NC Real Estate Final Exam Practice Test (not graded)

A property manager

A)

generally serves as the general agent of the owner.

B)

works on a commission rather than salaried basis.

C)

serves in a nonfiduciary capacity to the landlord.

D)

must have a North Carolina real estate license.

A)

generally serves as the general agent of the owner.

Under the North Carolina statute of frauds, an oral lease for longer than three years is

A)

renewable.

B)

unenforceable.

C)

not assignable.

D)

illegal.

B)

unenforceable.

To be valid in North Carolina, a deed must include

A)

words of conveyance.

B)

the grantee's signature.

C)

total consideration amount.

D)

the grantor's seal.

A)

words of conveyance.

A Chinese buyer-client has instructed his buyer agent to show him properties that are in predominantly Chinese neighborhoods. If the agent were to comply with this client's instructions, the agent would

A)

be in compliance with the North Carolina Real Estate License Law because he must obey his client.

B)

be in compliance with the North Carolina Fair Housing Act.

C)

violate the Civil Rights Act of 1866.

D)

violate the Federal Fair Housing Act of 1968.

D)

violate the Federal Fair Housing Act of 1968.

An offer to purchase real estate is a binding contract after it has been signed, communicated, and accepted by whom?

A)

Seller

B)

Buyer

C)

Lender

D)

Both buyer and seller

D)

Both buyer and seller

All the following are elements of value EXCEPT

A)

utility.

B)

demand.

C)

uniqueness.

D)

scarcity.

C)

uniqueness.

The market value of a parcel of land is

A)

an estimate of the present worth of future benefits.

B)

equal to assessed value.

C)

a measure of past expenditures.

D)

the price the seller wants for the property.

A)

an estimate of the present worth of future benefits.

Someone seeking to be excused from the dictates of a zoning ordinance because of hardship should request a

A)

certificate of nonconforming use.

B)

certificate of alternative usage.

C)

variance.

D)

building permit

A)

certificate of nonconforming use.

A house cost $330,000 four years ago and just sold at a 5% profit. What was the sales price?

A)

$346,500

B)

$342,500

C)

$396,000

D)

$355,300

A)

$346,500

330,000 x .05 = 16,500

330,000 + 16,500 = 346,500

The effect of discount points is

A)

a decrease in the borrower's interest rate.

B)

both an increase in the lender's yield and a decrease in the borrower's interest rate.

C)

neither an increase in the lender's yield nor a decrease in the borrower's interest rate.

D)

an increase in the lender's yield.

A)

a decrease in the borrower's interest rate.

The North Carolina Real Estate Commission has the power to

A)

interpret the legality of a real estate contract between consumers.

B)

regulate the brokerage activities of licensees.

C)

fine licensees that do not comply with licensing law and/or Commission Rules.

D)

determine the maximum commission a broker may charge on any one transaction.

B)

regulate the brokerage activities of licensees.

The legal practice of oral buyer agency in North Carolina requires

A)

the relationship be put in writing before presenting an offer.

B)

a definite time period for the agency relationship.

C)

that the consumer go under contract to buy a property within 30 days.

D)

the buyer to agree to oral dual agency as well.

A)

the relationship be put in writing before presenting an offer.

*

When the subdivision developer built the roads and installed the utilities throughout the neighborhood, what type of easement was given to the utility providers?

A)

Implied easement

B)

Easement in gross

C)

Appurtenant easement

D)

Prescriptive easement

?

Which tax advantage is NOT associated with owner-occupied personal dwellings?

A)

Deductibility of mortgage interest

B)

Capital gains treatment of resale profits

C)

Possibility of tax-free capital gains

D)

Ability to depreciate the property

D)

Ability to depreciate the property**

**

#15

A broker receives an earnest money deposit with a written offer that indicates that the buyer will leave the offer open for the seller's acceptance for 10 days. On the fifth day, and prior to acceptance by the seller, the buyer notifies the broker that he is withdrawing his offer and demands the return of the deposit. In this situation, which statement is TRUE?

A)

The offeror cannot withdraw the offer; it must be held open for the full 10-day period.

B)

The offeror can withdraw the offer, but the broker will declare the deposit forfeited and retain all of it in lieu of a commission.

C)

The offeror can withdraw the offer, but the seller and the broker will each retain one-half of the forfeited deposit.

D)

The offeror has the right to withdraw the offer and have the deposit returned any time before contract acceptance.

D)

The offeror has the right to withdraw the offer and have the deposit returned any time before contract acceptance.

A leasehold estate that automatically renews itself at each expiration is a

A)

periodic tenancy.

B)

tenancy for years.

C)

tenancy at sufferance.

D)

tenancy at will.

A)

periodic tenancy.

#18

If a person is being compensated, which of the following activities does NOT require an active North Carolina real estate license?

A)

Managing apartments in several different complexes for family members

B)

Negotiating the sale of personally owned real estate

C)

Negotiating exchanges of property

D)

Listing property for sale

B)

Negotiating the sale of personally owned real estate

The sellers agree to an open listing for their house with only ABC Realty and Homes Realty. Open listings are not allowed to be entered into the local multiple listing service. The house is sold by a licensee with XYZ Realty. Which statement is TRUE regarding the sellers' obligation to pay commission?

A)

Only XYZ Realty is entitled to the commission.

B)

ABC Realty, Homes Realty, and XYZ Realty are all entitled to share the commission.

C)

ABC Realty and Homes Realty will share the commission.

D)

The sellers are not obligated to pay the commission to anyone.

A)

Only XYZ Realty is entitled to the commission.**

**

Which of the following statements made by a broker would potentially be a violation of antitrust laws?

A)

My firm charges 6% for listing and marketing residential properties in this area.

B)

Our firm does charge more than our competitor, but we offer a wider range of marketing services.

C)

My competitor's fees are so low that no other brokerage firm will cooperate with that firm.

D)

We think highly of our competitors, but we think we offer more value for our fee.

C)

My competitor's fees are so low that no other brokerage firm will cooperate with that firm.

Which of the following statements is FALSE about the North Carolina Time Share Act?

A)

An active North Carolina real estate license is needed to sell time shares in North Carolina.

B)

In North Carolina, any payments received by a time share developer or broker must be deposited in a trust or escrow account in an insured bank or savings and loan in North Carolina and remain there for 3 days or upon cancellation by the purchaser, whichever occurs first.

C)

Developers of time shares in North Carolina must obtain a registration certificate from the North Carolina Real Estate Commission before they can offer a project's time shares for sale to the public.

D)

A public offering statement must be given to a buyer of a new time share which provides a rescission period.

B)

In North Carolina, any payments received by a time share developer or broker must be deposited in a trust or escrow account in an insured bank or savings and loan in North Carolina and remain there for 3 days or upon cancellation by the purchaser, whichever occurs first.

**??

A property is being appraised for loan purposes. The property is an elegant old mansion that has been converted into three apartments. Which approach to value is the appraiser most likely to use?

A)

Sales comparison approach

B)

Income capitalization approach

C)

Replacement cost approach

D)

Reproduction cost approach

A)

Sales comparison approach

-

A house is three blocks away from an international airport. This is an example of

A)

economic obsolescence.

B)

physical deterioration.

C)

deferred maintenance.

D)

functional obsolescence.

A) economic obsolescence

On Monday, an offer was written to buy a seller's vacant lot for $32,000. On Tuesday, the seller counteroffers by raising the purchase price to $33,500. The prospective buyer does not reply, so on Friday, the seller changes his mind and accepts the original price of $32,000. Under these circumstances, there is

A)

no valid agreement because the original offer was not accepted within 72 hours of it having been made.

B)

a valid agreement because the seller accepted the original offer exactly as it was made.

C)

no valid agreement because the seller's counteroffer was a rejection of the original offer.

D)

a valid agreement because the seller accepted before the prospective buyer withdrew his original offer.

C)

no valid agreement because the seller's counteroffer was a rejection of the original offer.

A broker enters into a listing agreement with a seller wherein the seller will receive $120,000 from the sale of a vacant lot and the broker will receive any sales proceeds exceeding that amount as commission. This type of agreement is called

A)

an exclusive-agency listing.

B)

an illegal listing.

C)

a net listing.

D)

an exclusive right-to-sell listing.

C)

a net listing.

The license status of a North Carolina provisional broker who paid the license renewal fee on time and completed all continuing education in a timely manner but did not complete at least one of the postlicensing courses by the first required deadline is

A)

inactive.

B)

active.

C)

expired.

D)

canceled.

A)

inactive.**

**

A woman purchased a condominium unit and obtained financing from a local savings association. In this situation, which best identifies the buyer's role under a deed of trust?

A)

Beneficiary

B)

Mortgagee

C)

Grantor

D)

Trustee

D)

Trustee

-

Which of the following does NOT terminate an offer?

A)

A counteroffer by the offeree

B)

An offer from a third party

C)

The death of the offeror before acceptance

D)

Revocation of the offer before its acceptance

B)

An offer from a third party

A property owner is selling a rectangular lot that has 150' of road frontage and is 375' deep. If the owner sells the lot for $50,000 per acre, what would be the sales price per front foot?

A)

$50,000

B)

$64,565

C)

$430.43

D)

$333.33

C)

$430.43

1 acre = 43560 sq feet

375 x 150 = 56,250 sq feet

56,250 / 43560 = 1.291 acres

1.291 x50k = 64,566.12 / 150 = 430.44

*

Acceleration is a loan provision that says

A)

the lender can call the loan due and payable in full if the borrower defaults.

B)

the lender can charge additional interest if the payment is late.

C)

the trustee can speed up the foreclosure procedure due to the amount of the loan.

D)

the borrower can make extra payments at any time.

A)

the lender can call the loan due and payable in full if the borrower defaults.**

**

A broker found a buyer for a seller's house. The buyer put down an earnest money deposit with the broker, and the parties signed a sales contract. Before the sale was closed, a title search revealed a defect in the seller's title, making it impossible for the seller to deliver good title. Which statement is TRUE?

A)

The buyer must accept a non-warranty deed at closing.

B)

The seller was entitled to keep the buyer's deposit if the buyer canceled the sale.

C)

The buyer was entitled to cancel the sale without penalty.

D)

The buyer must complete the transaction if the seller reduces the sales price appropriately.

B)

The seller was entitled to keep the buyer's deposit if the buyer canceled the sale

Steering is the practice of

A)

requiring brokers to join a multiple-listing service.

B)

illegally setting standard commission rates in an area.

C)

leading prospective buyers to or away from certain areas based on protected class.

D)

refusing to make loans to people of a protected class.

C)

leading prospective buyers to or away from certain areas based on protected class.

Rental payments received by a broker must be deposited into a trust or an escrow account

A)

no later than three banking days following receipt of the money.

B)

per landlord's instructions regardless of other time limits.

C)

no later than five calendar days following receipt.

D)

no later than 24 hours after receipt.

A)

no later than three banking days following receipt of the money.

Which of the following statements is FALSE about appraisal?

A)

Brokers may refer to their comparative market analysis as an appraisal.

B)

Licensed real estate brokers are allowed to perform a comparative market analysis as long as they do not in any way represent themselves as a real estate appraiser.

C)

A comparative market analysis is an analysis of comparable sold properties to estimate a comparable sales price.

D)

North Carolina real estate brokers may provide broker price opinions for a fee to nonbrokerage clients.

A)

Brokers may refer to their comparative market analysis as an appraisal.

36

A typical promissory note for an FHA-insured loan may contain all the following EXCEPT

A)

a mortgage insurance requirement.

B)

an acceleration clause.

C)

a prepayment penalty.

D)

an alienation clause.

?

Which of the following items would likely be considered to be a fixture that would transfer to the buyer with the purchase of a residential property?

A)

Curtains in the master bedroom that match the wallpaper

B)

A dining room chandelier that is a family heirloom

C)

A security system that is leased by the seller

D)

A basketball goal that is cemented into the driveway extension

D)

A basketball goal that is cemented into the driveway extension

A man sold his house for $105,000. He owned the house for five years and made a profit of 25% on the sale over his previous purchase price. How much was originally paid for the house?

A)

$95,000

B)

$80,000

C)

$78,750

D)

$84,000

D)

$84,000

105k = 1.25x

105k/1.25 = 84k

In funding a loan that is secured by a residence, the lender is required to disclose all costs involved in obtaining the financing. This consumer protection is provided by the

A)

Equal Credit Opportunity Act.

B)

Sherman Antitrust Act.

C)

Fair Credit Reporting Act.

D)

Truth in Lending Act.

D)

Truth in Lending Act.**

**

Which contract does NOT have to be in writing to be enforceable in North Carolina?

A)

Contract to sell real estate

B)

Listing agreement

C)

Agreement creating an easement

D)

Two-year lease

D)

Two-year lease**

**

In North Carolina, a trustee is the conditional holder of title to mortgaged real estate. North Carolina is considered what type of state?

A)

Lien theory

B)

Strict forfeiture

C)

Title theory

D)

Statutory share

C)

Title theory

An appraiser is using the cost approach to value. After determining the replacement cost of the building, she will

A)

estimate depreciation on the building.

B)

add the land value that was determined by the sales comparison approach.

C)

neither estimate depreciation on the building nor add the land value that was determined by the sales comparison approach.

D)

both estimate depreciation on the building and add the land value that was determined by the sales comparison approach.

B)

add the land value that was determined by the sales comparison approach.

-

44

If the annual net income of a commercial property remains constant and the capitalization rate increases, the value of the property will

A)

increase the tax basis only.

B)

decrease.

C)

increase.

D)

be unaffected.

B)

decrease.

A residence with leaky plumbing is suffering from

A)

external obsolescence.

B)

curable physical deterioration.

C)

incurable physical deterioration.

D)

functional obsolescence.

B)

curable physical deterioration.

-

The art of analyzing and effectively weighing the findings from the different appraisal methods is called

A)

averaging.

B)

capitalization.

C)

final estimating.

D)

reconciliation.

D)

reconciliation.

The main purpose of the property manager is to

A)

raise the rents as often as possible.

B)

show the property to qualified tenants.

C)

obtain the highest possible net income for the landlord.

D)

keep the rental property in good shape.

D)

keep the rental property in good shape.

or c?

49

A real estate loan that uses both real estate and personal property as collateral is known as a

A)

blanket mortgage.

B)

growing equity mortgage.

C)

package mortgage.

D)

graduated payment mortgage.

C)

package mortgage.**

-blanket covers more than one property, package covers real estate and personal property

A real estate loan indicates that if the title transfers to the property, the lender must be paid in full immediately. This is known as

A)

alienation.

B)

subordination.

C)

satisfaction.

D)

acceleration.

D)

acceleration.

Which of the following statements is TRUE about the North Carolina Real Estate Commission's Working with Real Estate Agents form?

A)

The consumer must sign the form.

B)

By signing the form, the consumer is agreeing to an agency relationship with a broker.

C)

The form must be given at the point of first contact with a consumer.

D)

The licensee must provide the form in all sales transactions, including commercial sales.

B)

By signing the form, the consumer is agreeing to an agency relationship with a broker.

Which of the following situations present at signing would result in a void contract?

A)

The buyer is elderly.

B)

The buyer is 17 years old.

C)

The buyer provided no earnest money at the time of signing.

D)

The seller has been declared incompetent by a court.

C)

The buyer provided no earnest money at the time of signing.

-

Which of the following statements is FALSE about a property management contract?

A)

It is a type of agency contract.

B)

It is not necessary if the landlord resides in another country.

C)

It is an agreement that must be in writing before services are provided.

D)

It is an agreement between the owner of income property and a management firm or an individual property manager that outlines the scope of the manager's authority.

B)

It is not necessary if the landlord resides in another country.

The commission rate is 7¾% on a sale of $50,000. What is the dollar amount of the commission?

A)

$4,085

B)

$3,500

C)

$6,452

D)

$3,875

D)

$3,875

50k x .0775 = $3,875

Which of the following liens is NOT an example of a specific lien?

A)

Real property taxes

B)

Mortgage or deed of trust

C)

Special assessments

D)

Federal income taxes

C)

Special assessments

A broker who fails to renew his license for more than two years

A)

may reinstate his license if he takes three postlicensing courses.

B)

can renew at any time by paying the appropriate fees.

C)

may reinstate his license if he pays a penalty.

D)

will have to start all over as though he never had a license.

D)

will have to start all over as though he never had a license.

58

The North Carolina law that provides that a contract to sell land is not protected against a third party unless recorded is called the

A)

statute of frauds.

B)

Connor Act.

C)

Marketable Title Act.

D)

Machinery Act.

**B)

Connor Act.

**

A cloud on title to a property may be cured by

A)

bringing an action to repudiate the title.

B)

recording the new owner's title as per the Connor Act.

C)

paying cash for the property at closing to avoid RESPA compliance.

D)

obtaining quitclaim deeds from the party or parties with possible interests in the property.

D)

obtaining quitclaim deeds from the party or parties with possible interests in the property.

The method that is the most reliable in estimating the value of an owner-occupied, single-family residence is the

A)

sales comparison approach.

B)

income capitalization approach.

C)

gross rent multiplier method.

D)

cost approach.

A)

sales comparison approach.

The Lead-Based Paint Hazard Reduction Act requires that in residential transactions subject to the Act, a

A)

seller test the property to discover any lead-based paint in the living areas prior to offering the property for sale.

B)

prospective buyer test the property to discover any lead-based paint in the living areas within 10 days of contract execution.

C)

prospective buyer be given the EPA lead hazard informational pamphlet and a disclosure statement about the presence of lead in the property.

D)

seller remove all lead-based paint from the property prior to closing.