TEXAS REAL ESTATE EXAM Questions and Verified Correct Answers Latest Update 2024 GRADE A+., Exams of Business Ethics

Download TEXAS REAL ESTATE EXAM Questions and Verified Correct Answers Latest Update 2024 GRADE A+. and more Exams Business Ethics in PDF only on Docsity! 1 TEXAS REAL ESTATE EXAM Questions and Verified Correct Answers Latest Update 2024 GRADE A+ 1. Mary knew that her marriage was on shaky ground when she bought a house in her own name. She was hoping to save the relationship, so she wrote a quitclaim deed conveying the property from herself to herself and her husband as joint tenants, NOT as tenants in common with full rights to survivorship. She told her husband she had done this, but this deed was NOT recorded. When Mary and her husband finally divorced, the deed disappeared. In a state, which is NOT a community property or curtesy state does the ex-have a claim to the property? a. No, however, had the deed been recorded, it would have served constructive notice and as such would be defensible b. Yes, she told him it existed, and the courts always accept oral argument when it relates to real property c. As they were legally married at the time of the conveyance, he automatically owns a one- half interest d. As he did not sign the original conveyance as granted, it was not a legal deed 2. A listing has expired with one firm. A licensee from another firm wants to contact the owner to list the property. The licensee may call the owner only if the: a. Owners are not listed on the Do-not-call list b. Licensee showed the property while it was listed with the other firm c. Property was listed with another firm in the multiple service in the last 180 days d. Licensee gets written approval …( ) 3. The heir to a large estate will be of legal age within 30 days. He lists for sale with a broker one of the properties held by the estate. The broker knows of a buyer for the property and sells it within 24 hours of listing, with closing to be in 45 days. Both listing and sale contracts are: a. Fulfilled b. Executed c. Voidable d. Executory 4. An exclusive buyer representation agreement does not include a legal description of the property. What is the result of this omission? 2 a. The agreement is void b. The agreement is unenforceable c. The agreement is valid; a legal description is not required d. The agreement is voidable until a legal description is provided 5. A loan-to-value ratio indicates an: a. Lower equity in the property b. Greater risk of foreclosure c. Higher equity in the property 5 c. Inform the public of credit costs d. Set maximum interest charges 16. What is the term when a seller is in default and is allowed to pay off the mortgage before foreclosure? a. Equitable right to redemption b. Equitable right to recall c. Foreclosure avoidance d. Judicial foreclosure 17. A person conveying an ownership interest in real property is known as the: a. Grantor b. Grantee c. Mortgagor d. Mortgagee 18. How long does someone have to make a complaint to HUD? a. 1 week b. 1 year c. 6 months d. 7 years 19. Which of the following is LEAST likely to be considered in establishing the value of a property? a. Date of sale b. Capitalization rate c. Lot size d. Square footage of building 20. The term “external obsolescence” refers to: a. Normal wear and tear b. Comparable sales approach c. Market data approach d. Cost approach Answer: none of these (it is due to negative influences outside the property) 21. The homeowner of a home with no liens obtained a home equity loan of $75,000, secured by his home. Several months later he borrowed $15,0000 and then $13,000 each loan secured by “a lien against his home”. He then lost his job and failed to pay his past due property taxes of $7500. His loan went into default and his home was foreclosed. assuming that the liens for all three loans were recorded in a timely manner, what is the order of payoff to the lien holders? a. $7500, $75,000. $15,000. $13,000 b. $7500, $13,000, $15,000, $75,000 c. $75,000, $7500, $15,000, $13,000 6 d. $75,000, $15,000, $13,000, $7500 22. What is the greatest advantage of using FHA financing when purchasing a home that the buyer plans to occupy? a. FHA requires a fixed-rate loan so that the buyer can rely on a fixed payment b. The required down payment may be lower than conventional loans c. The loan will be automatically assumable to a future buyer d. FHA requires the seller to pay the buyer’s closing cost 23. A salesperson has the opportunity to list a 6-plex that is 100 percent rented. The salesperson does NOT need to account for any expenses. The numerical he should use to predict the price at which the building will sell is known as the: a. Gross rent multiplier (GRM) b. Net rent multiplier (NRM) c. Gross income multiplier (GIM) d. Return on investment (ROM) 24. What is not acceptable as an earnest money deposit? a. Cash b. Debit c. Credit d. Check 25. What should buyers insert into their purchase offer to make sure they would NOT have to go through the purchase if they CANNOT obtain the necessary financing? a. Escape clause b. Provision for liquidated damages c. Contingency d. Walk-through agreement 26. Which of the following entries satisfies the requirement that an advertisement show that the broker is in the real estate brokerage business? a. J. Jones Realty b. J. Jones, Real Properties c. J. Jones, Real Estate Agency d. J. Jones, Real Estate Ventures 27. A manager rents a unit to a tenant who later has a car accident and is confined to a wheelchair. The tenant now wants the manager to lower all the light switches and install grab bars. Does the manager have to make these modifications? 7 a. No, the tenant can modify the unit and deduct the cost from rent. b. NO, the tenant can modify the unit at his expense and will be responsible for restoring the unit c. Yes, because the landlord is responsible for keeping the units in a habitable condition d. Yes, but only if the term of the lease is for more than one year 28. According to the New Jersey Real Estate Licensing Law, what is the maintenance requirement for all records of real estate transactions? a. Files must be able to be reproduced on paper for review by the commission b. Files must be kept on paper, and available for review for up to 10 years c. Files must be submitted electronically to the commission d. Files must be kept on premises and available to the public at any time 29. May a New Jersey real estate licensee decline to cooperate with other New Jersey licensees? a. Yes, if the client directs the licensee according to New Jersey regulations b. Yes, if the client gives verbal direction not to cooperate c. Yes, the brother directs the salesperson not to cooperate d. No, licenses are required to cooperate under all circumstances 30. When MUST a listing broker provide a copy of a fully executed written listing agreement to the owner? a. Upon execution of the listing agreement by all parties b. Within three days of execution of the listing agreement by registered mail, return- receipt-request c. Within five business days of execution of the listing agreement d. At the time of presentation of a written offer 31. Which of the following actions is NOT a cause for suspension or revocation of a New Jersey real estate license? a. Failing to provide a client with a copy of the signed exclusive listing contract b. Delivering a consumer information statement to a seller after having made a listing presentation c. Payment of a referral fee by a licensed NJ broker to a broker in another state d. Collecting a commission as a broker from both parties to a transaction while representing both parties as their agent 32. Under what conditions may a salesperson accept a bonus offer by a seller for services rendered? a. The salesperson receives payment directly from the seller b. The salesperson has broker’s approval c. The seller pays the bonus to the broker, who passes it on to the salesperson d. Under no circumstances 10 45. Which of the following statements about branch offices is INCORRECT? a. The name of the branch office supervisor must be recorded with the commission b. A licensed broker-salesperson must supervise the office on a full-time basis c. Two salespersons may be designated to share supervising responsibilities d. The employing broker is ultimately responsible for all licensees employed at the branch office 46. A real estate broker has a fiduciary responsibility to her client and her responsibilities include investigating financial references, ordering, and examining credit reports, and familiarity with the ADA Title. This broker is most likely working for the client as. a. An affiliate b. An escrow officer c. A property manager d. A designated broker 47. In New Jersey, the Private well testing ACT (PWTA) requires a. The buyer to order the test b. The selling broker to recommend sources of remediation c. The buyer and seller to certify receipt of test results before title transfer d. The seller to remediate if the well fails the test 48. In jurisdiction where a seller’s property condition disclosure is required, the licensee is responsible for a. Completing the property condition disclosure b. Ensuring that the seller complete the property condition disclosure before closing c. Ensuring that the buyer received the property disclosure before the contract is finalized d. Checking the disclosure for accuracy and ensuring that the buyer receives it before closing 49. According to the New Jersey Real Estate License Law, employment agreements between salesperson and brokers MUST include which of the following provisions? a. A clause outlining the compensation to salesperson in the event that their employment is terminated b. A clause requiring the salesperson to purchase errors and omissions insurance coverage c. A clause confirming the salesperson’s status as an independent contractor d. An attorney review clause stating that it is the broker’s option to hire an attorney in order to protect the broker’s rights 50. New Jersey Real Estate Commission regulations require a licensee to terminate membership in a real estate board or multiple listing service whenever the organization a. Suggest uniform commission rates among all member brokers 11 b. Lobbies against legislation that the licensee personally favors c. Charges dues that the licensee feels are excessive d. Advocates rules, practices, and standards with which the licensee does not agree 51. A seller’s agent is contacted by a potential buyer whose financial status is questionable. When asked to write an offer, the agent should a. Refuse to write the offer b. Insist on a prompt closing c. Ask for a high earnest money payment d. Relay any reservations to the seller 52. A broker who charges or collects an advance fee in excess of $25 for services to be rendered MUST: a. Deduct the amount collected from the commission or settlement b. Give the principal receipts for all expenditures c. Furnish within ninety days of its collection an accounting of how the money was used d. Retain the different between the amount collected and the amount spent 53. Minors are held liable for real estate contract obligations if they a. Are at least 16 years of age b. Have the contract notarized c. Graduated from high school d. Have their guardian co-sign 54. Which of the following is a permitted free offering? a. A complimentary home warranty with every listing b. A coupon for discounted commission on listing services c. A free dinner for attendees at a homebuyers evening seminar d. Free use of a local moving van for all listings 55. An individual is hired by the homeowner’s association of KLM Condominiums. The individual is not required to be a real estate licensee in New Jersey UNLESS the individual engages in which of the following activities? a. Collecting the monthly association membership fees b. Negotiating a contract with a security service c. Retaining landscaping services d. Soliciting tenants for vacant rental units 56. Which disclosure is the most commonly required in a residential real estate sale? a. Radon b. Lead-based paint c. Neighborhood composition 12 d. Seller’s property disclosure 57. According to the CAN SPAN ACT, every email advertisement for real estate services must do all the following EXCEPT a. Clearly indicate the nature of the content of the email b. Inform the recipient of the name and locations of the brokerage firms c. Allow a method for the recipient to opt out and not receive future emails d. Advised the recipient that it will take 180 days to remove the recipient’s name from the emails list. 58. Which of the following property valuation estimates or reports would have to be prepared by a licensed or certified appraiser? a. A broker’s price opinion b. A comparative market analysis c. A reconciliation report for an FHA loan d. A value analysis for a non-residential property valued below $250,000 59. The purchase for a new home was $230,000. The buyer put down 20% and the balance was a mortgage for 80% of the purchase price. The appraised value at the time of closing was $250,000 and the assessed value was $220,000. What will the buyer pay for the year’s property taxes if her tax rate is 0.2%? a. $440 b. $500 c. $3,680 d. $4,600 60. Depreciation usually applies to a. The building only b. The land only c. Both the land and the building d. Income obtained from the building 61. A lender whose mortgagor has defaulted may be offered a deed in lieu of foreclosure. If he accepts, which of the following will be TRUE? a. Because it is voluntary, it will not be an adverse item on the buyer’s credit b. The lender will usually retain his rights under mortgage insurance or VA guarantee c. The lender will take title subject to any junior liens d. The loan will still be assumable 62. A neighborhood grocery store no longer complies with the law because a new zoning ordinance is adopted so that the property is zoned for residential use. Nevertheless, the owner is allowed to continue to operate the grocery store. This is an example of 15 73. An order for payment from the Real Estate Guaranty Fund issued as a result for conduct by a licensee will result in a a. Minimum five-year renovation of license b. Automatic revocation of license with no eligibility for reinstatement until the fund is reimbursed c. Minimum $5,000 fine d. Automatic suspension of license for a minimum of one year with no eligibility for reinstatement until the fund is reimbursed 74. A real estate licensee representing a buyer may do all of the following EXCEPT a. Disclose the seller’s motivation for selling b. Identify latent property defects c. Prepare a Competitive Market Analysis (CMA) d. Disclose the highest price the buyer is willing to pay 75. Ted and Carol want to by a house that is listed for $105,000. The seller accepts the odder they wrote for $5,000 less than list price. They have 20% down payment and need to get an 80% loan to value mortgage. Their lender offers them a 30-year mortgage at 5.5% interest. The taxes are $1,494 per year. How much is their monthly payment? Be sure to use the amortization table. a. $484.40 b. $806.40 c. $618.90 d. $661.61 Answer: 76. Which of the following is used in the cost approach when estimating the value of improvements? a. The assessed value of the property including the land b. How much it would cost to build a similar building at today’s cost c. The price per square foot of comparable properties d. Location, available financing, and depreciation 77. Broker A has created an extremely aggressive business model which has allowed for a very quick success in the market. The other brokers in the market area have decided not to allow Broker A to show their listings or show Broker A’s listings. This would violate: a. Regulation Z b. The Sherman Antitrust Act c. The Real Estate Boycott Act d. The Real Estate Settlement Procedures Act 78. In many states, usury laws a. Determine the possible legal use of land b. Provide a right to use property belonging to another c. Impose a tax on a purchase of personal property resale or use 16 d. Establish a maximum rate of interest allowed for loans 79. Federal rules require a Closing Disclosure document provided by the lender. The broker should counsel the borrower to review this document and compare it with the Loan Estimate document. The closing Disclosure should be received by the borrower a. At the closing of the transaction b. At least 3 days prior to loan consummation c. Not later than 30 days following the loan consummation d. Not later than 10 business days following loan application 80. A prospective tenant who is hearing impaired is looking at an apartment in an 8-unit building and wishes to install a doorbell that does not ring but flashes a bright light. The landlord must a. Allow the tenant to make the modifications at his own expense b. Charge an additional monthly fee for the modifications c. Make the modifications at the landlord’s expense d. Not allow the tenant to make the modifications 81. Which disclosure is most commonly required in a residential real estate sale? a. Radon b. Lead-based paint c. Neighborhood composition d. Seller’s property disclosure 82. A licensee just attended a class on using social media to further her real estate sales career. She was so excited about the class that she immediately came home and signed up on Facebook, Twitter, and LinkedIn. She has chosen a listing to market via social networking, a residence recently built to resemble an antebellum mansion. Which of the following words or phrases may she lawfully include in her advertising? a. Updated antebellum b. Antebellum mansion c. Antebellum style mansion d. Beautiful “antebellum” estate 83. The lead paint addendum that must be presented with the purchase and sale contract for certain older homes will a. Required the removal of all lead paint prior to the closing b. Provide the buyer with the opportunity to waive the right to a lead paint inspection c. Mandate that sellers remove any lead paint only on interior walls d. Make the sellers liable for any of the buyers lead-related medical problems 84. Which of the following would a broker examine to get a summary of ownership history, liens, and encumbrances on a piece of real property? 17 a. Chain of title b. Abstract of title c. Certificate of title d. HOA Disclosure packet 85. Which of the following is true of a quitclaim deed? a. It cannot be used to transfer a title held in fee simple b. It has warranties similar to a special warranty deed c. It can be used to remove a cloud on a title d. It cannot be recorded 86. What does the mortgage lender most often rely on when deciding how much is sage to lend on a parcel of real estate? a. Market analysis b. Sales contract c. Appraisal report d. Assessor’s determination 87. Which of the following items would be prorated at closing with the credit going to the seller? a. Accrued interest on an assumed mortgage b. Prepaid property taxes c. Earnest money d. Unearned rent collected in advance 88. A residential developer desires to limit all construction in a subdivision to a single-family houses of at least 3,000 square feet. Which of the following is the BEST way for the developer to ensure this will take place? a. Have an architectural review committee approve building plans b. Establish a homeowner’s association c. Petition for a zoning change d. Create deed restrictions 89. A lender whose mortgagor has defaulted may be offered a deed in lieu of foreclosure if he accepts which of the following will be true? a. Because it is voluntary, it will not be an adverse item on the buyer’s credit b. The lender will take the title subject to any junior liens c. The lender will usually retain his rights under mortgage insurance or VA guarantee d. The loan will still be assumable 90. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if: a. It satisfies or exceeds all terms included in the counteroffer 20 102. In a mortgage trustee and form of loan, the terms of payment would be found on the a. Trust deed or mortgage b. Deed c. Loan application d. Promissory note 103. A licesee represents the seller of a commercial property. A licensee tells the buyer a new highway exit ramp will be built within 6 months to give access to the property although he knows that this is the only one of several possibilities considered by local planners. The exit ramp is subsequently located elsewhere. Could the licensee be liable to the buyer for the statement of the ramp? a. No, the statement was the licensee’s opinion b. No, the licensee cannot be held liable for the planning district c. Yes, the statement was unjustifiable puffing d. Yes, this is a material misrepresentation 102. Properties and areas are assessed at 50% of their value. The tax rate is $6 per $100 mill rate of 60. What is the annual property tax on a house in the area of the house if the house is valued at $72,000? a. $600 b. $1200 c. $2160 d. $4320.19 103. The purchase and sales agreement provided for release of earnest money to the seller after property inspection. The seller requests an earnest money prior to the property inspection. The principal broker should a. Release the earnest money to the seller immediately b. Notify the buyer of the brokers intentions to release the earnest money to the seller c. Release the earnest money after buyer approval d. Refuse to release the earnest money 104. A broker maintains a property management trust (escrow) account which has the clients funds in it. the brokers accounting records show that client Smith has a negative $1,000 balance in it whereas client Jones has $2,000 balance in his account Answer: It is in violation of real estate license law 105. The buyer wrote an offer to purchase a property and gave the broker $10,000 earnest money. The offer required the seller to respond within six days. Three days later the buyer decided to terminate the offer and has asked for the earnest money to be refunded. What will normally happen to the earnest money in such a situation? 21 A.) The broker can withdraw the offer, but the seller and the broker will each retain five thousand dollars as liquidated damages B.) The broker will retain the earnest money deposit in lieu of commission in the the event of termination C.) The buyer cannot terminate the offer until six days are up and will therefore forfeit the earnest money deposit D) Until the seller has accepted the offer the buyer has the right to terminate and receive the refund of the deposit 106. Which of the following Metes and Bounds description? beginning at the intersection of Bunker hill road and Munson ave, Thence 150 ft south; thence 85 ft west; thence 150 ft north; thence: A.) 150 ft south to the point of beginning B.) 150 ft west to the point of the beginning C.) 85 ft west to the point of the beginning D.) 85 f t east to the point of the beginning 107. The seller responded to the buyer’s offer, proposing a changes to some of the terms. In this case the seller would be the A.) Offeror giving a counteroffer B.) Offeror giving a counteroffer C.) Offeror giving an amended offer D.) Offeror giving an amended offer 108. A lender may add 1/12th of the estimated cost of the annual property taxes and hazard insurance on the mortgaged property to the monthly loan payment deposit in: A.) A PMI account B.) A margin account 22 C.) An impound, escrow, or reserve account D.) An adjustment account 109. The PRIMARY purpose of percolation tests and test borings is to determine whether? A.) The absorption capacity of the soil is sufficient for intended use. B.) A reinforced footing or foundation should be used. C.) A particular type of well is drilled to a sufficient depth. D.) The building inspector should issue a building permit. 110. Which type of deed offers the purchaser the greatest amount of protection? A.) General Warranty Deed B.) Quitclaim Deed C.) Bargain and Sale Deed D.) Fiduciary Deed 111. What type of mortgage loan is likely to be tied to a publicly available index that is mutually acceptable to the lender and the borrower? A.) Renegotiable rate mortgage B.) Graduated payment mortgage C.) Adjustable rate mortgage D.) Freddie mac 112. A buyer broker located the property that is listed with another broker. The buyer makes an offer through the buyer broker and an agreement of sales results in the situation, the buyer broker is acting?