Final Exam Example for Topics – questions only

Sales Associate / Broker Prelicense Topics Class – Questions Only for Practice Final exam example
(Answers to these questions will be given with proper SUBSCRIPTION)

1 What does PITI stand for?
A. Principal (P), Interest (I), Income Taxes (T), and Insurance (I).
B. Principal (P), Interest (I), Property Taxes (T), and Insurance (I).
C. Primary (P), Interest (I), Tariffs (T), and Insurance (I).
D. Principal (P), Income (I), Property Taxes (T), and Insurance (I).

2 A property is secured by a mortgage that does not contain a “power of sale” clause. To foreclose, the lien holder will have to:
A. obtain a deed in lieu of foreclosure.
B. obtain a writ to extinguish the lien.
C. file a foreclosure suit.
D. file a deficiency suit.

3 A person’s payment history comprises approximately __% of his or her FICO score.
A. 35
B. 30
C. 10
D. 15

4 Which Fair Housing Law added sex to the list of protected classes?
A. Housing and Community Development Act
B. Fair Housing Amendments Act
C. Housing and Neighborhood Development Act of 1974
D. Title VIII of the Civil Rights Act of 1968

5 When a seller signs a listing agreement, who are the actual contract parties?
A. Seller and Licensee
B. Seller and MLS Association
C. Seller and Managing Broker
D. Licensee and Cooperating Broker

6 What is the best response to questions regarding neighborhood safety?
A. Refer the client to law enforcement records.
B. Explain that you feel safe in the neighborhood.
C. Explain that no records are kept on neighborhood crime.
D. Respond with specific facts.

7 Which statement is true about a comparative market analysis (CMA)?
A. A CMA is the same as an appraisal.
B. It can help a seller decide what to ask for the property.
C. An agent is obligated to complete a CMA on each listing he or she takes.
D. It is not a valid way to arrive at market value.

8 Under Illinois law, what must the residential seller do with respect to radon?
A. Provide the buyer with mitigation options
B. Provide the buyer with the Illinois Disclosure of Information on Radon Hazard form.
C. Provide the buyer with the HUD Disclosure of Information on Radon Hazard form.
D. Remove the property from the market until the situation is corrected.

9 A house is being appraised using the sales comparison approach. The house has three bedrooms, two bathrooms, and a patio. The appraiser selects a comparable house that has three bedrooms, 2.5 bathrooms, and no patio. The comparable house just sold for $200,000. A half-bath is valued at $10,000, and a patio at $2,000. Assuming all else is equal, what is the adjusted value of the comparable?
A. $188,000
B. $192,000
C. $208,000
D. $190,000

10 Why is a buyer’s agency agreement good for the licensee?
A. It’s less money for the broker.
B. The licensee’s hard work is rewarded with buyer loyalty.
C. Buyers can work with more than one agent.
D. Sellers can choose an exclusive agent.

11 A seller was willing to sell her property, but only if she would net $150,100 from the sale after paying a 5% commission. What would be the selling price of the property to net $150,100?
A. $158,000
B. $156,000
C. $155,000
D. $160,000

12 Getting paid by the buyer before showing a property is an example of:
A. A bonus
B. A retainer fee
C. Referral fee
D. A transaction fee

13 Which legal description makes use of principal meridians and base lines?
A. Metes and bounds
B. The recorded plat system
C. The Public Land Survey System
D. The computer-assisted surveying system

14 Which of the following information would you not collect for a listing?
A. Listing Price
B. Owner’s Name
C. Bank account numbers
D. Street Number

15 What information was added to the Property Condition Disclosure Report in 2010?
A. Radon
B. Meth lab
C. Lead-based paint
D. Termites

16 How might a licensee hide the true identity of his or her client on a sales offer?
A. Insert “and/or assigns” in the buyer’s line.
B. Insert “NA” on the buyer’s line.
C. Complete an open sales offer.
D. Leave blank the buyer’s line.

17 Which of these items is important to include on your weekly listing activity report?
A. Your advertising budget
B. Agent comments about the property
C. An updated price reduction strategy
D. Number of competing property listings you obtained

18 Which of the following is considered a fixed operating expense?
A. Utilities.
B. Cleaning expenses.
C. Insurance premiums.
D. Management fees.

19 The Illinois Supreme Court decision in the Chicago Bar Association, et al., vs. Quinlan and Tyson, Inc. case prohibits which of the following parties from preparing formal closing statements?
A. Real estate licensees unless that licensee is also an attorney.
B. The buyer’s lender.
C. The lender’s agent (typically this is a title insurance company).
D. The seller’s lawyer.

20 What is the customary form of agency representation in Illinois?
A. Disclosed agency
B. Basic agency
C. Designated agency
D. Agency at large

21 A builder owns ½ acre of land with a front footage of 80 feet along the street. What is the depth of the land?
A. 136.125 feet
B. 272.25 feet
C. 544.5 feet
D. 1,089 feet

22 What is the main purpose of a mortgage Loan Estimate form?
A. To provide the lender with a standard to measure loan offers.
B. To provide a means for the federal government to control lending rates
C. To provide a means for borrowers to comparison shop more effectively for competing loan offers
D. To detect fraudulent loan practices
23 If an owner of real property dies without leaving a will and with no legal heirs, what will generally happen to the property?
A. It will transfer to the decedent’s executor.
B. It will become a public easement.
C. It will be divided among adjoining property owners.
D. It will revert to the state or county by escheat.
24 Which of the following is not a national estate trade organization?
25 Which organization has the authority to investigate anyone regulated by Illinois’ license act?
A. Illinois Realtor Board
B. Council of the IDFPR
C. Real Estate Administration and Disciplinary Board of IDFPR
26 Which of the following is a difference between an appraisal and a CMA?
A. The CMA does not consider current listings.
B. The appraisal must follow professional appraisal standards.
C. The appraisal does not consider comparable properties.
D. The CMA is impartial, while the appraisal allows for bias.
27 What is the reaction when a buyer is faced with too many options?
A. They become paralyzed
B. They make quick decisions.
C. They make bad decisions.
D. They welcome the challenge.
28 A property manager is charged with protecting the principal’s asset. Which of his required duties would that be?
A. Honesty
B. Reasonable care and skill
C. Confidentiality
D. Loyalty
29 What term is used to denote everything that a person owes?
A. Due Bills
B. Arrears Payments
C. Accounts Payable
D. Liabilities
30 or 125 Which of the following would not be found in a management agreement?
A. Tax abatements
B. Property description
C. Extent of authority
D. Management fee information

31 RESPA applies to all of the following EXCEPT which?
A. Primary residence purchase
B. Cash Sale
C. Loan invoicing a first mortgage
D. Federally-insured loan
32 What is the required downpayment for a VA-guaranteed loan?
A. None.
B. 3% of the first $25,000, %5 of the remainder.
C. Depends on the loan amount.
D. Depends on the Certificate of Eligibility.
33 The property manager is responsible for giving the owner a copy an executed agreement ____.
A. At the time the owner’s signature is obtained.
B. Within one business day of execution
C. Within 3 business days following execution.
D. Within a reasonable time
34 Which of these situations is not a typical reason to renegotiate a sales contract?
A. Seller needs to change the closing date.
B. Buyer loses financing.
C. Seller changes jobs.
D. Appraisal comes in low.
35 A letter of intent is also called what?
A. Declaration of purchase
B. List of questions
C. Term sheet
D. Statement of facts
36 If a municipality has declared a moratorium on new construction and demand is increasing, what would be the likely effect on real estate prices?
A. Prices would level off
B. Prices would rise.
C. Prices would fall.
D. Prices would continue to follow the trend that preceded the moratorium.
37 Which duty requires the agent to get the client the best transaction possible?
A. Care
B. Obedience
C. Disclosure
D. Confidentiality
38 If any dispute between the parties arises regarding the deposited escrow, money what action should the sponsoring broker take?
A. Always refund the money to the first party who formally request the return of the funds.
B. Split the monies in thirds, one third to the buyers, one third to the buyers, one third to the sponsoring broker.
C. Place the monies in an escrow account titled “Contested Escrow Funds Fiduciary Account” (CEFFA) which must be non-interest bearing.
D. Not release the money without a written release from both parties or both parties’ duly authorized agents (power of attorney or attorney at law).
39 The appraisal approach that is used in making a Comparative Market Analysis is ____.
A. The income capitalization approach.
B. The sales comparison approach.
C. The cost approach.
D. The summation approach.
40 What accounting tools are used to determine a buyer’s ability to pay off a loan?
A. Income Statement and Expense Vouchers
B. Credit car interest and Outstanding loans
C. Income to Payment ratio
D. Income ratio and Dept ratio

41 Beginning after the 2013 renewal, individuals renewing or obtaining a managing broker’s license must complete how many CE credit hours, in addition to the Broker Management Course?
A. 3
B. 6
C. 9
D. 12
42 ____________ includes but is not limited to referral fees, commission, and bonuses.
A. Rebates
B. Compensation
C. Flat fees
D. Finder fees
43 Errors and Omissions insurance ________.
A. is required by law.
B. must be registered with the State of Illinois.
C. is not recommended.
D. is a form of liability insurance.
44 Which of the following charges does the buyer usually pay?
A. Utility Tax
B. Existing liens
C. Broker’s commission
D. Lender fees
45 Which of these defects is specifically addressed in the Residential Real Property Disclosure Report?
A. Mold
B. Urea Formaldehyde
C. Illegal drug manufacturing
D. Carbon monoxide
46 Regulation Z applies to which of these situations?
A. $85,000 condominium loan
B. $250,000 restaurant loan
C. $485,000 shopping mall loan
D. $96,000 inventory & supply loan
47 Information about a property that has a significant bearing on a buyer’s decision to purchase that property is called what?
A. Latent fact.
B. Material fact.
C. Latent misalignment.
D. Defect.
48 John is doing a CMA for his potential sellers. He has collected the data on the seller’s property and collected data on a number of comparables. Now he’s ready to make his price adjustments. Which statement is true?
A. If a comparable has a feature that the subject property lacks, he will add the value of that feature to the subject property.
B. If a comparable lacks a feature the subject property has, he will subtract the value of that feature from the comparable.
C. He should eliminate any comparable for which he would need to make more than two adjustments.
D. If a comparable lacks a feature the subject property has, he will add the value of that feature to the comparable.

49 One of the strengths of the sales comparison approach is that it:
A. takes into account the subject property’s investment value.
B. reveals the profit margin of the builder or developer of the subject property.
C. discovers the underlying value of the subject property apart from the influence of competing properties.
D. takes into account the subject property’s specific amenities in relation to competing properties.
50 What is the purpose of the license laws?
A. To protect investors
B. To protect the public
C. To protect agents
D. To protect mortgage lenders
51 Which of the following would be considered as preventive maintenance?
A. Replacing a furnace
B. Adding additional parking spaces
C. Painting wood trim
D. Replacing a defective water heater
52 In what section of the listing agreement would you find property tax exemptions?
A. Provisions
B. Dual Representation
C. Additional Terms and Property Information
D. General Provisions
53 The owners of income property, who are real estate licensees, are not required to use their sponsoring broker’s escrow account for their tenants’ security deposits:
A. Unless the owner has a salesperson license.
B. If they are the sole owner of the property.
C. Unless the property is located in the city limits of Chicago.
D. Unless property owner has his primary residence within the city of Chicago.

54 –
55 Broker Jack accepted a listing for a home. A week later the owner told him that he was not willing to sell to an Asian person or family. Which of the following is TRUE?
A. Jack should explain to the owner that the request is in violation of Fair Housing Law and cannot abide by it.
B. He should have the owner document the request in writing and file it with the listing agreement.
C. Jack should abide by the owner’s wishes.
D. He should restrict his advertising to venues that do not cater to Asian community.
56 What is the relationship called when a principal allows a licensee to represent him or her?
A. Dual agency
B. Special appointment
C. Time-share agreement
D. Agency
57 If a tenant occupies a leased property without the consent of the landlord after a lease expires, the type of estate that results is called ____.
A. an estate at sufferance.
B. a holdover estate.
C. an adverse leasehold
D. a hostile leasehold.
58 According to the Illinois Human Rights Act, religious organizations may limit those renting or buying to those persons of the same religion:
A. under no circumstances
B. only if the religious membership is not restricted based on race, color or national origin
C. only if the membership is approved by the Act
D. without limitation
59 “Real estate” includes such things as:
A. fences, sidewalks, and piers on a parcel of land.
B. mobile homes temporarily parked on a parcel of land.
C. timber that has been cut and is lying on a parcel of land.
D. business equipment an owner or tenant has placed on a parcel of land.
60 Don a sales associate for ABC Reality is on 50/50 commission split with his broker. Don was the listing agent for a property and earned $2,500 for the transaction. If the commission rate was 5% and ABC Realty earned one half of the commission, what was the sales price of the property?
A. $200,000
B. $75,000
C. $10,000
D. $166,700
61 Which association is designed to support minority real estate professionals, the members are known as Realtists?
62 A MLS Board sets the commission rate for all members. What does this violate?
A. Clayton Trust Act
B. Fair Housing Act
C. Civil Rights Act of 1968
D. Sherman Antitrust
63 What is the difference between market value and market price, if any?
A. They are the same.
B. Market value is an estimate; market price is the price at which property is offered.
C. Market value is an average price derived from comparable sales; market price is a price based on a cost of creating the property.
D. Market value is what might be expected, market price is the actual sold price.
64 Dave inherited an acre of land with a depth of 165 feet that went down to the seasonal creek. What is the width of the land?
A. 264 feet
B. 260 feet
C. 156 feet
D. 275 feet

65 of 126 Which agency has responsibility for licensing real estate training schools?
A. Department of Licensing
B. Division of School Oversight
C. Standards Section of the Division of Real Estate
D. Department of financial and Professional Regulation
66 All parties in real estate transaction have a right to know:
A. Whom the Agent represents.
B. The source of the down payment.
C. The reason for the property sale.
D. Who is Buying the property.
67 Which of the following comparables is probably the best indicator of market value for the subject of a CMA?
A. One that has sold but has not yet closed.
B. One that sold in the three months before the CMA.
C. One that is currently listed.
D. One that was taken off the market after three months.
68 What is a voluntary agreement between legally competent parties, and supported by legal consideration, to perform or refrain from performing some legal act?
A. Brokerage agreement
B. Listing
C. Contract
D. Redemption
69 Which of the following acts can be performed by an unlicensed assistant:
A. Setting appointments for property viewing
B. Showing properties to buyers
C. Conducting an open house for buyers
D. Negotiating compensation issues
70 If a property is being sold that is in poor condition, the buyer may be asked to do what?
A. Pay a higher price
B. Waive his rights to sue
C. Skip the home inspection
D. Ignore the survey
71 The acronym COD stands for?
A. Connect, Order, Displace
B. Care, Obedience, Disclosure
C. Compliance, Obey, Discover
D. Conditional, Order, Disclose
72 Why would a property owner file a quiet title suit?
A. To force the grantor to defend the title against a third party claim.
B. To terminate a co-ownership estate when one co-owner is unwilling.
C. To keep the owner’s name out of the records.
D. To have an encumbrance removed if the lienholder cannot prove its validity.
73 Betty made a 20% profit on a residential lot she sold for $30,000. What did she pay for the property?
A. $25,000
B. $20,000
C. $26,000
D. $27,000
74 What kind of a contract exists when a promise is exchanged for a promise?
A. Executed
B. Bilateral
C. Unilateral
D. Option
75 In a strict foreclosure, ____.
A. a lender takes title to the liened property directly.
B. a lender receives the proceeds from the forced sale of the liened property.
C. the defaulting owner does not have the opportunity to prevent the foreclosure by paying the amounts owned.
D. a foreclosure suit is optional.

76 The income approach to value is based on the economic principles of:
A. anticipation and contribution.
B. anticipation and substitution.
C. assemblage and plottage.
D. highest and best use and substitution.

77 Which of the following transaction is covered by RESPA?
A. A seller takes back a purchase-money mortgage.
B. The VA guarantees a first-mortgage loan on a duplex apartment house.
C. An FDIC-insured lender finances the purchases of a 6-unit apartment building.
D. A home is purchased under an installment contract.
78 Seller Jane is offering an $800 bonus to any agent who sells her home within three weeks. How would an agent be paid the bonus?
A. Seller Jane is not allowed to pay a bonus.
B. The bonus must go to the agent’s sponsoring broker and then be passed on to the agent.
C. The bonus can be given directly to the licensee.
D. The bonus money must be put into Seller Jane’s escrow account, prior to release to the licensee.
79 A creditor is generally required to provide a Loan Estimate within:
A. two business days of the receipt of the consumer’s loan application.
B. three business days of the receipt of the consumer’s loan application.
C. four business days of the receipt of the consumer’s loan application.
D. five days of the receipt of the consumer’s loan application.
80 To comply with Illinois Radon Awareness Act the seller is required to fill out the Illinois Disclosure of Information on Radon Hazards form by initialing, explaining, and providing which of the following?
A. All available records and reports pertaining to elevated radon concentrations within the dwelling.
B. A metering device to determine radon concentrations.
C. An estimate of costs to mitigate the radon gas.
D. The plan for the seller to conduct radon testing and mitigation activities prior to entering into a contract with purchasers.
81 A buyer wants to take the offer to an attorney to review it. What should Broker Bob do?
A. Tell the buyer the contract is a standard form, and it’s a waste of money to take it to the attorney.
B. Encourage the buyer to get the attorney to review it quickly.
C. Tell the buyer to submit the offer first and then take a copy to the attorney to review.
D. Bob should not say anything.
82 Ed wants to build a small 800 square foot cabin on a lot that is 80 feet deep. If the building sideyard setbacks are 20 feet and the cabin is 20 feet wide, what is the square footage of the lot?
A. 4,800 square feet
B. 3,600 square feet
C. 2,000 square feet
D. 1,600 square feet
83 What is the secondary mortgage market?
A. A group of financial institutions that lend money to people who are refused by primary lenders.
B. A group of public and private institutions that lend money to banks to enable them to issue mortgage loans.
C. A group of loan warehousing agencies that buy mortgage loans from originators and package them for resale to investors.
D. A group of government-sponsored agencies that buy mortgage-backed securities from the primary market.
84 What is the purpose of risk management?
A. Accepting risk.
B. Adding to the level of risk.
C. Reducing the level of risk.
D. Seeking risk to increase expenses.
85 Any license who violates any of the provisions regarding escrow accounts may be judged to have endangered the public interest and may be subject to ___.
A. License revocation.
B. A temporary license suspension.
C. A fine of not more than $5,000 per violation.
D. A fine and possible imprisonment for felonious commingling.
86 If Donna borrowed $5,000 for one year and paid $150 interest, what was her interest rate?
A. 1%
B. 2%
C. 3%
D. 4%
87 Which statement about the Junk Fax Prevention Act is FALSE?
A. Licensees must provide an opt-out provision.
B. Licensees can only send faxes to existing clients.
C. This act applies only to managing brokers, not their employees.
D. Licensees must stop faxes upon request.
88 In practice, property management compensation is established by ______.
A. The client
B. The property management company
C. The size of the property to be managed
D. None of the above
89 What technique is used to elicit “yes” responses from a client?
A. Stay quiet as you go through the property.
B. Keep up a running commentary – for example, this is the living room.
C. Point out all of the faults in the property.
D. Encourage comparisons with other properties they have seen.
90 If a landlord rejects a prospective tenant based on a and credit report, according to the Fair Credit Reporting Act, the prospective tenant:
A. may require the landlord to obtain a second report.
B. may dispute the report and receive a free report from the credit-reporting agency.
C. may require the landlord to submit all of his reasons for rejection in writing.
D. may appeal the landlord’s decision with the FCRA Board.
91 A lease that continues from month to month is known as a/an:
A. Tenancy by the month
B. Estate from period to period
C. Lease at will
D. Lease at sufferance
92 Under the Equal Credit Opportunity Act, a lender, or a real estate agent who assists a seller in qualifying a potential buyer, may not:
A. tell a rejected loan applicant the reasons for the rejection.
B. ask the buyer/borrower about his/her religion or national origin.
C. ask the buyer/borrower to explain gasps in his/her employment history.
D. use a credit report if the loan applicant disputes any information in the report.
93 Which duty an agent has to his/her client never stops?
A. Obedience
B. Disclosure
C. Confidentiality
D. Loyalty
94 The cost approach attempts to estimate either the property’s:
A. replacement or reproduction cost.
B. land or acreage cost.
C. building or annex cost.
D. rehabilitation or remodeling cost.
95 A property owner acquired a property by means of a deed that included a deed restriction against building any kind of unattached office/art studio in a separate structure. What can the owner do to overcome the restriction?
A. Apply to the Zoning Board of Appeals is for a special permit.
B. Have the necessary parties execute a quitclaim deed.
C. Sue in court to have the deed declared invalid.
D. Obtain written permission to violate the restriction from the original grantor.
96 Any contracts for the sale of the land must be in writing to be enforcement in court, according to which law?
A. Statute of Frauds
B. Illinois Human Rights Act
C. Illinois Fair Housing Act
D. The Federal Fair Housing Act
97 In which of these places is asbestos not likely to be found?
A. Oil furnace
B. Vinyl floor tiles
C. Home built in 1935
D. Sheet rock or Sheetrock
98 Which of the following statements about the RESPA/TRID Loan Estimate is TRUE?
A. The settlement agent presents the Loan Estimate to the seller and buyer at closing.
B. It is an estimate of settlement charges that are expected to be expected to be significantly higher at closing.
C. It must be provided to the borrower no later than 48 hours before closing
D. It must reflect the actual charges that occur at settlement, with a few exceptions.
99 Which of the following is true of a joint tenancy?
A. The tenants can determine the size of the share owned by each tenant.
B. The size of the tenant’s shares is determined by the amount of equity each has invested in the property.
C. The tenants have an equal and indivisible ownership interest.
D. There can be no more than two co-owners, and each has a fifty percent interest.

Final Exam Example for Topics – questions only – part2

100 Licensees may be disciplined under Illinois real estate license law for many actions. Under this law, the IDFPR has the authority to:
A. Impose civil penalty fines within its disciplinary guidelines
B. Impose criminal fines within its disciplinary guidelines
C. Impose jail time violations
D. Investigate activity and turn all violations over to the state attorney
101 Sam paid $500,000 for a five-unit apartment building. The gross income is $1,000 per month per unit, with annual expenses of $15,000 annually. What was the capitalization rate for this investment?
A. 9%
B. 10%
C. 11%
D. 12%
102 Sandra, a real estate sales associate, found a buyer for a $200,000 house. The seller agreed too pay a 6% commission to the listing broker, half of which will be paid to Sandra’s broker. Sandra is on a 50-50 split with her broker. What is the amount of her commission?
A. $3,000
B. $6,000
C. $12,000
D. $4,000
103 Which of the following is not a leasehold estate?
A. Estate at sufferance
B. Estate at will
C. Life estate
D. Estate for Years.
104 A person just seeking information from a real estate licensee is referred to as a(n):
A. Client
B. Customer
C. Agency
D. Consumer
105 Which of these items, would not contribute to the property manager’s fee?
A. Renewed leases
B. Percentage of rental income
C. Base fee
D. Reduction in tax load
106 Someone who possesses all ownership interests in real property owns:
A. equitable title to the real property.
B. legal title to the real property.
C. equitable and legal title to the real property.
D. statutory title to the real property.
107 Which of the following situations illustrates the principles of contribution?
A. A homebuyer makes a down payment of 20% instead of the 10% the lender requires.
B. A homeowner adds a third bathroom to a house and thereby increases the appraised value by $10,000.
C. The appraised value of a house goes up by $20,000 over a two-year period because of the prices recently paid for other houses in the neighborhood.
D. Because of a decline in mortgage interest rates, a homeowner in a certain market is able to list her house at a higher price.
108 On the day prior to closing, the buyer does a walk-through and sees that the seller took a chandelier that was supposed to remain. What should the buyer’s broker do?
A. The broker should take the price of a new chandelier out of his commission.
B. The broker should try to put the closing on hold until the chandelier can be recovered.
C. Advise the buyer to speak with his/her attorney about a financial adjustment, at the closing, for the cost of the chandelier.
D. The contract should be terminated.
109 TRID mortgage loan rules apply to what type of real estate transactions?
A. Any closed end-loan secured by real property, but not including unimproved property
B. Only single-family real property
C. Any closed end-loan secured by real property, including unimproved property
D. Any closed end-loan of less than $375,000 and secured by real property
110 The document that provides evidence that a certain property is pledged as collateral for a loan is the ___.
A. trust deed or mortgage.
B. promissory note.
C. loan commitment.
D. collateral acknowledgment.
111 How long from receipt of a peer review does the Department have to respond?
A. 20 days
B. 30 days
C. 3 months
D. 2 months
112 Which tax is imposed on any deed or instrument which conveys interest in property?
A. Order Tax
B. Real Estate Transfer Tax
C. Render Tax
D. Settlement Tax
113 A duplex brings in $900 per month per unit and has $6,000 in annual expenses. What should an investor who wants a 10% return pay for the duplex?
A. $216,000
B. $156,000
C. $108,000
D. $48,000
114 Which legal ruling determined that a licensee is only allowed to fill in the blanks on a contract form?
A. Chicago Bar Association vs. Quinlan & Tyson, Inc.
B. Bales vs. Bates
C. Hulse vs. Criger
D. Link vs. Jones
115 Which Fair Housing Law added handicapped individuals to the list of protected classes?
A. Jones v. Mayer
B. Title VII of the Civil Rights Act of 1968
C. Mayer v Wade
D. Fair Housing Amendments Act of 1988
116 The economic concept that says a buyer will pay no more for one property than he would have to pay for an equally desirable and available property is ___.
A. anticipation.
B. highest and best use.
C. progression.
D. substitution.
117 When does the seller receive a copy of the listing agreement?
A. When the first offer is presented.
B. At the time of closing
C. Within two weeks of signing.
D. At the time of signing.
118 Which of the following statements would be called “puffing”?
A. The house has 6 rooms.
B. The house has quality written all over it.
C. The house has backs up to a public park.
D. The house has 2,350 sq. feet in living space.
119 An important characteristic of a “distressed” property compared to a “conventional” property is that:
A. The seller has excessive equity despite depressed prices.
B. The seller’s hardship does not qualify for a short sale.
C. The seller is usually trying to avoid a bank foreclosure.
D. The distressed property can quickly become stigmatized.
120 On a Closing Disclosure, what section would indicate if the lender would or would not accept partial payments on the loan?
A. Schedule of Payments
B. Advance Payments
C. Full Payment Options
D. Partial Payment Section
121 What is the purpose of the license laws?
A. To protect the consumer
B. To protect the broker
C. To protect the administrative staff
D. To protect mortgage lenders
122 When the buyer checks “yes” to dual agency on a Buyer Representation agreement, what does the buyer actually agree to?
A. The buyer agrees to dual agency.
B. The buyer agrees dual agency certain conditions.
C. The buyer is only acknowledging that the possibility of dual agency exists.
D. The buyer agrees to the possibility of additional compensation to the broker.
123 What type of financing allows the seller to retain legal title and the buyer to acquire equitable title?
A. Lease purchase
B. Installment land contract
C. Option to buy
D. Bridge loan
124 A policy manual is a reflection of the _________.
A. sponsoring broker’s mission statement
B. licensee’s business plan
C. licensee’s plan of action
D. sponsoring broker’s short-term goals
125 Which government agency files suits in ADA cases?
A. Dept. of Housing
B. Dept. of Justice
C. Dept. of Revenue
D. Dept. of Fair Housing

126 In the Public Land Survey System, a section contains how many acres?
A. 1,280 acres
B. 640 acres
C. 320 acres
D. 80 acres

127 A person filing a complaint may be entitled to:
A. Actual damages
B. Eighty percent of punitive damages
C. A payment from the General Revenue Fund.
D. $12,000

128 The difference between what a borrower has to pay to purchase a property and the amount a lender will lend on the property is the _____.
A. loan-to-value ratio.
B. lender’s profit margin.
C. buyer’s down payment.
D. origination fee.

129 Even though it is attached to a structure, an item may be considered personal property rather than real property if _______.
A. the owner originally intended to remove it after a period of time.
B. it can be removed without altering the appearance of the structure.
C. the owner installed it at some time after acquiring the real property.
D. it is unnecessary to the physical integrity of the structure.

130 In a transaction, the person who is being represented by a licensee is called what?
A. Customer
B. Agent Consumer
C. Consumer
D. Client

131 The steps in the income capitalization approach are:
A. estimate gross income, multiply times the gross income multiplier.
B. estimate effective income, subtract tax, apply a capitalization rate.
C. estimate net operating income, then apply a capitalization rate to it.
D. estimate potential income, apply a capitalization rate to it.

132 Diane paid $600,000 for a six-unit apartment building. The gross income is $900 per month per unit, with annual expenses of $16,800 annually. What was the capitalization rate for this investment?
A. 8%
B. 10.8%
C. 11%
D. 4.6%

133 Seller Jake provides a licensee with a bogus Property Condition Disclosure report. This is a form of what?
A. Active fraud
B. Passive fraud
C. Negligent Reporting
D. Subrogation

134 Which of these statements about an independent contractor is true?
A. He or she gets regular hourly pay.
B. He or she is reimbursed for all business expenses.
C. He or she is reimbursed for all travel expenses.
D. He or she is paid a commission.

135 To whom does a deed in lieu of foreclosure offer advantages?
A. The borrower only.
B. The lender only.
C. Neither the borrower nor the lender.
D. Both the borrower and the lender.

136 Which statement about subleases and lease assignments is correct?
A. In an assignment, responsibility and liability for the original lease is transferred completely to the assignee.
B. In an assignment, the assignee becomes primarily liable for the lease and rent; the original tenant remains secondarily liable.
C. A sublease does not convey any of the leasehold interest.
D. A sublease conveys the entire leasehold interest.

137 Which of these statements about purchase contracts is TRUE?
A. Both the offer and the acceptance must be in writing.
B. The offer can be oral, but the acceptance must include all of the seller’s terms in writing.
C. All offers must be approved by the licensee.
D. Neither offer nor acceptance must be in writing, but the deed for title transfer must be in writing.

138 Which of these statements about counteroffers is TRUE?
A. A counteroffer can only be prepared by the seller.
B. If the buyer rejects the first counteroffer, the seller can accept the buyers’ original offer.
C. A counteroffer can give the buyers a way out.
D. Only two counteroffers can be made per transaction.

139 A property that conformed with zoning ordinances when it was developed but does not conform to new ordinances is said to be _________.
A. a special exception.
B. a variance.
C. a legal nonconforming use.
D. an anomaly.

140 What does the term “mixed-use property” mean?
A. A subdivision with common areas for all residents.
B. Combination of residential and commercial use in a single building.
C. An apartment complex attached to a city park.
D. An industrial park in a farming community.

141 If questioned by a party about the property being occupied by a person with AIDS, licensees should state:
A. Only the facts they know through investigation of the property.
B. Facts disclosed from the seller.
C. That they know a person with aids occupied the property, but cannot disclose the person identity.
D. That they are prohibited by law from answering.

142 What type of agency allows the broker to appoint a specific licensee to work with a client?
A. Special agency
B. Dual agency
C. Sponsoring licensee
D. Designated agency

142 Which of the following groups are exempt from the Telephone Consumer Protection Act?
A. All new phone users after March 2008
B. Hospitals
C. A company responding to a consumer’s inquiry OR Tax-exempt non-profits
D. Out of state lottery businesses

143 Who pays the independent contractor’s withholding tax?
A. Managing Broker
B. Managing Broker and the Contractor share the cost.
C. The Independent Contractor
D. The Brokerage Firm

144 A mortgage Loan Estimate must be __________.
A. in writing and contain the information prescribed by the TRID rule.
B. in writing and contain the information prescribed by HUD.
C. sent to the applicant within 3 weeks of a written loan request.
D. copied and sent to a local HUD office within 3 business days of acceptance.

145 The loss of value in an improvement over time is referred to as:
A. deterioration.
B. obsolescence.
C. depreciation.
D. deflation.

146 When a licensee represents a person, what type of relationship is established?
A. Associate
B. Client
C. Consumer
D. Customer

147 Don a sales associate for ABC Realty is on a 50/50 commission split with his broker. Don was the listing agent for a property and earned $2,500 for the transaction. If the commission rate was 5% and ABC Realty earned one half of the commission, what was the sales price of the property?
A. $200,000
B. $75,000
C. $10,000
D. $166,700

148 What does a comparative market analysis attempt to do?
A. Convince a seller to list with you.
B. Find things in the home a seller needs to repair.
C. Establish a home’s fair market value.
D. Discover why some homes haven’t sold.

149 A property owner acquired a property by means of a deed that included a deed restriction against building any kind of unattached structures on the property. The owner now wants to build a small office/art studio in a separate structure. What can the owner do to overcome the restriction?
A. Apply to the Zoning Board of Appeals for a special permit.
B. Have the necessary parties execute a quitclaim deed.
C. Sue in court to have the deed declared invalid.
D. Obtain written permission to violate the restriction from the original grantor.

150 Which of the following is true of easements in general?
A. They involve the property that contains the easement and a non-owning party.
B. They apply to a whole property, not to any specific portion of the property.
C. They cannot be assigned or transferred.
D. They may require a specific use, but cannot prohibit one.

151 The basic intent of zoning ordinances is to:
A. establish the basis for public ownership of land for the common good.
B. establish subdivision rules and regulations.
C. specify usage for every parcel within the zoning authority’s jurisdiction.
D. restrict development in unincorporated areas.

152 Real estate agents must be able to convert measurements. Of the following, which conversion is INCORRECT?
A. Convert feet to inches: multiply the number of feet by 12
B. Convert inches to feet: divide the number of inches by 12
C. Convert feet to yards: divide the number of feet by 9
D. Convert yards to feet: multiply the number of yards by 3

153 When two adjacent pieces of property are joined together, the value of the one larger parcel may be greater than the value of the two separately. Which principle of value is this?
A. Progression.
B. Highest and best use.
C. Assemblage.
D. Contribution.

154 Which does NOT represent a way to describe real property?
A. A metes and bounds system
B. The Public Land Survey System
C. The unrecorded plat system
D. The recorded plat system

155 Broker licensees are exempt from continuing education requirements if they serve in the United States armed forces, serve as an elected state or federal official, or ____________________.
A. serve as an appointed member of federal government.
B. serve as a full-time employee of IDFPR.
C. serve as an appointed member of state government.
D. serve as an elected official at the local county or city level.

156 If a property has riparian rights, the owner has the right to _________.
A. pollute the water for a legitimate business purpose.
B. build a dam.
C. require downstream property owners to pay a fee for use of the water.
D. use the water in a way that does not infringe on another’s riparian rights.

157 What steps can a broker take when the buyer raises an objection about the color of a house?
A. Suggest that the buyer look at a different house.
B. Suggest that the buyer make an offer reflecting the cost of a new paint job.
C. Tell the buyer to make a full price offer and add an allowance for the paint job.
D. Not waste any more time on this house. The buyer will never make an offer

158 If any dispute between the parties arises regarding the deposited escrow money, what action should the sponsoring broker take?
A. Always refund the money to the first party who formally request the return of the funds.
B. Split the monies in thirds, one third to the buyers, one third to the sellers, and one third to the sponsoring broker.
C. Place the monies in an escrow account titled “Contested Escrow Funds Fiduciary Account” (CEFFA) which must be non-interest bearing.
D. Not release the money without a written release from both parties or both parties’ duly authorized agents (power of attorney or attorney at law).

159 The usual first step in the short sale transaction is
A. The lender releases the lien.
B. The seller signs the listing agreement.
C. The buyer makes an offer.
D. The seller gets an inspection.

160 A contract in which both parties promise to do something is known as what kind of contract?
A. Executory
B. Unilateral
C. Bilateral
D. Executed

161 All of the following are prorated, EXCEPT:
A. interest on a new loan.
B. property taxes.
C. interest on assumed loans.
D. rents.

162 In the case of a month-to-month tenancy, the landlord may terminate it at any time by giving how much notice?
A. No notice is necessary with month-to-month tenancy.
B. 7 days
C. 30 days
D. 45 days

163 A legal description is necessary because it:
A. is used for mail and package delivery.
B. is used for social gatherings and interaction.
C. is used to determine the property’s location.
D. is required for voter registration.

164 Two brokers working for the same firm decide to specialize in commercial properties and charge a flat-fee commission rate. Is this an illegal action?
A. Yes. It’s a violation of antitrust laws.
B. No. Antitrust does not apply to listing agreements.
C. Yes. A broker’s commission must be related to the costs involved in each transaction.
D. No. The brokers do not represent competing firms.

165 A loan applicant has an annual gross income of $36,000. How much will a lender allow the applicant to pay for monthly housing expense to qualify for a loan if the lender uses an income ratio of 28%?
A. $2,160
B. $840
C. $1,008
D. $720

166 Ted paid $480,000 for a duplex with a 10% capitalization rate. If both units in the duplex rented for the same amount, what is the net operating income (NOI) for the property?
A. $48,000
B. $36,000
C. $24,000
D. $4,000

167 The broker is required to keep:
A. A list of available properties
B. Confidential information about his client
C. A file on sex offenders
D. A picture of his agents

168 Seller Jane listed a problem on her property disclosure report. What happens now?
A. The buyer is required to have an inspector verify the problem.
B. The home must sell as is.
C. The buyer could ask for a price break because of the problem.
D. Jane must repair it before the home transfers.

169 If net income on a property is $20,000 and the cap rate is 5%, the value of the property using the income capitalization method is:
A. $100,000
B. $400,000
C. $1,000,000
D. $4,000,000

170 Home inspectors in Illinois:
A. must be registered with the Illinois Attorney General’s Office.
B. must be licensed by the Illinois Department of Financial and Professional Regulation.
C. are not licensed or registered.
D. must be licensed with the Illinois Secretary of State.

171 How do you stay in control of a call from a prospect?
A. Asking questions
B. Taking notes
C. Explaining broker’s services
D. Providing facts

172 Which of the following is an example of “shotgunning?”
A. Without mentioning it in the contract or settlement statement, a borrower agrees to give the seller cash at closing for some repairs
B. A listing agent agrees to raise the asking price of a property during negotiations.
C. A borrower conceals some debts to qualify for a larger loan than the lender’s debt-to-income ratio would allow.
D. A borrower obtains several mortgages on the same property for a total greater than the property’s value.

173 James, a sponsoring broker/property manager, must maintain all security deposits in an escrow account for the duration of the lease, unless the _________.
A. Tenant indicates to James that he/she waives the requirement.
B. James the sponsoring broker has less than five property management lease contracts.
C. Lease is for less than three years.
D. Tenant waives this requirement in writing. If such a waiver is included in the lease, it must be in bold print.

174 Jim’s property is undergoing a reduction in market price due to the pressures of a threatened foreclosure. His property is known as:
A. Redlined property.
B. Distressed property.
C. Underground property.
D. Stigmatized property.

175 Which of the following is true of an amortizing loan?
A. The amount of annual interest paid is the same for every year of the loan term.
B. Part of each periodic payment is applied to repayment of the loan balance in advance and part is applied to payment of interest in arrears.
C. Except for any points that may be paid, the interest on the loan balance is usually paid in advance.
D. The interest rate is reduced each year to maintain equal payments even though the outstanding loan balance is smaller.

176 To calculate the periodic payment of a loan, it is necessary to know the loan amount, interest rate and
A. the loan term.
B. loan points.
C. discount rate.
D. down payment.

177 Which of the following statements best defines the practice of fraud?
A. Overstating perceptions
B. Exaggerating the benefits
C. Intentional misrepresentation
D. Unintentional omission

178 What does the term “as is” in real estate mean?
A. The buyer cannot have a home inspection.
B. The seller does not have to tell about the leaky roof.
C. The seller can be silent about the condition of the property.
D. The seller will make no repairs.

179 Radon gas can be traced back to:
A. lead-based building products.
B. decaying radium.
C. plastic lumber products.
D. groundwater pollutants.

180 The process of making a fair distribution of expenses, through settlement, at the close of the sale is called:
A. proration.
B. principal.
C. amortization.
D. conversion.

181 A contract in which all parties have completed all acts under the contract is known as what?
A. Bilateral
B. Unilateral
C. Executory
D. Executed

182 What should you do if you feel the offer is not in the seller’s best interest?
A. Reject the offer.
B. Have the buyer’s agent submit the offer to the seller.
C. Tell the sellers how you feel and what you think about the offer.
D. Don’t submit the offer.

183 A recorded plat system contains all of the following, EXCEPT:
A. a plat map that shows the location and boundaries of individual parcels.
B. a series of landmarks and monuments that are numerically categorized.
C. a contiguous group of lots, which is called a block.
D. lots and blocks with assigned numbers or letters.

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