in a transaction. What is Alex called in this situation?

• A) Listing agent
• B) Dual agent
• C) Single agent
• D) Married agent
• Correct Answer: C) Single agent

• Rationale: A single agent represents only one party (either buyer or seller) in a transaction, without any obligation to the other party.

7. How might a voidable contract become valid?

• A) If the party who has reason to disaffirm contract elects instead to perform it
• B) If neither party agrees to the terms
• C) If the party who wants to enforce the contract seeks damages
• D) If the party who wants to enforce the contract seeks legal relief
• Correct Answer: A) If the party who has reason to disaffirm contract elects instead to perform it
• Rationale: A voidable contract is valid unless the party with the right to void it decides to do so. If that party chooses to perform, the contract becomes fully enforceable.

8. What is the definition of "valuable consideration" in regard to contract validity?

• A) Cash or cash equivalents
• B) Tangible goods
• C) Something specifically offered in exchange for something else
• D) Something offered by only one party
• Correct Answer: C) Something specifically offered in exchange for something else
• Rationale: Valuable consideration means something of value is given in exchange for something else, which is essential for a contract to be legally binding.

9. Which clause protects a lender if he does NOT want the loan to be assumed by another party?

• A) Abandonment
• B) Subordination
• C) Satisfaction
• D) Alienation
• Correct Answer: D) Alienation

• Rationale: The alienation clause, also known as a "due-on-sale" clause, prevents the transfer of the mortgage to a new buyer without the lender’s consent.

10. Which parties typically purchase title insurance once the transaction is complete?

• A) The HUD and the seller
• B) The lender and the buyer
• C) The licensee and the buyer
• D) The broker and lender
• Correct Answer: B) The lender and the buyer
• Rationale: Title insurance is usually purchased by both the lender (to protect their interest) and the buyer (to protect their ownership rights).

11. A town is replacing a sidewalk that serves eight (8) homes. The length of the sidewalk is 900ft. Laura's property has 60ft of the sidewalk. If the cost of the project to be paid by a special assessment is $18,000, what will Laura's assessment be?

• A) $
• B) $
• C) $1,
• D) $2,
• Correct Answer: C) $1,200
• Rationale: Laura's assessment is calculated as (60/900) * $18,000 = $1,200.

12. Non-judicial foreclosure is required to foreclose on a ____?

• A) Deed of recovery
• B) Chain deed
• C) Deed of trust
• D) Deed of liability
• Correct Answer: C) Deed of trust
• Rationale: Non-judicial foreclosure is used when a deed of trust (rather than a mortgage) is the security instrument, allowing the lender to foreclose without court involvement.

13. A buyer told broker Lena that she wants to move to a Cuban neighborhood. Then the buyer asked if Lena could show her the best home in a Cuban area. How should Lena respond to this request?
    • A) Lena should comply with this request to the best of her abilities
    • B) Lena should explain to the buyer that she ethically and legally cannot recommend housing based on national origin
    • C) Lena should not answer the question unless the buyer offers to pay her more
    • D) Lena should refer the buyer to a brokerage that can legally steer buyers
    • Correct Answer: B) Lena should explain to the buyer that she ethically and legally cannot recommend housing based on national origin
    • Rationale: Steering based on national origin is a violation of Fair Housing Laws. Lena must inform the buyer that such requests cannot be honored legally or ethically.
14. 160 County Drive has 4 acres of open pasture and a 1,900 square foot home. The home has 2 bedrooms and 4 bathrooms. Call 555- 555 - 5555 now for information! What is missing from this advertisement that makes it a blind ad?
    • A) The price
    • B) The broker’s identification
    • C) The reason the property is for sale
    • D) How long the property has been on the market
    • Correct Answer: B) The broker’s identification
    • Rationale: A blind ad does not include the broker’s identity, which is a legal requirement in advertising to ensure transparency.
15. Why is designated agency a good alternative to traditional dual agency?
    • A) Fair housing laws do not apply to transactions involving designated agency
    • B) Even though the same broker represents each party, both the buyer and seller have a licensee who exclusively acts as their agent in the transaction
    • C) Designated agency is legal in all 50 states while dual agency is banned in every state
    • D) Only the broker is involved in the transaction and the parties do not have an exclusive agent

• Correct Answer: B) Even though the same broker represents each party, both the buyer and seller have a licensee who exclusively acts as their agent in the transaction
• Rationale: Designated agency allows the same brokerage to represent both parties, while different agents exclusively serve the buyer and the seller, reducing conflicts of interest.

16. Which of the following is a violation of the Sherman Anti-Trust laws?

• A) Commingling
• B) Zoning
• C) Redlining
• D) Market Allocation
• Correct Answer: D) Market Allocation
• Rationale: Market allocation, where competitors agree to divide markets or customers, is a violation of the Sherman Anti-Trust laws aimed at preserving fair competition.

17. The first step in the appraisal process is to ___?

• A) Estimate the value of the land
• B) State the problem
• C) Analyze the neighborhood
• D) Gather data
• Correct Answer: B) State the problem
• Rationale: The appraisal process begins with clearly defining the purpose and scope of the appraisal, which is referred to as “stating the problem.”

18. Robert owns his property and enjoys the full bundle of rights. Can he use his property as collateral for debt?

• A) Yes, Robert can encumber the property, but only if the debt is less than $10,
• B) Yes, Robert can encumber his property
• C) No, Robert cannot encumber his property
• D) Yes, Robert can encumber the property, but only if the debt is more than $50,

• Correct Answer: B) Yes, Robert can encumber his property
• Rationale: One of the rights in the bundle of rights is the right to encumber the property, meaning to use it as collateral for a loan.

19. One of the major considerations in a master plan is...

• A) How to best maximize tax revenue
• B) The effect of new development on traffic patterns and the environment
• C) The effect on the voting boundaries of an area
• D) The effect on the culture of an area
• Correct Answer: B) The effect of new development on traffic patterns and the environment
• Rationale: A master plan outlines the development of a community, focusing on the impacts of new developments on traffic, environment, and overall community needs.

20. New salesperson Juliet has been assigned office duty for Saturday and Sunday. What is another common term for office duty?

• A) Compliance time
• B) Floor time
• C) Chill time
• D) Time in
• Correct Answer: B) Floor time
• Rationale: “Floor time” refers to scheduled hours when agents are on duty at the office to handle calls, walk-ins, and other inquiries.

21. Earl orally agreed to an 18-month lease with landlord Blake. Is this contract enforceable?

• A) Yes, all oral leases are enforceable
• B) No, all leases longer than one year must be in writing to be enforceable
• C) Yes, all leases for longer than 6 months are enforceable
• D) No, it is not enforceable unless Earl is older than 50 years old

• Correct Answer: B) No, all leases longer than one year must be in writing to be enforceable
• Rationale: According to the Statute of Frauds, leases longer than one year must be in writing to be legally enforceable.

22. Which type of clause allows a broker to collect a commission for some period of time after the listing expires?

• A) A return on investment clause
• B) Recovery clause
• C) Self-dealing clause
• D) Carryover clause
• Correct Answer: D) Carryover clause
• Rationale: A carryover clause, also known as an “extension” or “protection” clause, allows the broker to collect a commission if a sale is made to a prospect they introduced during the listing period, even after the listing expires.

23. The cost of doing direct mail advertising depends on all of these things except which?

• A) The amount you have to pay the state’s Real Estate Commission for approval
• B) The frequency of the mailings
• C) Percent of people that reply
• D) The date of mailing
• Correct Answer: A) The amount you have to pay the state’s Real Estate Commission for approval
• Rationale: Direct mail advertising costs depend on frequency, response rate, and mailing date but not on approval fees from the state’s Real Estate Commission.

24. Which statement about a deed in lieu of foreclosure is FALSE?

• A) It gives the borrower an opportunity to change the loan terms
• B) The borrower’s credit is hurt less than in a formal foreclosure
• C) Avoids public notice of foreclosure

• D) There is less risk to the lender that the borrower will damage the property in revenge for the loss of the property
• Correct Answer: A) It gives the borrower an opportunity to change the loan terms
• Rationale: A deed in lieu of foreclosure allows the borrower to voluntarily transfer the property to the lender without foreclosure, but it does not change loan terms.

25. Broker Jack has an agreement with seller Mauve that says Jack will receive compensation if anyone except Mauve sells Mauve's home. This is an example of ____?

• A) Enclave agency
• B) Exclusive agency
• C) Net agency
• D) Exclusive right to sell
• Correct Answer: B) Exclusive agency
• Rationale: An exclusive agency listing means the broker is compensated if anyone other than the seller finds a buyer. If the seller sells the property themselves, the broker does not receive a commission.

26. Broker Torrey hires salesperson Wes as an independent contractor. As an independent contractor, Wes can expect which of the following from Broker Torrey?

• A) Company laptop
• B) Performance expectations
• C) Paid time off
• D) Healthcare policy
• Correct Answer: B) Performance expectations
• Rationale: While independent contractors are not entitled to employee benefits like laptops or healthcare, brokers can set performance expectations for their work.

27. Which of the following best describes the principle of conformity?

• A) The value of a home increases when the supply is short
• B) A home maintains its highest value by being in a neighborhood with similar-type housing
• C) A property will decrease in value if there are rumors of a zoning challenge

• D) Value-wise, it is best for a neighborhood to have a little demographic diversity
• Correct Answer: B) A home maintains its highest value by being in a neighborhood with similar-type housing
• Rationale: The principle of conformity states that maximum property values are achieved when properties are similar to others in the neighborhood in terms of style, size, and quality.

28. Why is the condition of bearing walls more important than non-bearing walls?

• A) Bearing walls protect the home from outdoor elements and radon gas
• B) Bearing walls are part of the interior framework of the house
• C) Bearing walls support the ceiling and roof
• D) Bearing walls are much weaker than non-bearing walls
• Correct Answer: C) Bearing walls support the ceiling and roof
• Rationale: Bearing walls are essential structural elements that support the weight of the roof and upper floors, unlike non-bearing walls, which are primarily for partitioning spaces.

29. Owner Tom decided to lease out his basement to a college student. By leasing the basement, Tom has ____?

• A) Exercised one of his police powers
• B) Permanently transferred his subsurface rights
• C) Transferred a portion of his bundle of rights
• D) Encroached his bundle of rights
• Correct Answer: C) Transferred a portion of his bundle of rights
• Rationale: Leasing property involves transferring a part of the bundle of rights, specifically the right of possession, to another person temporarily.

30. Which of these listing agreement statements is FALSE?

• A) The listing price is listed on the listing agreement
• B) The seller can change the listing agreement whenever they want
• C) A listing agreement can be modified, but only if all parties agree in writing

• D) Contract law applies to listing agreements
• Correct Answer: B) The seller can change the listing agreement whenever they want
• Rationale: Sellers cannot unilaterally change the listing agreement. Any modifications must be agreed upon in writing by both the seller and the broker.

31. Which of the following is a valuable skill for a property manager to have?

• A) Knowledge of building systems
• B) Knowledge of how to steer tenants into specific buildings
• C) Knowledge of appraisal
• D) Knowledge of mortgage disclosure
• Correct Answer: A) Knowledge of building systems
• Rationale: Property managers need to understand building systems to maintain and manage properties effectively.

32. A tenant who stays in rented property after the lease has expired without the consent of the landlord is said to have ____?

• A) A tenant at request
• B) A freeload tenant
• C) A tenant in sufferance
• D) An encroaching tenant
• Correct Answer: C) A tenant in sufferance
• Rationale: A tenant in sufferance remains in possession of the property without the landlord’s consent after the lease has expired, which can lead to eviction.

33. What is a forecast of income and expenses that can be protected over 5 years?

• A) Cash flow statement
• B) Stabilized budget
• C) Balance sheet
• D) Capital budget
• Correct Answer: B) Stabilized budget

• Rationale: A stabilized budget projects income and expenses over a period (e.g., 5 years), assuming stable operating conditions.

34. If a cooperative corporation cannot pay its bills, what would happen?

• A) Only the residents who have not paid their rents on time can be affected
• B) HUD will bail out the struggling co-op
• C) The corporation owning the property would be dissolved, and all of the residents could lose their interest in the cooperative
• D) The co-op must evict all current stock owners
• Correct Answer: C) The corporation owning the property would be dissolved, and all the residents could lose their interest in the cooperative
• Rationale: In a co-op, residents own shares in the corporation. If the co-op cannot pay its bills, the corporation may be dissolved, and residents could lose their investment.

35. Mary abandoned her property by failing to pay its property taxes, and the property reverted to the state. This is an example of _____?

• A) Condemnation
• B) A zoning exception
• C) Escheat
• D) Eminent domain
• Correct Answer: C) Escheat
• Rationale: Escheat is the process where the state claims ownership of a property when the owner dies without a will or heirs, or in cases of abandonment.

36. Who can qualify for an FHA loan?

• A) Eligible veterans only, or widows or veterans who have not remarried
• B) People with a net worth over $1,000,
• C) Anyone with qualified income
• D) Only members of protected classes

• Correct Answer: C) Anyone with qualified income
• Rationale: FHA loans are available to any individual with a qualified income and credit history, regardless of veteran status or net worth.

37. Home Hoarding Realty is advertising to the public that their managing broker has been in the business 37 years and has sold over 1,250 homes. This is an example of ____?

• A) Selfish advertising
• B) Product advertising
• C) Institutional advertising
• D) Antitrust advertising
• Correct Answer: C) Institutional advertising
• Rationale: Institutional advertising promotes the overall image or reputation of a company rather than specific products or services.

38. Escrow moneys should be held in the broker's....

• A) Business account
• B) Personal account
• C) Escrow account
• D) Safe
• Correct Answer: C) Escrow account
• Rationale: Escrow money must be held in a separate escrow account to keep client funds secure and distinct from the broker's business or personal funds.

39. The assessed value of Sidney’s home is $350,000 but the home was recently appraised at $225,000. As a result, Sidney believes her tax bill is way too high. What option does Sidney have?

• A) She can file an appeal with the local board of assessment review
• B) She can opt to pay her tax bill based on appraisal of $225,
• C) She must file an appeal to adjust the millage rate
• D) Sidney has no option

• Correct Answer: A) She can file an appeal with the local board of assessment review
• Rationale: If the homeowner believes the assessment is incorrect, they can file an appeal to have the assessed value and tax bill reviewed.

40. Carla has been walking across a path on John's property for the past 22 years. John knows about this but has never given Carla permission. What might a court grant to Carla?

• A) An easement by necessity
• B) An easement by prescription
• C) An encroachment by necessity
• D) Ownership by prescription
• Correct Answer: B) An easement by prescription
• Rationale: An easement by prescription is granted when someone has used another's property openly and continuously for a certain period without permission.

41. Broker Ron wants to open a separate escrow account for each transaction he is involved in. Is this legal?

• A) No, only lawyers and trust companies can open escrow accounts
• B) No, each broker can only have one escrow account
• C) Yes, this is legal unless he has more than three escrow accounts open at once
• D) Yes, there is no legal limit on the number of escrow accounts a broker can have
• Correct Answer: D) Yes, there is no legal limit on the number of escrow accounts a broker can have
• Rationale: Brokers can have multiple escrow accounts, with each account designated for a specific transaction.

42. Which of the following would qualify as an example of a retail property?

• A) Hospital
• B) Farm
• C) Shopping center
• D) Warehouse

• Correct Answer: C) Shopping center
• Rationale: A shopping center is a retail property because it is used for commercial purposes, specifically for selling goods and services to consumers.

43. Which of the following statements is false regarding tenancy in common?

• A) The co-owners must be married
• B) The tenants share an indivisible interest
• C) All tenants in common have distinct and separable ownership of their respective interests
• D) Any number of people may be co-tenants in a single property
• Correct Answer: A) The co-owners must be married
• Rationale: Tenants in common do not need to be married; they can be any individuals sharing ownership of a property with separate interests.

44. Of the following liens: a $100,000 mortgage, a $2,500 property tax bill, and a $8, mechanic's lien, and a $25,000 judgment lien, which will be paid off first after a foreclosure sale?

• A) The $8,000 mechanics lien
• B) The $25,000 judgment lien
• C) The $100,000 mortgage
• D) The $2,500 property tax lien
• Correct Answer: D) The $2,500 property tax lien
• Rationale: Property tax liens take priority over other liens and must be paid first in the event of a foreclosure.

45. If a cooperating broker accepts the offer of subagency from a listing broker, to whom does the cooperating broker owe fiduciary duties?

• A) Seller
• B) Listing broker
• C) Buyer
• D) Nobody

• Correct Answer: A) Seller
• Rationale: In a subagency relationship, the cooperating broker represents the seller, not the buyer, and owes fiduciary duties to the seller.

46. Alex's home has been on the market for 8 months. What is most likely the reason Alex's home has not sold yet?

• A) There has not been enough advertising done by broker
• B) The property is overpriced
• C) The kitchen is ugly and outdated
• D) The air conditioner is old
• Correct Answer: B) The property is overpriced
• Rationale: The most common reason a property does not sell is that it is overpriced for the market, discouraging potential buyers.

47. A type of mortgage which allows the lender to increase the outstanding balance of a loan up to the original amount of the loan in order to advance additional funds is called an ____?

• A) Wraparound mortgage
• B) Take-out mortgage
• C) Open-ended mortgage
• D) Spiral mortgage
• Correct Answer: C) Open-ended mortgage
• Rationale: An open-ended mortgage allows the borrower to borrow additional funds up to the original loan amount, using the same mortgage.

48. Under the _______ of recording, title passes when the conveyance is registered on the title certificate.

• A) Binder system
• B) Torrens system
• C) Metes system
• D) Meridians system

• Correct Answer: B) Torrens system
• Rationale: The Torrens system requires that title transfers be registered with the state or county to be legally effective.

49. Ownership of a property reverted to the grantor of the estate when its usage failed to conform to a stated condition in the grant. What type of estate existed?

• A) Fee simple defeasible
• B) Freehold estate with reversion
• C) Life estate without condition subsequent
• D) Fee simple absolute
• Correct Answer: A) Fee simple defeasible
• Rationale: A fee simple defeasible estate is a type of ownership where the property must be used in a certain way; if not, ownership reverts back to the grantor.

50. Broker Austin represents a party in a transaction where there is a dispute regarding the deposited escrow money. What should Austin do?

• A) Hold the money until both parties (or their lawyers) provide a written release
• B) Claim the escrow money for himself
• C) Split the money evenly
• D) Immediately release the money to the party he represents
• Correct Answer: A) Hold the money until both parties (or their lawyers) provide a written release
• Rationale: The broker must hold the escrow funds until both parties agree on its release or the matter is settled legally.

51. Which form does RESPA (Real Estate Settlements Procedures Act) require lenders to use to detail the costs that the buyer and seller will pay at closing?

• A) Loan estimate
• B) Truth-in-lending form
• C) Closing disclosure
• D) RESPA settlement statement

• Correct Answer: C) Closing disclosure
• Rationale: RESPA requires lenders to use the Closing Disclosure form to itemize all the costs and fees that the buyer and seller will pay at closing.

52. What is the common lease term for space in an office building?

• A) 3-6 months
• B) 2 years
• C) 1 year
• D) 3-5 years
• Correct Answer: D) 3-5 years
• Rationale: The typical lease term for commercial office space ranges from 3 to 5 years, allowing stability for both landlord and tenant.

53. "This property has the best view in the entire county." This statement is an example of ____?

• A) Fraud
• B) Unintentional misrepresentation
• C) Puffing
• D) A fair housing violation
• Correct Answer: C) Puffing
• Rationale: Puffing is an exaggerated opinion about the property’s value or features that is not intended to be taken as a fact.

54. Which of the following statements about independent contractors is false?

• A) A broker cannot tell an independent contractor how to work
• B) He or she is reimbursed for all business expenses
• C) He or she is paid commission on all sales
• D) He or she will have to pay income tax

• Correct Answer: B) He or she is reimbursed for all business expenses
• Rationale: Independent contractors are responsible for their own business expenses and are not reimbursed by the broker.

55. Broker Jon is attaching a rider strip to a For Sale sign. What information is most likely on this rider strip?

• A) Jon's license number
• B) Picture of Jon
• C) The owner’s phone number
• D) Jon's cell phone number
• Correct Answer: D) Jon's cell phone number
• Rationale: A rider strip often contains additional contact information, such as the agent's direct phone number, to help potential buyers connect quickly.

56. In the appraisal process, looking at the number of recreational facilities, the distances to schools, and the adequacy of public transportation is called?

• A) Demographic analysis
• B) Market data approach
• C) Neighborhood analysis
• D) Comparative market analysis
• Correct Answer: C) Neighborhood analysis
• Rationale: Neighborhood analysis involves evaluating the amenities and services in a neighborhood that affect property values.

57. Which of these activities is appropriate to do within the first few days of obtaining a listing?

• A) Discuss modifying the listing price
• B) Discuss protected classes that the sellers do not want to show the home to
• C) Require the seller to pay for a formal appraisal
• D) Have the managing broker send a "thank you for listing" letter to the sellers

• Correct Answer: D) Have the managing broker send a "thank you for listing" letter to the sellers
• Rationale: Sending a thank-you letter is a good practice to build rapport and acknowledge the seller’s trust in the brokerage.

58. How does the Federal Reserve control the money supply?

• A) They set the range of acceptable loan amounts
• B) All loan underwriters are employed by the Federal Reserve
• C) They tell lenders what percentage of assets they must keep as reserves
• D) They set the number of loans that can be made
• Correct Answer: C) They tell lenders what percentage of assets they must keep as reserves
• Rationale: The Federal Reserve controls the money supply by setting reserve requirements for banks, which determine how much money banks must hold and not loan out.

59. A seller decided to back out of a sales contract for no good reason. What recourse does the buyer have?

• A) To sue for specific performance
• B) To sue the state’s recovery fund
• C) No recourse
• D) Sue the seller’s broker for breaking the contract
• Correct Answer: A) To sue for specific performance
• Rationale: The buyer can sue for specific performance to compel the seller to complete the sale according to the terms of the contract.

60. Bobbie decided to redeem her property after a tax sale. Bobbie exercised her _____?

• A) Legal right of rescission
• B) Statutory right of redemption
• C) Optional right of disclosure
• D) Required right of recourse

• Correct Answer: B) Statutory right of redemption
• Rationale: The statutory right of redemption allows a homeowner to reclaim property after a tax sale by paying back taxes, interest, and fees within a specified period.

61. Should a licensee who represents both the buyer and seller tell the buyer about material defects on the seller's property?

• A) No, material defects cannot be shared with the buyer when dual agency exists
• B) Yes, any defects known to the broker should have been disclosed to the buyer
• C) No, the broker can only disclose material facts that the seller tells him to disclose
• D) No, caveat emptor would apply
• Correct Answer: B) Yes, any defects known to the broker should have been disclosed to the buyer
• Rationale: Even in dual agency, a licensee must disclose known material defects, as failing to do so can lead to legal liabilities.

62. Unlike buyer/seller agency agreements that create _________, the management agreement creates ________?

• A) General agency, special agency
• B) Universal agency, special agency
• C) Special agency, universal agency
• D) Special agency, general agency
• Correct Answer: D) Special agency, general agency
• Rationale: Buyer/seller agreements typically create a special agency, while property management agreements often create a general agency, allowing broader authority.

63. The cost to replace an improvement with original materials is known as ____?

• A) Replacement cost
• B) Placebo cost
• C) Cloning cost
• D) Reproduction cost

• Correct Answer: D) Reproduction cost
• Rationale: Reproduction cost refers to the cost to recreate an exact replica of a building using the same materials and design as the original.

64. Which of the following legal description methods has been used the longest in the US?

• A) Rectangular survey system
• B) Recorded plat system
• C) British survey system
• D) Metes and bounds system
• Correct Answer: D) Metes and bounds system
• Rationale: The metes and bounds system, which describes land using physical features and measurements, has been used in the US since colonial times.

65. Which of the following would be found in a management proposal?

• A) Tenant credit history
• B) Desired demographic of property
• C) Schedule of maintenance requirements
• D) List of all pets residing in the complex
• Correct Answer: C) Schedule of maintenance requirements
• Rationale: A management proposal typically includes details about property maintenance schedules, financial budgets, and operational plans.

66. An income-producing property rents for $2,790 per month and the GRM is 97. What is the estimated market value of the property?

• A) $270,630
• B) $287,370
• C) $1,004,400
• D) $301,550
• Correct Answer: A) $270,630
• Rationale: Market Value = Monthly Rent * GRM = $2,790 * 97 = $270,630.

67. Francis just signed the papers on a conventional 30-year, $210,000 loan. He was wondering what type of interest will he be paying on the loan. What is the correct answer?
    • A) Complex interest
    • B) Simple interest
    • C) Revolving interest
    • D) Repetitive interest
    • Correct Answer: B) Simple interest
    • Rationale: Mortgage loans typically involve simple interest, where interest is calculated on the principal balance only.
68. The system of land ownership in the United States is known as what?
    • A) The allodial system
    • B) The feudal system
    • C) The aristocratic system
    • D) The riparian system
    • Correct Answer: A) The allodial system
    • Rationale: The allodial system allows private ownership of land, free from feudal obligations, unlike the feudal system where land is owned by a lord.
69. Jordan has a month-to-month lease with landlord Greg. What type of lease did Jordan sign?
    • A) Estate from period-to-period
    • B) Estate at sufferance
    • C) Estate at will
    • D) Estate at easement
    • Correct Answer: A) Estate from period-to-period
    • Rationale: A month-to-month lease is a type of periodic estate, where the lease continues for successive periods until either party gives notice to terminate.

70. What is the balance on an amortized loan of $780,000 after the first payment if the interest rate is 5% with a monthly P&I of $3,780?
    • A) $779,470
    • B) $ 776,220
    • C) $776,750
    • D) $779,131
    • Correct Answer: A) $779,470
    • Rationale: Monthly Interest = $780,000 * (0.05 / 12) = $3,250; Principal Paid = $3,780

• $3,250 = $530; Balance = $780,000 - $530 = $779,470.

71. Vicky was posing as a customer of Establishment Realty. However, she was really there to see if Establishment Realty was following fair housing laws. Vicky was a ____?
    • A) Tester
    • B) Block watcher
    • C) Yellow liner
    • D) Checkers
    • Correct Answer: A) Tester
    • Rationale: A tester is someone who visits real estate offices or attends open houses to check for compliance with fair housing laws.
72. If a comparable has one less bathroom than the subject, an adjustment is made by ____?
    • A) Adding value to the subject
    • B) Deducting value from the subject
    • C) Adding value to the comp
    • D) Deducting value from the comp
    • Correct Answer: C) Adding value to the comp
    • Rationale: The value of the missing bathroom is added to the comparable property to bring it to the same standard as the subject property.

73. What are the primary advantages of PEX piping?
    • A) PEX piping is lightweight but not flexible
    • B) PEX piping is able to withstand high and low temperatures and it is highly resistant to chemicals
    • C) PEX piping is strong and sturdy
    • D) PEX piping is ideal for septic systems and sewer systems
    • Correct Answer: B) PEX piping is able to withstand high and low temperatures and it is highly resistant to chemicals
    • Rationale: PEX piping is flexible, resistant to temperature variations, and durable, making it ideal for plumbing systems.
74. Neal's home has been foreclosed on and sold at a Sheriff's sale. The sale brought in $500,000 and the total liabilities on the home were $425,000. Who receives the additional $75,000?
    • A) The lender
    • B) Neal
    • C) The purchaser of the property
    • D) The state’s real estate commission or recovery fund
    • Correct Answer: B) Neal
    • Rationale: Any excess proceeds from a foreclosure sale, after all liabilities and expenses are paid, go to the homeowner.
75. How does Planned Unit Development zoning differ from ordinary zoning?
    • A) Applies only to residential and commercial properties
    • B) Organized by HUD instead of local zoning ordinances
    • C) Requires developer to obtain a separate building permit for every structure
    • D) It requires that multiple tracts of land be developed according to a single design for efficient use of space
    • Correct Answer: D) It requires that multiple tracts of land be developed according to a single design for efficient use of space