Residential Real Estate Exam Practice Tests
Course Introduction
This course provides an in-depth exploration of the residential real estate market, focusing on key principles, processes, and practices involved in buying, selling, and managing residential properties. Topics include property valuation, financing options, legal considerations, marketing strategies, and the role of real estate agents. Students will examine current trends and issues in the market, ethical responsibilities, and the impact of government policies and economic factors on residential real estate. Practical case studies and industry examples are used to prepare students for successful careers in residential real estate and related fields.
Recommended Textbook
Real Estate Principles 11th Edition by Charles J. Jacobus
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Page 2
Chapter 1: Nature and Description of Real Estate
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Sample Questions
Q1) The most accurate way to uniquely locate and bound a parcel of real property is to use
A) an aerial photograph.
B) a topographical map.
C) a full legal description.
D) latitude and longitude.
Answer: C
Q2) A TV antenna attached to the chimney would be considered the property of the sellers and could be removed by them.
A)True
B)False
Answer: False
Q3) A point of beginning must be included in a metes and bounds land description.
A)True
B)False
Answer: True
Q4) If a listing agreement mentions a refrigerator as part of real estate offering it should still be mentioned in the ____________________.
Answer: sales contract
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Chapter 2: Rights and Interests in Land
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Sample Questions
Q1) If title to real property is said to be fee simple, it can NOT be alienated.
A)True
B)False
Answer: False
Q2) A property owner who holds fee simple title to land will have all of the following "sticks" in his bundle of rights EXCEPT the right to A) occupy and use it.
B) restrict the use of it.
C) devise it.
D) violate building, health and safety codes.
Answer: D
Q3) An easement may be cancelled by all of the following EXCEPT
A) the servient tenement.
B) the dominant tenement.
C) acquiring both lots.
D) prescription.
Answer: A
Q4) A properly recorded easement on real property is an ____________________. Answer: encumbrance
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Chapter 3: Forms of Ownership
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Sample Questions
Q1) A corporation, composed of many stockholders, desired to take title to real property. They would most likely take title
A) as a legal life estate.
B) in severalty.
C) as tenants in common.
D) as holders of corporate property.
Answer: B
Q2) Some states automatically assume that a tenancy by the entirety is created when ____________________ persons buy real estate.
Answer: married
Q3) In nearly all states, if two or more persons are named as owners, and there is no indication as to how title was taken, they are presumed to be ______________________________.
Answer: tenants in common
Q4) A trust is an arrangement whereby title to real and/or personal property is transferred by its owner (the Trustor)to a beneficiary.
A)True
B)False
Answer: False
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Chapter 4: Transferring Title
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Sample Questions
Q1) Sylvia, as executor of a relative's estate, realized that she had no authority to warrant and defend the acts of previous title holders when conveying the property to the new owners. She would probably use a special warranty deed.
A)True
B)False
Q2) For a deed to convey title to real property, it must contain the legal description of the property.
A)True
B)False
Q3) A deed, which is properly completed and delivered but lacks the grantee's signature is
A) invalid until the grantee signs.
B) invalid until recorded.
C) valid if the grantee is identified.
D) void.
Q4) In a _________________________ deed, the grantor warrants the property's title only against defects occurring during the grantor's ownership and not against defects existing before that time.
Q5) The actual act of conveying ownership is known as a ____________________.
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Chapter 5: Recordation Abstracts and Title Insurance
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Sample Questions
Q1) Documents to be recorded are photocopied and then placed in alphabetic order.
A)True
B)False
Q2) An abstract of title is a summary of all deeds or other documents dealing with the transfer of ownership.
A)True
B)False
Q3) Which statement is true of title insurance?
A) It is required by law
B) It insures the owner against defects in title
C) It reveals all defects in the chain of title
D) It is only required for commercial property
Q4) Under the Torrens system, once a title is registered , any subsequent liens or encumbrances against it must be entered on the registrar's copy in order to give constructive notice.
A)True
B)False
Q5) People record deeds to provide constructive notice to the world.
A)True
B)False
7
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Chapter 6: Contract Law
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Sample Questions
Q1) If a contract is made under duress, it would be void.
A)True
B)False
Q2) The sum of money agreed upon in advance to be the damages in the event certain problems occur later is best described as
A) judgement damages.
B) liquidated damages.
C) default damages.
D) punitive damages.
Q3) Which of the following are considered to be legally competent?
A) Corporations
B) Persons of unsound mind
C) Minors
D) A 15 year old woman
Q4) As a requirement of a valid contract ____________________ and ____________________ requires that one party makes an offer to another party.
Q5) Under certain circumstances the ____________________ evidence rule permits oral evidence to complete an otherwise incomplete or ambiguous written contract.
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Chapter 7: Real Estate Sales Contracts
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Sample Questions
Q1) A _________________________ allows the tenant to buy the property at a preset price for a given period of time.
Q2) The process of dividing ongoing expenses and income items as of the closing date is called
A) prorating.
B) "as is" basis.
C) closing.
D) arbitrating.
Q3) The amount of earnest money necessary for a given transaction is NOT determined by
A) the buyer.
B) the seller.
C) the buyer and seller.
D) the broker.
Q4) An option to purchase real property is NOT
A) a contract.
B) covered by the statute of frauds.
C) covered by real property laws.
D) cancelable by the optionor.
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Chapter 8: Mortgage and Note
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Questions
Q1) A borrower wants provisions written into his mortgage whereby the lender will remove a portion of the property from the mortgage upon partial repayment of the loan. The borrower would ask for an alienation clause.
A)True
B)False
Q2) Which lien would have highest priority?
A) Property tax lien
B) Mechanic's lien
C) First mortgage or trust deed
D) The lien which is recorded first
Q3) In a promissory note the entity to which the debt is owed is known as the ____________________ or ____________________.
Q4) The phrase "jointly and severally liable" in a note or bond applies when there are two or more
A) makers.
B) obligees.
C) trustees.
D) holders.
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Page 10
Chapter 9: Deed of Trust
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Sample Questions
Q1) Under a deed of trust the borrower is known as the ____________________.
Q2) In a real estate transaction financed with a deed of trust, the grantee on the deed of trust is the borrower.
A)True
B)False
Q3) The presence of a power of sale right prohibits the trustee from using a court-ordered foreclosure.
A)True
B)False
Q4) The beneficiary's right, upon default, to take physical possession and collect income generated by the property is called
A) assignment of rents.
B) reconveyance.
C) power of sale.
D) the trustee has the right, not the beneficiary.
Q5) The trustee in a deed of trust is a neutral ____________________ party.
Q6) A trust deed can be used to secure a mortgage.
A)True
B)False
Page 11
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Chapter 10: Lending Practices
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Sample Questions
Q1) A home sells for $150,000 but is appraised by a lender for $145,000. The lender will typically apply the loan-to-value ratio to the larger of the two numbers.
A)True
B)False
Q2) A mortgage lender will lend based on a proportion of the appraisal or sale price, whichever is less. This is called the loan-to-value ratio.
A)True
B)False
Q3) Who normally pays the discount points when a conventional loan is taken out to purchase a residence?
A) Broker
B) Seller
C) Lender
D) Buyer
Q4) The role of the FHA in residential mortgage lending is
A) guaranteeing the loan.
B) insuring the loan.
C) loaning the money.
D) as a secondary lender.
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Chapter 11: The Loan and the Consumer
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Sample Questions
Q1) Job stability, income adequacy and credit rating of the borrower are the most important factors that a lender considers in analyzing a loan application.
A)True B)False
Q2) In analyzing a mortgage loan application, a lender considers job stability, income adequacy and sales price.
A)True B)False
Q3) In analyzing a mortgage loan application, a lender considers all EXCEPT A) job stability. B) income adequacy. C) credit rating. D) sales price.
Q4) The practice of lenders to refuse to make loans in certain areas regardless of the quality of the structure or the borrower's ability to repay the loan is called
Q5) Regulation Z deals with annual percentage rates. A)True B)False
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Chapter 12: Sources of Financing
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Sample Questions
Q1) Mortgage brokers do not lend their own money but simply put lender and borrower together.
A)True
B)False
Q2) From whom would a borrower obtain a VA or FHA loan?
A) Approved mortgage lender
B) VA or FHA
C) Insurance companies
D) Sale of bonds
Q3) Other lenders providing mortgage money might include
A) pension and trust funds.
B) credit unions.
C) commercial finance companies.
D) all of the above.
Q4) Freddie Mac was originally formed to provide a secondary mortgage market facility for the
A) Federal National Mortgage Association.
B) Government National Mortgage Association.
C) Federal Home Loan Bank Board.
D) Mortgage Guaranty Insurance Corporation.
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Chapter 13: Types of Financing
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Q1) In a graduated payment mortgage, the graduated part is the
A) interest rate.
B) monthly payment.
C) maturity date.
D) entire loan is graduated.
Q2) Some real estate agents and lenders refer to a loan that is carried back by a seller as a purchase money mortgage.
A)True
B)False
Q3) A loan where items classed as personal property are included with the real estate is called a(n)____________________ mortgage.
Q4) What feature in an adjustable rate mortgage protects the borrower against very large monthly payment increases?
A) Index rate
B) Adjustment period
C) Interest rate cap
D) Margin
Q5) A mortgage secured by two or more properties is called a ____________________ mortgage.
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Chapter 14: Taxes and Assessments
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Sample Questions
Q1) In calculating "basis" for income tax purposes, one must take into consideration the market value of similar properties.
A)True
B)False
Q2) The property tax rate may be expressed as a mill rate, dollars per thousand or dollars per hundred.
A)True
B)False
Q3) Local government programs and services are financed primarily through state income taxes.
A)True
B)False
Q4) Taxes become a lien
A) in advance.
B) only when delinquent.
C) in arrears.
D) when an assessment appeal is filed.
Q5) The sale of an appreciated property structured to spread out the payment of income taxes on the gain is called a(n)____________________ sale.
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Chapter 15: Title Closing and Escrow
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Sample Questions
Q1) During a "dry closing" the money is disbursed to the seller.
A)True
B)False
Q2) A buyer's walk-through is conducted for the purpose of
A) appraising the property in order to get a loan on it.
B) inspecting the property for major structural defects.
C) meeting the seller and obtaining the keys to the property.
D) making a final inspection just prior to closing.
Q3) During a "dry closing" the deed is disbursed to the buyer.
A)True
B)False
Q4) Escrow closings cannot be used when refinancing a property.
A)True
B)False
Q5) The proration of prepaid condominium association dues will result in a
A) charge to the seller and credit to the buyer.
B) charge to the buyer and credit to the seller.
C) charge to the seller and credit to the association.
D) charge to the association and credit to the buyer.
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Chapter 16: Real Estate Leases
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Sample Questions
Q1) Lonnie and Connie had a one-year lease that ended November 30. They were still living in the apartment as of December 12 without a new lease and without the landlord's permission. They have become
A) tenants at sufferance.
B) tenants in common.
C) tenants at will.
D) tenants for years.
Q2) A couple's one year lease has expired, but they continued living on the premises. If they now pay rent on a monthly basis, this type of tenancy is A) by the entireties.
B) at will.
C) periodic.
D) at sufferance.
Q3) If commercial space is rented out for $.07 per square foot per month the annual rent on a space 80' × 150' would be $9,400.
A)True
B)False
Q4) A(n)____________________ is the total transfer of the lessee's rights to another person.
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Chapter 17: Real Estate Appraisal
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Q1) If an appraiser felt some comparable sales were better indicators of value than other comparables, he would assign more weight to them in the
A) adjusted sales price.
B) correlation process.
C) 4-3-2-1- rule.
D) replacement cost approach.
Q2) The American Institute of Real Estate Appraisers issues the
A) GRI designation.
B) MAI designation.
C) CPM designation.
D) MIA designation.
Q3) When an appraiser has a property to evaluate, which of the following would he need to know first?
A) Comparable properties
B) Amount of his fees
C) Assessed valuation
D) Highest and best use
Q4) ____________________ cost is the cost at today's prices of constructing an exact replica of the subject improvements using the same or very similar materials.
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Chapter 18: Licensing Laws and Professional Affiliation
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Q1) The sales associate, affiliated with a broker, who brings about a sale is paid by the title company.
A)True
B)False
Q2) A nonexempt person who sells real estate for others
A) must always be licensed.
B) need not be licensed if there is no listing agreement..
C) must be a licensed broker.
D) can sell real estate to people in other states.
Q3) In most states, members of the real estate commission are full-time employees appointed by the governor.
A)True
B)False
Q4) To recall and make void is to ____________________.
Q5) Executors of estates are specifically exempt from holding a real estate license.
A)True
B)False
Q6) Interpretations of various articles of the REALTORS® Code of Ethics is known as the ____________________ of Practice.
Page 20
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Chapter 19: The Principal-Broker Relationship: Employment
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Q1) A broker lists a property and gets a sum from the seller as an advance deposit against the hours he spends marketing the property. This is called
A) a net listing.
B) an exclusive right to sell listing.
C) an advanced fee listing.
D) an open listing.
Q2) A listing that does not require the listing agent to show that he or his subagents are the procuring cause in order to earn a commission is
A) an exclusive right to sell listing.
B) an exclusive agency listing.
C) a net listing.
D) illegal.
Q3) Under an exclusive authority to purchase agreement, the buyer must pay the real estate commission.
A)True
B)False
Q4) With a net listing, the sales commission is a fixed dollar amount.
A)True
B)False
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Chapter 20: The Principal-Broker Relationship: Agency
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Q1) A broker listed a property and in one week found a buyer for the property herself. Under these circumstances, the broker
A) may only represent the seller.
B) may have a dual agency.
C) may not represent the buyer.
D) is not required to disclose a dual agency.
Q2) Dual agency results when
A) a broker represents a buyer and writes an offer on his own listing.
B) a broker presents an offer on any listing.
C) an outside agent presents an offer on a broker' listing.
D) a buyer works with more than one broker.
Q3) A buyer making an offer on a property writes an earnest money check to the broker. The seller will not be available for 5 days. What should the broker do with the check?
A) Attach it to the offer in the file
B) Mail it with the offer to the seller
C) Hold the check until the contract has been signed by all parties
D) Hold it until the seller returns home
Q4) The relationship of a sales associate to the employing broker is that of a ____________________ agent.
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Chapter
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Q1) The 1968 Fair Housing Law does not apply to an individual renting his only house without using a broker.
A)True
B)False
Q2) All of the following are true of the ADA, enacted on July 26, 1992, EXCEPT
A) it provides access requirements and prohibits discrimination against disabled people.
B) it affects the real estate brokerage industry in that the licensees need to determine compliance.
C) it requires modifications to procedures so that disabled individuals are not excluded from regular programs.
D) it requires alterations to the property, no matter what that cost will be.
Q3) According to the 1968 Fair Housing Law, the Equal Housing Opportunity logo should appear in all of the following EXCEPT
A) real estate brokerages.
B) real estate classified newspaper advertising.
C) model home sale sites.
D) mortgage lenders' offices.
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Page 23
Chapter 22: Condominiums, Cooperatives, Puds, and Timeshares
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Q1) A corporation that owns or leases the land and building and, in turn, leases space to its shareholders is characteristic of a
A) condominium.
B) cooperative.
C) joint venture.
D) time share.
Q2) Traditionally, the resale of cooperative shares has been financed by means of second mortgages on the seller's unit.
A)True
B)False
Q3) A common element where the use is restricted to a specific unit owner is called a ____________________ common element.
Q4) All states have passed condominium laws that are variously known as a state's horizontal property act, strata titles act, or condominium act.
A)True
B)False
Q5) An example of a limited common element could be an assigned ____________________ stall.
24
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Chapter 23: Property Insurance
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Sample Questions
Q1) As an owner of real estate, one is exposed to losses by A) damage to the property.
B) other persons being injured on the property.
C) both a and b.
D) neither a nor b.
Q2) If one rents rather than owns, they would choose the ____________________ form (HO-4).
Q3) A landlord policy combines property damage, liability, medical payments, and loss of ____________________.
Q4) Medical payments coverage provides payment regardless of who is at fault.
A)True
B)False
Q5) Fire insurance is the foundation of property damage policies.
A)True
B)False
Q6) The money paid for insurance is called the insurance
A) rider.
B) endorsement.
C) peril.
D) premium.
Page 25
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Chapter 24: Land-Use Control
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Q1) A(n)____________________ allows an individual landowner to vary from zoning requirements.
Q2) Examples of zoning ordinances are
A) condemnations.
B) prescribed architectural design.
C) density limitations.
D) house color.
Q3) A licensed agent must be diligent to determine the existing zoning and building regulations for the property that he wishes to sell. Which of the flowing would cause the fewest problems to the agent and his buyer?
A) A home, which lies two feet outside the offset line, described on the deed.
B) A conforming business that produces such noise and odors as to be an annoyance to a nearby neighborhood.
C) A garage that was build by the seller without a building permit and slightly on his neighbor's lot.
D) A multi-family apartment building that is a non-conforming use.
Q4) When a municipality regulates a property to where it has no value or, in some cases, has no remaining economic value it is considered a ____________________.
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Page 26
Chapter 25: Real Estate and the Economy
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Q1) The real estate brokerage industry is an example of a
A) base industry.
B) secondary industry.
C) export industry.
D) primary industry.
Q2) Which of the following is more likely to be the LEAST demanding of appreciation potential in the ownership of real estate?
A) The owner of a rental residence
B) An owner who occupies a property as a principal
C) A business which owns apartment buildings
D) A corporation which owns office buildings
Q3) Typically, most families acquire their largest and most expensive housing between ages
A) 25 to 35.
B) 45 to 55.
C) 35 to 45.
D) over age 60.
Q4) The dependency on the number of base industries present and the ability of those industries to continue to consistently export their products is called
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Chapter 26: Investing in Real Estate
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Q1) A disclosure statement given prospective investors in a limited partnership, outlining the plan and prospects for the partnership as called a cash flow projection.
A)True
B)False
Q2) Two investors buy a house for use as a rental property. Their accountant tells them they can deduct depreciation on 80% of the $76,000 value over 27 1/2 years. How much can they deduct in the third year of ownership?
A) $2,211
B) $4,422
C) $6,633
D) $6,756
Q3) When one holds unimproved land as an investment, expenses such as taxes and interest are
A) not deductible for income tax purposes.
B) deductible in the year in which the expenses are incurred.
C) deductible the following year.
D) deductible only when the property is sold.
Q4) In a typical limited partnership, the organizers are ____________________ partners.
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