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CALIFORNIA REAL ESTATE EXAM MULTIPLE CHOICE QUESTIONS AND ANSWERS
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CALIFORNIA REAL ESTATE EXAM MULTIPLE CHOICE QUESTIONS AND ANSWERS
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CALIFORNIA REAL ESTATE EXAM MULTIPLE CHOICEQUESTIONS AND ANSWERS
An appraiser's definition of "Value" would be:
a. present worth of all rights to future benefits arising out of ownership.
b. the ability of one commodity to command other commodities in exchange. c.
relationship between the thing desired and the potential purchaser.
d. all of the above. - Answers -d. all of the above.
These are elements of value.
Which of the following abbreviations is associated with the FHA?
a. NAR
b. CPM
c. MIP/MMI
d. MBA - Answers -c. MIP/MMI
MIP - Mortgage Insurance Premium/Mutual Mortgage Insurance.
An investor group recently sold a parcel of land for $217,500, which was 45% more than
they paid for it. The land is described as follows: N½ of the NW¼ of the SE¼ of Section
13 plus the W½ of the NE¼ of Section 13. What was the original price they paid per
acre for the property?
a. $1,500
b. $1,200
c. $1,000
d. $750 - Answers -a. $1,500
$217,500 ÷ 145% (1.45) = $150,000 original price
Acreage: N½ of the NW¼ of the SE¼ = 20 acres
W½ of the NE¼ = 80 acres
Therefore, price per acre = $150,000 ÷ 100 = $1,500.
Which of the following is NOT a lien?
a. Encumbrance
b. Homestead
c. Zoning
d. All of the above - Answers -d. All of the above
A lien is a charge against property, whereby the property is made security for payment
of the debt, i.e., attachment.
,A property sells for $121,000. The purchaser gives $10,000 down payment, agrees to
place an additional $5,000 down, and ta ke over an existing VA first loan of $100,000,
with the remainder to be in the form of a 2nd note and trust deed. For these cond itions,
how much would the documentary tax stamps be?
a. $1.10
b. $5.50
c. $133.10
d. $23.10 - Answers -d. $23.10
Do NOT pay on old existing loan being taken over. Therefore, ($121,000 - 100,000) ÷
1,000 x ($1.10) = 21.0 x $1.10 = $23.10.
If an appraiser were called upon to evaluate a public building, which had unique and
distinctive architecture, he would employ which of the following methods of valuation?
a. Replacement (cost approach)
b. Comparison
c. Capitalization
d. None of the above - Answers -a. Replacement (cost approach)
Since there is no income for capitalization and no means for comparing sales,
replacement cost is the only approach available.
The members of the National Association of Real Estate Brokers are called:
a. Realtors®.
b. Consolidated Brokers.
c. Realtists.
d. None of the above. - Answers -c. Realtists.
If the taxes on a newly acquired property will amount to 1.25% of the purchase price,
what will the first installment (6 months) bill for a home costing $125,500 be?
a. $765.35
b. $742.51
c. $784.38
d. $795.97 - Answers -c. $784.38
$125,500 x (.0125) ÷ 2 = $784.38.
The best source for establishing the age of a home would be the:
a. county tax assessor.
b. building and safety department.
,c. county recorder's office.
d. either a or b. - Answers -a. county tax assessor.
The county tax assessor is the best source for establishing the age of a home.
"Gross multiplier" is used to determine value of certain types of income properties. It is
determined by:
a. dividing the gross rental income by the appraised value. b. multiplying the market
price by the capitalization rate.
c. dividing the sales price by the gross monthly rental.
d. multiplying the gross monthly rental by a reasonable cap rate. - Answers -c. dividing
the sales price by the gross monthly rental.
Gross Rent Multiplier is a rough, quick way of converting gross rent into market value.
Which of the following could be used with a purchaser without the immediate
involvement of a title change?
a. Grant deed
b. Land contract
c. Quit claim deed
d. Warranty deed - Answers -b. Land contract
The land contract does not pass title until some later time, whereby the buyer (vendee)
has performed certain requirements (i.e., accumulate a minimum amount of equity for
down payment); title in the meantime remains with the seller (vendor).
It is preferable to use the replacement cost method of appraisal on new buildings, as
opposed to old buildings, because:
a. it is easier to estimate depreciation.
b. values of land change.
c. it is difficult to estimate historical values.
d. local codes are changed from time to time. - Answers -a. it is easier to estimate
depreciation.
As the age of the improvements on a property increases, it becomes more difficult to
forecast the allowable depreciation.
The following are essential to the creation of an "agency" relationship, except:
a. parties are competent.
b. agreement to pay consideration.
c. agreement between principal and agent.
d. fiduciary relationship. - Answers -b. agreement to pay consideration.
, "Gratuitous agent" would not necessitate consideration.
SHE owns a single-family residence in which SHE lives. SHE trades HE for another
residence which HE is renting to a tenant. Both parties intend to use their newly
acquired properties for rental income. Which of the following is true?
a. SHE can negotiate a tax-free (deferred) exchange.
b. HE can negotiate a tax free (deferred) exchange.
c. Both parties can negotiate tax-free exchanges.
d. Neither can negotiate a tax-free exchange. - Answers -b. HE can negotiate a tax free
(deferred) exchange.
HE is exchanging income property for the same—like-for-like; SHE is not.
Examination of the records indicate there are conflicts between the local zoning
restrictions and private restrictions contained within the deed that conveyed the
property. Which of the following statements is true?
a. The deed restrictions would prevail.
b. The zoning restrictions would prevail.
c. Since they are in conflict, the earlier restriction would prevail.
d. The more restrictive of the two (deed vs. zoning) requirements would prevail. -
Answers -d. The more restrictive of the two (deed vs. zoning) requirements would
prevail.
The more restrictive of conflicting zoning restrictions would prevail.
Three general partners borrowed money and agreed to be liable for the repayment,
either individually or collectively. They signed the security instrument:
a. jointly.
b. singularly.
c. jointly and collectively.
d. jointly and severally. - Answers -d. jointly and severally.
They are jointly (collectively) and severally (individually) responsible.
When all expenses, including taxes and insurance, are paid by the lessee along with a
new amount of "rent" as agreed upon to the landlord, this is referred to as a:
a. gross lease.
b. net lease.
c. percentage lease.
d. sandwich lease. - Answers -b. net lease.
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