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PSI- Real Estate Practice Exam
Questions with complete
answers(verified for accuracy)
-Agency coupled with an interest - answer A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? -Agency coupled with an interest -Specific agency -General agency -Exclusive agency -A homeowner - answer A lawsuit for inverse condemnation may be brought by -The police -The city -A homeowner -The zoning board -The owner withdraws the counteroffer before it is accepted - answer A prospective buyer made an offer to purchase property. The owner responded with a counteroffer. While the buyer was reviewing the counter offer, the owner received a better offer. The owner can accept the second offer if -It satisfies or exceeds all terms included in the counter offer -The owner withdraws the counteroffer before it is accepted -The owner gives the first buyer notice that another offer was received and an opportunity to revise the bid
-The first buyer is informed, in writing, the owner's intent to accept another offer -Were located near the property being listed - answer When compiling a competitive market analysis, a broker would look for comparable properties that -Were sold for cash -Had been extensively advertised -Were offered by owner with no broker -Were located near the property being listed -If you feel it is in your best interest, please do so - answer Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as part of their due diligence for the purchase of the home. Which of the following would be the most appropriate way for the listing agent to respond? -If you feel it is in your best interest, please do so -Since I represent the seller I am not able to answer your questions -I am not aware of any issues that such an inspection would identify -Since the seller has provided a property disclosure, there should be no need for any further inspection -Prepayment penalties and rebates - answer According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad EXCEPT the -Cash price or amount of the lian -Amount of down payment required -Number, amount, and frequency of payments -Prepayment penalties and rebates
-The second mortgagee receives nothing unless he forced the foreclosure auction -The former owner receives $4, -More variety on loan programs available - answer In helping a buyer to select a lender, if the buyer believes he has good credit and his income is documentable as a salary and by tax returns, the licensee might recommend a mortgage banker, instead of a mortgage broker, for all of the following reasons EXCEPT -Closing cost may be lower -Loan originator has knowledge of the underwriter's policies -More variety on loan programs available -Originator and lender are part of same company -$26,720 - answer A buyer wants to purchase a home for $160, with a 15% down payment. The lender charges 2 points. How much money does the buyer need upfront to make the purchase? -$2, -$24, -$24, -$26, -The party or parties employing the broker - answer To what party or parties does the broker owe the fiduciary duty of care? -The seller -Both the buyer and the seller -The party or parties employing the broker -The party or parties paying the commission -All real estate activities of salespersons - answer A managing broker can be held responsible for
-All actions of associated salespersons -All real estate activities of salespersons -Only those real estate activities the broker is aware of -No activities of independent contractors -Building codes - answer Ordinances that specify construction standards are -Building codes -Building permits -Construction alterations -Certificates of occupancy -Receiving compensation from both the buyers and the seller - answer Antitrust laws prohibit competing brokers from all of the following EXCEPT -Boycotting other brokers in the marketplace -Dividing the market to restrict competition -Agreeing to set sales commissions and management rates -Receiving compensation from both the buyers and the seller -$121,505 - answer An owner lists her home at a 7% commission rate and wants to net $45,000 after paying the mortgage balance of $68,000 and the broker's commission. To the nearest dollar, what should the selling price be to net her $45,000? -$105, -$110, -$120, -$121,
-Specify questionable items of property in the written sales contract -Use the legal definition of a fixture as any permanently attached item -A couple in their late 60's who need to tap their home equity to help cover their expenses but do not want to sell their house - answer Which of the following consumers would be able to derive the most benefit from a reverse mortgage? -Any homeowner whose property is free of any mortgages encumbrances -A young couple whose mortgage loan has a higher interest rate than the current rate for new loans -A 65-year-old man who has recently bought a condominium with a conventional loan for 90 percent of the purchase price -A couple in their late 60's who need to tap their home equity to help cover their expenses but do not want to sell their house -An agent to the broker and subagent to the principal - answer A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is -An independent contractor to the broker and an agent to principal -An agent to the broker and subagent to the principal -A subagent to the broker and an agent to the principal -An agent to the broker and an agent to the principal -There is no dollar limit on damages paid - answer A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that -The case will be more thoroughly reviewed -There is no dollar limit on damages paid
-Only a district court judge can order that the property be sold to the complaining party -Only a district court judge can order jail time for the guilty party -No operating expenses of the leased space - answer A gross lease con be best defined as one where the tenant pays, as a part of the rent -All property changes excluding utilities -No operating expenses of the leased space -Outside maintenance and property taxes only -All property expenses except the interest on the owner's mortgage -Defects that clearly appear in the title search - answer An exception to title insurance coverage is -Forged documents -Defects found in public newspapers -Incorrect records of marital status -Defects that clearly appear in the title search -All owners, present and future - answer A deed restriction is applicable to the activities of -The current owner -All owners, present and future -Tenants -Mortgagors -Disclose the agency relationship when arranging the showing and disclose material information about the buyer if presenting an offer
- answer A licensee has an agency representation agreement with a buyer. When showing another company's listing, what obligation
-All contingencies are removed -The sale closes -An insurance company - answer The FHA functions MOST like -A bank or savings and loan association -A mortgage company -An investment group -An insurance company -Conditional use permit or zoning variance - answer A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? -Deed agreement -Approval of surrounding property owners -Inclusionary zoning -Conditional use permit or zoning variance -Have short deadlines - answer When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies involving inspections or approval by a third party should -Have short deadlines -Be discouraged by the broker -Be stated as briefly as possible -Be limited to mortgage arrangements -Proper appropriation - answer Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of the two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are
automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of -Eminent domain -Proper appropriation -Express reservation -Avulation -Be executed by the grantor - answer To be valid, every deed must -Contain a warranty -Include granting language -Be executed by the grantor -Be executed by the grantee -Be signed by the grantee if there are covenants -A competitive market analysis to determine the property's value - answer A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest -Listing the property at the price the owner believes it is worth -Listing the property at lease 30% above the current mortgage -A competitive market analysis to determine the property's value -Setting the price at the value of the most recently sale in the neighborhood -GRM - answer Which rule-of-thumb formula for estimating property value is being offered to an investor who is told that a house renting for $900 a month should sell for about $90, -CMA -IRV -NOI -GRM
-Setting a listing price -Divorce proceedings -Property tax assignments $1,150 - answer If you own a building free and clear that is worth $115,000, and want an annual return of 12%, what net income is needed each month? -A covenant that restricts selected parcels within a defined subdivision - answer Which restrictive covenant would be considered illegal? -A covenant that is more restrictive than local zoning ordinances -A restriction that is time-limited and expires after a stated period -A covenant that restricts the type of building that may be constructed -A covenant that restricts selected parcels within a defined subdivision -Tenancy at will - answer A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold does the tenant have? -Gross lease -Proprietary lease -Tenancy at sufferance -Tenancy at will -Are of indeterminable duration - answer A major difference between freehold estate and nonfreehold estate is that all freehold estates -Are of indeterminable duration -Terminate upon the death of the person whose life they are based
-Are inheritable by the holder's heirs -Are estates for a fixed term -$176,100 - answer If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5.5% or a 20-year loan at 4.5%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION TABLE.) -$158, -$158, -$175, -$176, -$407 - answer A buyer id getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5.5% or for 30 years at 6.5%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) -$ -$ -$ -$ -Public health and safety - answer An environmental impact statement typically describes the effects of a proposed project on factors such as -Public health and safety -Zoning regulations -Highest and best use of the land -Mapping requirements
-A contract - answer A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called -An agency -An assessment -A contract -A fiduciary duty -Indemnification - answer Under the common law of agency, licensees owe the broker with whom they are associated all of the following duties EXCEPT -Loyalty -Competence -Indemnification -Full disclosure -An exclusive agency listing - answer A couple listed their home with a broker. After 2 months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. This listing was MOST likely -An exclusive agency listing -An exclusive right to sell listing -A net listing -An advance fee listing -The supervising broker - answer A salesperson in a branch office is sued for damages by a buyer after the salesperson misrepresents a property. Who has the ultimate responsibility for the salesperson's actions?
-The owner of the property -The supervising broker -The branch manager -The salesperson -Require the buyer to acknowledge disclosure of the presence of any known lead paint - answer The Department of House and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, -Will no longer lend or guarantee loans on these older properties -Require evidence of testing for and disclosure of any type of lead contamination before they will lend or guarantee loans on such properties -Require funds to be escrowed for lead abatement as a condition of lending or guaranteeing loans on such properties -Require the buyer to acknowledge disclosure of the presence of any known lead paint -A suicide that occurred in the house last year - answer State laws differ on whether a buyer is entitled to know about -A suicide that occurred in the house last year -Possible lead paint in the property -The flooding of the basement every spring -The fact that the seller's are getting a divorce -License revocation and criminal prosecution - answer Failure of a real estate agent to comply with Fair Housing practices is punishable by -License revocation only -Criminal prosecution only -License revocation and criminal prosecution
the bill once the work was completed and the construction company filed a lien to obtain payment of the debt. The encumbrance created is called -An equitable lien -A mechanic's lien -A lien by default -A workman's lien -The buyer finds a better property for better terms - answer Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances would NOT give either party a justifiable reason to insist on a mutual release? -The buyer finds a better property for better terms -A title defect that will take months to clear is discovered -A basement fire causes damage that requires extensive repairs -The buyer is unable to obtain financing that meets the terms of the contract's financing contingency -He is no longer the listing agent - answer The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that -He is no longer the listing agent -He will set up an appointment for showing the home -He will leave the key under the door mat -The house is currently off the market -The seller is heavily under the influence of alcohol at the time of signing - answer A broker has signed a listing contract for the sale of a home. Which of the following could make this contract voidable?
-The seller cannot write and sign with an "X" -The listing contract specifies that no other broker may show the house -The seller is heavily under the influence of alcohol at the time of signing -The listing contract specifies that a commission will be paid only if the house is sold within 3 weeks. -Displayed in the brokerage office - answer An equal housing opportunity notice MUST be -Displayed in the brokerage office -Included in all written advertisements -Specified in all listing agreements and offers to purchase -Given to all prospective clients -The builder - answer A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with -The builder -The buyers -The builder and the buyers -Neither the builder nor the buyers -An option contract - answer A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is calld -A buy-sell agreement -An option contract -An installment contract
