California Real Estate Exam Multiple Choice

California Real Estate Exam Multiple Choice 600+ Questions and Verified Correct Answers Guaranteed A+ At First Attempt "A" has been given power of attorney for the purpose of selling "B's" house. Which of the following is NOT true?

• "A" cannot sell the property if "B" has recorded a homestead on it.
• Power of attorney must be recorded for "A" to sell the property.
• Power of attorney is terminated in the event "B" is declared incompetent and unable

to enter into a legal contract.

• "A" may purchase the property, providing he/she pays a fair market value for the

home. - Correct Answer: d. "A" may purchase the property, providing he/she pays a fair market value for the home.

An attorney-in-fact cannot deed or convey the property to self. If he desires to purchase it, he/she must "give up" the power of attorney.

"Domicile" most frequently meCorrect Answer: :

• semi-circled ceiling.
• relationship of parties.
• home or residence.

d. none of above. - Correct Answer: c. home or residence.

"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. b. 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.

Gross Rent Multiplier is a rough, quick way of converting gross rent into market value.

"Moral philosophy" best matches:

• ethnics.
• ethics.
• dedication.

d. subordination. - Correct Answer: b. ethics.

"Placement of a home on a lot" best matches:

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• option.
• avulsion.
• dedication.

d. plot plan. - Correct Answer: d. plot plan.

Plot plan is planning the most advantageous place on a parcel of land for an improvement to be located.

"The right of one or more persons to possess and use something to the exclusion of

others" describes:

• discrimination.
• novation.
• ownership.

d. equity. - Correct Answer: c. ownership.

*A broker obtained an exclusive listing to sell a piece of property. He spent much time, money, and energy. The seller refused to allow the broker to proceed under the

agreement. The broker should:

• consider the seller's refusal a breach and sue for damages.
• consider the seller's refusal a breach and claim the amount of commission as

liquidated damages.

• ignore the seller and proceed.
• relieve seller of liability, and work on improving relationship so as to enable retaining

future business. - Correct Answer: a. consider the seller's refusal a breach and sue for damages.

When seen from a technical point of view. In reality, sometimes "d" would result in more favorable and profitable end results.

*For federal income tax purposes, a taxpayer could increase the basis of his/her residence with which of the following?

• Property taxes
• Accrued depreciation
• Addition of a patio
• None of the above, for a personal residence basis cannot be adjusted for any reason

- Correct Answer: c. Addition of a patio

Capital improvements are acceptable adjustments to basis.

*Which of the following phrases would best bind all parties to pay their debts?

• Jointly
• Individually 2 / 4

• Individually and severally

d. Jointly and severally - Correct Answer: d. Jointly and severally

All parties are held responsible collectively or individually for the entire obligation.

1. A real property security endorsement is valid for:

• as long as the broker's license is valid, and it needs no further endorsement.
• multiples of 4 years.
• one year.
• the term of the broker's license to which the endorsement is affixed. - Correct

Answer: d. the term of the broker's license to which the endorsement is affixed.

• A conventional loan would differ from an FHA loan in that the conventional loan

would have:

• lower monthly payments.
• lower interest rates.
• lower down payment requirements.

d. lower loan-to-value ratio. - Correct Answer: d. lower loan-to-value ratio.

FHA typically will loan a greater percentage of value to the borrower than a conventional lender, requiring a smaller down payment. The conventional lender does not have the "insurance" against loss that the FHA lender has and, therefore, is taking greater risks and must receive more down payment (equity) from the buyer/borrower.

• A buyer has purchased a residence for $100,000 utilizing VA entitlement to finance

the entire purchase price. The interest rate = 12%; combined monthly payments for 30 years will accumulate to be $370,300. What will be the initial month's principal payment?

• $128.61
• $78.61
• $28.61

d. $0.00 - Correct Answer: c. $28.61

Monthly (P+I) = $370,300 ÷ (30 x 12) = $1,028.61 Initial month interest = $100,000 x 12% ÷ 12 = $1,000 Therefore, initial month principal amount = $1,028.61- $1,000 = $28.61.

• A property was leased to a lessee for a two-year period, with monthly lease

payments to be $800. The lessor collected the first and last month payments. This agreement would most likely not include which of the following statements?

• Escalator clause
• Compliance with local laws 3 / 4

• Condemnation provisions

d. Third-party liability clause - Correct Answer: a. Escalator clause

A signed agreement whereby the lease amount is specifically set (for a short period of time) would probably not include an escalator clause.

• In a single-family dwelling, the extended (spread out) part of the bottom of the

exterior of the foundation is called the:

• base.
• footing.
• foundation.

d. pier. - Correct Answer: b. footing.

Base of foundation wall, pier, or column.

6. All of the following would cause economic obsolescence, except:

• improperly placed improvements.
• old fashioned kitchens.
• unfavorable zoning changes.
• industries moving out of the neighborhood. - Correct Answer: b. old fashioned

kitchens.

Old fashioned kitchens represent a form of functional obsolescence. The other three items are caused by factors outside the property. Therefore, they are forms of economic obsolescence.

• One way to jointly hold title to real property is "joint tenancy." Another way would be:

• tenancy in common.
• community property.
• tenancy in partnership.

d. all of the above. - Correct Answer: d. all of the above.

• The owner of a large apartment complex was considering adding another swimming

pool. An appraiser hired to do a study for the owner would use what basic principle of appraising to determine the feasibility of adding the pool?

• Substitution
• Competition
• Contribution

d. Appreciation - Correct Answer: c. Contribution

Would the addition of the pool contribute to the rent schedule?

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