Real Estate Sales Practice Questions PDF

REAL ESTATE SALES - NATIONAL + OHIO Dashboard Cameron's Stuff You completed this session Here's how you did on Dec 6, 2024, 11:59:08 PM: 125 88 Total Correct Questions...

REAL ESTATE SALES - NATIONAL + OHIO Dashboard Cameron's Stuff You completed this session Here's how you did on Dec 6, 2024, 11:59:08 PM: 125 88 Total Correct Questions Category Progress Missed 37 0 Marked for 70% Review Property Ownership 7 Total Questions 4 Correct 3 Missed ★ 0 Marked for Review 👎 Question (1 of 7) Which is NOT an encumbrance? CORRECT ANSWER: license YOUR MISSED ANSWER: appurtenant easement RATIONALE Since a license is revocable, it cannot burden the property owner's title. A license does not create an interest in another's land. ID: 10177 👎 Question (5 of 7) A wife and husband may not hold title to their home as  CORRECT ANSWER: tenants at will YOUR MISSED ANSWER: tenants in common RATIONALE Tenancy at will is a leasehold estate. ID: 10189 👎 Question (6 of 7) What is NOT considered when determining whether an item is a fixture or personal property? CORRECT ANSWER: value of the annexed item YOUR MISSED ANSWER: relationship of the parties RATIONALE The value of the item is not considered. Most often the item is valuable. Intention and manner of annexation are the most heavily weighed factors in this decision. ID: 10183 Land Use Controls and Regulations 4 Total Questions 2 Correct 2 Missed ★ 0 Marked for Review 👎 Question (2 of 4) Billy has a two-acre lot that is zoned agricultural. He asks his real estate agent if she could tell him how to go about building a house on the land. Billy's agent tells him that he needs CORRECT ANSWER: a use variance YOUR MISSED ANSWER: an area variance RATIONALE Zoning restrictions are issued by the local government. Declarations and bylaws are the rules that govern a condominium. A planned unit development involves more than one kind of land use. An area variance is just permission from the government to deviate from the zoning rule. A use variance is permission from the government to use the land for something different than what is it zoned for. ID: 12034 👎 Question (3 of 4) Building codes can be enforced by CORRECT ANSWER: the issuance of permits YOUR MISSED ANSWER: zoning laws RATIONALE  Building codes set construction standards; building plans must comply with the code for a permit to be issued. Failure to comply with the permit may result in a stop order, fines, and/or injunctions. Zoning laws set forth permitted uses. Licenses allow certain activities. Letters of approval are not a method of enforcement. ID: 12026 Valuation and Market Analysis 6 Total Questions 4 Correct 2 Missed ★ 0 Marked for Review 👎 Question (3 of 6) When the appraiser looks at the home Sandy just purchased, they notice it has a fireplace and the comparable homes do not. They make a $3,000 upward adjustment on their sales comparison approach worksheet. The $3,000 adjustment is based on what appraisal principle? CORRECT ANSWER: contribution YOUR MISSED ANSWER: conformity RATIONALE This is the amount the fireplace "contributes" to the value. It is not necessarily the cost to install the individual item. ID: 13571 👎 Question (5 of 6) Reproducing a structure best describes building CORRECT ANSWER: an exact replica of the structure YOUR MISSED ANSWER: the functional equivalent of the original structure RATIONALE Building an exact replica means that the new building has the exact look and feel as the original structure. If an historical building were destroyed, the building would likely be reproduced. ID: 13565 Financing 8 Total Questions 7 Correct 1 Missed ★ 0 Marked for Review 👎 Question (4 of 8) A mortgage that has not been recorded CORRECT ANSWER: is effective between the lender and the borrower only  YOUR MISSED ANSWER: has no legal effect RATIONALE While the mortgage may not become a lien unless it is recorded, it is still effective between the lender and the borrower only. It would not be effective against the subsequent purchaser who had no knowledge of the unrecorded mortgage. A mortgagor would still be personally liable under the mortgage and promissory note. ID: 6915 General Principles of Agency 10 Total Questions 8 Correct 2 Missed ★ 0 Marked for Review 👎 Question (1 of 10) John has an open listing on his home with Company X. Paul has an exclusive right to sell listing with the same company. Their contracts have a 30-day protection period. Both listings expire on March 31st. On April 15th, Paul and John view each other's properties for the first time, and decide to swap homes. How much commission is Company X due? CORRECT ANSWER: none YOUR MISSED ANSWER: commission from just Paul RATIONALE No commission is due Company X. Protection periods will protect an agency only in regard to purchasers who have viewed the property during the listing period. ID: 2018 👎 Question (9 of 10) Which would be considered evidence of the agency relationship between broker and seller? CORRECT ANSWER: listing agreement YOUR MISSED ANSWER: buyer-broker contract RATIONALE The listing agreement gives actual authority to the broker to represent the seller. ID: 2004 Property Condition and Disclosures 8 Total Questions 8 Correct 0 Missed ★ 0 Marked for Review Contracts 14 Total Questions 7 Correct 7 Missed ★ 0 Marked for Review 👎 Question (3 of 14) What would cause termination of a real estate contract? CORRECT ANSWER: completion YOUR MISSED ANSWER: fraud RATIONALE The termination of a contract occurs if it is completed (i.e., closed). Fraud makes a contract voidable by the lied to party, but it does not necessarily terminate the contract. Acceptance of an offer would commence the contract, not terminate it. Applying for financing is typically not a cause for termination of a real estate contract. ID: 6596 👎 Question (5 of 14) An offer to purchase that states the offer will remain open for 72 hours CORRECT ANSWER: may be withdrawn by the offeror at any time before the offer is accepted YOUR MISSED ANSWER: may be withdrawn within 72 hours, only with the approval of the offeree RATIONALE An offer is just an offer. It does not become a contract until it is accepted. Thus, even if the offer said it would remain open for 72 hours, it is not binding upon either party as it is not a contract. On the 72nd hour the offer will expire. ID: 6621 👎 Question (7 of 14) Consideration in a real estate sales contract would be CORRECT ANSWER: money in exchange for real estate YOUR MISSED ANSWER: offer and acceptance RATIONALE Valuable consideration (money in exchange for real estate) is an essential element to a real estate contract. Love and affection would be an example of good consideration but is used when gifting property, not when a real estate contract is involved. Offer and acceptance are two of the other essential elements to a contract, as is contractual capacity. ID: 6591 👎 Question (10 of 14) If seller Adam simply decides not to go through with the closing on a sale to buyer William, what can William do about it? CORRECT ANSWER: Sue for specific performance and for damages YOUR MISSED ANSWER: nothing, because the deal has not yet closed RATIONALE A successful lawsuit for specific performance may compel Adam to perform his responsibilities under the contract, including transferring title to William. In addition, if William can prove other damages due to Adam's refusal to perform, William may also sue to recover those damages. If the contract was executed (completed), William would have obtained equitable title, and it would not matter that closing had not occurred. ID: 6601 👎 Question (11 of 14) Transferring one's rights or obligations under a contract to another and being relieved of liability best describes CORRECT ANSWER: novation YOUR MISSED ANSWER: consideration RATIONALE An assignment does not relieve the withdrawing party of liability; novation does. ID: 6578 👎 Question (13 of 14) Ed makes an offer to buy William's house for $45,000. William counters that he wishes to receive $47,000 for the house. Ed rejects William's counteroffer. William later says he will accept Ed's original offer of $45,000. Which statement is TRUE? CORRECT ANSWER: there is no contract between Ed and William YOUR MISSED ANSWER: there is a bilaterally enforceable contract between Ed and William RATIONALE There is no contract between Ed and William, as a counteroffer is a rejection of the original offer. Once William rejected Ed's offer and made a counteroffer, he could not resurrect Ed's offer by going back and accepting it. A unilateral contract is one that is enforceable, but only by one party. A bilateral contract is a contract enforceable by both parties. ID: 6592 👎 Question (14 of 14) Tommy asks his real estate agent to prepare a lease agreement instead of a purchase agreement now that he has decided to rent rather than buy. The agent should  CORRECT ANSWER: advise Tommy to see his lawyer YOUR MISSED ANSWER: prepare the lease and present the lease RATIONALE A real estate agent may fill in the blanks of a real estate purchase agreement approved by a local bar association. Leases are in the same category as deeds, land contracts, and other legal instruments--the agent cannot prepare these documents. ID: 6636 Transfer of Title 6 Total Questions 4 Correct 2 Missed ★ 0 Marked for Review 👎 Question (3 of 6) The Real Estate Settlement Procedures Act was enacted to CORRECT ANSWER: protect consumers from abusive lending practices YOUR MISSED ANSWER: provide detailed information concerning cost of interest and interest paid over the life of a loan RATIONALE RESPA ensures that consumers are provided with important, accurate, and timely information about the actual costs of selling or closing a transaction, not about the cost of obtaining a loan and interest. The costs of obtaining loans and interest are provided under Regulation Z of the Truth-in-Lending Act. ID: 10786 👎 Question (4 of 6) What type of title insurance coverage protects the holder from damage due to a secret lien? CORRECT ANSWER: extended coverage YOUR MISSED ANSWER: standard coverage RATIONALE Only extended coverage title insurance protects the holder from unrecorded defects in the title. ID: 10775 Practice of Real Estate 10 Total Questions 6 Correct 4 Missed ★ 0 Marked for Review 👎 Question (1 of 10) An out-of-state prospect asks an agent to locate a diverse neighborhood for him. The agent should CORRECT ANSWER: explain that research of this nature is beyond the agent's scope of authority YOUR MISSED ANSWER: research the population trends in the neighborhoods RATIONALE A real estate agent has no duty or obligation to provide demographic data that would have the effect of limiting housing choices. An agent can provide resources for the consumer to explore on their own (i.e. www.census.gov). ID: 6002 👎 Question (4 of 10) Homeowners with both a first and second mortgage decide to ask their primary lender to accept a short sale offer on their home. The primary lender allows the short sale. The listing agent should warn the seller of the CORRECT ANSWER: second mortgage holders rights YOUR MISSED ANSWER: tax consequences RATIONALE While the first mortgage holder could allow the owner to take a short sale, there is no rule saying the seller gets to walk away with all debt forgiven. A short sale typically takes months to negotiate and so the listing agent would not have to warn the client of a quick transaction. The second mortgage holder can turn the debt over to a collection agency. Tax advice should come from an accountant not a real estate agent. Legal advice should always come from an attorney. ID: 6036 👎 Question (8 of 10) Which would be considered exempt under the Civil Rights Act of 1866? CORRECT ANSWER: there are no exemptions YOUR MISSED ANSWER: a private club RATIONALE There are no exemptions under the Civil Rights Act of 1866. ID: 6005 👎 Question (9 of 10) A agent goes on a listing appointment where the owner informs the agent that he has missed a couple of mortgage payments. The property values have declined and now the owner owes more for the property than it's worth. In order for the owner to sell without needing to bring money to the closing table, the agent should suggest that the seller  CORRECT ANSWER: negotiate a short sale with his bank YOUR MISSED ANSWER: offer the bank a deed in lieu of foreclosure RATIONALE For an agent to suggest a deed in lieu of foreclosure would be giving legal advice; this is illegal without a license to practice law. A short sale is when the lender allows the owner to sell the property for less than what's owed on it. A broker is more likely to suggest exclusive agency over the owner selling by themselves. If the agent is not experienced in negotiating short sales he should refer the seller to an agent who is rather than just walk away. ID: 6028 Real Estate Calculations 8 Total Questions 4 Correct 4 Missed ★ 0 Marked for Review 👎 Question (4 of 8) Local ordinance requires a 20-foot rear and front setback. The ordinance also requires a 10-foot side set back. If the lot measures 100' x 200' and a developer wants to build a three-story office building, which is the maximum allowable square footage of the office building? CORRECT ANSWER: 38,400 square feet YOUR MISSED ANSWER: 12,800 square feet RATIONALE From the 100' frontage, subtract the 10' per side setback (100' - 20' = 80'). From the 200' depth, subtract the 20' rear and front setback (200' - 40' = 160'). 80 feet of frontage x 160 feed of depth = 12,800 square feet allowed by local ordinance. Remember, the developer wants to build a three-story building on the lot, so multiply that figure by three floors: 12,800 square feet x 3 stories = 38,400 square feet allowed by local ordinance. ID: 9009 👎 Question (6 of 8) Joan purchased a townhouse for $166,500 and wants to make a 13% profit on the original investment after paying a 6.0% commission. Rounding your answer to the nearest dollar, what must the property sell for to make this profit? CORRECT ANSWER: $200,154 YOUR MISSED ANSWER: $220,350 RATIONALE This is a two-part calculation. First, determine what the 13% profit would be on $166,500 by multiplying it by 113% (the original investment plus 13%) or $166,500 x 1.13 = $188,145. Next, divide the result of $188,145 by 94% (100% minus 6% commission) or $188,145 / 0.94 = $200,154.25. Rounded, Joan must sell the townhouse for at least $200,154.  ID: 9008 👎 Question (7 of 8) The property sale will close on April 15, 2010. Taxes are $4,300 per year and are paid through December 2009. Calculate the seller's share of taxes using a calendar year (365 days). CORRECT ANSWER: $1,236.98 YOUR MISSED ANSWER: $1,362.89 RATIONALE There isn't really a formula for calculating prorations. First, calculate a cost per day, then determine the number of days in which taxes haven't been paid, and then multiply the number of days by the daily tax rate. Substitute numbers for the known factors in the formula. Step 1: Determine the Daily Tax Rate: $4,300 / 365 = $11.7808; Step 2: Determine the Number of Days: January 31 + February 28 + March 31 + April 15 = 105; Step 3: Determine Amount Owed: 105 days x $11.7808 per day = $1,236.984. The seller owes $1,236.98 in taxes. ID: 9014 👎 Question (8 of 8) Bill was thinking of purchasing an apartment building. He wanted an 11% return on his investment and asked to see the books for this building. There are four apartments on each floor of the five-story building. The rent for an apartment on the first floor is $400 a month, and each floor's rent increases $50 per month, per apartment. Bill noticed a loss of rent through vacancy and collection losses of 9%, and when he figured the operating expenses, they averaged $720 a month. With all of this information, what is the most that Bill should pay for this building (round your answer to the nearest thousandth). CORRECT ANSWER: $914,000 YOUR MISSED ANSWER: $897,000 RATIONALE The size of the numbers means nothing! Just remember the formula from a capitalization problem. Figure the gross income (the ideal income): $1,600 (4 x $400) + $1,800 (4 x $450) + $2,000 (4 x $500) + $2,200 (4 x $550) + $2,400 (4 x $600) = $10,000 per month. Multiply $10,000 by 12 to get an annual income of $120,000.@@ The second step reminds us that the income we are showing is ideal, not real. We have to take away rent losses to find out just how much effective gross income is really generated by this building. Subtract the 9% vacancy and collection loss rate from the projected income: $120,000 x 91% (100% - the 9% vacancy and collection loss rate) = $109,200 real income (effective income). Once the investor pays his operating expenses, he'll know how many net dollars his building brings in. $109,200 - $8,640 ($720 x 12 months) = $100,560 net dollars. @@Now the last step: Divide the net income ($100,560) by the rate of return that Bill wants this money to represent, 11% ($100,560 divided by 11% = $914,181.81). Rounded to the nearest thousandth, if Bill pays more than $914,000, he will not make 11% on his investment. ID: 8998 State Governance of the Real Estate Profession 4 Total Questions 2 Correct 2 Missed ★ 0 Marked for Review 👎 Question (1 of 4) Who promotes the Canons of Ethics? CORRECT ANSWER: the Commission YOUR MISSED ANSWER: the Division RATIONALE The Commission, which is all about our education, teaches ethical guidelines to help navigate through common ethical dilemmas. ID: 3692 👎 Question (4 of 4) The power to set continuing education standards is vested with CORRECT ANSWER: the Ohio Real Estate Commission YOUR MISSED ANSWER: the Superintendent of the Ohio Division of Real Estate RATIONALE The Ohio Real Estate Commission is vested with the power to set licensing exam standards and continuing education standards. The Superintendent reports to the Commission, and is charged with administering license laws. ID: 3691 Licensing Requirements 6 Total Questions 4 Correct 2 Missed ★ 0 Marked for Review 👎 Question (3 of 6) What is the minimum passing score needed for each portion of the state license exam? CORRECT ANSWER: 70% YOUR MISSED ANSWER: 75% RATIONALE Starting in January, 2011, a score of 70% or better is a passing score for the state license exam. ID: 18655  👎 Question (6 of 6) If an applicant for a real estate broker's license fails to pass the state examination, how many times may he retake the exam before having to retake the required pre-licensure education? CORRECT ANSWER: no limit YOUR MISSED ANSWER: three RATIONALE There is no limit on the number of times an applicant for a broker's license can retake the examination. ID: 18627 License Law and Rules of the Ohio Real Estate Commission 16 Total Questions 14 Correct 2 Missed ★ 0 Marked for Review 👎 Question (11 of 16) The buyer is making an offer contingent on obtaining financing from the seller and asks the agent to prepare the document. The agent should CORRECT ANSWER: Seek legal counsel YOUR MISSED ANSWER: ask broker for advice RATIONALE An agent can only fill in the blanks of a purchase agreement approved by a local Bar Association. A court could determine that the agent is practicing law to create an addendum to a contract. ID: 527 👎 Question (14 of 16) If a licensee reduces his brokerage commission to facilitate agreement between a seller and buyer, what must happen? CORRECT ANSWER: the licensee must disclose the commission reduction in the purchase agreement YOUR MISSED ANSWER: the licensee must get the seller to sign a "price reduction amendment" to the listing agreement RATIONALE One of the issues for disciplinary action by the real estate commission is "having offered anything of value" as an inducement to a person to enter into a contract for the purchase and sale of real estate. A reduction in commission constitutes an offer of value to induce the seller to sell, and must be disclosed in the purchase agreement. ID: 455 Brokerage Relationships (Agency Law) 14 Total Questions 10 Correct 4 Missed ★ 0 Marked for Review 👎 Question (2 of 14) A real estate licensee, under an exclusive right to sell listing agreement, is CORRECT ANSWER: required to Act solely on behalf of the seller's interest YOUR MISSED ANSWER: required to work exclusively with the listed property and no other property RATIONALE The Agency Disclosure Statement, in explaining seller agency, states that the agent and the brokerage are required to act solely on behalf of the seller's interest to obtain the best price and terms for the seller. ID: 1039 👎 Question (6 of 14) A salesperson takes a call at the office. The caller is a buyer who says he has a trust fund and wants to buy a house. The house the caller is interested in is a house personally owned by the real estate agent. Which situation is not possible? CORRECT ANSWER: the salesperson can represent both himself and the buyer YOUR MISSED ANSWER: the salesperson must disclose the agency relationship RATIONALE As of September 2014, no licensee can act as a dual agent when the licensee is a principal in a transaction. ID: 1078 👎 Question (9 of 14) What should a salesperson do if a buyer-client, who happens to be an Hispanic American, instructs the agent to show him homes in areas where "other Hispanics" live? CORRECT ANSWER: ask the client to specify areas of interest YOUR MISSED ANSWER: call her broker for instructions RATIONALE Obeying a client's lawful instructions is a duty of agency, but identifying areas by national origin of the occupants is steering. The agent should ask for more specific geographic directions and concentrate on features and affordability of the property. ID: 1028  👎 Question (13 of 14) A salesperson went on a listing appointment and negotiated an Exclusive Agency agreement with the seller. What documents did the seller sign? CORRECT ANSWER: Listing agreement, Waiver Of Duties Statement, Consumer Guide, Lead Paint Disclosure, Residential Disclosure YOUR MISSED ANSWER: Listing agreement, agency Disclosure, Consumer Guide, Lead Paint Disclosure, Residential Property Disclosure RATIONALE In an Exclusive Agency agreement, the seller is doing most of the tasks a listing agent would in an Exclusive Right to Sell listing agreement. In the event of an Exclusive Agency agreement, the state needs the seller to execute a Waiver of Duties statement so there is evidence that the seller knew the broker would not be marketing the property. ID: 1067 Leasing and Property Management 4 Total Questions 4 Correct 0 Missed ★ 0 Marked for Review