Real Estate Exam Review Questions

Real Estate Exam Preparation Questions

Question 1: Legally Binding Mortgage Loan

  • Documents Required:

    • A. Promissory note and deed of trust

    • B. Sales contract and mortgage agreement

    • C. Title insurance and appraisal report

    • D. Warranty deed and lease agreement

  • Correct Answer: A

    • Explanation: The promissory note outlines the borrower's promise to repay the loan, while the deed of trust secures the property as collateral for the loan.

Question 2: Earnest Money in a Sales Contract

  • Scenario: Buyer defaults on contract, has provided $10,000 earnest money for a $200,000 property.

  • Options:

    • A. Return the entire amount to the buyer

    • B. Keep the entire amount as compensation

    • C. Deduct any incurred expenses and return the remaining amount

    • D. Distribute the money among the agents involved

  • Correct Answer: B

    • Explanation: Earnest money serves as a security deposit and is typically forfeited by the buyer in default.

Question 3: Surface Rights, Air Rights, Subsurface Rights

  • Definition of Rights:

    • A. Severable rights

    • B. Literal rights

    • C. Owners rights

    • D. Riparian rights

  • Correct Answer: A

    • Explanation: These rights can be sold separately while retaining ownership of the property.

Question 4: Easement Type

  • Definition of Easement:

    • A. Easement by prescription

    • B. Easement appurtenant

    • C. Easement in gross

    • D. Easement of utility

  • Correct Answer: B

    • Explanation: An easement appurtenant allows the use of a neighboring property and transfers with the land.

Question 5: Quieting a Title

  • Meaning:

    • A. Clearing any liens or encumbrances on a property

    • B. Transferring ownership from seller to buyer

    • C. Resolving disputes over property boundaries

    • D. Conducting a thorough property inspection

  • Correct Answer: A

    • Explanation: Refers to resolving claims that could cloud ownership rights.

Question 6: Highest Form of Land Ownership

  • Ownership Type:

    • A. Fee simple defeasible

    • B. Fee simple determinable

    • C. Fee simple subject to condition subsequent

    • D. Fee simple absolute

  • Correct Answer: D

    • Explanation: Fee simple absolute encompasses full property rights including possession, control, and disposition.

Question 7: Commission Calculation on Sale of Land

  • Sale Details: Sold for $750/acre, commission rate 8%, land is a triangular parcel.

  • Dimensions: Base length 1,200 feet, height 700 feet

  • Options:

    • A. $578.51

    • B. $1,680.20

    • C. $2,520.05

    • D. $3,360

  • Correct Answer: A

    • Calculation: Area = ( rac{1}{2} imes 1200 imes 700) = 420,000 ext{ sq ft}.

    • Convert to acres: rac{420,000}{43,560} = 9.6418733 ext{ acres}.

    • Total sale = 9.6418733 imes 750 = 7,231.4.

    • Commission = 7,231.4 imes 0.08 = 578.51.

Question 8: Principle of Property Value

  • Scenario: Tom builds a house valued at $100,000 adjacent to $225,000 homes.

  • Principles:

    • A. Principle of regression

    • B. Principle of progression

    • C. Principle of substitution

    • D. Principle of contribution

  • Correct Answer: B

    • Explanation: The property value can increase when surrounded by higher-value properties.

Question 9: License Implications of Real Estate Actions

  • Actions of Bob Jones: Hired Sally, shows property, quotes prices, accepts deposits.

  • Options:

    • A. Legal with Sally's consent

    • B. Illegal, leading to consequences

    • C. Permissible if a property owner

    • D. Acceptable if no contracts signed

  • Correct Answer: B

    • Explanation: Shows property and accepts deposits without a license is illegal.

Question 10: Purpose of Building Permits

  • Purpose Options:

    • A. Income for the city

    • B. Control amount of building allowed

    • C. Supersede deed restrictions

    • D. Minimum level of construction standards

  • Correct Answer: D

    • Explanation: Ensures safety and public welfare through construction standards.

Bonus Question: Supporting the Channel

  • Options:

    • A. Hit the like button

    • B. Leave a comment about exam date

    • C. Purchase exclusive exam prep

    • D. All of the above

  • Correct Answer: A

    • Note: Hitting the like button is emphasized as the best support for the channel.