California Real Estate Exam Multiple Choice Questions And Correct Detailed Answers (Verified Answers) Already Graded A+ TESTBANK

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California Real Estate Exam Multiple Choice Questions And Correct Detailed Answers (Verified Answers) Already Graded A+

• "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.

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

2. 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.

(The county tax assessor is the best source for establishing the age of a home.)

• 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?

• $765.35
• $742.51
• $784.38
• $795.97

Correct Answer: c. $784.38

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($125,500 x .0125 ÷ 2 = $784.38)

4. 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 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?

• Replacement (cost approach)
• Comparison
• Capitalization
• None of the above

Correct Answer: a. Replacement (cost approach)

(Since there is no income for capitalization and no means for comparing sales, replacement cost is the only approach available.)

• A property sells for $121,000. The purchaser gives $10,000 down payment, agrees to

place an additional $5,000 down, and take 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 conditions, how much would the documentary tax stamps be?

• $1.10
• $5.50
• $133.10
• $23.10

Correct Answer: 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)

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• Which of the following is NOT a lien?
• Encumbrance
• Homestead
• Zoning
• All of the above

Correct Answer: d. All of the above

(A lien is a charge against property, whereby the property is made security for payment of the debt.)

• 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?

• $1,500
• $1,200
• $1,000
• $750

Correct Answer: a. $1,500

($217,500 ÷ 1.45 = $150,000 original price. Total Acreage = 20 + 80 = 100 acres. $150,000 ÷

100 = $1,500)

• Which of the following abbreviations is associated with the FHA?
• NAR
• CPM
• MIP/MMI
• MBA

Correct Answer: c. MIP/MMI

(MIP - Mortgage Insurance Premium/Mutual Mortgage Insurance.)

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

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• 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.

(These are elements of 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

(The land contract does not pass title until some later time; title in the meantime remains with the seller.)

• 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.

(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.