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355 Cards in this Set

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1. What economic factors affect the real estate market as well as other goods and services?
- Supply and demand
- Pricing
- Costs incurred in bringing the properties to market
- Value aspects of desire, usefulness, scarcity and ability to pay
1. How are properties affected by the local economy?
If the economy picks up, sales increase. If it slows, sales decrease.
1. List three kinds of property in the real estate market.
Any three of these six: industrial, commercial, agricultural, special purpose, recreational, investment
1. Jim has decided that he will learn all he can about the new subdivisions at the west end of town. Jim has decided to specialize in what area of real estate?
Geography
From whom may a salesperson receive compensation for performed activities?
ONLY from the employing broker
What is the major difference between an employee and an independent contractor?
The issue of control – A broker can control the what and the how of an employee. A broker can control the what, but not the how of an independent contractor.
What kinds of insurance do brokers normally require of their employees?
High limits of automobile insurance with the broker named as an insured.
Errors and omissions insurance.
What should a licensee’s written employment agreement contain?
Each person’s responsibilities to the other
The broker’s supervision
The licensee’s duties
The licensee’s compensation program
Give an example of a specific short-term goal.
Anything specific and measurable such as:
I will schedule 2 practice listing presentations with an experienced co-worker next week.
I will attend the 2-hour seminar about using e-mail that the local board is sponsoring on Friday morning.
What do you need to remember about making phone calls to potential clients?
Check into and follow the National Do Not Call guidelines.
What is meant by the term “sphere of influence”?
People that you know or have known that could be potential clients – family, friends, former co-workers, church associates, etc.
What are members of NAR required to do?
Attend mandatory ethics training every four years.
Alice has decided that she will specialize in selling farm land. Which area of specialization would she fall into?
a) Geography
b) Type of property
c) Business type
d) Type of client
b) Type of property
Which of these statements is true?
a) Salesperson Harry can solicit his own listings.
b) Salesperson Julie can receive her commission from the cooperating broker in her latest transaction.
c) Salespersons must perform all of their activities on behalf of their employing broker.
d) Broker Tom has only limited responsibility for the actions of his licensees.
c) Salespersons must perform all of their activities on behalf of their employing broker.
Which of the following circumstances would concern you about working for Broker John?
a) John offers weekly training seminars.
b) There are several successful agents at John's office.
c) John's office has a selection of books, CDs and tapes for agent use.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.
d) John expects his agents to spend 5 hours a week on unsupervised telephone duty.
Which of the following statements is not true?
a) A broker may require licensees to carry high levels of automobile insurance.
b) It's a good idea for brokers to carry workers' compensation coverage.
c) A broker is not responsible for the acts of independent contractors.
d) Employee status versus independent contractor status is an IRS issue.
c) A broker is not responsible for the acts of independent contractors.
Which of the following would be an example of a licensee specializing in business type?
a) Jim specializes in clients who want to buy restaurants.
b) Alice knows everything about the exclusive east side neighborhoods.
c) Tom specializes in options.
d) Chris is a buyer's agent.
a) Jim specializes in clients who want to buy restaurants.
Broker Alice has hired several independent contractors in her firm. Which of the these activities does she have control over?
a) What the licensees wear.
b) What percent of commission the licensees can charge.
c) How much time the licensees must spend in the office.
d) Whether or not the licensees attend staff meetings.
b) What percent of commission the licensees can charge.
All of the following are true statements about goals except which one?
a) Goals should be measurable.
b) It's easier to prioritize your tasks if your goals are in writing.
c) Once you set a goal you should never change it.
d) Goals must be realistic if you hope to accomplish them.
c) Once you set a goal you should never change it.
Which of the following is NOT a condition of the safe harbor test?
a) Person must be properly licensed.
b) Gross income must be based on production.
c) Clearly written contractor agreement must exist.
d) Gross income must be based on hours worked.
d) Gross income must be based on hours worked.
Which of the following is not a national estate trade organization?
a) NAR
b) CAR
c) NAREB
d) AREAA
b) CAR
1. A shopping center would be primarily categorized as what type of property?
a) Residential
b) Agricultural
c) Investment
d) Commercial
d) Commercial
Why is it important for licensees to understand the Americans with Disabilities Act?
Brokers must evaluate whether they need to make physical changes to their office space to comply with the law.
Licensees should inform their commercial and investor clients of the need to have their leases professionally evaluated and their offices inspected for compliance.
Alex Jones owns a duplex and lives in one unit. He refuses to rent the other unit to families with children. What would you say about Alex’s actions?
Alex is within the guidelines of the Fair Housing Act since he is the owner of a dwelling that has fewer than four units, one of which is owner-occupied.
If a person feels like he or she has been discriminated against, how long does that person have to file a complaint?
With HUD – within one year of the alleged act.

In state or federal court – within two years of the alleged act.
Salesperson Sally tells her senior citizen buyers that the home they want to view is located in a neighborhood with several small children and loud teenagers. She tells them they would not be comfortable in this home and she shows them a list of homes in other neighborhoods she thinks would be more appropriate. What would you say about Sally’s behavior?
Sally is guilty of steering, which is prohibited by Fair Housing laws.
Which California fair housing law(s) apply to financial institutions?
Both the Unruh Civil Rights Act and the Holden Act.
Define panic selling.
Panic selling is soliciting a listing or inducing someone to sell by telling him or her that persons of a certain protected class are moving into the neighborhood.
Broker Sam receives a deposit check from a client, along with the purchase contract. How long does he have to deposit it into his trust account?
Sam has three business days to deposit the check, unless the buyer authorizes him to hold the uncashed check until the offer is accepted.
How much of his own money can broker Jake keep in a trust account and not be considered guilty of commingling?
Up to $200 to use for service fees on the account
Which of the following is not a source of information for professional ethics codes?
a) State laws
b) Licensing regulations
c) Real estate associations
d) Real estate schools
d) Real estate schools
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?
a) Redlining
b) Panic selling
c) Steering
d) Misrepresentation
b) Panic selling
If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?
a) 30 days
b) 90 days
c) 1 year
d) 2 years
c) 1 year
Which Fair Housing Law added sex to the list of protected classes?
a) Housing and Community Development Act
b) Title VIII of the Civil Rights Act of 1968
c) Jones v. Mayer
d) Fair Housing Amendments Act
a) Housing and Community Development Act
How long must trust account records be kept?
a) 1 year
b) 2 years
c) 3 years
d) 5 years
c) 3 years
Which of these is not an exemption to fair housing law?
a) Senior housing for residents 62 or older
b) A religious organization providing housing to members only
c) The sale of a single-family home by an owner who owns five residences
d) Rental of a unit in an owner-occupied four-family flat
c) The sale of a single-family home by an owner who owns five residences
A person who believes he or she has been discriminated against has how long from the time of the alleged violation to file a suit in a state or federal court?
a) 6 months
b) 12 months
c) 18 months
d) 24 months
d) 24 months
Which California Fair Housing law provides protection from discrimination by business establishments?
a) Rumford Fair Housing Act
b) Unruh Civil Rights Act
c) Holden Act
d) Fair Employment and Housing Act
b) Unruh Civil Rights Act
If a broker receives a deposit check with a purchase contract, which of these is he not allowed to do?
a) Deposit it directly into escrow.
b) Give it to the principal.
c) Deposit into the brokerage business account.
d) Hold it with the buyer's permission until the contract is accepted.
c) Deposit into the brokerage business account.
Which is not a true statement about the Americans with Disabilities Act?
a) A broker might need to change the layout of the office to make the aisles wider for clients in wheelchairs.
b) A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities.
c) An apartment manager might be required to allow a tenant with a disability to widen a doorway.
d) A shopping center might have to remodel their public restrooms.
b) A duplex owner might need to remodel the kitchen in the rental unit to accommodate persons with disabilities.
When is an agency relationship created?
An agency relationship is created when a person (the principal) delegates to another person (an agent) the right to act on his or her behalf in business transactions with third parties.
What exception exists to the duty of obedience when working with a client?
An agent is not bound by the duty of if the principal’s directions are not legal.
An agent’s fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?
Confidentiality. This duty extends beyond the termination of the relationship. No personal information gained during the term of the agreement can ever be disclosed to another party.
Amanda calls broker Tim to schedule a showing of one of his listings. Amanda loves the home and wants to make an offer. What should Tim do next?
Tim must disclose to Amanda his agency relationship with the seller and get her written permission for a dual agency arrangement. He must also inform the seller of his agency relationship with Amanda and get the seller’s written permission for the dual agency arrangement. If both parties agree to dual agency, they can proceed. If not, Amanda will have to find other representation.
When must a licensee provide an agency disclosure to a prospective client?
The listing agent must provide the disclosure to the seller prior to securing the listing agreement.
The selling agent must provide the disclosure to the seller “as soon as practicable” prior to presenting a purchaseoffer.
The selling agent must provide the disclosure to the buyer“as soon as practicable” prior to the execution of the buyer’s offer to purchase.
What is the Real Estate Transfer Disclosure Statement and who is responsible for providing it?
It is a statement that describes the condition of the property in detail. The seller must complete it, sign it and provide it to the buyer, but there is a section on page three of the form that the seller’s agent (if there is one) must complete and sign.
Agent Jim needs to do a visual inspection of his listing. What kinds of things should he be looking for?
Structural defects, deterioration, water damage and insect damage.
Why should agent Grace give her client a Combined Hazards Book?
This book contains three booklets which meet the seller’s and agent’s requirements for disclosure of earthquake hazards, lead-based paint and other environmental hazards.
What required disclosure is a result of Megan’s Law?
California requires that every sales contract or lease contain a notice which states that information about sex offenders registered under Megan’s Law is available to the public on an Internet web site maintained by the Department of Justice.
Which disclosures are NOT required to be made when selling residential property?
Natural deaths, unnatural deaths occurring more than three years prior to the sale and information about residents having AIDS or dying from AIDS.
What is a public report and when must it be provided?
A public report is a statement from the Department of Real Estate that discloses to prospective buyers pertinent facts about a subdivision. Purchasers must sign a receipt indicating that they have received and accepted the report before they enter into the purchase transaction.
What does the Real Estate Settlement Procedures Act require of lenders?
That they provide a good faith estimate of closing costs within three days of the loan application; that they let the borrower know in writing if they expect someone else to service the loan; that they give the HUD-1 Settlement Statement to the buyer at or before settlement and allow the borrower to inspect the statement one business day before closing.
Which of the following types of agency is not allowed in California?
a) Dual agency
b) Buyer's agency
c) Subagency
d) Designated agency
d) Designated agency
The principles of an agency relationship include all of these factors except which one?
a) Mutual consent
b) Authorization
c) Compensation
d) Fiduciary duties
c) Compensation
Which of the following is not a fiduciary duty an agent owes to his or her principal?
a) Loyalty
b) Confidentiality
c) Accountability
d) Blind obedience
d) Blind obedience
Agent 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"?
a) There is a crack in the basement wall.
b) The owner of the property is HIV positive.
c) The air conditioner does not work.
d) The casement windows have broken seals.
b) The owner of the property is HIV positive.
When must a listing agent present the Disclosure Regarding Real Estate Agency Relationships to the seller?
a) Prior to bringing an offer to purchase.
b) Prior to accepting the listing.
c) As soon as possible.
d) Prior to conducting any showings.
b) Prior to accepting the listing.
Which disclosure form gives detailed information about the property's condition?
a) Real Estate Transfer Disclosure Statement
b) Agency Disclosure
c) Natural Hazard Disclosure Statement
d) Mello-Roos Report
a) Real Estate Transfer Disclosure Statement
If an agent does not comply with the requirement of conducting a visual inspection of a property, how long after possession does the buyer have to file a suit?
a) 6 months
b) 12 months
c) 24 months
d) 36 months
c) 24 months
Which booklet is not part of the Combined Hazards Book?
a) The Residential Environmental Hazards Guide
b) Protect Your Family From Lead In Your Home
c) The Homeowners Guide to Earthquake Safety
d) Consumer Guide to Disclosure for Buyers
d) Consumer Guide to Disclosure for Buyers
Timeshare buyers have the right to rescind a transaction within what timeframe after signing the purchase contract?
a) 1 day
b) 3 days
c) 7 days
d) Never
c) 7 days
Which disclosure is required by the Real Estate Settlement Procedures Act?
a) Good faith estimate
b) Finance charges and annual percentage rate
c) Transfer of the loan collection
d) Rights regarding discrimination
a) Good faith estimate
What do you need to check if you want to conduct a door-to-door canvass in a neighborhood?
To see if door-to-door solicitation is allowed and if it requires a permit.
Name one advantage and one disadvantage of telephone contacts. (See answers on screens 6 and 7.)
Advantage – Can make several calls in a relatively short period of time.

Disadvantage – Many homeowners are turned off by phone solicitations and may hang up quickly.
What is a good approach to use when contacting the owner of an expired listing?
Find out why the listing did not sell and approach the owners with a plan that will address that issue and correct it for a successful sale.
What are the major areas of newspaper leads?
FSBO ads
Rental ads
Special announcements
Legal notices
What kind of newspaper ad could you place to solicit a listing?
An ad that is looking for a specific kind of home for one of your buyer clients.
List four sections of an Internet website that might be of particular appeal to prospective buyers.
Your current listings
List of services you offer specifically for buyers, such as help in finding a lender
Information on current interest rates
Mortgage loan calculator
(See screen 26 for other correct answers.)
How can a builder help you generate leads?
Builders can refer to you their customers who need to sell their current homes.
Why is it important to have a written prospecting plan?
It will keep you on track and provide a guideline for deciding what parts of the plan need to be changed or expanded.
Which of the following statements is not true?
a) Retired persons are a good source of neighborhood information.
b) You can use a reverse telephone directory to get the names of residents.
c) Knocking on doors never requires special permits.
d) Visiting a neighborhood with a co-worker could make you feel more comfortable.
c) Knocking on doors never requires special permits.
Prospecting:
a) Only needs to be done periodically.
b) Is critical to your success in real estate.
c) Is helpful but not necessary.
d) Is best left to experienced brokers.
b) Is critical to your success in real estate.
Which of the following is a good direct mail technique?
a) Use windowed envelopes.
b) Send colored self-fold flyers.
c) Print postage labels from your computer.
d) Hand address the envelopes.
d) Hand address the envelopes.
Which of the following is not a probable reason for a listing to expire without selling?
a) No open houses
b) Needs repair
c) Not properly priced
d) Not marketed correctly
a) No open houses
All of the following are good newspaper sections to read for prospecting except which?
a) Obituary column
b) Classified rental ads
c) Business section
d) Special announcements
c) Business section
Developing a prospecting plan is similar to:
a) Establishing goals.
b) Developing an earnings statement.
c) Setting a training schedule.
d) Writing a meeting agenda.
a) Establishing goals.
Which of the following is not a legal notice that can provide a listing lead?
a) Death notice
b) Vacancy
c) Divorce
d) Tax delinquency
b) Vacancy
Which of these Internet pages might not be of particular interest to sellers?
a) Staging a home
b) Inspection tips
c) List of properties for sale
d) List of sold homes
c) List of properties for sale
How might probate information help in prospecting?
a) Gives the names of lawyers who might require property assistance.
b) Allows the agent to determine community market trends.
c) Shows property addresses that should be excluded from prospecting.
d) Provides the names of individuals who may want to sell inherited property.
d) Provides the names of individuals who may want to sell inherited property.
All of these are true of prospecting except:
a) It can provide a steady stream of future clients.
b) It helps to identify buyer and seller needs.
c) It keeps your name in front of potential buyers and sellers.
d) It guarantees sales.
d) It guarantees sales.
Your listing presentation manual should be made up of two sections that address what issues?
Why the person should enter into a listing agreement.
Why the listing agreement should be with you and your company.
What is the main reason sellers choose to sell their property without an agent’s help?
They think they will save money by not having to pay a large commission.
Name three benefits of listing a home with an agent that you could share with sellers. (These or other choices from screen 17.)
Advice on getting the home ready for sale.
Advertising and promotion activities paid for by agents.
Qualification of all prospective buyers.
What is an important issue for potential buyer clients to understand?
How the buyer’s agent gets paid his or her fee.
What is a competitive market analysis?
A comparison of properties that are similar to the seller’s property in location, size, style, age and amenities
When looking at homes currently for sale, what is important for a prospective seller to know about asking price?
Asking price is not always a good indicator of the actual selling price of a property.
When preparing a competitive market analysis, what categories of homes should an agent research?
Properties currently for sale
Recently sold properties
Expired properties not sold
What is a good method for estimating what a seller will net from the sale of the property?
Obtain and complete the Estimated Seller’s Proceeds form, which estimates all of the costs involved in the sale and subtracts that amount from the estimated selling price.
A competitive market analysis is an attempt to:
a) Find things in the home a seller needs to repair.
b) Establish a home's fair market value.
c) Discover why some homes haven't sold.
d) Convince a seller to list with you.
b) Establish a home's fair market value.
What form can an agent use to show a seller what he or she will net on the sale of the property?
a) Statement of Closing Costs
b) Competitive Market Analysis
c) Sale Price Disclosure
d) Estimated Seller Proceeds
d) Estimated Seller Proceeds
Which of the following is not a true statement?
a) Buyers looking at FSBO homes are usually looking for a bargain.
b) FSBO sellers believe they will save money if they sell themselves.
c) FSBO sellers who list with an agent will pay their own advertising costs.
d) Buyers of FSBO homes are usually the ones who save money.
c) FSBO sellers who list with an agent will pay their own advertising costs.
How many properties should be included for comparison in a competitive market analysis?
a) Two properties in each category
b) Five current listings -- three recently sold and two expired
c) A minimum of three properties in the recently sold category
d) Twelve properties total
c) A minimum of three properties in the recently sold category
A listing presentation can be compared to:
a) A training session
b) An employment interview
c) A practice closing
d) A sure sale
b) An employment interview
All of the following are benefits of listing with an agent except which?
a) Preparation of an appraisal of the property
b) Help during escrow
c) Qualification of buyers
d) Help with required forms and disclosures
a) Preparation of an appraisal of the property
A competitive market analysis contains information about all of the following items except which?
a) Currently listed homes
b) Recently sold homes
c) Recently remodeled homes
d) Similar expired listings that didn't sell
c) Recently remodeled homes
Which of the following items would not usually be included in a presentation manual for buyers?
a) Information on the firm's services
b) The agent's resume
c) Press releases about the company
d) A list of former client references
d) A list of former client references
A presentation manual:
a) Should be professionally produced.
b) Can be used in place of a verbal presentation.
c) Is not necessary if the verbal presentation is strong.
d) Lends good visual support to what the agent is saying.
d) Lends good visual support to what the agent is saying.
Which of the following will give you comparative market data the fastest?
a) Multiple listing service
b) County records
c) Company files
d) Title companies
a) Multiple listing service
What is an important thing to remember about listing agreements?
They must be in writing to be enforceable.
Describe an open listing.
An open listing is a non-exclusive listing that allows a seller or buyer to engage a number of different brokers to sell or help purchase property. The broker who brings the buyer or finds the suitable property gets the commission. If the owner sells the property or the buyer finds his or her own property, no commission is owed to any broker.
What is the major difference between an exclusive-authorization-and-right-to-sell listing and an exclusive-agency listing?
With exclusive-right-to-sell, the broker has the exclusive right to market the property and receive a commission regardless of who procures the buyer. With exclusive agency, the owner retains the right to find a buyer and sell the property and owe the exclusive broker no commission.
What is the agreement that a broker can enter into with a buyer?
Exclusive-Authorization-to-Acquire-Property agreement authorizes the broker to work as the agent for the buyer rather than the seller.
What does the safety clause in the listing agreement do?
Allows the broker to receive a commission under certain conditions if he or she sells the property within a specified number of days after the listing contract expires.
What does the security and insurance clause of the listing agreement address?
This section states that the broker is not responsible for loss or damage to the property, even with a lockbox present. The seller must take steps to safeguard any valuables and obtain insurance to cover the risks.
What does the paragraph in the listing agreement titled “Entire Contract” deal with?
This paragraph states that the agreement supersedes all previous discussions, negotiations and agreements between the seller and the broker. Therefore, anything that is not written into the agreement is not part of the agreement.
What does the Water Heater Statement of Compliance address?
It’s a mandatory seller disclosure dealing with the law requiring water heaters to be strapped, braced or anchored to resist earthquake motion.
6. All of the following are valid listing agreements. Which one is illegal in many states?
a) Exclusive agency.
b) Open.
c) Exclusive-right-to-sell.
d) Net.
d) Net.
6. Which kind of listing gives one broker the right to sell, but allows the owner to sell the property and not owe a commission to the broker?
a) Non-exclusive agency
b) Exclusive agency
c) Exclusive-right-to-sell
d) Net
b) Exclusive agency
6. The Lead-Based Paint Disclosure is required for homes built:
a) Before 1978
b) Before 1976
c) After 1980
d) After 1975
a) Before 1978
6. Which is true of an exclusive-authorization-to-acquire-property agreement?
a) The buyer must pay the broker a commission.
b) The broker will owe fiduciary responsibilities to the seller as well as the buyer.
c) It must specify a definite termination date.
d) Commission is never involved.
c) It must specify a definite termination date.
6. Which of the following forms is non-standard and should be prepared by a broker to give to sellers?
a) Natural Hazards Disclosure
b) Water Heater Compliance
c) Estimated Seller's Proceeds
d) Defective Furnaces in California
d) Defective Furnaces in California
6. An agent must give a copy of the listing agreement to the sellers:
a) At the time the agent presents an offer.
b) At the time the agreement is signed.
c) When the seller pays commission.
d) After the agent has had time to make copies at the office.
b) At the time the agreement is signed.
6. When the broker and seller agree that the broker can receive commission for a specified number of days after the listing expires if selling to a "named" party on a list, it's referred to by what term?
a) Security clause
b) Non-penalty clause
c) Safety clause
d) Effective period
c) Safety clause
6. In the listing agreement, a seller can choose to decline/disapprove all but which of the following items?
a) Sign in yard
b) Broker compensation to other brokers
c) Posting to MLS
d) Lockbox
AAQ
b) Broker compensation to other brokers
6. Which of the following statements is not true about a net listing?
a) Sets a limit on the commission a broker can earn.
b) Is generally viewed as unprofessional.
c) Is illegal in many states.
d) Allows a broker to have as a commission anything above the minimum the seller sets.
a) Sets a limit on the commission a broker can earn.
6. Which of these documents is for sellers only and not for buyers?
a) Smoke Detector Statement of Compliance
b) Real Estate Transfer Disclosure
c) Residential Listing Agreement
d) Seller’s Affidavit of Nonforeign Status and/or California Withholding Exemption
c) Residential Listing Agreement
7. What is the primary criticism that sellers have about their agents?
Lack of communication.
7. When you meet with your sellers after you obtain the listing, what is one of the first things you should share with them to get them involved in the process?
It’s important and helpful to give the sellers written homeowner tips for improving the cosmetic aspects of both the interior and exterior of their property.
7. What kinds of things should you include in a weekly activity report?
• Number of inquiries on the property that week
• Number of showings
• Advertising done that week
• Open houses held
• Number of open house visitors
• Comments made by other agents or prospective buyers
7. How can you prepare your sellers for receiving offers?
Share a blank copy of the purchase agreementwith them and go over each of the paragraphs on the form. Also talk to them about the possibility of getting a quick offer and the consequences that could result from the tendency to reject such an offer.
7. Name four traditional marketing tools that you should use with every listing you get.
For Sale sign
Photos
Classified ads
Fliers

Lockboxes and MLS listings are also critical, but can only be used with seller permission.
7. What are some important tips for home tours?
• Sellers should not be at home.
• Have some light refreshments for the agents.
• Play soft mood music.
• Give each agent a property flier.
• Have agents fill out a short evaluation of the home.
7. In addition to agent and MLS home tours, what are some other ancillary tools you can use?
Neighborhood canvass letter
Agent open house
Public open house
7. What should you keep in mind when developing your marketing plans?
Each plan should be client-specific – that is, have some standard tasks, but also some activities that are customized to the particular sellers.
7. Which of the following actions by an agent would most probably upset the sellers?
a) Conducting an agent open house.
b) Sending a weekly activity report.
c) Sharing all visitor comments two weeks before the listing ends.
d) Placing a classified ad in the weekend paper.
c) Sharing all visitor comments two weeks before the listing ends.
7. All of these items are important to include on your weekly activity report except which?
a) Number of calls that week
b) Agent comments about the property
c) Classified ads placed on the property
d) Number of hits on the company website
d) Number of hits on the company website
7. Which of these forms is not filled out by the seller?
a) Smoke Detector Compliance
b) Modification of Terms
c) Transfer Disclosure Statement
d) Water Heater Compliance
b) Modification of Terms
7. All of these statements are true except which one?
a) Virtual tours are an expensive marketing tool to use.
b) An agent should print off a copy of the listing on the company's Internet site to send to the sellers.
c) Participation in the MLS increases a licensee's inventory.
d) Property evaluations from other agents have valuable information for sellers.
a) Virtual tours are an expensive marketing tool to use.
7. If there is no interest in the property on a given week, the agent should:
a) Skip the activity report for that week.
b) Share that information with the sellers.
c) Tell the sellers you expect an offer to be coming soon.
d) Tell the sellers it's time to reevaluate the price.
b) Share that information with the sellers.
7. All of these activities are appropriate to do within the first few days of obtaining a listing except which?
a) Give the sellers a copy of some homeowner's tips.
b) Discuss modifying the listing price.
c) Explain your marketing plan to the sellers.
d) Have the broker send a "thank you for listing" letter to the sellers.
b) Discuss modifying the listing price.
7. Which of these marketing tools is not considered a traditional tool?
a) Flier
b) Classified ad
c) Photos
d) Video tour
d) Video tour
7. You should try to attach a rider strip to your For Sale sign that has:
a) Your home telephone number.
b) Your GRI designation.
c) Your cell phone number.
d) Your fax number.
c) Your cell phone number.
7. Which of these is not a helpful homeowner tip?
a) Display lots of family photos to impress potential buyers.
b) De-clutter your garage and basement.
c) Bake muffins or cinnamon rolls to create a "homey" feel.
d) Make sure all light bulbs and lamps are working and are bright.
a) Display lots of family photos to impress potential buyers.
7. If someone shows up at the sellers' door unexpectedly to see the home, the sellers should:
a) Tell them to call your office.
b) Invite them in and show them around.
c) Take their names and call your office.
d) Ask them to leave.
c) Take their names and call your office.
8. Name and define the two forms of advertising.
Institutional advertising attempts to establish a positive image of the company, its services and its reputation in the minds of the public.

Product advertising is directed toward the particular properties a company has for sale.
8. Explain the method used to write good advertising.
The AIDA standard says that if you want your ads to get results, they must capture the reader’s Attention, arouse Interest in your product, create a Desire for the product and then prompt the reader to Action.
8. What is important to remember about capturing the reader’s attention?
This is the most critical step. If you don’t capture the attention, you can’t deliver the message.
8. What do many firms do to avoid confusion with their advertising plan?
Many firms choose to have a single person in the office in charge of watching advertising costs, controlling volume, scheduling the advertising that meets the objectives, compiling advertising data and evaluating the effectiveness of the ads placed.
8. What kind of ad is illegal in California?
Blind ads that do not identify the advertiser as a broker are illegal.
8. What is the difference between classified ads and display ads?
Classified ads are inexpensive, contain words only and are printed in the classified section of the paper.

Display ads are expensive, can contain words, pictures and graphics and are printed outside the classified section of the paper.
8. Why is television becoming a more common advertising venue?
Many cable stations now run “community bulletin boards” that advertise items for sale, including real estate. Also, “home showcase” programs are becoming more common on the cable networks.
8. What kind of advertising does the Truth in Lending Act prohibit?
Bait-and-switch advertising
8. The cost of doing direct mail advertising depends on all of these things except which?
a) How you target your audience
b) The frequency of the mailings
c) The number of pieces you send
d) The date of the mailing
d) The date of the mailing
8. Which kind of advertising aims at increasing sales by informing the public of a company's capabilities?
a) Operational
b) Institutional
c) Product
d) Classified
b) Institutional
8. An unlicensed person who advertises as if he or she were a real estate broker:
a) Is subject to a $1,000 fine.
b) Can serve up to a year in prison.
c) Has no legal issues to deal with.
d) Can be fined up to $10,000.
d) Can be fined up to $10,000.
8. Which of these is a free form of advertising?
a) Shopping guides
b) Telephone directory
c) Press release
d) Blind ad
c) Press release
8. Which of these statements is not true?
a) Radio advertising is not as effective as other methods because listeners can be distracted by their activities and not hear the ads.
b) Newsletters can be a very effective advertising forum for niche marketers.
c) Advertising in the telephone directory is cost effective because the directories can reach every home in the marketing area.
d) Magazine ads are significantly more expensive than newspaper ads.
a) Radio advertising is not as effective as other methods because listeners can be distracted by their activities and not hear the ads.
8. All of these would be effective at capturing a reader's attention except which?
a) Use as little white space as possible.
b) Use a question as a headline.
c) Use available color.
d) Make the headline bold and all caps.
a) Use as little white space as possible.
8. Which of these is not a tool to help evaluate advertising effectiveness?
a) Telephone log
b) Code in a print ad
c) Advertising budget
d) Designated telephone number
c) Advertising budget
8. Which of these words or phrases might be considered discriminatory when used in advertising?
a) No smoking
b) Couples only
c) Handicap accessible
d) Kids welcome
b) Couples only
8. Which of these is not an AIDA characteristic?
a) Interest
b) Attention
c) Desire
d) Activity
d) Activity
8. What kind of ad usually combines both institutional and product advertising?
a) Classified
b) Display
c) Press release
d) Classified-display
b) Display
9. What is the most important factor for a prospective homebuyer to consider in the decision to purchase?
Affordability
9. What is floor time and why is it important?
Floor time consists of periods when agents can take inquiries. When a licensee is on floor duty, any new caller who does not ask for a specific agent by name becomes that licensee’s prospect. Floor time is particularly important for licensees who are trying to build a client base.
9. When handling a telephone inquiry, why should you limit the amount of information you give out about the property?
The less information you give, the less chance the caller will find a reason to eliminate the property and the better chance you’ll have of getting an appointment to show it.
9. Agent Greg receives a call about one of his firm’s ads. He succeeds in setting up an appointment to meet with the caller. What approach can Greg use to discourage the person from calling other agents?
Greg should suggest that the caller go through the ads and circle any and all other properties of interest. Then he should ask the caller to bring the paper to the meeting so that he can look up information about all the circled properties.
9. What four categories of information are important for you to collect from your prospects?
Demographics
Current information
Needs and wants
Financial information
9. Define “qualifying the buyer.”
The process of correlating the buyer’s needs and wants with his or her actual financial capacity to buy.
9. What should you do before you show any properties?
Prepare by determining your approach and then making notes about the specific features you want to showcase at each property.
9. What is an important technique that allows buyers to see themselves in the home?
Asking who, what, where and how questions for each room and feature of the home.
9. Most buyers who see a newspaper ad that interests them:
a) Drive by the property.
b) Call your office.
c) Check out your Internet site.
d) Visit your office.
b) Call your office.
9. Which of these is not a good technique to get the name of a caller who is reluctant to give you that information?
a) Offer to mail the caller a set of fliers on interesting properties.
b) Ask the caller if he or she would like to receive e-mails on newly listed properties.
c) Offer to show the caller a newly-listed, not-yet-advertised property, even if one doesn't exist.
d) Offer to call the prospect when new listings that meet his or her criteria come on the market.
c) Offer to show the caller a newly-listed, not-yet-advertised property, even if one doesn't exist.
9. Prospects Jim and Linda arrive with agent Bill at the first showing. When Bill pulls in front of the home, Linda decides immediately that she doesn't want to see the inside. What should you do?
a) Tell Linda that the sellers will be very disappointed if they cancel the appointment.
b) Launch into your list of the home's special features and hope she changes her mind.
c) Emphasize that this home is a great buy and it would be a shame for them to dismiss it without looking first.
d) Call the sellers immediately and let them know you won't be coming by.
d) Call the sellers immediately and let them know you won't be coming by.
9. Which of the following is not an advantage of home ownership?
a) Increase in property value
b) Increase in equity
c) Repairs and maintenance
d) Tax deductions
c) Repairs and maintenance
9. A buyer calls your office to inquire about a property he saw advertised. He sounds really excited about this property. Where is it that he likely found out the property was for sale?
a) On the Internet
b) In a classified ad
c) From the For Sale sign
d) From a direct mail flier
a) On the Internet
9. Which of the following would be the least desirable phone handling technique?
a) Answer a question with a question when possible.
b) Give as much detailed information about the property as you can.
c) Ask the caller "when" not "if" he or she wants to see the property.
d) Arrange to meet the prospect at your office.
b) Give as much detailed information about the property as you can.
9. All of these questions could help you determine a prospect's capacity to make a purchase except which one?
a) How much do you have in your savings account?
b) Have you been pre-qualified or pre-approved by a lender yet?
c) Do you need the equity from your current home for the new home purchase?
d) Where do you and your spouse work?
a) How much do you have in your savings account?
9. A reference list of alternative comparable properties is sometimes referred to as the:
a) Cheat sheet.
b) Telephone answering register.
c) Switch sheet.
d) Alternative list.
c) Switch sheet.
9. Which of these statements is not true about qualifying buyers?
a) You'll know how much house they can afford.
b) Lenders are in the best position to qualify buyers.
c) Sellers are apt to choose qualified buyers over ones who have not been qualified.
d) Collecting information and pre-qualifying buyers yourself is the easiest and best approach.
d) Collecting information and pre-qualifying buyers yourself is the easiest and best approach.
9. Sara just bought her first new home. She put 20% down and got a mortgage for the remainder. The difference between what Sara owes and what her home is worth is known as what?
a) Principal
b) Capital gain
c) Replacement cost
d) Equity
d) Equity
10. What are the five aspects that are involved in any selling approach?
Knowing your product.
Communicating information effectively.
Establishing rapport with the buyer.
Identifying and handling objections.
Asking for the sale.
10. When establishing rapport, what’s one of the best ways to get to know your buyers?
Ask open-ended questions to get buyers talking about their needs, wants and desires.
10. What signals do buyers use to indicate they may be willing to make a purchase?
Buying signals include actions, words and body language.
10. What’s a bonus closing and what’s important to keep in mind about this technique?
A bonus closing offers an inducement for the sale, usually in the form of something the seller will include in the sale. An agent should use this close carefully and always be sure to have the seller’s approval beforehand.
10. Why is it important for the buyers to indicate whether or not they intend to occupy the property?
It can have an affect on such items as loan qualification, rates and terms.
10. What’s important to know about the Liquidated Damages paragraph?
This paragraph must be initialed by both parties for it to apply.
10. What happens if the parties do not initial the section of dispute resolution that deals with binding arbitration?
If they don’t initial it, binding arbitration will not be part of the agreement and they could choose to settle a dispute in court.
10. Which section of the purchase agreement does not apply directly to the buyers and sellers?
There is a final section where the escrow holder acknowledges receipt of the contract and agrees to act as the escrow holder in the transaction.
10. Which of these is not an important aspect of selling?
a) Establishing buyer rapport
b) Knowing your inventory
c) Giving buyers your opinion of what works best for them
d) Handling objections
c) Giving buyers your opinion of what works best for them
10. Offering a buyer more than one option and having him or her choose is using what kind of closing technique?
a) Bonus
b) Alternative
c) Ownership
d) Standing-Room-Only
b) Alternative
10. All of the following are good approaches for handling objections except which?
a) View an objection as the buyer's request for more information.
b) Use the "yes-but" technique to handle the objection.
c) Ask the buyer more questions.
d) Tell the buyer it's not an issue.
d) Tell the buyer it's not an issue.
10. Which paragraph of the purchase agreement must be initialed by both buyers and sellers for it to apply?
a) Dispute resolution by mediation
b) Removal of contingencies
c) Liquidated damages
d) Buyer indemnity and seller protection
c) Liquidated damages
10. What would be the least effective way to get to know your buyers' needs?
a) Ask closed-ended questions.
b) Listen carefully to everything your prospects say and repeat some specifics back at appropriate times so that they know you have heard what they said.
c) Watch actions and body language.
d) Ask open-ended questions.
a) Ask closed-ended questions.
10. What does the paragraph on repairs state?
a) The buyer must make all repairs.
b) If checked, the seller can complete repairs after closing.
c) The seller can do all repairs himself.
d) All repairs must be in compliance with existing building codes.
d) All repairs must be in compliance with existing building codes.
10. Agent Jim tells his buyers that the seller will leave the riding lawn mower if the buyers make an offer now. What kind of closing technique is Jim using?
a) Assumptive
b) Alternative
c) Bonus
d) Ownership
c) Bonus
10. Which paragraph of the purchase agreement states that if the buyer defaults after acceptance, he or she may be liable for the broker's commission?
a) Terms and conditions of offer
b) Broker compensation from buyer
c) Dispute resolution
d) Liquidated damages
a) Terms and conditions of offer
10. Which of these is an emotional reason that buyers buy property?
a) Tax advantages
b) Status
c) Investment
d) Schools
b) Status
10. All of these might be a buying signal except which?
a) Taking room measurements.
b) Asking about a possession date.
c) Moving closer to the agent to get a better look.
d) Walking through the home quickly.
d) Walking through the home quickly.
11. When preparing to present an offer to the sellers, what kinds of supporting information can be helpful?
A new Estimate of Sellers’ Proceeds, using the current offering price as the basis and an updated competitive market analysis, would be helpful.
11. What is important to remember about multiple offers?
All multiple offers must be presented at the same time; if you know of an offer that is coming in, you must tell the sellers at the time you present the current offer; if you know of any verbal offers, share that information with the sellers also.
11. When making your presentation, what topics should you cover?
The history of the listing activities, information about the buyers and then the offer itself.
11. Why is it important to talk to the sellers about the buyers?
This is an opportunity to assure the sellers that these buyers will appreciate and care for the home.
11. What actions can the sellers take regarding the purchase offer?
They can accept it outright, reject it totally, or submit a counteroffer.
11. What is important for the sellers to know about a counteroffer?
It’s important that sellers realize that a counteroffer is actually a rejection of the original offer, and by submitting one, they are giving the buyers an easy out if they want one.
11. Ben and Blanche receive a $200,000 offer on their home which is listed at $208,000. They were counting on a full-price offer and are very disappointed. What approach can their agent take to change the sellers’ perception of the offer?
The agent can tell Ben and Blanche that the $200,000 offer represents 96% of their asking price. This takes a positive view of the price. The agent should point out that price is only one aspect of the offer and then go on to discuss the other terms of the agreement that may appeal to the sellers.
11. When does a purchase offer become a legal contract?
When the party who made the offer is notified of its acceptance. Notification is the delivery of a signed copy of the acceptance to the offeror.
11. Which of these statements about counteroffers is not true?
a) A counteroffer represents a rejection of an offer.
b) A counteroffer by a seller to a buyer turns the seller from offeree to offeror.
c) A counteroffer can give the buyers an "out" if they want one.
d) If the buyer rejects the first counteroffer, the seller can accept the first offer.
d) If the buyer rejects the first counteroffer, the seller can accept the first offer.
11. Jake has received two offers on one of his listings. The home is listed at $210,000. One offer is for $208,000; the other is for $200,000. What should Jake do?
a) Present the $208,000 offer today and wait for a response from the sellers before he presents the other offer.
b) Present the $200,000 first and recommend rejection. Then present the $208,000 offer.
c) Present the $208,000 offer and the $200,000 offer together at the same presentation meeting.
d) Hold both offers because he heard that a full-price offer is on its way.
c) Present the $208,000 offer and the $200,000 offer together at the same presentation meeting.
11. Once an offer has been accepted, the agent should do all of the following except which?
a) Make sure all required disclosures have been done.
b) Attend the final walkthrough.
c) Be sure all requested inspections have been ordered.
d) Meet with the buyers' lender to ensure they're getting a good deal.
d) Meet with the buyers' lender to ensure they're getting a good deal.
11. Most sellers object to offers based on:
a) Closing issues
b) Offering price
c) Financing issues
d) Contingencies
b) Offering price
11. When presenting information about the buyers to the sellers, which piece of information might not be useful in helping the sellers make a decision?
a) The buyers' family is pressuring them to purchase this home.
b) The buyers have been pre-qualified by a lender.
c) The buyers are interested in another property.
d) The buyers love the landscaping improvements the sellers have made.
a) The buyers' family is pressuring them to purchase this home.
11. When you receive an offer on a listing for less than asking price, you should not:
a) Study the other terms of the offer so that you can maximize the offer's benefits and minimize the lower price.
b) Set up a face-to-face meeting with the sellers as soon as possible.
c) Prepare additional documentation to take to the presentation.
d) Give the sellers the price over the phone so that they can think about it before you meet with them.
d) Give the sellers the price over the phone so that they can think about it before you meet with them.
11. Which of these is not a good thing to do when writing a counteroffer?
a) Fill out a separate, numbered counteroffer form.
b) Rewrite whole paragraphs to ensure clarity.
c) Date and attach supporting documents.
d) Exert pressure on the sellers for changes you think are important.
d) Exert pressure on the sellers for changes you think are important.
11. Who typically presents an offer to the sellers?
a) Selling broker
b) Listing agent
c) Listing broker and selling broker
d) Selling agent
b) Listing agent
11. Which of these is not a true statement?
a) A purchase offer is a binding contract between the buyer, the seller and their agents.
b) If a seller changes the terms of the offer to purchase, he has created a counteroffer.
c) An offer or counteroffer can be withdrawn at any time before it has been accepted.
d) Once the offer or counteroffer is accepted and the offeror has been notified, a legal contract is formed.
a) A purchase offer is a binding contract between the buyer, the seller and their agents.
11. When you believe an offer is both fair and reasonable but it does not meet the sellers' asking price, you should:
a) Make no recommendations and let the sellers decide on their own.
b) Recommend a counteroffer back to list price.
c) Work toward acceptance.
d) Recommend that the seller delay response to make the buyer nervous and then submit a counteroffer.
c) Work toward acceptance.
12. How much is the loan origination fee and what does it cover?
The loan origination fee is typically 1% of the loan amount. It covers the lender’s cost for generating the loan.
12. What kind of problem can result from a straight loan?
A straight loan is an interest-only loan. If the property doesn’t appreciate in value over time, the borrower could end up with less in proceeds on the sale than what he needs to pay off the loan.
12. What kinds of limits are placed on the interest rate in an adjustable rate mortgage??
Interest rate caps limit the amount of interest the borrower can be charged. Periodic caps limit the amount the rate can change at any one time. Overall (or aggregate) caps limit the amount the interest can increase over the life of the loan.
12. Describe a reverse annuity mortgage.
With this type of mortgage, the lender makes payments to the borrower. Popular among senior citizens who are on fixed incomes and would like to benefit from their home’s equity without having to sell
12. Define the term loan-to-value ratio.
The term loan-to-value ratio means the ratio of debt to the value of the property. If the loan-to-value ratio is low, the borrower is paying a higher down payment on the property
If the loan-to-value ratio is high, the borrower is making a low down payment.
12. When is a lender required to terminate a borrower’s private mortgage insurance?
After the borrower has accumulated 22% of equity in the property and is current with the loan payments.
12. What is the difference between an FHA loan and a VA loan?
FHA insures loans and VA guarantees them.
12. What is the major difference between a CalVet loan and other loans?
Unlike other loans, the CalVet loan is actually a land contract. When a veteran is approved for a CalVet loan, the state purchases the property and resells it to the veteran using a contract of sale. The state retains the title to the property until the loan is paid off, after which California will issue a grant deed to transfer legal title to the veteran.
12. Define a purchase money mortgage.
With a purchase money mortgage, the buyer borrows from the seller in addition to the lender. This is sometimes done when a buyer cannot qualify for a bank loan for the full amount; so the seller “takes back” a portion of the purchase price as a second mortgage. A purchase money mortgage can also be a first mortgage.
12. What’s the difference between a lease purchase and a lease option?
In a lease purchase arrangement, a tenant enters into two agreements simultaneously – an agreement to purchase and a lease.

A lease option is a clause in a lease that gives the tenant the right to purchase the property under specific conditions – usually at a predetermined price and within a set period of time.
12. Greg and Joyce purchased a home from the builder who offered to pay $5,000 at closing as an incentive to get them to buy. What kind of mortgage might they get?
A buydown mortgage.
12. What are grant programs typically used for?
Down payment assistance.
12. A blanket mortgage:
a) Covers more than one piece of property.
b) Entails entering into two agreements simultaneously.
c) Is subordinate to a first mortgage.
d) Reduces the monthly payment for a borrower during the initial years.
a) Covers more than one piece of property.
12. Which loan covers the period of time between the end of one mortgage and the beginning of another?
a) Construction
b) Wraparound
c) Open-end
d) Bridge
d) Bridge
12. In which of the following types of loans is the payment allocated only to interest?
a) Straight
b) Balloon
c) Amortized
d) Adjustable rate
a) Straight
12. Which of these statements is true about a CalVet loan?
a) Loan terms are from 15 to 25 years.
b) If the loan is VA guaranteed, no down payment is required.
c) There is a 6-month pre-payment penalty for paying off the loan early.
d) Interest rates are typically fixed rate.
b) If the loan is VA guaranteed, no down payment is required.
12. Lenders can charge all of the following except which fee when a borrower gets a loan?
a) Loan origination fee
b) Points
c) Survey fee
d) Discount points
c) Survey fee
12. Which statement is true?
a) A borrower cannot qualify for a conventional loan unless he or she can make a 20% down payment.
b) Private mortgage insurance is available for FHA loans.
c) A borrower can request the cancellation of PMI payments when the equity reaches 20% of the appraised value.
d) A lender can continue to collect PMI payments until the homeowner's equity reaches 25%.
c) A borrower can request the cancellation of PMI payments when the equity reaches 20% of the appraised value.
12. Which of the following is not true about reverse annuity mortgages?
a) The lender makes payments to the borrower.
b) This mortgage type is popular among the elderly.
c) The borrower pays a fixed rate of interest.
d) The loan must be repaid before the borrower's death.
d) The loan must be repaid before the borrower's death.
12. Which of these is also called a contract for deed?
a) Purchase money mortgage
b) Lease purchase
c) Second mortgage
d) Installment land sales contract
d) Installment land sales contract
12. A growing equity mortgage:
a) Is an adjustable rate loan.
b) Allows quick repayment of the loan through accelerated payments.
c) Includes a margin.
d) Has a payment cap.
b) Allows quick repayment of the loan through accelerated payments.
12. Which of the following is a low loan-to-value ratio?
a) Jake is getting a VA loan with no down payment.
b) Sandy and Bill are putting 30% down on their home purchase.
c) Alice is getting a conventional loan and making a 15% down payment.
d) Tim and Gail have qualified for an FHA loan.
b) Sandy and Bill are putting 30% down on their home purchase.
12. Mark gets a home loan and the lender will charge him 3 points at closing. If the loan is for $68,000, what will Mark be assessed in points?
a) $680
b) $1,360
c) $2,040
d) $2,720
c) $2,040
13. What is the role of the Fed?
To stabilize the economy through the judicious handling of the money supply and credit available in the US.
13. Explain the difference between the primary and secondary mortgage markets.
The primary market lends money directly.
The secondary market buys, sells and trades loans.
13. Explain the difference between the primary and secondary mortgage markets.
The primary market lends money directly.
The secondary market buys, sells and trades loans.
3. Differentiate between mortgage brokers and mortgage bankers.

Mortgage bankers originate loans.
Mortgage brokers act as middlemen to bring borrowers and lenders together.
13. What do Fannie Mae and Ginne Mae do that Freddie Mac does not?
Guarantee payment of mortgages.
13. If lenders intend to sell mortgages in the secondary market, what must they do?
Use the standardized procedures – called uniform procedures – outlined in the Fannie Mae and Freddie Mac forms.
13. List the steps of underwriting.
Qualify the buyer.
Qualify the property.
Decide yes or no to the loan.
13. What makes up a mortgage?
A mortgage has two parts: debt and security for the debt.
13. What actions does a lender take to sell a mortgage in the secondary market?
The original lender signs the note over to a third party investor or other mortgage company and then executes a document called an assignment of mortgage.
13. What is the basic purpose of Truth in Lending - Regulation Z?
Give buyers information about the true cost of obtaining credit, so that borrowers can compare the costs of various lenders.
13. What is the right to rescind and what is not covered by this rule?
The borrower has a right to cancel the transaction by notifying the lender within three days. This does not apply to residential first mortgage loans.
13. What are the penalties for violating Regulation Z?
Twice the amount of the finance charge or a minimum of $100, up to a maximum of $1,000.
Also court costs, attorney fees and actual damages.

Willful violation of regulation Z is a misdemeanor that is punishable by a fine of up to $5,000 or one year in prison, or both.
13. What does ECOA prohibit?
Discrimination against applicants on the basis of race, color, religion, national origin, sex, marital status, age or dependency on public assistance
13. All of the following are primary mortgage market lenders except which?
a) Investment groups
b) Credit unions
c) Mortgage brokers
d) Holding warehouse agencies
d) Holding warehouse agencies
13. ECOA requires that a lender send a denial notice within:
a) 30 days
b) 60 days
c) 90 days
d) 120 days
a) 30 days
13. Regulation Z applies to:
a) $35,000 farm loan
b) $50,000 restaurant loan
c) $75,000 condominium loan
d) $85,000 warehouse loan
c) $75,000 condominium loan
13. When a lender is evaluating a buyer's ability to repay a loan, the lender looks at all of these items except which one?
a) Educational history
b) Past credit history
c) Present employment status
d) Liabilities
a) Educational history
13. Who is FNMA?
a) Fannie Mae
b) Ginnie Mae
c) Fannie Mac
d) Freddie Mac
a) Fannie Mae
13. Which of the following statements is not true about the Federal Reserve?
a) Regulates reserve requirements for all institutions that offer checking accounts.
b) Supervises the Truth in Lending Act.
c) Supervises the Federal Housing Authority.
d) Engages in open market operations.
c) Supervises the Federal Housing Authority.
13. Fannie Mae does all of the following activities except which?
a) Buys conventional, FHA and VA loans.
b) Buys pools of mortgages in exchange for mortgage-backed securities.
c) Guarantees payment of all interest and principal on mortgage-backed securities.
d) Administers special assistance programs.
d) Administers special assistance programs.
13. RESPA applies to:
a) Second mortgage on a time-share
b) First mortgage on a single-family home
c) Primary mortgage on an office building
d) Settlement charges on a shopping center
b) First mortgage on a single-family home
13. Which statement is not true?
a) Mortgage brokers do not lend money.
b) Mortgage bankers bring borrowers and lenders together.
c) Mortgage bankers are a large source of residential loans in California.
d) Mortgage bankers originate loans.
b) Mortgage bankers bring borrowers and lenders together.
13. The amount of debt, time and method of payment, interest rate and other loan terms are part of the:
a) Mortgage
b) Promissory note
c) Contract for deed
d) Purchase agreement
b) Promissory note
13. The maximum commission amount a mortgage loan broker can charge on a second mortgage loan of 3 years for $18,000 is what?
a) $900.00
b) $1,500.00
c) $1,800.00
d) $2,700.00
d) $2,700.00
13. California law requires that a licensee acting as a loan broker keep the Mortgage Loan Disclosure Statement on file for how long?
a) 1 year
b) 2 years
c) 3 years
d) 4 years
c) 3 years
14. What is escrow?
The process in which a disinterested third party holds all money and documents relating to a transaction until all of the terms and conditions of the escrow instructions have been satisfied.
14. Who needs title insurance and why?
Both the buyer and the lender need title insurance. Insurance for the buyer ensures a clear title and protects his or her investment. Insurance for the lender protects the lender’s interest in the property.
14. What is the difference between CLTA and ALTA policies? How does ALTA-R differ from ALTA?
CLTA is the basic standard policy and ALTA provides extended coverage. ALTA includes a survey and ALTA-R does not.
14. What items are not covered by any title insurance policy?
Defects known to the insured but not disclosed to the title insurer.
Government zoning regulations.
14. What is the Uniform Settlement Statement?
A RESPA-required form that details the costs that the buyer and seller will pay at closing.
14. What is the ultimate result of using the HUD Form-1 statement?
The buyer will see the actual debits and credits for the purchase and know exactly how much money to bring to closing. The seller will know exactly how much he or she will receive at closing.
14. If an item is paid for in advance by the seller, how will it be handled on the settlement statement?
The buyer will receive a debit and the seller will receive a credit.
14. What do you call those items that have been incurred by the seller but not paid, and how will they be handled on the settlement statement?
These items are paid in arrears. The buyer will get a credit and the seller will get a debit.
14. Accepting referral fees:
a) Is common business practice.
b) Could be a violation of state licensing laws.
c) Is forbidden under any circumstances.
d) Is permissible in amounts under $50.
b) Could be a violation of state licensing laws.
14. Which of the following is not an item that a buyer usually pays at closing?
a) Fee for clearing the title
b) Mortgage recording fee
c) Homeowner's insurance
d) ALTA policy
a) Fee for clearing the title
14. Who is responsible for ordering the preliminary title report?
a) Buyer
b) Escrow officer
c) Seller
d) Real estate salesperson
b) Escrow officer
14. Which of the following statements is NOT true regarding a broker acting as an escrow agent?
a) Under no circumstances may a broker advertise that he or she conducts escrows.
b) A broker cannot use the word "escrow" in a fictitious name.
c) The broker must conduct the escrow personally and not delegate any escrow activities.
d) Written escrow instructions must include a statement with the broker's name, indicating he or she is a licensed real estate agent.
a) Under no circumstances may a broker advertise that he or she conducts escrows.
14. Which of these individuals could not act as an escrow agent without an escrow license?
a) Attorney
b) Banker
c) Broker
d) Real estate salesperson
d) Real estate salesperson
14. RESPA gives the buyer the right to review the completed settlement statement how long before closing?
a) Two calendar days
b) One business week
c) One calendar week
d) One business day
d) One business day
14. Proof of ownership of a property is called:
a) Marketable title
b) Abstract of title
c) Evidence of title
d) Title commitment
c) Evidence of title
14. Which item is not covered by CLTA, ALTA or ALTA-R insurance policies?
a) Claims of persons in possession of the property
b) Mining claims
c) Zoning ordinances
d) Unrecorded federal real estate liens
c) Zoning ordinances
14. RESPA applies to all of the following EXCEPT which?
a) Condominium purchase
b) Seller-financed loan
c) Loan involving a second mortgage
d) Federally-insured loan
b) Seller-financed loan
14. Which statement is not true about opening escrows?
a) The escrow holder will need information about the broker's commission.
b) The escrow holder will use the purchase agreement as the basis for writing the escrow instructions.
c) The buyer's and seller's agents will sign the escrow instructions.
d) Once escrow instructions are signed, changes can only be made with the written agreement of all parties.
c) The buyer's and seller's agents will sign the escrow instructions.
15. What is important to know about unlicensed real estate assistants?
Unlicensed assistants can perform a variety of activities to assist real estate licensees in transactions. However, they may not perform any activity which requires a real estate license.
15. What types of office administration tasks are important for a licensed assistant to perform?
A good filing system is critical and should include cross-referencing and indexing components.
15. In what three ways can an assistant aid an agent with appointments?
Act as an “appointment reminder.”
Compile files with the appropriate blank documents for the agent to take to listing and selling appointments.
Meet with appraisers or inspectors as the agent’s representative.
15. Why is coordinating escrow so important and how can an assistant help?
The escrow process can make or break a sale. An assistant can talk to the escrow officer to find out what documents have been returned, what documents are outstanding, if all contingencies have been removed and if all conditions have been met.
15. Which of the following would not be a reason to choose to be an assistant?
a) To gain self-confidence
b) To learn more about the real estate business
c) To have a stable, steady income
d) To make more money than a real estate agent
d) To make more money than a real estate agent
15. What is a good method for an assistant to keep track of the various types of files a real estate broker must have?
a) An ABC filing system
b) A master transaction file
c) A hybrid filing system
d) A cross-referencing system
d) A cross-referencing system
15. Janet is an unlicensed assistant. She can do all of the following except which?
a) Prepare a listing contract.
b) File a listing contract.
c) Gather listing forms for her employer.
d) Prepare color flyers on listings.
a) Prepare a listing contract.
15. Gail is a licensed real estate assistant. Which of the following activities would she not be authorized to perform?
a) Discuss a contract with a buyer.
b) Conduct an open house on her own.
c) Write and sign commission checks to salespersons.
d) Meet with an inspector at a listing.
c) Write and sign commission checks to salespersons.
15. Which statement is not true?
a) Sending cards and newsletters is a good way to keep in contact with clients and prospects.
b) An assistant should never be left with the task of taking photos of a new listing.
c) An assistant can keep track of the progress of activities during escrow.
d) In most situations, an assistant should not have the responsibility of in-person contact with clients.
b) An assistant should never be left with the task of taking photos of a new listing.
15. Assistants who are asked to be available for tasks in the field rather than in the office are referred to as:
a) Part-time workers
b) Field staff
c) On-call assistants
d) Commission-only assistants
c) On-call assistants
15. Which of these items on a resume accompanying an application for an assistant's position should be kept brief?
a) Interests
b) Technical skills
c) People skills
d) Education
a) Interests
15. A real estate assistant:
a) Must have a real estate license.
b) Needs a license to perform activities that are not strictly administrative in nature.
c) Can perform some real estate activities without a license.
d) Must have an assistant license.
b) Needs a license to perform activities that are not strictly administrative in nature.
15. Which statement is true about a real estate assistant?
a) Does not need to be familiar with office policy.
b) Must be a full-time employee.
c) May be an independent contractor.
d) Must start out as a part-time employee.
c) May be an independent contractor.
15. Assistants who are hired to work part time:
a) Work 12-15 hours per week.
b) Get salary plus benefits.
c) Usually get a percentage of the commission in addition to a salary.
d) Should get workmen's compensation.
d) Should get workmen's compensation.
16. When is real property reassessed?
Real property is reassessed every time it is transferred.
16. What does Proposition 58 state?
Proposition 58 allows the transfer of property from one spouse to another or to children without triggering a reassessment.
16. For whom do property tax exemptions exist and for how much?
There is a homeowner’s exemption for $7,000 against the assessed value and a veteran’s exemption for $4,000 against the assessed value.
16. Explain the documentary transfer tax.
The California tax laws allow a county or city to adopt a documentary transfer tax to apply to the transfer of properties located in the county. The tax is computed on the total price paid for the property, less any assumed loans. The tax is computed at the rate of 55 cents for each $500 of consideration or fraction thereof.
16. Under what circumstances can a loss on the sale of a personal residence be deducted from income taxes?
Normally, under no circumstances. But if the property is converted to an income-producing rental, then a loss on the subsequent sale could be deducted.
16. What items can an owner of an income-producing property deduct that an owner of a personal residence cannot?
Operating expenses and depreciation.
16. What are the capital gains exclusions associated with the sale of a personal residence?
A single seller can exclude up to $250,000 of gain and a couple can exclude up to $500,000.
16. What is important for a broker to remember about the Foreign Investment in Real Property Tax Act?
The buyer is responsible for withholding 10% of the sales price if the seller is a foreigner and the home is priced over $300,000. If the money is not withheld, the buyer and broker are equally responsible and the broker could end up paying the entire unpaid taxes due.
16. When is real property reassessed?
Real property is reassessed every time it is transferred.
16. What does Proposition 58 state?
Proposition 58 allows the transfer of property from one spouse to another or to children without triggering a reassessment.
16. For whom do property tax exemptions exist and for how much?
There is a homeowner’s exemption for $7,000 against the assessed value and a veteran’s exemption for $4,000 against the assessed value.
16. Explain the documentary transfer tax.
The California tax laws allow a county or city to adopt a documentary transfer tax to apply to the transfer of properties located in the county. The tax is computed on the total price paid for the property, less any assumed loans. The tax is computed at the rate of 55 cents for each $500 of consideration or fraction thereof.
16. Under what circumstances can a loss on the sale of a personal residence be deducted from income taxes?
Normally, under no circumstances. But if the property is converted to an income-producing rental, then a loss on the subsequent sale could be deducted.
16. What items can an owner of an income-producing property deduct that an owner of a personal residence cannot?
Operating expenses and depreciation.
16. What are the capital gains exclusions associated with the sale of a personal residence?
A single seller can exclude up to $250,000 of gain and a couple can exclude up to $500,000.
16. What is important for a broker to remember about the Foreign Investment in Real Property Tax Act?
The buyer is responsible for withholding 10% of the sales price if the seller is a foreigner and the home is priced over $300,000. If the money is not withheld, the buyer and broker are equally responsible and the broker could end up paying the entire unpaid taxes due.
16. How long must buyers and brokers keep the documentation on a foreign sale?
a) 2 years
b) 3 years
c) 4 years
d) 5 years
d) 5 years
16. Homeowners can deduct all but which of the following from their income taxes?
a) Mortgage interest
b) Depreciation
c) Prepayment penalties
d) Property taxes
b) Depreciation
16. According to FIRPTA, what percent would a buyer need to withhold when purchasing a $200,000 home from a foreigner?
a) 0%
b) 3%
c) 3.30%
d) 10%
a) 0%
16. When a person acquires new property, which is true?
a) The owner has 30 days to notify the county assessor.
b) The seller must file a bill of sale with the county clerk.
c) The owner has 45 days to pay the new property taxes.
d) The owner has 45 days to file a change in ownership statement.
d) The owner has 45 days to file a change in ownership statement.
16. Mike bought his home last year for $150,000. His property taxes would be assessed at:
a) $1,000
b) $1,500
c) $2,250
d) $3,000
b) $1,500
16. How can a seller lessen the tax impact of selling a home for enough profit that he or she will be boosted to a much higher tax bracket?
a) There is nothing that can offset this problem.
b) Do a tax-free exchange instead.
c) Participate in a tax shelter program.
d) Do an installment sale.
d) Do an installment sale.
16. When is the first installment of property taxes due?
a) First of February
b) Tenth of April
c) First of November
d) Tenth of December
c) First of November
16. Bill and Brenda bought their home for $150,000. They made $50,000 of improvements. They sold the home for $450,000 and paid $30,000 in selling expenses, including the broker's commission. On what amount will they pay capital gains tax?
a) $0
b) $220,000
c) $250,000
d) $300,000
a) $0
16. A totally disabled veteran could be eligible for a property tax exemption of up to what amount?
a) $50,000
b) $100,000
c) $150,000
d) $200,000
c) $150,000
16. Which proposition limited the maximum amount of tax on real property?
a) Proposition 13
b) Proposition 58
c) Proposition 60
d) Proposition 90
a) Proposition 13
17. What are the three important considerations for a good property investment?
The property must meet the investor’s objectives.
The investor must have the financial ability to handle the costs involved.
The investor must examine the economic soundness of the investment.
17. What are some tax benefits associated with investing?
Tax shelters, deferral of capital gains through a 1031 exchange, installment sale.
17. How could refinancing be an investment benefit?
Refinancing one property can free up funds to purchase another income property. The proceeds from the refinancing would be tax free and the interest on the new loan for the second property will be fully tax deductible.
17. How is property management seen as a risk to investing?
Most investors are not property managers. They don’t have the time, skill or even the desire to manage the property on their own. If they don’t hire a professional property manager, there could be real problems keeping the investment profitable.
17. How do life insurance companies get involved in the investment market?
Life insurance companies like to invest in large commercial projects like shopping malls. Since they do not have a restricted geographical lending area, they have no problem lending on projects that are distant from their home offices.
17. How does a limited partnership differ from a general partnership?
A limited partnership has one general partner who has unlimited personal liability for the group’s debts and obligations, while the other partners are liable only up to the limits of their capital investment. In a general partnership, all partners have unlimited personal liability for the debts and obligations of the partnership.
17. What does the net operating income of a property represent?
This figure represents the amount of income available as a return to the investor.
17. When studying the characteristics of an area in which an investment property is located, what factors should the investor look at carefully?
Population, rental trends and projected demand for units in the area.
17. What are the three important considerations for a good property investment?
The property must meet the investor’s objectives.
The investor must have the financial ability to handle the costs involved.
The investor must examine the economic soundness of the investment.
17. What are some tax benefits associated with investing?
Tax shelters, deferral of capital gains through a 1031 exchange, installment sale.
17. How could refinancing be an investment benefit?
Refinancing one property can free up funds to purchase another income property. The proceeds from the refinancing would be tax free and the interest on the new loan for the second property will be fully tax deductible.
17. How is property management seen as a risk to investing?
Most investors are not property managers. They don’t have the time, skill or even the desire to manage the property on their own. If they don’t hire a professional property manager, there could be real problems keeping the investment profitable.
17. How do life insurance companies get involved in the investment market?
Life insurance companies like to invest in large commercial projects like shopping malls. Since they do not have a restricted geographical lending area, they have no problem lending on projects that are distant from their home offices.
17. How does a limited partnership differ from a general partnership?
A limited partnership has one general partner who has unlimited personal liability for the group’s debts and obligations, while the other partners are liable only up to the limits of their capital investment. In a general partnership, all partners have unlimited personal liability for the debts and obligations of the partnership.
17. What does the net operating income of a property represent?
This figure represents the amount of income available as a return to the investor.
17. When studying the characteristics of an area in which an investment property is located, what factors should the investor look at carefully?
Population, rental trends and projected demand for units in the area.
17. What is the foremost reason people invest in property?
a) To save on taxes
b) To make money
c) To plan for retirement
d) To have a second home to enjoy
b) To make money
17. Which lender typically deals in interim financing?
a) Commercial bank
b) Life insurance company
c) Syndicate
d) Real estate trust
a) Commercial bank
17. Which figure represents the amount of income available as a return to an investor?
a) Net operating income
b) Potential gross income
c) Adjusted gross spendable income
d) Effective gross income
a) Net operating income
17. When all members have unlimited liability for debts and obligations of the group, the organization is a:
a) Limited Partnership
b) Corporation
c) General Partnership
d) Syndicate
c) General Partnership
17. Which of the following is not a possible benefit of investing in real property?
a) Tax shelter
b) Liquidity
c) Income
d) Stability
b) Liquidity
17. Examining the economic soundness of a property means looking at all of the following except which?
a) Zoning issues
b) Community growth trends
c) Refinancing
d) Income projections of the property
c) Refinancing
17. Which statement is not true about a Real Estate Investment Trust?
a) Sells ownership shares.
b) Receives special tax considerations.
c) Offers high yields to customers.
d) Easy to qualify for.
d) Easy to qualify for.
17. An association of two or more people who combine financial resources to achieve investment objectives is:
a) Not allowed in California.
b) A syndicate.
c) Made up of wealthy individuals.
d) A group of brokers.
b) A syndicate.
17. Which of these lenders would be most likely to finance a large shopping mall?
a) Commercial bank
b) Seller
c) Savings and loan association
d) Life insurance company
d) Life insurance company
17. Which of the following is a possible benefit of investing in real property?
a) Capital outlay
b) Financing
c) Appreciation
d) Property management
c) Appreciation
18. What is goodwill as it relates to a business?
Goodwill is an intangible asset that results from the reputation of the business. It is defined as the expectation that the public will continue to do business at the establishment.
18. List the three Institute of Real Estate Management property management designations.
Certified Property Manager© (CPM©) for individuals meeting a certain level of education and experience.
Accredited Residential Manager© (ARM©) for resident managers.
Accredited Management Organization© (AMO©) for companies who employ at least one CPM.
18. What are the three general responsibilities of a property manager?
Renting the units promptly at the highest market rent possible.
Keeping operational and other costs within budget.
Preserving and enhancing the physical value and prestige of the property.
18. Describe how a property manager can receive his or her fees.
A property manager’s fees can be a flat monthly amount, a percentage of the gross rents collected or a combination of the two. In addition to the fees collected on rentals, a property manager can receive additional compensation for renewing leases and for supervising major repairs or alterations.
18. What should a good management contract contain?
- Terms and period of the contract.
- Policies pertaining to the management of the premises.
- Management fees.
- Authority and powers given by the owner to the manager.
18. Which type of leasehold estate is commonly referred to as a periodic tenancy?
Estate from period to period.
18. Define a gross lease.
The tenant pays a fixed rent and the owner pays the taxes, insurance and other normal ownership expenses.
18. Under what conditions may a landlord enter a tenant’s property?
Only when one of the following conditions exists:

- An emergency requires the landlord to enter.
- The tenant gives consent to enter.
- The landlord enters during normal business hours and only after giving 24 hours notice to either make repairs or to show the property to prospective tenants, purchasers or contractors.
- The tenant has abandoned or surrendered the property.
- The landlord has a court order allowing the entry.
18. California allows a property manager to charge a non-refundable screening fee of how much?
a) $15
b) $20
c) $25
d) $30
d) $30
18. Which document shows the assets and liabilities of a business?
a) Bill of sale
b) Balance sheet
c) Profit and loss statement
d) Purchase contract
b) Balance sheet
18. How often can a tenant call his or her own professional to make repairs and then deduct the amount from the next month's rent?
a) Never
b) Once every 3 months
c) Once a year
d) Twice in a 12-month period
d) Twice in a 12-month period
18. When a tenant agrees to pay all taxes, insurance, maintenance and repairs, that tenant has what kind of lease?
a) Gross
b) Percentage
c) Net
d) Graduated
c) Net
18. When setting up a rent schedule, a property manager should analyze all but which of the following?
a) Neighborhood amenities
b) Community growth
c) Area vacancy rates
d) New home sales
d) New home sales
18. What kind of lease contains a recapture clause?
a) Percentage
b) Net
c) Gross
d) Graduated
a) Percentage
18. The IREM designation reserved for individuals who meet a certain level of education and experience is:
a) CPM
b) ARM
c) CPR
d) AMO
a) CPM
18. Which of the following represents an intangible business asset?
a) Equipment
b) Inventory
c) Goodwill
d) Fixtures
c) Goodwill
18. A lease that has no time limit is an:
a) Estate for years
b) Estate at will
c) Estate from period to period
d) Estate at sufferance
b) Estate at will
18. When can a landlord enter a tenant's property to make repairs or show it?
a) Only after receiving the tenant's consent.
b) During business hours and only after giving the tenant 24 hours notice.
c) Anytime he or she chooses.
d) Only with a court order.
b) During business hours and only after giving the tenant 24 hours notice.