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California Real Estate Practice 2nd Edition Test Bank

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    California Real Estate Practice 2e Mid - Term Exam 1. Consumer surveys indicate that the biggest shortcoming among real estate professionals is: a. inadequate training . b. failure to communicate . c. lack of negotiating skills . 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 a market 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 manual is : a. available at your local association 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 are her : a. record of listings and closed 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 estate associate licensee is the “agent” of the: a. buyer . b. seller . c. her employing broker . d. corporation . 8. For tax purposes the IRS considers a California real estate licensee to be a/an: a. employee of the employing broker . b. independent contractor . c. partnership . d. corporation . 9. For purposes of Workmen’s Compensation Insurance the state of California considers a real estate licensee to be a/an: a. employee of the principal broker . b. an independent contractor . c. a partnership . d. a corporation . 10. The single most important factor in deciding your fate as a real estate professional is: a. motivation . b. perseverance . c. tenacity . d. attitude .

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    11. Success as a real estate salesperson depends to a large extent on: a. the number of names in your sphere of influence (SOI) . b. knowing the right people . c. the commission split paid by your broker . d. your ability to choose the right broker to work with . 12. Most real estate salespeople fail due to: a. fear of rejection . b. too few listings . 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. Professional real estate designations 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 conditions stipulated by the IRS for a licensee to qualify as an Independent Contractor require s a 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 manufactured homes that : a. have been registered for six months . b. are new and unregistered . c. are in place on an existing pad . d. are to 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 with the : a. commission split offered by the employing broker . b. availability of a private office . c. company paid advertising allowance . d. availability of additional company 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 be recognized as valid . b. to be enforceable . c. or it is void able . d. per the Commissioner’s Regulations . 22. Proper timing for agency disclosure to a buyer must be as soon as practicable but : a. prior to signing the purchase agreement. b. prior to signing the listing agreement . c. must be done before submitting to escrow . d. must be done before closing escrow .

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    23. A listing presentation is preceded b y : 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 these licensees may be compensated directly by a seller, buyer or lessee? a. any of the 498 licensees b. only the licensed broker associates c. only the licensed sales associates d. only the licensed principal broker 25. A seller may make changes to a buyer’s initial offer by: a. changing the contract and initialing the change . b. making changes using a contract addendum . c. making a 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 the agency disclosure process are done in what order? a. disclose, confirm and elect b. confirm, elect and disclose c. disclose, elect and confirm d. elect, disclose and confirm

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    29. Where the value of a property is less than the loan on the property it is called a : 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 Real Estate Brokers . b. National Association of REALTORS ® . c. National Association of REALTISTS ® . d. National Association of Realty Sellers . 33. People often decide rent rather than buy property because of: a. prior employment and tax implications . b. family separation and divorce agreements . c. economic conditions created by home ownership . d. restricted mobility created 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 is defined 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 home they want . d. explaining features and 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. decided slavery 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 extremely effective 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 monthly expenses divided by gross monthly income . d. total monthly expenses divided by principle, interest, taxes and insurance . 39. The Civil Rights Act of 1964 a. created the Real Estate Settlement Procedures Act . b. prevented discrimination in housing . c. prevented sexual discrimination . d. made Executive Order 11063 into law . 40. An very effective way to build a database of prospects is: a. create a n internet web site and blog . b. canvas neighborhoods by knocking on doors . c. categorize and make email lists according to niche 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 denies equal enjoyment of facilities and services in any place of public accommodation based on: a. an individual’s sexual preference . b. race , ethnic or sexual ori entation . c. physical or mental disabilities . d. employment of 6 or more employees . 42. The main purpose of holding an “open house” is to : a. sell the house to a 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 disclosure satisfies 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 on geologic hazards . d. must also provide a copy of “The Homeowner’s Guide to Seismic Safety.” 48. The Transfer Disclosure Statement has the effect of giving the buyer a: a. two day right to rescind the contract if delivered before the contract is signed . b. four day right to rescind the contract; six days if delivery is by mail . c. four day right to rescind the contract for the life of the escrow . d. three day right to rescind the contract if delivered directly ; five days if delivered by mail . 49. Easton vs . Strassburger case involved a licensee’s failure to: a. disclose dual agency at the earliest practicable moment. b. provide a transfer disclosure statement within the seven day requirement. c. make a competent visual inspect ion of the property and report defects to buyer . d. comply with the seller’s obligation to disclose red fl ags . 50. The selling licensee must disclose agency to a seller before : 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 answers 1. b. Many consumer surveys indicate that the biggest shortcoming among real estate professionals is a general failure to communicate effectively with clients, customers, and each other. p. 3 2. c. Emphasis should be placed on the most recent sales because they reflect the most current market conditions. p. 229/233 3. b. Strength or weakness in the real estate marketplace is determined by perceived value that, in turn, creates supply and demand. p. 5 4. b. A listing presentation manual can be an important marketing tool and is subjective by nature, the look and appearance will vary with each licensee. p. 229 5. c. You have only two things to sell – your time and your knowledge. p. 8 6. d. The CMA should be limited only to residential properties and small apartment house sales. p. 228 7. c. The licensee is the “agent” of the broker. p. 7 8. b. For tax purposes, the Internal Revenue Service may consider you to be an independent contractor, but the state of California sees you as an employee of your employing broker. p. 15 9. a . Brokers and sales associates requiring supervision are considered employees of the employing broker by the state of California. p. 15,38 10. d. Your attitude is the single biggest factor in deciding your fate as a real estate professional. p. 12 11. d. Your success as a real estate professional greatly depends your ability to choose the right broker. p. 34 12 . a. More people fail as real estate professionals due to an unfounded fear of rejection than any other reason. p. 10 13. a. Leasing fees are usually a percentage of the gross rental income received per the lease agreement. p. 33

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    14. b. Professional designations indicate specialized knowledge and expertise. p. 49 15. d. Representing either the buyers only or the sellers only but never both together is called single agency. p. 31 16. d. The Internal Revenue Service (IRS) provides guidelines that allow licensees to qualify as independent contractors for tax purposes if three criteria are met and one of those is that they must be licensed as a real estate broker or salesperson. p. 42 17. c. Real estate professionals may solicit buyers and sellers for manufactured homes that have been purchased by a user and registered for a year or more, or are already in place on an existing pad or plot of land, but they may not sell new manufactured homes. p p . 32 - 33 18. c. While unemployment insurance coverage is not required, since real estate professionals as independent contractors are not eligible for any benefits, workers’ compensation insurance is a requirement and all employing brokers must have a policy in place. p. 44 19. d. During the first few months in the real estate business, there simply is no substitute for training, and lots of it. p. 35 20. a. Role - playing is simply a part of what all of us do every day. p. 45 21. b. The California Statute of Frauds stipulates that, except for leases of one year or less, all real estate sales contracts must be in writing. p. 194 22. a . The selling agent shall provide the disclosure form to the buyer as soon as practicable prior to execution of the buyer’s offer to purchase. p. 106 23. a. A marketing plan and a CMA must precede a listing presentation otherwise a licensee will have no basis for pricing or marketing. p. 227 24. d. For compensation purposes there can be only one “agent” in a real estate company, whether it is a sole proprietorship, Limited Liability Company (LLC), or corporation and that is the designated broker. p. 100 25. c. A seller has only three options on receipt of a buyer’s offer: accept without changes, 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, informed consent of all parties to the transaction. p. 105 27. b. Of the answers offered making a counter offer is the only acceptable answer. p. 218 28. c. Disclose – Elect – Confirm (DEC) is the three - step process of giving proper disclosure to a principal in a purchase, sale, or lease. p. 102 29. c. If the value of the property is less than the loan on the property, it’s called a “short sale.” p. 214 30. b. The agency disclosure must be provided to the seller “as soon as practicable prior to entering into the listing agreement.” p. 106 31. c. A buyer or seller signature on the Agency Disclosure merely acknowledges receipt of a copy of the mandated disclosure and is not their agreement to elect any form of representation. pp. 176 - 177 32. a. A group of African American real estate brokers founded the National Association of Real Estate Brokers and adopted the registered trademark Realtist ® to designate its members. p. 63 33. d. The restricted mobility that tends to accompany property ownership makes a person somewhat less mobile than if they rent. p, 191 34. b. The word ethics is derived from two Greek words: ethikos, which means moral , and ethos, which means character . p.53 35. b, Selling is using dialogue and questions to lead a customer to a predetermined end. p. 187 36. c. In 1857, the U.S. Supreme Court handed down the Dred Scott decision, essentially requiring the federal government to keep out of any slavery issues, as they were strictly a matter for the states. p. 63 37. d. Because some attorneys felt that the Fourteenth Amendment effectively replaced the Civil Rights Act of 1866 and that it was no longer law, a statement was “tacked on” to another voting rights act that became known as the Civil Rights Act of 1870. p. 65

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