Real Estate Brokerage Final Exam Questions
Course Introduction
This course provides an in-depth exploration of the principles, practices, and legal frameworks of real estate brokerage. Students will examine the roles and responsibilities of real estate brokers, including agency relationships, licensing laws, ethical considerations, marketing strategies, and transaction management. The curriculum covers topics such as listing and selling property, contracts, client communication, negotiation techniques, and risk management. Through case studies and practical exercises, students will gain the knowledge and skills needed to succeed in the dynamic and highly regulated field of real estate brokerage.
Recommended Textbook
Real Estate Principles 11th Edition by Charles J. Jacobus
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Page 2
Chapter 1: Nature and Description of Real Estate
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Sample Questions
Q1) Easements, rights of way, and condominium parking stalls are examples of A) emblements.
B) trade fixtures.
C) riparian rights.
D) appurtenances.
Answer: D
Q2) Correction lines, which occur at intervals in the rectangular survey system, are necessary
A) to correct the mistakes made by surveyors.
B) to allow for magnetic fields which interfere with compasses.
C) because of the curvature of the earth.
D) because of the gravitational pull of the moon.
Answer: C
Q3) The right to use water from a stream that is on or adjacent to your land is referred to as accretion.
A)True
B)False
Answer: False
Q4) Timber on land becomes ____________________ property.
Answer: personal
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Chapter 2: Rights and Interests in Land
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Q1) An encumbrance affects the loan to value ratio.
A)True
B)False
Answer: False
Q2) The best way to determine whether a property has an encroachment is to search the title.
A)True
B)False
Answer: False
Q3) By what action does the government take property for public use?
A) Condemnation
B) Adverse possession
C) Zoning
D) Public vote
Answer: A
Q4) The person who conveys a life estate to a life tenant controls who receives ____________________ after the death of the life tenant.
Answer: title
Q5) A properly recorded easement on real property is an ____________________.
Answer: encumbrance
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Chapter 3: Forms of Ownership
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Sample Questions
Q1) When a property is held by one person, it is called an estate in ____________________.
Answer: severalty
Q2) In states recognizing tenancy by the entirety for married couples, in order to legally sell property, a husband and wife must both sign the
A) listing and the deed.
B) earnest money agreement and the deed.
C) listing only.
D) earnest money agreement only.
Answer: B
Q3) A joint venture is a partnership to carry out numerous business projects.
A)True
B)False
Answer: False
Q4) Which of the following is required to create a joint tenancy?
A) Unities of time, title, interest and possession need not be present.
B) New joint tenants may be added without forming a new joint tenancy.
C) Survivorship exists among joint tenants.
D) Only a husband and wife may hold title as joint tenants.
Answer: C
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Chapter 4: Transferring Title
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Sample Questions
Q1) The signature of the grantor is required in most states for any deed to be valid.
A)True
B)False
Q2) An unwitnessed handwritten will is called a A) poor man's will.
B) codicil.
C) personal will.
D) holographic will.
Q3) A holographic will is a typed or preprinted will.
A)True
B)False
Q4) In real estate, the word "convey" means to transfer.
A)True
B)False
Q5) To properly convey title to land and its building, a deed must describe the A) land.
B) buildings.
C) appurtenances.
D) easements.
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Chapter 5: Recordation Abstracts and Title Insurance
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Q1) A formal declaration by a person signing a document that he or she, in fact, did sign the document is called a(n)____________________.
Q2) Documents to be recorded are photocopied and then placed in alphabetic order.
A)True
B)False
Q3) When a title defect must be removed, a quiet title suit may be the best solution.
A)True
B)False
Q4) If a chain of title is broken, one must search outside the recorder's office by searching probate court records and civil court actions to regain the title sequence.
A)True
B)False
Q5) Under the Torrens system, once a title is registered , any subsequent liens or encumbrances against it must be entered on the registrar's copy in order to give constructive notice.
A)True
B)False
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7
Chapter 6: Contract Law
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Sample Questions
Q1) Which of the following is an essential element of a contract?
A) A counter offer
B) Acceptance
C) Performance
D) A fair price
Q2) A contract that results not from a written or oral agreement but from the actions of the parties involved is called an expressed contract.
A)True
B)False
Q3) Rights, benefits, and obligations under a contract can not be assigned to someone else.
A)True
B)False
Q4) A contract created under duress is
A) invalid.
B) voidable.
C) unenforceable.
D) void.
Q5) A(n)____________________ contract results when a promise is exchanged for performance.
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Chapter 7: Real Estate Sales Contracts
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Q1) "Time is of the essence" means that the time limits set by the contract must be faithfully observed or the contract is voidable by the defaulting party.
A)True
B)False
Q2) The phrase "as is" when used in real estate contracts means the buyer is accepting the property without
A) a survey.
B) a title report.
C) new financing.
D) warranty as to physical condition.
Q3) If two or more parties want to express their mutual intention to buy, sell, lease, develop, or invest, and wish to do so without creating any firm, legal obligation, they may use a ______________________________.
Q4) If a person has the right to rent a house and the guaranteed opportunity to buy it at a fixed price at a later date, he would have what is known as a lease with option to buy.
A)True
B)False
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9
Chapter 8: Mortgage and Note
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Sample Questions
Q1) The mortgage holding the highest priority would be the one that is recorded first.
A)True
B)False
Q2) A "due on sale" clause
A) may be called a subordination clause.
B) gives the lender the right to call the entire loan balance upon alienation.
C) is the right of a mortgagor to repay a loan.
D) gives the mortgagor the right to sell his property with a loan assumption by the buyer.
Q3) When a clause in a mortgage allows the lender to proceed against a borrower's other assets if the foreclosure sale does not satisfy the debt, the result is called a
A) statutory redemption.
B) deficiency judgment.
C) equity of redemption.
D) foreclosure redemption.
Q4) An acceleration clause most nearly means to speed up the payments.
A)True
B)False
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10
Chapter 9: Deed of Trust
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Sample Questions
Q1) With regard to a deed of trust, the trustee
A) can be the beneficiary.
B) receives recorded title.
C) receives equitable title.
D) receives naked title.
Q2) A deed of trust can never be foreclosed judicially.
A)True
B)False
Q3) If the borrower defaults, the trustee has the right to sell the property and convey ownership to the purchaser with a ______________________________.
Q4) A deed given as security for the loan against real estate is known as A) a trust deed.
B) illegal consideration. C) usury.
D) hypothecated.
Q5) A mortgage can be foreclosed judicially.
A)True B)False
Q6) Under a deed of trust, the lender is known as the ____________________.
Q7) The trustee in a deed of trust is a neutral ____________________ party.
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Chapter 10: Lending Practices
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Sample Questions
Q1) The word point means 1% of the _________________________.
Q2) After December 1, 1986, the FHA would no longer allow a ____________________ assumption of an FHA insured loan.
Q3) Discount points are more likely to be used during periods of A) tight money.
B) available money.
C) cash sales.
D) seller financed sales.
Q4) A mortgage in which the lender collects additional money to pay hazard insurance and property taxes on the mortgaged property is called a(n)____________________ mortgage.
Q5) The homeowner has made regular mortgage payments over ten years and the housing values in the neighborhood have steadily risen. The equity has A) stayed the same.
B) steadily declined.
C) steadily increased.
D) fluctuated and now is less than it was when the house was purchased.
Q6) Like FHA insurance, the object of private mortgage insurance (PMI)is to insure lenders against ____________________ losses.
Page 12
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Chapter 11: The Loan and the Consumer
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Sample Questions
Q1) Regulation Z deals with annual percentage rates.
A)True
B)False
Q2) In analyzing a mortgage loan application, a lender considers all EXCEPT
A) job stability.
B) income adequacy.
C) credit rating.
D) sales price.
Q3) When considering loan applications, lenders like to see
A) very little use of credit cards.
B) good repayment records.
C) derogatory information.
D) information at least seven years old.
Q4) The borrower's assets that are in cash or readily convertible into cash are called ____________________ assets.
Q5) In evaluating the borrower's life insurance, the ____________________ is the amount of money the policy holder would receive if the policy were surrendered to the insurance company.
Q6) A borrower has a limited right of ____________________ in a credit transaction.
Page 13
Q7) ____________________ loans have risk-based pricing and rates are not quoted.
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Chapter 12: Sources of Financing
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Q1) _________________________ loans provide a "piece of the action" for insurance companies as well as more inflation protection than a fixed rate of interest.
Q2) There is no limit to the cost of a home under the Farmer Mac program.
A)True
B)False
Q3) Freddie Mac was originally formed to provide a secondary mortgage market facility for the
A) Federal National Mortgage Association.
B) Government National Mortgage Association.
C) Federal Home Loan Bank Board.
D) Mortgage Guaranty Insurance Corporation.
Q4) Which of the following specializes in making loans and reselling them?
A) FNMA
B) Mortgage brokers
C) Mortgage bankers
D) VA
Q5) GNMA will guarantee all loan types.
A)True B)False
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Chapter 13: Types of Financing
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Q1) A loan where items classed as personal property are included with the real estate is called a(n)____________________ mortgage.
Q2) For the borrower there are no disadvantages to an ARM loan.
A)True
B)False
Q3) It is possible for individuals to buy second lien notes.
A)True
B)False
Q4) Regulation Z requires creditors to state the maximum interest rate that an ARM loan may adjust to.
A)True
B)False
Q5) A package mortgage involves several properties under the same mortgage.
A)True
B)False
Q6) All of the following may be used for setting ARM interest rates EXCEPT
A) one-year U.S. Treasury securities.
B) six-month Treasury bills.
C) cost of funds to thrift institutions.
D) Gross National Product is not used to set ARM interest rates.
Page 16
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Chapter 14: Taxes and Assessments
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Q1) Taxes on real property are levied
A) on an ad valorem basis.
B) according to the value of the property.
C) both a and b.
D) neither a nor b.
Q2) The following public improvements would most probably be funded by a special assessment EXCEPT
A) installation of street lights.
B) curbs.
C) reconstruction of city sewage plant.
D) widening of neighborhood streets.
Q3) A woman sold her residence of 3 years for $96,500 and immediately invested in another residence at a sales price of $150,000. Assuming a basis of $46,500 in the original property, how much taxable gain will she have to report on this sale?
A) $7,000
B) $53,500
C) $46,500
D) None of the above
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Chapter 15: Title Closing and Escrow
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Sample Questions
Q1) Of the following, the final action to be taken to complete a closing is
A) acknowledgement of all instruments.
B) recordation of appropriate instruments.
C) signing of the deed.
D) title search.
Q2) A 9% amortized loan with a November 1 balance of $40,000 requires the payment of principal and interest at the first of each month. If prorating is done as of the 20 of November, the
A) buyer owes the seller $100.
B) buyer owes the seller $200.
C) seller owes the buyer $100.
D) seller owes the buyer $200.
Q3) In prorating rents, the dollar amount is a credit to the seller and a debit to the buyer.
A)True
B)False
Q4) Escrow closings cannot be used when refinancing a property.
A)True
B)False
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18
Chapter 16: Real Estate Leases
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Sample Questions
Q1) The designation of "certified property manager" means an IREM graduate property manager.
A)True
B)False
Q2) If a lease were signed by a lessee who is a minor, the lease is
A) void.
B) voidable by the landlord.
C) voidable by the tenant.
D) unenforceable.
Q3) Typical duties of a licensed real estate property manager include screening tenants, maintaining deposit accounts and routine maintenance.
A)True
B)False
Q4) A contract that contains predetermined rent increases to take effect during the life of the lease is
A) a step-up lease.
B) one with a participation clause.
C) a percentage lease.
D) a net lease.
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Chapter 17: Real Estate Appraisal
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Q1) Seller motivation is considered most in the income approach.
A)True
B)False
Q2) An apartment building sells for $600,000 and has a gross rent multiplier of 6.0.how much annual rent does the building produce?
A) $60,000
B) $100,000
C) $10,000
D) $36,000
Q3) Depreciation resulting from outmoded design is classed as
A) functional obsolescence.
B) physical deterioration.
C) economic obsolescence.
D) social obsolescence.
Q4) The rents that a property can be expected to produce on an annual basis may be referred to as the projected gross income.
A)True
B)False
Q5) The property to be appraised is known as the ____________________ property.
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Chapter 18: Licensing Laws and Professional Affiliation
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Q1) A license may be revoked upon proof of violation of fair housing laws.
A)True
B)False
Q2) A person who sells real estate for others
A) must be licensed in order to collect compensation.
B) need not be licensed if no compensation is involved.
C) both a and b.
D) neither a nor b.
Q3) A real estate broker's or salesperson's license would most likely be revoked for
A) failure to pay REALTORS® dues.
B) misrepresentations.
C) failure to practice real estate.
D) failing to split a commission with an unlicensed individual.
Q4) To temporarily make ineffective is to ____________________.
Q5) The term REALTOR® applies to any licensed real estate salesperson.
A)True
B)False
Q6) To recall and make void is to ____________________.
Q7) The broker in charge of an office is called the ____________________ broker.
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Chapter 19: The Principal-Broker Relationship: Employment
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Q1) A listing agreement is a(n)____________________ contract between a property owner and a real estate broker.
Q2) The broker/manager receives 45% of the commissions on all sales made through her office. What would she receive on monthly sales totaling $252,000 at an average 3.7% commission (rounded to the nearest dollar)?
A) $9,324
B) $4,196
C) $7,527
D) $3,765
Q3) A licensed salesperson has an open listing with Sara and an exclusive listing with Kelley. One week after both listings expire, Sara and Kelley sell their homes to each other. With no more information available, the licensee would claim a commission from both parties.
A)True
B)False
Q4) A broker who is the primary cause of a transaction is known as the ____________________ cause.
Q5) A listing that gives the broker the nonexclusive right to find a purchaser is a(n)____________________ listing.
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Chapter 20: The Principal-Broker Relationship: Agency
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Q1) Fiduciary responsibilities of an agent to the principal include faithful performance, loyalty, and provision of legal advice.
A)True
B)False
Q2) When an agent's authority arises from custom in the industry, it is identified as
A) implied authority.
B) ostensible authority.
C) customary authority.
D) conventional authority.
Q3) If, in showing a property, the salesperson said, "In my opinion, this house is absolutely the greatest in the world," the salesperson
A) could lose his license for fraud.
B) is guilty of misrepresentation.
C) is puffing.
D) is guilty of redlining.
Q4) Errors and omission insurance may cover intentional acts to deceive.
A)True
B)False
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Chapter
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Q1) If O'Malley deeds property to O'Halloran on the condition that no Englishmen live there, what is the status of the deed?
A) The condition is grandfathered in.
B) The deed is unenforceable.
C) The deed is valid but the condition is unenforceable.
D) The deed is voidable.
Q2) A situation where one or more individuals under the age of 18 are domiciled with a parent or other person having custody is described as ____________________ status.
Q3) A protected class is a class of people that by law are protected from ____________________.
Q4) Inducement of panic selling in a neighborhood for financial gain is known as blockbusting.
A)True
B)False
Q5) The Civil Rights Act of 1866 prohibits
A) racial discrimination.
B) steering.
C) block busting.
D) discrimination for any reason.
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Chapter 22: Condominiums, Cooperatives, Puds, and Timeshares
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Q1) Individual ownerships of separate portions of a building plus joint ownership of the common elements is characteristic of a
A) condominium.
B) cooperative.
C) co-op.
D) PUD.
Q2) Money set aside from the budget for expenses that do not occur every month is called reserves.
A)True
B)False
Q3) In a planned unit development, the owner's association can dictate interior and exterior colors, exterior landscaping, and use of common areas.
A)True
B)False
Q4) The maintenance fees for a condominium project are also called ____________________ dues.
Q5) The rules that govern how an owner's association will be run are called
25
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Chapter 23: Property Insurance
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Q1) Medical payments provided under a homeowner policy can be paid to
A) the named insured and family members.
B) guests of the insured on the premises.
C) claims arising from business pursuits.
D) none of the above.
Q2) An agreement by the insurer to modify a basic policy, also called a rider or attachment, is known as a(n)____________________.
Q3) Among the following, who does NOT hold an insurable interest?
A) A property owner.
B) The listing broker.
C) A mortgage lender.
D) The tenant.
Q4) Flood insurance can be purchased for
A) structures and contents.
B) public liability.
C) medical expenses.
D) damages and legal costs.
Q5) "New for old" means that the policy pays replacement cost.
A)True
B)False
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Chapter 24: Land-Use Control
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Q1) To prepare a master plan a city or regional planning commission is usually created.
A)True
B)False
Q2) The effect of a proposed development on a community is determined by the preparation of an environmental impact statement.
A)True
B)False
Q3) When a small area of land in an existing neighborhood is rezoned, this is known as down zoning.
A)True
B)False
Q4) When there is a space specified along each property line in a neighborhood within which no building may be erected, it is called
A) a sidewalk.
B) a commercial lot.
C) a setback.
D) an offset.
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Chapter 25: Real Estate and the Economy
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Q1) Generally, for every job created by a base industry, there will be created in service industries approximately
A) an equal number of jobs.
B) two jobs.
C) one job for every two persons employed in the base industry.
D) four jobs.
Q2) Federal tax laws have traditionally allowed owners of investment properties to deduct all of the following EXCEPT
A) depreciation on land.
B) maintenance costs.
C) operating costs.
D) ad valorem taxes.
Q3) ____________________ inflation results in higher prices due to increased costs of labor and supplies.
Q4) The existence of a base industry is essential to the maintenance of local real estate values.
A)True
B)False
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Chapter 26: Investing in Real Estate
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Q1) In a typical limited partnership, the organizers are ____________________ partners.
Q2) A property is purchased for $50,000 with a $45,000 loan. Several years later the loan has been reduced to $40,000 and the property is sold for $55,000. What is the seller's equity build-up at the time of sale?
A) none
B) $5,000
C) $10,000
D) $15,000
Q3) For most people, the best time to invest in high-risk investments is between the ages of 55 and 65.
A)True
B)False
Q4) ____________________ is the increase in property value that the owner hopes will occur while owning it.
Q5) Accelerated depreciation schedules, set up before the Tax Reform Act of 1986 became effective, were grand fathered in and did not change.
A)True
B)False
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