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Master Exam Practice

Terms in this set (66)

Which method would an appraiser be most likely to use when appraising a newly built (1yr old) apartment building with no rental history.
- Cost approach
(most appropriate for newly built income property with no income history)
When an appraiser is appraising a property he usually considers all of the following except:
- The assessed value
( is only for tax purposes)
Which loan would be most likely to qualify for FHA insurance?
A loan to purchase 1-4 units of residential rental property.
Involuntary methods of conveying property includes all of the following except:
- Quitclaim deeds
(are a form of voluntary)
RESPA (Real Estate Settlement Procedures ACT) would apply to which of the following?
1-4 family residential dwellings
A change in flight patterns that caused a loss in property value would be an example of:
Economic Obsolescence
A bill of sale is used to transfer the ownership of what?
-Personal Property
(ex: cars, furniture, clothing, appliances, and other non-food items)
A promise in exchange for a promise, supported by consideration, is the basis for a:
Valid, binding, bilateral, contract.
In the formation of contracts, "valuable, good, sufficient and adequate" are terms of which of the following?
- Consideration
(as long as it's acceptable to the other party in contract)
Essentials of a valid contract
Mutual consent, lawful object, consideration, capable parties.
A listing broker had a signed sales contract on a house. The broker then noticed a crumbling wall in the basement. The broker should inform:
both the buyer and seller.
When a buyer withdraws his offer to purchase a real property prior to acceptance by the seller, the:
buyer is entitled to a refund of the earnest money deposit.
The effectiveness of the market data approach is limited most by which of the following factors?
Economic conditions that rapidly change.
What item will appear as a debit on the buyer's closing statement?
- The purchase price
(the price is always a credit for the seller and a debit for the buyer)
An appraiser examines a building that is 25 years old. Because of superior upkeep, it has the condition of an 11 year-old building. The appraiser may use the 11 years-old age as the:
- Effective age
(age based upon its condition, not its actual age)
When the rent charged is based on the gross sales of a business, the lease is correctly termed:
A percentage lease
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 beginning?
- Metes and bounds
(used in describing property which starts at an identifiable starting point and then describes the succeeding sides by their bearing [direction] and length [distance]).
With a tenancy for years:
no notice is required to terminate the lease.
(an estate tenancy for years always has a specific beginning and ending dates, no notice is required)
In some states, the instrument used instead of a mortgage is a:
- Deed of trust.
(differs from a mortgage and it simplifies the process of foreclosure in case of default)
Jones put his house on the market. Brown made a written purchase offer that Jones accepted in writing. When is the contract valid?
- When Brown is notified of the acceptance.
(acceptance of an offer must be communicated to the offeror)
The primary purpose of a deed is to:
- Transfer title rights.
(a title is evidence of ownership, a deed is evidence of the transfer)
Which of the following is/are considered to be personal property?
- Furniture
In a new counter-offer:
the counter-offeror becomes the counter-offeree.
Economic obsolescence in a property is generally:
a type of depreciation that is incurable.
Which of the following is an encumbrance?
liens, easements, mortgages.
One example of an easement in gross is the right of:
Utility companies to access a property in order to maintain wires or pipes.
Which of the following would be classified as a general lien?
Judgment lien
The difference between the value of a property and the total amount of liens against it is known as:
Equity
Which type of lease requires the lessee to pay a flat rent?
Gross lease
A township contains only:
36 sections
(same as 36 square mile)
Which of the following would usually occur in a sale and leaseback transaction?
The property is sold on the condition that the new owner lease it back to the seller at the time title passes.
(a sale-leaseback is usually used for the purpose of creating cash flow from a commercial property)
If one uses the words "of definite duration" to describe a lease, it is most likely an:
Estate for years
(estate for years always will have a definite termination date which makes it a definite duration time)
The type of real estate ownership that is MOST all-inclusive is a:
Fee simple absolute estate.
An agent becomes the agent of the seller when both the seller and the agent sign a:
Listing Agreement
The difference between a freehold and leasehold estate is:
ownership versus possession.
To help a buyer get an FHA loan, a real estate broker should put the buyer in contact with
a lending institution approved by the FHA.
A purchaser is qualified to obtain an FHA loan for his new home. Which of the following would he apply to?
An FHA lender
A portion of Joe's building was inadvertently built on Ginny's land. This is called an:
Encroachment
A broker accepts an exclusive authorization and right to sell listing from a corporation. During the listing term, all of the officers of the corporation die. In this case:
the listing remains full in effect.
(the listing is unaffected)
A balloon payment is usually associated with a
large payment during the term or at the end of the payment schedule.
The Seddon family purchased the largest and most expensive house in a new subdivision. Five years later, when they were ready to move, they discovered the value of their home had gone up proportionately less than the other houses in the neighborhood. The phenomenon is an example of the principle of:
Regression
If 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 of the following types of leases?
Percentage
Eminent domain and escheat are two examples of
involuntary alienation.
(when property is transferred without the owner's consent)
A property owner conveys a life estate to his brother for the brother's lifetime and designates his cousin as the person to whom the property will pass when the life estate ends. When the brother dies, what happens to the property?
The cousin automatically becomes the fee simple owner of the property.
1 Acre =
43,560 square feet
A landowner sells one acre if his two-acre property to a friend. He reserves for himself and appurtenant easement over the friend's land for ingress and egress. The landowner's property is:
the dominant tenement
(they have the right to cross the property)
The amount of a loan expressed as a percentage of the value of the real estate offered as collateral is the:
loan to value ratio
Part of the consideration offered to a seller when the buyer signs an agreement of sale is called:
- Earnest money
(deposit made to a seller that represents a buyer's good faith to buy a home)
For the past 30 years, the Seddons continue to operate a neighborhood grocery store. Last week, the city council passed a zoning ordinance that prohibits packaged food sales in the area where the Seddon's grocery store is located. The store is now an example of:
non-conforming use
(example of grandfathering that's common when new zoning rules are put into place)
A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. The broker is legally called the
procuring cause.
The principle of appraising, which states that the maximum value is achieved when the property is in harmony with its surroundings, is the principle of
conformity
The addition to one's land by the gradual deposit of soil through natural causes is
accretion
A home is the smallest in a neighborhood of large, expensive houses. The larger houses have an effect on the value of the smaller home called the principle of:
progression
A tenant's lease has expired, but the tenant has not vacated the premises or negotiated a renewal lease. The landlord has not given the tenant permission to remain in the building. This situation is an example of:
tenancy at sufferance.
The portion of the value of an owner's property that exceeds the amount of the owner's mortgage debt is called:
Equity
When a company furnishes materials for the construction of a house and is subsequently not paid, it may file a
mechanic's lien
A buyer, Joe, and a seller, Stephen, both sign a purchase contract. What kind of title interest, if any, does Joe have in the property at this point?
Equitable
A court order to a properly designated individual to sell property in order to satisfy a judgment is called:
a writ of execution
A borrower takes out a mortgage loan that requires monthly payments of $875.70 for 20 years, and a final payment of $24, 095. This is what type of loan?
Balloon
Real property can become personal property by the process called:
- Severance
(the changing item of real estate to personal property)
The removal of land when a stream suddenly changes its channel is
- Avulsion
(sudden loss or addition to land)
A person who has complete control over a parcel of real estate is said to own a:
- Fee simple estate
(highest degree of ownership)
Discrimination is prohibited in lending practices under which of these acts?
Equal Credit Opportunity Act (ECOA)
(since 1992)
Which activity requires a real estate license?
A service that, for a fee, matches individuals who want to buy and sell properties.
A normal size section in the Government Rectangular Survey System contains:
1 square mile
A possessory right or ownership interest in real estate is called an:
estate
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