Download Lesson I

Lesson 1
Chapter 1-3
1.
The largest real estate trade organization is
a.
National Association of Real Estate Brokers (NAREB)
b.
National Association of Realtors (NAR)
c.
National Realtors Association (NRA)
d.
Real Estate Broker’s Agent Council
2.
The supply of real estate is affected by
a.
wage levels
b.
family size
c.
construction costs
d.
all of these
e.
a & b only
The demand for real estate is effected by
a.
wage levels
b.
family size
c.
construction costs
d.
all of these
e.
a & b only
3.
4.
Government agencies can affect the real estate market by regulating
a.
real estate taxes.
b.
land use controls.
c.
interest rates.
d.
amount of money available for mortgage loans.
e.
all of the above.
5.
Which of the following DOES NOT belong?
a.
warehouses
b.
shopping centers
c.
hotels
d.
business property, including office space
e.
stores
6.
Physical characteristics of land include
a.
immobility
b.
uniqueness
c.
indestructibility
d.
all of these
e.
a & b only
7.
Personalty is
a.
not real property.
b.
movable.
c.
personal property.
d.
e.
all of the above.
none of the above.
8.
A tree growing on a parcel is classified as
a.
land
b.
personal property if cut down
c.
a fixture
d.
all of these
e.
a & b only
9.
Economic characteristics of land include
a.
supply
b.
uniqueness
c.
situs
d.
all of these
e.
a and c only
10.
Accession is best described as
a.
the way a land owner acquires real property when trade fixtures are not
removed.
b.
the process of changing personal property into real property.
c.
the process of changing real property into personal property.
d.
none of the these.
11.
Which order goes from most encompassing to least encompassing?
a.
Land, Real Estate, Real Property
b.
Real Property, Real Estate, Land
c.
Land, Real Property, Real Estate
d.
Real Estate, Real Property, Land
12.
If you own common facilities like roofs and swimming pools, and the unit you
live in, you must own a(n)
a.
apartment
b.
condominium
c.
cooperative
d.
none of these
13.
If you share common facilities like roofs, swimming pools and have a proprietary
lease on your unit you must own a(n)
a.
apartment
b.
condominium
c.
cooperative
d.
none of these
14.
As a rule of thumb, the monthly mortgage payments should be no more than
a.
25 to 28% of gross pay
b.
c.
d.
e.
25 to 28% of take-home pay
33 to 36% of gross pay
33 to 36% of take-home pay
a and c only
15.
Total debt payments, including student loans, car payments, mortgage and credit
card payments should be no more than
a.
25 to 28% of gross pay.
b.
25 to 28% of take-home pay.
c.
33 to 36% of gross pay.
d.
33 to 36% of take-home pay.
e.
a & c only.
16.
PITI is an acronym for
a.
practical insect, termite inspection
b.
potential income tax
c.
principal, interest, taxes, insurance
d.
none of these
17.
Equity in a home decreases when
a.
the home owner pays the monthly mortgage payment
b.
the value of the home falls
c.
the value of the home rises
d.
a and c only
e.
none of these
18.
The coinsurance clause of a homeowner’s policy requires the homeowner have
coverage equal to
a.
at least 80% of the purchase price
b.
at least 80% of the replacement cost of the property
c.
at least 80% of the replacement cost of the dwelling (excluding land)
d.
must pay the 1st $500 dollars of loss.
19.
Your first job after graduating college pays $30,000 per year for the house of your
dreams. Your total housing expense is $675 per month. Your total housing and
the debt expense is $950 per month. Using the rules of thumb, would you qualify
for the loan?
a.
yes, the total housing expense is < 28% of monthly gross income
b.
no, the total housing expense is > 28% of monthly gross income
c.
yes, the total housing/debt expense is < 38% of monthly gross income
d.
no, the total housing/debt expense is > 36% of monthly gross income
e.
a and c
20.
Which of the following is NOT covered by apartment/condominium policies?
a.
Theft
b.
Damage to the structure
c.
d.
e.
Windstorm
Liability coverage
Fire
21.
A licensed real estate professional acting as a point of contact between two or
more people in negotiating the sale, rental, or purchase of a property is known as
a(n)
a.
sales affiliate
b.
broker.
c.
property manager.
d.
appraiser.
22.
When demand for a commodity decreases and supply remains the same,
a.
price tends to rise.
b.
price tends to fall.
c.
price is not affected.
d.
the market becomes stagnant.
23.
Detailed information about the age, education, behavior, and other characteristics
of members of a population group is called
a.
population.
b.
demographics.
c.
family lifestyles.
d.
households.
24.
When responsible for maintaining a client's property and maximizing return on
the client's investment, a broker is serving as a(n)
a.
rental agent.
b.
building maintenance specialist.
c.
property manager.
d.
investment counselor.
25.
All of the following would affect supply EXCEPT
a.
population.
b.
construction costs.
c.
government controls.
d.
the labor force.
26.
All of the following are categories of the uses of real property EXCEPT
a.
residential.
b.
develop[mental.
c.
agricultural.
d.
industrial.
27.
A bill of sale is used to transfer the ownership of
a.
real property.
b.
c.
d.
fixtures.
personal property.
appurtenances.
28.
A rancher owns a parcel of land on which oil is discovered. If the rancher has not
previously conveyed the oil rights, who owns the oil?
a.
The rancher
b.
The tenant to whom the property has been leased
c.
The state government
d.
The federal government
29.
All of the following are included in the right to control one's property EXCEPT
a.
The right to sell the property to a neighbor
b.
The right to exclude the utilities’ meter reader
c.
The right to erect “no trespassing” signs
d.
The right to enjoy profits from its ownership
30.
Tonya leases store space to Klem for a restaurant, and Klem installs his ovens,
booths, counters, and other equipment. When would these items become real
property?
a.
After they are installed.
b.
After Klem defaults on his rental payments.
c.
After the lease takes effect.
d.
If Klem does not remove them at lease expiration.
31.
All of the following are physical characteristics of land EXCEPT
a.
indestructibility.
b.
uniqueness.
c.
immobility.
d.
scarcity.
32.
The buyer of a $125,000 home has paid $2,000 as earnest money and has a loan
commitment for 70% of the purchase price. The balance of the cash the buyer
needs to complete the transaction is
a.
$3,500.
b.
$35,500.
c.
$37,000.
d.
$37,500.
33.
Margie listed her real estate for sale at $100,000. If her cost was 80 percent of the
listing price, what will her percentage of profit be when her real estate is sold for
the listing price?
a.
10 percent
b.
15 percent
c.
20 percent
d.
25 percent
34.
The selling price of a property is $96,000. This can be financed if the buyer can
put 10 percent down and pay a loan origination fee of 1.5 percent. How much
cash must the buyer produce to complete this transaction?
a.
$10,080
b.
$10,896
c.
$11,040
d.
$11,084
35.
Most homeowner’s insurance policies contain which of the following clauses?
a.
A property improvement clause
b.
A coinsurance clause
c.
A co-ownership clause
d.
A property devaluation clause
36.
A major manufacturer of automobiles announces that it will relocate one of its
factories, along with 2,000 employees, to Smallville. What effect will this
announcement most likely have on Smallville’s housing market?
a.
Houses will be likely to become less expensive as a result of the
announcement.
b.
Houses will be likely to become more expensive as a result of the
announcement.
c.
Because the announcement involves an issue of demographics, not of
supply and demand, housing prices will stay the same.
d.
The announcement involves an industrial property, residential housing
will not be affected.
37.
The words broker and REALTOR® are
a.
interchangeable.
b.
different categories of membership in the National Association of
REALTORS®
c.
different titles offered by separate professional organizations.
d.
unrelated: A broker is a real estate licensee and a REALTOR® is a
member of the National Association of REALTORS®.
38.
A licensee who has several years of experience in the industry decided to retire
from actively marketing properties. Now she helps clients choose among the
various alternatives involved in purchasing, using or investing in property. What
is her profession?
a.
Real estate counselor
b.
Real estate appraiser
c.
Real estate educator
d.
REALTOR®
39.
Schools would be considered part of which real estate classification?
a.
Special purpose
b.
c.
d.
Industrial
Commercial
Government-held
40.
Property management, appraisal, financing and development are all examples of
a.
factors affecting demand.
b.
specializations within the real estate industry.
c.
non-real-estate professions.
d.
activities requiring broker management and supervision.
41.
Jerome is building a new enclosed front porch on his house. A truckload of
lumber that he purchased has been left on his driveway for use in building the
porch. At this point, the lumber is considered to be
a.
real property because it will be permanently affixed to the existing
structure.
b.
personal property.
c.
a chattel that is real property.
d.
a trade or chattel fixture.
42.
A buyer purchased a parcel of land and immediately sold the mineral rights to an
oil company. The buyer gave up which of the following?
a.
Air rights
b.
Surface rights
c.
Subsurface rights
d.
Occupancy rights
43.
Method of annexation, adaptation to real estate, and agreement between the
parties are the legal tests for determining whether an item is
a.
a trade fixture or personal property.
b.
real property or real estate.
c.
a fixture or real property
d.
an improvement.
44.
When moving into a newly purchased home, the buyer discovered that the seller
had taken the electric lighting fixtures that had been installed over the vanity in
the bathroom at the time of purchase. The seller had not indicated that the fixtures
would be removed, and the contract did not address this issue. Which of the
following is true?
a.
Lighting fixtures are normally considered to be real estate.
b.
The lighting fixtures belong to the seller because he installed them.
c.
These lighting fixtures are considered trade fixtures.
d.
Original lighting fixtures are real property, but replacement fixtures would
be personal property.
45.
Parking spaces in multiunit buildings, water rights and similar things of value are
classified as
a.
b.
c.
d.
covenants.
emblements.
chattels.
appurtenances.
46.
When an owner of real estate sells the property to someone else, which of the
“sticks” in the bundle of legal rights is he or she using?
a.
Exclusion
b.
Legal enjoyment
c.
Control
d.
Disposition
47.
Sam inherited Rolling Hills from his uncle. The first thing he did with the vacant
property was to remove all the topsoil, which he sold to a landscaping company.
Sam then removed a thick layer of limestone and sold it to a construction
company. Finally, he dug 40 feet into the bedrock and sold it for gravel. When
Sam died, he left Rolling Hills to his daughter, Pat. Which of the following is
true?
a.
Pat inherits nothing because Rolling Hills no longer exists.
b.
Pat inherits a large hole in the ground, but it is still Rolling Hills, down to
the center of the earth.
c.
Pat owns the gravel, limestone, and topsoil, no matter where it is.
d.
Sam’s estate must restore Rolling Hills to its original condition.
48.
Sam and Alice are a married couple who file a joint income tax return and have
lived in their home for twenty years. Greg is a single homeowner who has lived in
his home for five years. Mike and Candy are father and daughter and bought their
home together last year. Based on these facts, which of the following statements
is true if all three homes are sold today?
a.
All of these homeowners qualify for a $500,000 exclusion from capital
gains taxation on the transactions.
b.
A $500,000 exclusion applies to Sam and Alice as well as to Mike and
Candy, a $250,000 exclusion applies to Greg.
c.
A $500,000 exclusion applies to Sam and Alice, a $250,000 exclusion
applies to Greg, and no exclusion applies to Mike and Candy.
d.
Only Sam and Alice qualify for any exclusion from capital gains taxation.
49.
When a person buys a house using a mortgage loan, the difference between the
amount owed on the property and its market value represents the homeowner’s
a.
tax basis.
b.
equity.
c.
replacement cost.
d.
capital gain.
50.
For which of the following risks would a homeowner have to purchase a special
policy in addition to a typical basic or broad-form homeowner’s insurance policy?
a.
b.
c.
d.
The cost of medical expenses for a person injured in the policyholder’s
home
Theft
Vandalism
Flood damage
Essay questions are for your convenience to prepare for the midterm and final. You do
not have to turn them in for a grade.
1.
With all of the benefits of home ownership listed in Chapter 3, why do so many
people rent? What are some of the benefits renters have over homeowners?
2.
How does equity differ from a long-term capital gain?