Download National PSI Broker Exam Prep: Real Estate Principles and Practices and more Exams Real Estate Management in PDF only on Docsity!
NATIONAL PSI BROKER EXAM PREP
WITH 100% CORRECT ANSWERS
"A buyer is getting a new mortgage with a 95% loan-to-value ratio. The final loan amount the lender will lend the buyer is determined by the A) lower of the sales price or appraised value. B) higher of the sales price or appraised value. C) sales price only.
D) appraised value only. - Correct Answer A"
"Rental rates have increased by 2% in the last six months. Which appraisal principle BEST explains this rate increase? A) Principle of substitution B) Principle of supply and demand C) Principle of contribution
D) Principle of highest and best use - Correct Answer B"
"The current monthly GRM in a neighborhood is 200, and the annual income is $24,000. What is the estimated value of a property in this neighborhood? A) $200, B) $240, C) $400,
D) $4,800,000 - Correct Answer C"
"A real estate broker must know what items are required to create valid agreements. All of the following are considered to be essential to the validity of a purchase agreement EXCEPT A) acceptance by the offeree and communication of the acceptance to the offeror. B) all parties have the ability and competency to enter into a legal agreement. C) consideration as agreed to between the seller and the buyer.
D) the buyer supplying earnest money. - Correct Answer D"
"A seller decides NOT to sell a property in spite of having an executory contract with a buyer. The buyer's remedy is A) amend the contract and change the terms to get the buyer's earnest money returned. B) file criminal charges to void the agreement.
C) liquidated damages to recover the earnest money and force the seller to sell.
D) sue the seller for specific performance to force compliance with the agreement. - Correct Answer
D"
"The subject property has two baths and one fireplace. The property across the street sold for $181, and has two baths and two fireplaces. The property behind the subject sold for $175,000 and has two baths and no fireplace. In the area, baths are worth $5,000 and fireplaces are worth $3,000. What is the subject property worth? A) $175, B) $177, C) $178,
D) $180,000 - Correct Answer C"
"New home warranties cover all of the following EXCEPT A) poor workmanship in the bathroom and bedrooms. B) items considered to be part of the merchantability and habitability of the home. C) structural damage caused by flooding.
D) failure of roofing materials in the first year. - Correct Answer C"
"A buyer was told by a salesperson that the area she wished to buy a home in was not appropriate for single women. If the buyer wants to pursue a fair housing compliant against the salesperson, she A) has up to four years to file a complaint. B) has up to two years to file in court. C) must first file at the state level and then at a federal level.
D) is required to file a lawsuit. - Correct Answer B"
"All of the following are protected under federal fair housing laws EXCEPT A) religion and race. B) age and marital status. C) familial status and color.
D) national origin and sex. - Correct Answer B"
"According to federal government lending regulations, a buyer purchasing a home must have an appraisal for all the following types of financing EXCEPT A) FHA. B) VA. C) loan sold to FNMA.
D) seller carry. - Correct Answer D"
C) the buyer has given the seller a large amount of repair items and the seller and the buyer have agreed to mutually rescind the agreement due to inspection issues. D) the buyer found out the property is not zoned to be used as the buyer wishes. The buyer sends a notice to terminate based upon the contract contingency giving the buyer 10 days to verify the property
use. - Correct Answer A"
"Which of the following is TRUE about the executory stage of a contract to purchase real property? A) The seller has possession and equitable title. B) The buyer has legal title and possessory rights once all the contingencies have terminated. C) This stage is for the seller to determine if the buyer's offer is acceptable or if the seller should counteroffer.
D) The seller has legal title and the buyer is the equitable owner until title is conveyed at closing. -
Correct Answer D"
"A property is under contract. During the inspection, the buyer finds major structural issues that the seller is unable to correct before closing. The buyer and the seller agree to terminate the contract, which is known as A) a valid contract which has become voidable by both parties. B) specific performance for both parties with no monetary remedy. C) mutual rescission of the contract.
D) a void contract with parties in agreement. - Correct Answer C"
"A buyer has requested that the seller give him a six-month opportunity to purchase the seller's property for $400,000 with 10% down. The buyer has agreed to give the seller $4,000 to hold the offer open for the next six months, with the seller keeping the $4,000 if the buyer decides not to purchase. The contract is A) an open listing agreement. B) an option agreement. C) an implied sales agreement with both parties bound.
D) a bilateral agreement with both the buyer and seller bound because there was a payment. - Correct
Answer B"
A broker is completing a CMA to determine the potential listing price of a seller's home. Which of the following is NOT part of the final CMA given to the seller? A) Highest and best use evaluation B) Comparable sales analysis C) Adjustments to past sales
D) Pictures of comparables - Correct Answer A"
"Houses in the local area have had an increase in sales price and a decrease in days on the market. A broker who is attempting to determine the current market value for a residential listing would get the BEST estimate of value by using A) a GRM as the primary consideration to determine value. B) the cost approach with reproduction estimates. C) comparables that are no more than six months old.
D) comparables that are no more than 12 months old. - Correct Answer C"
"A minor has inherited a large old house from her father. The minor sells it to her aunt. Is the purchase contract valid? A) Yes, it is valid and enforceable. B) No, it is void. C) No, it is voidable by the minor.
D) No, it is unenforceable by the minor. - Correct Answer C"
"All of the following are common law requirements for a valid listing agreement EXCEPT A) a definite termination date. B) specific performance remedies should one of the parties default. C) a negotiable commission clause.
D) be an expressed written agreement in order to enforce the commission clause. - Correct Answer B"
"Legal agreements may be valid, void, or voidable, depending on whether they contain all the required essential elements of a contract. All of the following would make a contract voidable EXCEPT A) it isn't in writing. B) a minor has signed the document. C) the buyer is under duress.
D) the broker misrepresented the property. - Correct Answer A"
"A buyer and a seller enter into a purchase agreement. The agreement includes a contingency that the buyer can terminate the contract if she cannot sell her current home. This type of agreement is an A) executed contract. B) executory contract. C) option contract.
D) unilateral contract. - Correct Answer B"
"All the following actions would be acceptable in a sales transaction EXCEPT A) the buyer waives the lead-based paint inspection.
D) all current unit owners as tenants in common. - Correct Answer D"
"Which of the following is TRUE about the transfer of residential property? A) Trade fixtures and land convey via a deed, while all personal property transfers via a bill of sale. B) Fixtures must be excluded if the seller is not conveying them, while personal property must be included for the buyer to receive it. C) All personal property and fixtures are transferred via the bill of sale.
D) The general warranty deed from the seller to the buyer guarantees good title. - Correct Answer B"
"A property for sale has an easement that the listing broker notes in the MLS. The purchase agreement does not mention the easement, but it appears in the title work. Which of these is TRUE? A) The buyer may rescind the contract because the easement was not fully described. B) The easement transfers with the deed as an appurtenance and has been disclosed. C) The easement will not transfer with the property because it must be listed on the bill of sale to transfer. D) The buyer may sue the seller to clear the title and remove the easement because it was not part of
the purchase agreement. - Correct Answer B"
"XYZ, a limited partnership, was created to invest in commercial rental properties. In this type of partnership, A) the partners can lose no more than their investment. B) all partners have equal say and equal liability. C) each partner must invest at least $15,000 as seed money.
D) the general partner is the partner with the largest single investment. - Correct Answer A"
"As part of land surveys and legal descriptions, monuments are used to establish the property's A) lot size. B) variances. C) zoning rules.
D) boundaries. - Correct Answer D"
"A development company has a large section of land for developing housing. The property has been surveyed, and a plat map was created. The next step the development company should take in order to sell lots is to A) train a sales group to start selling lots. B) issue building permits and develop building codes. C) record the plat map with the county.
D) request a certificate of occupancy from the county. - Correct Answer C"
"A legal description states: "Commencing at the corner of Ridge Street and Maple, then east 40 degrees to Elm Ave." This type of description is known as A) metes and bounds. B) rectangular survey. C) lot, block, and subdivision.
D) assessor's parcel number. - Correct Answer A"
"The MOST important reason for brokers and salespeople to understand title and ownership issues and the essential elements of contracts and deeds is so they will know A) how commissions are determined and who pays them. B) how to advise buyers and sellers on legal and other issues in contracts and title work. C) what requirements are needed for valid documents and who is required to sign the real estate paperwork.
D) what is required to determine clear title and how to prepare closing documents. - Correct Answer
C"
"A broker can send the buyer or the seller to a title insurance company in which he is a partner if he A) also provides the buyer or the seller with a list of other title companies. B) gives the buyer or the seller a written disclosure of the broker's relationship with the title company. C) directs them to another real estate company.
D) suggests they consult an attorney. - Correct Answer B"
"Real estate offers several advantages to investors. Which of the following is NOT an advantage a real estate investor would have? A) Different depreciation rates for residential and commercial properties B) Liquidity of the investment C) Ability to use a 1031 tax-deferred exchange
D) Depreciation on personal taxes - Correct Answer B"
"The main purpose of a conveyance deed in a real estate transaction is to A) guarantee that the title and ownership are valid and good. B) create a recordable document to transfer ownership and create a chain of title. C) act as a record of all the promises made from the grantee to the grantor.
D) transfer title from the grantor to the grantee. - Correct Answer D"
"A buyer and the buyer's agent have looked at several residential properties. The buyer wants to be able to run her business out of her home. The buyer has a property under contract that has Residential- zoning. The buyer's agent should advise the buyer to
"The seller tells the broker, "If you bring me a buyer, I will pay you a commission." The broker MOST likely has what type of agreement with the seller? A) Unilateral open listing B) Bilateral exclusive right-to-sell listing C) Unilateral exclusive agency listing
D) Exclusive buyer representation agreement - Correct Answer A"
"In a jurisdiction using the common laws of agency to govern real estate activity, a broker who represents both the seller and the buyer as a dual agent A) may treat both parties as customers. B) must have a signed disclosure and consent from both parties. C) should tell the sellers they must sell "as is" so a disclosure is not required.
D) should tell the buyer she must offer full price so there is no conflict. - Correct Answer B"
"Because of the trust and money received in the process of selling real property, most agreements signed by the buyer and the seller that are used to hire the brokerage firm are A) exclusive agency agreements. B) fiduciary agreements. C) special agency agreements.
D) implied agency agreements. - Correct Answer B"
"An agent working under an exclusive right-to-sell agreement owes the principal several fiduciary obligations. All of the following are fiduciary obligations of an agent EXCEPT A) the agent must use reasonable skill and care in selling the principal's property. B) the agent is obligated to disclose all material facts even if the principal asks the agent not to. C) the agent is obligated to be loyal to the principal and place the principal's interests ahead of the agent's own interests. D) the principal is obligated to pay the agent a certain amount of consideration in order for a valid listing
contract to be formed. - Correct Answer D"
"A broker lists a property and begins marketing it. The seller sells the property to a neighbor and upon closing pays the broker a full commission. What type of listing agreement did the brokerage firm have with the seller? A) Open B) Exclusive agency with a "seller may not sell" contingency C) Exclusive right to sell
D) Exclusive agency - Correct Answer C"
"A seller asked a broker how the commission the broker requested was determined. The BEST response would be for the broker to tell the seller that commissions are A) negotiable and based on the work being done. B) set by the local real estate commission based on volume and sales activity. C) set by local boards of REALTORS® first and then by the broker.
D) set by the brokerage firm in conjunction with other firms. - Correct Answer A"
"A listing contract shows personal property items, including an antique set of fireplace tools that the seller has stated he might consider selling with the property. The purchase contract does not mention the tools but lists the buyer keeping the washer and dryer. At closing, the fireplace tools will A) be conveyed to the buyer using a bill of sale. B) be automatically conveyed by the deed. C) remain the property of the seller.
D) be left for the buyer because the seller listed them on the MLS sheet. - Correct Answer C"
"The seller of a property going into foreclosure has told the broker that the seller is very motivated to sell and will consider all offers. The broker should A) tell any buyers or buyers' agents to make offers lower than the listing price. B) say nothing unless the seller gives the broker written notice to disclose motivation. C) put "motivated seller" on the MLS listing and all other advertising.
D) lower the listing price in the MLS to generate more offers. - Correct Answer B"
"The broker is selling an investment property she has owned for many years. She listed the property and put it in the MLS. If an interested buyer calls to inquire about the property, the broker A) has no obligation to disclose her ownership until closing. B) should first get the buyer's name and contact information so she can set a showing. C) will be required to disclose her ownership to the buyer if the buyer decides to make an offer.
D) should disclose she is the owner and agent for the property before further discussion. - Correct
Answer D"
"A listing agent for bank foreclosure hears that a buyer has expressed interest. At the first meeting, the buyer states, "I am very interested in the property." Under the common law of agency, what is the disclosure obligation of the listing agent to the buyer? A) Disclose that the listing agent is an agent for the seller and the buyer as a customer should not tell the listing agent anything the buyer does not want told to the seller. B) Tell the buyer the listing agent will automatically be a transaction-broker and will maintain confidentiality for both the buyer and the seller. C) Disclose that the listing agent will be a dual agent and will need to treat both parties the same.
"The broker notices that the floor in the bedroom is not flat. There are no cracks in the foundation or other indications of structural issues. The broker should A) recommend to both the seller and the buyer that they have an expert examine the foundation. B) tell the seller that they must sell "as is" so no disclosure would be required. C) demand that the seller have the structure certified.
D) tell the seller that it is proper to give the buyer verbal notice of the issue. - Correct Answer A"
"The length and type of coverage for a pre-owned home warranty program is determined by A) each state. B) the warranty contract. C) federal law.
D) tradition. - Correct Answer B"
"A broker is aware that a property near his new listing may have environmental concerns. In this situation, the environmental issues A) do not need to be disclosed unless they are within the property's boundaries. B) do not need to be disclosed because issues outside the neighborhood have no impact on value. C) need to be disclosed because they can impact the value of the listing.
D) need to be disclosed only if they are not obvious and would not be easy for a buyer to discover. -
Correct Answer C"
"A buyer is under contract for a home that is vacant and bank owned. While the buyer and his agent are doing a walk-through inspection, the agent discovers that the recent hail storm caused roof damage. What should be the agent's next step? A) Have the buyer call his insurance agent to see if he is covered B) Tell the buyer not to worry because the agent is sure the bank will repair the roof before closing C) Tell the listing broker to have the roof replaced or the buyer will terminate the contract
D) Disclose the issue to the buyer and then to the listing broker - Correct Answer D"
"Which of the following is TRUE about the federal lead-based paint law? A) It gives the buyer the option to waive the lead-based paint inspection. B) It requires the seller to remove any known lead-based paint. C) It requires the listing broker to give the disclosure to the buyer.
D) It requires the seller to inspect the property. - Correct Answer A"
"Typically, a managing broker of a brokerage firm who is responsible for the salespeople under him would be required to do all of the following EXCEPT
A) make sure the salespeople are trained and competent to practice real estate. B) attend all closings with every salesperson in the office. C) make sure all salespeople are in compliance with the state license laws.
D) supervise all salespeople and review all closing files to make sure they are correct. - Correct Answer
B"
"A buyer with six children was told by a broker that the neighborhood she wanted to view was not suitable for her family because it had very few children. The buyer decided to file a fair housing complaint against the broker and brokerage firm. In this type of case, the first step is for HUD to A) take the broker's license until the hearing is completed. B) request that the real estate commission start an investigation. C) require the buyer to prove that discrimination occurred.
D) start an investigation to verify if the complaint is valid. - Correct Answer D"
"A potential buyer was turned down for a mortgage loan because of the high crime rate in the area where the property is located. This is an example of A) legal redlining because crime rates can impact value. B) blockbusting by the lender. C) a good business practice because the buyer had children.
D) redlining by the lender. - Correct Answer D"
"A new salesperson showing a property has made a number of statements to her buyers. All of the following statements by the salesperson would be considered puffing EXCEPT A) "The best views in the city are in this neighborhood." B) "The finest lake and mountain views in the state are in this neighborhood." C) "This neighborhood has the highest SAT scores."
D) "This is the best house in the neighborhood." - Correct Answer C"
"An apartment building advertises its apartments as "adult only." This advertising is A) legal if each unit has at least one person over 55 living in it. B) illegal and discriminatory against children. C) legal per federal law, but may be illegal per state laws.
D) legal if the adults are married. - Correct Answer A"
"If a borrower is refused a loan because the borrower is retired and receiving public assistance, the lender is in violation of A) HUD. B) RESPA. C) ECOA.
B) so the state can audit the firm at any time. C) to have a safe place and additional protection for funds that don't belong to the firm.
D) to enable the brokerage to keep operations and funds from buyers and sellers in the same account. -
Correct Answer C"
"A deed restriction is BEST described as a A) requirement set by a grantor and included in the deed that gives the grantor reversionary rights if the grantee fails to abide by the requirement. B) rule or regulation regarding safe building practices, such as a requirement for structural elements. C) rule set by a developer to help maintain the value of a subdivision. The rule runs with the land and is binding on future owners.
D) rule regarding how property can be used (i.e., residential, commercial, agricultural, or industrial). -
Correct Answer C"
"Which of the following would NOT be a requirement under ADA or fair housing laws? A) A landlord must allow disabled tenants to make changes to the property and may not charge the tenants or force them to move. B) The owner of a commercial building could refuse to make changes to the "first come first serve" parking to accommodate a disabled tenant. C) A building with a no-pets policy would have to allow service animals without an additional charge. D) A tenant who makes changes to an apartment to accommodate a disability can be required to return
the unit to its original condition upon lease expiration. - Correct Answer B"
"A commercial tenant pays a base rent of $1,000 per month plus a percentage of the owner's taxes, maintenance costs, and insurance. This type of lease is known as A) a percentage lease. B) a net lease. C) an index lease.
D) a fixed lease. - Correct Answer B"
"In the appraisal process, the capitalization rate is used by an appraiser to determine which type of value? A) Future value of any type of property B) Past value of a unique and income-producing property C) Present value of an income-producing property
D) Probable value of residential property - Correct Answer C"
"If the current monthly GRM on a single-family home is 100 with an estimated annual income of $24,000, what is the estimated value of the property?
A) $120,
B) $200,
C) $240,
D) $2,400,000 - Correct Answer B"
"An appraiser is using the sales comparison approach to estimate the value of a residential home. The appraiser will make positive and negative adjustments to the sold comparables for all of the following factors EXCEPT A) square footage of the sold properties. B) lot size and location of each sold comparable in relation to the subject. C) actual replacement and reproduction cost.
D) date of sale of each sold comparable. - Correct Answer C"
"The BEST approach for an appraiser trying to determine market value of a shopping center, apartment building, or office building would be the A) replacement approach to value. B) income approach to value. C) sales comparison approach to value.
D) summation approach to value. - Correct Answer B"
"An active real estate professional must be able to help consumers determine the probable sales price of a real property. A broker's or salesperson's competitive market analysis would be used for all of the following EXCEPT A) setting the loan value. B) determining the listing price. C) assisting sellers and buyers in determining market value.
D) estimating the probable sales price. - Correct Answer A"
"An appraiser has been asked to determine the value of a church. The appraiser has determined the best approach to value for this property is the cost approach. While completing the process of determining the value, the appraiser will consider all of the following EXCEPT A) reproduction cost of the subject property. B) value of the land under the church. C) adjusted square footage of the subject and comparables.
D) current depreciation of the property improvements. - Correct Answer C"
"All of the following are true of FHA and VA loans EXCEPT A) there can be no prepayment penalty. B) the loan is assumable by a qualified buyer.
"A borrower is in default on his home loan and has offered to give the lender a deed in lieu of foreclosure. The lender declined the borrower's offer. This is MOST likely because A) the loan to value is too high. B) there is a junior or secondary lien. C) it will take more time and cost more than foreclosing on the property.
D) the lender would not get possession or title upon transfer. - Correct Answer B"
"Ann has a contract with Ben in which she must perform if Ben decides to go forward. This is what type of contract? A) Unilateral for Ben B) Bilateral for both C) Unilateral for Ann
D) Nonbinding - Correct Answer C"
"A buyer and a seller have been through several counteroffers on a property and finally reached an agreement that was accepted by all parties. During this stage of the process when the contract has yet to be performed, the status of the contract is A) executory. B) executed. C) voidable.
D) unilateral. - Correct Answer A"
"The seller has requested that the earnest money be 5% of the purchase price, but the buyer is concerned about giving such a large amount of money, which might not be returned. The purpose of the buyer's earnest money is to A) act as consideration, which is required in all valid contracts. B) give the seller specific performance as a remedy if the buyer fails to get a loan. C) act as liquidated damages if the buyer defaults without meeting contingency requirements. D) give the seller a reason to allow a financing contingency, which states that if the buyer can't get a
loan, the seller will always be able to keep the earnest money. - Correct Answer C"
"Mutual rescission, when the parties rescind a contract and return all things of value to each party, would likely occur in all of the following situations EXCEPT A) the property being destroyed. B) the inspection finding major heating problems. C) the buyer deciding to buy another home.
D) financing not being available. - Correct Answer C"
"All of the following make a purchase agreement voidable EXCEPT
A) the seller being under extreme duress. B) the buyer being a minor. C) the seller misrepresenting the property.
D) the buyer signing the contract without reading it. - Correct Answer D"
"A buyer and a seller enter into a written binding contract in which the seller agrees to sell at a specific price for a set term. Later the buyer decides not to buy the property and the seller has no recourse against the buyer. The contract is A) an estoppel agreement. B) an option agreement. C) an implied agreement.
D) a bilateral agreement. - Correct Answer B"
"A property is under a purchase contract with everything but the loan contingency satisfied. The closing is set for the next week. This is known as the A) executory stage with the buyer holding legal title. B) equitable stage with the seller holding equitable title. C) executory stage with the buyer holding equitable title.
D) executed stage with seller holding legal title. - Correct Answer C"
"The Jones family rented a summer vacation home from Mr. Smith for a period of four years. At the end of the third year, Smith suddenly died, and the property was sold by his heirs. The lease the Jones family holds is A) not affected by the death of Smith or the sale by his heirs. B) terminated upon the sale by the heirs. C) terminated upon the death of Smith.
D) up for renegotiation by the new property owner. - Correct Answer A"
"Jim has been leasing an apartment from Sally, but his job has just been transferred. Sally has agreed to let Jim out of his lease, and she will sign a new lease with Jim's friend Cindy. This is an example of A) an assignment. B) a novation. C) a rescission.
D) an addendum. - Correct Answer B"
"The seller received an offer on Tuesday. On Wednesday the seller countered the offer and gave the buyer three days to accept the counteroffer. On Thursday the seller received a much better offer than the first one and decided to accept the new offer. In order to accept the new offer, the seller
