National Psi Exam Prep Broker Pre-Test

Front 1

Which of the following is NOT a function of a CMA?

Back 1

The answer is HIGHEST AND BEST USE EVALUATION. An appraiser does a highest and best use evaluation, which will not appear in a CMA.

Front 2

In a rapidly changing market, a broker who is trying to determine the current market value of a residential listing should use

Back 2

The answer is COMPARABLES THAT ARE NO MORE THAN 6 MONTHS OLD. In a changing market, the more recent the comparables the more likely they are to reflect upward or downward price changes.

Front 3

The monthly gross rent multiplier is 200, and the annual income is $24,000. The value of the property is

Back 3

The answer is $400,000. Monthly GRM × Monthly income = Value 200 × 2,000 ($24,000 ÷ 12) = $400,000

Front 4

A buyer and seller enter into a written binding contract in which the seller agrees to sell at a specific price for a set term. The buyer decides not to buy the property and the seller has no recourse against the buyer. The contract is

Back 4

The answer is AN OPTION AGREEMENT. An option is a unilateral agreement that sets the sales price and term but also gives the buyer the option not to buy the property. If the buyer decides not to buy, an option contract does not allow the seller to sue (recourse). The seller will most likely keep the buyer's option money in this case.

Front 5

A minor inherits a property and then sells it to an adult. Can the minor rescind the contract?

Back 5

The answer is YES, IT IS VOIDABLE BY THE MINOR. Contracts with minors entered into by adults are always voidable by the minor.

Front 6

A seller decides NOT to sell a property in spite of having an executory contract with a buyer. The buyer’s remedy is

Back 6

The answer is SPECIFIC PERFORMANCE TO SUE THE SELLER TO FORCE COMPLIANCE WITH THE AGREEMENT. Specific performance is a legal action created by the contract that allows one party, in this case the buyer, to sue the other to comply or perform with the terms of the agreement. The buyer’s only remedy is to sue the seller to sell.

Front 7

A buyer and seller enter into a purchase agreement. The agreement includes a contingency that the buyer can terminate the contract if she cannot sell her current home. This type of agreement is an

Back 7

The answer is EXECUTORY CONTRACT. Once an offer is accepted it becomes an executory (bilateral) contract until all of the contingencies have been met and the contract is closed. Once it is closed, it is an executed contract.

Front 8

All of the following would be acceptable in a sales transaction EXCEPT

Back 8

A) the buyer waives the lead-based paint inspection.
B) the seller excludes transfer of the built-in microwave in the contract.
C) the buyer receives earnest money after terminating per the financing contingency.
D) the seller removes the built-in microwave after closing before giving possession. <<<CORRECT

Front 9

The monthly expenses for a rental property are $8,000 for taxes, $4,000 for utilities, $2,000 for repairs and maintenance, and a mortgage payment of $3,000. What amount will a tenant with a triple-net lease pay in addition to the rent?

Back 9

The answer is $14,000. A triple-net lease includes taxes, utilities, and repairs. The mortgage payment is not part of the tenant’s obligation.

Front 10

John bought his property 20 years ago for $190,000 and put 20 percent down for a loan value of $152,000. The current loan amount is $102,000 and the property recently appraised for $185,000. John has an equity of

Back 10

The answer is $83,000. Equity is determined by the current value minus the current debt. In this case, $185,000 – $102,000 = $83,000 in equity.

Front 11

A property is valued at $390,000. Using straight-line depreciation of 39 years, how much has the property depreciated after 8 years?

Back 11

The answer is $80,000.

Straight-line depreciation = Property value ÷ Useful life of property.

$390,000 ÷ 39 = $10,000 per year × 8 years taken = $80,000.

Front 12

An ordinary life estate terminates upon

Back 12

The answer is DEATH OF THE RECIPIENT. A life estate terminates upon death of the life tenant or recipient. Notice or death of the grantor will not terminate a life estate.

Front 13

A legal description states: “Commencing at the corner of Ridge Street and Maple, then east 40 degrees to Elm Ave.” This description is known as

Back 13

The answer is METES AND BOUNDS. The metes-and-bounds method uses a beginning point (the only legal description that will state “starting at”), linear measurement, and compass degrees to describe the perimeter or boundaries of a parcel of land. No other legal description uses a starting point.

Front 14

Ownership and title of real property are guaranteed by

Back 14

The answer is NOTHING, BECAUSE NO DOCUMENTS CAN GUARANTEE OWNERSHIP. Only the grantor (seller) can sign the deed. Depending on which deed is used, the grantor gives the grantee promises about what the grantor is conveying. Abstracts and title opinion show who owns the property and if there are current title issues, but no documents can guarantee that the chain of title is good and the new owner won’t have any title or ownership issues.

Front 15

What can be deducted from income taxes?

Back 15

The answer is POINTS, INTEREST, AND TAXES. Remember POIT: Points, Origination, Interest, and Taxes can be deducted. Insurance, homeowners’ association fees, and principal are never deductible.

Front 16

The grantor’s promise that he owns the property and has the power to convey title is known as the covenant

Back 16

The answer is OF SEIZIN. Seizin is the grantor's promise of ownership, and the grantor has the ability to convey title. Further assurance promises to correct errors in paperwork, quiet enjoyment is protection against third parties claiming title, and the covenant against encumbrances states that the grantee was informed of all encumbrances.

Front 17

The listing agreement must have all of the following EXCEPT

Back 17

A) a negotiable commission clause.
B) specific performance remedies should one of the parties default. <<<CORRECT
C) be in writing to enforce the commission clause.
D) a termination date.

Listings that are employment agreements do not have specific performance remedies. Specific performance is used in purchase agreements, not in employment agreements.

Front 18

Because of the trust and money received in the process of selling real property, most agreements used to hire the brokerage firm are

Back 18

The answer is FIDUCIARY AGREEMENTS. Agency agreements are created by written fiduciary agreements. Exclusive agency is a type of fiduciary agreement. Implied agency is created by actions, and the agreement will determine whether the agent will be a special, general, or universal agent.

Front 19

For new real estate broker associates and salespeople, determining commissions can be difficult. As a rule of thumb, real estate commissions are determined by

Back 19

The answer is NEGOTIATION IN ALL CASES. Commissions are always negotiable in all cases.

Front 20

Which of the following is TRUE about the lead-base paint requirement?

Back 20

The answer is THE BUYER MAY WAIVE THE INSPECTION. The lead paint disclosure gives the buyer the option to waive the inspection. Lead paint disclosure is the seller’s obligation, not the broker’s; the seller does not need to inspect, test, or remove lead-based paint. Brokers are obligated to make sure the seller and the buyer are in compliance with the law.

Front 21

An apartment building advertises its apartments as “adult only.” This advertising is

Back 21

The answer is LEGAL IF EACH UNIT HAS AT LEAST ONE PERSON OVER 55 LIVING IN IT. Federal law allows senior housing to discriminate based on familial status (to not rent or sell to families with children) if 80 percent of the units are rented to at least one person over 55 years old.

Front 22

Which of the following is NOT a protected class under federal fair housing law?

Back 22

The answer is MARITAL STATUS. Martial status is not protected under federal fair housing law. FReSH CoRN is the memory aid: familial status, race (equal), sex, handicap, color, (opportunity), religion, and national origin.

Front 23

A family with children was told that they cannot rent a unit in an apartment building. Is this acceptable

Back 23

The answer is YES, IF THE UNIT IS IN A DESIGNATED SENIOR HOUSING BUILDING. Senior housing with 80 percent of the units having renters or owners over age 55 may discriminate against families with children. The housing must be certified as senior housing.

Front 24

A person who has been refused a loan has a right to be informed of the credit denial. This right comes from

Back 24

The answer is THE EQUAL CREDIT OPPORTUNITY ACT. The Equal Credit Opportunity Act gives anyone who is denied a loan the right to be informed of the reasons for the denial.