Real Estate Practice Exam 4

John purchases a home, and the seller helps to finance the sale. The price is $100,000, and John is to make a $10,000 cash down payment. The amount of the mortgage payments would pay it off in thirty years, but the owner requires that it come due in seven years. What type mortgage is this?

fully amortizing

term

partially amortizing

adjustable rate

Correct! Wrong!

Plottage is

the plotting of a linear regression analysis curve on investment income.

plotting the direction of growth in a comprehensive plan.

an increase in value of individual parcels when joined with other parcels.

marking off cemetery lots.

Correct! Wrong!

An appraiser noted a 3 year-old air conditioning system which was operable. He assigned $2,500 depreciation to the system. What type of depreciation is it?

curable physical deterioration

incurable physical deterioration

curable functional obsolescence

incurable functional obsolescence

Correct! Wrong!

Concerning the buyer's attitude and willingness to pay, the lender considers

credit rating

assets

income

all of the above

Correct! Wrong!

A seller tells a real estate licensee that he does not want his house shown to ethnic buyers. The sales associate should say

“No problem. We probably won't have any buyers like that, anyway.”

“ will try my best to steer these buyers elsewhere.”

“I can't handle the sale of your property if you expect me to discriminate.”

“I’m going to call HUD and report you immediately.”

Correct! Wrong!

John is a broker in Tallahassee, and meets for lunch with Martha, his most important competitor. They agree that, effective January 1 of the following year, both companies will begin charging 7.5% commissions on all residential properties. Which is correct?

This is legal if the sellers and buyers agree to pay.

This is a violation of FREC rules.

This is a violation of Regulation Z.

This is a violation of anti-trust laws.

Correct! Wrong!

Which of the following forms of depreciation is usually found in external obsolescence?

intrinsic

inherent

incurable

curable

Correct! Wrong!

Jim Singletary wishes to construct an office building containing 24,000 square feet. The zoning in the area requires 1 parking space for every 400 square feet of building area. How many spaces will be necessary?

60

160

200

400

Correct! Wrong!

Lien theory means that the mortgage

creates a lien on the property, with the mortgagee having title

instrument conveys title to the mortgagee with mortgagor having a lien

is a lien on the property, but property title is vested with the mortgagor

is a lien on the property, but property title is vested with the mortgagee

Correct! Wrong!

Which of the following expenses is not deducted from effective gross income in calculating net operating income?

depreciation

utilities

advertising

management

Correct! Wrong!

What is not available to the Federal Reserve System in controlling the money supply?

open market operations

adjusting the discount rate

changing the reserve requirement

changing depreciation rules

Correct! Wrong!

What is the final step after an appraiser has utilized all three approaches to value?

average each approach

use primarily the comparable sales approach

correlating

reconciliation

Correct! Wrong!

An example of functional obsolescence is which of the following?

increased traffic flow on the street in front of the house

community recycling plant next door

four bedroom, one bath house

leaking pipes

Correct! Wrong!

If the capitalization rate increases, the value

increases proportionately.

remains stable.

increases non-proportionately

decreases.

Correct! Wrong!

Which is most closely related to the comparable sales approach?

reproduction cost

present value of the income stream

principle of substitution

level annuity capitalization rate

Correct! Wrong!

Investor Charles Greenacre is purchasing a building from the Acme Tool Company with a 20-year net-net-net leaseback offering outstanding cash throwoff and good tax treatment. The building was built to the seller's needs under strict specifications to the seller's business. Greenacre should be most concerned with

the physical condition of the building.

the financial condition of the seller.

the chance of property appreciation

the chance of increased maintenance costs.

Correct! Wrong!

Which is not correct? I. Redlining is not a violation of state and federal laws. II. “Blockbusting” is a description of the practice of scaring owners into selling because of 'undesirable elements' moving into the neighborhood. III. A sales associate has a direct fiduciary relationship with his seller under an exclusive right of sale agreement.

I only

I and II

I, II, and III

I and III

Correct! Wrong!

Which is synonymous?

lender - mortgagor

seller - grantee

buyer - vendor

mortgagee - lender

Correct! Wrong!

Which two expenses are deductible for income taxes that are not deducted in calculating net operating income?

annual debt service and interest

annual debt service and depreciation

interest and depreciation

management and interest

Correct! Wrong!

Under the income approach, value equals

vacant land value plus depreciated building value

rate times income

rate divided by income

income divided by rate

Correct! Wrong!

Real Estate Practice Exam 4

John purchases a home, and the seller helps to finance the sale. The price is $100,000, and John is to make a $10,000 cash down payment. The amount of the mortgage payments would pay it off in thirty years, but the owner requires that it come due in seven years. What type mortgage is this?

Plottage is

An appraiser noted a 3 year-old air conditioning system which was operable. He assigned $2,500 depreciation to the system. What type of depreciation is it?

Concerning the buyer's attitude and willingness to pay, the lender considers

A seller tells a real estate licensee that he does not want his house shown to ethnic buyers. The sales associate should say

John is a broker in Tallahassee, and meets for lunch with Martha, his most important competitor. They agree that, effective January 1 of the following year, both companies will begin charging 7.5% commissions on all residential properties. Which is correct?

Which of the following forms of depreciation is usually found in external obsolescence?

Jim Singletary wishes to construct an office building containing 24,000 square feet. The zoning in the area requires 1 parking space for every 400 square feet of building area. How many spaces will be necessary?

Lien theory means that the mortgage

Which of the following expenses is not deducted from effective gross income in calculating net operating income?

What is not available to the Federal Reserve System in controlling the money supply?

What is the final step after an appraiser has utilized all three approaches to value?

An example of functional obsolescence is which of the following?

If the capitalization rate increases, the value

Which is most closely related to the comparable sales approach?

Which is synonymous?

Which two expenses are deductible for income taxes that are not deducted in calculating net operating income?

Under the income approach, value equals

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