Final Exam Example Principles

Sales Associate / Broker Prelicense Applied RE Principles Interactive Class – Final Exam Example-Questions Only

(Answers to these questions will be given with proper SUBSCRIPTION)

1) Home inspections may be performed by
A. structural engineers.
B. licensed real estate home inspectors.
C. builders.
D. licensees.

2) If the buyer’s agent is representing his or her parent, sibling, other close relative or close friend, why shouldn’t the broker be a dual agent?
A. It is a violation of the Robinson–Patman Act.
B. It is never recommended to work with family and friends.
C. It will be difficult for an agent to be neutral in these situations.
D. It is an example of nepotism.

3) Even when a property is sold “as is,” buyers may request an inspection
A. because the buyer wants to ensure that there are no hidden surprises.
B. because the buyer should have the seller correct any problems that are found.
C. because the inspection report may be required to get final approval for a mortgage.
D. because it can help with the appraisal.

4) A ____________ clause is the period of time the buyer has after the seller receives another offer to either remove the “subject to sale” contingency, or terminate the contract.
A. Plan B
B. Rejection
C. Kick-out
D. Back-out

5) “Kimberly Apartments – Two-bedroom apartments for rent. Children welcome, no more than 2 per apartment. Wheelchair ramp. Covered parking.” Which terms are considered violations in this ad?
A. Covered parking
B. Two-bedroom
C. Wheelchair ramp
D. Children welcome, no more than 2 per apartment

6) Who may withdraw funds from the trust account?
A. Anyone
B. The office administrator
C. Sponsored licensees
D. The sponsoring broker

7) In Illinois, who prepares the Closing Disclosure form?
A. The seller
B. The buyer
C. The lender
D. The licensee

8) A broker may share confidential information of his/her client after the listing expires
A. with the client’s written permission.
B. when representing another party.
C. when a customer asks.
D. under any circumstances, once the listing expires.

9) The three major types of listings are open, exclusive right to sell, and
A. closed net.
B. inclusive agency.
C. exclusive right to buy.
D. exclusive agency.

10) In an exclusive buyer agency agreement, if the broker does not collect the commission from the listing broker or the owner, who will owe the commission?
A. The buyer’s agent
B. No one
C. The MLS
D. The buyer

11) A prorated expense at closing is
A. an amount received by both the buyer and seller
B. a different amount charged to one party and received by the other party
C. the same amount charged to one party and received by the other party.
D. an amount from both the buyer and seller

12) Nancy is asked by a buyer to take a promissory note as an earnest deposit. What should she do?
A. Ask her broker for help.
B. Tell the buyer she cannot accept non-cash items as earnest money.
C. Inform the seller of the earnest deposit situation and state the terms clearly in the purchase offer.
D. Persuade the buyer to make a cash deposit.

13) A listing agent has been hired by the seller who signed a listing agreement. What is true regarding this situation when a buyer is shown the property by the listing agent without being a dual agent?
A. The seller is the customer and the buyer is the client
B. The buyer is the customer and the seller is the client
C. Both the seller and buyer are clients
D. Both the seller and buyer are customers

14) A dual agent may disclose
A. the maximum price a buyer is willing to pay.
B. the lowest price the seller will accept.
C. motivating factors of the two parties.
D. material facts about the property.

15) If foreclosure proceedings have begun, how should the seller be notified?
A. Over the phone
B. In writing
C. The seller does not need to be notified
D. In person

16) Taxes paid in arrears appear on the TRID Closing Disclosure Form as Adjustments for Items Unpaid by ___________.
A. Agent
B. Seller
C. Lender
D. Buyer

17) For a short sale to be accepted by the lender, a number of documents must be on file. These documents are commonly known as ___________.
A. The binder
B. The materials
C. The deck
D. The packet

18) If any change is made to the escrow account, the sponsoring broker must notify ____________ with ten days.
A. All clients
B. The FCC
C. The Division

19) The Act defines “minimum services” required for
A. all listings.
B. all MLS listings.
C. all open listings.
D. all exclusive listings.

20) The sellers should be aware that the buyers will be conducting a _________________ within a day or two of closing.
A. Neighborhood poll
B. Final walk-through inspection
C. Price comparison
D. Deed transfer

21) An open listing is often considered to be what type of contract?
A. Terminable
B. Mutual
C. Unilateral
D. Bilateral

22) Which of the following is a good property showing tip?
A. Remove all area rugs.
B. Allow pets to interact with the buyers.
C. Lock up storage areas.
D. Remove clutter.

23) Under most exclusive buyer brokerage agreements, the buyer may have to pay the buyer agent’s commission
A. if the seller or listing broker will not.
B. if the buyer makes a full-price offer.
C. any time the buyer has an accepted offer.
D. prior to the buyer’s agent locating a property.

24) A _____________________ is a good risk management tool to affect non-discrimination, and it assists the licensee in obtaining answers needed to serve the buyer’s needs.
A. Buyer insurance policy
B. Standardized buyer questionnaire
C. Risk assessment
D. Seller’s packet

25) How is the seller’s loan interest computed?
A. For the day of closing
B. For a full month
C. From closing to the end of the month
D. From the first of the month through the day of closing

26) If the buyer agency agreement is for four months, how long is the agent is obligated to work with the buyer?
A. The full four months even after the transaction closes
B. Four months, or until a transaction closes, whichever is earlier
C. As long as necessary
D. Until the buyer makes an offer

27) In a CMA, ______________ properties have limited value because the sale price is still unknown.
A. Pending
B. Sold
C. Expired

28) When is a licensee prohibited from acting as a dual agent in a transaction?
A. A licensee is prohibited from serving as a dual agent if he or she is a friend of the seller.
B. A licensee is prohibited from serving as a dual agent if he or she is a friend with the buyer.
C. A licensee is prohibited from serving as a dual agent if he or she has knowledge of latent defects.
D. A licensee is prohibited from serving as a dual agent if he or she has an ownership interest in the property.

29) Which Illinois act includes the following protected classes: marital status, order of protection, military status, military discharge, ancestry, sexual orientation or preference, and age?
A. Illinois Human Rights Act
B. Illinois Equality Act
C. Illinois Anti-discrimination Act
D. Illinois Fair Tenancy Act

30) Which offers is a listing agent is required to present?
A. Only all cash offers
B. Only those that are above the listing price
C. All offers
D. Only those that are equal to the listing price

31) Some brokers charge the buyer a fee prior to the buyer viewing properties. This fee is a
A. retainer fee.
B. bonus.
C. transaction fee.
D. referral fee.

32) The best reason for the buyer to have representation is
A. The seller has representation.
B. The listing agent is on the seller’s side.
C. The licensee offered it.
D. The buyer’s agent can provide a strong negotiating position.

33) Illinois counties impose an additional tax of $.25 per $500 or portion thereof of taxable consideration, making the combined total transfer tax __________ or portion thereof.
A. $1.50 per $500
B. $.50 per $1,000
C. $.75 per $500
D. $.20 per $500

34) A minority buyer asked to see homes in a certain price range, and the agent limited the showings to areas where other minorities live. This is an example of
A. blockbusting.
B. steering.
C. redlining.
D. directing.

35) Information about a property that has a significant bearing on a buyer’s decision to purchase that property is referred to as a
A. latent fact.
B. material fact.
C. statutory face.
D. defect.

36) Rent is prorated for the current month and is due from __________ at Closing on the TRID Closing Disclosure Form for the portion of the month the buyer will own the property.
A. The agent
B. The title company
C. The seller
D. The tenant

37) The 1996 lead-based paint regulation requires sellers or lessors of almost all residential properties built before _________ to disclose known lead-based paint hazards and provide any relevant records available.
A. 1905
B. 1996
C. 1978
D. 1987

38) The day before closing, the buyer did the final walk-through and found that the seller had taken the dining room chandelier that was to remain. What should the buyer’s broker do?
A. Pay for the price of the chandelier out of his commission.
B. The broker should hold up closing until the chandelier is recovered.
C. Ask the buyer to speak with his attorney about a financial adjustment at the closing.
D. Terminate the contract.

39) A buyer made an offer on a property and included $5,000 earnest money. A few hours later, she decided that she did not want the property and wanted the money back. How can she accomplish this?
A. Obtain a court injunction.
B. Stop payment on the check.
C. She can’t get the money back until closing.
D. Withdraw the offer before the seller accepts it.

40) Which of the following activities is NOT a “Non-Agency” act?
A. Showing houses to buyers
B. Attending an open house to answer questions about the property
C. Accompanying an appraiser on a visit to a property
D. Setting appointments for property viewings

41) A ______________ is a sale in which the title has transferred, but the selling price is not enough to pay all the liens and costs of sale.
A. Short sale
B. Fire sale
C. Foreclosure sale
D. Deed sale

42) Federal fair housing laws do NOT include which of the following protected classes?
A. Age and marital status
B. Family status and race
C. Sex and disability
D. Religion and national origin

43) Who should determine the listing price?
A. The MLS
B. The seller
C. The listing agent
D. The buyer’s agent

44) Which of the following is a true statement?
A. All listing agreements must include a definite expiration date.
B. All listings must include an automatic renewal clauses.
C. All listings must expire within six months.
D. All listings must contain a broker protection clause.

45) If the buyer assumes the seller’s loan, the buyer will make the payment
A. at the end of the month following closing.
B. at the end of the first of the week following closing.
C. at closing.
D. on the first of the month following closing.

46) Which statement is true regarding the seller’s disclosure of property condition form?
A. The agent should assist the seller in completing the form if requested.
B. Completion of the disclosure form is required by law.
C. The agent can coach the seller on how to complete the form.
D. Disclosure is optional but recommended.

47) Sponsoring brokers are prohibited from mixing their own funds with funds in special accounts. This is known as _____________.
A. Blending
B. Conversion
C. Commingling
D. Combining

48) Records of escrow account transactions must be kept on file for _____ years at managing broker’s place of business.
A. 2
B. 3
C. 4
D. 5

49) Four months after buyer Gail bought a home, the roof leaked during a storm. When the home was listed, seller Gary told broker Jim that the roof leaked, but they had agreed not to tell any prospective buyers. Jim’s defense is this – the buyer did not ask about the roof. Under these circumstances, what can Gail do?
A. Gail can sue Jim for non-disclosure of a material fact.
B. Gail cannot sue Jim because he represented only Gary.
C. Gail can sue Gary only.
D. Gail has no recourse since the leaking roof should have been discovered by her inspection company.

50) If a buyer’s agency agreement provides for the agent to get a commission regardless of whether the buyer buys a for sale by owner or listed property, it is
A. an exclusive agency buyer agency agreement
B. an exclusive buyer agency agreement.
C. an open buyer agency agreement.
D. a non-exclusive buyer agency agreement.

Final Exam Example Principles part2

51) A mold disclosure is required for which of the following properties?
A. Residential properties with one to four units
B. HUD properties
C. All residential properties
D. All residential properties except for-sale-by-owner properties.

52) If Buyer Jim’s parents wrote the earnest money check for Jim to write an offer, and Jim cannot obtain financing, to whom is the earnest money check returned?
A. Jim
B. Jim’s Parents
C. The Title Company
D. The agency that holds the escrow account.

53) If the buyer is borrowing more than ________, the lender will require PMI insurance, which will add to closing costs and monthly payment.
A. 30%
B. 80%
C. 50%
D. 75%

54) What can a seller do to alleviate some of the buyers’ worries over potential problems after closing?
A. Let them spend a night in the home after they make an offer
B. Give them an allowance to buy new furniture
C. Include a home warranty
D. Tell them how much they like living in the home

55) Anyone in IL who performs lead abatement without a license is guilty of
A. a license law violation.
B. a felony.
C. no violation.
D. a Class A misdemeanor.

56) John’s lender agreed to accept a payoff less than the principal balance of John’s mortgage so that John could sell his home for the actual market value. What was this called?
A. Deed in lieu of foreclosure
B. Foreclosure
C. Short sale
D. Loan modification

57) When starting a listing presentation, what is one of the first questions that should be asked?
A. “What commission are you expecting to pay?”
B. “What is your listing price?”
C. “Are you currently listed with another brokerage?”
D. “How long do you want to list the property?”

58) The state and county transfer taxes are paid by ______________.
A. The lender
B. The seller
C. The buyer
D. The title company

59) A broker recently listed a four-plex occupied by the owner that has 2-bedroom units. Which of these ads would be a legal ad?
A. “Adults only”
B. “No more than 2 children”
C. “Wheelchair accessible”
D. “Retirees only”

60) The statutory method of prorating is best described as
A. annual charge divided by 355 days.
B. annual charge divided by 12 months.
C. annual charge divided by 12 months, and month of closing divided by actual days in the month.
D. annual charge divided by 360 days.

61) Which type of status is viewed as a stronger buying position?
A. A buyer who has many charge accounts
B. A buyer with a good rental history
C. A buyer who has been prequalified
D. A buyer who has been preapproved

62) According to the Illinois Real Estate License Act of 2000, sponsoring brokers who are responsible for earnest money deposits for property sales (and security deposits for leases)
A. must be bonded with the Illinois Sponsoring Brokers Insurance Trust.
B. must maintain a separate business account in any type of financial institution for depositing these monies.
C. must open special trust (or escrow) accounts in which to deposit the funds they have been given.
D. must deposit these monies in a brokerage operations account with special accounting procedures to segregate brokerage monies from escrow monies.

63) Who benefits from a deed in lieu of foreclosure?
A. The borrower
B. The lender
C. Both the borrower and the lender
D. The buyer

64) If escrow money is deemed abandoned, it is transferred to the ______________ to be handled as unclaimed property.
B. Office of the State Treasurer
C. Federal Trade Bank

65) The state’s portion of the transfer tax is ___________.
A. $.75 per $7,500
B. $.50 per $1,000
C. $.50 per $500
D. $.20 per $500

66) _________________ is equal to the sale price minus the value of any conveyed personal property and any mortgage amount that survives the conveyance.
A. Taxable consideration
B. Appraisal tax
C. Capital gains tax
D. Taxable itemization

67) Does the MLS determine the rates that member brokers can charge for their services?
A. No, individual brokers make those decisions.
B. Yes, the MLS sets the rates for services.
C. Yes the MLS, in partnership with the brokers, sets the rates.
D. No, the MLS only sets how member brokerages will share commissions with cooperating brokers.

68) If escrow records are lost, stolen or destroyed, the broker must report the loss to the Division’s ________________ within 48 hours.
A. Fraud division
B. Enforcement division
C. Recuperation department
D. Discipline committee

69) A non-refundable retainer fee belongs to the __________________.
A. The office petty cash fund
B. Seller
C. Sponsoring broker
D. Buyer

70) If serious problems are found during an inspection, what should a listing agent do?
A. Advise the sellers to cover up the problem as best they can
B. Advise the sellers to contact an expert
C. Advise the sellers to fix the problem on their own
D. Advise the sellers to reduce the price

71) Most one- to four-unit residential properties in IL require which disclosure(s)?
A. Mold and radon disclosures
B. Residential Real Property Disclosure and mold disclosure
C. Residential Real Property Disclosure and radon disclosure
D. Lead-based paint disclosure and radon disclosure

72) The most widely used agreement is the _____________ listing agreement.
A. Exclusive Agency
B. Net
C. Exclusive right to sell
D. Open

73) Disclosure of agency should occur
A. no later than entering into an agency agreement.
B. upon the first face-to-face meeting.
C. before writing an offer
D. after the offer is written but before closing

74) When working with a short sale property, what should the licensee do first?
A. List the property at a discounted price
B. Suggest that the owner sign up for financial counseling
C. Find out exactly how much is owed on the property
D. Run a credit check on the owner

75) Two brokers working for the same company meet over coffee and decide to charge the same set commission rate on all listings. Is this illegal?
A. Yes. It’s a violation of anti-trust laws.
B. No. the brokers do not represent competing companies.
C. Yes. A broker’s commission must be related to the cost of each transaction.
D. No. Anti-trust laws do not apply to commission rates.

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