General: Multiple Choice Ch. 1-4

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  1. Office buildings and retail space are examples of

    A. special-use real estate
    B. residential property
    C. commercial real estate
    D. industrial property
    C. commercial real estate
    (this multiple choice question has been scrambled)
  2. A person who advises a real estate client who is making a purchase to use or invest in real estate is called a(n)

    A. counselor
    B. subdivider
    C. mortgage broker
    D. educator
    A. counselor
    (this multiple choice question has been scrambled)
  3. All of the following factors will tend to affect demand for real estate EXCEPT

    A. employment levels
    B. transfer taxes
    C. demographics
    D. wage rates
    B. transfer taxes
    (this multiple choice question has been scrambled)
  4. When the population of a town suddenly increases, which of the following is MOST likely to occur?

    A. rental taxes fall due to increased competition
    B. real estate prices will increase
    C. demand for housing decreases
    D. new housing starts will decrease
    B. real estate prices will increase
    (this multiple choice question has been scrambled)
  5. Property management, appraisal, financing, and development are all

    A. real estate brokerage professions
    B. separate professions within the real estate industry
    C. demographic factors that affect demand for real property in a commercial market
    D. specializations directly linked to state and federal government financial policies
    B. separate professions within the real estate industry
    (this multiple choice question has been scrambled)
  6. The idea that no 2 parcels of land are exactly alike is called

    A. location
    B. subdivision
    C. uniqueness
    D. immobility
    C. uniqueness
    (this multiple choice question has been scrambled)
  7. All of the following factors can affect the supply of real estate EXCEPT

    A. government controls
    B. construction costs
    C. demographics
    D. labor force
    C. demographics
    (this multiple choice question has been scrambled)
  8. A property owner who does not want to deal with the everyday tasks of managing a rental property can hire a(n)

    A. property manager
    B. home inspector
    C. appraiser
    D. developer
    A. property manager
    (this multiple choice question has been scrambled)
  9. When the supply of a certain commodity decreases while demand remains the same, the price of that commodity will tend to

    A. decrease by 20%
    B. decrease by 10%
    C. increase
    D. remain the same
    C. increase
    (this multiple choice question has been scrambled)
  10. All of the following are examples of government policies that can affect the real estate market EXCEPT

    A. the Federal Reserve Board's discount rate
    B. federal environmental regulations
    C. a shortage of skilled labor or building materials
    D. land-use controls, such as zoning
    C. a shortage of skilled labor or building materials
    (this multiple choice question has been scrambled)
  11. Land, mineral, and air rights in the land are included in the definition of

    A. attachments
    B. improvements
    C. subsurface rights
    D. real property
    D. real property
    (this multiple choice question has been scrambled)
  12. Which of the following is an example of an economic characteristic of land?

    A. scarcity
    B. immobility
    C. uniqueness
    D. indestructibility
    A. scarcity
    (this multiple choice question has been scrambled)
  13. Another word for uniqueness is

    A. scarcity
    B. nonhomogeneity
    C. fructus industrials
    D. immobility
    B. nonhomogeneity
    (this multiple choice question has been scrambled)
  14. All of the following are included in the bundle of rights EXCEPT

    A. control
    B. exclusion
    C. possession
    D. expansion
    D. expansion
    (this multiple choice question has been scrambled)
  15. The right to dispose of real property by will or deed is contained in the

    A. bundle of rights
    B. deed
    C. statutory law of the state
    D. statutory law of the federal government
    A. bundle of rights
    (this multiple choice question has been scrambled)
  16. Growing trees, fences, and buildings would all be considered

    A. fixtures
    B. chattels
    C. land
    D. real estate
    D. real estate
    (this multiple choice question has been scrambled)
  17. The most important economic characteristic of land is

    A. uniqueness
    B. permanence
    C. location
    D. possession
    C. location
    (this multiple choice question has been scrambled)
  18. The developer added sewer lines and utilities and built 2 streets. What are these items called?

    A. permanence of investment
    B. improvements
    C. fixtures
    D. additions
    B. improvements
    (this multiple choice question has been scrambled)
  19. The new owner received the land, a garage, and the right to drive on his neighbor's driveway. This right is an example of a(n)

    A. chattels
    B. appurtenance
    C. improvements
    D. fixture
    B. appurtenance
    (this multiple choice question has been scrambled)
  20. A tenant farmer built a chicken coop and a tool shed. These buildings belong to the

    A. tenant, but the tenant must pay additional rent for them
    B. owner of real estate
    C. owner, but the owner must reimburse the tenant
    D. tenant
    D. tenant
    (this multiple choice question has been scrambled)
  21. Method of annexation, adaptation, and agreement are the legal tests for determining whether an item is

    A. a chattel or an emblement
    B. fructus naturales or fructus industriales
    C. real property or personal property
    D. land or real estate
    C. real property or personal property
    (this multiple choice question has been scrambled)
  22. After suffering through a tornado and then flooding from the river, the buildings were gone. The land was still there. This is an example of

    A. indestructibility
    B. uniqueness
    C. location
    D. scarcity
    A. indestructibility
    (this multiple choice question has been scrambled)
  23. The seller asked the real estate agent to draw up several documents relating to seller financing. Under these circumstances, the agent should

    A. draw up the documents
    B. ignore the instructions
    C. ask the broker for assistance
    D. refer the seller to an attorney
    D. refer the seller to an attorney
    (this multiple choice question has been scrambled)
  24. A man particularly liked the ornate brass lighting fixtures in a woman's house and immediately made an offer, which the woman accepted. On moving day, the man discovered that the woman had replaced all the ornate brass fixtures with plain steel ones. Which of the following is MOST likely a correct assumption?

    A. Woman: "The lighting fixtures were personal property when I bought them at the store, so they're personal property forever."
    B. Woman: "As long as I replaced them with something of comparable value, I can take them with me."
    C. Woman: "The lighting fixtures belong to me because I installed them."
    D. Man: "Lighting fixtures are normally considered to be real property."
    D. Man: "Lighting fixtures are normally considered to be real property."
    (this multiple choice question has been scrambled)
  25. A farmer has posted a number of "No Trespassing" and "No Hunting" signs on his property. Which stick in the bundle of rights gives the farmer this authority?

    A. enjoyment
    B. exclusion
    C. disposition
    D. control
    B. exclusion
    (this multiple choice question has been scrambled)
  26. A right or privilege tied to real property, although not necessarily part of the property, is called a(n)

    A. trade fixture
    B. deed
    C. appurtenance
    D. emblements
    C. appurtenance
    (this multiple choice question has been scrambled)
  27. An important characteristic of personal property is that it is

    A. small enough to be carried by a person
    B. movable
    C. alive
    D. less than 100 years old
    B. movable
    (this multiple choice question has been scrambled)
  28. Mobile home, rather than manufactured housing, is the term used for a factory-built home that was built before

    A. 1980
    B. 1990
    C. 1976
    D. 1987
    C. 1976
    (this multiple choice question has been scrambled)
  29. To determine whether an item is a fixture, the MOST important test is whether the

    A. effort needed to remove the item is significant
    B. person who installed it intended for it to be permanent
    C. item must be dismantled for removal
    D. value of the item is high
    B. person who installed it intended for it to be permanent
    (this multiple choice question has been scrambled)
  30. A woman planted a rose bush on her property and plans to dig it up and take it with her when her house is sold. The sales contract explicitly excludes the rose bush from the sale. This provision is necessary because the rose bush is considered to be

    A. a trade fixture
    B. personal property
    C. an emblement
    D. real estate
    D. real estate
    (this multiple choice question has been scrambled)
  31. The P in the acronym PITI stands for

    A. proprations
    B. principal
    C. primary amount
    D. prepaid items
    B. principal
    (this multiple choice question has been scrambled)
  32. Which of the following may be deducted from a homebuyer's gross income for income tax purposes?

    A. appraisal fee
    B. VA funding fees
    C. mortgage insurance premiums
    D. loan discount points
    D. loan discount points
    (this multiple choice question has been scrambled)
  33. A man's homeowners' insurance policy contains a coinsurance provision;the house is insured for replacement cost. If the man's home burns, which of the following statements is TRUE?

    A. the man may make a claim for the depreciated value of the damage
    B. the man's claim will be settled for the actual cash value of the damage
    C. the man may make a claim for the full cost of the repair without deduction for depreciation
    D. the man's claim will be prorated by dividing the percentage of replacement cost by the minimum coverage requirement
    C. the man may make a claim for the full cost of the repair without deduction for depreciation
    (this multiple choice question has been scrambled)
  34. A couple purchased their home 7 years ago for $250,000. Now, they are being transferred to a new city and must sell their home, currently valued at $350,000. They are 52 and 53 years old, respectively, and they are concerned about paying capital gains on their apparent profit of $100,000. Which of the following statements is important to them?

    A. they will have to pay taxes on their gain, because the amount is more than the excluded amount
    B. no taxes are due because they have lived there for the required time period and the gain is under the allowed amount
    C. they will have to pay taxes on the amount of the gain if they decide to rent rather than buy a new home
    D. there is no problem as long as they purchased a new home for $350,000 or more within the next 24 months
    B. no taxes are due because they have lived there for the required time period and the gain is under the allowed amount
    (this multiple choice question has been scrambled)
  35. A high-rise building that includes office space, stores, and residential units is an example of a

    A. master-planned community
    B. planned unit development
    C. mixed-use development
    D. loft building
    C. mixed-use development
    (this multiple choice question has been scrambled)
  36. A single man is 57 years old. He has lived in the same house for the past 4 years. When the sale of his house closes next week, how will taxes be determined on any gain from the sale of the home?

    A. the gain is excluded from income taxation up to $125,000 at most because of his age and time-in-residence
    B. taxes will need to be paid, because he has lived in the house for less than the required time period
    C. the gain is excluded from taxation if it is less than $250,000
    D. the gain will be taxed at a lower rate because of his age
    C. the gain is excluded from taxation if it is less than $250,000
    (this multiple choice question has been scrambled)
  37. All of the following are examples of items that a monthly condominium assessment would cover EXCEPT

    A. real estate taxes on individual units
    B. maintenance of building exteriors
    C. management fees
    D. maintenance of common facilities
    A. real estate taxes on individual units
    (this multiple choice question has been scrambled)
  38. A woman's house is constructed so that the flow of her home is built several inches above the 100-year flood mark. If the woman applies for a federally related mortgage loan, how will her mortgage lender apply flood insurance rules?

    A. it may exempt the woman's house from the flood insurance requirement
    B. it is prohibited by federal law from requiring flood insurance
    C. it must require flood insurance
    D. it may invoke the National Flood Insurance Act for properties lying inside, or within 500 feet of, designated flood-prone area
    A. it may exempt the woman's house from the flood insurance requirement
    (this multiple choice question has been scrambled)
  39. A prospective buyer wants to purchase a house. His gross monthly income is $6,500. He wants to estimate how much he can reasonably afford to pay for a monthly PITI payment. What is the maximum monthly PITI payment that he can afford based on the past rule for this calculation?

    A. $2,340
    B. $1,775
    C. $1,820
    D. $1,635
    C. $1,820

    $6,500 x 28% = $1,820
    (this multiple choice question has been scrambled)
  40. All of the following expenses may be deducted from a homeowner's gross income for income tax purposes EXCEPT

    A. loan discount points
    B. real estate taxes
    C. interest paid on overdue real estate taxes
    D. loan-prepayment penalties
    C. interest paid on overdue real estate taxes
    (this multiple choice question has been scrambled)
  41. A married couple is planning to purchase a house. She earns $45,000, and he earns $37,500 per year. Their college loan payments total $350 per month, and a car payment is $375 per month. Using the old rules for calculating maximum monthly debt payment and PITI, what is the maximum amount of PITI they estimate they can afford?

    A. $1,925
    B. $2,475
    C. $2,818
    D. $1,750
    D. $1,750

    Step 1. Calculate their total monthly income
       $45,000 + $37,500 = $82,500 (annual income of the couple)
       $82,500 ÷ 12 = $6,875 (monthly income of the couple)

    Step 2. Apply the old rule for maximum total debt payments, including PITI
       $6,875 x 36% = $2,475

    Step 3. Subtract the debt payments to determine the estimated maximum PITI
       $2,475 - $350 - $375 = $1,750
    (this multiple choice question has been scrambled)
  42. Which of the following property coverage is included in both basic form and broad form homeowners insurance policies?

    A. lighting damage
    B. damage from frozen plumbing pipes
    C. collapse of the building
    D. damage due to the weigh of ice on the roof
    A. lighting damage
    (this multiple choice question has been scrambled)
  43. A broad form homeowners' insurance policy generally covers all of the following EXCEPT

    A. flooding
    B. vandalism
    C. theft
    D. frozen pipes
    A. flooding
    (this multiple choice question has been scrambled)
  44. The reason that homeowners buy homeowners' insurance is to

    A. pay for replacing the furnace or roof because of age
    B. be reimbursed for financial losses suffered because of events, such as fire or theft
    C. protect the homeowner for accidents on other peoples' property
    D. be reimbursed for monetary losses due to a defect in the title
    B. be reimbursed for financial losses suffered because of events, such as fire or theft
    (this multiple choice question has been scrambled)
  45. Which of the following is a characteristic of penalty-free IRA withdrawals for 1st-time homebuyers?

    A. the withdrawn amount is not subject to income tax
    B. the limit on the withdrawn amount is $15,000
    C. the buyer must be no more than 30 years old
    D. the withdrawn amount must be spent entirely within 120 days on a down payment
    D. the withdrawn amount must be spent entirely within 120 days on a down payment
    (this multiple choice question has been scrambled)
  46. People buy homes for all of the following reasons EXCEPT

    A. home ownership gives a sense of belonging to the community
    B. home ownership usually gives residents more leisure time than renting provides
    C. they can provide federal income tax deductions
    D. homes can appreciate in value
    B. home ownership usually gives residents more leisure time than renting provides
    (this multiple choice question has been scrambled)
  47. Retirement communities are often developed as

    A. converted-use properties
    B. planned unit developments
    C. industrial complexes
    D. time-shares
    B. planned unit developments
    (this multiple choice question has been scrambled)
  48. In addition to examining the financial ability of applicants to handle loan payments, lenders also assign a key role in the loan decision to

    A. the size of the property
    B. whether the borrower is under age 55
    C. the age of the home
    D. credit scores
    D. credit scores
    (this multiple choice question has been scrambled)
  49. The decision to rent or buy a home is affected by all of the following factors EXCEPT

    A. convenience of shopping
    B. how long the person wants to live in a certain area
    C. tax consequences
    D. mortgage interest rate
    A. convenience of shopping
    (this multiple choice question has been scrambled)
  50. A characteristic of both planned unit developments and condominium is

    A. small lot sizes and street areas
    B. conversion of a property from a prior use, such as a factory or warehouse, to residential use
    C. title to the units is held by a corporation
    D. an association that collects fees from owners and maintains common areas
    D. an association that collects fees from owners and maintains common areas
    (this multiple choice question has been scrambled)
  51. To insure against losses due to visitor injuries within the owner's unit, condominium owners typically obtain a policy that includes

    A. a broad form type of homeowners' insurance
    B. errors and omissions insurance
    C. liability insurance
    D. a basic form type of homeowners' insurance
    C. liability insurance
    (this multiple choice question has been scrambled)
  52. A database of consumer claim history that makes it possible for insurance companies to access prior claim information is called the

    A. Comprehensive Loss Underwriting Exchange (CLUE)
    B. Fannie Mae Databank (FMD)
    C. National and Fiduciary Insurance Program (NFIP)
    D. Database of Prior Insurance Claims (DBPI)
    A. Comprehensive Loss Underwriting Exchange (CLUE)
    (this multiple choice question has been scrambled)
  53. Why should agents note whether a property for sale is located on a flood plain?

    A. property value is negatively affected
    B. buyers have lower expenses for insurance
    C. higher transfer fees are required to transfer title to the property
    D. the federal government may require a house to be removed from the property
    A. property value is negatively affected
    (this multiple choice question has been scrambled)
  54. A large tree on a man's property died and slowly rotted. Eventually, a large branch fell off from its own weight and damaged the back porch roof. What type of homeowners' insurance policy would cover this damage?

    A. broad form insurance
    B. emblements insurance
    C. liability insurance
    D. basic form insurance
    A. broad form insurance
    (this multiple choice question has been scrambled)
  55. How is flood insurance coverage determined?

    A. it is calculated as 80% of the property value
    B. it is based on a table of standard values for properties in the flood-prone area
    C. it depends on the income level of the property owners
    D. it covers either the property value or mortgage loan amount (up to a limit)
    D. it covers either the property value or mortgage loan amount (up to a limit)
    (this multiple choice question has been scrambled)
  56. An individual who is authorized and consents to represent the interests of another person is a(n)

    A. facilitator
    B. agent
    C. principle
    D. customer
    B. agent
    (this multiple choice question has been scrambled)
  57. A broker represents a woman but is currently working with a man to find a home. Assuming that no statute has replaced the traditional common law, which of the following correctly identifies the parties in this relationship?

    A. the broker is the woman's agent; the man is the broker's customer
    B. the woman is the broker's customer; the man is the broker's client
    C. the man is the broker's client; the woman is the broker's principal
    D. the broker is the man's agent; the woman is the broker's client
    A. the broker is the woman's agent; the man is the broker's customer
    (this multiple choice question has been scrambled)
  58. The agent's obligation to use skill and expertise on behalf of the principal arises under which of the following common-law duties?

    A. loyalty
    B. obedience
    C. disclosure
    D. care
    D. care
    (this multiple choice question has been scrambled)
  59. An agent representing the seller has a duty to disclose to the principal all of the following EXCEPT

    A. the agent's advertising budget
    B. the offers that are ridiculously low
    C. the buyer's intention to resell the property for a profit
    D. the buyer's financial ability to offer a higher price
    A. the agent's advertising budget
    (this multiple choice question has been scrambled)
  60. A broker has an agency agreement to represent a seller in the sale of a house. The agreement's expiration date is June 10. On May 5, the home is struck by lightning and burns. The seller, overwhelmed by grief, dies. Based on these facts, which of the following is TRUE?

    A. only the mutual agreement of the parties can terminate a valid agency agreement before its expiration date
    B. the agency agreement was terminated by the fire, although the seller's death also would have done so
    C. If the house had not been destroyed by the fire, the seller's death would not have terminated the agreement; the broker would become the broker for the seller's estate
    D. the agency agreement was not terminated until the seller's death on June 11
    B. the agency agreement was terminated by the fire, although the seller's death also would have done so
    (this multiple choice question has been scrambled)
  61. A person who is designated by the principal in a broad range of matters related to a particular transaction or activity is a

    A. designated agent
    B. facilitator
    C. special agent
    D. general agent
    D. general agent
    (this multiple choice question has been scrambled)
  62. A real estate broker signed an agency agreement with a seller. The asking price for the seller's house was $499,000. A few days later, the broker met a prospective buyer who was interested in buying a home in the $480,000 to $510,000 price range. The broker agreed to help the buyer locate such a property and to represent him in negotiating a favorable purchase price. Based on these facts, which of the following statements is TRUE?

    A. the broker has created a dual agency agency problem and should immediately terminate the agreement with either the buyer or seller
    B. the broker has created a potential undisclosed dual agency problem and should disclose the relationships to both parties before showing the seller's home to the buyer
    C. the seller is the broker's client, and the buyer is the broker's customer; there is no dual agency problem
    D. the broker's relationships and the buyer and the seller are separate issues, and no dual agency question arises
    B. the broker has created a potential undisclosed dual agency problem and should disclose the relationships to both parties before showing the seller's home to the buyer
    (this multiple choice question has been scrambled)
  63. A broker is showing a house to a prospective buyer. He points out the rustic charm of the sagging front porch and refers to a weed-choked backyard as a delightful garden. The broker is engaging in which of the following?

    A. intentional misrepresentation
    B. fraud
    C. puffing
    D. negligent misrepresentation
    C. puffing
    (this multiple choice question has been scrambled)
  64. A house built over a ditch covered with decaying timber, or a house with ceilings that are improperly attached to the support beams are examples of

    A. stigmatized properties
    B. conditions that need not be disclosed
    C. environmental hazards
    D. latent defects
    D. latent defects
    (this multiple choice question has been scrambled)
  65. The seller's agent has certain duties to the client principal. All of the following are duties of the principal EXCEPT

    A. cooperating with the agent
    B. compensating the agent
    C. suggesting marketing strategies to the agent
    D. dealing with the agent in good faith
    C. suggesting marketing strategies to the agent
    (this multiple choice question has been scrambled)
  66. Every state has mandatory agency disclosure laws that stipulate

    A. when, how, and to whom licensees must reveal for whom they provide client-based services
    B. how an implied agency may occur
    C. how a customer is differentiated from a client
    D. restrictions on disclosure of confidential information
    A. when, how, and to whom licensees must reveal for whom they provide client-based services
    (this multiple choice question has been scrambled)
  67. Who is the agent's principal?

    A. buyer
    B. seller
    C. whoever hired the agent
    D. person who pays the commission
    C. whoever hired the agent
    (this multiple choice question has been scrambled)
  68. The broker was hired to represent the seller, to market the property, and no solicit offers to purchased. The broker is called a

    A. general agent
    B. special agent
    C. facilitator
    D. nonagent
    B. special agent
    (this multiple choice question has been scrambled)
  69. A house was the scene of a drug arrest and a violent murder last year. When it was listed on the market, many people considered it to be a

    A. property with a material defect
    B. stigmatized property
    C. latent property
    D. damaged property
    B. stigmatized property
    (this multiple choice question has been scrambled)
  70. All of the following will terminate an agency relationship EXCEPT

    A. an offer made on the property
    B. an expiration of the agreement
    C. the death of either party
    D. the destruction of the property
    A. an offer made on the property
    (this multiple choice question has been scrambled)
  71. What is a seller's agent required to disclose to prospective buyers about the material defects in the property?

    A. only information about material defects the seller has provided the agent
    B. all information about material defects that the agent knows or should know
    C. both information the seller has provided the agent, and material defects that the agent has personally observed
    D. only information about material defects that the agent has personally observed
    B. all information about material defects that the agent knows or should know
    (this multiple choice question has been scrambled)
  72. Which of the following statements could be negligent misrepresentation?

    A. "The uneven floors just mean that the building dates to colonial times."
    B. "I think these low doorways are a charming part of the Cape Cod style."
    C. "The size of the bedrooms makes them wonderfully cozy and perfect for your children."
    D. "The simple design is uncluttered and can give you many possibilities for decor."
    A. "The uneven floors just mean that the building dates to colonial times."
    (this multiple choice question has been scrambled)
  73. The seller's agent is aware of, but does not disclosed to a buyer that a new landfill has been approved for development on the adjacent property. This could be an example of

    A. negligent misrepresentation
    B. a latent defect
    C. unnecessary disclosure
    D. fraudulent misrepresentation
    D. fraudulent misrepresentation
    (this multiple choice question has been scrambled)
  74. A key element of an agent's fiduciary responsibilities of loyalty is to

    A. avoid conflicts of interest
    B. report the status of all funds received from, or on behalf of, the principal
    C. reveal relevant information or material facts
    D. obey the principal's instructions in accordance with the contract
    A. avoid conflicts of interest
    (this multiple choice question has been scrambled)
  75. When a broker places trust funds of others into the company's operating account and then withdraws funds for the firm's use, what illegal practice has taken place?

    A. DBA accounting
    B. asset-liability management
    C. escrowing
    D. conversion
    D. conversion
    (this multiple choice question has been scrambled)
Author:
naderataei
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207171
Card Set:
General: Multiple Choice Ch. 1-4
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