CALIFORNIA REAL ESTATE PRACTICE EXAM QUESTIONS AND ANWERS (1)

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CALIFORNIA REAL ESTATE

PRACTICE EXAM QUESTIONS

AND ANWERS

1. The members of the National Association of Real Estate Brokers are called:

• Realtors®
• Consolidated Brokers
• Realtists
• None of the above

Correct Answer: 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

Correct Answer: C. $784.38

Explanation: $125,500 x (.0125) ÷ 2 = $784.38.

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3. The best source for establishing the age of a home would be the:

• county tax assessor.
• building and safety department.
• county recorder's office.
• either a or b.

Correct Answer: A. county tax assessor.

Explanation: 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:

• dividing the gross rental income by the appraised value.
• multiplying the market price by the capitalization rate.
• dividing the sales price by the gross monthly rental.
• multiplying the gross monthly rental by a reasonable cap rate.

Correct Answer: C. dividing the sales price by the gross monthly rental.

Explanation: 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?

• Grant deed
• Land contract
• Quit claim deed
• Warranty deed

Correct Answer: B. Land contract

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Explanation: 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:

• it is easier to estimate depreciation.
• values of land change.
• it is difficult to estimate historical values.
• local codes are changed from time to time.

Correct Answer: A. it is easier to estimate depreciation.

Explanation: 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:

• parties are competent.
• agreement to pay consideration.
• agreement between principal and agent.
• fiduciary relationship.

Correct Answer: B. agreement to pay consideration.

Explanation: "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?

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• SHE can negotiate a tax-free (deferred) exchange.
• HE can negotiate a tax free (deferred) exchange.
• Both parties can negotiate tax-free exchanges.
• Neither can negotiate a tax-free exchange.

Correct Answer: B. HE can negotiate a tax free (deferred) exchange.

Explanation: 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?

• The deed restrictions would prevail.
• The zoning restrictions would prevail.
• Since they are in conflict, the earlier restriction would prevail.
• The more restrictive of the two (deed vs. zoning) requirements would prevail.

Correct Answer: D. The more restrictive of the two (deed vs. zoning)

requirements would prevail.

Explanation: The more restrictive of conflicting zoning restrictions would

prevail.

10. An appraiser's definition of "Value" would be:

• present worth of all rights to future benefits arising out of ownership.
• the ability of one commodity to command other commodities in exchange.
• relationship between the thing desired and the potential purchaser.
• all of the above.

Correct Answer: D. all of the above.

Explanation: These are elements of value.