Principles of Real Estate
Exam Answer Key
Course Introduction
Principles of Real Estate provides a comprehensive introduction to the fundamental concepts and practices within the real estate industry. The course examines the legal, financial, and economic aspects of real estate, covering topics such as property ownership, land use controls, contracts, agency relationships, transfer of property, financing methods, and valuation techniques. Students gain insight into the roles of various professionals in the field and develop an understanding of market analysis, investment considerations, and ethical issues. This foundational knowledge prepares students for further study in real estate and for informed participation in property-related transactions.
Recommended Textbook
California Real Estate Principles 9th Edition by
Dennis J. McKenzie
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15 Chapters
624 Verified Questions
624 Flashcards
Source URL: https://quizplus.com/study-set/3880
Page 2
Chapter 1: Introduction to Real Estate
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) California became a state in:
A) 1848.
B) 1849.
C) 1850.
D) 1851.
Answer: A
Q2) Which of the following is considered to be real property?
A) a lease to an apartment house
B) a cash register in a drug store
C) a grape crop, sold under contract, but not yet harvested
D) standing timber sold with land
Answer: D
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Chapter 2: Part I: Legal Description, Method of Acquiring
Title , and Deeds
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69 Verified Questions
69 Flashcards
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Sample Questions
Q1) Ben's father passed away and left Ben a ring in his will that Ben had always admired along with a sizeable sum of money. Ben received this gift as a:
A) bequest.
B) devise.
C) legacy.
D) both a and c.
Answer: B
Q2) What would not be an example of a trade fixture:
A) attached shelving in a retail store
B) an oven in a restaurant
C) a swing set at a day care facility
D) a water heater in a residence
Answer: D
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Page 4
Chapter 3: Encumbrances, Liens, and Homesteads
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) A utility easement held by the telephone company for the installation of a telephone line would be best described as:
A) easement in gross
B) easement appurtenant
C) dominant tenement
D) lien right
Answer: A
Q2) A deeds to B and B takes possession but does not record the deed. A then tells a friend C about the deed to B. A then deeds the same property to C, who records the deed. Based on this information, title probably vests in:
A) A
B) B
C) C
D) both B and C
Answer: B
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Page 5
Chapter 4: Real Estate Agency
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) A real estate broker, in order to influence a person to buy, states that the property will absolutely double in value in six months. The sale takes place and 6 months later the property has declined in value. This broker could be considered guilty of:
A) duress
B) acting in a legal manner
C) false promise
D) ostensible promise
Q2) Before giving a listing to a broker, the owner informed the broker that the roof was in bad shape. The broker later showed the house and assured the buyer that the house was in excellent condition, without any known problems. After the first rain, the house suffered heavy water damage due to a leaky roof. The buyer is angry and will probably sue the:
A) broker and the seller
B) broker
C) broker, seller, and escrow company
D) title insurance company
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Chapter 5: Real Estate Contracts and Mandated
Disclosures
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) According to the exclusive right to sell CAR Residential Listing Agreement, a real estate broker is entitled to the commission if the property is:
A) withdrawn from the market with the mutual consent of the seller and the listing agent
B) sold during the listing period
C) destroyed due to a natural hazard
D) found to be unmarketable by a title company
Q2) A broker receives a deposit from a buyer with no instructions to hold the check uncashed pending the seller's acceptance of the offer. After the offer is accepted, the broker decides to put the check in a safe in the office for security purposes until the broker can get to the bank in two weeks. The broker is:
A) guilty of conversion
B) innocent of any wrongdoing
C) guilty of commingling
D) required to place the deposit into a trust fund
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Chapter 6: Practical Real Estate Mathematics
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) The law that states real estate contracts must in writing to be enforceable is called the statute of:
A) frauds
B) time
C) contracts
D) limitations
Q2) Real estate broker José, lists a property for $300,000. A six percent commission is agreed upon. Another agent brings an offer for $280,000. The seller then asks Jose to reduce his side if the commission to two and a half percent. José agrees. What is the difference between the reduction in commission and the original commission that Jose will receive?
A) $18,000
B) $2,000
C) $7,000
D) $9,000
Q3) A lot is sold for $180,000, making a 20% profit over cost. What was the cost?
A) $136,000
B) $144,000
C) $148,000
D) $150,000
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Chapter 7: Introduction to Real Estate Finance
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34 Verified Questions
34 Flashcards
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Sample Questions
Q1) For loans that under the California usury law, the maximum interest rate is:
A) 5% above the Federal Funds Rate
B) 10% or 5% above the Federal Reserve Discount Rate, whichever is greater
C) 10% or 5% above the Federal Reserve Discount Rate, whichever is lesser
D) 10% above the Prime Rate
Q2) To settle the estate of the deceased, a probate sale is held on a mobile home. The first court bid is $30,000; the next minimum bid must be for at least:
A) $31,000
B) $32,000
C) $33,000
D) $31,750
Q3) In a trustee's sale, the proceeds of the sale were sufficient to pay the demands of the first and second trust deed holders, foreclosure costs, and provide a small cash surplus. What is the priority schedule for the distribution of the cash proceeds?
A) trustor; first trust deed; second trust deed; foreclosure costs
B) foreclosure costs; trustor; first trust deed; second trust deed
C) first trust deed; second trust deed; foreclosure costs; trustor
D) second trust deed; first trust deed; foreclosure costs; trustor
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9
Chapter 8: Part I: Real Estate Lenders
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) Real Estate Investment Trusts (also known as REIT):
A) were created to encourage small investors to invest in real estate transactions with other small investors
B) operate in the second trust deed market
C) are usually a two year loan
D) invest in savings banks
Q2) Which of the following types of loans are made only to individuals who are intending to occupy the property as a personal residence?
A) VA
B) conventional
C) purchase money
D) jumbo
Q3) Insurance companies are one of the major sources for conventional loans. Insurance companies:
A) generally do not use the services of a loan correspondent
B) restrict their loans to the immediate area of their home office
C) loan funds primarily on large commercial properties
D) have only a minor portion of their money in mortgages
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Chapter 9: Real Estate Appraisal
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) All things being equal, the higher the cap rate, the:
A) higher the value
B) lower the return
C) higher the rent
D) lower the value
Q2) Discount points are typically found in
A) VA loans
B) FHA loans
C) conventional loans
D) Cal-Vet loans
Q3) Capitalization is a process of:
A) establishing the cost of capital
B) converting an income flow into value
C) computing gross income
D) determining reserves for depreciation
Q4) The cost approach would be given the least weight if appraising a:
A) new home
B) new apartment
C) old home
D) special purpose property
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Chapter 10: The Role of Escrow and Title Insurance Companies
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40 Verified Questions
40 Flashcards
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Sample Questions
Q1) The sales price is $800,000. The buyer is to put $200,000 down and to obtain a new first loan for $500,000, and the seller is to carry back a second loan for $100,000. The documentary transfer tax is:
A) $880
B) $770
C) $550
D) $220
Q2) Which insurance policy requires the title company to make a physical inspection of the property?
A) CLTA
B) standard
C) RESPA
D) ALTA
Q3) A history of title transfers for a particular parcel of land is a/an:
A) preliminary report
B) title insurance policy
C) abstracter index
D) chain of title
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Chapter 11: Landlord and Tenant Relations
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40 Verified Questions
40 Flashcards
Source URL: https://quizplus.com/quiz/77302
Sample Questions
Q1) A lease on agricultural land cannot exceed:
A) 15 years
B) 37 years
C) 51 years
D) 99 years
Q2) Which insurance policy requires the title company to make a physical inspection of the property?
A) CLTA
B) standard
C) RESPA
D) ALTA
Q3) A professional property manager
A) is required to have a real estate license
B) must reside on the premises
C) is typically a salaried employee of the property owner
D) all charge the same amount for their services
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Chapter 12: Land-Use Planning, Subdivisions, Fair Housing, and
Other Public Controls
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39 Verified Questions
39 Flashcards
Source URL: https://quizplus.com/quiz/77301
Sample Questions
Q1) All of the following are common interest developments, except: A) condominiums
B) PUDs
C) stock cooperatives
D) standard tract homes
Q2) A tenant may not be evicted in retaliation for using the rental offset for A) one year
B) six months
C) 90 days
D) none of the above
Q3) It is illegal to disqualify a person who wishes to buy or rent a home based on:
A) physical handicap
B) income levels
C) credit rating
D) all of these
Q4) Redlining in California is illegal because of the:
A) Fair Housing Act
B) Rumford Act
C) Unruh Act
D) Housing Financial Discrimination (Holden) Act
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Chapter 13: Introduction to Taxation
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) The amount paid as a commission for the sale of an owner-occupied home can be deducted on the seller's federal income tax as:
A) a long-term capital gain
B) a standard deduction
C) an expense of sale
D) an ordinary loss
Q2) Property taxes become a lien on:
A) July 1
B) November 1
C) February 1
D) January 1
Q3) In a 1031 real estate exchange, a tax liability arises if the person exchanging receives:
A) like kind property
B) boot
C) income property
D) investment property
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Chapter 14: Single-Family Homes and Mobile Homes
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) Regarding a second (vacation) home:
A) they are considered excellent tax shelters
B) mortgage interest is deductible to the extent allowed by law
C) they are considered excellent investments
D) all of the above are correct
Q2) When a builder purchases lumber, he or she does so by the board foot. Which of these contain 8 board feet?
A) a 2" x 8" board 12 feet long
B) a 4" x 4" board 10 feet long
C) a 2" x 4" board 12 feet long
D) a 2" x 6" board 10 feet long
Q3) A real estate licensee should have a basic understanding of construction terms. One thing he or she should know is that the foundation of a standard built home rests upon the:
A) floor joist
B) sole plate
C) footing
D) collar beam
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16
Chapter 15: A Career in Real Estate
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39 Verified Questions
39 Flashcards
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Sample Questions
Q1) To obtain a broker's license, a person must:
A) Be 25 years of age
B) Score 80% or higher on the broker's exam
C) Hold a salesperson's license for two years
D) Hold a salesperson's license for one year
Q2) In order to get a real estate broker's license, an applicant must fulfill which of the following requirements?
A) complete 8 statutory courses designated by law
B) pass a 150-question examination
C) live in the State of California
D) get at least a grade of 70% on the exam
Q3) A statement that shows the financial position of a business as of a certain date is called:
A) profit and loss
B) Schedule E
C) balance sheet
D) Schedule C
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