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Real Estate Exam
Terms in this set (527)
1 of 5 - Which agency has oversight responsibilities regarding home inspectors?
Illinois Department of Financial and Professional Regulation
2 of 5 - Which of the following is NOT an activity included in the definition of Broker?
Holds a non-public open house.
3 of 5 - Which of the following is NOT a part of confidential information?
Physical condition of the property.
4 of 5 - What is the purpose of the license laws?
To protect the public
5 of 5 - Which Illinois Real Estate Council has responsibility for licensing schools and instructors?
1 of 15 - What are the three unique physical characteristics of land?
Immobile, indestructible, heterogeneous.
2 of 15 - Which of the following is included in the bundle of rights inherent in ownership?
3 of 15 - What do we call the conversion of real property to personal property by detaching it from the real estate?
4 of 15 - The concerns of the federal government in regulating real property rights include
5 of 15 - The level of government that focuses on land-use regulations and taxation is the
County & Local
6 of 15 - What guarantees the right of private ownership of real estate in the United States?
7 of 15 - Which of these is the best definition for personal property?
Any property that is not classified as real property.
8 of 15 - The primary distinction between the legal concepts of land and real estate is that
land does not include man-made structures.
9 of 15 - Surface rights include which of the following?
10 of 15 - The concept that the state controls all bodies of water is called
the doctrine of prior appropriation
11 of 15 - What part of a non-navigable waterway does the owner of an abutting property own?
To the middle of the waterway
12 of 15 - Which of the following terms refers to the rights of a property that abuts a navigable body of water?
13 of 15 - Which of the following is included in the legal concept of land?
The surface of the earth, downward, and all natural things permanently attached to the earth.
14 of 15 - When may an item attached to a structure be considered personal property rather than real property?
When the owner originally intended to remove it before conveying the property.
15 of 15 - Which government entity is the primary regulator of the real estate business?
1 of 24 - Three people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is:
Tenancy in Common
2 of 24 - Jim knowingly acquired a property with a lien attached. What happens to the lien?
The lien continues to be against Jim's property.
3 of 24 - A certain property has the following lien recorded against it: a mortgage lien dating from three years ago; a mechanic's lien dating from two years ago; a mechanic's lien dating from two years ago; a real estate tax lien for the current year; and a second mortgage lien dating from the current year. In case of a foreclosure, which of these liens will be paid first?
Real estate tax lien
4 of 24 - When a single individual or entity owns a fee or life estate in a real property, the type of ownership is
tenancy in severalty.
5 of 24 - What distinguishes a lien from other types of encumbrance?
It involves a monetary claim against the value of the property.
6 of 24 - Which of the following statements regarding month-to-month leases is FALSE?
They have a definite ending date.
7 of 24 - Which of the following is a feature of a testamentary trust?
It takes effect only when the trustor dies.
8 of 24 - There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property A is said to be which of the following in relation to property B?
9 of 24 - The distinguishing features of a condominium estate are
fee simple ownership of the airspace in a unit and an undivided share of the entire property's common areas.
10 of 24 - The "four unities" required to create a joint tenancy include which of the following conditions?
Parties must acquire respective interests at the same time.
11 of 24 - Which of the following describes a situation in which an easement might be created against the wishes of the property owner?
The property has been continuously used as a prescriptive easement with the knowledge but not the permission of the owner for a period of time.
12 of 24 - An encumbrance
limits a freehold interest.
13 of 24 - How is a conventional life estate created?
A fee simple owner grants the life estate to a life tenant.
14 of 24 - When an interest-holder lacks the right of ownership, what kind of interest is it that he or she has?
15 of 24 - An affirmative easement gives the benefited party
the right to a defined use of a portion of another's real property.
16 of 24 - The highest form of ownership interest one can acquire in real estate is the
fee simple estate.
17 of 24 - Upon the death of the life tenant, a life estate passes to
the original owner or other named person.
18 of 24 - In a cooperative, unit owners/members own
19 of 24 - What distinguishes a freehold estate from a leasehold estate?
The duration of the owner's rights cannot be determined in a freehold.
20 of 24 - An interest in real estate is best defined as ownership of
one or more of the bundle of rights to real property.
21 of 24 - Who are the essential parties involved when real estate is placed into a trust?
Trustor, trustee, and beneficiary
22 of 24 - A tenant has refused to vacate an apartment after his lease expires. This is called
a tenancy at sufferance.
23 of 24 - A property owner who is selling her land wants to control how it is used in the future. She might accomplish her aim by means of
a deed restriction.
24 of 24 - A tenancy at will
remains in effect as long as lease conditions are met.
1 of 18 - A deed is not valid unless it is
accompanied by a consideration.
2 of 18 - For a deed to convey title, it is necessary for the deed to be
accepted by the grantee.
3 of 18 - The only required clause in a deed of conveyance is one that
names the parties, describes the property, and indicates a consideration.
4 of 18 - Which document contains a summary of the title search?
5 of 18 - Constructive notice of ownership of a parcel of real estate is primarily demonstrated through
6 of 18 - Aunt Molly, who had no legal heirs, died without leaving a will. What will happen to her estate?
It will escheat to the state or county after all claims have been settled.
7 of 18 - Uncle Jake wrote his will out on a notepad. This type of will is called
8 of 18 - The type of deed that gives the highest assurances of good title is the
general warranty deed.
9 of 18 - A hermit lives secretly in a cave on a large property. After twenty years, the hermit makes a claim of ownership. This claim will most likely be
declined because possession was secretive.
10 of 18 - An owner transfers title to a property to a buyer in exchange for a consideration. This is an example of
11 of 18 - The amount of the transfer tax is based on
the actual sales price of the property conveyed. *Note, in Illinois the tax can be reduced if a buyer has assumed the seller's mortgage "subject to."
12 of 18 - A person claims ownership of a parcel of real estate to a prospective buyer, stating that she has lived on the property for five years and nobody has ever bothered her. The claimant also shows the buyer a copy of the deed. The legal basis of this claim is referred to as
13 of 18 - Title records do all of the following EXCEPT
14 of 18 - Which of the following best describes the concept of "legal title" to real estate?"
Ownership of the bundle of rights to real estate.
15 of 18 - A break in the chain of title to a property results in
a cloud on title.
16 of 18 - A lender forecloses on a property. The type of deed that will convey ownership after a public auction is reconfirmed by the court is a
17 of 18 - Of the principal forms of title evidence in Illinois, the one that provides the best evidence is
a title insurance policy.
18 of 18 - Which authority regulates involuntary title transfers?
1 of 20 - With regard to environmental issues, which of the following is TRUE?
Licensees must disclose potential hazards if known.
2 of 20 - Which of the following statements about federal and state environmental laws is TRUE?
They must be incorporated into local land use plans.
3 of 20 - Counties and municipalities have the legal right to control land use due to
delegation of authority by state-level enabling acts.
4 of 20 - The Illinois Residential Disclosure Act requires that material defects related to which of the following must be disclosed by the seller EXCEPT
5 of 20 - Dioxins, mercury, and Methyl Tertiary Butyl Ether (MTBE) are examples of
soil and water pollutants.
6 of 20 - When a property is taken by eminent domain, what right does the owner have?
To receive "just compensation."
7 of 20 - Which of the following can terminate a private deed restriction?
A quitclaim deed
8 of 20 - Unlike a deed restriction, a declaration restriction
cannot be extinguished by a quitclaim deed.
9 of 20 - If a property owner demonstrates a need, a zoning board may grant a
10 of 20 - When was lead first banned in the manufacture of paint used in residential properties?
11 of 20 - Which of the following is NOT a regulated environmental condition?
Cell phone radiation
12 of 20 - A buyer may terminate a purchase contract without liability within ____ business days if a disclosure report indicating a material defect is received after a binding real estate contract has been entered into by all parties:
13 of 20 - If a municipality exerts its power of eminent domain against a certain property owner, what happens?
The owner must sell the property or grant an easement to the municipality for just compensation.
14 of 20 - The Illinois Residential Real Property Disclosure Act requires a seller to give a buyer a written property condition disclosure
before the buyer signs an offer to purchase.
15 of 20 - A property is exempt from lead disclosure requirements if
it has no separate bedrooms.
16 of 20 - Who is responsible for insuring that a buyer receives the Protect Your Family From Lead pamphlet?
Agents for buyers and sellers
17 of 20 - Licensees are required to disclose to a buyer that
the licensee knows of a latent structural defect.
18 of 20 - Which environmental legislation created the requirement for environmental impact surveys on large development projects?
The National Environmental Policy Act
19 of 20 - A central goal of public land use planning is to
balance individual property rights with the community's welfare.
20 of 20 - The authority that allows governments to control land use is called
1 of 5 - One regulation-based reason for becoming knowledgeable about house styles is that an agent must
be accurate in advertising listings.
2 of 5 - Concerning the measurement of square footage in houses, which of the following statements is TRUE?
There are no official state standards for measurement.
3 of 5 - The most common method of framing a house since 1945 is
platform or western framing.
4 of 5 - Which of the following is a safety device likely to be found in a bathroom or garage?
Ground fault circuit interrupter
5 of 5 - Which of the following best describes a Prairie-style house?
Strong horizontal emphasis, low and heavy appearance. Note: Frank Lloyd Wright built prairie-style homes with brick.
1 of 20 - Acts that a licensee may perform for a consumer, which are informative or clerical in nature and do not rise to the level of active representation on behalf of a consumer are known as:
2 of 20 - A written or oral agreement between a sponsoring broker and a consumer for licensed activities to be provided to a consumer in return for compensation or the right to receive compensation from another is called a:
3 of 20 - According to the Act, legal proceedings, against a license for a violation of the Act, must commence no later than ___________ years from the occurrence.
4 of 20 - The name of a case wherein it was determined that a real estate licensee can only fill in the blanks in a form provided by legal counsel is ______.
Chicago Bar Association vs. Quinlan & Tyson, Inc.
5 of 20 - What is the result when a licensee produces a ready, willing and able buyer, but the seller refused to complete the transaction?
The licensee's firm may be entitled to the commission.
6 of 20 - Annie is a licensee. Which of the following entities can she receive referrals from and pay a referral fee?
None of the above
7 of 20 - In which of the following cases might confidential information be disclosed?
If required by the law.
8 of 20 - When is a licensee required to disclose third party sources of compensation to client?
As soon as known, third party compensation must be disclosed.
9 of 20 - Which of the following describes a person who is not represented, but is receiving ministerial acts?
10 of 20 - Referral fees and bonuses for licensees are known as:
11 of 20 - Which of the following statements are correct?
Compensation does not create agency.
12 of 20 - Seller Joe Needy lists his home for $40,000 and the listing agent tells the prospective buyer to submit a low offer because the seller is desperate. The buyer offers $38,000 and the seller accepts. In this situation:
The broker violated the agency relationship.
13 of 20 - The person who is being represented by a licensee is known as the:
14 of 20 - Which of the following statements is true regarding compensation?
All of the above are true regarding compensation.
15 of 20 - Seller Joe has told his agent Sam that if he sells his house within three weeks, he will give Sam a $500 bonus. What are the acceptable means by which Sam can be paid the bonus?
The bonus is to be given to Sam's sponsoring broker and then passed on to Sam
16 of 20 - Agency is governed by ___________ law and ____________ law.
Common and Statutory
17 of 20 - Which of the following forms of commission agreements is not recommended due to potential ethical issues?
Commission is the excess of the sale price over an agreed-upon (net) price
18 of 20 - What is the type of agency created, when a licensee holds a stake in the transaction?
Agency coupled with an interest
19 of 20 - The relationship between the licensee and a principal, during which the licensee is authorized to represent the principal in certain transactions, is known as:
20 of 20 - What is commonly referred to as "the Act" in Illinois real estate is actually:
The Real Estate License Act of 2000, as amended 12/31/2009
1 of 20 - Which of the following types of agency is not allowed in Illinois?
Undisclosed dual agency
2 of 20 - Seller Jim provides a buyer with a forged home warranty. This is a form of
3 of 20 - Broker Jim signs a listing agreement with seller, Grace, and a buyer agency agreement with buyer, Pat. Broker Jim shows buyer Pat the property owned by seller Grace. Both Grace and Pat signed written disclosure statements agreeing to this arrangement. What is this relationship called?
4 of 20 - What do we call an agent who represents only one party in a real estate transaction?
5 of 20 - Colleen plans to be a dual agent in a real estate transaction. At what point, if any, should she receive her clients' permission to act as a dual agent.
Colleen must disclose her intention to be a dual agent, and have written permission of both clients before acting as a dual agent.
6 of 20 - Is it permissible, as a buyer representative, to dispense advice to your purchaser client?
Yes. A buyer representative should advise the client on matters of which he/she has knowledge. It is important to advise the client to obtain expert advice on areas in which the licensee is not an expert.
7 of 20 - Agency most nearly means:
One who represents and acts for another
8 of 20 - The situation that allows the broker to appoint more than one agent for the client within the same firm, is called:
9 of 20 - When does the first substantive contact take place?
A potential buyer or seller begins to discuss his or her needs.
10 of 20 - Licensee Paul is bound to inform his client of all facts that might affect the client's interests -- both what Paul knows and what he "should have known." Which of these situations would not be something Paul "should know?"
The owner of the property is HIV positive.
11 of 20 - What is the best course of action in dealing with questions regarding the level of crime in a neighborhood?
Refer your client to public records.
12 of 20 - A property seller signs a listing agreement with a licensee. What is this an example of?
13 of 20 - When should a seller agency disclosure take place?
At the time of the first substantive dialogue
14 of 20 - Who should receive an agency disclosure?
All clients and customers
15 of 20 - Which of the following can a dual agent disclose?
Material or latent defects.
16 of 20 - Which laws holds harmless a licensee to discover latent defects?
Munjal v. Baird & Warner, Inc. et al.
17 of 20 - All of the following is considered confidential information EXCEPT:
The buyer has four children.
18 of 20 - Broker Dan is representing Mandy as a buyer's agent. He wants to show Mandy one of his listed properties. Which statement is true?
Dan needs to get the informed, written consent of both Mandy and the seller to act as a dual agent.
19 of 20 - Which of the following statements would be defined as "puffing?"
The property has the best view in the subdivision.
20 of 20 - What is the standard for agency representation in Illinois?
1 of 8 - Which of the following is true regarding ministerial acts performed by the seller's licensee for the buyer?
Performing such ministerial acts for the buyer cannot be construed to form a brokerage engagement with the buyer.
2 of 8 - Which of the following acts can non-licensed staff legally perform?
Responding to telephone inquiries quoting from published information.
3 of 8 - An act that is informative in nature, but does not rise to the level of representation, is known as:
A ministerial act
4 of 8 - What action should a licensee take when providing ministerial acts for a consumer?
Give a disclosure of non-agency.
5 of 8 - Agent Bob frequently sends a part-time licensee along on each home inspection. Is that allowed?
6 of 8 - What action should a non-licensed staff member take when a caller asks about listing commission rates?
Refer the caller to a licensee.
7 of 8 - In what situations can non-licensed staff legally perform discretionary acts?
8 of 8 - Which of the following best describes discretionary acts?
Acts that require decision making and judgment.
1 of 5 - How long is an agency coupled with an interest enforced?
Until the interest ends
2 of 5 - Which of the following actions terminate terms of the agency?
3 of 5 - When a licensee leaves a brokerage, what becomes of the agency coupled with an interest agreement?
It remains in force.
4 of 5 - What actions can the principal take to abolish the agency?
The principal cannot terminate the agency.
5 of 5 - In Illinois, which statement is correct regarding agency coupled with an interest?
Agency coupled with an interest is allowed.
1 of 10 - When a licensee represents a seller, what type of relationship is established?
2 of 10 - Al Dobbs, a licensee, has been hired by the seller who signed a listing agreement. What is true regarding this situation when a buyer is shown the property by Al Dobbs under Ministerial Acts?
The buyer is the customer and the seller is the client.
3 of 10 - Seller Jane is currently under contract with Broker Jill. Jane meets Broker Fred at a baseball game and they discuss real estate market trends. Jane calls Fred the following week to seek new representation. What action can Fred take?
Fred can discuss the terms of a future agency representation with Jane.
4 of 10 - When a licensee works with an unrepresented seller by showing a buyer client the seller's property, what type of working relationship is established with the seller, after proper written notice to the seller?
5 of 10 - Who may be liable when a buyer client's interests are not protected?
The buyer's agent
6 of 10 - With whom do licensees typically have a working relationship?
client, customer, consumer
7 of 10 - Fiduciary duty is primarily based on ______________.
8 of 10 - A licensee has lost a portion of the earnest money. Which fiduciary duty has the licensee violated?
9 of 10 - Agency relationships impose fiduciary duties on both
Client and Licensee
10 of 10 - When a licensee responds to an inquiry from a person seeking general information, what type of working relationship is established?
1 of 10 - When must the licensee give the seller an agency disclosure?
Before the seller shares confidential information or signs the listing agreement.
2 of 10 - When does a dual agency arrangement become "official?"
When the licensee gets written confirmation from both the seller and the buyer in the transaction.
3 of 10 - In what situations can a Broker share confidential information regarding a client, after the client's listing expires.
When the client gives written permission
4 of 10 - Which fiduciary duty requires the agent to collect information about the customer for the client?
5 of 10 - Brokers should provide statutory services
only to clients.
6 of 10 - Confidentiality ends
with the written permission of the client.
7 of 10 - Agent Kim lost the keys to her Client's house and always left the back door unlocked. Agent Kim failed in her __________ responsibility.
8 of 10 - Seller Jim has asked Agent Fred to hold an open house. Agent Fred agreed to schedule an open house but has not followed through. This is a failure of which fiduciary duty?
9 of 10 - Care, Obedience and Disclosure are fiduciary duties of
10 of 10 - Which fiduciary duty requires the agent to safeguard the earnest money check?
1 of 10 - Which of these transfers of residential real property are exempt from the Illinois Property Disclosure Act?
Builder Frank sold a newly-constructed home that has never been occupied.
2 of 10 - What information was added to the report in 2010?
3 of 10 - How long does a person have to initiate an action for a violation of the Property Disclosure Act?
4 of 10 - Which statement is FALSE?
The Property Disclosure Act obligates the seller to make a specific investigation or inquiry in an effort to complete the disclosure statement.
5 of 10 - What happens if a seller lists a defect on the disclosure report?
The buyer could take that information into account when structuring an offer.
6 of 10 - What MUST be printed on or included with the Property Disclosure Report?
A copy of the actual Disclosure Act
7 of 10 - Based on the Real Estate License Act of 2000 the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has
8 of 10 - To which of these transfers of residential real property does the Property Disclosure Act apply?
Transfer by sale, exchange, installment land sale contract, or assignment of beneficial interest
9 of 10 - Under the Illinois Property Disclosure Act, who is exempt from disclosure?
Any person who has never occupied, nor managed, the property
10 of 10 - In Illinois, the Residential Real Property Disclosure Act requires that when a residential seller signs the listing agreement, he or she must prepare a disclosure document completed by any of the following except the
1 of 10 - The Deceptive Trade Practices Act (DPTA) exists to protect whom?
2 of 10 - Based on the Illinois Real Estate License Act the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has
3 of 10 - Negligent misrepresentation is practiced
4 of 10 - Agents need to remember, "stigmatized" conditions are not material and
are not required to be disclosed.
5 of 10 - According to various sections of the Administrative Code, if Broker Bob is showing property that was the site of an act that had no effect on the physical condition of the property or its environment Broker Bob
Is not required to disclose the act.
6 of 10 - The Deceptive Trade Practices Act (DPTA) can come to bear on a real estate licensee when
an agent lies to get someone to put in a contract on a property.
7 of 10 - A property may have hidden defects undiscoverable by ordinary inspection that jeopardizes structural integrity or an occupant's safety, these items are defined as
8 of 10 - Information about a property that has a significant bearing on a buyers decision to purchase that property is a
9 of 10 - Broker Bob is showing a property that may be considered a stigmatized property. If in doubt Broker Bob should
Seek legal counsel regarding the disclosure of the stigmatized property.
10 of 10 - Fraud is practiced
1 of 10 - Which of these environmental hazards is specifically addressed in the Residential Real Property Disclosure Report?
Illegal methamphetamine manufacturing
2 of 10 - Broker Sandra accepted a listing for a home. A week later the owner told her that he was not willing to sell to an African-American person or family. Which of the following is true?
Sandra should explain to the owner that the request is in violation of Fair Housing law and she cannot abide by it.
3 of 10 - Which statement is FALSE?
Underground storage tanks pose no hazard to residential areas.
4 of 10 - For which geological hazard would disclosure to a potential buyer be mostly ineffective?
5 of 10 - Which of the following would a potential seller be least interested in knowing at the time of the listing presentation?
The charitable organizations the firm supports
6 of 10 - Which of these statements is FALSE regarding what a licensee should do to prepare for a listing meeting?
Have an appraisal done of the property.
7 of 10 - Which piece of information about a property would be the least helpful for a licensee to collect?
Company that writes the homeowner's policy
8 of 10 - Which environmental hazard is the easiest for a licensed inspector to detect and to be mitigated?
9 of 10 - In which of these places is asbestos not likely to be found?
10 of 10 - When a licensee does a comparison of the prices of similar properties that have recently sold, similar properties currently on the market, and properties that have not sold in anticipation of getting a listing she is
Preparing a comparative market analysis (CMA).
1 of 10 - Technically a property can be listed at any price, however deliberately misleading a client as to the market value of the property to guarantee a listing is an ethical violation. This practice is commonly referred to as
"Buying" a listing
2 of 10 - Oftentimes people confuse market value with
3 of 10 - What is an important legal characteristic of an option to buy agreement?
The seller must perform if the buyer exercises the option, but the buyer is under no obligation to do so.
4 of 10 - The best description for a CMA is
An analysis of the sales prices of similar homes, so the seller can decide how much to ask for the property
5 of 10 - Which of the following is a good example of a unilateral contract?
An option to buy
6 of 10 - What is the most common reason a property fails to sell?
7 of 10 - Which of these would be a form an agent could use to show a seller what he or she will net on the sale of the property?
Estimate of Seller Proceeds
8 of 10 - What type of financing exists when a seller defers receipt of some or all of the purchase price of the property over a specified period of time?
Installment land contract
9 of 10 - The highest price a buyer is willing to pay and the lowest price the seller will accept for a property is known as what?
10 of 10 - A competitive market analysis is an attempt to
Establish a home's fair market value.
1 of 10 - Property that is undergoing a reduction in market price due to the pressures of a threatened foreclosure, divorce, estate settlement, drastic economic changes, and/or deteriorating physical condition is called
2 of 10 - An important characteristic of a distressed property, caused by a divorce, compared to a 'conventional' property is that
the seller generally has a limited time to sell.
3 of 10 - The final step in the short sale transaction is
the seller delivers the deed.
4 of 10 - One characteristic of a short sale transaction is that
lenders may not allow a short sale if they discover other assets the seller concealed.
5 of 10 - Which of the following is exempted from the lender's scrutiny in considering a short sale?
None of the foregoing are exempt
6 of 10 - Short sales are not intended to allow property owners to walk away from their financial obligation based on arbitrary reasons. Lenders require sellers to show proof of hardship, which include all of the following, except
a chronic history of seeking and exceeding higher credit limits.
7 of 10 - A licensee might suggest some optional strategies a seller might consider rather than a short sale. These strategies would include all of the following, except
8 of 10 - The seller's main concern in arranging for the sale of a distressed property is
what the lender intends to do about the shortage.
9 of 10 - Before advertising a property as "distressed," an agent should
obtain the seller's permission.
10 of 10 - As part of the short sale consulting process, the licensee should discuss the following with the sellers
any portion of the loan that is "forgiven" may be considered income and must be reported for tax purposes.
1 of 10 - Home warranties are
a good selling point.
2 of 10 - When starting a listing, what question is the most important?
"Are you currently listed with another brokerage?"
3 of 10 - Commencement date can best be described as
the date when the listing agreement was signed.
4 of 10 - In what section of the listing agreement would you find reference to fair housing?
5 of 10 - Which of the following statements violates antitrust laws?
Standard commission is 4.5%.
6 of 10 - Which of the following might be a "red flag" when taking a listing?
7 of 10 - Which of the following would not appear as an "interior feature" on the listing?
8 of 10 - In what section of the listing agreement would you find property exemptions?
Additional Terms and Property Information
9 of 10 - Which of the following information would you not collect for a listing?
Spouse's Maiden Name
10 of 10 - In what section of the listing agreement does the seller provide his responsibilities?
1 of 10 - Real estate agents who take listings of homes must have their sellers fill out a disclosure form about their knowledge or lack of knowledge about the presence of lead-based paint in the home if the home was
built prior to 1978.
2 of 10 - Radon gas can be traced back to
3 of 10 - To comply with the Illinois Radon Awareness Act the seller is required to fill out the Illinois Disclosure of Information on Radon Hazards form by initialing, explaining, and providing all of the following items, except
the plan for the seller to conduct radon testing and mitigation activities prior to entering into a contract with purchasers.
4 of 10 - Which of the following is FALSE regarding the toxic effects of lead-based paint?
Can be absorbed through the skin
5 of 10 - In Illinois, the Residential Real Property Disclosure Act requires that when a seller signs the listing agreement, he or she must also prepare a property condition disclosure document completed by any of the following except the
6 of 10 - Licensee Mike knows that the property located at 15 S. Elm is stigmatized due a violent death that occurred at the address five years ago. Mike does not disclose this information to out-of-town buyers. What act has Mike violated?
7 of 10 - Based on the Illinois License Act the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has
8 of 10 - Buyer Jake took possession of a house on March 12, 2010. Buyer Jake needs to file a case based on a disclosure violation. When must he file?
On or before March 12, 2011.
9 of 10 - What rights does a buyer have, if a seller fails to provide a disclosure document prior to the transfer of the property?
Buyer has the right to terminate the contract.
10 of 10 - Under law, when the seller has knowledge of high radon gas levels, what must the seller provide to the buyer?
The Illinois Disclosure of Information on Radon Hazard form
1 of 10 - No-shows for a scheduled appointment can happen. How should an agent handle no-shows?
The agent should prepare her client during the listing presentation for no-shows.
2 of 10 - Which of the following is a good property showing tip?
3 of 10 - All of these activities are appropriate to do within the first few days of obtaining a listing except which?
Discuss modifying the listing price.
4 of 10 - What is a good technique to make a home appear homey?
Bake some brownies just before the showing.
5 of 10 - When should a licensee schedule an office tour?
Soon after the listing is taken.
6 of 10 - What is the best strategy to take when a listing is about to expire?
Schedule a meeting with the seller a few weeks before the listing expires and review options.
7 of 10 - If someone shows up at the sellers' door unexpectedly to see the home, the sellers should
Take their names and call your office.
8 of 10 - Which of these items is not important to include on your weekly activity report?
Number of hits on the company website
9 of 10 - Which of the following actions by an agent would most probably upset the sellers?
Sharing all visitor comments two weeks before the listing ends
10 of 10 - Which of these is not a helpful homeowner tip?
Display lots of family photos to impress potential buyers.
1 of 10 - Which of the following is a good suggestion for keeping track of listings that have been shown to a client?
Maintain a file on each client and record all properties shown.
2 of 10 - What are the two categories of duties?
Action and Protection
3 of 10 - Who must approve a dual agency representation?
All parties in the transaction.
4 of 10 - Which is the only duty that continues beyond the agency relationship, unless a client gives a licensee permission to share the information with others?
5 of 10 - Which of the following best defines dual agency?
Representing both the buyer and seller in a transaction.
6 of 10 - What type of agency is standard in Illinois?
7 of 10 - When does a seller first become aware of the possibility of a dual agency?
At the time that the listing agreement is signed.
8 of 10 - The acronym COD stands for
Care, Obedience, Disclosure
9 of 10 - How might a licensee hide the true identify of his or her client on a sales offer?
Insert "and/or assigns" in the buyer's line.
10 of 10 - Which skill must the licensee use the most to ensure that his or her client receives the best care?
1 of 10 - What are the three types of Buyer's Agreements?
Exclusive buyer, Exclusive agency buyer, Open buyer agency.
2 of 10 - The best reason for the buyer to have representation is
The buyer's agent can provide a strong negotiating position.
3 of 10 - It is important that you take the time to go over each of the provisions of the buyer representation agreement especially the
4 of 10 - What type of contract is a Buyer's Agreement?
5 of 10 - Under an exclusive buyer brokerage agreement, the buyer may have to pay the buyer agent's commission
When the seller and listing broker will not
6 of 10 - Which provision in the buyer's agreement deals with the limits to the professional duties and abilities of the licensee?
7 of 10 - After the termination of a Buyer's Agreement, when might a licensee's firm still earn a commission?
If the buyer purchases a property that was shown by the licensee during the term of the agreement.
8 of 10 - The reason licensees like buyer agency so much is
The buyer will be loyal to the buyer's agent
9 of 10 - When the buyer checks "yes" to dual agency on a Buyer Representation agreement, what does the buyer actually agree to?
By checking "yes" to this paragraph, the buyer is only acknowledging that the possibility of dual agency exists.
10 of 10 - Getting paid by the buyer before showing him homes is an example of
A retainer fee
1 of 10 - When meeting a buyer, what should you deal with first?
Their emotional needs.
2 of 10 - What is the reaction when a buyer is faced with too many options?
They become paralyzed.
3 of 10 - What two pieces of information are most helpful to know when working with buyers?
Motivation and Urgency
4 of 10 - You should change the buyer's wants and needs based on what?
5 of 10 - To be successful with investor buyers, what must a licensee do?
Determine exactly what the buyer wants
6 of 10 - What drives downsizers?
7 of 10 - When selecting a property, what is the most desirable outcome?
Meeting wants and needs
8 of 10 - What is the key to working with relocation buyers?
9 of 10 - What is fortunate about working with upsizers?
They known what they want.
10 of 10 - Which type of buyer will most likely have the highest fear factor?
1 of 10 - Which type of status is viewed as a stronger buying position?
A buyer who holds a preapproval letter.
2 of 10 - The evaluation process used to determine the borrower's ability to repay a loan and estimating the value of the property being used as collateral is called
3 of 10 - What is the single most important document used to determine loan worthiness?
4 of 10 - Which two tools are used to determine a buyer's ability to pay the loan?
Income ratio and Debt ratio
5 of 10 - Buyers can find out how much of a loan they can qualify for by
Preapproval, a formal process that only a lender can perform.
6 of 10 - Which type of loan requires that debt-ratio guidelines must not exceed 41 percent?
7 of 10 - How will you know if the letter regarding a buyer's loan capacity is a prequalification letter or a preapproval letter?
If the letter states that the loan approval is subject to "verification of the buyers' income and credit information" it is a prequalification letter.
8 of 10 - What term is used to denote everything that a person owes?
9 of 10 - Bob and Linda Todd are buyers with $60,000 of stable income. Using the typical conventional loan qualifying percentage and assuming about 20% of that amount would be for taxes and insurance, how much of a monthly payment (principal and interest) could the Todd's qualify for?
10 of 10 - How do lenders determine the value of a property?
Lenders rely on appraisal reports.
1 of 10 - What technique helps you uncover what property features are most important to clients?.
2 of 10 - Joe Broker takes a prospective buyer into a home. Joe turns on the lights to add warmth, walks the buyer through the house, leaves a business card, then locks up and leaves the premises. What steps did Joe miss?
Forgot to knock upon entering and turn off the lights.
3 of 10 - If a prospective buyer calls about a listing, what is the most important thing a broker should do?
Set an appointment to show it
4 of 10 - What is the primary purpose of the first meeting with prospective buyers?
To pre-qualify them
5 of 10 - All of these questions could help you determine a prospect's capacity to make a purchase except which one?
How much do you have in your savings account?
6 of 10 - What is the key to a successful showing?
7 of 10 - Which of the following is not necessary for a presentation package?
Home Warranty Application
8 of 10 - A buyer calls your office to inquire about a property he saw advertised. He sounds knowledgeable about this listing. Where is it that he likely found out the property information?
On the Internet
9 of 10 - How do you stay in control of a call?
By asking questions
10 of 10 - What technique is used to elicit "yes" responses from a client?
1 of 10 - In which of the following instances should a broker suggest that a buyer should consult an attorney?
If the buyers are requesting unusual provisions not covered by the standard contract
2 of 10 - Mary makes an offer to purchase a duplex from Sam. They agree on a price and both parties execute the contract. Mary learns that Sam is only selling half of the duplex. Mary wants to terminate the contract. What is the result?
The contract is voidable due to mutual mistake.
3 of 10 - If a buyer has given the broker a signal that the buyer is ready to make an offer, what should the broker do to get the buyer to make the offer?
Proceed as if the buyer has decided to make an offer.
4 of 10 - Broker Carol's buyer wants to submit an offer that Carol believes is too low. What should Carol say to the buyer?
Show the buyer comparables and indicate that the seller's price is in line with similar properties.
5 of 10 - Broker Bob has a buyer who has seen a property twice and seems ready to make an offer. However, he is objecting because the roof is 12 years old. What should Bob do?
Ask the buyer if the buyer would like to make an offer taking the roof age into account.
6 of 10 - A buyer wants to take the offer to an attorney to review it. Broker Tim knows that another offer will be coming in at about the same time. What should Tim do?
Encourage the buyer to get the attorney to review it quickly.
7 of 10 - What can Broker Kevin do to create urgency in a buyer?
Point out how long houses in the area stay on the market and discuss how many showings there have been.
8 of 10 - Broker Dave represents Buyer Mary. Mary wants to make an offer on a house that is 25% lower than the asking price. Dave writes the offer but is too embarrassed to submit it. Instead, Dave terminates the relationship with Mary. Has Dave acted properly?
No, Dave should have submitted the offer.
9 of 10 - Broker Will represents a young couple who is preparing an offer on a home. Through preapproval, Will knows the couple can only afford to pay $100,000. The couple insists on offering $120,000. What should Will do?
Encourage the couple to offer only what they can afford.
10 of 10 - Broker Sally has a buyer who seems to like a property but is concerned because the kitchen is out of date. What should Sally do?
Suggest that the buyer include an allowance for updating in the offer.
1 of 9 - Which of the following charges does the buyer usually pay?
2 of 9 - A falsified Real Estate Transfer Declaration is a
Class B misdemeanor
3 of 9 - Which document is used to show the amount of taxable consideration that was used to determine the transfer taxes?
Real Estate Transfer Declaration
4 of 9 - What is a fee charged to secure a specific interest rate?
Loan Lock Fee
5 of 9 - What document is a detailed accounting of the transaction that is prepared before closing?
6 of 9 - What tax is imposed on any deed or instrument which conveys interest in real property?
Real estate transfer tax
7 of 9 - Which of the following charges does the seller usually pay?
8 of 9 - Which of the following deeds are exempt from transfer tax?
9 of 9 - When does an Assumption Fee apply?
When the buyer assumes the seller's existing loan.
1 of 10 - Who is responsible for keeping track of all the dates listed in the contract?
2 of 10 - If a property is located in a flood zone and the property owner does not obtain flood insurance, what are the consequences?
A lender would not make a loan on the property.
3 of 10 - Since each home has an "insurance record" of its own, licensees should advise buyers to obtain a CLUE Report and
Make their offer subject to receiving and approving a copy of the seller's CLUE report.
4 of 10 - During the inspection period under a contract, the buyer discovered that there was a title defect that needed to be rectified. The parties are uncertain about the amount of time it will take to correct the problem. What should they do?
Amend the contract to extend the time to a time certain to correct the problem.
5 of 10 - Buyer Jim's loan is turned down the week before closing. What happens now?
The buyer could ask for an extension to allow Jim to find another lender.
6 of 10 - During the walk-through, the buyer sees that the seller did not do a proper cleaning of the house. What is the best way of handling this?
At the closing, the buyer could ask for a credit from the seller for the cost of the cleaning.
7 of 10 - What does the coinsurance clause do?
Requires the homeowner to have property insurance equal to 80% of the home's replacement value.
8 of 10 - Bob Broker is representing a buyer and is assisting with the closing. He tells the buyer that Eagle Inspections will get the inspection done quickly and thoroughly. Has Bob acted properly?
No, because he recommended a specific company.
9 of 10 - If a general home inspection showed a possible crack in a foundation, what should the buyer do?
Ask a structural engineer to inspect and give an opinion.
10 of 10 - After the contract has been executed, the buyer needs to change the closing date. What should the broker do?
Have the buyer ask his attorney to prepare an amendment requesting the change.
1 of 8 - Who is responsible to demonstrate evidence of CE compliance?
Each renewal applicant
2 of 8 - What are the three licensee designations in Illinois?
Broker, Managing Broker, Leasing Agent
3 of 8 - Within how many days does a change in managing brokers need to be reported to the IDFPR?
4 of 8 - A credit hour must include classroom instruction in coursework of a minimum of:
6 of 8 - Managing Broker Jane owns a recreational vehicle that contains real estate records. She'd like to have her RV licensed as her principal place of business. What does the law say about this type of action?
The RV is not considered an office under Illinois Law.
5 of 8 - Broker licensees are exempt from continuing education requirements if they serve in the United States armed forces, serve as an elected state or federal official, or ____________________.
serve as a full-time employee of the Department.
8 of 8 - Beginning after the 2013 renewal, individuals renewing or obtaining a managing broker's license must complete a broker-management course of how many CE credit hours?
7 of 8 - When does a real estate advertising business need to hold a real estate license?
If and when the business engages in the practice of real estate brokerage.
1 of 6 - Licensee Jim has a deal with home inspector Jake. For every client referral, Jim earns $25. When does Jim's action become unlawful?
When Jim fails to inform all parties in writing.
2 of 6 - When is a licensee required to disclose interest?
When the licensee holds more than 1% owner interest.
3 of 6 - What action can a licensee take if a client refuses to approve a dual agency relationship?
A licensee may without liability withdraw from representing a client who has not consented to a disclosed dual agency.
4 of 6 - In what situation is undisclosed dual agency acceptable?
5 of 6 - Which of the following statements best describes a contemporaneous offer?
Two or more offers being written at the same time on the same property from the same designated agent.
6 of 6 - When is a licensee banned from acting as a dual agent in a transaction?
A licensee is prohibited from serving as a dual agent if he or she has an ownership interest in the property.
1 of 8 - Any business which finds, attempts to find, or offers to find, for any person who pays or is obligated to pay a fee or other valuable consideration, a unit of rental real estate or a lessee to occupy a unit of rental real estate, not owned or leased by the business is known as:
A rental finding service
2 of 8 - Which of the following is true regarding licensure?
All of the above are true.
3 of 8 - Which of the following is a true statement?
State and federal employees performing official duties do not need to be licensed.
4 of 8 - Which of the following entities are exempt from holding a license?
General circulation newspapers
5 of 8 - Janice performs only activities related to the leasing of residential property, and she requires a license. Which of the following titles applies to Janice?
6 of 8 - Who does NOT need a real estate license under Illinois law?
An attorney acting under a power-of-attorney to deal with property from the owner.
7 of 8 - In which of the following situations, when performing duties for compensation, must a person or corporation have a real estate license?
All of the above situations require a person or corporation to have a real estate license.
8 of 8 - Which of the following would NOT require a real estate license?
An attorney representing a client
1 of 8 - A licensee who violates license law the first time is guilty of which of the following?
A first-time offender is guilty of a Class A Misdemeanor.
3 of 8 - Ads not stating the broker's name, not stating that the advertiser is licensed, or those with only a phone number, P.O. box, or street address are known as:
2 of 8 - Lawrence practiced real estate without a license and was caught for the second time . For his offense, Lawrence can be charged with a _________________________.
Class 4 felony
4 of 8 - Carol's legal action must start within how many years after she became aware of the acts that led to legal action to obtain recovery from the fund?
Carol's legal action must begin within 2 years.
5 of 8 - Which of the following is a fund established from real estate license revenues to cover claims of "wronged" parties who have suffered monetary damages due to a real estate licensee?
Real Estate Recovery Fund
6 of 8 - Who can file a complaint with the IDFPR?
7 of 8 - Which of the following organizations would initiate the investigation of anyone regulated by Illinois' license act?
Real Estate Administration and Disciplinary Board of IDFPR
8 of 8 - How many days from receipt of a peer review does the Department have to respond?
1 of 20 - Based on HUD standards of affordability, what is the highest percent of gross income that can go towards housing?
2 of 20 - When must a model home comply with ADA guidelines?
If the home also has a sales office area.
3 of 20 - What is a good policy regarding a seller who refuses to accept an offer from a potential buyer that is in a specific protected class?
Terminate the listing.
4 of 20 - Which is a TRUE statement about the Americans with Disabilities Act?
The act applies to AIDS victims.
5 of 20 - Which of these phrases would not be considered discriminatory if used in advertising?
6 of 20 - Which Fair Housing Law added handicap individuals to the list of protected classes?
Fair Housing Amendments Act of 1988
7 of 20 - Which governmental agency files suits in ADA cases?
Dept. of Justice
9 of 20 - What is the maximum penalty for the first time violation of the Fair Housing Act, if the case is heard by an Administrative Law Judge?
10 of 20 - Which of the following classes are not protected by federal law?
11 of 20 - Seller Jim tells his listing licensee that regardless of the offer, he will not sell to any Asian families. How does this impact the listing agent?
The licensee could be held liable if he or she knowing goes along with the request.
12 of 20 - Records show that Banker Fred has increased the interest rate on all loans to Native Americans by an additional 3%. Has Banker Fred violated any laws?
Yes, this would be viewed as discriminatory.
13 of 20 - A broker only shows homes in certain neighborhoods based on matching existing residents with similar potential buyers. This broker is guilty of what prohibited activity?
14 of 20 - If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?
15 of 20 - Which of these classes are protected by the Fair Housing Laws of Illinois?
16 of 20 - What practice helps move low-income persons into previously-owned higher income owner properties?
17 of 20 - Which Fair Housing Law added sex to the list of protected classes?
Housing and Community Development Act
18 of 20 - A broker induces an owner to sell by telling him that Hispanics are moving into the neighborhood. This broker is guilty of what prohibited activity?
19 of 20 - What is the limit for HUD to start a discrimination investigation?
20 of 20 - Is any city in Illinois allowed to pass an occupancy law regarding number of tenants per apartment?
Yes, if the requirement is judged as reasonable.
1 of 8 - To which of the following transactions does RESPA NOT apply?
2 of 8 - What is the purpose of RESPA?
That home buyers receive the correct figures pertaining to their closing costs.
3 of 8 - Regulation Z applies to which of these situations?
$75,000 condominium loan
4 of 8 - Which statement is true about accepting referral fees?
It could be a law violation.
5 of 8 - What is the title of the booklet that lenders must give to every person at the time of application for a loan?
"Your home loan toolkit"
6 of 8 - During a loan interview, a lender always asks borrowers what church they attend. What law, if any, does this action violate?
7 of 8 - Which of the following is exempt from RESPA?
All cash sale
8 of 8 - Which document is required by RESPA to detail the costs that the buyer and seller will pay at closing?
1 of 6 - Which of these is not a violation of antitrust laws?
2 of 6 - Matt Bower is a developer. Will Jones is a builder. Matt agrees to sell Will a lot, but he conditions the sale by insisting that Will agree to list the property with him after the home is built. What is this called?
3 of 6 - One broker says to another "I'll take the east side of town and your company can take the west side." What is this an example of?
4 of 6 - Two brokers working for the same firm meet over coffee and decide to charge the same set commission rate to all of their sellers. Is this an illegal action?
No. The brokers do not represent competing firms.
5 of 6 - If a group of area brokers have a meeting to set commission rates, what does this violate?
Sherman Antitrust Act
6 of 6 - All of the members of one board of REALTORS agree that they will not show the properties of the members of another board of REALTORS. What is this an example of?
1 of 10 - Internet ads, on a licensee's home page, must contain
licensee's name, company name/address, geographic location.
2 of 10 - Which of the following statements are illegal in real estate ads?
Those of the Catholic faith only accepted.
3 of 10 - Which of the following is true regarding blind ads?
Licensees may not use blind ads regardless of who owns the property.
4 of 10 - Which of the following real estate ads would not be acceptable?
Great location for empty nesters, close to park and hospitals.
5 of 10 - Licensee Judy takes a weekly ad out in the South Side Journal. Judy does not place ads in any of the other neighborhood newspapers. What might be said about Judy's advertisement practices?
Ads in only one local paper may appear to be discriminatory.
6 of 10 - Ads should be written
from the perspective of all the protected classes
7 of 10 - Advertising a property that is subject to an exclusive listing agreement with a sponsoring broker other than the licensee's own without the permission of and identifying that listing broker is an example of:
Deceptive and misleading advertising
8 of 10 - Section 1450.145 defines a "Page" as what?
Each html document
9 of 10 - Using or altering existing listing information or keywords that are copied from one Internet site and posted or displayed for the benefit of the general public in front of a firewall at another site, without written or electronic authorization and disclosure of ownership is known as:
10 of 10 - At times, the woman's shelter at St. Mary's Catholic Church has rental units open to the public. Are they allowed to advertise for female renters only?
Yes, gender based ads for shared living housing is acceptable.
1 of 6 - Which of the following groups are exempt from the Telephone Consumer Protection Act?
2 of 6 - Which agency handles junk fax complaints?
3 of 6 - If you call a person that is listed on the National Registry, what is the fine per occurrence?
4 of 6 - Which of the following is a rule of the federal Do-Not-Call List?
The law prohibits unsolicited phone calls to any consumer telephone number listed on the registry.
5 of 6 - Which statement about the Junk Fax Prevention Act is TRUE?
Licensees can only send faxes to existing clients.
6 of 6 - Agent Jim wants to send out a e-mail to all the local real estate agents to inform them about an open house he is holding. What must he do to be in compliance with the CAN-SPAM Act?
Jim must give the agents a way to opt out of any future e-mail messages.
1 of 12 - Real estate value in general is:
The present monetary worth of benefits arising from the ownership of real estate.
2 of 12 - A phase that is NOT part of the usual real estate market cycle is
3 of 12 - The concept of market value is best described as
the price that a willing, informed, and unpressured seller and buyer agree upon for a property, assuming a cash price and the property's reasonable exposure to the market.
4 of 12 - What a property actually sells for is its:
5 of 12 - Of the following market conditions or trends, which is NOT important as an influence on market value?
Number of competing agents in the market area.
6 of 12 - Which of the following is a local market influence on market value?
7 of 12 - Highest and best use of a property is that use which
is physically and financially feasible, legal, and the most productive.
8 of 12 - A person paid $150,000 for a house with the intention of renting it out for $1,000 per month. The economic principle that led the person to pay this price based on the property's ability to generate this future income is known as:
9 of 12 - One reason real estate agents need to understand influences on market value is so they can
foresee how current conditions may affect their transactions.
10 of 12 - How readily or easily title or rights to real estate can be transferred affects the property's:
11 of 12 - Which of the following situations illustrates the principle of contribution?
A homeowner adds a third bathroom to a house and thereby increases the appraised value by $10,000.
12 of 12 - A property owner buys an adjacent parcel and combines it with the original parcel to create a property with a higher value than the total of the two separate property values. The operative principle of value in this situation is called:
1 of 10 - To complete the sales comparison approach, the appraiser
weighs the comparables.
2 of 10 - Appraisals are performed by
licensed professional appraisers.
3 of 10 - Appraisals make all of the following assumptions EXCEPT
buyer and seller are uninformed consumers.
4 of 10 - Which of the following best describes the outcome of a CMA?
A range of listing prices based on adjusted comparable values.
5 of 10 - What is meant by "amenities" in a property description?
Special features that distinguish the property.
6 of 10 - A significant difference between an appraisal and a broker's opinion of value is
the appraiser uses less current market data.
7 of 10 - Who decides the final listing price of a property?
8 of 10 - When collecting property information for a CMA, a licensee should focus on
the condition of the subject property and surrounding properties.
9 of 10 - The three approaches to value employed by appraisers are the sales comparison approach, the income approach, and the
10 of 10 - Which of the following statements provides the best definition of appraisal?
It is a professional appraiser's opinion of the value of a property as of a specific date.
1 of 8 - The main limitation of using a pending sale for a comparable is that
the final sales price is not known.
2 of 8 - If a comparable is better than the subject in some characteristic,
an amount is deducted from the sale price of the comparable.
3 of 8 - All the following qualities are required in a good comparable for an appraisal EXCEPT
locational identity to the subject.
4 of 8 - One of the principal factors for adjustment in a CMA or sales comparison appraisal is
time of sale.
5 of 8 - As a rule, the fewer the total number of adjustments, the smaller the adjustment amounts, and the less the total adjustment amount:
the more reliable the comparable.
6 of 8 - As a comparable, an expired listing can be a useful indicator of
a listing price that was too high for the market.
7 of 8 - If a comparable sold for $200,000 but lacks a garage valued at $10,000, while the subject has one, the adjusted value of the comparable is
8 of 8 - Because the sale prices of the comparables are known, while the value and price of the subject are not, adjustments:
can be made only to the comparables' prices, not to the subject's.
1 of 5 - As sources of comparables, the CMA case study listed all of the following EXCEPT
county title records.
2 of 5 - How many of the five comparables in the case study required only one adjustment?
3 of 5 - The comparable that required both the greatest number of adjustments and the greatest total amount of adjustment was
an expired listing.
4 of 5 - Comparable 3 in the case study had one more bathroom than the subject had. Therefore,
An amount was subtracted from the value of the comparable.
5 of 5 - In weighting the comparables in the CMA case study, Comparable 2 was counted as the best indicator of value because
it was a sale requiring only one adjustment.
1 of 11 - An appraisal that seeks the cost of constructing, at current prices, a "precise duplicate" of the subject improvements is seeking the
2 of 11 - The loss of value due to adverse changes in the surroundings of the subject property is considered to be
an incurable loss.
3 of 11 - Which of the following statements best describes the cost approach to appraisal?
Add the estimated land value and cost of improvements and subtract the accrued depreciation of the improvements.
4 of 11 - How does an appraiser using the cost approach estimate the value of the land?
By applying the sales comparison approach to comparable land sales.
5 of 11 - One of the strengths of the cost approach is that it
is very accurate for a property with new improvements that represent the highest and best use.
6 of 11 - A property is being appraised by the cost approach. The appraiser estimates that the land is worth $10,000 and the replacement cost of the improvements is $75,000. Total depreciation from all causes is $7,000. What is the indicated value of the property?
7 of 11 - One weakness of the cost approach for appraising market value is that
market value is not always the same as what the property cost to construct.
8 of 11 - The principle underlying straight-line depreciation from physical deterioration is that
a property loses the same increment of value each year over the economic life of the property.
9 of 11 - The cost of constructing a similar structure at current prices and using current materials and methods is called
10 of 11 - Which of the following methods of estimating cost adds together estimates of individual cost components such as material and labor?
Unit-in Place Method.
11 of 11 - The cost approach is used for ___________ properties, which cannot be valued by other methods because of lack of comparable sales or income data.
1 of 11 - A weakness of the income approach is that it
is difficult to determine an appropriate capitalization rate.
2 of 11 - A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $30,000, vacancy and credit losses of $1,500, and operating expenses of $10,000. Using a capitalization rate of nine percent, what is the indicated value (to the nearest $1,000)?
3 of 11 - Potential gross income minus an allowance for vacancy and credit losses equals
effective gross income.
4 of 11 - A strength of the income capitalization approach is that it
uses a method that is also used by investors to determine how much they should pay for an investment property.
5 of 11 - An income property recently sold for $200,000, and the net operating income was $21,000. What was the capitalization rate for this property?
6 of 11 - Effective gross income minus total operating expenses equals
net operating income.
7 of 11 - Which of the following statements best describes the income capitalization approach?
Divide the income a property generates or might generate by a capitalization rate.
8 of 11 - The capitalization rate represents
an investor's desired rate of return on capital invested in a property.
9 of 11 - The income capitalization approach, or income approach, is most effectively used for appraising
income or rental properties.
10 of 11 - Why is the income capitalization method generally considered less effective than other methods for appraising single-family residences?
There is often little market data to use in setting rents and cap rates for the analysis.
11 of 11 - A property is estimated to produce a net operating income of $1,000,000. Which of the following capitalization rates would produce the greatest estimated value for the property?
1 of 15 - In a deed of trust transaction, which of the following occurs?
The trustor conveys title to a trustee in exchange for loan funds from the beneficiary.
2 of 15 - Wesley wants to sells his house to Maria. Maria would like to assume Wesley's mortgage loan. Wesley's lender demands full and immediate repayment of the loan if Wesley completes the sale. The lender can make this demand if the mortgage contains a
3 of 15 - A lender who charges a rate of interest in excess of legal limits is guilty of
4 of 15 - The document that commits a mortgage loan borrower to repay the loan is the
5 of 15 - Ginnie Mae operates by
guaranteeing to lenders that monthly payments on mortgage loans will be made.
6 of 15 - Because of a borrower's default on payments, a mortgage lender calls the entire balance due and payable immediately. The clause in the mortgage document that allows the lender to do this is the
7 of 15 - When financial institutions use funds from depositors to make mortgage loans, the process is called
8 of 15 - A homeowner borrows money from a lender and gives the lender a mortgage on the property as collateral for the loan. The homeowner retains title to the property. This is an example of
9 of 15 - Which of the following best expresses the mechanics of a mortgage loan transaction?
The borrower gives the lender a note and a mortgage in exchange for loan funds.
10 of 15 - A lender is charging three points on a $100,000 loan. How much does this amount to for the borrower?
11 of 15 - The primary mortgage market includes all of the following EXCEPT
12 of 15 - What is a "satisfaction piece?"
A document executed by a lender as evidence that a loan has been repaid in full.
13 of 15 - A lender lends money to a homeowner and takes legal title to the property as collateral during the payoff period. They are in a
14 of 15 - If the loan term, loan amount, and interest rate of a loan are known, it is possible to calculate the
15 of 15 - Freddie Mac issues securities known as
Guaranteed Mortgage Certificates.
1 of 15 - Which of the following best describes a reverse annuity mortgage?
A homeowner's equity is pledged as collateral for a loan paid out over time. The loan is repaid when the house is sold.
2 of 15 - Which of the following is a feature of a fully-amortized loan?
It has the same payment amount every month.
3 of 15 - Norm is buying a furnished condo in Chicago. Which type of mortgage is specifically designed for property and contents?
4 of 15 - If a borrower in a VA-guaranteed loan defaults,
The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure proceeds.
5 of 15 - A permanent long-term mortgage loan that is not government-backed is a
6 of 15 - What is the function of the index in an adjustable rate mortgage loan?
It is the starting point for calculating the interest rate for the loan.
7 of 15 - Buyer Jane has a loan which requires her to pay $588.00 per month for 20 years. At the end of the loan period, Jane has to make a final payment of $27, 580. What type of mortgage does Jane hold?
8 of 15 - The feature of an adjustable rate loan that prevents the monthly payment during an adjustment period from varying up or down by more than a set amount is the
9 of 15 - Interest rates on FHA loans are
negotiated by lender and borrower.
10 of 15 - Which of the following statements about contracts for deed in Illinois is TRUE?
The seller cannot repossess the property without a judicial foreclosure if a defaulting buyer has 20 percent equity and the contract term is longer than five years.
11 of 15 - To be eligible for an FHA-insured loan, a property must be
appraised by an FHA-approved appraiser.
12 of 15 - Lenders use private mortgage insurance to
minimize their risk when accepting a loan with a low downpayment.
13 of 15 - The basic FHA-insured loan program is provided for loans on
1-4-family residential properties.
14 of 15 - Why are interest rates generally higher on second loans than on first loans?
Second loans are riskier because they are not paid off until first loans are paid in case of default.
15 of 15 - Owner Sam has a $75,000 mortgage on his home. Sam sells his home to Bill for $100,000. Bill pays $7,000 down and borrows $93,000 on a new mortgage. This mortgage includes the existing $75,000 mortgage because the new lender will make the payments on the old mortgage. This is an example of a what kind of loan?
1 of 13 - If an individual is seeking a federally-related loan to finance a residential property located in a designated flood-hazard zone, federal law requires
the borrower to purchase flood hazard insurance.
2 of 13 - The lender's process of determining a borrower's ability to repay a loan and evaluating a property is known as
3 of 13 - A lender may deny a loan application and retain the application fee if
the application form contains fraudulent information.
4 of 13 - Which of the following best expresses the income ratio used by lenders to assess a loan applicant's borrowing capacity?
Monthly housing expenses divided by monthly gross income.
5 of 13 - What is a "lock-in" loan commitment?
A lender's time-sensitive agreement to lend a specific amount at a specific interest rate for a specific term.
6 of 13 - Mortgage loan applicants must meet underwriting standards for income, debt, cash, and
7 of 13 - Larry and Sandy have a combined monthly income of $5,000. Using the FHA and VA debt ratio of 41%, how much monthly housing and debt obligation can they qualify for?
8 of 13 - ECOA prohibits all of the following underwriting practices EXCEPT
asking applicants how long they have worked at their present job.
9 of 13 - If a lender's loan-to-value ratio is 90%, how much will the lender lend on a house valued at $200,000?
10 of 13 - Regulation Z disclosure requirements apply to which of the following loans?
All loans secured by a residence.
11 of 13 - When does the initiation of a loan application process occur?
When a lender receives a completed loan application package from an applicant.
12 of 13 - The Equal Credit Opportunity Act protects against discrimination in all of the following areas EXCEPT
13 of 13 - RESPA requires that a lender, within three days of receiving the loan application, must give a borrower
a good faith estimate of settlement costs.
1 of 11 - On what document would a consumer find information regarding a good-faith estimate of credit costs and transaction terms for a property loan mortgage?
2 of 11 - Which of the following mortgage loan items would NOT typically fall under origination charges?
3 of 11 - Which of the following statements best describes the term "consummation" as defined under Regulation Z?
The time that a consumer becomes contractually obligated on a credit transaction
4 of 11 - On a mortgage Loan Estimate, how are loan amounts and interest rates that might be changed after the closing indicated?
Yes or no statements
5 of 11 - According to RESPA, a business day is a
day on which the creditor's offices are open to the public for carrying out substantially all of its business functions.
6 of 11 - What does a demand feature mean in a mortgage loan?
A demand feature would allow the lender to require early repayment.
7 of 11 - What does it mean when a loan applicant signs the Confirm Receipt section on page 3 of the Loan Estimate?
It means that the borrower has received a copy of the form.
8 of 11 - The administration aspect of a loan from the time the proceeds are dispersed until the loan is paid off is called
9 of 11 - A mortgage Loan Estimate must be delivered within
three business days of loan application.
10 of 11 - What type of information is found in the Loan Calculations section on page 5 of the Closing Disclosure?
The total amount of all payments on the loan, the dollar amount of the finance charges over the life of the loan, the amount financed, the annual percentage rate (APR), and the total interest percentage (TIP)
11 of 11 - What is typically deposited into a mortgage loan escrow account?
Money held for certain future payments, such as insurance and taxes
1 of 12 - Ronald defaulted on his home mortgage payments. The lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald's house sold for $29,000 and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes?
Seek a deficiency judgment.
2 of 12 - What action must the lender take when a notice of reinstatement occurs?
The lender must dismiss the suit and continue the mortgage.
3 of 12 - The first step in a judicial foreclosure is
acceleration of the loan.
4 of 12 - In Illinois, the homestead exemption protects the first ___ of the value of a debtor's home against seizure to pay debts.
5 of 12 - Which of the following statements about foreclosure in Illinois is TRUE?
Mortgage foreclosures require a court proceeding.
6 of 12 - In what type of foreclosure is the lender required to file suit asking a court to order the borrower to pay the mortgage debt by a certain date or the lender will automatically gain full title to the property?
7 of 12 - In what type of foreclosure does a lender give a borrower a notice of default in a form prescribed by the state?
8 of 12 - Which of the following statements best defines Statutory Right of Redemption?
The right of a defaulted property owner to recover the property after the sale.
9 of 12 - Which of the following statements best defines Equitable Right of Redemption?
The legal right of a borrower to redeem property between the time of default and the foreclosure sale.
10 of 12 - If a bankruptcy proceeding begins before a foreclosure proceeding,
the foreclosure proceeding is stayed until completion of the bankruptcy process.
11 of 12 - Which statement about a deed in lieu of foreclosure is TRUE?
It avoids public notice of the foreclosure.
12 of 12 - One way that a Chapter 13 bankruptcy differs from a Chapter 7 bankruptcy is that it
includes a plan for repayment.
1 of 5 - Which of the following is NOT considered a predatory lending practice?
Charging low origination fees to encourage loan applications.
2 of 5 - What is the practice of "loan flipping?"
Inducing a borrower to refinance a mortgage loan repeatedly with no benefit to the borrower.
3 of 5 - The essence of mortgage fraud is
misstating, misrepresenting, or omitting information that is relied on in an mortgage loan underwriting decision.
4 of 5 - Loans designed for persons with blemished credit histories and that carry a higher rate of interest than prime loans to compensate for increased credit risk are called
5 of 5 - A buyer borrows $20,000 from his mother to make a downpayment. This loan must be repaid within five years, but the buyer tells the mortgage lender it is a gift. Has any fraud been committed?
Yes, it is loan fraud.
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