California Real Estate Practice 2nd Edition Test Bank

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California Real Estate Practice 2e Mid-Term Exam1.Consumer surveys indicate that the biggest shortcoming among real estateprofessionals is:a. inadequate training.b. failure to communicate.c. lack of negotiatingskills.d. inaccurate pricing in the CMA.2. When arriving at a value conclusion in a CMA the most weight should be given to:a. expired listings.b. pending listings.c. recent sold listings.d. active listings.3. Strength or weakness in amarket place is determined by:a. buyer and seller knowledge.b. perceived value.c. buyer motivation.d. the seller’s asking price.4. A listing presentation manualis:a.available at your localassociation office.b. unique to each licensee.c. created from a standard form template.d.provided by each employing broker.5. The two things a licensee has to sell areher:a. record oflistings andclosed sales.b. residential and commercial property.c. time and knowledge.d. number of listings and effective advertising.Formatted:Tab stops:1.27 cm, Left +2.54 cm, Left +3.81 cm, Left +5.08 cm, Left +6.35 cm, Left +7.62 cm,Left +11.9 cm, Left

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6. A CMA should be limited to:a. land parcels only.b. large apartment complexes.c. commercial property.d. residential and small apartments.7. A California real estateassociatelicensee is the “agent” ofthe:a. buyer.b. seller.c. her employing broker.d.corporation.8. For tax purposes the IRS considers aCaliforniareal estate licensee to be a/an:a. employee of the employing broker.b. independent contractor.c. partnership.d.corporation.9.Forpurposes of Workmen’s Compensation Insurance thestate of Californiaconsiders a real estate licensee to be a/an:a. employee of theprincipalbroker.b. an independent contractor.c. a partnership.d. a corporation.10. The single most important factor in deciding your fate as a real estate professionalis:a. motivation.b. perseverance.c. tenacity.d. attitude.

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11. Success as a real estatesalespersondepends to a large extent on:a. the number of names in yoursphere of influence (SOI).b. knowing the right people.c. the commission split paid by your broker.d. your ability to choose the right brokerto work with.12.Most real estate salespeople faildue to:a. fear of rejection.b. too fewlistings.c. too few closed escrows.d. lack of motivation.13. Leasing fees to a broker are usually computed as a:a. percentage of gross rental income.b. percentage of the lessee’s sales.c. percentage of net operating income.d. fixed amount set by each broker.14. Professionalreal estatedesignations are an indication of:a. a broker license.b. advanced training and knowledge.c. commercial property sales experience.d. success as a broker or licensee.15. Brokers that represent either buyers only or sellers only are called:a. a seller’s agency firm.b. a sub agency firm.c. a dual agency firm.d. a single agency firm.16. One of the three conditionsstipulatedby the IRS for a licensee to qualify as anIndependent Contractor requiresa licensee to be:a. under the supervision of a licensed broker.b. compensated for hours worked.c. capable of working independently.d. licensed as a salesperson or broker.

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17. A real estate licensee may legally solicit buyers and sellers for manufacturedhomesthat:a. have been registered for six months.b. are new and unregistered.c. are in place on an existing pad.d.areto be delivered from the manufacturer.18. Employing brokers must provide:a. disability insurance.b. unemployment insurance.c. workmen’s compensation insurance.d. errors and omissions insurance coverage.19. A new licensee should be primarily concerned withthe:a. commission split offered by the employing broker.b. availability of a private office.c. company paid advertisingallowance.d.availability of additionalcompany training.20. The practice of role playing is:a. something we all do every day.b.something only actors do.c. not very helpful to a new licensee.d. ineffective in making a sales presentation.21. California real estate contracts must be in writing:a. to berecognized asvalid.b. to be enforceable.c. or it is voidable.d.per the Commissioner’s Regulations.22. Proper timing for agency disclosure to a buyer must beas soon as practicable but:a. prior to signing the purchase agreement.b. prior to signing the listing agreement.c. must be done beforesubmitting toescrow.d. must be done beforeclosingescrow.

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23. A listing presentation is preceded by:a. creating a marketing plan and a competitive market analysis.b. completing the Transfer Disclosure Statement.c. preparing an estimate of buyer closing costs.d.a property appraisal and home inspection.24. A brokerage firm has 498 licensees working under its license. How many of theselicensees may be compensated directly by a seller, buyer or lessee?a. any of the 498 licenseesb. only the licensed broker associatesc. only the licensed sales associatesd. only thelicensed principalbroker25. A seller may make changes to a buyer’s initial offer by:a. changing the contract and initialing the change.b.making changes usinga contract addendum.c.makinga counter offer.d. accepting the offer and noting the exceptions.26. If dual agency is elected the licensee will need:a. written consent of the seller.b. verbal consent of either party.c. written consent of both parties.d.written consent of the lender.27. A seller may respond to a buyer’s offer:a. by accepting the offer with one minor change.b. making a counter offer.c. using a Modification of Terms form.d. all of the above.28. The three elements of theagency disclosure process are done in what order?a. disclose, confirm and electb. confirm, elect and disclosec. disclose, elect and confirmd. elect, disclose and confirm

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29. Where the value of a property is less than the loanon the propertyit is calleda:a. reverse mortgage.b. negative balance.c. short sale.d. lender’s option.30. Proper timing of agency disclosure to a seller must be:a. as soon as practicable prior to signing the residential purchase agreement.b. as soon as practicable prior to signing the listing agreement.c. as soon as practicable prior to closing escrow.d. as soon as practicable prior to opening escrow.31. A buyer’s signature on the Agency Disclosure form:a. creates an agency relationship between the licensee and the buyer.b. accepts the potential for dual agency.c. acknowledges receipt of a copy of the disclosure.d. is an agreement for single agency representation.32. A REALTIST®is a member of the:a. National Association of RealEstate Brokers.b. National Association of REALTORS®.c. National Association of REALTISTS®.d. National Association of Realty Sellers.33. People often deciderent rather thanbuy property because of:a.prior employment andtax implications.b. familyseparation and divorce agreements.c.economic conditions created by home ownership.d. restricted mobilitycreated by home ownership.34. Ethics has to do with:a. what is legal or illegal.b. standards of moral character.c. minimum standards of behavior.d. legal standards of behavior.

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35. Selling isdefined in the text as:a. using questions and dialogue to elicit a customer’s needs and wants.b. leading a customer to a predetermined end.c. helping a customer find the hometheywant.d. explaining featuresand benefits of the home.36. The Dred Scott decision of the Supreme Court in 1857:a. allowed the federal government to become involved in slavery issues.b. decided slavery was a federal issue.c. decidedslavery was a matter for the states.d. upheld the constitutionality of the Missouri Compromise.37. The Civil Rights Act of 1866 was:a. passed by Congress three times.b.granted civil rights to all slaves.c.was extremelyeffective in providing equal rights.d. effectively nullified by court decisions.38. The “back-end ratio” is:a. net income divided by monthly payments.b. principle, interest, taxes and insurance divided by gross income.c. total monthlyexpensesdivided by gross monthly income.d. total monthlyexpensesdivided by principle, interest, taxes and insurance.39. The Civil Rights Act of 1964a. created the Real Estate Settlement Procedures Act.b. prevented discrimination in housing.c. prevented sexual discrimination.d. made Executive Order 11063 into law.40. Anveryeffective way to build a database of prospects is:a. create an internet web site and blog.b.canvas neighborhoods by knocking on doors.c.categorize andmake email lists according toniche markets.d.list everyone who might do business or refer prospects.

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41. The Americans with Disabilities Act (ADA) prohibits discrimination that deniesequalenjoyment of facilities and services in any place of public accommodationbased on:a. an individual’s sexual preference.b. race,ethnicor sexualorientation.c. physical or mental disabilities.d.employment of 6 or more employees.42. The main purpose of holding an “open house” isto:a. sell the house toa walk-in buyer.b.satisfy seller advertising requirements.c.meet potential buyers and sellers.d.meet the requirements of the MLS.43. Most listings expire because they are:a. overpriced.b. not staged properly.c. undervalued.d. difficult to show.44. The Real Estate Settlement and Procedures Act(RESPA)applies to all except:a. home improvement companies.b. real estate licensees.c. hazard insurance agents.d. title and escrow companies.45. A“material fact”is defined as:a. any fact relating to the property.b. facts which influence a buy/sell decision.c. information as to the ethnic origin of a buyer.d. information regarding the marital status of a prospective buyer.

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46. Full disclosuresatisfies the:a.principal and listing broker’s obligation.b.licensee’s obligation to the seller.c.buyer representation obligation of the listing broker.d.both licensee’s and principal’s duties under the law.47. Sellers who provide buyers with a copy of the Combined Hazards Booklet are:a. legally required to do so.b. not obligated to provide additional information on these hazards.c. must provide additional information ongeologichazards.d. must also provide a copy of “The Homeowner’s Guide toSeismicSafety.”48. The Transfer Disclosure Statement has the effect of giving the buyer a:a. two day right to rescind the contractif delivered before the contract is signed.b.fourday right to rescind the contract; six daysif delivery is by mail.c. four day right to rescind the contractfor the life of the escrow.d.threeday right to rescind the contract if delivereddirectly;fivedays ifdeliveredby mail.49. Easton vs.Strassburger case involved a licensee’s failure to:a. disclose dual agencyat the earliest practicable moment.b. provide a transfer disclosure statementwithin the seven day requirement.c. make a competent visualinspection ofthe property and report defects tobuyer.d. comply with theseller’s obligation to disclose redflags.50. The selling licensee must disclose agency to a sellerbefore:a. the seller signs the purchase agreement.b. presenting the offer.c. opening escrow account.d. any counter offer may be presented.

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Mid term exam answers1. b.Many consumer surveys indicate that the biggest shortcomingamong real estate professionals is a general failure to communicateeffectively with clients, customers, and each other. p. 32. c.Emphasisshould be placed on the most recent sales because theyreflect the most current market conditions. p. 229/2333. b.Strength or weakness in the real estate marketplace is determinedby perceived value that, in turn, creates supply and demand. p. 54. b.A listing presentation manual can be an important marketing tool andis subjective by nature, the look and appearance will vary with eachlicensee. p. 2295. c.You have only two things to sell–your time and your knowledge. p. 86. d.The CMA should be limited only to residential properties andsmall apartment house sales. p. 2287. c.The licensee is the “agent” of the broker. p. 78. b.For tax purposes, the Internal Revenue Service may consider you tobe an independent contractor, but the state of California sees you asan employee of your employing broker. p. 159.a.Brokers and sales associates requiring supervision are consideredemployees of the employing broker by the state of California. p. 15,3810. d.Your attitude is the single biggest factor in deciding your fate as areal estate professional. p. 1211. d.Your success as a real estate professional greatly depends yourability to choose the right broker. p. 3412.a.More people fail as real estate professionals due to an unfoundedfear of rejection than any other reason. p. 1013. a.Leasing fees are usually a percentage of the gross rental incomereceived per the lease agreement. p. 33

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14. b.Professional designations indicate specialized knowledge andexpertise.p. 4915. d.Representing either the buyers only or the sellers only but never bothtogether is called single agency. p. 3116. d.The Internal Revenue Service (IRS) provides guidelines that allowlicensees to qualify as independent contractors for tax purposesif three criteria are met and one of those is that they must belicensed as a real estate broker or salesperson. p. 4217. c.Real estate professionals may solicit buyers and sellers for manufacturedhomes that have been purchased by a user and registered for a year ormore, or are already in place on an existing pad or plot of land, but theymay not sell new manufactured homes. pp. 32-3318. c.While unemployment insurance coverage is not required, since realestate professionals as independent contractors are not eligible for anybenefits, workers’ compensation insurance is a requirement and allemploying brokers must have a policy in place. p. 4419. d.During the first few months in the real estate business, there simply is nosubstitute for training, and lots of it. p. 3520. a.Role-playing is simply a part of what all of us do every day.p. 4521. b.The California Statute of Frauds stipulates that, except for leases of oneyear or less, all real estate sales contracts must be in writing. p. 19422.a.The selling agent shall provide the disclosure form to the buyer as soon aspracticable prior to execution of the buyer’s offer to purchase. p. 10623. a.A marketing plan and a CMA must precede a listing presentation otherwisea licensee will have no basis for pricing or marketing. p. 22724. d.For compensation purposes there can be only one “agent” in a real estatecompany, whether it is a sole proprietorship, Limited Liability Company(LLC), or corporation and that is the designated broker.p. 10025. c.A seller has only three options on receipt of a buyer’s offer: accept withoutchanges, reject, or make a counter offer. p. 218

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26. c.If dual agency is elected, the licensee will need the written, informedconsent of all parties to the transaction. p. 10527. b.Of the answers offered making a counter offer is the only acceptableanswer. p. 21828. c.Disclose–Elect–Confirm (DEC) is the three-step process of giving properdisclosure to a principal in a purchase, sale, or lease. p. 10229. c.If the value of the property is less than the loan on the property,it’s called a “short sale.”p. 21430. b.The agency disclosure must be provided to the seller “as soon aspracticable prior to entering into the listing agreement.” p. 10631. c.A buyer or seller signature on the Agency Disclosure merely acknowledgesreceipt of a copy of the mandated disclosure and is not their agreement toelect any form of representation. pp. 176-17732. a.A group of African American real estate brokers founded the NationalAssociation of Real Estate Brokers and adopted the registeredtrademark Realtist®to designate its members. p. 6333. d.The restricted mobility that tends to accompany property ownership makesa person somewhat less mobile than if they rent. p, 19134. b.The word ethics is derived from two Greek words: ethikos, whichmeansmoral, and ethos, which meanscharacter. p.5335. b,Selling is using dialogue and questions to lead a customer to apredetermined end. p. 18736. c.In 1857, the U.S. Supreme Court handed down the Dred Scott decision,essentially requiring the federal government to keep out of any slaveryissues, as they were strictly a matter for the states. p. 6337. d.Because some attorneys feltthat the Fourteenth Amendment effectivelyreplaced the Civil Rights Act of 1866 and that it was no longer law, astatement was “tacked on” to another voting rights act that became knownas the Civil Rights Act of 1870. p. 65

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