TEST 1 -- WRONG

Question 1

After an appraiser has collected all the data, what is the next step in the appraisal process?

(A) simply average out the value estimates; (B) reconcile or correlate the adjusted sales price of the comparables; (C) assign appropriate value to individual estimates and average the total number; (D) give an opinion of value.

Answer 1

(B) reconcile or correlate the adjusted sales price of the comparables

After the appraiser has collected all the data, the next step in the appraisal process is to reconcile or correlate the adjusted sales prices of the comparables and use the most influential data for the final valuation.

Question 2

A tenant leased a building from an owner. The owner then sold the building to a new owner. The tenant’s financial situation changed after the building was sold. Which of the following is true?

(A) the new owner can make the lessee pay-off the lease; (B) the change in lessee’s financial situation is none of the new owner’s business; (C) the new owner can increase the security deposit required from the tenant; (D) the new owner can raise the rent.

Answer 2

(B) the change in lessee’s financial situation is none of the new owner’s business

The sale of a property does not usually terminate a lease. The new owner of the property has no more rights than the prior owner

Question 3

When real estate increases in value because of an increase in population and/or inflation, this would be classified as:

(A) social valuation; (B) economic obsolescence; (C) an unearned increment; (D) effective value.

Answer 3

(C) an unearned increment

“Unearned Increment” describes when property gains in value due to inflation or an increase in population.

Question 4

A real estate licensee inspected a home for sale and discovered some problems in the property. How long does the buyer have to sue for the failure of the licensee to disclose problems in the TDS?

(A) 1 year; (B) 2 years; (C) 3 years; (D) 5 years.

Answer 4

(B) 2 years

A buyer has two years to sue a real estate licensee for failure to disclose known defects in the TDS.

Question 5

When would the cost approach to appraisal be least appropriate?

(A) new homes in a subdivision; (B) middle-aged property; (C) old buildings; (D) multifamily property.

Answer 5

(C) old buildings

The cost approach is least appropriate for appraising old buildings, because depreciation becomes difficult to calculate as the building gets older

Question 6

The process of calculating the present worth of a property on the basis of its capacity to continue to produce an income stream is called:

(A) depreciation; (B) capitalization; (C) market data; (D) recapture.

Answer 6

(B) capitalization

The process of calculating the present worth of a property on the basis of its capacity to continue to produce an income stream is called: capitalization.

Question 7

In the capitalization approach to appraisal, the appraiser arrives at an effective gross income figure, by making a deduction for:

(A) interest payments on the loan; (B) repairs; (C) vacancy; (D) depreciation.

Answer 7

(C) vacancy

The appraiser subtracts vacancy from the scheduled gross income to arrive at the effective gross income.

Question 8

Which of the items listed below would an appraiser subtract from scheduled gross income to arrive at annual net income when using the capitalization approach to appraisal?

(A) cost of loans against the property; (B) allowance for rent loss and vacancies; (C) federal income tax; (D) reserve for appreciation of buildings.

Answer 8

(B) allowance for rent loss and vacancies

The appraiser subtracts allowance for rent loss and vacancies when calculating annual net income in the capitalization approach to appraisal.

Question 9

When comparing the value of property and the price of property, changes in financing terms will affect:

(A) value only; (B) price, not value; (C) only properties that have been sold; (D) both value and prices.

Answer 9

(B) price, not value

Changes in financing terms will effect the price, but not the value of the property.

Question 10

Implied covenants are not normally included in a:

(A) grant deed; (B) quitclaim deed; (C) warranty deed; (D) all deeds include implied warranties.

Answer 10

(B) quitclaim deed

The quitclaim deed contains no implied covenants.

Question 11

In a real estate transaction where the seller uses a land contract instead of a trust deed, the land contract may be described as:

(A) identical to a mortgage; (B) a security device; (C) just like an option; (D) a third party instrument.

Answer 11

(B) a security device

In a real estate transaction where the seller uses a land contract instead of a trust deed, the land contract may be described as a security device.

Question 12

According to California law, all of the following could be created as blanket encumbrances, except:

(A) trust deeds; (B) real property taxes; (C) mortgages; (D) mechanics liens.

Answer 12

(B) real property taxes

A real property tax lien must specifically attach to one particular parcel. If one person owns several parcels of real property with overdue property taxes, the government will record a real property tax lien separately against each parcel.

Question 13

In a land contract the buyer (vendee) gets:

(A) possession; (B) a freehold estate; (C) An estate in fee; (D) all of the above.

Answer 13

(A) possession

The buyer in a land contact (vendee) gets the right of possession of the property and becomes an equitable owner holding equitable title.

Question 14

The “improved value” of land is:

(A) the current market value of the land and improvements; (B) the present value of income to be received from the use of the land in the future;
(C) the replacement cost of the improvements minus the depreciation; (D) the difference between the contract rent and the economic rent.

Answer 14

(A) the current market value of the land and improvements

The improved value of land is the current market value of the land and improvements combined.

Question 15

The term “estoppel” describes:

(A) an architectural element; (B) a plumbing fixture; (C) a document confirming the terms of a lease and that tenant has no claims against the landlord; (D) a trade fixture.

Answer 15

(C) a document confirming the terms of a lease and that tenant has no claims against the landlord

An “estoppel certificate” is a document from a tenant confirming the terms of the lease and that the tenant has no claims against the landlord.

Question 16

Joe, a licensed real estate broker, has just written up an exclusive listing on Fred’s home. At this time, Joe’s listing may be described as:

(A) a bilateral contract; (B) an executory contract; (C) an express contract; (D) all of the above.

Answer 16

(D) all of the above

This is an exclusive listing, making it bilateral. The listing has just been created, making it executory. The contract was written, making it express. This contract is an express, bilateral, executory contract.

Question 17

An interest in real property may be taken by either prescription or by adverse possession. The interest taken by prescription is:

(A) the right to use land which belongs to another person; (B) a possessory interest; (C) an equitable title; (D) a private grant.

Answer 17

(A) the right to use land which belongs to another person

The interest taken by prescription (an easement) is the right to use land which belongs to another person.

Question 18

A quitclaim deed conveys only the present right, title and interest of:

(A) the grantee; (B) the servient tenant; (C) the grantor; (D) the lessee.

Answer 18

(C) the grantor

A quitclaim deed conveys only the present right, title and interest of the person signing the quitclaim deed (grantor).

Question 19

A new employment contract between the seller of a home and a broker, whereby the seller agrees to pay the broker a commission if she produces a “ready, willing, and able” buyer and in return, the broker agrees to use due diligence in procuring the buyer, is called:

(A) a unilateral executory contract; (B) a unilateral executed contract; (C) a bilateral executory contract; (D) a bilateral executed contract.

Answer 19

(C) a bilateral executory contract

A new employment contract between the seller of a home and a broker, whereby the seller agrees to pay the broker a commission if she produces a “ready, willing, and able” buyer is called an executory listing contract. The broker’s agreement to use due diligence in procuring the buyer, make this a bilateral executory contract.

Question 20

The maximum commission a loan broker may charge to negotiate a $4,000 hard money second trust deed, due in 3 years is:

(A) $200; (B) $400; (C) $600; (D)$800.

Answer 20

(C) $600

The maximum commission a loan broker may charge to negotiate a $4,000 hard money second trust deed, due in 3 years, is 15% ($600). $4,000 X 15% = $600.

Question 21

A joint tenancy in real property can legally be created with the execution of a deed by:

(A) a husband and wife to themselves as joint tenants; (B) existing joint tenants to themselves and others as joint tenants; (C) existing tenants in common to themselves as joint tenants; (D) any of the above ways.

Answer 21

(D) any of the above ways.

A joint tenancy in real property can legally be created with the execution of a deed by a husband and wife to themselves as joint tenants, existing joint tenants to themselves and others as joint tenants, or existing tenants in common to themselves as joint tenants.

Question 22

The “standard coverage” title insurance policy on real property insures the policy holder against loss occasioned by:
(A) unrecorded liens or encumbrances; (B) a forgery in the chain of recorded title; (C) rights of parties in possession of the property; (D) governmental action, such as zoning.

Answer 22

(B) a forgery in the chain of recorded title

The “standard coverage” title insurance policy (CLTA policy) protects against matters of record, such as a forgery in the chain of recorded title.