Principles of Real Estate II Final Exam Questions and Answers, Exams of Real Estate Management

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Principles of Real Estate II Final Exam

Containing 70 Questions with Certified

Solutions 2024-2025.

1. The ______________ is the most active in the regulation of real estate licensees. - Answer: d) state government

2. Which of the following is necessary for a deed of conveyance to be valid? - Answer: b) The deed must be in writing
3. The primary distinction between the legal concepts of real estate and real property is that - Answer: a) real property includes ownership of a bundle of rights.
4. An applicant for a salesperson license must - Answer: c) have a finger printing and background check prior to receiving a license.
5. TRELA makes provisions for - Answer: c) a prerequisite of a minimum of 15 classroom hours counted toward license renewal every two years.
6. A(n) ______________ is a freehold estate that is limited to the duration of the life of the owner. - Answer: b) life estate
7. What distinguishes a lien from other types of encumbrance? - Answer: a) It involves a monetary claim against the value of a property.
8. What type of conventional life estate ends with the death of the life estate owner? - Answer: b) Ordinary life estate
9. When speaking of real estate market dynamics, the amount of available properties that becomes occupied over a period of time is called - Answer: b) absorption.

10. What is the primary danger of allowing an encroachment? - Answer: c) Over time, the encroachment may become an easement by prescription that damages the property's market value.
11. What statement is TRUE of payment that is made from the real estate recovery fund on account of a licensee's acts? - Answer: d) The license is suspended immediately, but will be reissued upon reimbursement of the fund, with interest.
12. A salesperson listed a home and then transferred his license to another broker. Which of the following is true? - Answer: d) The listing will stay with the original broker.
13. A licensee is required to keep the Commission updated with - Answer: a) her current email address.
14. When an owner leases her property, she temporarily relinquishes the right to - Answer: c) occupy the property.
15. Which education requirement can a person leave out when applying for a salesperson license? - Answer: a) Evidence of a degree in some form of postsecondary education.

16. Which of the following is an expense which would be listed on the HUD- Uniform Settlement Statement? - Answer: b) Title insurance fees
17. Listing, marketing, facilitating transactions and managing information summarizes the critical skills in which of the following? - Answer: d) Real estate brokerage
18. Which of the following happens when a leased property is sold? - Answer: a) The buyer acquires title subject to the lease.
19. Which of the following is a valid distinction between a corporation and a proprietorship? - Answer: a) A corporation has perpetual existence; a proprietorship terminates upon the owner's death.
20. What type of property is abstract, having no physical existence in itself, other than as evidence of one's ownership interest? - Answer: a) Intangible
21. In an economic system, supply is defined as - Answer: b) the quantity of a product or service available for sale, lease, or trade at any given time.
22. Which is NOT included in the ownership bundle of rights? - Answer: d) Taxation
23. Which of the following items are paid in arrears? - Answer: c) Taxes and interest

24. Which of the following laws or rulings extended discrimination to include gender, handicapped status, and family status? - Answer: c) The Fair Housing Amendments Act of 1988.
25. What type of seller financing allows the seller to receive a junior mortgage from the buyer to use to make the payments on the original first mortgage? - Answer: b) Wraparound mortgage
26. All of the following are ways of specializing in the real estate brokerage business except? - Answer: b) By area
27. Who are the essential parties involved in an estate in trust? - Answer: d) Trustor, trustee, and beneficiary.
28. The purpose of a covenant clause in a deed of conveyance is to - Answer: a) state the grantor's assurance or warrant to the grantee that a certain condition or fact concerning the property is true.
29. The most commonly used deed is the - Answer: a) general warranty deed.
30. Who owns the property in a time-share estate? - Answer: b) The property is owned by tenants in common or by a freehold owner who leases on a time-share basis.

31. A broker has her license suspended for violating state license law. In such a case, the licenses of her three salespeople are - Answer: b) inactive.
32. A property owner is precluded by deed restriction from developing a thirty foot boat dock. The limitation prompts the owner to sell to another party. The new owner - Answer: b) takes title subject to the same restriction.
33. In the state of Texas, what circumstances would restrict the government from using eminent domain? - Answer: b) If the result of the property being taken will confer a private benefit on a particular private party.
34. A county or municipal authority usually grants a certificate of occupancy for new construction only after - Answer: c) the construction complies with building codes.
35. If a parcel does not have a lot and block number and is too irregular to be described as a fraction of a section, the legal description - Answer: b) will include a metes and bounds description.
36. How many acres are there in the S 1/2 of the NW 1/4 of Section 3? - Answer: c) 80 acres
37. If the monthly rent of a property is $3,000, and the gross rent multiplier (GRM) is 80, what is the value of the property? - Answer: b) $240,

38. The principal shortcoming of the gross rent multiplier approach to estimating value is that - Answer: a) numerous expenses are not taken into account.
39. If net income on a property is $20,000 and the cap rate is 5%, the value of the property using the income capitalization method is - Answer: b) $400,000.
40. What calculation is used to figure a property's ROI (return on investment)? - Answer: c) Net operating income divided by price
41. The steps in the income capitalization approach are - Answer: c) estimate net income, and apply a capitalization rate to it.
42. An appraiser would use which approach to determine the value of an apartment building? - Answer: c) Income capitalization approach
43. The roof of a property cost $10,000. The economic life of the roof is 20 years. Assuming the straight- line method of depreciation, what is the depreciated value of the roof after 3 years? - Answer: d) $1,
44. A tax certificate - Answer: b) entitles its holder to apply for a tax deed after a certain period.
45. A unique characteristic of a special assessment tax is that - Answer: a) it only applies to properties which will benefit from the public improvement.

46. A local government authority may establish a __________ tax district which is designated for a specific benefit or service and expires once the cost of the project has been paid for. - Answer: a) special
47. A millage rate is derived by - Answer: a) dividing the tax requirement by the tax base.
48. The approval process for development of multiple properties in an area includes submission of - Answer: b) a plat of subdivision.
49. A datum is a reference point used for legal descriptions of - Answer: b) the standard rectangular survey description.
50. The legal description of a tract of land in a subdivision that has been recorded is usually with - Answer: a) the lot and block number and unit number, if any.
51. In the state of Texas, a homestead is defined as - Answer: b) a parcel of real property containing the owner's family home.
52. The principle which holds that there is, theoretically, a single use for a property that produces the greatest income and return is known as - Answer: b) highest and best use.
53. Which of the following is true of a loan with negative amortization? - Answer: b) Payments are not sufficient to retire the loan.

54. A builder is required to secure a loan with mortgages on three properties. This is an example of - Answer: b) a blanket mortgage loan.
55. If a loan has _______________, the loan balance increases over the term of the loan. - Answer: a) negative amortization
56. A graduated payment loan is a mortgage loan where - Answer: c) the loan payments gradually increase.
57. License regulators, empowered by state law to oversee brokerage practices, may - Answer: a) take punitive actions against fraud or misrepresentation.
58. The principal role of the Veteran's Administration in the mortgage lending market is to - Answer: a) guarantee loans made by approved lenders.
59. Which of the following phrases could a licensee use to advertise without violating Fair Housing laws? - Answer: b) "No Section 8"
60. The taxes for the year 2011 were $600.00, and were to be paid in arrears. The closing took place on June 15, 2011. Using a calendar year with the seller paying for closing day, how much was the tax proration, and how did it appear on a full settlement statement? - Answer: c) Debit the buyer $272.88 and credit the seller the same amount.

61. A house sold for $165,000, and the total commission received by the broker was $12,375.00. What was the rate of commission? - Answer: b) 7.50%
62. Under the Fair Housing Act, discrimination based on which of the following is prohibited? - Answer: d) None of the above.
63. Cash flow is a measure of how much pre-tax or after-tax cash an investment property generates. To derive cash flow it is therefore necessary to exclude - Answer: a) cost recovery expense.
64. Capital gain tax is figured by multiplying one's tax bracket times - Answer: b) the difference between net sale proceeds and adjusted basis.
65. A distinguishing feature of a deed condition is that - Answer: a) it gives the grantor the right to re-possess the property if the grantee violates the condition.
66. Testing for fair housing compliance - Answer: c) Both A and B.
67. In mortgage lending, which action is acceptable: - Answer: c) Refusing to make a mortgage loan because of the applicant's credit score.
68. Real estate taxes can be imposed by taxing entities at which level of government? - Answer: d) All of the above.

69. What taxes are based on the assessed value of property? - Answer: b) Ad valorem.
70. A buydown is a financing arrangement where - Answer: a) the lender lowers the interest rate on a loan in exchange for a prepayment of principal.