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REAL ESTATE FINAL EXAM
QUESTIONS AND CORRECT ANSWERS
"A seller listed his home for six months on February 26. On April 29, a buyer made an offer on the property. The listing broker presented the offer to the seller on April 30. The seller accepted the offer on May 1, with the closing to occur on June 15. Assuming the closing took place on June 15,
when did the listing expire? - CORRECT ANSWER 6/15"
"The sellers listed their property for six months on February 26 for $522,500. They agreed to pay the listing broker a 7% commission at closing on the agreed upon sale price. A buyer made an offer on the property on March 29 for $510,000. The seller countered the offer on April 1 at $517,500, and the buyer accepted the counter offer with the closing to occur on June 15. How much commission did the seller owe the listing broker, and how would it appear on the
settlement statement? - CORRECT ANSWER $36,225. Debit the seller."
"The discount points charged by a lender on a federal VA or FHA loan are a percentage of the -
CORRECT ANSWER loan amount."
"An increase in the availability of money would lead to which effect? - CORRECT ANSWER
Interest rates would go down." "When the amortized payment of a mortgage remains constant over the period of the loan but
leaves an outstanding balance to be paid at the end, this payment is called - CORRECT
ANSWER a balloon payment."
"In an installment land contract, what type of title did the seller retain? - CORRECT ANSWER
Legal"
"Which of the following is true of a second mortgage? - CORRECT ANSWER It is usually
issued at a higher rate of interest."
"Usury MOST nearly means - CORRECT ANSWER illegal interest."
"A borrower bought a $174,000 house with no down payment. The loan was probably -
CORRECT ANSWER a VA loan."
"A house sold for $420,000. The buyer made a 20% down payment. Monthly interest on the loan
was $1,400. What was the interest rate on the loan? - CORRECT ANSWER • 5%"
"Which of the following describes a mortgage that requires principal and interest payments at regular intervals and is called the liquidation of debt by periodic installment until the debt is
satisfied? - CORRECT ANSWER Amortized loan"
"Which is the most common form of mortgage? - CORRECT ANSWER Amortized loan"
"Under RESPA, a copy of Real Estate Settlement Costs And You must be given - CORRECT
ANSWER at the time of loan application, or within 3 days of application."
"The primary purpose of Truth in Lending is to - CORRECT ANSWER disclose the true costs
of obtaining credit."
"Why is the RESPA closing statement allowed to be examined on or before closing? - CORRECT
ANSWER To check for mathematical errors"
"Why would a mortgagee have an appraisal on the property? - CORRECT ANSWER To assure
the property value is sufficient to cover the loan" "Seller Jolita lists her house with Broker Fred. Fred then buys Jolita's house and collects the
agreed-upon commission. This is an example of - CORRECT ANSWER self-dealing."
"An owner was selling his own home. Can he advertise the down payment? - CORRECT
ANSWER Yes, because it was his own home."
"Which is true about restrictive covenants? - CORRECT ANSWER They are placed by private
parties in a deed." "Looking at shopping centers in the appraisal process, the social fiber of the community and
distances from schools is called - CORRECT ANSWER neighborhood analysis."
"Which best describes why a buyer purchases a home using the market data approach? -
CORRECT ANSWER Buyers buy after they compare the house with others."
"How many feet in one yard? - CORRECT ANSWER 3 feet in one yard"
"At age 18, Leslie is considering what to do when she graduates from high school in 9 months. Can
she begin taking prelicense coursework during her final year of high school? - CORRECT
ANSWER Yes, but she cannot be licensed until she receives her high school diploma."
"* What must a listing agreement include? - CORRECT ANSWER a definite expiration date,
include a description of the property, and specify the fee or commission."
"What type of Acts were developed to make laws aimed at controlling zoning and property use? -
CORRECT ANSWER Enabling Acts"
"What Florida Act was initiated to limit urban sprawl and encourage a more compacted
development of land use? - CORRECT ANSWER The Growth Management Act"
"Mario signed an exclusive listing with Paula to sell his apartment complex. After a few weeks Mario cancelled the listing agreement and contacted an auction house to turn the property
quickly. Paula feels she is owed a commission. Is she correct? - CORRECT ANSWER No,
because Paula did not meet the conditions for payment of commission before the cancellation of the agreement."
"What are the goals of planning and zoning? - CORRECT ANSWER savings of tax money by
preventing urban sprawl; adequate provisions of services such as fire, police and libraries; providing for road right-of-ways and set backs; protection against costly drainage, flooding or environmental problems; protection for the public from harm in building; reduction in political and equity problems in landfills, prisons etc.; reduction in cost for major catastrophes such as earthquakes, tornados and fire." "Beth wanted a new entrance sign to her brokerage. She took the old sign down, but following a problem with the supplier, after 2 months still hadn't put up a new one. Beth received a citation for not having a proper entrance sign displayed. If Beth wants to dispute the citation which of the
following is TRUE? - CORRECT ANSWER Beth may dispute the citation within 30 days of
being served." "John has been farming his land in Florida for nearly 22 years. His principal crops are cabbage and oranges. He also raises pigs and horses for sale on his 280-acre property. He has consistently used conservation methods and fertilizing to maintain the value of the land. He has also reforested where possible on his property. He is currently seeking some tax relief. Is he likely to
get relief? - CORRECT ANSWER Yes, because his property falls under the Florida Green Belt
Law."
"***What is the Florida Green Belt Law? - CORRECT ANSWER This taxes agricultural land at
a lower rate than the encroaching cities around the land, and preserves the land for future agricultural use." "Wilma accepted an offer on her home from a buyer who provided a $3,500 earnest money deposit, but thereafter neither she nor her broker heard from the buyer. What is the most
accurate way the broker should handle this situation and the $3,500? - CORRECT ANSWER
The broker must notify the Commission within 15 business days that he has a good-faith doubt." "Moe relocated from Brooklyn to Florida, qualified for a Florida broker's license and opened a small office in Palm Beach. His family back in Brooklyn say he should open an office in Brooklyn
too. Could Moe do this legally? - CORRECT ANSWER Yes, there is no law that prohibits a
broker in Florida from having an office out of state as long as all of his escrow funds are held in trust by a Florida bank or credit union." "Lane, a broker, listed a small cottage near the causeway at $250,000, but the seller finally had to accept an offer of only $230,000. When Lane met with the parties, both the buyer and her client asked her to prepare a second contract in the amount of $250,000 "so the mortgage company will give us a higher loan." Is there anything wrong with Lane following his client's and the buyer's
wishes? - CORRECT ANSWER Yes, it is illegal to enter into a dual contract for the purpose of
securing a larger loan." "If the board determines a proposed site does not conform with existing land use plans and
zoning ordinances, what steps may the board take? - CORRECT ANSWER Authorize a
variance to the land use plan and zoning ordinances to bring the proposed site into line with the existing local land use plans and zoning ordinances." "Broker Marge was swamped, and asked Jilly and Kelly to help with 1 of her clients. Jilly is a non- licensed secretary and Kelly is a real estate licensee working in a non-representative role with the seller. Who could help Marge and provide the seller with a comparative market analysis (CMA)?
CORRECT ANSWER Kelly could. There is no restriction to prevent a licensee from preparing
a CMA for a buyer or seller." "Eve and her husband Adrian have homesteaded property. Adrian owns investment real estate in severalty and has expressed his desire that his investment property would go to his friend Rex.
When Adrian dies testate, which of the following statements is TRUE regarding the situation? -
CORRECT ANSWER Eve automatically has 100% interest/ownership in the principal
residence. She may also file for an elective share of the investment property. Rex would be entitled to the investment property by reason of the testate."
"Rita fell in love with a home built in 1905. She was surprised when the listing broker gave her a
lead-based paint disclosure form at closing. Which of the following is TRUE? - CORRECT
ANSWER The law says the seller may not accept an offer from the buyer unless both the Lead-
based Paint Disclosure and EPA pamphlet have been given. If the seller fails to give the disclosure and pamphlet to the buyer, the broker is responsible for doing so." "When Rex obtained his Florida sales associate license he misrepresented the facts and concealed that his insurance license in another jurisdiction had been revoked more than 20 years before.
Which of the following is a mandated penalty according to Florida law? - CORRECT ANSWER
There is a mandated $1,000 administrative fine, and Rex's license will be revoked."
"What is the acronym for the process of adverse posession to take place in Florida? - CORRECT
ANSWER P.O.A.C.H."
"*** What does P.O.A.C.H. stand for? - CORRECT ANSWER Posession, Open, Actual,
Continuous, Hostile." "Eldon arrived in Coral Gables and found the perfect apartment. He signed a written agreement with the property owner, but the contract had no date of termination. Which of the following
most accurately describes Eldon's situation? - CORRECT ANSWER Eldon has a valid contract.
The owner did not violate the law. The owner is only obligated under this scenario to give Eldon at least 15 days' notice plus the payment period to vacate prior to the end of the monthly period." "A buyer is visiting open houses and runs across a nice looking home for sale. Can the listing agent
show the buyer the home? - CORRECT ANSWER Yes, as long as the listing agent gives the
buyer an agency disclosure notice which states he represents the seller."
"Which best describes a subagent? - CORRECT ANSWER A seller hires A1 Realty to sell his
property. The broker at A1 lists the property and a broker at Sun Realty brings a buyer but does NOT represent the buyer." "A mortgage in Florida may not contain both a prepayment penalty clause and which of the
following? - CORRECT ANSWER A due-on-sale clause"
"Private home ownership in Florida is subject to which of the following? - CORRECT
ANSWER Government interference called P.E.T.E. (Police Power, Eminent Domain, Taxation,
Escheat.)" "After failing his Florida licensing exam Doug decided to change his career path and began working as an administrator for the FHA. With FHA approval, Doug gave lists of foreclosed
properties to broker Paige, under the provision that Paige would pay him a percentage of commissions earned by her company on properties from that list. Which of the following is
TRUE? - CORRECT ANSWER Paige is violating the law because she is agreeing to pay
compensation to an individual who is not licensed." "Beacon Real Estate has signed agency agreements with the Platts and the Browns. The Browns
like the Platts' home and want to make an offer. Can Providence represent both parties? -
CORRECT ANSWER No, because no Florida real estate broker may act as a dual agent."
"A broker has just secured a new listing. If he wants to erect a "For Sale" sign on the property,
what must he do first? - CORRECT ANSWER The broker must get the property owner's
permission to do so." "What is the correct term for a Florida real estate licensee working under the direction of a
broker? - CORRECT ANSWER Real estate sales associate"
"A sales associate, Jose, entered agency agreements with both the Cunninghams (sellers) and Marissa (buyer). Jose helped Marissa write an offer for $5,000 less than the asking price and presented it to the Cunninghams. Jose pressured the Cunninghams to accept the lower offer since
the house had been on the market for 3 months with little interest. Is this allowable? -
CORRECT ANSWER No, Jose is working as a transaction broker and is acting unfairly
towards the Cunninghams." "When applying for the Florida real estate licensure examination, what does a candidate need to
submit? - CORRECT ANSWER An authenticated application; digital fingerprint data; the
appropriate fee(s)"
"In Florida can a real estate agent list a property for sale based on the "net price"? - CORRECT
ANSWER Yes, net listings are legal in Florida."
"Which of the following brokers is in violation of the recent updates to Florida statutes regarding brokerage offices? Which of the following is in violation of brokerage office and sign
requirements? - CORRECT ANSWER Broker Alana has her office in her condominium. The
condo association prohibits owners from displaying any materials on their doors, so Alana has her business sign posted on the inside of her condo door, which is visible to clients as soon as they enter." "Cody bought a house in the fall which was found to have a leaky roof during the following spring's rainstorms. The sellers had discussed the roof leaks with transaction broker, but the transaction broker decided not to divulge those details to the Cody and now claims Cody did not
"With regards to the 2003 changes to the Florida Statutes, which of the following limitations has
been placed on FREC in the collection of fees for the Recovery Fund? FREC can assess fees -
CORRECT ANSWER until the Recovery Fund reaches $1 million."
"A sales associate decides to sell his own property without using a broker. Which of the following
is TRUE regarding any advertising the sales associate may wish to do? - CORRECT ANSWER
The sales associate must disclose the fact that he is a real estate licensee." "Which of the following is considered a material fact that MUST be disclosed per the Florida
statutes? - CORRECT ANSWER While the owner was restaining his deck, the staircase
crumbled due to termite activity."
"With regards to appraisal services, which of the following holds TRUE? - CORRECT
ANSWER The law allows brokers and sales associates to provide valuation services for
compensation as long as they do not represent themselves as appraisers." "A real estate licensee is acting as a transaction broker facilitating the sale of a commercial
building. Which of the following is correct regarding transaction brokerage in Florida? -
CORRECT ANSWER Neither party is required to sign the broker disclosure notice if the
broker is acting as a transaction broker."
“A real estate licensee has a buyer agency agreement. What is the seller in this situation? -
CORRECT ANSWER A customer."
"An optionor and an optionee make a contract for an option on a commercial piece of property. If
the optionee decides to exercise his option, when must he perform? - CORRECT ANSWER He
must exercise his option under the terms of the option contract."
"When can a landlord evict a disabled blind or disabled tenant from the premises? - CORRECT
ANSWER If the tenant has loud parties, makes too much noise, and is constantly disturbing
other tenants" "4. Broker Carr, with ABC Real Estate Company, listed the property with a seller. Broker Smith, with XYZ Real Estate Company, called Broker Carr, and disclosed that he was a Buyer Agent. Broker Smith wrote a contract with a buyer for the sale of the property. What, if any, is the
relationship between the buyer's broker, the seller and the listing broker? - CORRECT
ANSWER There is not a relationship between the parties. Broker Carr represents the Seller and
Broker Smith represents the Buyer."
"A buyer bought a property without telling the seller of his intended purpose for the property. The contract contains no contingency clauses and it is a properly executed contract. After the closing, the buyer is unable to obtain the zoning he needs for his commercial project. What is the
contract at this stage? - CORRECT ANSWER Enforceable"
"6. The seller and the buyer finally agreed to a purchase price of $203,500 with the closing to occur on June 15. The taxes for the year in the amount of $2,500 have not been paid by the seller. (Taxes are paid in arrears). How much would the tax proration amount to, and how would it appear on a full settlement statement? Base your answer on a 365 day year, and the buyer is
responsible for the day of settlement. - CORRECT ANSWER $1,130.14 debit the seller and
credit the buyer" "The seller and the buyer agreed to a purchase price of $270,000 with the closing to occur on June
- The seller's loan balance after the June 1 payment was $170,000. with an interest rate of 6%.The monthly payment was $1,800 principal and interest. What was the loan balance the day
of closing, and how much interest did the seller owe the bank? - CORRECT ANSWER Loan
balance $170,000; interest due $425" "The buyer and seller agreed to a purchase price of $310,500. The buyer received an 80% loan.
How much was the buyer's loan and how did it appear on the settlement statement? - CORRECT
ANSWER $ 248,400. Credit the buyer only."
"A home improvement company was negotiating with a homeowner to add on two rooms to a home. The company agreed to take a second mortgage as long as the homeowner also included the rest of the property in the loan. The company and the homeowner agreed to a price and the company provided the necessary disclosure form on Monday and the homeowner signed the agreement at noon the following day. Assuming that the week had five business days, until what
time could the homeowner rescind the loan? - CORRECT ANSWER Friday, midnight (Three
business day period)"
"The seller under a land contract is called - CORRECT ANSWER The vendor"
"On an 8% straight term loan of $6,071, the borrower paid total interest of $1,700. How long did he
have the loan? - CORRECT ANSWER 42 months"
"Are recording fees and title insurance premiums part of the Truth in Lending statement? -
CORRECT ANSWER No, These are considered legal, not financing fees and therefore are not
part of the Truth in Lending statement."
"A mortgage broker - CORRECT ANSWER arranges loans between borrowers and investors."
"The lender is required, under RESPA, to provide a detailed "Good Faith Estimate (GFE)"
statement at the time of loan application or within three business days to - CORRECT
ANSWER the buyer."
"In which of the following markets may a lender sell a loan that a mortgage banker has
previously originated? - CORRECT ANSWER Secondary market"
"Though 30 year loans are more common, 15 year loans are considered standard, conventional
loans. - CORRECT ANSWER Yes."
"Under an FHA graduated payment mortgage, which of the following fluctuates over the term of
the loan? - CORRECT ANSWER Monthly payments"
"Who are graduated payment mortgages aimed to> - CORRECT ANSWER Particularly at
young families who expect to see their earnings rise over the next five to ten years."
"The maximum permissible "loan to value ratios" are - CORRECT ANSWER based on sale
price or appraised value, whichever is lower."
"Are there any state-mandated qualifying requirements for conventional loans? - CORRECT
ANSWER No, Not only are guidelines not uniform, qualification standards can vary
enormously from lender to lender."
"A buyer wants to take out an FHA loan. The broker should refer the buyer directly to -
CORRECT ANSWER any approved lending institution such as a bank or savings and loan
association." "An owner advertised "beautiful acreage; only $5,000 down; owner will personally finance down
payment." Would this be in violation of the Truth in Lending Act? - CORRECT ANSWER No.
Owners are not covered by Regulation Z."
"What is Regulation Z? - CORRECT ANSWER is the part of the Truth in Lending Act of 1968
that promulgates rules that protect consumers against misleading practices by the lending industry." "A mortgage company makes a number of loans to be assembled into one package and sold to permanent investors. This process is an example of interim financing to the mortgage company
and is called - CORRECT ANSWER warehousing."
"If a single parent is applying for a real estate loan, when would the fact have to be revealed that
part of the parent's income is from child support? - CORRECT ANSWER If the parent was
relying on the income for repayment of the loan"
"When the lender under a deed of trust requires title insurance, who would be the most likely
person to pay for it? - CORRECT ANSWER The trustor"
"Trustor is another name for? - CORRECT ANSWER Borrower"
"The Pickets are purchasing a home for $780,000 and the lender is giving them a 90% loan at 5%
interest, plus a 2% loan origination fee. How much is the loan origination fee? - CORRECT
ANSWER $14,040"
"Discrimination is prohibited in lending practices under - CORRECT ANSWER ECOA"
"A buyer assumes the mortgage. How is the owner relieved of the liability? - CORRECT
ANSWER Novation"
"Which type of loan will result in the largest reduction of the principal balance most quickly? -
CORRECT ANSWER 6% over 15 years"
"Who is the largest purchaser in the secondary market? - CORRECT ANSWER Fannie Mae"
"What does Fannie Mae stand for? - CORRECT ANSWER Federal National Mortgage
Association"
"Which transaction requires a securities license? - CORRECT ANSWER Selling shares in
Fannie Mae"
"Who is NOT an originator of primary loans? - CORRECT ANSWER FHA"
"A buyer wanted to use a promissory note for consideration on the purchase of a property. Can he
do this? - CORRECT ANSWER Yes. This is acceptable as long as the seller agrees."
"If advertised alone, which would be in violation of Truth in Lending? - CORRECT ANSWER
"No down payment required.""
"A real estate agent should tell the buyer, his customer, which of the following? - CORRECT
ANSWER A pending or recent zoning change"
"A square is 1/8 of a mile by 1/8 of a mile. How many acres is this? - CORRECT ANSWER 10
acres One-eighth of a mile square is the same as 10 acres. Multiply 1/8 X 1/8 = 1/64 divided into 640 acres = 10 acres"
"The Adams family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the monetary value of the home had gone up proportionately less than the other houses in the neighborhood. This phenomenon is an
example of the principle of - CORRECT ANSWER regression."
"In valuing a single family residence by the comparison approach, an appraiser would make
adjustments to - CORRECT ANSWER the comparable properties."
"Some expenses paid at closing must be __________ between the buyer and the seller. The most
common items that fall into this category include taxes, insurance, and utilities. - CORRECT
ANSWER prorated"
"How does one determine the gross rent multiplier? - CORRECT ANSWER Property value
divided by the monthly rent"
"Restrictive covenants that run with the land - CORRECT ANSWER apply to and bind all
successive owners of the property." "In doing a market analysis, an appraiser found a recently sold property where the owners had just gone through a divorce. The property had been listed for $260,000 for 3 months but was
purchased for $170,000 by one of the spouses. Should the appraiser use this as a comparable? -
CORRECT ANSWER No--because of the divorce it was not an "at arms' length" transaction."
"After a long dispute with a bankrupt and corrupt Florida broker, the Gonzalez family was awarded a judgment for $12,500 in actual damages and $87,500 in punitive damages, for a total of $100,000. They were then surprised find that the Real Estate Recovery Fund would not cover all
$100,000. Which of the following is TRUE? - CORRECT ANSWER The Real Estate Recovery
Fund is expressly limited to only actual, not punitive damages. Therefore only $12,500 would be available for recovery in this case." "Ralph is a sales person with Sunlight Real Estate Brokers and when he shows his client Ben a property listed by Xavier Realty, Ben decides to make an offer on the property. Ralph notices that Ben has written the earnest money deposit check to be made payable to the wrong name. Which
of the following statements accurately describes the error and ideal corrective action? -
CORRECT ANSWER Because Ben wrote the check payable to Ralph, Ralph should return the
check to Ben and request he make out a new check." "Marhall has a court order against a bankrupt broker for $75,000 in damages caused by the
broker's misconduct. How much will Marshall receive from the Recovery Fund? - CORRECT
ANSWER $50,000"
"Alejandro is a salesperson at Rococo Real Estate Brokerage in Pensacola. While visiting his daughter in Daytona, Alejandro sees a property offered by Daytona Diligent Realty which he proceeds to sell to a client back in Pensacola. Alejandro receives 5% commission from Daytona Diligent Realty. Is there anything wrong with this situation, and if so, what is the key legal
condition? - CORRECT ANSWER Yes, Alejandro and Daytona Diligent Realty are in violation
of Florida's real estate license law.***** (Alejandro may only be compensated by his broker, Rococo Real Estate, so any offer of commission or fee made directly by Daytona Diligent Realty must be refused. Both parties are in violation of Florida's real estate license law.)"
