California Real Estate Salesperson Exam — Questions and Answers

Question 1: Under California law, how long must a real estate broker retain transaction records?

2 years
1 year
5 years
3 years (Correct answer)

Correct answer: 3 years

California requires brokers to retain transaction records for a minimum of three years from the date of closing.

Question 2: In California, a landlord must provide how much notice to terminate a month-to-month tenancy for a tenant who has lived there for more than one year?

45 days
60 days (Correct answer)
90 days
30 days

Correct answer: 60 days

California requires 60 days' written notice to terminate a month-to-month tenancy for tenants who have resided in the unit for more than one year.

Question 3: Which type of zoning allows multiple land uses — residential, commercial, and industrial — in the same area?

Exclusionary zoning
Exclusion zoning
Mixed-use zoning (Correct answer)
Euclidean zoning

Correct answer: Mixed-use zoning

Mixed-use zoning permits a combination of residential, commercial, and sometimes industrial uses within the same district.

Question 4: A home was purchased for $280,000 and appreciated 5% per year for 3 years. What is the approximate value at the end of 3 years?

$322,000
$322,050 (Correct answer)
$318,000
$310,000

Correct answer: $322,050

$280,000 × 1.05³ = $280,000 × 1.157625 = $324,135; closest is $322,050 — using compound appreciation.

Question 5: A broker who represents both the buyer and seller in the same transaction is known as:

A buyer's agent
A dual agent (Correct answer)
A transaction broker
A selling broker

Correct answer: A dual agent

A dual agent represents both the buyer and seller in the same transaction, requiring written consent from both parties in California.

Question 6: Which type of depreciation is caused by factors outside the property, such as a nearby freeway?

Physical deterioration
Economic obsolescence (Correct answer)
Functional obsolescence
Structural depreciation

Correct answer: Economic obsolescence

Economic (external) obsolescence results from negative influences outside the property that reduce its value.

Question 7: A landlord has a 'no pets' policy. A tenant with a documented disability requests permission to keep an emotional support animal. The landlord should:

Require the tenant to pay an additional pet deposit
Deny the request because the no-pets policy applies equally to all tenants
Grant the request as a reasonable accommodation unless it causes undue hardship (Correct answer)
Only allow it if the animal is a professionally trained service animal

Correct answer: Grant the request as a reasonable accommodation unless it causes undue hardship

Under fair housing law, landlords must provide reasonable accommodations for tenants with disabilities, including waiving a no-pets policy to allow emotional support animals.

Question 8: The least protection against blighting in any given area is provided by which of the following?

Zoning ordinances
Residents aware of the hazards of blighting
Artificial and natural barriers
A neighborhood not fully developed (Correct answer)

Correct answer: A neighborhood not fully developed

Blighting refers to the process of urban decay or deterioration in a neighborhood. Among the given options, a neighborhood that is not fully developed provides the least protection against blighting. Undeveloped areas often lack established infrastructure, strong community ties, and comprehensive zoning ordinances, making them more vulnerable to neglect, lack of investment, and the onset of decay compared to well-planned and developed areas with active residents and protective regulations.

Question 9: A property generates a net operating income of $50,000 per year and has a capitalization rate of 5%. What is the estimated value?

$500,000
$2,500,000
$1,000,000 (Correct answer)
$250,000

Correct answer: $1,000,000

Value = NOI ÷ Cap Rate = $50,000 ÷ 0.05 = $1,000,000.

Question 10: In California, within how many days must a landlord return a tenant's security deposit after they vacate?

30 days
14 days
21 days (Correct answer)
10 days

Correct answer: 21 days

California law requires landlords to return security deposits, along with an itemized statement of deductions, within 21 days of the tenant vacating.

Question 11: Can real estate agent give advice on how to acquire title?

governor
No (Correct answer)
goodwill
VA

Correct answer: No

Real estate agents are licensed to facilitate property transactions, but they are not qualified or legally permitted to provide legal advice. Matters concerning title acquisition, such as how to hold title (e.g., joint tenancy, tenancy in common), involve complex legal implications that should only be addressed by a licensed attorney. Agents must always advise clients to seek legal counsel for such specific legal questions.

Question 12: A property was purchased for $300,000 and sold for $360,000. What is the percentage of profit?

16.67%
15%
20% (Correct answer)
25%

Correct answer: 20%

Profit = $60,000; $60,000 ÷ $300,000 = 0.20 = 20%.

Question 13: In California, what is the primary method used by appraisers to value single-family homes?

Income approach
Sales comparison approach (Correct answer)
Cost approach
Capitalization approach

Correct answer: Sales comparison approach

The sales comparison approach is preferred for residential properties because it uses recent comparable sales data.

Question 14: A property sells for $525,000. The buyer puts down 20%. The lender charges 2 discount points. How much do the discount points cost?

$7,350
$10,500
$6,300
$8,400 (Correct answer)

Correct answer: $8,400

Loan = $525,000 × 0.80 = $420,000; 2 points = 2% × $420,000 = $8,400.

Question 15: Which term describes the loss in value of a property due to physical wear and tear over time?

Economic obsolescence
Functional obsolescence
Accrued depreciation
Physical deterioration (Correct answer)

Correct answer: Physical deterioration

Physical deterioration is the loss in value caused by normal wear and tear, deferred maintenance, or structural damage.

Question 16: How many continuing education hours must a California real estate salesperson complete to renew their license for the first time?

36 hours
45 hours (Correct answer)
60 hours
18 hours

Correct answer: 45 hours

For first-time renewal, California salespersons must complete 45 hours of DRE-approved continuing education.

Question 17: A tenant with a disability asks a landlord to allow installation of a grab bar in the bathroom. This is an example of:

A reasonable modification (Correct answer)
An ADA structural requirement
A reasonable accommodation
A habitability standard

Correct answer: A reasonable modification

A reasonable modification is a physical change to the premises; a reasonable accommodation is a change in rules, policies, or practices—the grab bar is a physical alteration.

Question 18: A monthly mortgage payment is $1,850. If the annual interest rate is 7% and the loan balance is $250,000, how much of the first payment goes toward interest?

$1,750.00
$1,291.67
$1,166.67
$1,458.33 (Correct answer)

Correct answer: $1,458.33

$250,000 × 0.07 ÷ 12 = $1,458.33 interest for the first month's payment.

Question 19: Which of the following is not included in the "Principle of Balance"?

Capital
Land
Depreciation (Correct answer)
Management

Correct answer: Depreciation

The 'Principle of Balance' in real estate appraisal refers to the idea that maximum value is achieved when the four agents of production—land, labor, capital, and management—are in proper proportion to each other. Depreciation, which is a loss in value due to any cause, is not one of these fundamental agents of production. Therefore, depreciation is not included in the Principle of Balance.

Question 20: A property has a net operating income of $24,000 per year. Using a 8% cap rate, what is the estimated value?

$192,000
$288,000
$300,000 (Correct answer)
$240,000

Correct answer: $300,000

Value = NOI ÷ Cap Rate = $24,000 ÷ 0.08 = $300,000.

Question 21: A property sells for $450,000 and the commission rate is 6%. How much commission is earned?

$22,500
$18,000
$30,000
$27,000 (Correct answer)

Correct answer: $27,000

$450,000 × 0.06 = $27,000 total commission.

Question 22: What is the purpose of a CAM (Common Area Maintenance) charge in a commercial lease?

To recover costs for maintaining shared areas like parking lots and lobbies (Correct answer)
To cover the landlord's mortgage payment
To compensate the property manager
To fund future tenant improvements

Correct answer: To recover costs for maintaining shared areas like parking lots and lobbies

CAM charges reimburse landlords for the costs of maintaining and operating common areas shared by all tenants.

Question 23: Which term describes all current tenants, their unit numbers, lease terms, and monthly rent amounts?

Estoppel certificate
Rent roll (Correct answer)
Operating statement
Vacancy report

Correct answer: Rent roll

A rent roll is a document listing all tenants, their units, lease dates, and rental amounts for a property.

Question 24: A conditional use permit (CUP) allows:

Commercial use in residential zones without conditions
Any use regardless of zoning
Permanent exemptions from all zoning rules
Specific uses that require review due to their potential impact (Correct answer)

Correct answer: Specific uses that require review due to their potential impact

A CUP allows uses that may be compatible with a zone but need case-by-case review to manage potential impacts.

Question 25: Which of the following actions would most likely result in the revocation of a real estate license in California?

Commingling client funds with personal funds (Correct answer)
Advertising a property with a slightly inaccurate square footage
Showing a property without an appointment
Failing to return a client's phone call within 24 hours

Correct answer: Commingling client funds with personal funds

Commingling client funds with personal or business funds is a serious violation that can result in license revocation in California.

Question 26: A seller nets $280,000 after paying a 5% commission. What was the sale price?

$294,737 (Correct answer)
$296,000
$280,000
$294,000

Correct answer: $294,737

Net = Sale Price × (1 − 0.05); $280,000 ÷ 0.95 = $294,736.84, rounded to $294,737.

Question 27: How long does a person have to file a complaint with HUD after a fair housing violation?

2 years
1 year (Correct answer)
60 days
90 days

Correct answer: 1 year

A person has one year from the date of the alleged discriminatory act to file a complaint with the U.S. Department of Housing and Urban Development (HUD).

Question 28: Which California environmental law requires an environmental impact report (EIR) for significant government-approved projects?

CEQA (Correct answer)
TILA
FIRREA
RESPA

Correct answer: CEQA

The California Environmental Quality Act (CEQA) requires assessment of environmental impacts before approving significant projects.

Question 29: A type of mortgage in which the lender makes periodic payments to the borrow, who is required to be age 62 or older in the FHA program, is called?

Opposite
Accelerate
Reverse (Correct answer)
Deficit

Correct answer: Reverse

A reverse mortgage is a specialized type of loan that allows homeowners, typically those aged 62 or older in the FHA program, to convert a portion of their home equity into cash. Instead of the borrower making payments to the lender, the lender makes periodic payments to the borrower. The loan balance grows over time and is typically repaid when the last borrower moves out, sells the home, or passes away.

Question 30: What is 'blockbusting' in real estate?

Inducing owners to sell by exploiting fears about changing neighborhood demographics (Correct answer)
Redeveloping an entire city block
Subdividing a large property into many smaller lots
Buying multiple properties simultaneously

Correct answer: Inducing owners to sell by exploiting fears about changing neighborhood demographics

Blockbusting is the illegal practice of inducing homeowners to sell by creating fears about minorities moving into the area.

Question 31: A property manager who mixes security deposit funds with operating funds is committing:

Conversion
Fraud
Commingling (Correct answer)
Conversion and commingling

Correct answer: Commingling

Commingling is the illegal mixing of client funds (such as security deposits) with the property manager's or broker's own funds.

Question 32: The income approach to value is MOST appropriate for which type of property?

Vacant land
Owner-occupied single-family homes
Historic landmark buildings
Income-producing investment properties (Correct answer)

Correct answer: Income-producing investment properties

The income approach is most suitable for investment properties where investors base value on income-generating potential.

Question 33: Which California agency is primarily responsible for enforcing fair housing laws in the state?

California Department of Consumer Affairs
California Bureau of Real Estate Appraisers
California Department of Real Estate (DRE)
California Civil Rights Department (formerly DFEH) (Correct answer)

Correct answer: California Civil Rights Department (formerly DFEH)

The California Civil Rights Department (formerly the Department of Fair Employment and Housing, DFEH) is the primary state agency enforcing California's fair housing and anti-discrimination laws.

Question 34: A seller refuses to accept an offer because the buyer is of a certain religion. This is a violation of which law?

RESPA
CERCLA
The Federal Fair Housing Act (Correct answer)
TILA

Correct answer: The Federal Fair Housing Act

The Federal Fair Housing Act prohibits discrimination in the sale, rental, or financing of housing based on religion, among other protected classes.

Question 35: Which of the following is NOT a government power used to control land use?

Police power
Eminent domain
Easement by prescription (Correct answer)
Taxation

Correct answer: Easement by prescription

Prescriptive easement is a private law concept, not one of the four governmental powers (PETE: Police power, Eminent domain, Taxation, Escheat).

Question 36: Real estate commission rate

are established by the California Bureau of Real Estate
should be no higher than 10%
are not fixed by law (Correct answer)
should be no lower than 2%

Correct answer: are not fixed by law

Real estate commission rates in California are not fixed by law or any regulatory body; they are fully negotiable between the real estate broker and the client. Any attempt by brokers to standardize or set uniform commission rates would be considered an illegal act under antitrust laws. This ensures a competitive market for real estate services.

Question 37: One discount point is equal to

None of the above
1% of the loan amount (Correct answer)
1% of the interest sale
1% of the sales price

Correct answer: 1% of the loan amount

A discount point is a fee paid to the lender at the time of closing, typically by the borrower, to reduce the interest rate on a mortgage loan. One discount point is equal to 1% of the loan amount. For example, on a $200,000 loan, one discount point would cost $2,000. Paying points can lower the monthly mortgage payments over the life of the loan.

Question 38: The principle of substitution states that a buyer will pay no more for a property than:

The seller's asking price
The cost of an equally desirable substitute property (Correct answer)
Its appraised value plus 10%
Its assessed value

Correct answer: The cost of an equally desirable substitute property

The principle of substitution holds that value is capped at the cost of acquiring a comparable substitute.

Question 39: How many protected classes are established under the federal Fair Housing Act?

5
7 (Correct answer)
9
6

Correct answer: 7

The federal Fair Housing Act protects seven classes: race, color, religion, national origin, sex, familial status, and disability.

Question 40: The Rumford Fair Housing Act in California prohibits discrimination based on protected characteristics in:

Only federally-assisted housing
Only home sales
Only residential rentals
Both sales and rentals of most housing (Correct answer)

Correct answer: Both sales and rentals of most housing

The Rumford Fair Housing Act prohibits discrimination in both the sale and rental of most housing in California, making it broadly applicable.

Question 41: What is the purpose of the California Real Estate Recovery Fund?

To reimburse sellers for marketing expenses
To pay for real estate education programs
To compensate victims who suffer financial loss due to a licensee's fraud or misrepresentation (Correct answer)
To fund the DRE's operating budget

Correct answer: To compensate victims who suffer financial loss due to a licensee's fraud or misrepresentation

The Recovery Fund compensates consumers who obtain a court judgment against a licensee for fraud, misrepresentation, or deceit.

Question 42: As compared with other commodities, capital turnover in real estate investments is:

faster.
slower. (Correct answer)
about equal.
slightly above the average.

Correct answer: slower.

Compared with other commodities, capital turnover in real estate investments is significantly slower. Real estate is a highly illiquid asset, meaning it cannot be easily converted to cash quickly without a substantial loss in value. The buying and selling process involves large sums of capital, extensive due diligence, and often lengthy transaction periods, all contributing to a much slower rate of capital turnover than readily traded goods or financial instruments.

Question 43: A real estate agent who discourages buyers from purchasing in certain neighborhoods based on the racial composition of those neighborhoods is guilty of:

Commingling
Blockbusting
Steering (Correct answer)
Redlining

Correct answer: Steering

Steering is the illegal practice of directing buyers toward or away from certain neighborhoods based on the protected characteristics of current residents.

Question 44: A buyer qualifies for a maximum monthly payment of $2,200 (PITI). If taxes are $250/month and insurance is $100/month, how much is available for principal and interest?

$1,850 (Correct answer)
$2,200
$1,950
$2,100

Correct answer: $1,850

$2,200 − $250 − $100 = $1,850 available for principal and interest.

Question 45: A purchaser of a home could not complete a legal contract because of which of the following?

Did not have sufficient cash for down payment and costs
Is not yet "of age" (is 17 years old) (Correct answer)
Is not a citizen
None of the above

Correct answer: Is not yet "of age" (is 17 years old)

For a contract to be legally binding, all parties must have the legal capacity to enter into it. A person who is not yet 'of age,' meaning a minor (typically under 18 years old), generally lacks the legal capacity to form a valid contract for the purchase of real estate. While a minor can enter into a contract, it is usually voidable at the minor's option, meaning they can choose to disaffirm it, thus preventing a legally enforceable agreement.

Question 46: Under which condition may a California landlord enter a rental unit without prior notice?

To show the unit to prospective buyers with 12 hours notice
Once a month for routine inspections
Whenever they wish to inspect
In an emergency situation (Correct answer)

Correct answer: In an emergency situation

California landlords may enter without notice only in genuine emergency situations such as fire or serious water damage.

Question 47: Which term describes the right of the state to take ownership of property when a person dies without heirs and without a will?

Adverse possession
Eminent domain
Escheat (Correct answer)
Forfeiture

Correct answer: Escheat

Escheat is the government power by which the state takes title to property when the owner dies intestate with no heirs.

Question 48: Which of the following is NOT a protected class under the federal Fair Housing Act?

National origin
Sexual orientation (Correct answer)
Familial status
Disability

Correct answer: Sexual orientation

Sexual orientation is not a protected class under the federal Fair Housing Act, though California's state law does provide this protection.

Question 49: Which of the following real estate advertising practices violates fair housing laws?

Describing a property as being near parks and schools
Using photographs that exclusively depict people of one race (Correct answer)
Advertising the property's proximity to a house of worship
Using the Equal Housing Opportunity logo in all ads

Correct answer: Using photographs that exclusively depict people of one race

Fair housing law prohibits advertising that indicates a preference or limitation based on race or other protected classes, including the exclusive use of images depicting only one racial group.

Question 50: What is the minimum age requirement to obtain a real estate salesperson license in California?

18 years (Correct answer)
16 years
21 years
25 years

Correct answer: 18 years

California requires applicants for a real estate salesperson license to be at least 18 years of age.

Question 51: Which of the following is NOT one of the four forces that influence real estate value?

Social factors
Governmental factors
Economic factors
Technological factors (Correct answer)

Correct answer: Technological factors

The four forces influencing real estate value are social, economic, governmental, and environmental (physical) factors — not technological.

Question 52: What must a California real estate licensee provide to buyers and sellers at the first substantive contact?

The Disclosure Regarding Real Estate Agency Relationships form (Correct answer)
A home inspection report
A purchase agreement
An appraisal of the property

Correct answer: The Disclosure Regarding Real Estate Agency Relationships form

California law requires licensees to provide the Agency Disclosure form at the earliest practical opportunity to clarify representation.

Question 53: A chattel mortgage is usually given in connection with?

Commercial Property
Personal Property (Correct answer)
Farms
Realty

Correct answer: Personal Property

A chattel mortgage is a type of mortgage that is usually given in connection with personal property, rather than real estate. 'Chattel' is a legal term for movable property, such as vehicles, equipment, or inventory. This type of mortgage allows a borrower to use personal property as collateral for a loan, granting the lender a security interest in that specific movable asset.

Question 54: The lending of money at a rate of interest above the legal rate is?

Both and B
Usury (Correct answer)
Neither A nor B
Speculation

Correct answer: Usury

Usury is the illegal act of lending money at an interest rate that is excessively high or above the maximum legal rate permitted by state law. Usury laws are designed to protect borrowers from predatory lending practices and prevent lenders from charging exorbitant interest. Violations of usury laws can result in penalties for the lender, such as forfeiture of interest or even the principal.

Question 55: Which type of depreciation refers to a loss in value due to outdated or inefficient design features within the property?

Physical deterioration
Deferred maintenance
Economic obsolescence
Functional obsolescence (Correct answer)

Correct answer: Functional obsolescence

Functional obsolescence is a loss in value caused by outdated design, layout, or equipment within the property.

Question 56: The California Real Estate Commissioner is appointed by whom?

The California Legislature
The Governor of California (Correct answer)
The California Association of Realtors
The State Attorney General

Correct answer: The Governor of California

The California Real Estate Commissioner is appointed by the Governor to head the California Department of Real Estate.

Question 57: A salesperson earns 60% of the commission her broker receives. The broker receives 50% of the 6% total commission on a $500,000 sale. How much does the salesperson earn?

$9,000 (Correct answer)
$18,000
$15,000
$6,000

Correct answer: $9,000

$500,000 × 6% = $30,000 total; broker gets $15,000; salesperson gets 60% × $15,000 = $9,000.

Question 58: Agent advice to owners on showing their home would NOT include

repair instructions
landscaping instructions
cleaning instructions
instructions to be present so they can volunteer information (Correct answer)

Correct answer: instructions to be present so they can volunteer information

Real estate agents typically advise owners *not* to be present during showings. Owners tend to volunteer too much information, which can inadvertently reveal weaknesses in their negotiating position or deter potential buyers. The agent's role is to control the showing experience and information flow to best represent the seller's interests, making the property more appealing without unnecessary disclosures.

Question 59: In California, what is the maximum security deposit a landlord may collect from a residential tenant for an unfurnished unit?

Three months' rent
One month's rent
Two months' rent (Correct answer)
Four months' rent

Correct answer: Two months' rent

California law limits security deposits for unfurnished residential units to a maximum of two months' rent.

Question 60: The 'disparate impact' theory in fair housing law refers to:

A facially neutral policy that has a disproportionately negative effect on a protected class (Correct answer)
A landlord explicitly treating tenants differently based on their protected class
A lender refusing loans in racially diverse neighborhoods
A property owner making openly discriminatory statements

Correct answer: A facially neutral policy that has a disproportionately negative effect on a protected class

Disparate impact occurs when a policy that appears neutral on its face disproportionately and unjustifiably harms members of a protected class, even without discriminatory intent.

Question 61: Which type of lease requires the tenant to pay a base rent plus some or all of the property's operating expenses?

Percentage lease
Net lease (Correct answer)
Gross lease
Month-to-month lease

Correct answer: Net lease

A net lease requires the tenant to pay base rent plus some or all operating expenses such as taxes, insurance, and maintenance.

Question 62: What term describes a use of land that was legally established but does not conform to current zoning requirements?

Spot zoning
Nonconforming use (Correct answer)
Conditional use
Variance

Correct answer: Nonconforming use

A nonconforming use is a legally existing land use that predates and does not comply with current zoning regulations.

Question 63: Which government power allows a local municipality to regulate land use through zoning ordinances?

Escheat
Police power (Correct answer)
Taxation
Eminent domain

Correct answer: Police power

Police power gives government the authority to enact zoning laws and regulations to protect public health, safety, and welfare.

Question 64: All water heaters must be

warranted by the state
at least 80 gallons in capacity
braced, anchored, or strapped (Correct answer)
cemented in place

Correct answer: braced, anchored, or strapped

In California, all water heaters are legally required to be braced, anchored, or strapped to the building structure. This seismic safety measure prevents them from tipping over during an earthquake. Tipping water heaters can rupture gas lines, cause fires, or lead to significant water damage, making this a critical safety regulation for homes.

Question 65: Which term describes the illegal practice of directing buyers toward or away from neighborhoods based on race or ethnicity?

Blockbusting
Redlining
Churning
Steering (Correct answer)

Correct answer: Steering

Steering is the illegal practice of directing clients to or away from certain areas based on protected characteristics.

Question 66: The principle reason owners try to sell their homes without an agent is?

none of these
to be able to pick the buyer
to save the commission (Correct answer)
to have a quick sale

Correct answer: to save the commission

The primary motivation for owners attempting to sell their homes without a real estate agent (For Sale By Owner or FSBO) is almost always to avoid paying the commission typically charged by agents. This commission, often a significant percentage of the sale price, represents a substantial cost that sellers hope to save and keep for themselves. While other factors might play a role, cost savings is the dominant reason.

Question 67: What does the California Subdivision Map Act require before a parcel of land can be subdivided?

Local government approval of a tentative and final map (Correct answer)
Federal environmental clearance only
Court order
DRE approval only

Correct answer: Local government approval of a tentative and final map

The Subdivision Map Act requires local government approval of both a tentative and final map before land can be subdivided.

Question 68: If a listing broker and selling broker split the 6% commission equally, how much does each receive on a $350,000 sale?

$12,500
$21,000
$7,000
$10,500 (Correct answer)

Correct answer: $10,500

$350,000 × 0.06 = $21,000 total commission; split equally = $10,500 each.

Question 69: Which document is typically used to legally subdivide land in California?

Deed of trust
Subdivision map (Correct answer)
Grant deed
Quitclaim deed

Correct answer: Subdivision map

A subdivision map (tract or parcel map) is recorded with the county to legally divide land into separate parcels.

Question 70: Which document authorizes a property manager to act on behalf of the property owner?

Property management agreement (Correct answer)
Lease agreement
Rental application
Estoppel certificate

Correct answer: Property management agreement

The property management agreement is the contract that grants the manager authority to act as the owner's agent.

Question 71: What does a 'vacancy rate' measure in property management?

The percentage of rent that goes uncollected
The rate at which tenants leave each year
The percentage of units currently occupied
The percentage of total units that are unoccupied (Correct answer)

Correct answer: The percentage of total units that are unoccupied

The vacancy rate is the percentage of total available units that are currently unoccupied and not generating income.

Question 72: A loan of $180,000 has an LTV ratio of 80%. What is the purchase price of the property?

$240,000
$210,000
$200,000
$225,000 (Correct answer)

Correct answer: $225,000

Purchase price = Loan ÷ LTV = $180,000 ÷ 0.80 = $225,000.

Question 73: Under California law, which of the following is a protected class in housing that is NOT protected under federal fair housing law?

Marital status (Correct answer)
Sex
National origin
Familial status

Correct answer: Marital status

California law protects marital status as a class, preventing landlords from refusing to rent to single, married, or divorced individuals based on their marital status.

Question 74: Annual property taxes are $3,600. If closing occurs on April 1 (taxes paid in arrears), how much does the seller owe the buyer at closing for taxes?

$2,700
$900 (Correct answer)
$1,800
$3,600

Correct answer: $900

3 months (Jan–Mar) × $300/month = $900 owed to buyer for taxes accrued during seller's ownership.

Question 75: What is 'spot zoning'?

Rezoning a small parcel inconsistently with surrounding uses (Correct answer)
Zoning applied to entire subdivisions
Temporary zoning for a special event
Zoning based on environmental impact

Correct answer: Rezoning a small parcel inconsistently with surrounding uses

Spot zoning occurs when a small parcel is rezoned differently from its surroundings, which is often challenged as arbitrary.

Question 76: When comparing properties in the sales comparison approach, adjustments are made to which property?

The comparable sale only (Correct answer)
Neither — no adjustments are needed
Both the subject and comparable equally
The subject property only

Correct answer: The comparable sale only

In the sales comparison approach, adjustments are made to the comparable sale to reflect differences from the subject property.

Question 77: Which appraisal approach estimates value by calculating the cost to replace or reproduce a building minus depreciation, plus land value?

Sales comparison approach
Gross rent multiplier approach
Income approach
Cost approach (Correct answer)

Correct answer: Cost approach

The cost approach estimates value by adding land value to the depreciated cost of improvements.

Question 78: In California, who is licensed to perform federally related real property appraisals?

A licensed or certified appraiser (Correct answer)
A notary public
Any licensed real estate salesperson
A broker with 5 years experience

Correct answer: A licensed or certified appraiser

Only licensed or certified appraisers may perform federally related real estate appraisals under FIRREA requirements.

Question 79: When a broker sells six notes and trust deeds taken back by a developer of a new subdivision, he must give to each prospective purchaser a:

real property security statement. (Correct answer)
final public report.
notice of intended sale.
loan disclosure statements.

Correct answer: real property security statement.

When a broker sells multiple notes and trust deeds, particularly those originating from a developer of a new subdivision, these transactions can be considered the sale of real property securities. To protect purchasers, California law requires the broker to provide a 'real property security statement' to each prospective buyer. This statement provides detailed disclosures about the investment, helping buyers make informed decisions about the risks involved.

Question 80: Which principle of value states that the value of a property is determined by what a buyer would pay in an open and competitive market?

Principle of contribution
Principle of supply and demand (Correct answer)
Principle of conformity
Principle of substitution

Correct answer: Principle of supply and demand

The principle of supply and demand states that value is set by the interplay of market supply and buyer demand.

Question 81: Under California real estate law, a listing agent owes which duties to the seller?

Only honesty and fair dealing
Loyalty only, as the seller is the principal
Only the duty to present all offers
Loyalty, disclosure, confidentiality, diligence, and accounting (Correct answer)

Correct answer: Loyalty, disclosure, confidentiality, diligence, and accounting

A listing agent owes the seller fiduciary duties including loyalty, disclosure, confidentiality, diligence, and accounting.

Question 82: What is the gross rent multiplier (GRM) used to estimate?

Monthly operating expenses
Annual depreciation amount
Vacancy rate
Property value based on rental income (Correct answer)

Correct answer: Property value based on rental income

The GRM is calculated by dividing the sale price by the gross monthly (or annual) rental income to estimate value.

Question 83: Appraiser Hansen estimated all direct and indirect construction costs of the Harley Building separately, then totaled them. She used the?

cost averaging method
index method
unit in place method
quantity survey method (Correct answer)

Correct answer: quantity survey method

The quantity survey method is the most detailed and accurate approach in cost appraisal, where an appraiser estimates all direct and indirect costs of construction separately. This involves a comprehensive breakdown of every material, labor, and overhead expense required to build the property. By totaling these individual costs, the appraiser arrives at a precise estimate of the building's replacement or reproduction cost.

Question 84: Under California law, how much notice must a landlord typically give a month-to-month tenant before increasing rent?

30 days (Correct answer)
60 days
15 days
90 days

Correct answer: 30 days

California requires at least 30 days' written notice for rent increases of 10% or less, and 90 days for increases over 10%.

Question 85: Under the Fair Housing Act, which type of senior housing community may legally restrict occupancy to persons 62 or older?

Any community designated senior housing by local government
Any community where 80% of units have one resident 55 or older
A community where all residents are 62 or older (Correct answer)
Any community that markets itself as senior housing

Correct answer: A community where all residents are 62 or older

One exemption from the familial status prohibition applies to housing where all residents are 62 or older; a separate exemption applies where 80% of occupied units have at least one person age 55 or older.

Question 86: Which of the following is a property manager's responsibility under California law?

Selecting only tenants approved by the HOA
Setting rents above fair market value
Maintaining the property in a habitable condition (Correct answer)
Guaranteeing rental income to the owner

Correct answer: Maintaining the property in a habitable condition

California's implied warranty of habitability requires landlords and their agents to maintain properties in safe, livable condition.

Question 87: A licensee who has a personal interest in a transaction MUST:

Withdraw from the transaction immediately
Disclose the interest to all parties (Correct answer)
Obtain DRE approval before proceeding
Charge a reduced commission

Correct answer: Disclose the interest to all parties

California law requires licensees to disclose any personal interest they have in a transaction to all parties involved.

Question 88: A subdivision consisting of individually owned lots as well as areas owned in common is a

stock cooperative
planned development (Correct answer)
community apartment project
condominium project

Correct answer: planned development

A planned development (PD) is a type of subdivision where residents own their individual lots, but also share ownership and responsibility for common areas like parks, pools, or recreational facilities. These common areas are typically managed by a homeowners' association (HOA). This structure distinguishes it from condominiums, where individual units are owned but the land and common areas are jointly owned.

Question 89: A broker showed African American prospective buyers homes in African American and racially mixed neighborhoods. He would show African American prospects homes in predominantly Caucasian areas only if the prospects specifically requested to see homes in those areas. The broker's action would be described as

unethical
steering
illegal
all of these (Correct answer)

Correct answer: all of these

The broker's actions constitute 'steering,' which is the illegal practice of guiding prospective buyers to or away from certain neighborhoods based on their race or other protected characteristics. This practice is a violation of fair housing laws, making it illegal. Furthermore, it is unethical as it perpetuates discrimination and limits housing choices, thus all options accurately describe the broker's conduct.

Question 90: What is the primary purpose of an estoppel certificate in property management?

To transfer ownership of the property
To confirm the terms of a lease as stated by the tenant (Correct answer)
To authorize rent increases
To terminate a lease early

Correct answer: To confirm the terms of a lease as stated by the tenant

An estoppel certificate is signed by a tenant confirming lease terms, rent amount, and any disputes — often required during a property sale.

Question 91: When a government regulation deprives an owner of substantially all economic use of their property without physical taking, it may be considered:

A regulatory taking (Correct answer)
A police power exemption
An eminent domain condemnation
A constructive eviction

Correct answer: A regulatory taking

A regulatory taking occurs when a government regulation goes so far that it effectively takes a property's economic value.

Question 92: A rectangular building measures 40 feet by 60 feet. At $85 per square foot, what is the replacement cost?

$179,000
$255,000
$102,000
$204,000 (Correct answer)

Correct answer: $204,000

40 × 60 = 2,400 sq ft; 2,400 × $85 = $204,000.

Question 93: A lender who refuses to make mortgage loans in certain neighborhoods based on the racial or ethnic composition of those areas is engaging in:

Blockbusting
Steering
Redlining (Correct answer)
Panic selling

Correct answer: Redlining

Redlining is the illegal practice of refusing to provide financial services in certain geographic areas, typically based on the racial composition of those neighborhoods.

Question 94: What financial report shows a property's income, expenses, and net operating income over a period of time?

Balance sheet
Operating statement (income statement) (Correct answer)
Cash flow projection
Rent roll

Correct answer: Operating statement (income statement)

An operating statement (income statement) summarizes a property's revenues and expenses to show net operating income.

Question 95: A real estate salesperson's license in California is valid for how long?

2 years
5 years
4 years (Correct answer)
1 year

Correct answer: 4 years

California real estate salesperson and broker licenses are issued for a four-year term and require continuing education for renewal.

Question 96: What is 'redlining' in real estate?

Refusing to make loans or provide services in certain areas based on race or ethnicity (Correct answer)
Marking up a real estate contract with changes
Removing a listing from the MLS
Requiring a home inspection before closing

Correct answer: Refusing to make loans or provide services in certain areas based on race or ethnicity

Redlining is the illegal practice of denying services or loans in certain areas based on the racial or ethnic composition of the neighborhood.

Question 97: What does 'effective age' mean in the context of real estate appraisal?

The age required by lender guidelines
The actual number of years since construction
The age recorded on the building permit
The age implied by the property's condition and utility (Correct answer)

Correct answer: The age implied by the property's condition and utility

Effective age is the age suggested by a property's physical condition and maintenance, which may differ from its actual chronological age.

Question 98: Under California law, sexual orientation is a protected class in housing. This protection is provided by:

The Equal Credit Opportunity Act
The Americans with Disabilities Act
The California Fair Employment and Housing Act (FEHA) (Correct answer)
The federal Fair Housing Act

Correct answer: The California Fair Employment and Housing Act (FEHA)

Sexual orientation is protected under California's FEHA, providing broader protections than federal fair housing law, which does not include sexual orientation as a protected class.

Question 99: When a property owner's land is taken by the government through eminent domain, the owner is entitled to receive:

Assessed value
Book value
Just compensation (fair market value) (Correct answer)
Replacement cost

Correct answer: Just compensation (fair market value)

The Fifth Amendment requires government to pay 'just compensation,' which courts generally interpret as fair market value.

Question 100: Which principle requires that a real estate licensee avoid placing their own interests above those of their client?

Duty of loyalty (Correct answer)
Duty of care
Duty of disclosure
Duty of obedience

Correct answer: Duty of loyalty

The duty of loyalty requires licensees to put their client's interests ahead of their own in all matters related to the agency relationship.

Question 101: Which federal law prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, and disability?

Fair Housing Act of 1968 (Correct answer)
Civil Rights Act of 1866
Equal Credit Opportunity Act
Americans with Disabilities Act

Correct answer: Fair Housing Act of 1968

The Fair Housing Act of 1968 prohibits discrimination in the sale, rental, and financing of housing based on seven protected classes.

Question 102: A lot is described as being 1/4 of a section. How many acres does it contain?

80 acres
320 acres
160 acres (Correct answer)
40 acres

Correct answer: 160 acres

A section = 640 acres; 1/4 of a section = 640 ÷ 4 = 160 acres.

Question 103: A conventional mortgage is a?

Amortizing
Not guaranteed by any government agency (Correct answer)
Guaranteed by the FHA
Approved by the VA

Correct answer: Not guaranteed by any government agency

A conventional mortgage is a type of home loan that is not insured or guaranteed by any government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). These loans are typically offered by private lenders and often require a higher credit score and down payment compared to government-backed loans. They are the most common type of mortgage.

Question 104: What is a variance in the context of zoning law?

A penalty for violating a zoning ordinance
A court order overturning a zoning law
An exception to a zoning requirement granted to a specific property (Correct answer)
A change to the zoning classification of a property

Correct answer: An exception to a zoning requirement granted to a specific property

A variance is an official exception granted to a property owner to deviate from specific zoning requirements.

Question 105: Under the federal Fair Housing Act, which of the following is a valid exemption?

A private club not operated for commercial purposes may limit housing to its members (Correct answer)
Any owner of single-family homes may discriminate without restriction
Any landlord owning fewer than 10 units is fully exempt from the Act
Religious organizations may sell housing only to members of their religion with no restrictions

Correct answer: A private club not operated for commercial purposes may limit housing to its members

The Fair Housing Act allows private, non-commercial clubs to give preference to their own members in the rental of housing owned for non-commercial purposes.

Question 106: What is the standard fee structure for most residential property managers in California?

A per-tenant fee paid annually
A percentage of collected monthly rents (typically 8–12%) (Correct answer)
A flat monthly fee regardless of occupancy
A one-time fee at the start of each lease

Correct answer: A percentage of collected monthly rents (typically 8–12%)

Most residential property managers charge a percentage of collected rents, typically ranging from 8% to 12% per month.

Question 107: A deed restriction that prohibits commercial use of residential property is an example of which type of private land use control?

Encroachment
Lien
Easement
Covenant, condition, or restriction (CC&R) (Correct answer)

Correct answer: Covenant, condition, or restriction (CC&R)

CC&Rs are private deed restrictions that run with the land and restrict or regulate how property may be used.

Question 108: What does the capitalization rate (cap rate) represent in real estate appraisal?

The ratio of net operating income to property value (Correct answer)
The percentage of down payment required
The annual appreciation rate
The ratio of gross rent to sale price

Correct answer: The ratio of net operating income to property value

The cap rate is calculated by dividing the net operating income (NOI) by the property's value or purchase price.

Question 109: A percentage lease, commonly used in retail properties, calculates rent as:

A base rent plus a percentage of the tenant's gross sales (Correct answer)
A percentage of the landlord's mortgage payment
A percentage of the property's appraised value
A fixed amount per square foot annually

Correct answer: A base rent plus a percentage of the tenant's gross sales

A percentage lease charges a base rent plus a percentage of the tenant's gross sales, often used in shopping malls.

Question 110: A California landlord discovers a prospective tenant receives Section 8 housing assistance. Under California law, the landlord:

Is only required to accept Section 8 if the property participates in the program
May not refuse to rent based on this fact alone (Correct answer)
May refuse to rent based on this fact alone
Must verify the amount of assistance before deciding

Correct answer: May not refuse to rent based on this fact alone

Under California's FEHA, source of income is a protected class, so refusing to rent solely because a tenant uses Section 8 housing assistance is illegal discrimination.

Question 111: Under California's AB 1482 (Tenant Protection Act), which type of properties are generally exempt from statewide rent control?

Apartment buildings built before 1995
All commercial properties
Single-family homes and condos (with proper notice) (Correct answer)
All government-subsidized housing

Correct answer: Single-family homes and condos (with proper notice)

Single-family homes and condominiums are generally exempt from AB 1482 rent control if the owner provides proper written notice.

Question 112: Which California law prohibits discrimination by all business establishments in the state, including housing providers?

The Rumford Fair Housing Act
The California Fair Employment and Housing Act
The California Civil Rights Act
The Unruh Civil Rights Act (Correct answer)

Correct answer: The Unruh Civil Rights Act

The Unruh Civil Rights Act prohibits discrimination by all California business establishments, providing broad civil rights protections including in housing transactions.

Question 113: Which appraisal principle holds that the value of a component is measured by how much it adds to the whole property's worth?

Principle of conformity
Principle of contribution (Correct answer)
Principle of anticipation
Principle of progression

Correct answer: Principle of contribution

The principle of contribution measures a component's value by the amount it adds to the total property value.

Question 114: Under the Fair Housing Act, 'familial status' is defined as:

Any household with more than two occupants
Any household headed by a single parent
A household with one or more children under 18 living with a parent or legal guardian (Correct answer)
Married couples only

Correct answer: A household with one or more children under 18 living with a parent or legal guardian

Familial status protects households with one or more children under 18 living with a parent, legal guardian, or designee, as well as pregnant women.

Question 115: Property managers can be protected against receiving no fees when managing a vacant property they are unable to rent by a

minimum fee (Correct answer)
separate leasing fee
holdover clause
recapture clause

Correct answer: minimum fee

A minimum fee clause in a property management agreement protects the property manager by guaranteeing a base payment even if the property remains vacant and unrented. This ensures the manager is compensated for their time and effort in marketing and attempting to lease the property, regardless of whether a tenant is secured. Without such a clause, the manager might receive no income for their work on a vacant unit.

Question 116: A property has a market value of $400,000 and an assessed value of 80% of market value. The tax rate is $1.25 per $100 of assessed value. What are the annual taxes?

$6,000
$3,200
$5,000
$4,000 (Correct answer)

Correct answer: $4,000

$400,000 × 0.80 = $320,000 assessed value; $320,000 ÷ 100 × $1.25 = $4,000.

Question 117: Under California law, all funds received by a broker on behalf of a client must be deposited into a trust account within:

5 business days
3 business days (Correct answer)
24 hours
48 hours

Correct answer: 3 business days

California law requires brokers to deposit client funds into a trust account within three business days of receipt.

Question 118: Which federal law is the primary law prohibiting discrimination in the sale, rental, and financing of housing?

Fair Housing Act of 1968 (Correct answer)
Equal Credit Opportunity Act of 1974
Civil Rights Act of 1866
Americans with Disabilities Act of 1990

Correct answer: Fair Housing Act of 1968

The Fair Housing Act of 1968 (Title VIII of the Civil Rights Act of 1968) is the primary federal law prohibiting housing discrimination.

Question 119: What government power allows the state to take private property for public use after paying just compensation?

Escheat
Police power
Taxation
Eminent domain (Correct answer)

Correct answer: Eminent domain

Eminent domain is the power of government to take private property for public use with payment of just compensation.

Question 120: Under California law, which agency is responsible for overseeing real estate subdivisions and protecting buyers?

California Environmental Protection Agency
California Department of Real Estate (DRE) (Correct answer)
California State Board of Equalization
California Department of Housing

Correct answer: California Department of Real Estate (DRE)

The California DRE regulates real estate subdivisions and requires public reports to protect buyers in new subdivisions.

Question 121: An investment property was purchased for $400,000 and sold 5 years later for $520,000. What is the total return on investment (ROI)?

25%
30% (Correct answer)
20%
35%

Correct answer: 30%

Profit = $120,000; ROI = $120,000 ÷ $400,000 = 0.30 = 30%.

Question 122: The practice of inducing homeowners to sell by suggesting that members of a protected class are moving into the neighborhood is called:

Redlining
Steering
Puffing
Blockbusting (Correct answer)

Correct answer: Blockbusting

Blockbusting (also called panic selling) is the illegal practice of inducing homeowners to sell by suggesting protected class members are moving in, with the aim of depressing property prices.

Question 123: What is the purpose of a general plan (master plan) in California land use?

To set minimum lot sizes only
To establish tax rates for all parcels
To regulate real estate license fees
To guide long-term growth and development of a community (Correct answer)

Correct answer: To guide long-term growth and development of a community

California's general plan is a long-term blueprint guiding community development, land use, housing, and infrastructure.

Question 124: A lot measures 150 feet by 200 feet. How many square feet does it contain?

35,000 sq ft
40,000 sq ft
30,000 sq ft (Correct answer)
25,000 sq ft

Correct answer: 30,000 sq ft

150 × 200 = 30,000 square feet.

Question 125: Which organization enforces California's Real Estate Law and issues licenses?

California Department of Real Estate (DRE) (Correct answer)
National Association of Realtors (NAR)
California Bureau of Real Estate Appraisers
California Association of Realtors (CAR)

Correct answer: California Department of Real Estate (DRE)

The California Department of Real Estate (DRE) is the state agency that licenses and regulates real estate professionals.

Question 126: What is a building code primarily designed to regulate?

Minimum construction standards for safety (Correct answer)
Real estate license requirements
Land use and zoning
Property tax assessments

Correct answer: Minimum construction standards for safety

Building codes establish minimum standards for construction to protect occupants' health and safety.

Question 127: How many acres are in a parcel that measures 660 feet by 660 feet?

2 acres
5 acres
1 acre
10 acres (Correct answer)

Correct answer: 10 acres

660 × 660 = 435,600 sq ft; 435,600 ÷ 43,560 = 10 acres.

Question 128: When you ask prospective buyers if they prefer June 1, July 1, or August 1 for possession, what type of closing technique are you using

narrative close
inducement
positive choice (Correct answer)
fear of loss

Correct answer: positive choice

A positive choice closing technique offers the buyer a choice between two or more desirable options, assuming they have already decided to purchase. By asking about preferred possession dates (June 1, July 1, or August 1), the agent bypasses the 'if you buy' question and moves directly to 'when you buy.' This subtly encourages the buyer to commit by focusing on a minor detail of the transaction, making the purchase seem like a foregone conclusion.

Question 129: When appraising income property, which term describes the total potential rental income if the property were fully occupied?

Effective gross income
Cash flow before tax
Gross scheduled income (Correct answer)
Net operating income

Correct answer: Gross scheduled income

Gross scheduled income (GSI) is the maximum possible rental income assuming 100% occupancy at market rents.

Question 130: California's Fair Employment and Housing Act (FEHA) adds which protected class that is NOT found in federal fair housing law?

Race
Familial status
Source of income (Correct answer)
Disability

Correct answer: Source of income

California's FEHA includes source of income as a protected class, meaning landlords cannot refuse to rent to Section 8 voucher holders solely because of their payment source.

Question 131: The principle of anticipation states that property value is based on:

Past sales prices of nearby properties
Current construction costs
The present worth of future benefits (Correct answer)
The assessed tax value

Correct answer: The present worth of future benefits

The principle of anticipation holds that value is created by the expectation of future benefits the property will provide.

California Real Estate Salesperson Exam

The California Real Estate Salesperson Exam is administered by the California Department of Real Estate (DRE) and tests knowledge of real estate principles, practices, California-specific laws, disclosures, agency duties, contracts, financing, and property valuation required to obtain a salesperson license.

150

Questions

195 min

Time Limit

70%

To Pass

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