Pearson Vue Real Estate National Practice Exam Review

A landlord enters into a lease with a tenant. The lease contains a provision stating that, if the landlord decides to sell the property during the term of the lease, the tenant will have the first right of refusal to purchase the property. Prior to the tenant's lease expiration, the landlord would like to sell the property. The landlord:

must offer the tenant the first opportunity to purchase

Which of the following types of legal descriptions identifies a property by outlining its boundaries in terms of a series of directions and distances from a specific point of origin?

metes and bound

If a purchase contract for a commercial property includes a due diligence contingency for the buyer, then the buyer MAY:

terminate the contract if the buyer is not satisfied with the inspection

Which of the following actions is an example of blockbusting?

stating that the presence of certain persons in a neighborhood will increase crime

When a contract states that "time is of the essence," the contract MUST be delivered and presented:

as soon as possible

In order for a property manager to determine net operating income on a property, which of the following fees is subtracted from the effective gross income?

operating expenses

A broker lists a property. The broker advertises and shows the property several times, but after each showing, the owners call the broker with a list of unreasonable restrictions they want placed on the showing of the property. The broker decides not to continue the listing. In this situation, the broker:

may rescind the listing contract upon obtaining permission from the owners

A portion of an advertisement reads: "New four-bedroom, two-bath home for sale in a family neighborhood. Yours for only $1,100 per month." This advertisement VIOLATES the provisions of the:

Truth in Lending and Fair Housing Acts

The CERCLA is administered by the:

Environmental Protection Agency (EPA)

A net lease affords the lessee the:

deduction for real estate taxes

If a broker lists a property and agrees to net the seller $83,000 after the broker's 6% commission is paid, the property must be sold for a MINIMUM of:

$88,298

Which of the following items would have to be disclosed to prospective buyers by the listing broker?

a defect existing in the property being offered

The presence of government-regulated wetlands on a building lot:

is a material fact

The direct sales comparison (market data) approach would be MOST appropriate for establishing the value of a:

5-year old single family residence

Potential buyers tell their sales agent that they are worried about the presence of radon gas in a home they are thinking about buying. What SHOULD the sale agent say?

"I suggest that a radon inspection be performed."

The federal act that provides the funds for waste management and solutions for cleanup is the :

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

The final decision in establishing the listing price is made by the:

seller

When a broker lists a property that is owned by a married couple as joint tenants, the broker SHOULD make sure that the listing agreement is signed by:

the broker and both of the spouses

Broker P lists a property for a seller. A buyer, represented by Broker Q, submits an offer to purchase the house and tells Broker P that they are willing to pay up to $10,000 more than the offer price, if the seller counters. In this situation, Broker P is:

obligated to convey the information to the seller because of the duties to their clients

With the exception of court-ordered sales, the amount of earnest money to be deposited by a prospective buyer is determined by the:

agreement between the seller and the buyer

A loan that provides for increases and decreases in the interest rate during its term is known as a(n):

adjustable-rate mortgage

Items permanently attached to real property are considered:

fixtures

A plaintiff files a lawsuit against a license for a property that was later determined to have termite damage. The licensee was unaware of any damage at the time of the property sale. The type of insurance that protects the licensee in this situation is:

errors and omissions

The value of a property is affected by negative forces outside the property, which are beyond the control of the owner. This is referred to as:

economic obsolescence

The act of recovering title to property lost through foreclosure on a mortgage is called:

redemption

As defined in a real estate contract, the due diligence period allows which party to thoroughly investigate a property?

buyer

The income approach is most likely to be used when determining the value of a(n):

office building

The gross income multiplier (GIM) is BEST used to value:

commercial properties

An agreement that restricts the use and occupancy of real estate, is part of a conveyance, and is binding on all subsequent buyers is called a(n):

covenant

Which of the following documents is usually prepared when a real estate buyer also purchases a seller's riding lawn mower?

a bill of sale

A seller rejects an offer of $84,000 on a property that is listed for $85,000. One week later, another prospective buyer asks the salesperson to submit an offer of $82,000 for the property. In this situation, the salesperson SHOULD:

present the offer to the seller

Under the law of agency, a broker's responsibility to the principal is to:

exercise care, obedience, accounting, and disclosure

The difference between reproduction cost and the present value of a property is:

depreciation

The owners of a shopping center want a major department store's lease to provide rental payments that reflect the store's sales. They are most likely to use which type of lease?

percentage

When a buyer purchases a property subject to a seller's existing mortgage, which of the following statements is CORRECT?

the seller's obligations under the existing mortgage remain unchanged

A property manager works in the best interests of the:

owner

The donation of private land for public use is called:

dedication

If two lots, each at 75 feet wide by 105 feet long, cost $30,000 in total, what is their approximate cost per square foot?

$2

Under a sales contract, the legal remedy that MAY be used to force the seller to consummate the sale is called:

specific performance

Which of the following clauses will put the priority of an existing mortgage or deed of trust below that of a mortgage recorded later?

a subordination clause

A minority couple asks a licensee to show them a listed house. The licensee suggests that they look at houses in areas with larger minority populations than that of the listed house. What is the licensee guilty of?

steering

A licensee preparing a competitive market analysis (CMA) has information on a comparable property that is similar in all respects to the subject property except that, while the subject property is ten years old and has two baths, the comparable property is five years old and has one bath. In this case, the licensee should adjust the:

sale price of the comparable property, down for the age and up for the number of baths

Which of the following actions BEST describes proper supervision of a licensee by their broker?

reviewing all documents and transaction files prior to closing

A visually impaired person with a service animal completes an application for rental of an apartment that has a vigorously enforced "no pets" policy in the building. According to the Federal Fair Housing Act, the owner MAY:

require the tenant to restore any damage to the apartment that results from the animal

The potential gross monthly rent on an apartment building is $5,380. In July, operating expenses were $3,500. A tenant whose monthly rent is $625 failed to pay the rent in July. If the property manager's commission is 6% of the rental income, the manager's fee for July was:

$285

A valid real estate sales contract MUST:

be signed by the seller

A property owner MUST convey property that is subject to an option when the optionee:

fulfills the terms of the option

A licensee describes a house as "fabulous and wonderful" and "having the best view in town." This is most likely an example of:

puffing

An illegal lending practice whereby a bank refuses to make mortgage loans in a certain neighborhood based on the ethnic makeup of that area is known as:

redlining

The owners of a house sign a listing agreement and later tell the licensee that the garage rood leaks. If the owners tell the licensee not to reveal the roof's condition to any prospective buyers, the licensee MUST:

disclose the condition of the roof to prospective buyers

If a licensee is paid a salary of $600 per month plus half of the office's 6% fee on all sales, what MUST the licensee's monthly sales be in order for the license to receive a total monthly income of $2,220?

$54,000

The price at which a willing and informed buyer would buy, and a willing and informed seller would sell, is called the:

market value

A 40-foot easement exists across the front of a property, and a zoning ordinance requires a building setback of 50 feet from the front property line. If the property is offered for sale, a licensee SHOULD take which of the following actions when notifying prospective buyers about this situation?

inform them of the existence of both the easement and the setback line

In a condominium apartment project, the BEST term to describe swimming pools and laundry rooms for the use of unit owners is:

common elements

In a real estate closing, the buyer generally pays for the:

recording of a new mortgage

The compensation a buyer agrees to pay under the terms of a buyer representation agreement is to be paid at settlement to the:

buyer's agent

According to the Federal Fair Housing Act, which of the following individuals is permitted to reside in housing with a familial status exemption?

a 63-year-old employed postal worker

A homeowner who plans to travel for a year asks a real estate firm to rent the house and indicates a preference for a white family rather than a black family, "if at all possible." Under the Federal Fair Housing Act, the broker SHOULD inform the owner that these instructions:

cannot be followed because they violate the act

To be certain that a property has no encroachments, an appraiser should check a :

survey

A child inherits their parent's property prior to their 18th birthday. If the child decides to sell the property, and enters into a purchase agreement, the contract could be:

voidable by the seller

A licensee pays for the maintenance on a rental unit using a tenant's security deposit. This is an example of:

conversion of funds

When private property is abandoned, the state MAY acquire title to that property under the right of:

escheat

The difference between the value of a property and the total amount of liens against it is known as:

equity

A title insurance policy will protect a buyer from financial losses that are cause by a(n):

encumbrance to which the policy has not taken an exception

Which of the following phrases is considered discriminatory advertising by HUD?

"exclusive neighborhood"

when a prospective buyer asks about a property's location in regard to a flood zone, the licensee SHOULD direct the buyer to:

obtain an up-to-date flood map from FEMA

A buyer makes a down payment of $27,000 on a house selling for $75,000 and secures a new mortgage for the difference at $288 per month for 25 years. How much does the buyer pay in interest over the life of the mortgage?

$38,400

A property has an appraised value of $50,000. A loan is granted on the property for 75% of its appraised value. The loan is spread over 25 years at an interest rate of 3/4% per month. If the amount paid toward the principal is to remain constant throughout the life of the loan, what is the FIRST monthly payment?

$406

If a prospective buyer is concerned about the electric service on a property, the buyer's licensee SHOULD:

recommend that the buyer insert an inspection contingency in the purchase agreement

Buyers make an earnest money deposit on a property and sign a contract that is contingent on specific financing terms. Though a bank commits to the financing, the buyers end up changing their minds. The buyers proceed to notify the seller, in writing, that they do not intend to buy the property. Which of the following statements is CORRECT?

the seller may sue the buyers for breach of contact

When using the cost approach to determine the value of a residential dwelling, an appraiser SHOULD:

determine replacement value less depreciation

A licensee deposited a client's earnest money into the licensee's personal account to hold. This is considered illegal and known as:

commingling

Which of the following statements about the income approach to value is CORRECT?

it estimates an investment property's value based on its return

A buyer purchased a house for $80,000 and obtained a $60,000 mortgage. If 3 discount points were charged to originate the loan, the total cost of the origination fee is:

$1,800

Federal law REQUIRES a written disclosure be provided to purchasers for which of the following environmental hazards?

lead-based paint

The owner of a farm has found a buyer for the property, which is leased to a tenant farmer. With regard to any growing crops that were planted by the tenant, which of the following statements is TRUE?

the crops run with the land

Public regulations that control the specific uses of land in a given area are called:

zoning laws

On Tuesday, buyers make an offer to purchase a house for $250,000 and include a provision to buy the dining room furniture. The offer expires at 5:00 pm on Sunday. On Thursday, the sellers reply that they will accept the offer of $250,000, but they will not include the dining room furniture. While the buyers are considering the counteroffer on Friday, the sellers change their minds and decide to accept the original offer, including dining room furniture, in writing. What is the current obligation of the buyers?

they are not legally obligated to purchase the house

When a married couple takes title to a property as tenants in common, they have elected a form of ownership that allows for:

unequal shares of ownership