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PEARSON VUE PRACTICE TEST
"c. External (economic) obsolescence - CORRECT ANSWER 29. If a rural subdivision loses the benefit of
fire protection from a nearby city, which of the following forms of depreciationBEST describes the loss of value? a. Physical deterioration b. Functional obsolescence c. External (economic) obsolescence d. regression"
"b. Failure to repair a furnace in the winter within a reasonable timeframe - CORRECT ANSWER 32.
Which of the following acts by the landlord could allow the tenants to claim constructive eviction? a. Sale of the leased property by the landlord b. Failure to repair a furnace in the winter within a reasonable timeframe c. Assignment of the leases by the landlord to the bank to secure a loan d. Refusal of the landlord to renew an estate for years lease"
"b. The seller must sign the listing contract - CORRECT ANSWER 35. A broker is working with a seller.
The broker prepares, completes, and signs a listing contract. What MUST be done next to have an enforceable listing contract? a. The broker must advertise the property online b. The seller must sign the listing contract c. The seller must get the property inspected for possible defects d. The broker must conduct open houses on the property"
"c. 14320 - CORRECT ANSWER A buyer purchases a home for $55,000 and gets a commitment from a
lender for an 80% loan. The lender has advised the buyer that 3 discount points will be charged. If additional closing costs are $2,000, how much total cash MUST the buyer have at closing? a. 1300 b. 13200 c. 14320 d. 15650"
"c. Always prohibited - CORRECT ANSWER Any referral of a settlement service provider for
compensation is a. Only allowed on federally funded transaction b. Allowed when fully disclosed c. Always prohibited d. Only prohibited on federally funded transaction"
"a. Earnest monies received from a clients properties in the agency's business account - CORRECT
ANSWER A licensee is commingling trust funds by depositing:
a. Earnest monies received from a clients properties in the agency's business account b. Earnest monies and rents received from a client's various properties in the same escrow/trust account c. Rents received from the licensee's own properties in a personal account d. Tenants security depositites received from various clients properties in the same escrow/trust account."
"d. Impending action - CORRECT ANSWER 25. A lis pendens filed in a foreclosure is a notice of a(n):
a. Mortgagee in possession b. Deficiency judgement c. Writ of entry d. Impending action"
"c. Released from the original offer - CORRECT ANSWER 42. Upon receipt of a purchase agreement
with certain terms, the seller makes a counteroffer. This means the prospective buyer is: a. Bound by the offer b. May not make another counteroffer c. Released from the original offer d. Bound to accept the counteroffer"
"c. Bring the greatest return to the property - CORRECT ANSWER 49. The highest and best use of a
property is described as the use that will: a. Effect the most favorable tax position b. Earn the highest gross income c. Bring the greatest return to the property d. Cover the greatest area on the site"
"b. 51200 - CORRECT ANSWER A lease calls for a commercial tenant to pay a guaranteed rental of
$1,775 per month plus 6.5% of the gross income in excess of $325,000 per year. If the yearly gross income is $785,000, what is the annual rent? a. 51025 b. 51200 c. 52800 d. 72325"
"c. Built-in dishwasher - CORRECT ANSWER The lease of a restaurant terminates and the tenant
wishes to move to another location. Which of the following items can the tenant remove from the restaurant as trade fixtures? a. Sprinkler system b. Radiators c. Built-in dishwasher d. Recessed ceiling lighting"
c. The homeowner and the buyer do not have a contract of sale. d. The homeowner must reimburse the broker for any expenses incurred."
"b. The owner - CORRECT ANSWER A sales agent is meeting with a potential home seller about listing
their home. There are many comparable properties for sale in the neighborhood. Who determines the listing price? a. The real estate commissions b. The owner c. The broker d. The sales agent"
"d. 305,000 - CORRECT ANSWER Ten years ago, a house valued at $200,000 was built on a two-acre
plot valued at $50,000. Five years later, one acre of the plot was sold for $60,000. If the rest of the lot continued to appreciate at the same average annual percent and if the house appreciated at 1/2 percent a year, what is the present combined value of the house and lot? a. 255, b. 280, c. 285, d. 305,000"
"a. Off-site improvements - CORRECT ANSWER Quality and adequacy of water and sewer, availability
and cost of energy, and access and condition of public roads are factors that are categorized as: a. Off-site improvements b. On-site improvements c. Zoning considerations d. Soft costs"
"b. The contract binds both parties to complete the sale within a given period of time. - CORRECT
ANSWER 18. Which of the following statements about a real estate sales contract is CORRECT?
a. The contract conveys legal title to property when it has been signed by both parties. b. The contract binds both parties to complete the sale within a given period of time. c. Both parties have the right of specific performance. d. The broker may keep the earnest money if the buyer defaults."
"d. 232,333 - CORRECT ANSWER 19. The potential gross income of a warehouse is $36,000 per year,
and the vacancy allowance is 2%. The taxes are $2,000 per year, and annual maintenance costs are $3,600. Annual reserves for replacement are $1,800, debt service is $13,500, and depreciation is $3,500. If the capitalization rate is 12%, what is the estimated value of the warehouse? a. 134, b. 203, c. 218, d. 232,333"
"c. Buyer - CORRECT ANSWER 20. The Equal Credit Opportunity Act (ECOA) requires that a copy of an
appraisal paid for by a buyer must be made available to the: a. Title company b. Appraisal institute c. Buyer d. Seller"
"c. National flood insurance program - CORRECT ANSWER 21. A homeowner's property damaged by
flood waters would be covered by the: a. Federal Emergency Management Agency b. American flood insurance program c. National flood insurance program d. Federal emergency housing association"
"b. Discount point - CORRECT ANSWER 22. A lender charges a percentage of the loan that fluctuates
depending on the availability of mortgage money. This charge is called a: a. Tax service fee b. Discount point c. Document preparation fee d. Warehousing fee"
"b. 40000 - CORRECT ANSWER 23. A managing broker receives a 1% commission on the total sales of
the office. The office charges a 7% commission on residential sales and has 4 salespeople, each of whom sold $1 million worth of real estate and received a 3% commission. Based on the sales of these four salespeople, what is the managing broker's income? a. 2800 b. 40000 c. 120000 d. 160000" "b. The power of attorney must be in writing if it grants J the power to sign a sales contract on behalf of
M. - CORRECT ANSWER 24. M has given J power of attorney to act as attorney-in-fact to sell M's
property. In this situation, which of the following statements is CORRECT? a. The power of attorney empowers J to sign a deed conveying title to M's property even if the power of attorney does not contain this specific statement. b. The power of attorney must be in writing if it grants J the power to sign a sales contract on behalf of M. c. If M dies, J may enter into a valid contract of sale on behalf of M's estate. d. Any contract J enters into under the power of attorney should be signed "J, attorney-in-fact for M.""
c. Bill of sale - CORRECT ANSWER 1A buyer purchases a furnished condominimum apartment as an
investment. The document that evidences the buyer's ownership of the furniture is a a. Special warranty deed b. Homeowner's insurance policy
b. Assign the note to a third party c. Secure the deed by signing a mortgage d. Secure the note by signing a mortgage"
"a. The property's description - CORRECT ANSWER 34. Which of the following information about a
property MUST be included in a listing agreement? a. The property's description b. The property's setback requirements c. The length of time the seller has owned it d. The lowest price the seller could accept for it"
"a. Reconcile the three estimates - CORRECT ANSWER 36. When value estimates are derived from
cost, direct sales comparison (market data) and income approaches, and the results are relatively close in dollar amounts, an appraiser should do which of the following to obtain a final value estimate? a. Reconcile the three estimates b. Average the three estimates c. Use the highest estimate d. Eliminate the least appropriate approach and average the remaining dollar amounts"
"b. Voidable contract between the parties and neither party can sue - CORRECT ANSWER 37. An
unenforceable contract is BEST defined as a(n): a. Contract in which a party can sue the other to force performance b. Voidable contract between the parties and neither party can sue c. Oral contract can be taken to court for specific performance d. Contract in which a party to an oral agreement cannot sue for damages"
"a. At the tenant's cost - CORRECT ANSWER 38. According to the Federal Fair Housing Act, as amended
in 1988, if a tenant requests permission to install grab bars in a bathroom due to a physical handicap, a landlord MUST permit installation of the bars: a. At the tenant's cost b. Only if alternative housing for the tenant is unavailable in the community c. If the cost of improvement is under $ d. At the landlord's cost"
"c. 25 - CORRECT ANSWER 39. A broker is subdividing a 4-1/2 acre parcel into 50-foot x 100-foot lots.
After allowing 71,020 square feet for streets, how many lots can the parcel hold? a. 18 b. 22 c. 25 d. 39"
"a. Lead-based paint - CORRECT ANSWER 41. Federal law requires a written disclosure to purchasers
for which of the following environmental hazards? a. Lead-based paint b. Formaldehyde c. Asbestos d. radon"
"b. An estimate of value - CORRECT ANSWER 43. An appraiser submits an appraisal report based upon:
a. The loan amount b. An estimate of value c. A predetermined value for the client d. The purchase agreement"
"a. Escheat - CORRECT ANSWER 44. If a person dies intestate with no qualified heirs, the state
exercises which of the following specific rights to take possession of the decedent's estate? a. Escheat b. Eminent domain c. Police power d. Reversionary"
"c. Fulfills the terms of the option - CORRECT ANSWER 45. A property owner MUST convey property
that is subject to an option when the optionee: a. Assignes the option b. Sells the option c. Fulfills the terms of the option d. Offers to exercise the option at a reduced price"
"c. Present both offers at the same time - CORRECT ANSWER 46. At 3:00 pm, Salesperson K receives
an offer on one of their listings from another salesperson. Salesperson K immediately calls the sellers and arranges to meet with them at 6:00 pm. At 4:30 pm, a salesperson from a cooperating broker brings another offer to Salesperson K. At 5:00 pm, the office assistant informs Salesperson K that a third salesperson will be showing the house at 5:30 pm. In this situation, Salesperson K SHOULD: a. Present only the offer that Salesperson K thinks is the best b. Present only the offer that was made first c. Present both offers at the same time d. Advice the seller that K will wait to present the offers until the third salesperson reports any possibile interest"
"d. Inform the seller and potential buyers of the problem. - CORRECT ANSWER 47. A licensee listed a
home in July when the basement was dry. While preparing to show the house in September, after several days of rain, it was found that the basement walls and floor were extremely wet. The licensee SHOULD: a. Order repairs at the seller's expense
"a. It remains enforceable - CORRECT ANSWER 55. If a property owner gives an interested party a
properly executed option with a fixed expiration date of December 31 but dies before that date, which of the following statements about the option is CORRECT? a. It remains enforceable b. It immediately becomes void c. It remains in effect only if the property owner dies intestate d. It remains valid but must be exercised within a statutory period"
"a. Do not have any required agency relationships with the seller - CORRECT ANSWER 56. A
homeowner sent an unsolicited letter to every real estate office in a town requesting they sell the homeowner's house. The letter stated an asking price of $450,000 and the homeowner promised to pay a 7% commission if a closing occurred. Immediately upon receipt of the letter, the brokerage firms: a. Do not have any required agency relationships with the seller b. Cannot exclusively represent a buyer for this property c. Are required to accept or reject the agency promptly d. Are instantly agents of the seller"
"c. No legal recourse to sue the individual is possible - CORRECT ANSWER 57. An individual asks a
neighbor, who is an inactive licensee, to sell a home for the individual and the individual agrees to pay the neighbor a commission. After the home is sold, the individual refuses to pay the commission. What is the neighbor's BEST option? a. Sue the individual for the agreed upon commission under a verbal agreement b. Sue the individual under a signed commission agreement c. No legal recourse to sue the individual is possible d. Put a lien on the home in order to obtain the commission"
"c. The option need not be consummated - CORRECT ANSWER 58. An option contract differs from a
contract for the sale of real estate in that: a. The option does not need consideration to be legally binding b. An option is revocable by the optionor c. The option need not be consummated d. The option automatically renews itself"
"a. Current, certified survey - CORRECT ANSWER 59. A CORRECT metes and bounds legal description
can be found in a(n): a. Current, certified survey b. Previous appraisal c. Geodetic map d. Abbreviated legal description"
"b. The buyers are within their rights because of the broker's misrepresentation - CORRECT ANSWER
- Prospective buyers are shown a house by a broker and assured that the property is connected to the
sewer system. Just prior to the closing, the buyers learn that there is no sewer connection and refuse to go through with the sale. Which of the following statements is MOST accurate about this situation? a. The broker and the seller would most likely sue the buyers for specific performance b. The buyers are within their rights because of the broker's misrepresentation c. The broker is entitled to the commission d. The seller can retain the earnest money deposit as liquidated damages."
"d. Exclusive right-to-sell - CORRECT ANSWER 61. Which of the following listing agreements gives the
broker the MAXIMUM protection of receiving a commission? a. Open b. Exclusive agency c. Net d. Exclusive right-to-sell" "b. Owners who rent out only one room in the house they live in and two apartments in house next door
and refuse to rent to students with religious affilations different from theirs - CORRECT ANSWER 62.
Houses with either rooms or small apartments to rent are situated near a university. Which of the following owners are in VIOLATION of the Federal Fair Housing Act? a. Owners who split their house into apartments, move across town, and refuse to rent either apartment to people with pets b. Owners who rent out only one room in the house they live in and two apartments in house next door and refuse to rent to students with religious affilations different from theirs c. Owners who live in their house, rent out four extra rooms, and refuse to rent to students unless they put up an extra month's rent as an added security deposit d. Owners who rent out two rooms in their house but refuse to rent to Hispanic people"
"d. Title - CORRECT ANSWER 63. Water and mineral rights to real property are insured by what type of
insurance? a. Riparian b. Homeowners c. Flood d. Title"
"b. Federal Fair Housing Act - CORRECT ANSWER 64. A broker has listed a home for rent and has
placed the following advertisement in the local newspaper: "For rent. Lovely home, 3 bedrooms, 2 bathrooms, 2-car garage. Recently remodeled and repainted. Within walking distance of the town park and the public library. Mature couple preferred." Which of the following laws has the broker violated? a. Regulation Z b. Federal Fair Housing Act c. Americans with disabilities act d. Uniform Residential Landlord-tenant Act"
b. The lessee must be compensated for interruption of the lease c. The lessor must provide the lessee with substitute space for the remaining years d. The lease cannot be interrupted."
"b. The broker and seller are liable for misrepresentation - CORRECT ANSWER 70. A buyer enters into
a purchase agreement on a property that is "for sale by owner." The inspection reveals serious structural defects, which causes the transaction to fail. The seller completes minor cosmetic repairs to cover the defects and then lists the property with a broker, who is aware of the defects. A second buyer has an inspection that reveals no serious problems and the broker makes no disclosure of the defects. The transaction closes. Six months later the defects are discovered. Which of the following statements about liability for misrepresentation is CORRECT? a. Only the seller is liable for misrepresentation b. The broker and seller are liable for misrepresentation c. The second buyer has no legal recourse because the second inspection revealed no defects. d. Only the second buyer's inspector is liable because they did not discover the defects."
"b. Waivers of mechanic's lien rights - CORRECT ANSWER 71. Before distributing funds for
construction loans, lenders usually require general contractors to provide: a. Interest due to date b. Waivers of mechanic's lien rights c. Proof of payments to all subcontractors d. Proof of payment of takeout loan insurance."
"c. Be responsible for monetary fines - CORRECT ANSWER 72. A broker met with a Hispanic couple
that wanted to see homes in a predominately Caucasian neighborhood. Instead, the broker took them to a Hispanic neighborhood. The broker was later informed the couple were "testers," and a discrimination complaint was filed. The broker MAY: a. Be exonerated because they were testers b. Immediately lose their license c. Be responsible for monetary fines d. Be required to close their office until the matter is resolved"
"d. time share - CORRECT ANSWER 73. An individual with an ownership interest that involves a specific
period of occupancy along with an interest in common areas, such as the use of exterior lands, pools, and tennis courts, has a: a. partnership b. condominium c. cooperative d. time share"
"a. 837.50 - CORRECT ANSWER 74. Under a city's rent-control guidelines, a four-unit property owner
may improve the property and increase the monthly rent per unit at a rate of 1.5% of the cost of the improvement. If an improvement costs $2,500, the owner MAY increase the monthly unit rents from $800 to:
a. 837. b. 830. c. 809. d. 807.50"
"a. Ground-floor apartments only - CORRECT ANSWER 75. A builder plans to construct fifty garden
apartments in a two-story building. The building will not have an elevator. Which of the apartments MUST meet adaptability requirements according to the Federal Fair Housing Act? a. Ground-floor apartments only b. Second-floor apartments only c. Apartments rented to elderly persons only d. The entire apartment complex"
"b. Liquidated damages - CORRECT ANSWER 76. When the parties to a contract stipulate that a
specified sum must be paid by any party who breaches the contract, the sum is called: a. Punitive damages b. Liquidated damages c. Compensatory damages d. Actual damages"
"c. Law of intestate descent and distribution - CORRECT ANSWER 77. When land is held in fee simple
absolute, and a sole owner dies leaving no will, the owner's title passes in accordance with the: a. Right of survivorship b. Law of testate distribution c. Law of intestate descent and distribution d. State's restrictions"
"b. 27,495 - CORRECT ANSWER 78. A seller has an outstanding loan balance of $47,244 on a house
that sells for $91,000. At the December 15 closing, the seller pays a 6% brokerage fee, a prorated portion of the annual $577 property taxes paid in arrears (with the seller responsible for the day of closing), $82 for deed preparation, and a $165 transfer fee. In this situation, the seller's net, figured on the basis of a 360-day year, will be: a. 35, b. 27, c. 38, d. 38,049"
"c. 128,000 - CORRECT ANSWER 79. The reproduction cost new of a subject commercial building is
$800,000. The effective age is 8 years, and the remaining economic life is 42 years. On the basis of this information, which of the following amounts is the estimated accrued depreciation? a. 16, b. 19, c. 128, d. 152,381"
