Topics Class Guides – Pre-License -(No Answers, just Questions)

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

1. Which of the following is NOT a part of confidential information?

A.    Client’s business holdings.

B.     Minimum a seller will accept for a property.

C.     Reason a property is listed on the market.

D.    Physical condition of the property.

2. Which of the following is NOT an activity included in the definition of Broker?

A.    Sells, exchanges, purchases, rents, or leases real estate.

B.     Negotiates the sale, exchange, purchase, rental, or leasing of real estate.

C.     Holds a non-public open house.

D.    Engages in the business of buying, selling, exchanging, renting, or leasing real estate.

3. Which agency in Illinois has responsibility for licensing schools and instructors?

A.    Training and Development Department

B.     Division of Real Estate

C.     Standards Council

D.    Advanced Advisory Council

4. Which agency has oversight responsibilities regarding home inspectors?

A.    Illinois Department of Financial and Professional Regulation

B.     National Home Inspectors

C.     Federal Home Inspectors Board

D.    Fair Labor Standards Board

5. What is the purpose of the license laws?

A.    To protect the public

B.     To protect the licensee

C.     To protect the broker

D.    To protect mortgage lenders

6. The level of government that focuses on land-use regulations and taxation is the

A.    federal.

B.     state.

C.     county and local.

D.    judicial.

7. The concerns of the federal government in regulating real property rights include

A.    discrimination.

B.     real estate taxes

C.     types of ownership.

D.    school districts.

8. The primary distinction between the legal concepts of land and real estate is that

A.    real estate includes air above the surface and minerals below the surface.

B.     real estate is indestructible.

C.     land has no defined boundaries.

D.    land does not include man-made structures.

9. When may an item attached to a structure be considered personal property rather than real property?

A.    When it can be removed without altering the appearance of the property.

B.     When it is unnecessary to the physical integrity of the property.

C.     When the owner installed it at some time after acquiring the property.

D.    When the owner originally intended to remove it before conveying the property.

10. Surface rights include which of the following?

A.    Subsurface rights

B.     Water rights

C.     Mineral rights

D.    Air rights

11. What guarantees the right of private ownership of real estate in the United States?

A.    Common law

B.     Local statutes

C.     The Napoleonic Code

D.    The Constitution

12. A property abutting a static body of water has ___________ rights.

A.    Allodial

B.     Alluvial

C.     Littoral

D.    Riparian

13. Which of these is the best definition for personal property?

A.    Any property owned by an individual.

B.     Real property that is not attached to real estate.

C.     Any property that is not classified as real property.

D.    Anything that includes real property.

14. Which government entity is the primary regulator of the real estate business?

A.    The federal government

B.     The county

C.     The state

D.    The court system

15. Which of the following is included in the bundle of rights inherent in ownership?

A.    To transfer

B.     To tax

C.     To inherit

D.    To move

16. What part of a non-navigable waterway does the owner of an abutting property own?

A.    To the low-water mark

B.     To the middle of the waterway

C.     To the high-water mark

D.    None of the water

17. The concept that the state controls all bodies of water is called

A.    states’ rights.

B.     the principle of anticipation.

C.     the doctrine of public utility.

D.    the doctrine of prior appropriation.

18. What do we call the conversion of real property to personal property by detaching it from the real estate?

A.    Detachment

B.     Affixing

C.     Severance

D.    Disengagement

19. Which is the “best” description of “Land”?

A.    Soil, ground and earth, plus any improvements and fixtures attached, mines, minerals and some airspace.

B.     Only the surface of the earth that is delineated by boundaries.

C.     The surface of the earth except for lakes and streams.

D.    Everything above, on, and below the surface of the earth.

20. What are the three unique physical characteristics of land?

A.    Fixed, unchangeable, homogeneous.

B.     Immobile, indestructible, heterogeneous.

C.     Three-dimensional, buildable, marketable.

D.    Natural, measurable, inorganic.

21. The most common datum used in the United States is:

A.    mean sea level.

B.     subsurface mineral level.

C.     the bearing.

D.    the meander.

22. A parcel of land that lies within an existing platted subdivision will usually have a legal description that is:

A.    convoluted.

B.     lengthy.

C.     concise.

D.    protracted.

23. A mismatch in the occupied lines and deed record lines in a land survey could mean that:

A.    the owner of the property no longer lives there.

B.     the property’s overlap is undiscovered.

C.     potential claims of ownership by senior right or adverse possession exist.

D.    the federal government owns the rights to the land.

24. Where does a metes and bounds survey begin?

A.    At the point of beginning

B.     At any monument

C.     At any landmark

D.    At the terminus

25. Which of the following is NOT one of the three ways to describe property?

A.    Metes and bounds

B.     Public Land Survey System

C.     Recorded plat system

D.    Unrecorded plot system

26. Which statement is INCORRECT regarding a recorded plat system?

A.    A plat map shows the location and boundaries of individual parcels.

B.     It uses a series of landmarks and monuments that are numerically categorized.

C.     A block is a contiguous group of lots.

D.    Lots and blocks are assigned numbers or letters.

27. Landmarks and monuments are used to establish all of the following, EXCEPT:

A.    the boundaries of property.

B.     the existence of unrecorded deeds.

C.     the location of a property’s corners.

D.    the point at which the boundary changes direction.

28. A large rock or an old tree is an example of a(n):

A.    improvement.

B.     landmark.

C.     legal description.

D.    boundary line.

29. When using a Public Land Survey System, a township is divided into sections, which is a square mile and contains:

A.    540 acres.

B.     640 acres.

C.     740 acres.

D.    840 acres.

30. All of the following legal descriptions of real property, EXCEPT:

A.    a metes and bounds system

B.     the public land survey system

C.     the recorded plat system

D.    the renowned plat system

31. Which of the following is the oldest method to describe land?

A.    Metes and bounds system

B.     Public land survey system

C.     Recorded plat

D.    Global positioning system

32. What system describes property by identifying registered lot and then block on a recorded subdivision plat or survey?

A.    Metes and bounds

B.     Public Land Survey System

C.     Recorded plat system

D.    Registered lot and block system

33. What type of legal description contains the direction of the boundary lines states in degrees, minutes, and seconds?

A.    The computer-assisted surveying system

B.     The Public Land Survey System

C.     The recorded plat system

D.    Metes and bounds

34. Which of the following statements is TRUE regarding a street address?

A.    A street address is a formal reference.

B.     A street address is sufficient for a legal description.

C.     A street address tells you how to find a property.

D.    A street address provides you with the boundaries of the property.

35. What is the measurement of a tract of land with its boundaries, contents, and location relative to other property?

A.    Calculus

B.     Survey

C.     Land speculation

D.    Relationship analysis

36. A legal description should be written in such a way that any person in the future would be able to understand the __________, with reasonable certainty.

A.    description and determine the property location

B.     price

C.     value

D.    sales comparables

37. The legal description that uses the principal meridians and base lines is called the:

A.    metes and bounds system.

B.     the public land survey system

C.     the recorded plat system

D.    the GPS survey system

38. What type of legal description uses grids to determine the location of a specific tract of land?

A.    Recorded map

B.     Metes and bounds

C.     Lot and block

D.    Public Land Survey System

39. During a survey and description of the improvements, surveyors determine the location of all the following, EXCEPT:

A.    fences.

B.     driveways.

C.     natural features, such as streams and ponds.

D.    comparable improvements.

40. After the actual survey is performed, a __________ is completed, which is a drawing that shows the location and dimensions of the property.

A.    survey sketch

B.     mining graph

C.     boundary chart

D.    gap and gore

41. In a metes and bounds system, bounds refer to:

A.    measurements in length.

B.     measurements in feet.

C.     depth.

D.    direction.

42. Which of the following is not one of the fundamental reasons for requiring a land description and survey in a real estate transaction?

A.    Existence of the property

B.     Relationship of the property to adjoining properties

C.     Loan options for financing real property

D.    Relationship of occupied to recorded lines

43. Which of the following is a fundamental reason for requiring a land description and survey in a real estate transaction?

A.      All of the choices apply

B.      Relationship of the property to adjoining properties

C.      Existence of the property

D.      Relationship of occupied lines to recorded lines

44. A block is a contiguous group of lots bound by:

A.    man-made features.

B.     natural resources.

C.     minerals.

D.    chemicals.

45. A __________ is described by its location, relative to the intersection of the baseline and meridian.

A.    township

B.     plat

C.     condominium

D.    meridian

46. Which of the following information is not shown on an improvement description and survey?

A.    Building location

B.     Building size

C.     Number of tenants in a building

D.    Building dimensions

47. There are two adjoining properties. An easement allows property A to use the access road that belongs to property B. In this situation, property A is said to be which of the following in relation to property B?

A.    Subservient estate

B.     Servient estate

C.     Senior tenant

D.    Dominant tenement

48. In a cooperative, unit owners/members own

A.    stock.

B.     real property.

C.     a promissory note.

D.    the holding company.

49. When a single individual or entity owns a fee or life estate in a real property, the type of ownership is

A.    tenancy in severalty.

B.     tenancy by the entireties.

C.     absolute fee simple.

D.    legal fee simple.

50. How is a conventional life estate created?

A.    It happens automatically when title transfers, unless a fee simple is specifically claimed.

B.     A fee simple owner grants the life estate to a life tenant.

C.     It is created by judicial action.

D.    It is created by a statutory period of adverse possession.

51. The “four unities” required to create a joint tenancy include which of the following conditions?

A.    Parties must acquire respective interests at the same time.

B.     Parties must be legally married at the time of acquiring interest.

C.     Parties must be family members.

D.    Parties must have joint financial resources.

52. What distinguishes a lien from other types of encumbrance?

A.    It involves a monetary claim against the value of the property.

B.     It lowers the value of a property.

C.     It is created voluntarily by the property owner.

D.    It attaches to the property rather than to the owner of the property.

53. A certain property has the following lien recorded against it: a mortgage lien dating from three years ago; a mechanic’s lien dating from two years ago; a real estate tax lien for the current year; and a second mortgage lien dating from the current year. In case of a foreclosure, which of these liens will be paid first?

A.    First mortgage lien

B.     Mechanic’s lien

C.     Real estate tax lien

D.    Second mortgage lien

54. Three people have identical rights but unequal shares in a property, share an indivisible interest, and may sell or transfer their interest without consent of the others. This type of ownership is

A.    joint tenancy.

B.     equal ownership.

C.     tenancy in common.

D.    estate in severalty.

55. A tenant has refused to vacate an apartment after his lease expires. This is called

A.    an estate In escrow.

B.     a tenancy at sufferance.

C.     an estate in trust.

D.    an estate at forbearance.

56. An encumbrance ___________.

A.    is a legal estate.

B.     reduces the tax burden of the property owner.

C.     expands the interest of a freehold estate.

D.    limits a freehold interest.

57. Which of the following statements regarding month-to-month leases is FALSE?

A.    They are also called periodic tenancies.

B.     They may exist without any written agreement.

C.     They have a definite ending date.

D.    They can be terminated with proper notice.

58. Who are the essential parties involved when real estate is placed into a trust?

A.    Owner, trustor and lawyer

B.     Owner, trustor and trustee

C.     Trustee, title company, and beneficiary

D.    Trustor, trustee, and beneficiary

59. An affirmative easement gives the benefited party

A.    the right to possess a defined portion of another’s real property.

B.     the right to prevent the owner of a real property from using it in a defined way.

C.     the right to a defined use of a portion of another’s real property.

D.    the right to receive a portion of any income generated by another’s real property.

60. The distinguishing features of a condominium estate are

A.    ownership of a share in an association that owns one’s apartment.

B.     tenancy in common interest in airspace and common areas of the property.

C.     fee simple ownership of the airspace in a unit and an undivided share of the entire property’s common areas.

D.    fee simple ownership of a pro rata share of the entire property.

61. The highest form of ownership interest one can acquire in real estate is the

A.    dower and curtesy.

B.     conventional life estate.

C.     estate for years.

D.    fee simple estate.

62. Jim knowingly acquired a property with a lien attached. What happens to the lien?

A.    The property incurs a second lien.

B.     The original owner must remove the lien prior to taking possession.

C.     The lien is abolished.

D.    The lien continues to be against Jim’s property.

63. When an interest-holder lacks the right of ownership, what kind of interest is it that he or she has?

A.    A trust

B.     An encumbrance

C.     An entailment

D.    A tenancy

64. Which of the following is a feature of a testamentary trust?

A.    It takes effect only when the trustor dies.

B.     It only applies to real property.

C.     It is activated at the time of signing.

D.    It is created in probate.

65. A property owner who is selling her land wants to control how it is used in the future. She might accomplish her aim by means of

A.    an injunction.

B.     a deed restriction.

C.     an easement.

D.    a land trust.

66. What distinguishes a freehold estate from a leasehold estate?

A.    A freehold includes the right to dispose or use.

B.     The duration of the owner’s rights cannot be determined in a freehold.

C.     A freehold cannot be defeasible.

D.    A leasehold is subject to government restrictions.

67. Upon the death of the life tenant, a life estate passes to

A.    the original owner or other named person.

B.     the owner’s heirs.

C.     the state.

D.    the owner’s spouse.

68. An interest in real estate is best defined as ownership of

A.    the full bundle of rights to real property.

B.     an estate.

C.     one or more of the bundle of rights to real property.

D.    the right to possession and use of real property.

69. Which of the following describes a situation in which an easement might be created against the wishes of the property owner?

A.    The property has been continuously used as a prescriptive easement with the knowledge but not the permission of the owner for a period of time.

B.     The owner of an adjoining property asks the property owner for an easement, is refused, and then uses the property anyway without the knowledge of the owner.

C.     The owner of an adjoining property decides he needs to widen his driveway by sharing his neighbor’s driveway and sues in court to create an easement by necessity.

D.    The owner of an adjoining property grants an easement to a third party that includes an easement on the first property.

70. A tenancy at will ____.

A.    has a definite expiration date.

B.     is also called an estate at sufferance.

C.     survives the death of the lessor or lessee.

D.    remains in effect as long as lease conditions are met.

71. The only required clause in a deed of conveyance is one that

A.    states restrictions and limitations to the estate being conveyed.

B.     names the parties, describes the property, and indicates a consideration.

C.     states that the grantor has done nothing to impair title to the property being conveyed.

D.    states the parties and the type of estate being conveyed.

72. A hermit lives secretly in a cave on a large property. After twenty years, the hermit makes a claim of ownership. This claim will most likely be

A.    upheld through adverse possession.

B.     upheld because of the long time of the possession.

C.     declined because possession was secretive.

D.    declined because the hermit’s cave cannot be considered an improvement.

73. Of the principal forms of title evidence in Illinois, the one that provides the best evidence is

A.    a title certificate.

B.     a title insurance policy.

C.     a Torrens certificate.

D.    an attorney’s opinion of abstract.

74. Uncle Jake wrote his will out on a notepad. This type of will is called

A.    holographic.

B.     normal.

C.     abstract.

D.    virtual.

75. Constructive notice of ownership of a parcel of real estate is primarily demonstrated through

A.    direct inspection to see who is in possession.

B.     title insurance.

C.     title records.

D.    a construction permit.

76. A deed is not valid unless it is

A.    written on a standard form.

B.     accompanied by a consideration.

C.     signed by an attorney.

D.    filed with the county recorder.

77. Which of the following best describes the concept of “legal title” to real estate?”

A.    Ownership of the bundle of rights to real estate.

B.     The right of a buyer or lender to obtain ownership.

C.     Possession of a deed.

D.    Absolute proof of ownership of real estate.

78. A person claims ownership of a parcel of real estate to a prospective buyer, stating that she has lived on the property for five years and nobody has ever bothered her. The claimant also shows the buyer a copy of the deed. The legal basis of this claim is referred to as

A.    prescriptive notice.

B.     constructive notice.

C.     hostile notice.

D.    actual notice.

79. The type of deed that gives the highest assurances of good title is the

A.    general warranty deed.

B.     bargain and sale deed.

C.     special warranty deed.

D.    guardian’s deed.

80. Which authority regulates involuntary title transfers?

A.    Federal law

B.     State law

C.     Common law

D.    Probate law

81. A break in the chain of title to a property results in

A.    a cloud on title.

B.     a title plant.

C.     a lien of indeterminate ownership.

D.    a duplicate title.

82. A lender forecloses on a property. The type of deed that will convey ownership after a public auction is reconfirmed by the court is a

A.    master deed.

B.     partition deed.

C.     tax deed.

D.    sheriff’s deed.

83. An owner transfers title to a property to a buyer in exchange for a consideration. This is an example of

A.    voluntary alienation.

B.     escheat.

C.     hypothecation.

D.    estoppel.

84. For a deed to convey title, it is necessary for the deed to be

A.    on a standard form.

B.     certified by the grantor.

C.     accepted by the grantee.

D.    signed by the grantee.

85. The amount of the transfer tax is based on

A.    the tax levy.

B.     the tax base.

C.     the actual sales price of the property conveyed. *Note, in Illinois the tax can be reduced if a buyer has assumed the seller’s mortgage “subject to.”

D.    the tax needs of the local jurisdiction.

86. Title records do all of the following EXCEPT:

A.    establish lien priority.

B.     reveal condition of title.

C.     give public notice of ownership.

D.    transfer ownership.

87. Aunt Molly, who had no legal heirs, died without leaving a will. What will happen to her estate?

A.    It will be sold at a public auction.

B.     It will be apportioned among the owners of adjacent properties.

C.     It will escheat to the state or county after all claims have been settled.

D.    It will be donated to charity.

88. Which document contains a summary of the title search?

A.    Opinion Abstract

B.     Title Certificate

C.     Title Insurance Rider

D.    Binder Title

89. A central goal of public land use planning is to

A.    balance individual property rights with the community’s welfare.

B.     develop an accord between property owners and tenants.

C.     impede development by for-profit developers and construction contractors.

D.    subordinate private interests to the public good.

90. Who is responsible for insuring that a buyer receives the Protect Your Family From Lead pamphlet?

A.    HUD

B.     Agents for buyers and sellers

C.     The buyer

D.    The seller

91. Counties and municipalities have the legal right to control land use due to

A.    the doctrine of appropriation.

B.     delegation of authority by state-level enabling acts.

C.     consensus of the local community through referendum.

D.    custom and tradition.

92. Which of the following statements about federal and state environmental laws is TRUE?

A.    Private property owners have no responsibility for compliance with them.

B.     They only apply to publicly owned property.

C.     Regional land use plans may treat them as optional.

D.    They must be incorporated into local land use plans.

93. When was lead first banned in the manufacture of paint used in residential properties?

A.    1978

B.     1986

C.     1992

D.    1996

94. Which environmental legislation created the requirement for environmental impact surveys on large development projects?

A.    The National Environmental Policy Act

B.     The Clean Air Amendment

C.     The Clean Water Act

D.    The Superfund Act

95. If a municipality exerts its power of eminent domain against a certain property owner, what happens?

A.    The owner must pay higher property taxes or give up the property.

B.     The owner must cede an easement without receiving any compensation.

C.     The municipality annexes the property.

D.    The owner must sell the property or grant an easement to the municipality for just compensation.

96. Dioxins, mercury, and Methyl Tertiary Butyl Ether (MTBE) are examples of

A.    benign chemicals.

B.     air pollutants.

C.     soil and water pollutants.

D.    naturally occurring substances.

97. A property is exempt from lead disclosure requirements if

A.    it has been certified by an inspector.

B.     it is a rental property.

C.     it has no separate bedrooms.

D.    it is occupied by fewer than five people.

98. The authority that allows governments to control land use is called

A.    eminent domain.

B.     due process.

C.     police power.

D.    annexation.

99. If a property owner demonstrates a need, a zoning board may grant a

A.    variance.

B.     conditional use permit

C.     nonconforming use.

D.    grandfathered use.

100. Unlike a deed restriction, a declaration restriction

A.    does not attach to the property.

B.     cannot be extinguished by a quitclaim deed.

C.     cannot be enforced by court injunction.

D.    is a public, rather than private, land use control.

101. Licensees are required to disclose to a buyer that

A.    a previous occupant suffered from AIDS.

B.     the seller is a sexual predator.

C.     a murder was committed in a neighboring house.

D.    the licensee knows of a latent structural defect.

102. When a property is taken by eminent domain, what right does the owner have?

A.    To be paid the appraised market value.

B.     To receive “just compensation.”

C.     To remain in residence until the property is redeveloped.

D.    To impose deed restrictions on the property.

103. A buyer may terminate a purchase contract without liability within ____ business days if a disclosure report indicating a material defect is received after a binding real estate contract has been entered into by all parties:

A.    one

B.     two

C.     three

D.    five

104. Which of the following is NOT a regulated environmental condition?

A.    Electromagnetic fields

B.     Cell phone radiation

C.     Airport traffic noise

D.    Construction in earthquake zones

105. The Illinois Residential Real Property Disclosure Act requires a seller to give a buyer a written property condition disclosure

A.    before the buyer signs an offer to purchase.

B.     at the time the buyer first views the property.

C.     before accepting the buyer’s offer to purchase.

D.    at any time before closing.

106. With regard to environmental issues, which of the following is TRUE?

A.    Licensees must demonstrate expert knowledge of a property’s physical conditions.

B.     Licensees must disclose potential hazards if known.

C.     Licensees have no liability for environmental violations.

D.    Licensees are under no obligation to be aware of environmental issues.

107. Which of the following can terminate a private deed restriction?

A.    A quitclaim deed

B.     A quiet title suit

C.     A title transfer

D.    A reconveyance deed

108. The Illinois Residential Disclosure Act requires that material defects related to which of the following must be disclosed by the seller EXCEPT

A.    asbestos.

B.     mold.

C.     methamphetamine production.

D.    mice.

109. Which of the following describes a person who is not represented by a licensee but is receiving clerical acts from the licensee?

A.    Shareholder

B.     Salesperson

C.     Customer

D.    Broker

110. What is commonly referred to as “the Act” in Illinois real estate is actually:

A.    The Real Estate License Act of 1983

B.     The Real Estate License Act of 2000, as amended 12/31/2009

C.     The IDFPR Act of 2000

D.    The Real Estate Council Act of 1998

111. Which of the following statements is true regarding compensation?

A.    The sponsoring broker is the only one allowed to compensate his/her licensee.

B.     Compensation must be disclosed to clients.

C.     Compensation must always go from the seller or the buyer through the sponsoring broker to the licensee.

D.    All of the above are true regarding compensation.

112. Annie is a licensee. Which of the following entities can she receive referrals from and pay a referral fee?

A.    Local banks

B.     National home inspection companies

C.     Attorneys

D.    None of the above

113. The name of a case wherein it was determined that a real estate licensee can only fill in the blanks in a form provided by legal counsel is ______.

A.    Smith vs. Johnson

B.     Chicago Bar Association vs. Quinlan & Tyson, Inc.

C.     Hulse vs. Criger

D.    Link vs. Jones

114. What type of agency exists when the agent can perform any and all actions that may be legally delegated to an agency representative?

A.    Universal Agency

B.     General Agency

C.     Special Agency

D.    Principle Agency

115. Seller Joe Needy lists his home for $40,000 and the listing agent tells the prospective buyer to submit a low offer because the seller is desperate. The buyer offers $38,000 and the seller accepts. In this situation:

A.    The broker was unethical, but because no one was hurt it is not improper.

B.     The broker violated the agency relationship.

C.     The broker’s action was proper in obtaining a quick offer.

D.    Any broker is authorized to encourage bidders.

116. In which of the following cases might confidential information be disclosed?

A.    If required by the law.

B.     Upon closing a brokerage.

C.     Under NO circumstance.

D.    Two years after the closing.

117. What is the type of agency created, when a licensee holds a stake in the transaction?

A.    Agency of limited liability

B.     Agency coupled with an interest

C.     Freehold agency

D.    Agency of contract

118. When is a licensee required to disclose third party sources of compensation to client?

A.    The licensee is not required to disclose third party compensation.

B.     Disclosure is required if based on brokerage office policy.

C.     Disclosure is required if monies come from out of state sources.

D.    As soon as known, third party compensation must be disclosed.

119. A written or oral agreement between a sponsoring broker and a consumer for licensed activities to be provided to a consumer in return for compensation or the right to receive compensation from another is called a:

A.    Listing agreement

B.     License by reciprocity agreement

C.     Dual agency agreement

D.    Brokerage agreement

120. Which of the following forms of commission agreements is not recommended due to potential ethical issues?

A.    Commission is the excess of the sale price over an agreed-upon (net) price

B.     Flat fee

C.     Hourly rate

D.    Percentage of the transaction amount

121. Referral fees and bonuses for licensees are known as:

A.    Compensation

B.     Percentages

C.     Commission

D.    Finder fees

122. The person who is being represented by a licensee is known as the:

A.    Customer

B.     Client

C.     Agent

D.    Fiduciary

123. What is the result when a licensee produces a ready, willing and able buyer, but the seller refused to complete the transaction?

A.    The buyer is required to pay the commission.

B.     The agency is required to pay the commission.

C.     The licensee’s firm may be entitled to the commission.

D.    The commission becomes null and void.

124. According to the Act, legal proceedings, against a license for a violation of the Act, must commence no later than ___________ years from the occurrence.

A.    2

B.     3

C.     5

D.    6

125. Seller Joe has told his agent Sam that if he sells his house within three weeks, he will give Sam a $500 bonus. What are the acceptable means by which Sam can be paid the bonus?

A.    The bonus can be given to Sam directly.

B.     The bonus is to be put into an escrow account, then given to Sam.

C.     The bonus is to be given to Sam’s sponsoring broker and then passed on to Sam

D.    Neither Sam nor the brokerage is allowed a bonus.

126. Agency is governed by ___________ law and ____________ law.

A.    Common and Statutory

B.     Basic and Civil

C.     Statutory and Civil

D.    Administrative and Secondary

127. The relationship between the licensee and a principal, during which the licensee is authorized to represent the principal in certain transactions, is known as:

A.    Dual agency

B.     Agency

C.     Time-share agreement

D.    Principality

128. Which of the following statements are correct?

A.    A written document is needed to create agency.

B.     A power of attorney is required to establish a special agent.

C.     Compensation creates agency.

D.    Compensation does not create agency.

129. When does the first substantive contact take place?

A.    A buyer contacts a broker through the Internet.

B.     A seller calls a broker to schedule a listing appointment.

C.     A potential buyer shows up at an open house.

D.    A potential buyer or seller begins to discuss his or her needs.

130a. What is the best course of action in dealing with questions regarding the level of crime in a neighborhood?

A.    Respond in vague terms.

B.     Dismiss any questions.

C.     Refer your client to public records.

D.    Explain that no information exist in this area.

130. What do we call an agent who represents only one party in a real estate transaction?

A.    Exclusive agent

B.     Single agent

C.     Subagent

D.    Broker agent

131. Who should receive an agency disclosure?

A.    Only sellers

B.     Only buyers

C.     Only licensees

D.    All clients and customers

132. Licensee Paul is bound to inform his client of all facts that might affect the client’s interests — both what Paul knows and what he “should have known.” Which of these situations would not be something Paul “should know?”

A.    There is a crack in the basement wall.

B.     The air conditioner does not work.

C.     The owner of the property is HIV positive.

D.    The casement windows have broken seals.

133. A property seller signs a listing agreement with a licensee. What is this an example of?

A.    General agency

B.     Universal agency

C.     No agency

D.    Express agency

134. Which laws holds harmless a licensee to discover latent defects?

A.    Still v. Minor 1987

B.     State of Illinois v. Paragon, et al

C.     Stubby v. Flag, 2000

D.    Munjal v. Baird & Warner, Inc. et al.

135. Agency most nearly means:

A.    One who is the source of another’s authority

B.     One who represents and acts for another

C.     One who has conferred authority to another

D.    One who has been paid a commission by another

136. Which of the following statements would be defined as “puffing?”

A.    The taxes are stated at $1,678 per year.

B.     The property has the best view in the subdivision.

C.     The lot is 220′ x 340′.

D.    The house has 4 baths.

137. Colleen plans to be a dual agent in a real estate transaction. At what point, if any, should she receive her clients’ permission to act as a dual agent.

A.    Colleen must disclose her intention to be a dual agent, and have written permission of both clients before acting as a dual agent.

B.     Colleen must disclose her agency status at the time any written agreement and/or written authorization is obtained.

C.     Colleen does not have to disclose her agency status.

D.    When Colleen’s broker directs the disclosure.

138. All of the following is considered confidential information EXCEPT:

A.    The sellers are selling because they are getting a divorce.

B.     The buyer will pay more than what’s being offered.

C.     The seller will take less than the current offer.

D.    The buyer has four children.

139. Which of the following can a dual agent disclose?

A.    The lowest price the seller will accept.

B.     The motivating factors for any person buying, selling or leasing the property.

C.     Material or latent defects.

D.    The terms of any prior offers or counter offers made by any party.

140. Is it permissible, as a buyer representative, to dispense advice to your purchaser client?

A.    No. A buyer representative should only dispense assistance, not advice.

B.     Yes. A buyer representative should be able to dispense advice on all areas, including inspections, technical issues, etc.

C.     Yes. A buyer representative should advise the client on matters of which he/she has knowledge. It is important to advise the client to obtain expert advice on areas in which the licensee is not an expert.

D.    No. A buyer representative should remain neutral and simply aid in the transaction.

141. Seller Jim provides a buyer with a forged home warranty. This is a form of

A.    Active fraud

B.     Passive fraud

C.     Active negligent

D.    Passive misrepresentation

142. Which of the following types of agency is not allowed in Illinois?

A.    Dual agency

B.     Buyer’s agency

C.     Designated agency

D.    Undisclosed dual agency

143. When should a seller agency disclosure take place?

A.    At the time of the first substantive dialogue

B.     Upon first face to face meeting

C.     Before writing up an offer

D.    After the offer is written but before closing

144. Broker Jim signs a listing agreement with seller, Grace, and a buyer agency agreement with buyer, Pat. Broker Jim shows buyer Pat the property owned by seller Grace. Both Grace and Pat signed written disclosure statements agreeing to this arrangement. What is this relationship called?

A.    Subagency

B.     Dual agency

C.     Exclusive agency

D.    Single agency

145. Broker Dan is representing Mandy as a buyer’s agent. He wants to show Mandy one of his listed properties. Which statement is true?

A.    There is no reason why Dan should not show Mandy the property.

B.     Dan must disclose to the seller that he is also representing the buyer.

C.     Dan needs to get the informed, written consent of both Mandy and the seller to act as a dual agent.

D.    Dan must notify the Department of State that he wants to represent both parties in the transaction.

146. The situation that allows the broker to appoint more than one agent for the client within the same firm, is called:

A.    Designated agency

B.     Dual agent

C.     Sponsoring licensee

D.    Sponsoring broker

147. What is the standard for agency representation in Illinois?

A.    Basic agency

B.     Disclosed agency

C.     Contractual agency

D.    Designated agency

148. What actions can the principal take to abolish the agency?

A.    The principal can stop payment of funds.

B.     The principal cannot terminate the agency.

C.     The principal can defer payments to an escrow account.

D.    The principal can reassign the rights to another stakeholder.

149. When a licensee leaves a brokerage, what becomes of the agency coupled with an interest agreement?

A.    It is transferred.

B.     It terminates.

C.     It remains in force.

D.    It is sent to escrow.

150. How long is an agency coupled with an interest enforced?

A.    No longer than 2 years

B.     Until the interest ends

C.     Upon the death of the licensee

D.    Upon the death of the principal

151. Which of the following actions terminate terms of the agency?

A.    Death

B.     Expiration

C.     Incapacity

D.    Bankruptcy

152. In Illinois, which statement is correct regarding agency coupled with an interest?

A.    Agency coupled with an interest is allowed.

B.     This form of agency is allowed only when no principal is assigned.

C.     This type of agency requires approval by the brokerage.

D.    A designated agent must be assigned to the transaction.

153. When a licensee represents a seller, what type of relationship is established?

A.    Shareholder

B.     Consumer

C.     Client

D.    Customer

154. With whom do licensees typically have a working relationship?

A.    client, customer, consumer

B.     MLS, seller, commissioner

C.     stakeholder, stockholder, shareholder

D.    husband, wife, child

155. Who may be liable when a buyer client’s interests are not protected?

A.    The listing agent

B.     The seller

C.     The buyer’s agent

D.    The principal

156. Agency relationships impose fiduciary duties on both

A.    Consumer and Seller

B.     Licensee and Consumer

C.     Customer and Client

D.    Client and Licensee

157. When a licensee works with an unrepresented seller by showing a buyer client the seller’s property, what type of working relationship is established with the seller, after proper written notice to the seller?

A.    Consumer

B.     Customer

C.     Guest Client

D.    Client

158. Seller Jane is currently under contract with Broker Jill. Jane meets Broker Fred at a baseball game and they discuss real estate market trends. Jane calls Fred the following week to seek new representation. What action can Fred take?

A.    Fred must get permission from Jane’s broker before speaking with her.

B.     Fred can cancel Jane’s current listing.

C.     Fred must end the conversation and wait until Jane is no longer under contract.

D.    Fred can discuss the terms of a future agency representation with Jane.

159. Fiduciary duty is primarily based on ______________.

A.    Trust

B.     Shared Interest

C.     Commission

D.    Due Diligence

160. Al Dobbs, a licensee, has been hired by the seller who signed a listing agreement without permission to act as a dual agent. What is true regarding this situation when a buyer is shown the property by Al Dobbs as a clerical act?

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.

161. When a licensee responds to an inquiry from a person seeking general information, what type of working relationship is established?

A.    Client

B.     Customer

C.     Consumer

D.    Guest Customer

162. A licensee has lost a portion of the earnest money. Which fiduciary duty has the licensee violated?

A.    Care

B.     Loyalty

C.     Disclosure

D.    Accounting

163. Seller Jim has asked Agent Fred to hold an open house. Agent Fred agreed to schedule an open house but has not followed through. This is a failure of which fiduciary duty?

A.    Loyalty

B.     Obedience

C.     Care

D.    Disclosure

164.When does a dual agency arrangement become “official?”

A.    When the seller signs the listing agreement.

B.     When the seller checks “yes” in the dual representation paragraph of the listing agreement.

C.     When the licensee gets written confirmation from both the seller and the buyer in the transaction.

D.    When the buyer submits an offer to purchase.

165. Which fiduciary duty requires the agent to safeguard the earnest money check?

A.    Confidentiality

B.     Accounting

C.     Loyalty

D.    Care

166. Care, Obedience and Disclosure are fiduciary duties of ______.

A.    Servitude

B.     Action

C.     Standards

D.    Customer Relations

167. Agent Kim lost the keys to her Client’s house and always left the back door unlocked. Agent Kim failed in her __________ responsibility.

A.    Care

B.     Oversight

C.     Loyalty

D.    Obedience

168. When must the licensee give the seller an agency disclosure?

A.    When the licensee sets up the listing appointment.

B.     Before the seller shares confidential information or signs the listing agreement.

C.     After the listing agreement is in place.

D.    Before an offer is made on the seller’s property.

169. Brokers should provide statutory services

A.    to cooperating brokers.

B.     to the broker.

C.     only to customers.

D.    only to clients.

170. In what situations can a Broker share confidential information regarding a client, after the client’s listing expires.

A.    When the broker signs on a new client

B.     When the client gives written permission

C.     The Broker can share any and all information after a listing expires.

D.    When a customer asks.

171. Confidentiality ends _______.

A.    with the written permission of the client.

B.     when a contract closes.

C.     after two years from the close date.

D.    when the broker retires the files.

172. Which fiduciary duty requires the agent to collect information about the customer for the client?

A.    Confidentiality

B.     Accounting

C.     Loyalty

D.    Obedience

173. In Illinois, the Residential Real Property Disclosure Act requires that when a residential seller signs the listing agreement, he or she must prepare a disclosure document completed by any of the following except the

A.    licensee.

B.     seller.

C.     seller’s attorney.

D.    seller’s power of attorney.

174. Which of these transfers of residential real property are exempt from the Illinois Property Disclosure Act?

A.    Jim sold his home to one of his fraternity brothers.

B.     Builder Frank sold a newly-constructed home that has never been occupied.

C.     Seller Sally exchanged her Illinois home with a buyer from New Jersey.

D.    Seller Gary was selling his condominium unit.

175. Based on the Real Estate License Act of 2000 the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has

A.    appurtenant knowledge.

B.     actual knowledge.

C.     subjacent knowledge.

D.    extra-territorial knowledge.

176. What MUST be printed on or included with the Property Disclosure Report?

A.    A copy of the actual Disclosure Act

B.     A copy of the inspection report

C.     An affidavit signed by the managing broker who has the listing

D.    The seller’s contact information including phone number and email address

177. Which statement is FALSE?

A.    Seller Pete is not liable for any error, inaccuracy, or omission of any information delivered in the property condition report if he did not have actual knowledge of the problem.

B.     Seller Amanda is not liable for any error, inaccuracy, or omission of any information delivered in the property condition report if she thought the problem had already been corrected.

C.     The Property Disclosure Act obligates the seller to make a specific investigation or inquiry in an effort to complete the disclosure statement.

D.    Seller Greg will be liable for any undisclosed material defects of which he had actual knowledge.

178. What information was added to the report in 2010?

A.    Mold

B.     Asbestos

C.     Lead-based paint

D.    Meth production

179. To which of these transfers of residential real property does the Property Disclosure Act apply?

A.    Transfers between spouses resulting from a judgment of dissolution of marriage or legal separation

B.     Transfers from a mortgagor to a mortgagee by deed in lieu of foreclosure or consent judgment

C.     Transfer by sale, exchange, or assignment of beneficial interest

D.    Transfers by a trustee in bankruptcy

180. What happens if a seller lists a defect on the disclosure report?

A.    The home must sell as is.

B.     The seller must repair it before the home transfers.

C.     The buyer is required to have an inspector verify the problem.

D.    The buyer could take that information into account when structuring an offer.

181. How long does a person have to initiate an action for a violation of the Property Disclosure Act?

A.    6 months

B.     One year

C.     Two years

D.    Five years

182. Under the Illinois Property Disclosure Act, who is exempt from disclosure?

A.    Beneficiary of a trust

B.     Contract purchaser or lessee of a ground lease

C.     Owner

D.    Any person who has never occupied, nor managed, the property

183. Fraud is practiced _________.

A.    accidentally.

B.     deliberately.

C.     by mistake.

D.    for a reason.

184. The Deceptive Trade Practices Act (DPTA) can come to bear on a real estate licensee when

A.    an agent lies to get someone to put in a contract on a property.

B.     a broker advertises a property on the internet.

C.     an agent holds an open house for another agent.

D.    an agent gives a client a list of home inspectors to choose from.

185. Based on the Illinois Real Estate License Act the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has

A.    appurtenant knowledge.

B.     actual knowledge.

C.     subjacent knowledge.

D.    extra-territorial knowledge.

186. Broker Bob is showing a property that may be considered a stigmatized property. If in doubt Broker Bob should

A.    Disclose whatever the seller advises.

B.     Not show the property under any circumstance.

C.     Seek legal counsel regarding the disclosure of the stigmatized property.

D.    Contact the local HUD office for advice.

187. Information about a property that has a significant bearing on a buyers decision to purchase that property is a

A.    Defect

B.     Latent fact

C.     Latent misalignment

D.    Material fact

188. Agents need to remember, “stigmatized” conditions are not material and

A.    are undiscoverable.

B.     therefore must be disclosed.

C.     are deemed latent ambiguities.

D.    are not required to be disclosed.

189. According to various sections of the Administrative Code, if Broker Bob is showing property that was the site of an act that had no effect on the physical condition of the property or its environment Broker Bob

A.    Is required to disclose the act.

B.     Is not required to disclose the act.

C.     Disclose whatever the seller advises.

D.    Should complete and deliver a Residential Real Property Disclosure Form to the buyer.

190. A property may have hidden defects undiscoverable by ordinary inspection that jeopardizes structural integrity or an occupant’s safety, these items are defined as

A.    Latent defects

B.     Material defects

C.     Stigmatized defects

D.    Latent misalignment

191. Negligent misrepresentation is practiced

A.    on purpose.

B.     deliberately.

C.     accidentally.

D.    intentionally.

192. The Deceptive Trade Practices Act (DPTA) exists to protect whom?

A.    The managing broker

B.     The public

C.     The Real Estate Commission

D.    The broker

193. When a licensee does a comparison of the prices of similar properties that have recently sold, similar properties currently on the market, and properties that have not sold in anticipation of getting a listing she is

A.    Preparing a comparative market analysis (CMA).

B.     Preparing a potential sales price analysis (SPA).

C.     Preparing a comparative analysis module (CAM).

D.    Preparing a formal appraisal.

194. Which of these environmental hazards is specifically addressed in the Residential Real Property Disclosure Report?

A.    Carbon monoxide

B.     Mold

C.     Urea Formaldehyde

D.    Illegal methamphetamine manufacturing

195. In which of these places is asbestos not likely to be found?

A.    Roofing

B.     Drywall

C.     Textured paint

D.    Vinyl floor tiles

196. Which environmental hazard is specifically mentioned on the Residential Real Property Disclosure?

A.    Underground storage tanks

B.     Methamphetamine production

C.     Radon

D.    Groundwater contamination

197. Which of these statements is FALSE regarding what a licensee should do to prepare for a listing meeting?

A.    Drive through the neighborhood and check out listed homes that are currently up for sale.

B.     Check recent real estate activities by accessing the local multiple listing service database and public records.

C.     Have an appraisal done of the property.

D.    Become familiar with the neighborhood.

198. For which geological hazard would disclosure to a potential buyer be mostly ineffective?

A.    Landslide

B.     Flood

C.     Earthquake

D.    Subsidence

199. Broker Sandra accepted a listing for a home. A week later the owner told her that he was not willing to sell to an African-American person or family. Which of the following is true?

A.    Sandra should abide by the owner’s wishes.

B.     She should restrict her advertising to venues that cater to the African-American community.

C.     Sandra should explain to the owner that the request is in violation of Fair Housing law and she cannot abide by it.

D.    She should have the owner document the request in writing and file it with the listing agreement.

200. Which of the following would a potential seller be least interested in knowing at the time of the listing presentation?

A.    A licensee’s qualifications

B.     How much profit the sellers could get from the sale

C.     The services offered by the licensee’s firm

D.    The charitable organizations the firm supports

201. Which piece of information about a property would be the least helpful for a licensee to collect?

A.    Company that writes the homeowner’s policy

B.     Zoning information

C.     Neighborhood amenities

D.    Improvements to the property

202. Which statement is FALSE?

A.    Mold often grows where it can’t be seen.

B.     Radon is an odorless, colorless gas.

C.     Underground storage tanks pose no hazard to residential areas.

D.    Urea formaldehyde foam insulation is no longer used.

203. What is an important legal characteristic of an option to buy agreement?

A.    The potential buyer is obligated to buy the property once the option agreement is completed.

B.     The seller must perform if the buyer exercises the option, but the buyer is under no obligation to do so.

C.     The contract can be executed at no cost to the buyer.

D.    It is a bilateral agreement.

204. Technically a property can be listed at any price, however deliberately misleading a client as to the market value of the property to guarantee a listing is an ethical violation. This practice is commonly referred to as

A.    Blockbusting

B.     “Buying” a listing

C.     Over listing

D.    Price-fixing

205. Oftentimes people confuse market value with

A.    Selling price

B.     Listing price

C.     Cost

D.    Assessed value

206. The best description for a CMA is ______.

A.    An appraisal

B.     A comparative mortgage analysis used by lenders

C.     An analysis of the sales prices of similar homes, so the seller can decide how much to ask for the property

D.    A cooperative marketing approach used by multiple listing services

207. What type of financing exists when a seller defers receipt of some or all of the purchase price of the property over a specified period of time?

A.    Sale leaseback

B.     Installment land contract

C.     Option to buy

D.    Purchase money loan

208. What is the most common reason a property fails to sell?

A.    Overpricing

B.     Lack of advertising

C.     In need of repair

D.    Not enough prospective buyers

209. A comparative market analysis is an attempt to

A.    Find things in the home a seller needs to repair.

B.     Establish a home’s fair market value.

C.     Discover why some homes haven’t sold.

D.    Convince a seller to list with you.

210. Which of these would be a form an agent could use to show a seller what he or she will net on the sale of the property?

A.    Statement of Closing Costs

B.     Comparative Market Analysis

C.     Sale Price Disclosure

D.    Estimate of Seller Proceeds

211. Which of the following is a good example of a unilateral contract?

A.    A listing agreement

B.     A personal services agreement

C.     A sale contract

D.    An option to buy

212. The highest price a buyer is willing to pay and the lowest price the seller will accept for a property is known as what?

A.    Selling price

B.     Cost

C.     Market value

D.    Exchange value

213. Short sales are not intended to allow property owners to walk away from their financial obligation based on arbitrary reasons. Lenders require sellers to show proof of hardship, which include all of the following, except

A.    a chronic history of seeking and exceeding higher credit limits.

B.     job loss / unexpected unemployment.

C.     loss of second income.

D.    divorce.

214. As part of the short sale consulting process, the licensee should discuss the following with the sellers

A.    the tax issues involved if the sale includes “boot”.

B.     the use of hardship situations that lenders have accepted even if the licensee’s seller has not suffered such a hardship.

C.     hiding liquid assets before contacting the lender.

D.    any portion of the loan that is “forgiven” may be considered income and must be reported for tax purposes.

215. An important characteristic of a distressed property, caused by a divorce, compared to a ‘conventional’ property is that

A.    the seller generally has a limited time to sell.

B.     the seller’s hardship does not qualify for a short sale.

C.     the seller has excessive equity despite depressed prices.

D.    the distressed property can quickly become stigmatized.

216. The seller’s main concern in arranging for the sale of a distressed property is

A.    who will hold the buyer’s earnest money deposit.

B.     what the lender intends to do about the shortage.

C.     what will happen to her credit score.

D.    how to report the sale to the IRS.

217. One characteristic of a short sale transaction is that _____.

A.    the sellers do not have to claim hardship to have a justifiable basis for a short sale transaction.

B.     lenders are not permitted to consider the seller’s non-real estate assets.

C.     lenders may not allow a short sale if they discover other assets the seller concealed.

D.    lenders will not consider a short sale if the loan payments are current.

218. Before advertising a property as “distressed,” an agent should

A.    increase the listing price to allow for the lower price that will be paid for the distressed property.

B.     obtain the seller’s permission.

C.     make every effort to remedy the circumstances that have put financial pressure on the property.

D.    examine the foreclosure documents for conditions that might allow the property to be sold without the “distressed” designation.

219. Property that is undergoing a reduction in market price due to the pressures of a threatened foreclosure, divorce, estate settlement, drastic economic changes, and/or deteriorating physical condition is called

A.    stigmatized property.

B.     distressed property.

C.     underground property.

D.    redlined property.

220. A licensee might suggest some optional strategies a seller might consider rather than a short sale. These strategies would include all of the following, except

A.    reinstatement of the mortgage.

B.     loan modification.

C.     wraparound mortgage.

D.    deed-in-lieu of foreclosure.

221. Which of the following is exempted from the lender’s scrutiny in considering a short sale?

A.    The seller’s tax returns

B.     The seller’s IRA account

C.     The sellers other real estate properties

D.    None of the foregoing are exempt

222. The final step in the short sale transaction is _______.

A.    the lender releases the lien.

B.     the buyer delivers the funds.

C.     the lender executes the deed to the buyer.

D.    the seller delivers the deed.

223. Home warranties are:

A.    illegal in Illinois.

B.     a good selling point.

C.     required by HUD homes.

D.    required for VA financing.

224. When starting a listing, what question is the most important?

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?”

225. Which of the following would not appear as an “interior feature” on the listing?

A.    Floor coverings

B.     Roof Type

C.     Number of Bathrooms

D.    Heating System

226. In what section of the listing agreement would you find property exemptions?

A.    Additional Terms and Property Information

B.     Dual Representation

C.     Seller’s Information

D.    General Provisions

227. In what section of the listing agreement would you find reference to fair housing?

A.    Personal Property

B.     General Provisions

C.     Home Warranties

D.    Possession

228. In what section of the listing agreement does the seller provide his responsibilities?

A.    Minimum Services

B.     Possession

C.     Seller Obligations

D.    Representation

229. Which of the following might be a “red flag” when taking a listing?

A.    Damp Basement

B.     New Roof

C.     Swimming Pool

D.    Security Cameras

230. Which of the following information would you not collect for a listing?

A.    Listing Price

B.     Owner’s Name

C.     Spouse’s Maiden Name

D.    Street Number

231. Which of the following statements violates antitrust laws?

A.    Our agency charges a rate of 4.5%.

B.     Commission rate is not set.

C.     Each agency has its own commission rate.

D.    Standard commission is 4.5%.

232. Commencement date can best be described as ____.

A.    the date when the brokerage files the agreement.

B.     the date when the property is shown in the MLS listings.

C.     the date when the listing agreement is approved by the mortgage lender.

D.    the date when the listing agreement was signed.

233. Buyer Jake took possession of a house on March 12, 2010. Buyer Jake needs to file a case based on a disclosure violation. When must he file?

A.    Within 2 years of occupancy.

B.     Within 2 years of recording conveyance.

C.     On or before April 2014

D.    On or before March 12, 2011.

234. Based on the Illinois License Act, the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has

A.    Appurtenant knowledge

B.     Actual knowledge

C.     Subjacent knowledge

D.    Extra-territorial knowledge

235. Radon gas can be traced back to _____________.

A.    lead-based building products.

B.     uranium.

C.     treated lumber

D.    asbestos-based building products.

236. To comply with the 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 all of the following items, except

A.    all available records and reports pertaining to elevated radon concentrations within the dwelling.

B.     documentation that all prior elevated radon concentrations have been mitigated or remediated.

C.     the plan for the seller to conduct radon testing and mitigation activities prior to entering into a contract with purchasers.

D.    acknowledgement that elevated radon concentrations are known to be present within the dwelling.

237. Licensee Mike knows that the property located at 15 S. Elm is stigmatized due a violent death that occurred at the address five years ago. Mike does not disclose this information to out-of-town buyers. What act has Mike violated?

A.    Residential Death Report Act

B.     None

C.     Illinois Disclosure Act

D.    Section 35 Act

238. In Illinois, the Residential Real Property Disclosure Act requires that when a seller signs the listing agreement, he or she must also prepare a property condition disclosure document completed by any of the following except the

A.    Licensee

B.     Seller

C.     Seller’s attorney

D.    Seller’s power of attorney

239. Under law, when the seller has knowledge of high radon gas levels, what must the seller provide to the buyer?

A.    The Federal Disclosure of Information on Radon Hazard form

B.     The HUD Disclosure of Information on Radon Hazard form

C.     The Illinois Disclosure of Information on Radon Hazard form

D.    The National Disclosure of Information on Radon Hazard form

240. Which of the following is FALSE regarding the toxic effects of lead-based paint?

A.    Can be absorbed through the skin

B.     Can be ingested

C.     Can be inhaled

D.    Can alter brain growth

241. Real estate agents who take listings of homes must have their sellers fill out a disclosure form about their knowledge or lack of knowledge about the presence of lead-based paint in the home if the home was

A.    constructed using EIFS.

B.     built prior to 1988.

C.     deemed a stigmatized property by ECOA.

D.    built prior to 1978.

242. What rights does a buyer have, if a seller fails to provide a disclosure document prior to the transfer of the property?

A.    Buyer has the right to sue the seller.

B.     Buyer has the right to terminate the contract.

C.     Buyer has the right to reduce the contract sell price.

D.    Buyer has the right to file a case in the Court of Appeals.

243. Which of these items is not important to include on your weekly activity report?

A.    Buyer’s comments about the property.

B.     Agent comments about the property

C.     Number of phone calls requesting property information.

D.    Number of hits on the company website

244. No-shows for a scheduled appointment can happen. How should an agent handle no-shows?

A.    The agent should make note of the no-show in the weekly activity report.

B.     The agent should prepare her client during the listing presentation for no-shows.

C.     The agent should have a no-show agent reschedule.

D.    The agent should report no shows to the MLS board.

235. When should a licensee schedule an office tour?

A.    If the listing does not sell within 30 days.

B.     Prior to taking a listing.

C.     Soon after the listing is taken.

D.    During a public open house

236. Which of these is not a helpful homeowner tip?

A.    Display lots of family photos to impress potential buyers.

B.     Declutter the garage and basement.

C.     Bake muffins or cinnamon rolls to create a “homey” feel.

D.    Make sure all light bulbs and lamps are working and are bright.

237. What is the best strategy to take when a listing is about to expire?

A.    Let the listing expire.

B.     Have your managing broker call the seller to discuss an extension.

C.     Schedule a meeting with the seller a few weeks before the listing expires and review options.

D.    Relist the property with MLS for two additional weeks.

238. What is a good technique to make a home appear homey?

A.    Bake some brownies just before the showing.

B.     Close all blinds and curtains.

C.     Organize storage spaces.

D.    Place more furniture in the space.

239. If someone shows up at the sellers’ door unexpectedly to see the home, the sellers should _________.

A.    Tell them to call your office.

B.     Invite them in and show them around.

C.     Take their names and call your office.

D.    Show them the outside of the property.

240. Which of the following is a good property showing tip?

A.    Remove all area rugs

B.     Allow pets to interact with the clients

C.     Lock-off storage areas

D.    Remove clutter

241. Which of the following actions by an agent would most probably upset the sellers?

A.    Conducting an agent open house

B.     Sending a weekly activity report

C.     Sharing all visitor comments two weeks before the listing ends

D.    Placing a classified ad in the weekend paper

242. All of these activities are appropriate to do within the first few days of obtaining a listing except which?

A.    Give the sellers a copy of some homeowner tips.

B.     Discuss modifying the listing price.

C.     Explain your marketing plan to the sellers.

D.    Have the broker send a “thank you for listing” letter to the sellers.

243. Which of the following is a good suggestion for keeping track of listings that have been shown to a client?

A.    Print off an MLS listing.

B.     Ask the client to keep a binder of all listings.

C.     Maintain a file on each client and record all properties shown.

D.    Leave a business card at each property shown.

244. What type of agency is standard in Illinois?

A.    Single

B.     Designated

C.     Dual

D.    General

245. Who must approve a dual agency representation?

A.    MLS Board

B.     All parties in the transaction.

C.     Company Shareholders

D.    Dual Agency Commission

246. The acronym COD stands for:

A.    Care, Obedience, Disclosure

B.     Compliance, Order, Distance

C.     Compliance, Obey, Discover

D.    Connect, Order, Displace

247. Which skill must the licensee use the most to ensure that his or her client receives the best care?

A.    Insight

B.     Judgment

C.     Accounting

D.    Listening

248. What are the two categories of duties?

A.    Advanced and Passive

B.     Accounting and Protection

C.     Action and Protection

D.    Active and Passive

249. When does a seller first become aware of the possibility of a dual agency?

A.    At the time that the listing agreement is signed.

B.     When the seller get the first written offer.

C.     Two weeks after signing a listing agreement.

D.    At the time of closing.

250. Which is the only duty that continues beyond the agency relationship, unless a client gives a licensee permission to share the information with others?

A.    Support

B.     Care

C.     Confidentiality

D.    Obedience

251. Which of the following best defines dual agency?

A.    Representing the seller in a transaction.

B.     Representing a buyer in a transaction.

C.     Representing neither the buyer or seller in a transaction.

D.    Representing both the buyer and seller in a transaction.

252. How might a licensee hide the true identity of his or her client on a sales offer?

A.    Insert the person’s initials only in the buyer’s line.

B.     Insert “TBA” on the buyer’s line.

C.     Leave the buyer’s line blank.

D.    Insert “and/or assigns” in the buyer’s line.

253. The reason licensees like buyer agency so much is:

A.    It’s more money for the broker

B.     The buyer will be loyal to the buyer’s agent

C.     The licensee offered it

D.    Buyers can work with more than one agent

254. What type of contract is a Buyer’s Agreement?

A.    Due Diligence

B.     Employment

C.     Partnership

D.    Work Order

255. 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.

256. After the termination of a Buyer’s Agreement, when might a licensee’s firm still earn a commission?

A.    If the buyer purchases a property that is listed in the MLS.

B.     If the buyer purchases a FSBO property.

C.     If the buyer purchases a property that was shown by the licensee during the term of the agreement.

D.    If the buyer purchases a property that is listed with the licensee.

257. Under an exclusive buyer brokerage agreement, the buyer may have to pay the buyer agent’s commission

A.    When the seller and listing broker will not

B.     When the buyer makes a full price offer

C.     When the buyer makes an offer

D.    Before finding a home

258. When the buyer checks “yes” to dual agency on a Buyer Representation agreement, what does the buyer actually agree to?

A.    By checking “yes” to this paragraph, the buyer is only acknowledging that the possibility of dual agency exists.

B.     By checking “yes” to this paragraph, the buyer agrees to dual agency.

C.     By checking “yes” to this paragraph, the seller agrees to dual agency.

D.    By checking “yes” to this paragraph, the buyer agrees to dual agency only if shown company listings.

259. Getting paid by the buyer before showing him homes is an example of

A.    A bonus

B.     A crime

C.     A retainer fee

D.    A transaction fee

260. What are the three types of Buyer’s Agreements?

A.    Exclusive purchase, Exclusive seller, Closed buyer agency.

B.     Limited Exclusive buyer, Exclusive dual agency buyer, Open ended buyer agency.

C.     Exclusive buyer, Exclusive agency buyer, Open buyer agency.

D.    Exclusive closed buyer, Exclusive open agency buyer, Restrictive buyer agency.

261. It is important that you take the time to go over each of the provisions of the buyer representation agreement especially the ___.

A.    indemnification of agent provision.

B.     services provision.

C.     HUD provision

D.    compensation provision.

262. Which provision in the buyer’s agreement deals with the limits to the professional duties and abilities of the licensee?

A.    Disclaimer

B.     Buyer’s Duties

C.     Minimum Services

D.    RESPA Compliance

263. What two pieces of information are most helpful to know when working with buyers?

A.    Hobbies and Life Style Interests

B.     Family Relations and Education Levels

C.     Occupation and Retirement Plans

D.    Motivation and Urgency

264. When selecting a property, what is the most desirable outcome?

A.    Matching likes and dislikes

B.     Meeting wants and needs

C.     Meeting wants

D.    Providing different options.

265. When meeting a buyer, what should you deal with first?

A.    Their emotional needs.

B.     Their financial needs

C.     Their long-terms needs

D.    Their practical needs

266. You should change the buyer’s wants and needs based on what?

A.    Buyer feedback

B.     The neighborhood

C.     Licensee’s perception

D.    Market trends

267. What is fortunate about working with upsizers?

A.    They know what they want.

B.     They can be shown all types of properties.

C.     They are in a hurry to move.

D.    They are willing to accept less than expected.

268. What is the key to working with relocation buyers?

A.    Selecting quality appointments

B.     Focus on fixer-uppers.

C.     Selecting properties that increase in value quickly.

D.    Minimize disruption

269. Which type of buyer will most likely have the highest fear factor?

A.    Relocation buyers

B.     Investor buyers

C.     First-time buyers

D.    Downsizing buyers

270. What drives downsizers?

A.    Extra Space

B.     Convenience

C.     Speed

D.    Quick decisions

271. To be successful with investor buyers, what must a licensee do?

A.    Show a wide range of properties.

B.     Be ready to close a deal quickly.

C.     Determine exactly what the buyer wants

D.    Determine the buyers net worth.

272. What is the reaction when a buyer is faced with too many options?

A.    They make quick decision.

B.     They limit their options.

C.     They welcome the challenge.

D.    They become paralyzed.

273. The evaluation process used to determine the borrower’s ability to repay a loan and estimating the value of the property being used as collateral is called ______.

A.    Subrogation.

B.     Assessment.

C.     Underwriting.

D.    Reconciliation.

274. How do lenders determine the value of a property?

A.    Lenders use standard HUD reports.

B.     Lenders rely on MLS reports.

C.     Lenders rely on current listing prices.

D.    Lenders rely on appraisal reports.

275. What is the single most important document used to determine loan worthiness?

A.    Job History

B.     Credit History

C.     Income Records

D.    Capital Assets

276. Bob and Linda Todd are buyers with $60,000 of stable income and unknown credit scores. Using a 28% front end loan qualifying ratio and assuming about 20% of that amount would be for taxes and insurance, how much of a monthly payment (principal and interest) could the Todd’s qualify for?

A.    $1,120.00

B.     $1,400.00

C.     $1,680.00

D.    Cannot be determined.

277. What term is used to denote everything that a person owes?

A.    Credit History

B.     Passive Capital

C.     Liabilities

D.    Arrears Payments

278. How will you know if the letter regarding a buyer’s loan capacity is a prequalification letter or a preapproval letter?

A.    The letter heading will state either Pre-approval or Pre-qualified.

B.     If the letter states that the loan approval is subject to “verification of the buyers’ income and credit information” it is a prequalification letter.

C.     If the letter states that the loan approval is subject to “verification of the buyers’ income and credit information,” it is pre-approval letter.

D.    Lenders do not issue pre-qualification letters.

279. Buyers can find out how much of a loan they can qualify for by:

A.    Pre-qualification, a formal process that can be performed by a real estate agent or by a lender.

B.     Pre-approval, a formal process that only a lender can perform.

C.     Pre-qualification, an informal process that can only be performed by a HUD lender or mortgage banker.

D.    Pre-approval, an informal process that a real estate agent or lender can perform.

280. Which type of loan requires that debt-ratio guidelines must not exceed 41 percent?

A.    Urban Renewal loans

B.     Conventional loans

C.     FHA loans

D.    PMI loans

281. Which type of status is viewed as a stronger buying position?

A.    A buyer who has many charge accounts.

B.     A buyer who has a good rent history.

C.     A buyer who has been pre-qualified.

D.    A buyer who holds a pre-approval letter.

282. Which two tools are used to determine a buyer’s ability to pay the loan?

A.    Income ratio and Debt ratio

B.     Income Statement and Expense Vouchers

C.     Credit card interest and Outstanding loans

D.    Loan-to-value assets and Liquid assets

283. What technique helps you uncover what property features are most important to clients?.

A.    Encourage an offer

B.     Invite comparisons

C.     Downplay property features

D.    Ask to list their present property.

284. Joe Broker takes a prospective buyer into a home. Joe turns on the lights to add warmth, walks the buyer through the house, leaves a business card, then locks up and leaves the premises. What steps did Joe miss?

A.    He did everything right.

B.     He should call the seller before leaving.

C.     He should not have turned on the lights.

D.    Forgot to knock upon entering and turn off the lights.

285. What is the key to a successful showing?

A.    Pre-qualifying the buyer

B.     Staging the house

C.     Organization

D.    Selecting the route

286. A buyer calls your office to inquire about a property he saw advertised. He sounds knowledgeable about this listing. Where is it that he likely found out the property information?

A.    On the Internet

B.     In a classified ad

C.     From the For Sale sign

D.    From a direct mail flier

287. What technique is used to elicit “yes” responses from a client?

A.    Tie-association

B.     Question-Tie

C.     Tie-down

D.    Tie-up

288. How do you stay in control of a call?

A.    Providing facts

B.     By asking questions

C.     Taking notes

D.    Describe the capability of local school districts

289. What is the primary purpose of the first meeting with prospective buyers?

A.    To find out what type of buyers they are

B.     To find out what kind of home they are interested in

C.     To pre-qualify them

D.    To show them your five best listings

290. If a prospective buyer calls about a listing, what is the most important thing a broker should do?

A.    Discuss the attributes of the property

B.     Prequalify the buyer

C.     Set an appointment to show it

D.    Ask lots of questions

291. Which of the following is not necessary for a presentation package?

A.    Property information sheet

B.     Photos

C.     Home Warranty Application

D.    Map

292. All of these questions could help you determine a prospect’s capacity to make a purchase except which one?

A.    How much do you have in your savings account?

B.     How soon are you planning to buy?

C.     Where do you and your spouse work?

D.    Do you need the equity from your current home for the new home purchase?

293. Broker Dave represents Buyer Mary. Mary wants to make an offer on a house that is 25% lower than the asking price. Dave writes the offer but is too embarrassed to submit it. Instead, Dave terminates the relationship with Mary. Has Dave acted properly?

A.    No, Dave should have submitted the offer.

B.     Yes, since Dave is not obligated to submit an offer he thinks is too low.

C.     No, Dave cannot terminate the relationship with Mary.

D.    Yes, since Dave was acting in good faith.

294. Broker Carol’s buyer wants to submit an offer that Carol believes is too low. What should Carol say to the buyer?

A.    Show the buyer comparables and indicate that the seller’s price is in line with similar properties.

B.     Back off and let the buyer make the decision.

C.     Suggest that the buyer sleep on it, and make an appointment for the next day to write up the offer.

D.    Tell the buyer another offer is coming in and he/she had better act quickly.

295. Mary makes an offer to purchase a duplex from Sam. They agree on a price and both parties execute the contract. Mary learns that Sam is only selling half of the duplex. Mary wants to terminate the contract. What is the result?

A.    Mary is out of luck; the contract is valid.

B.     The contract is voidable due to mutual mistake.

C.     The contract is void for lack of consideration.

D.    Sam is in default for misrepresentation.

296. Broker Will represents a young couple who is preparing an offer on a home. Through pre-approval, Will knows the couple can only afford to pay $100,000. The couple insists on offering $120,000. What should Will do?

A.    Go to the listing agent and ask if the sales price can be dropped to $100,000.

B.     Do nothing; it isn’t Will’s business.

C.     Encourage the couple to offer only what they can afford.

D.    Suggest that the couple pay more in earnest money.

297. What can Broker Kevin do to create urgency in a buyer?

A.    Encourage the buyer not to use an attorney; it takes too much time.

B.     Point out how long houses in the area stay on the market and discuss how many showings there have been.

C.     Set up a showing at a time that overlaps another showing so the buyer will know there is demand for the house.

D.    Kevin cannot do anything; it is out of his hands.

298. Broker Bob has a buyer who has seen a property twice and seems ready to make an offer. However, he is objecting because the roof is 12 years old. What should Bob do?

A.    Suggest that the buyer look at a different house.

B.     Point out that the roof is not leaking despite its age.

C.     Ask the buyer if the buyer would like to make an offer taking the roof age into account.

D.    Not waste any more time on this house. The buyer will never make an offer.

299. If a buyer has given the broker a signal that the buyer is ready to make an offer, what should the broker do to get the buyer to make the offer?

A.    Proceed as if the buyer has decided to make an offer.

B.     Back off and let the buyer make the decision.

C.     Suggest that the buyer sleep on it, and make an appointment for the next day to write up the offer.

D.    Tell the buyer another offer is coming in and the buyer had better act quickly.

300. In which of the following instances should a broker suggest that a buyer should consult an attorney?

A.    If the buyers are requesting unusual provisions not covered by the standard contract

B.     If the buyer and seller cannot agree

C.     If there is a dispute over the earnest money

D.    If the buyer breaches the contract

301. Broker Sally has a buyer who seems to like a property but is concerned because the kitchen is out of date. What should Sally do?

A.    Suggest that the buyer look at a different house.

B.     Suggest that the buyer include an allowance for updating in the offer.

C.     Offer to reduce the commission to help defray the cost of a new kitchen.

D.    Not waste any more time on this house. The buyer will never make an offer.

302. A buyer wants to take the offer to an attorney to review it. Broker Tim knows that another offer will be coming in at about the same time. What should Tim do?

A.    Tell the buyer about the other offer and urge the buyer to skip 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 cannot do anything; it is out of his hands.

303. When does an Assumption Fee apply?

A.    When the seller pays off the entire loan

B.     When the buyer assumes the seller’s existing loan.

C.     When the buyer assumes two loans.

D.    When the lender drafts a PMI loan.

304. Which of the following charges does the seller usually pay?

A.    Commission Fees

B.     Lender Fees

C.     Inspections

D.    PMI

305. Which of the following charges does the buyer usually pay?

A.    Existing liens

B.     Survey fees

C.     Broker’s Commission

D.    Lender Fees

306. Which document is used to show the amount of taxable consideration that was used to determine the transfer taxes?

A.    Taxable Income Tax Form

B.     Real Estate Transfer Declaration

C.     Form 2133 IRS

D.    Deed Order Tax Declaration

307. What is a fee charged to secure a specific interest rate?

A.    Lender’s Rebate Fee

B.     Take Fee

C.     Recording Fee

D.    Loan Lock Fee

308. A falsified Real Estate Transfer Declaration is a ___________.

A.    Class A misdemeanor

B.     Class B misdemeanor

C.     Class C misdemeanor

D.    Class B-1 misdemeanor

309. What document is a detailed accounting of the transaction that is prepared before closing?

A.    RESPA Statement

B.     Trust Account

C.     Settlement Statement

D.    Deed

310. What tax is imposed on any deed or instrument which conveys interest in real property?

A.    Impound Tax

B.     Property Exchange Tax

C.     Render Tax

D.    Real estate transfer tax

311. Which of the following deeds are exempt from transfer tax?

A.    Partitions

B.     Residential

C.     Land valued at $37,800 or less.

D.    Chattled Deeds

312. If a general home inspection showed a possible crack in a foundation, what should the buyer do?

A.    Request the general inspector to provide an opinion as to risk.

B.     Contact a foundation repair company to repair the crack.

C.     Ask a structural engineer to inspect and give an opinion.

D.    Contact an attorney.

313. After the contract has been executed, the buyer needs to change the closing date. What should the broker do?

A.    Have the buyer ask his attorney to prepare an amendment requesting the change.

B.     Rewrite the entire sales contract.

C.     The broker must have an attorney prepare an addendum.

D.    The broker may use a form called the Agreement to Amend/Extend Contract.

314. Who is responsible for keeping track of all the dates listed in the contract?

A.    The closing agent

B.     The lender

C.     The broker

D.    The title agent

315. During the walk-through, the buyer sees that the seller did not do a proper cleaning of the house. What is the best way of handling this?

A.    The buyer and his attorney should confer on how to handle the problem cleaning without delaying the closing. OR At the closing, the buyer could ask for a credit from the seller for the cost of the cleaning.

B.     The closing should be delayed until the cleaning is completed.

C.     The broker should hire a cleaning crew and take it out of the commission.

D.    The broker should prepare the Agreement to Amend/Extend Contract to change the purchase price.

316. Bob Broker is representing a buyer and is assisting with the closing. He tells the buyer that Eagle Inspections will get the inspection done quickly and thoroughly. Has Bob acted properly?

A.    No, because he recommended a specific company.

B.     Yes, he was exercising diligence in representing his client.

C.     No, because the broker should never make recommendations.

D.    Yes, because he knew Eagle was the best.

317. If a property is located in a flood zone and the property owner does not obtain flood insurance, what are the consequences?

A.    The property cannot be sold if the new buyer does not obtain flood insurance.

B.     The homeowner’s insurance will cover the cost of damage related to flooding up to 80% of the cost.

C.     A lender would not make a loan on the property.

D.    The property owner can be sued by the lender.

318. Buyer Jim’s loan is turned down the week before closing. What happens now?

A.    The sales contract automatically terminates.

B.     The seller needs to reduce the purchase price.

C.     The contract will get an automatic 30-day extension.

D.    The buyer could ask for an extension to allow Jim to find another lender.

319. During the inspection period under a contract, the buyer discovered that there was a title defect that needed to be rectified. The parties are uncertain about the amount of time it will take to correct the problem. What should they do?

A.    Amend the contract to extend the closing date to whatever date the title problem is solved.

B.     Amend the contract to extend the time to a time certain to correct the problem.

C.     Allow the contract to expire and rewrite it when the problem is solved.

D.    Close and escrow funds to cover the cost of correcting the problem.

320. What does the coinsurance clause do?

A.    Requires both the husband and the wife to be named as the insured.

B.     Requires the lender to be named as an additional insured.

C.     Requires the homeowner to have property insurance equal to 80% of the home’s replacement value.

D.    Requires any loss to be settled for actual cash value.

321. Since each home has an “insurance record” of its own, licensees should advise buyers to obtain a CLUE Report and:

A.    Have the property assessed by an CLUE insurance investigator.

B.     Not assume the sellers insurance, but purchase new insurance to avoid the CLUE issue.

C.     Make their offer subject to receiving and approving a copy of the seller’s CLUE report.

D.    Only purchase HO insurance from a CLUE certified insurance agent.

322. Managing Broker Jane owns a recreational vehicle that contains real estate records. She’d like to have her RV licensed as her principal place of business. What does the law say about this type of action?

A.    The RV can be used as a principal place of business office.

B.     The RV is not considered an office under Illinois Law.

C.     The RV is not an office, until a phone line can be installed.

D.    The RV can be used as a part-time office and licensed as a branch office.

323. A credit hour must include classroom instruction in coursework of a minimum of:

A.    35 minutes

B.     40 minutes

C.     50 minutes

D.    55 minutes

324. Individuals renewing or obtaining a managing broker’s license must complete a broker-management course of how many CE credit hours?

A.    4

B.     6

C.     9

D.    12

325. When does a real estate advertising business need to hold a real estate license?

A.    If and when the business engages in the practice of real estate brokerage.

B.     When the company has over 80% of real estate related advertisement business.

C.     If the company is operating solely as an advertising firm for real estate licensees.

D.    If and when any employee holds a real estate licensee.

326. What are the three licensee designations in Illinois?

A.    Salesperson, Agent, Licensee

B.     Agent, Subagent, Broker

C.     Agent, Representative, Lessor

D.    Broker, Managing Broker, Residential Leasing Agent

327. 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 on a MLS board.

C.     serve as a full-time employee of the Department.

D.    serve as an appointed member of state government.

328. Who is responsible to demonstrate evidence of CE compliance?

A.    Each renewal applicant

B.     IDFPR

C.     Managing Broker

D.    MLS Boards

329. Within how many days does a change in managing brokers need to be reported to the IDFPR?

A.    10

B.     15

C.     20

D.    30

330. What action can a licensee take if a client refuses to approve a dual agency relationship?

A.    A licensee may with liability withdraw from representing a client.

B.     A licensee may withdraw the listing.

C.     A licensee may without liability withdraw from representing a client who has not consented to a disclosed dual agency.

D.    A licensee may without liability withdraw from representing a client who has not consented to a disclosed dual agency, but the client must pay a referral fee.

331. When is a licensee banned from acting as a dual agent in a transaction?

A.    A licensee is prohibited from serving as a dual agent if he or she has a personal relationship with the seller.

B.     A licensee is prohibited from serving as a dual agent if he or she has a personal relationship 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.

332. Which of the following statements best describes a contemporaneous offer?

A.    Two or more offers being written at the same time on the same property from the same designated agent.

B.     Two or more offers being written at different times on the same property from the same designated agent.

C.     Two or more offers being written at the same time on different properties.

D.    Two or more offers being written at different times on different properties from the same designated agent.

333. In what situation is undisclosed dual agency acceptable?

A.    When the seller client agrees

B.     When two or more contemporaneous offers are made

C.     When the broker approves

D.    Never

334. When is a licensee required to disclose interest?

A.    When the licensee has more than two partners.

B.     When the licensee closes the transaction.

C.     When the licensee holds more than 5% owner interest.

D.    When the licensee holds more than 1% owner interest.

335. Licensee Jim has a deal with home inspector Jake. For every client referral, Jim earns $25. When does Jim’s action become unlawful?

A.    Jim’s action is legal, regardless of a disclosure

B.     Jim’s action is legal if he is not working as a dual agent.

C.     When Jim fails to inform all parties in writing.

D.    When Jim fails to record income with the MLS board.

336. Which of the following entities are exempt from holding a license?

A.    General circulation newspapers

B.     Rental Finding Service

C.     Real estate firm

D.    Companies offering properties for exchange.

337. Which of the following is a true statement?

A.    Agents selling real estate less than 10 hours a week do not need to be licensed.

B.     Agents selling real estate less than 45 hours a month do not need to be licensed.

C.     State and federal employees performing official duties do not need to be licensed.

D.    Auctioneers selling property do not need to be licensed.

338. Any business which finds, attempts to find, or offers to find, for any person who pays or is obligated to pay a fee or other valuable consideration, a unit of rental real estate or a lessee to occupy a unit of rental real estate, not owned or leased by the business is known as:

A.    A brokerage

B.     A sponsoring brokerage

C.     A rental finding service

D.    A rental location specialist

339. Which of the following would NOT require a real estate license?

A.    A person who deals in options

B.     An attorney representing a client

C.     One who sells or leases at an auction

D.    A person who negotiates to help someone else buy or sell real estate

340. Which of the following is true regarding licensure?

A.    Part-time Realtors must be licensed.

B.     Full-time Realtors must be licensed.

C.     Anyone offering to negotiate the sale of real estate must be licensed.

D.    All of the above are true.

341. Who does NOT need a real estate license under Illinois law?

A.    Someone supervising the collection of rent (or offering to do so) for the use of real estate.

B.     Someone advertising or representing herself as working to buy, sell, exchange, rent or lease real estate.

C.     Someone who negotiates or agrees to negotiate the sale, exchange, purchase, rental or lease of real estate.

D.    An attorney acting under a power-of-attorney to deal with property from the owner.

342. Janice performs only activities related to the leasing of residential property, and she requires a license. Which of the following titles applies to Janice?

A.    Agent

B.     Broker

C.     Salesperson

D.    Residential Leasing Agent or just Leasing Agent

343. In which of the following situations, when performing duties for compensation, must a person or corporation have a real estate license?

A.    Only when the person or corporation advertises or represents herself as working to buy, sell, rent, exchange or lease real estate.

B.     Only when the person or corporation opens real estate to the public, for the purpose of marketing.

C.     Only when selling or leasing, or offering to sell or lease real estate at an auction.

D.    All of the above situations require a person or corporation to have a real estate license.

344. Which of the following organizations would initiate the investigation of anyone regulated by Illinois’ license act?

A.    Real Estate Administration and Disciplinary Board of IDFPR

B.     Council of the IDFPR

C.     Illinois Environmental Protection Agency

D.    Illinois Human Rights Act Committee

345. A licensee who violates license law the first time is guilty of which of the following?

A.    A first-time offender is guilty of a Class A Felony.

B.     A first-time offender is guilty of a Class B Felony.

C.     A first-time offender is guilty of a Class A Misdemeanor.

D.    A first-time offender is guilty of a Class C Felony.

346. Who can file a complaint with the IDFPR?

A.    Only IDFPR Board Members

B.     HUD approved clients

C.     Pre-approved licensees

D.    Anyone

347. Lawrence practiced real estate without a license and was caught for the second time . For his offense, Lawrence can be charged with a _________________________.

A.    Class C felony

B.     Class 4 felony

C.     Class A misdemeanor

D.    Class B felony

348. Carol’s legal action must start within how many years after she became aware of the acts that led to legal action to obtain recovery from the fund?

A.    Carol’s legal action must begin within 2 years.

B.     Carol’s legal action must begin within 3 years.

C.     Carol’s legal action must begin within 4 years.

D.    Carol’s legal action must begin within 5 years..

349. How many days from receipt of a peer review does the Department have to respond?

A.    20 days

B.     60 days

C.     30 days

D.    45 days

350. Ads not stating the broker’s name, not stating that the advertiser is licensed, or those with only a phone number, P.O. box, or street address are known as:

A.    blank ads

B.     blind ads

C.     general ads

D.    generic ads

351. Which of the following is a fund established from real estate license revenues to cover claims of “wronged” parties who have suffered monetary damages due to a real estate licensee?

A.    Real Estate Administration Fund

B.     Real Estate Revenue Fund

C.     Real Estate Support Fund

D.    Real Estate Recovery Fund

352. Which Fair Housing Law added handicap individuals to the list of protected classes?

A.    Jones v. Mayer

B.     Title VIII of the Civil Rights Act of 1968

C.     Housing and Community Development Act

D.    Fair Housing Amendments Act of 1988

353. Records show that Banker Fred has increased the interest rate on all loans to Native Americans by an additional 3%. Has Banker Fred violated any laws?

A.    Yes, this would be viewed as discriminatory.

B.     No, loan terms can be established independently of discrimination laws.

C.     No, if the loan terms are not advertised.

D.    Yes, this is a violation of usury laws.

354. What practice helps move low-income persons into previously-owned higher income owner properties?

A.    Layer Down

B.     Filtering Down

C.     Flatten Down

D.    Roll Down

355. Which governmental agency files suits in ADA cases?

A.    Dept. of Justice

B.     Dept. of Housing

C.     Dept. of Revenue

D.    Dept. of Government Operations

356. Mortgage providers and Federal Loan programs base their loans on Debt to income ratios as determined by their own

A.    Housing Affordability Ratios

B.     evidence of debt payment

C.     credit affordability history

D.    trending payment evidence

357. A person filing the complaint may be entitled to __________.

A.    $10,000

B.     50% of punitive damages

C.     Actual damages

D.    A monthly payment from the General Revenue Fund.

358. What is the limit for HUD to start a discrimination investigation?

A.    90 days

B.     30 days

C.     1 year

D.    120 days

359. A broker only shows homes in certain neighborhoods based on matching existing residents with similar potential buyers. This broker is guilty of what prohibited activity?

A.    Redlining

B.     Blockbusting

C.     Steering

D.    Misrepresentation

360. If a person believes he or she has been discriminated against, how long does he or she have to file a HUD complaint?

A.    30 days

B.     90 days

C.     1 year

D.    2 years

361. What is a good policy regarding a seller who refuses to accept an offer from a potential buyer that is in a specific protected class?

A.    Do not advertise and hold open houses on this property.

B.     Do not allow the brokerage’s licensees to show the property.

C.     Document the discrimination

D.    Terminate the listing.

362. Which of these classes are protected by the Fair Housing Laws of Illinois?

A.    Middle Income Renters

B.     Criminal Record Holders

C.     Military Status

D.    Employment Status

363. Seller Jim tells his listing licensee that regardless of the offer, he will not sell to any Asian families. How does this impact the listing agent?

A.    The licensee is still required to take the listing.

B.     The licensee could be held liable if he or she knowing goes along with the request.

C.     The licensee must note the request on MLS listing only.

D.    The licensee must inform all agents regarding the request.

364. A broker induces an owner to sell by telling him that Hispanics are moving into the neighborhood. This broker is guilty of what prohibited activity?

A.    Redlining

B.     Blockbusting

C.     Steering

D.    Misrepresentation

365. Is any city in Illinois allowed to pass an occupancy law regarding number of tenants per apartment?

A.    No, if the housing units were built prior to 1997.

B.     No, unless the housing units are under Title 8.

C.     Yes, if the requirement is judged as reasonable.

D.    Yes, provided the city’s population is over 10,000.

366. Which is a TRUE statement about the Americans with Disabilities Act?

A.    The act applies to AIDS victims.

B.     The act applies to all structures built in the last 50 years.

C.     Shopping centers are exempt if built after March 13, 1991.

D.    An apartment manager might be required to widen all doorways to 60 inches.

367. Which Fair Housing Law added sex to the list of protected classes?

A.    Jones v. Mayer

B.     Title VIII of the Civil Rights Act of 1968

C.     Housing and Community Development Act

D.    Fair Housing Amendments Act

368. The following is evidence of guilt of a Fair Housing Violation

A.    Having violated the act previously

B.     Failure to display the Fair Housing poster as required by law

C.     A charge that you advertised a property with location of schools nearby

D.    Asking a buyer to prove they are over a certain age

369. Which of the following classes are not protected by federal law?

A.    Military status

B.     Sex

C.     Color

D.    Handicap

370. When must a model home comply with ADA guidelines?

A.    If the home is price more than $250,000.

B.     If the subdivision has more than 20 lots.

C.     If the home is more than 2,000 sq. ft.

D.    If the home also has a sales office area.

371. Which of these phrases would not be considered discriminatory if used in advertising?

A.    White family home

B.     Christian home

C.     Couples only

D.    Wheelchair ramps

372. Which document is required by RESPA to detail the costs that the buyer and seller will pay at closing?

A.    Summary of Accounts

B.     Estimate Monthly Payments

C.     HUD-1

D.    Closing Disclosure

373. Which of the following is exempt from RESPA?

A.    Condominium purchase

B.     Federally-insured loan

C.     Loan involving a second mortgage

D.    All cash sale

374. What is the title of the booklet that lenders must give to every person at the time of application for a loan?

A.    “Your loan, your home”

B.     “Your home loan toolkit”

C.     “Your mortgage home loan”

D.    “Protect your investment”

375. During a loan interview, a lender always asks borrowers what church they attend. What law, if any, does this action violate?


B.     FDIC

C.     ECOA

D.    No laws are broken.

376. Which statement is true about accepting referral fees?

A.    It is common business practice.

B.     It could be a law violation.

C.     It is forbidden under all circumstances.

D.    It is permissible in amounts under $50.

377. What is the purpose of RESPA?

A.    The Act is designed so title companies can compare service fees.

B.     That home buyers understand their purchase contract.

C.     That home buyers receive the correct figures pertaining to their closing costs.

D.    The Act is designed so lenders can compare companies’ mortgage fees.

378. To which of the following transactions does RESPA NOT apply?

A.    Seller-financed loans

B.     Residential property

C.     First or second mortgage loans

D.    A loan that is insured by a federal agency

379. Regulation Z applies to which of these situations?

A.    $35,000 farm loan

B.     $50,000 restaurant loan

C.     $75,000 condominium loan

D.    $85,000 warehouse loan

380. One broker says to another “I’ll take the east side of town and your company can take the west side.” What is this an example of?

A.    Market allocation

B.     Tie-in arrangement

C.     Group boycott

D.    Price fixing

381. Two brokers working for the same firm meet over coffee and decide to charge the same set commission rate to all of their sellers. Is this an illegal action?

A.    No. Antitrust laws do not apply to commission rates or MLS fees.

B.     Yes. A broker’s commission must be related to the costs involved in each transaction.

C.     No. The brokers do not represent competing firms.

D.    Yes. It’s a violation of antitrust laws.

382. Matt Bower is a developer. Will Jones is a builder. Matt agrees to sell Will a lot, but he conditions the sale by insisting that Will agree to list the property with him after the home is built. What is this called?

A.    Market allocation

B.     Price fixing

C.     Coercion

D.    Tie-in arrangement

383. All of the members of one board of REALTORS agree that they will not show the properties of the members of another board of REALTORS. What is this an example of?

A.    Price fixing

B.     Tie-in arrangement

C.     Group boycott

D.    Market allocation

384. If a group of area brokers have a meeting to set commission rates, what does this violate?

A.    Fair Housing Act

B.     Sherman Antitrust Act

C.     Civil Rights Act of 1968

D.    Jones v. Mayer

385. Which of these is not a violation of antitrust laws?

A.    Boycott

B.     Price fixing

C.     Redlining

D.    Market allocation

386. Ads should be written _______.

A.    from the perspective of all the protected classes

B.     from the perspective of targeting specific classes.

C.     from the perspective of maintaining the culture of the neighborhood.

D.    from the perspective of maintaining familial status in neighborhood.

387. Section 1450.145 defines a “Page” as what?

A.    Each page containing over 300 words

B.     A landing page

C.     Each html document

D.    Mircrosite

388. What is defined as the copying or extracting of existing listing information or keywords from a website, digital platform, or any form of social media of another licensee and using or altering that material and posting or displaying it for the benefit of the general public on another digital platform, form of social media, or in front of firewall on another website, without written or electronic permission and disclosure from the original listing licensee?

A.    Scraping

B.     Copywriting

C.     Spam

D.    Virus

389. Internet ads, on a licensee’s home page, must contain

A.    hours of business, owner’s name, agent’s addresses.

B.     types of agency offered, phone number, email address

C.     MLS association, types of real estate services offered, contact numbers.

D.    licensee’s name, sponsoring broker’s name, company name/address, geographic location.

390. Advertising a property that is subject to an exclusive listing agreement with a sponsoring broker other than the licensee’s own without the permission of and identifying that listing broker is an example of:

A.    Fair Housing violation

B.     A Sherman Antitrust violation

C.     Deceptive and misleading advertising

D.    An Illinois Human Rights Act violation

391. Which of the following statements are illegal in real estate ads?

A.    Property has a mother-in-law annex.

B.     Apartment is a four-story walk-up.

C.     No smokers and No pets.

D.    Those of the Catholic faith only accepted.

392. Which of the following is true regarding blind ads?

A.    Licensees may not utilize blind ads unless they own the advertised property.

B.     Licensees may not use blind ads regardless of who owns the property.

C.     A blind ad is an ad that excludes the licensees name.

D.    Blind ads placed by licensees are permitted if they do not discriminate.

393. Which of the following real estate ads would not be acceptable?

A.    Property sits on a corner lot with 3 bedrooms, new master bath and large family room.

B.     Great location for empty nesters, close to park and hospitals.

C.     Cozy 2 bedroom cottage in quiet neighborhood.

D.    Home is located in gated community with security entrance.

394. Licensee Judy takes a weekly ad out in the South Side Journal. Judy does not place ads in any of the other neighborhood newspapers. What might be said about Judy’s advertisement practices?

A.    Judy is targeting her market area.

B.     A city-wide ad would be more cost-effective.

C.     Ads in only one local paper may appear to be discriminatory.

D.    Judy is marketing to potential buyers who fit the profile of those already established homeowners and not practicing discrimination.

395. At times, the women’s shelter at St. Mary’s Catholic Church has rental units open to the public. Are they allowed to advertise for female renters only?

A.    Yes, gender based ads for shared living housing is acceptable.

B.     Yes, provided all renters are Catholic.

C.     No, ads cannot target specific gender types.

D.    Religious-type institutions do not have to comply with fair housing laws.

396. Which of the following is a rule of the federal Do-Not-Call List?

A.    Every state must have its own list.

B.     Only telemarketers are bound by this law.

C.     Consumers must update their information on the registry at least every two years.

D.    The law prohibits unsolicited phone calls to any consumer telephone number listed on the registry.

397. A managing broker may be protected from their broker’s violation of the Do Not Call Act if he or she has implemented

A.    Training on Do not Call procedures

B.     A written policy on Do not call procedures

C.     Provided a policy manual for the office

D.    Both a and b

398. Which of the following groups are exempt from the Telephone Consumer Protection Act?

A.    All new phone users after March 2008

B.     Hospitals

C.     Tax-exempt nonprofits

D.    Out of state lottery businesses

399. Which agency handles junk fax complaints?

A.    FCC

B.     FTC

C.     AIG


400. Agent Jim wants to send out an email to all the local real estate agents to inform them about an open house he is holding. What must he do to be in compliance with the CAN-SPAM Act?

A.    Jim must give the agents a way to opt out of any future email messages.

B.     He must be sure to include the entire mailing address of the home he is hosting.

C.     Jim must be sure his name and phone number are prominently displayed in the email.

D.    He cannot give any indication of the listing price of the home in the email.

401. Which statement about the Junk Fax Prevention Act is TRUE?

A.    Licensees must check the national registry before sending a fax.

B.     Licensees can only send faxes to existing clients.

C.     This act applies only to managing brokers, not their employees.

D.    Licensees are exempt from this act when sending open house notices.

402. Of the following market conditions or trends, which is NOT important as an influence on market value?

A.    Number of properties on the market.

B.     Trends in average time on the market.

C.     Number of competing agents in the market area.

D.    Trends in sale prices in different price ranges.

403. A phase that is NOT part of the usual real estate market cycle is

A.    oversupply.

B.     undersupply.

C.     supply-demand equilibrium.

D.    price-demand independence.

404. Real estate value in general is:

A.    The present monetary worth of benefits arising from the ownership of real estate.

B.     The past monetary worth of benefits arising from the ownership of real estate.

C.     The future monetary worth of benefits arising from the ownership of real estate.

D.    Its cost value.

405. One reason real estate agents need to understand influences on market value is so they can

A.    perform proper appraisals.

B.     obtain the highest market value possible for their listings.

C.     foresee how current conditions may affect their transactions.

D.    inform buyers that they will have to pay market price.

406. How readily or easily title or rights to real estate can be transferred affects the property’s:

A.    Reconciliation value.

B.     Transferability value.

C.     Anticipation value.

D.    Utility value.

407. Highest and best use of a property is that use which _________.

A.    is physically and financially feasible, legal, and the most productive.

B.     is legal, feasible, and deemed the most appropriate by zoning authorities.

C.     conforms to other properties in the area.

D.    entails the largest building that zoning ordinances will allow developers to erect.

408. Which of the following situations illustrates the principle 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.

409. A property owner buys an adjacent parcel and combines it with the original parcel to create a property with a higher value than the total of the two separate property values. The operative principle of value in this situation is called:

A.    Highest and best use.

B.     Assemblage.

C.     Progression.

D.    Subdivision.

410. The concept of market value is best described as

A.    the price a buyer will pay for a property, assuming other similar properties are within the same price range.

B.     the price an informed, unhurried seller will charge for a property, assuming a reasonable period of exposure with other competing properties.

C.     the price a buyer and seller agree upon for a property assuming stable interest rates, appreciation rates, and prices of other similar properties.

D.    the price that a willing, informed, and unpressured seller and buyer agree upon for a property, assuming a cash price and the property’s reasonable exposure to the market.

411. What a property actually sells for is its:

A.    Market value.

B.     Appraised value.

C.     Market price.

D.    Book value.

412. A person paid $150,000 for a house with the intention of renting it out for $1,000 per month. The economic principle that led the person to pay this price based on the property’s ability to generate this future income is known as:

A.    Anticipation.

B.     Substitution.

C.     Supply and demand.

D.    Utility.

413. Which of the following is a local market influence on market value?

A.    Inflation.

B.     Municipal infrastructure.

C.     Money supply.

D.    Federal tax laws.

414. As a rule, the fewer the total number of adjustments, the smaller the adjustment amounts, and the less the total adjustment amount:

A.    the less reliable the comparable.

B.     the more reliable the comparable.

C.     the less reliable the subject.

D.    the more reliable the subject.

415. One of the principal factors for adjustment in a CMA or sales comparison appraisal is

A.    location of mortgage lender.

B.     current residence of buyer.

C.     number of occupants.

D.    time of sale.

416. The main limitation of using a pending sale for a comparable is that

A.    the final sales price is not known.

B.     there is no date of sale.

C.     the selling price is too close to the present to allow for adjustment.

D.    a pending sale is not competitive with active listings.

417. If a comparable is better than the subject in some characteristic,

A.    an amount is deducted from the sale price of the comparable.

B.     no adjustment is necessary.

C.     an amount is added to the sale price of the comparable.

D.    all of the comparables must be adjusted accordingly.

418. Because the sale prices of the comparables are known, while the value and price of the subject are not, adjustments:

A.    should always be exaggerated.

B.     can be made only to the comparables’ prices, not to the subject’s.

C.     can be made only to the subject’s prices, not to the comparables’.

D.    always reduce the subject’s value.

419. As a comparable, an expired listing can be a useful indicator of

A.    a listing period that was too short.

B.     a listing price that was too high for the market.

C.     a seller who was inflexible.

D.    a property that was not as good as its competitors.

420. All the following qualities are required in a good comparable for an appraisal EXCEPT

A.    resemblance to the subject in utility and design.

B.     locational identity to the subject.

C.     sale in an arm’s-length transaction.

D.    recent sale.

421. If a comparable sold for $200,000 but lacks a garage valued at $10,000, while the subject has one, the adjusted value of the comparable is

A.    $190,000.00

B.     $200,000.00

C.     $210,000.00

D.    not relevant.

422. In a deed of trust transaction, which of the following occurs?

A.    The beneficiary conveys title to a trustee in exchange for loan funds.

B.     The trustee conveys title to a beneficiary in exchange for loan funds.

C.     The trustor conveys title to a trustee in exchange for loan funds from the beneficiary.

D.    The trustee conveys title to a trustor in exchange for loan funds from the beneficiary.

423. The document that commits a mortgage loan borrower to repay the loan is the

A.    deed.

B.     promissory note.

C.     mortgagor’s lien.

D.    hypothecary.

424. A lender lends money to a homeowner and takes legal title to the property as collateral during the payoff period. They are in a

A.    title-theory state.

B.     lien-theory state.

C.     state allowing land trusts.

D.    state where hypothecation is illegal.

425. Which of the following best expresses the mechanics of a mortgage loan transaction?

A.    The borrower gives the lender a note and a mortgage in exchange for loan funds.

B.     The lender gives the borrower a mortgage and receives a note in exchange for loan funds.

C.     The borrower receives a note in exchange for a mortgage from the lender.

D.    The lender gives the borrower a note, loan funds and a mortgage.

426. The primary mortgage market includes all of the following EXCEPT

A.    commercial banks.

B.     insurance companies.

C.     Fannie Mae.

D.    credit unions.

427. A homeowner borrows money from a lender and gives the lender a mortgage on the property as collateral for the loan. The homeowner retains title to the property. This is an example of

A.    intermediation.

B.     forfeiture.

C.     hypothecation.

D.    subordination.

428. Wesley wants to sells his house to Maria. Maria would like to assume Wesley’s mortgage loan. Wesley’s lender demands full and immediate repayment of the loan if Wesley completes the sale. The lender can make this demand if the mortgage contains a

A.    defeasance clause.

B.     release clause.

C.     due-on-sale clause.

D.    redemption clause.

429. If the loan term, loan amount, and interest rate of a loan are known, it is possible to calculate the

A.    periodic payment.

B.     loan points.

C.     discount rate.

D.    down payment.

430. What is a “satisfaction piece?”

A.    The final payment that repays a loan.

B.     The part of a mortgage that describes repayment terms.

C.     A document executed by a lender as evidence that a loan has been repaid in full.

D.    A downpayment or other payment that constitutes a legal consideration.

431. Because of a borrower’s default on payments, a mortgage lender calls the entire balance due and payable immediately. The clause in the mortgage document that allows the lender to do this is the

A.    alienation clause.

B.     acceleration clause.

C.     defeasance clause.

D.    prepayment clause.

432. Ginnie Mae operates by

A.    purchasing mortgages from conventional lenders.

B.     guaranteeing to lenders that monthly payments on mortgage loans will be made.

C.     issuing conventional mortgage loans.

D.    selling insurance to the FHA.

433. Freddie Mac issues securities known as

A.    Guaranteed Mortgage Certificates.

B.     Standard Lease-ups.

C.     Multi-issuer Pool Shares.

D.    Insured Mortgage Indexes

434. When financial institutions use funds from depositors to make mortgage loans, the process is called

A.    interference.

B.     syndication.

C.     intermediation.

D.    disintermediation.

435. A lender who charges a rate of interest in excess of legal limits is guilty of

A.    redlining.

B.     usury.

C.     profit-taking.

D.    mortgage fraud.

436. A lender is charging three points on a $100,000 loan. How much does this amount to for the borrower?

A.    $3.00

B.     $30.00

C.     $300.00

D.    $3,000.00

437. The feature of an adjustable rate loan that prevents the monthly payment during an adjustment period from varying up or down by more than a set amount is the

A.    periodic cap.

B.     aggregate cap.

C.     payment cap.

D.    negative amortization cap.

438. What is the function of the index in an adjustable rate mortgage loan?

A.    It is an amount added to the initial rate of the loan to increase the yield.

B.     It is the starting point for calculating the interest rate for the loan.

C.     It determines how much the interest rate of the loan may be adjusted periodically.

D.    It is the underlying rate of return the lender plans to receive over the loan term.

439. Buyer Jane has a loan which requires her to pay $588.00 per month for 20 years. At the end of the loan period, Jane has to make a final payment of $27, 580. What type of mortgage does Jane hold?

A.    Straight Line Mortgage

B.     Final Cap Mortgage

C.     Balloon Mortgage

D.    Adjustable Rate Mortgage

440. Lenders use private mortgage insurance to

A.    bring their loans into compliance with FHA requirements.

B.     avoid charging origination fees.

C.     increase their rate of return on a loan.

D.    minimize their risk when accepting a loan with a low downpayment.

441. Norm is buying a furnished condo in Chicago. Which type of mortgage is specifically designed for property and contents?

A.    All Inclusive Mortgage

B.     Package Mortgage

C.     Short Sale Mortgage

D.    Wrapped Mortgage

442. If a borrower in a VA-guaranteed loan defaults,

A.    The VA takes over the property and makes payments to the lender on behalf of the borrower.

B.     The VA reimburses the lender, up to the guaranteed amount, for losses not covered by foreclosure proceeds.

C.     The lender takes the property and also receives the amount guaranteed by the VA.

D.    The VA must pay off the loan balance.

443. Owner Sam has a $75,000 mortgage on his home. Sam sells his home to Bill for $100,000. Bill pays $7,000 down and borrows $93,000 on a new mortgage. This mortgage includes the existing $75,000 mortgage because the new lender will make the payments on the old mortgage. This is an example of a what kind of loan?

A.    Buydown

B.     Straight Line

C.     Wraparound

D.    Blanket

444. A permanent long-term mortgage loan that is not government-backed is a

A.    personal loan.

B.     conventional loan.

C.     primary loan.

D.    commercial loan.

445. The basic FHA-insured loan program is provided for loans on

A.    all residential properties.

B.     all properties that are valued at under $1,000,000.

C.     1-4-family residential properties.

D.    all properties that have been refused as collateral by conventional lenders.

446. To be eligible for an FHA-insured loan, a property must be

A.    no more than ten years old.

B.     built by FHA-approved contractors.

C.     under 2500 square feet in living area.

D.    appraised by an FHA-approved appraiser.

447. Which of the following is a feature of a fully-amortized loan?

A.    It has the same payment amount every month.

B.     It has a different payment amount every month.

C.     At the end of the loan term, there is a remaining balance to be paid off.

D.    A fixed amount of each monthly payment goes to the principal.

448. Interest rates on FHA loans are

A.    set for each of 80 regions throughout the country.

B.     determined by the prime rate plus a premium.

C.     negotiated by lender and borrower.

D.    set by statute and indexed to inflation.

449. Why are interest rates generally higher on second loans than on first loans?

A.    Lenders know that the borrower is desperate for cash.

B.     Second loans are not insurable.

C.     Second loans are riskier because they are not paid off until first loans are paid in case of default.

D.    There is less demand for second loans.

450. Which of the following best describes a reverse annuity mortgage?

A.    The monthly payments on a loan decrease over the loan term, leaving a balance to be paid off at the end of the term.

B.     A homeowner borrows an amount equal to the equity in her home, invests it, and pays part of the interest earned each month to the lender.

C.     A homeowner’s equity is pledged as collateral for a loan paid out over time. The loan is repaid when the house is sold.

D.    A homeowner buys an annuity and uses the interest from the annuity to pay off a mortgage loan.

451. Which of the following statements about contracts for deed in Illinois is TRUE?

A.    They cannot have a term longer than 5 years.

B.     If the buyer defaults at any point, the seller can cancel the contract, evict the tenant, and retain the property plus all payments.

C.     If the buyer has a 20 percent equity in the property, the seller must convey title.

D.    The seller cannot repossess the property without a judicial foreclosure if a defaulting buyer has 20 percent equity and the contract term is longer than five years.

452. The Equal Credit Opportunity Act protects against discrimination in all of the following areas EXCEPT

A.    physical handicap.

B.     religion.

C.     age.

D.    color.

453. The lender’s process of determining a borrower’s ability to repay a loan and evaluating a property is known as

A.    disqualification

B.     underwriting

C.     credit evaluation

D.    screening

454. If a lender’s loan-to-value ratio is 90%, how much will the lender lend on a house valued at $200,000?

A.    $10,000

B.     $20,000

C.     $180,000

D.    $190,000

455. Larry and Sandy have a combined monthly income of $5,000. Using the FHA and VA debt ratio of 41%, how much monthly housing and debt obligation can they qualify for?

A.    $847

B.     $1,220

C.     $2,050

D.    $2,950

456. Which of the following best expresses the income ratio used by lenders to assess a loan applicant’s borrowing capacity?

A.    Monthly gross income divided by monthly housing expenses.

B.     Monthly housing expenses divided by monthly gross income.

C.     Monthly housing expenses divided by monthly debt obligations.

D.    Monthly debt obligations divided by monthly net income.

457. What is a “lock-in” loan commitment?

A.    A lender’s time-sensitive agreement to lend a specific amount at a specific interest rate for a specific term.

B.     A borrower’s agreement to borrow from a particular lender at a fixed rate of interest.

C.     A seller’s agreement to carry some or all of the financing necessary for a buyer to purchase the seller’s property.

D.    A loan that is guaranteed to be assumable throughout the term of the loan.

458. Mortgage loan applicants must meet underwriting standards for income, debt, cash, and

A.    net worth.

B.     age.

C.     education.

D.    place of origin.

459. A lender may deny a loan application and retain the application fee if

A.    the applicant fails to qualify for the loan for any reason.

B.     the application package is incomplete.

C.     the application form contains fraudulent information.

D.    the loan being applied for is not guaranteed by Fannie Mae.

460. ECOA prohibits all of the following underwriting practices EXCEPT

A.    disregarding income from part-time work.

B.     refusing a loan because of the location of the collateral property.

C.     asking applicants how long they have worked at their present job.

D.    asking whether an applicant plans to have children.

461. RESPA requires that a lender, within three days of receiving the loan application, must give a borrower

A.    a HUD Uniform Settlement Statement.

B.     an itemized bill for all settlement costs.

C.     a Loan Estimate form. OR a good faith estimate of settlement costs.

D.    a copy of the full text of the law.

462. If an individual is seeking a federally-related loan to finance a residential property located in a designated flood-hazard zone, federal law requires

A.    the seller to purchase flood hazard insurance in the buyer’s name.

B.     the borrower to purchase flood hazard insurance.

C.     the Army Corps of Engineers to survey the property.

D.    the Department of Housing and Urban Development to offer flood hazard insurance at a discount.

463. When does the initiation of a loan application process occur?

A.    When a prospective borrower first meets with a loan officer or mortgage broker.

B.     When a loan officer or mortgage broker gives an application form to an applicant.

C.     When a loan applicant completes a loan application form.

D.    When a lender receives a completed loan application package from an applicant.

464. Regulation Z disclosure requirements apply to which of the following loans?

A.    All loans, secured and unsecured

B.     Agricultural and commercial loans over $25,000.

C.     All loans secured by real property.

D.    All loans secured by a residence.

465. What is typically deposited into a mortgage loan escrow account?

A.    Out-of-pocket money to be paid by the buyer at closing

B.     Money held for certain future payments, such as insurance and taxes

C.     Money required to pay for broker compensation.

D.    Money for loan service fees

466. What does it mean when a loan applicant signs the Confirm Receipt section on page 3 of the Loan Estimate?

A.    It means that the borrower has accepted the mortgage loan.

B.     It means that the borrower has decided to refuse the loan terms.

C.     It means that the borrower has 5 business days to accept or reject the loan terms.

D.    It means that the borrower has received a copy of the form.

467. On what document would a consumer find information regarding a good-faith estimate of credit costs and transaction terms for a property loan mortgage?

A.    Loan Estimate

B.     HUD-2

C.     Cost Estimate

D.    Loan Projection Estimate

468. According to RESPA, a business day is a

A.    the same as a calendar day.

B.     work day that exceeds 8 hours.

C.     day on which the creditor’s offices are open to the public for carrying out substantially all of its business functions.

D.    work day that exceeds 6 hours.

469. On a mortgage Loan Estimate, how are loan amounts and interest rates that might be changed after the closing indicated?

A.    Check marks

B.     Fill in the blanks

C.     Yes or no statements

D.    Plus or minus marks

470. A mortgage Loan Estimate must be delivered within

A.    three business days of loan application.

B.     four business days of loan application.

C.     five business days of loan application.

D.    two days of loan application.

471. Which of the following mortgage loan items would NOT typically fall under origination charges?

A.    Title Insurance

B.     Underwriting Fee

C.     Application Fee

D.    Points

472. The administration aspect of a loan from the time the proceeds are dispersed until the loan is paid off is called

A.    loan condition.

B.     loan rate.

C.     loan servicing.

D.    loan loading.

473. What does a demand feature mean in a mortgage loan?

A.    A demand feature would not allow the lender to require early repayment.

B.     A demand feature would allow the lender to require early repayment.

C.     A demand feature would allow the borrower to make an early repayment with a penalty.

D.    A demand feature would allow the borrower to shorten the life of the loan by making double monthly payments.

474. Which of the following statements best describes the term “consummation” as defined under Regulation Z?

A.    The time that a consumer becomes contractually obligated on a credit transaction

B.     The window of time that a consumer has to a accept or reject a credit transaction

C.     The amount of time that a mortgage loan is viable

D.    Three business days prior to acceptance of the loan

475. What type of information is found in the Loan Calculations section on page 5 of the Closing Disclosure?

A.    Assumption information regarding whether or not the lender will allow a loan assumption on a future sale or transfer

B.     Late payment information regarding what late fee the lender will charge

C.     Partial payments information regarding whether or not the lender would accept partial payments on the loan

D.    The total amount of all payments on the loan, the dollar amount of the finance charges over the life of the loan, the amount financed, the annual percentage rate (APR), and the total interest percentage (TIP)

476. In what type of foreclosure does a lender give a borrower a notice of default in a form prescribed by the state?

A.    Judicial foreclosure

B.     Strict foreclosure

C.     Standard foreclosure

D.    Non-judicial foreclosure

477. Which of the following statements best defines Equitable Right of Redemption?

A.    The legal right of a borrower to seek a reduction in payments on a property mortgage

B.     The legal right of a borrower to redeem property between the time of default and the foreclosure sale.

C.     The legal right of a borrower to seek a statutory right of reinstatement.

D.    The legal right of a borrower to appeal a deficiency judgment within 7 months of notice.

478. Ronald defaulted on his home mortgage payments. The lender obtained a court order to foreclose on the property. At the foreclosure sale, Ronald’s house sold for $29,000 and the unpaid balance of his loan is $40,000. What must the lender do to recover the $11,000 Ronald still owes?

A.    Sue for damages.

B.     Sue for specific performance.

C.     Seek a deficiency judgment.

D.    Seek a lis pendens.

479. Which statement about a deed in lieu of foreclosure is TRUE?

A.    It gives the borrower an opportunity to change the loan terms.

B.     It is a deed to the lender in exchange for a reduction in the loan payoff.

C.     It avoids public notice of the foreclosure.

D.    It is always accepted by the lender since it reduces the costs of foreclosure.

480. One way that a Chapter 13 bankruptcy differs from a Chapter 7 bankruptcy is that it

A.    results in a discharge of all obligations.

B.     includes a plan for repayment.

C.     prevents creditors from attempting to collect on debts.

D.    does not apply to installment debt.

481. The first step in a judicial foreclosure is:

A.    acceleration of the loan.

B.     filing a suit.

C.     obtaining a lis pendens.

D.    obtaining a writ of execution.

482. What action must the lender take when a notice of reinstatement occurs?

A.    The lender must declare a moratorium on mortgage payments.

B.     The lender must pay all fees and renegotiate the mortgage.

C.     The lender must dismiss the suit and continue the mortgage.

D.    The lender must dismiss the lien and continue the suit.

483. In what type of foreclosure is the lender required to file suit asking a court to order the borrower to pay the mortgage debt by a certain date or the lender will automatically gain full title to the property?

A.    Standard

B.     Judicial

C.     Strict

D.    Non-judicial

484. Illinois has enacted legislation “opting out” of any federal bankruptcy exemptions. As a result,

A.    Illinois bankruptcy filers may file “in state only” for any exempt property allowed by federal or state

B.     Illinois bankruptcy filers may file a federal bankruptcy and a state bankruptcy request

C.     Illinois bankruptcy filers are only permitted to exempt property using state laws

D.    No exemptions are allowed

485. If a bankruptcy proceeding begins before a foreclosure proceeding, __________.

A.    the foreclosure proceeding cancels the bankruptcy.

B.     the foreclosure proceeding is stayed until completion of the bankruptcy process.

C.     the bankruptcy proceeding is suspended until the foreclosure process is completed.

D.    the two processes are combined into one.

486. Which of the following statements best defines Statutory Right of Redemption?

A.    The right of a defaulted property owner to recover damages after the sale.

B.     The right of a lender to recover expenses after the sale from the defaulted property owner.

C.     The right of a defaulted property owner to recover the property after the sale.

D.    The right of a defaulted property owner to recover and remove personal property after the sale.

487. Which of the following statements about foreclosure in Illinois is TRUE?

A.    All types of foreclosure are allowed.

B.     Foreclosure is not allowed if there is a deed of trust.

C.     Mortgage foreclosures require a court proceeding.

D.    Illinois is a non-judicial foreclosure state.

488. Loans designed for persons with blemished credit histories and that carry a higher rate of interest than prime loans to compensate for increased credit risk are called

A.    subprime loans or sub-prime loans

B.     secondary mortgage market loans

C.     predatory loans

D.    conventional loans

489. A buyer borrows $20,000 from his mother to make a downpayment. This loan must be repaid within five years, but the buyer tells the mortgage lender it is a gift. Has any fraud been committed?

A.    Yes, there is a “silent mortgage.”

B.     Yes, it is loan fraud.

C.     Yes, it is a cash-back scheme.

D.    No, as long as the mortgage loan is senior.

490. What is the practice of “loan flipping?”

A.    Misinforming a loan applicant about the origination costs of competing loan venders.

B.     Inducing a borrower to refinance a mortgage loan repeatedly with no benefit to the borrower.

C.     Issuing a negatively-amortized loan to an ignorant consumer.

D.    Convincing a loan applicant to take a subprime loan when the applicant is actually qualified for a prime loan.

491. The essence of mortgage fraud is _________.

A.    charging loan applicants for services that are not performed.

B.     misstating, misrepresenting, or omitting information that is relied on in an mortgage loan underwriting decision.

C.     convincing consumers to use particular lenders and loan service providers.

D.    giving false information about closing costs to loan applicants.

492. Which of the following is NOT considered a predatory lending practice?

A.    Charging low origination fees to encourage loan applications.

B.     Adding unnecessary charges and products to the loan amount.

C.     Issuing an unaffordable loan based solely on the applicant’s assets.

D.    Failing to provide RESPA documents.

493. Which of the following would NOT be found in a consumer’s credit report?

A.    Information about bankruptcies and foreclosures.

B.     Social Security Number.

C.     Mortgage payment history.

D.    Annual income. OR Credit score.

494. The median FICO score in the United States is reportedly

A.    550

B.     672

C.     723

D.    799

495. The factors on which credit scores are based include all of the following EXCEPT ________.

A.    number of family members who have credit cards.

B.     length of credit history.

C.     number of recent inquiries.

D.    unused available credit.

496. Which of the following best describes the credit score?

A.    A numerical ranking of the amount of credit a borrower can qualify for.

B.     A statistical prediction of the likelihood that a borrower will default on a loan.

C.     The percentage of previously borrowed funds that an applicant has repaid.

D.    The total amount of debt a borrower is carrying divided by the borrower’s annual salary times the number of effective working years left to the borrower.

497. Under the Fair and Accurate Credit Transactions Act, if a consumer asks one of the national credit bureaus to investigate an alleged error in her credit report, the bureau must:

A.    give the consumer access to her full credit history.

B.     check the consumer’s credit history at the other national credit bureaus.

C.     notify all users of the consumer’s credit report that there is a dispute.

D.    investigate, correct, and notify the other bureaus of any error within thirty days.

498. Seller Jim wants to walk away with $175,000 in his pocket after the sale. Jim agrees to a net listing. The property sells for $212,000. How much money is Jim entitled to?

A.    $175,000

B.     212,000

C.     $212,000 minus 5% commission.

D.    175,000 minus a 5% commission.

499. Which of these statements is true?

A.    Once a listing agreement is signed by all parties it cannot be changed.

B.     The seller can change the listing agreement whenever he or she wants.

C.     A listing agreement can be modified, but only if all parties agree in writing.

D.    A listing agreement can change by the mutual verbal agreement of all parties.

500. Which of these listing agreements is considered a unilateral contract?

A.    Open

B.     Exclusive Agency

C.     Net

D.    Exclusive Sale and Listing

501. When must a seller receive a copy of the listing agreement?

A.    When an offer is accepted.

B.     When the first offer is presented.

C.     At the time of closing

D.    At the time of signing.

502. What type of listing allows the distribution of the listings to all other brokers?

A.    Shared Listing

B.     Open Listing

C.     Multiple Listing

D.    Dual Listing

503. Which of these sources would not be a way to determine who holds title to a property?

A.    Seller’s Deed

B.     Title Company

C.     County Tax Office

D.    MLS Data Bank

504. Net listings are _______________________

A.    Illegal in Illinois

B.     Encouraged

C.     Viewed as unprofessional

D.    Subject to excise taxes


505. When a seller signs a listing agreement, who are the actual contract parties?

A.    Seller and Licensee

B.     Seller and MLS Association

C.     Broker and Licensee

D.    Seller and Managing Broker

506. Which type of listing provides the most incentive for a broker to market a property?

A.    Exclusive Agency

B.     Open

C.     Net

D.    Exclusive Right to Sell

507. Which type of listing is least attractive to a broker?

A.    Exclusive right to sell

B.     Open

C.     Exclusive agency

D.    MLS listing

508. What task takes up the majority of a property manager’s time?

A.    Evaluating tax incentives

B.     Physically managing the property

C.     Evaluating utility services

D.    Allocating shares of stock for the units

509. What is a property manager’s first responsibility to the owner?

A.    Get liability insurance.

B.     Prosecute delinquent tenants.

C.     Realize maximum profit.

D.    Cure functional obsolescence.

510. Which of these functions is not performed by a property manager?

A.    Renting property

B.     Leasing property

C.     Keeping costs within budget

D.    Preparing the property deed

511. Which of these usually contributes to the property manager’s fee?

A.    Rebates from suppliers

B.     Percentage of rental income

C.     A percentage of fees paid to outside workers

D.    Capital improvement fund

512. Which of the following would not be found in a management agreement?

A.    Tenant credit histories

B.     Property description

C.     Extent of authority

D.    Management fee information

513. Which of the following groups is not a professional property management trade organization?

A.    National Property Management Association

B.     Commercial Land Council

C.     Urban Land Institute

D.    International Council of Shopping Centers

514. What does the management agreement create?

A.    Designated agency

B.     Sole proprietorship

C.     General agency

D.    Power of attorney

515. Which of the following would be considered as corrective maintenance?

A.    Replace a defective water heater

B.     Painting wood trim

C.     Adding additional parking spaces.

D.    Replacing furnace filters

516. What is a budget that includes income and expenses for ongoing operations?

A.    Capital reserve

B.     Operating

C.     Fixed

D.    Stabilized

517. Which IREM designation is reserved for individuals who meet a certain level of education and experience?

A.    CPM

B.     ARM

C.     CPR

D.    AMO

518. A letter of intent is basically _______________________.

A.    an agreement to agree.

B.     designed for long term leases.

C.     prepared by the seller’s account.

D.    designed for short term rentals.

519. A contract in which the party or parties have not completed all acts under the contract is known as:

A.    bilateral

B.     unilateral

C.     executory

D.    executed

520. Which of the following factors must be present for a contract to be valid?

A.    Recorded

B.     Involuntary

C.     Placed in the public record

D.    Mutual agreement

521. An oral or written contract in which the parties state the contract’s terms and communicate their intentions in words is known as:

A.    An implied contract

B.     An express contract

C.     Legally void

D.    Voluntary

522. What is a breach of contract?

A.    A termination of the contract by the mutual consent of the parties.

B.     Financial damage suffered by a party because another party has nullified a contract provision.

C.     A lawsuit to force a party to discharge the contract.

D.    The failure of a party to perform according to the terms of the contract.

523. An implied contract may be deemed to exist if:

A.    The parties do not disavow an express contract that has expired.

B.     The parties act as if there is a contract.

C.     An offering party does not receive written notice that the offer has been rejected.

D.    The parties promise to perform their part of the agreement if the other party performs.

524. A contract to commit an illegal act is:

A.    Legal

B.     Void

C.     Okay, if there are two witnesses

D.    Okay if it is written and contains the signatures of two witnesses

525. Those people who are of legal age and sound mind are considered:

A.    Legally competent parties

B.     Legally enforceable parties

C.     Legally considerate parties

D.    Legally viable parties

526. A promise by one party to act or perform in a specified manner provided the other party acts or performs in the manner requested is known as:

A.    An offer

B.     A contract

C.     Good consideration

D.    Valuable consideration

527. The necessary condition of mutual consent may be found lacking in a contract if:

A.    The two parties did not discuss every possible interpretation of the contract’s provisions.

B.     The offer which was accepted is vague.

C.     One party did not have the legal authority to sign the contract.

D.    The agreement is unwritten

528. According to contract law, every valid contract is also:

A.    void.

B.     enforceable.

C.     enforceable or unenforceable.

D.    voidable.

529. What is an important legal feature of a contract?

A.    It is not voidable.

B.     It must use precise wording in a document.

C.     It represents a “meeting of the minds.”

D.    It can be created only by an attorney.

530. James a 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 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.

531. Agent Tom works at the Cliffside an office of ABC Realty. The sponsoring broker at the main office for ABC Realty maintains an escrow account for all offices of ABC Realty. Tom has been very busy writing offers and has little time to drive to the main office so he has decided to open an escrow account at the office. Tom’s action is ________.

A.    Not allowed, no sponsored licensee may maintain his or her own escrow accounts.

B.     Allowed as a sponsored licensee as long as the sponsoring broker approves the opening of Tom’s escrow account.

C.     Allowed, with the consent of all parties to the transaction and his sponsoring broker.

D.    Allowed because the escrow rules do not cover this point.

532. Which of the following statements are TRUE regarding earnest money?

A.    Must be in the form of cash or a check.

B.     Earnest money is required with all contract offers

C.     Personal property can be offered as an earnest deposit.

D.    Earnest money is also known as evidence trust account money.

533. If any dispute between the parties arises regarding the deposited escrow money, the sponsoring broker should _________.

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).

534. Bob the sponsoring broker who accepts earnest money and maintains the bookkeeping system must reconcile each escrow account that he maintains within:

A.    Ten days after he receives the monthly bank statement.

B.     Ten days after he receives the transactions closing statement.

C.     Thirty days after he receives the monthly bank statement.

D.    Thirty days after he receives the brokerage portion of the total commission.

535. All licensees should IMMEDIATELY give earnest money checks to their sponsoring broker who MUST deposit said earnest money by

A.    The third day following the contract acceptance.

B.     The next business day after contract acceptance.

C.     Within seventy four hours from the time the offer is delivered.

D.    The third day following the final counteroffer.

536. A sponsoring broker must keep all escrow records for ________.

A.    3 years.

B.     5 years.

C.     7 years.

D.    10 years.

537. 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.

538. What is the legal requirement regarding the number of escrow accounts that can be opened?

A.    There is no legal limit.

B.     One per transaction.

C.     No more than 5 per quarter.

D.    One per office licensee.

539. How much time is allowed to produce escrow records when a request is made by the Illinois Division of Professional Regulations?

A.    2 weeks

B.     2 business days

C.     36 hours

D.    24 hours

540. When a broker makes a change to an escrow account, what action must be taken?

A.    Broker must inform the county Clerk of the change.

B.     Broker must tell all pending transaction holders of the change.

C.     Broker must submit the change to the Real Estate Division of IDFPR.

D.    Broker must inform all office licensees of the change.

541. When must a escrow account be interest bearing?

A.    By default, all escrow accounts are interest bearing.

B.     When all parties make the request.

C.     When the escrow account is held in an FDIC backed bank.

D.    All amounts under $2,000 must be deposited in an escrow account.

542. Buyer Jim put down a deposit in the form of a boat title worth $5,000. The boat is owned by Jim’s parents. The transaction was not completed, who should the boat title be returned to?

A.    Jim

B.     Jim’s Parents

C.     The Title Company

D.    The agency that holds the escrow account.

543. John a sponsoring broker may transfer escrow monies needed for a particular closing to that transaction’s closing agent up to:

A.    Thirty (30) business days prior to the scheduled closing date.

B.     Two (2) business days prior to the scheduled closing date.

C.     Seven (7) business days prior to the scheduled closing date.

D.    Whenever it is practical for John to transfer the escrow moneys.

544. Broker John received three earnest money checks on Friday. The upcoming Monday is a holiday. When is Broker John required to make an escrow deposit?

A.    Within 5 business days.

B.     When Broker John has received at least 5 escrow deposits.

C.     Tuesday

D.    By the close of business on Friday.

545. What is the value in doing another CMA when an offer is presented?

A.    A new CMA can provide a realistic interpretation of the offer.

B.     A new CMA is not useful when an offer is being made.

C.     A new CMA can give the buyers a way out of the offer.

D.    A new CMA is required for a loan application.

546. Which of these statements about purchase offers is true?

A.    The offer must be in writing, but the acceptance can be oral.

B.     The offer can be oral, but the acceptance must include all of the terms in writing.

C.     Both the offer and the acceptance must be in writing to be binding

D.    Neither offer nor acceptance must be in writing, but the deed for title transfer must be in writing.

547. When you believe an offer is both fair and reasonable but it does not meet the sellers’ asking price, you should _____.

A.    Make no recommendations and let the sellers decide on their own.

B.     Recommend a counteroffer back to list price.

C.     Work toward acceptance.

D.    Recommend that the seller delay response to make the buyer nervous and then submit a counteroffer.

548. Which of the following is not an option a seller might take once an offer has been presented?

A.    Accept the offer exactly as it is written

B.     Reject the offer totally

C.     Reject the offer and submit a counteroffer

D.    Rewrite the offer.

549. When you receive an offer on a listing for less than asking price, which of these would be the least effective course of action to take?

A.    Study the other terms of the offer so you can maximize the offer’s benefits and minimize the lower price.

B.     Set up a face-to-face meeting with the sellers as soon as possible.

C.     Prepare additional documentation to take to the presentation.

D.    Give the sellers the price over the phone so they can think about it before you meet with them.

550. When preparing for a presentation, how many copies of the offer should you make?

A.    Make three copies for your brokerage.

B.     Make only one copy for your personal records.

C.     Make a copy for each seller.

D.    Make a copy for the buyer’s agent.

551. When reviewing an offer, what is the purpose of providing buyer information?

A.    To avoid violation of fair housing laws.

B.     To raise the seller’s comfort level.

C.     To determine if a counteroffer is required.

D.    To help explain a “buyer’s” market.

552. Most sellers object to offers based on

A.    Closing issues

B.     Offering price

C.     Financing issues

D.    Contingencies

553. Which of these is not a good thing to do when writing a counteroffer?

A.    Fill out a separate, numbered counteroffer form.

B.     Promptly provide counter offer to the other party.

C.     Date and attach supporting documents.

D.    Exert pressure on the sellers for changes you think are important.

554. What is the impact of making a counteroffer?

A.    A counteroffer represents a rejection of an offer.

B.     A counteroffer by a seller to a buyer turns the seller from offeror to offeree.

C.     A counteroffer can give the sellers a way out.

D.    If the buyer rejects the first counteroffer, the seller can accept the buyers’ original offer.

555. What document is required when a settlement service provider involved in a RESPA-covered transaction refers the consumer to a provider with whom the referring party has an ownership or other beneficial interest?

A.    An Affiliated Financial Business Arrangement Disclosure (AFB)

B.     An Affiliated Business Provider Disclosure

C.     An Affiliated Business Ownership Disclosure

D.    An Affiliated Business Arrangement (AfBA) Disclosure

556. What document must be completed by a creditor if a mortgage loan is assigned to another loan service?

A.    Servicing Transfer Statement

B.     Service Agreement

C.     Agreement of Service

D.    Transfer of Loan Balance Agreement

557. Which of the following statements best define a closing statement?

A.    A document that describes the ownership and sales activity of the transferred property.

B.     A document that details the title search results.

C.     A document detailing fees, commissions, insurance, and prorated charges necessary for the transfer of ownership to take place.

D.    A document detailing federal transfer fees and expenses.

558. RESPA rules do not apply to:

A.    VA loans

B.     Seller-financed loans.

C.     HUD administered loans

D.    Equable assumption loans

E.     null

559. Equal item amounts on the closing statement that appear as a credit to one party and a debit to the other party is most likely a ______________________.

A.    Fee charged by the closing agent.

B.     Prorated Item

C.     Debit to the seller

D.    Debit to the buyer

560. Which document itemizes the estimated taxes, insurance premiums, and other charges anticipated to be paid from the Escrow Account during the first twelve months of the loan?

A.    Initial Escrow Statement

B.     Escrow Debit Statement

C.     List of Accounts

D.    Itemized Escrow Accounts Payable

561. This occurs when the buyer takes a second mortgage out with the seller and the transaction is not reported.

A.    Circle Mortgage

B.     Rebate Mortgage

C.     Silent Mortgage

D.    Quick Mortgage

562. Which party is responsible for expenses that will be paid in arrears?

A.    The seller

B.     The lender

C.     The closing agent

D.    The licensee

563. What type of closing consists of all parties in the transaction meeting at one time?

A.    Face-to-Face

B.     Open

C.     Closed

D.    Single

564. Jim’s brother Al, gives Jim $5,000 as a down payment on a property. Jim tells the lender that the down payment was a gift. We latter find that the $ 5,000 was a loan. What legal violations might be pending?

A.    If Jim can repay the “gift’ than there is not violation

B.     The lender can sue the closing agent for errors and omissions.

C.     There is no recourse after 2 years from the close date.

D.    This is a case of mortgage fraud.

565. Jill pays $2,450 per month on an apartment. No other expenses are paid by Jill. What type of lease does Jill hold?

A.    Gross Lease

B.     Net Lease

C.     Progressive Lease

D.    Not Net Lease

566. Business owner Jill, leases a store front. Her lease amount is based on the wholesale price index. What type of lease does Jill have?

A.    Proprietary Lease

B.     Bracket Lease

C.     Index Lease

D.    Step Lease

567. Which of these items is not included in a lease agreement?

A.    Terms

B.     Demising clause

C.     Description of premises

D.    Alienation clause

568. Grant moves into his new office space while he awaits the completion of the negotiations of the lease terms. During this interim period, Grant makes monthly rent payments and the owner accepts them. How would Grant’s lease at this time be classified?

A.    Estate for years

B.     Estate from period to period

C.     Estate at will

D.    Estate at sufferance

569. Which of the following summarizes the general terms of a ground lease?

A.    The landlord sells the ground to another, then leases it back.

B.     A tenant buys the landlord’s ground, then leases the improvements.

C.     The landlord leases the ground floor of the building to a commercial tenant.

D.    The tenant leases the ground from the landlord.

570. This occurs when a tenant remains on the property without the owner’s consent after lease termination.

A.    Estate at Sufferance

B.     Estate at Will

C.     Estate at Possession

D.    Estate in Default

571. What kind of lease contains a recapture clause?

A.    Percentage

B.     Net

C.     Index

D.    Graduated

572. Who may file for a constructive eviction?

A.    The Landlord

B.     The Courts

C.     The Tenant

D.    The Tenant’s Neighbors.

573. A type of lease when the tenant pays for the taxes, insurance, maintenance and repairs is called what?

A.    Simple Lease

B.     Triple Net Lease

C.     Quad Lease

D.    Expense Lease

574. What method is used to remove a tenant who is in default in paying rent?

A.    Foreclosure

B.     Condemnation

C.     Lock out

D.    Suit for eviction

575. Which kind of lease increases at specified intervals?

A.    Graduated

B.     Gross

C.     Percentage

D.    Net

576. Which kind of lease has no time limit?

A.    Estate for years

B.     Estate at will

C.     Estate from period to period

D.    Estate at sufferance

577. A tenant living in cooperative owned housing, would hold what type of lease?

A.    Index Lease

B.     Branch Lease

C.     Shared Lease

D.    Proprietary Lease

578. What is one important difference between a sublease and a lease assignment?

A.    In a sublease, responsibility for the original lease is transferred completely to the landlord.

B.     In a sublease, the original tenant retains primary responsibility for performance of the original lease contract.

C.     A sublease does not convey any of the leasehold interest.

D.    A sublease conveys the entire leasehold interest.

579. When a tenant agrees to pay taxes and maintenance, the tenant has what kind of lease?

A.    Gross

B.     Periodic

C.     Net

D.    Graduated

580. In an IRS audit, which of the following situations would cause the IRS to think that a contractor might really be an employee?

A.    The license attends sales meetings.

B.     The licensee gets a commission.

C.     The licensee takes unpaid sick days.

D.    The licensee receives an hourly wage.

581. Which of these guidelines is not part of the IRS safe harbor test?

A.    Income must be based on sales input.

B.     There must be a written contract in place.

C.     The contractor must be licensed as a real estate salesperson or broker.

D.    Contractors must have access to workers compensation benefits.

582. What can a broker require of his independent contractors?

A.    They must work at the office.

B.     They must receive a salary.

C.     They must attend weekly sales meetings.

D.    They must sign a written agreement.

583. If a licensee joins a company as an independent contractor, which of these will he probably have to pay for on his own?

A.    Contract Forms

B.     For Sale signs

C.     Listing Ads

D.    Health insurance

584. Who established “safe harbor rules?”

A.    IRS

B.     MLS

C.     IDFS

D.    HUD

585. Which of these statements about an independent contractor is true?

A.    He or she gets a regular salary with bonuses.

B.     He or she is reimbursed for all business expenses.

C.     He or she is paid commission on all sales.

D.    He or she will get three weeks of paid vacation every year.

586. Which of the following must a broker legally provide to an employee?

A.    Pension plan

B.     Unemployment insurance

C.     Health insurance

D.    Sales commission

587. Which of the following must be included in an employment or independent contractor agreement?

A.    Duty Assignment and Compensation

B.     Management Structure and Benefits

C.     Health Insurance and Expense Reporting

D.    Travel Expenses and Sick Leave Policy

588. In this type of program, an agent may start out at a lower percentage rate and then graduate to higher rate as his or her production increases.

A.    Advancement payment plan

B.     Step plan

C.     Graduated payment plan

D.    Progressive plan

589. For an independent contractor, how is the issue of withholding tax dealt with by the managing broker?

A.    Managing Broker withholds tax monies

B.     Managing Broker pays all withholding tax monies

C.     Managing Broker does not withhold tax monies

D.    Managing Broker escrows all withholding tax monies

590. When doing a comparative market analysis, an agent looks at all but which of the following factors?

A.    Prices of properties currently on the market.

B.     Prices of sold properties.

C.     Properties that were listed but did not sell.

D.    Recently renovated properties.

591. A comparative market analysis is an attempt to do what?

A.    Find things in the home a seller needs to repair.

B.     Identify an estimate of a property’s value based on comparables.

C.     Convince a seller to list with you.

D.    Discover why some homes haven’t sold.

592. Which data should have the most impact on what a subject property is realistically worth in the current market?

A.    Currently active properties.

B.     Recently-sold properties.

C.     Pending sales.

D.    Expired listings.

593. The cost approach would be most reliable for which of these properties?

A.    Renovated historic home

B.     Apartment building

C.     County court house

D.    New shopping mall

594. A property sold for $185,000 and is producing an annual net operating income of $16,650. What is the capitalization rate?

A.    7%

B.     8%

C.     9%

D.    11%

595. Tim and Sue have the smallest home in a sought-after neighborhood. The value of their home is increased because of the higher value of the other homes in the neighborhood. This is an example of what principle?

A.    Regression

B.     Substitution

C.     Anticipation

D.    Progression

596. The cost at today’s prices of producing a similar or equivalent structure is known as what?

A.    Real cost.

B.     Replacement cost.

C.     Reproduction cost.

D.    Restructure cost.

597. Which of the following problems would be an example of incurable depreciation?

A.    Outmoded bathroom

B.     Termite damage

C.     Non-air conditioned office complex

D.    Outdated boiler

598. What the market recognizes as “the change in value an improvement makes to a property” is called what?

A.    Competition

B.     Contribution

C.     Change

D.    Conformity

599. The sales comparison approach is based on what principle of value?

A.    Anticipation

B.     Competition

C.     Substitution

D.    Highest and best use

600. Eric and Sarah had a new home built for $275,000. Most of the homes in their neighborhood do not have the amenities and upgrades Eric and Sarah chose to put in their home. Eric and Sarah’s home will probably be affected by which principle?

A.    Progression.

B.     Substitution.

C.     Change.

D.    Regression.

601. The actual price of a property is known as what?

A.    Cost

B.     Exchange value

C.     Market price

D.    Use value

602. Which of these statements is not true?

A.    Asking price is a good indicator of selling price.

B.     Data on homes that have sold is more reliable if it is recent.

C.     Most often a property fails to sell because of overpricing.

D.    Actual sale price of similar homes has an impact on what a home is worth in the current market.

603. The highest amount a buyer is willing to pay and the lowest amount a seller will accept for a property is known as what?

A.    Price

B.     Cost

C.     Market value

D.    Exchange value

604. When analyzing the data collected for a comparative market analysis, which of the following statements is most likely false?

A.    Data on homes that sold more than six months ago is less reliable.

B.     Homes with listing prices that are too high take longer to sell.

C.     Asking price is a good indicator of selling price.

D.    Research properties should match the subject property’s characteristics as closely as possible.

605. When doing research to recommend a reasonable listing price for a home, the most critical part of the research deals with analyzing which of these figures?

A.    Asking prices for current homes.

B.     Listing prices of homes that sold.

C.     Listing prices of homes that expired unsold.

D.    Selling prices of recently sold homes.

606. Which of the following would not be found in a comparative market analysis?

A.    Currently listed homes

B.     Recently sold homes

C.     Recently remodeled homes

D.    Similar expired listings that didn’t sell

607. Which of the following is not a condition for highest and best use?

A.    Minimally productive

B.     Financially feasible

C.     Physically possible

D.    Legally permissible

608. A credit score is also called a ______ score.


B.     FICO

C.     FICA

D.    CSI

609. Randy Renter is earning $2000 per month. The apartment he wants to rent costs $800 per month. Should you rent it to him?

A.    No, he does not earn enough

B.     Yes, he earns enough

C.     No, unless there are mitigating factors

D.    Yes because he has no children

610. To whom should a property manager not rent?

A.    friends

B.     family

C.     romantic interests

D.    all of the above

611. In an Illinois property management relationship, there must be a written property management agreement between:

A.    The property manager and the tenant.

B.     The property owner and the tenant.

C.     The property owner and his partners.

D.    The property owner and the broker.

612. The number one responsibility of the property manager is to:

A.    Make money for the owner.

B.     Manage the maintenance of the property.

C.     Strive for the highest return on the property consistent with the owners’ instructions.

D.    Obey the property owner no matter what

613. What information should you obtain from people who are self-employed?

A.    tax returns for the last two years

B.     an audited statement

C.     an unemployment history

D.    a guaranty

614. What is the best way to obtain information about a prospective tenant’s employment history?

A.    Contact the unemployment commission

B.     Run a credit check

C.     Ask for references

D.    Check with the human resources department of a previous employer

615. The property management agreement creates a contractual agreement between:

A.    The property owner and the broker.

B.     The property owner and his partners.

C.     The property owner and the tenant.

D.    The property manager and the tenant.

616. Peter Property Manager has screened an applicant, who is clearly Middle Eastern. Peter decides to reject the applicant when he sees the applicant has moved three times in three years. Has Peter acted properly?

A.    No, if the applicant has explained the moves to Peter’s satisfaction and there is no other basis to reject him

B.     No, he must approve the applicant

C.     Yes, he can reject the applicant for any reason

D.    Yes, the applicant is clearly unstable

616. If a prospective tenant is rejected due to a bad credit report, the Fair Credit Reporting Act requires that ______.

A.    the landlord justifies his rejection in writing to the prospective tenant and the prospective tenant’s employer.

B.     the landlord notify the prospective tenant of the bad report and the name of the reporting service.

C.     the prospective tenant disclose reasons for the poor rating to the landlord.

D.    the landlord file a report with the credit agency.

617. The escrow account maintained by the property manager must be in a non-interest-bearing account

A.    without exception.

B.     unless the property is residential with 15 or more units.

C.     unless the property is residential with 25 or more units or local ordinance requires payment of interest.

D.    unless the property is industrial.

618. In a situation in which a property owner inserts a condition in the lease that ends the lease if a child under 18 is ever in the family living in the property, which of the following statements is most accurate?

A.    The lease would be valid as is.

B.     The lease would be invalid.

C.     That clause of the lease would be void.

D.    That clause of the lease would be enforceable.

619. According to the Illinois Human Rights Act, “elderly” is defined as anyone over:

A.    35 years old

B.     40 years old

C.     55 years old

D.    62 years old

620. Which of the following would NOT be considered a “place of public accommodation?”

A.    Restaurants

B.     Hotels

C.     Religious organizations

D.    Doctors’ offices

621. All security deposits held by a broker must be maintained, intact, in an escrow account other than the property management accounts:

A.    Without exception.

B.     Unless the owners have agreed otherwise in writing.

C.     Unless the broker has decided otherwise with good cause.

D.    Unless it’s in the city of Chicago, where the regulations do not require this type of escrow account.

622. Security deposits must be deposited in the escrow account:

A.    Within 6 hours after the lease is signed

B.     Within 24 hours after the lease is signed

C.     By the next business day after a lease is signed

D.    By the end of the third business day after the lease is signed.

623. All of the following are ways in which written eviction notices can be served to the tenant, but one. Which of the following is NOT one of these ways?

A.    Personal service on the tenant.

B.     Personal service on someone at the tenant’s home, who is more than 10 years old.

C.     Personal service on someone at the tenant’s home, who is more than 13 years old.

D.    Mailing to the tenant by certified or registered mail, with a return receipt from the tenant.

624. The Federal Fair Housing Act prohibits discrimination for all of the following reasons except:

A.    Race or color

B.     Sexual orientation

C.     Familial status

D.    Handicap

625. Rental properties may allow discrimination based on sex in the event of:

A.    A question of sexual orientation

B.     A transgendered individual.

C.     Roommates who share a common bathroom or bedroom.

D.    Roommates who share ONLY a common bedroom.

626. Which of the following is permissible as part of a property advertisement under HUD’s Fair Housing guidelines?

A.    “No children or pets”

B.     “Large master bedroom with bath”

C.     “Wonderful ethnic neighborhood”

D.    “Great family home”

627. Which of the following parties is NOT covered under the Illinois Human Rights Act?

A.    A 38-year-old woman who uses a seeing eye dog.

B.     A 43-year-old man who has been convicted of dealing illegal drugs.

C.     A 27-year-old homosexual man who is an alcoholic.

D.    A 43-year-old unmarried woman who is an Army reservist.

628. Which of the following is NOT permissible as part of an advertisement about an apartment for rent?

A.    “Great apartment complex with on-site chapel”

B.     “Kosher meals available”

C.     “Non-smoking building”

D.    “Maximum two children”

629. Illinois law generally requires what prior to an eviction?

A.    Written notice

B.     Oral notice

C.     That the police are called to escort the person from his home.

D.    That a professional moving company be called to empty the tenant’s apartment of his belongings after 30 days of unpaid rent.

630. A broker must establish and maintain a separate account for the deposit of current rents and money received from the owner or on the owner’s behalf for payment of expenses related to property management. This account is called the:

A.    Earnest money account

B.     Residential easing agent account

C.     Broker’s escrow account

D.    Property management escrow account

631. The percentage 10.0% converted to a decimal is:

A.    0.1

B.     1

C.     0.01

D.    0.001

632. If the annual interest is $100 on a 3-year, straight interest-only note, and the interest rate on the note is 5% per year, what is the amount of the loan?

A.    $2,000

B.     $10,000

C.     $12,000

D.    $15,000

633. Sales agent Sally needs to convert square feet to square yards. How should she make the calculation?

A.    Divide the number of square feet by 9.

B.     Divide the number of feet by 3.

C.     Multiply the number of square feet by 144.

D.    Multiply the number of square yards by 9.

634. What is the charge for the use of money?

A.    Principal

B.     Interest

C.     Proration

D.    Rate

635. Tom owns a 1,200 square foot, rectangular shaped ranch house that just barely fits on his 50 foot wide lot. If the house is 30 feet wide, what is the length of the house?

A.    40 feet

B.     24 feet

C.     45 feet

D.    35 feet

636. When adding numbers with decimals:

A.    line up the decimals vertically.

B.     line up the decimals horizontally.

C.     line up the decimals diagonally.

D.    line up the decimals obliquely.

637. Which of the following items is not typically prorated?

A.    Security deposits

B.     Interest on assumed loans

C.     Property taxes

D.    Fire and hazard insurance

638. Tom signed a note for $3,000, which is to be paid off in 12 months. He owes the $3,000 plus 9% interest when the note is due. An investor buys the note at a 20% discount. What is the amount paid by the investor?

A.    $2400

B.     $600

C.     $1,400

D.    $3,000

639. Which of the following measurement equivalents is incorrect?

A.    1 acre is equivalent to 43,560 feet.

B.     1 board foot is equivalent to 144 cubic inches.

C.     1 mile is equivalent to 5,280 feet.

D.    1 square yard is equivalent to 9 square feet.

640. 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

641. 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

642. Of the following numbers, which is the smallest?

A.    0.1667

B.     0.667

C.     1/8

D.    16 2/3%

643. What does the acronym “PITI” stand for?

A.    Principal, interest, taxes, and insurance

B.     Principal, income, taxes, and insurance

C.     Profit, interest, title, and insurance.

D.    Prepayment, interest, title, and insurance

644. 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

645. 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%

646. 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%


647. Which of the following is a safety device likely to be found in a bathroom or garage?

A.      Ground fault circuit interrupter

B.      Heat pump

C.      Mansard

D.      Footing

648. One regulation-based reason for becoming knowledgeable about house styles is that an agent must

A.      be able to identify good houses.

B.      be accurate in advertising listings.

C.      develop a specialty in certain types.

D.      know what home construction costs.

649. Which of the following best describes a Prairie-style house?

A.      Two-story classical portico with columns, hip roof.

B.      Wood-framed, clapboard-sided, with turrets and verandas.

C.      Strong horizontal emphasis, low and heavy appearance. Note: Frank Lloyd Wright built prairie-style homes with brick.

D.      One story, gable roof, built on a slab.

650. The most common method of framing a house since 1945 is

A.      balloon frame.

B.      post and beam.

C.      half-timber.

D.      platform or western framing.

651. Concerning the measurement of square footage in houses, which of the following statements is TRUE?

A.      State law prescribes how the measurements must be made.

B.      Only a licensed or certified appraiser can measure a house.

C.      There are no official state standards for measurement.

D.      Agents who make their own measurements cannot be challenged on their accuracy.

652. Which of the following describes a person who is not represented, but is receiving ministerial acts?

A.      Shareholder

B.      Salesperson

C.      Customer

D.      Broker

653. Acts that a licensee may perform for a consumer, which are informative or clerical in nature and do not rise to the level of active representation on behalf of a consumer are known as:

A.      Supervision

B.      Ministerial acts

C.      Acts of non-licensure

D.      Fiduciary acts

654. Which of the following acts can non-licensed staff legally perform?

A.      Responding to telephone inquiries quoting from published information.

B.      Negotiating contracts.

C.      Hosting open houses for the public.

D.      Explaining listing agreements.

655. An act that is informative in nature, but does not rise to the level of representation, is known as:

A.      A non-material act

B.      A fiduciary act

C.      A ministerial act

D.      A nominal act

656. What action should a licensee take when providing ministerial acts for a consumer?

A.      Give a disclosure of non-agency.

B.      Provide a ministerial acts agreement.

C.      Perform all acts prior to a purchase offer.

D.      Document all action in a non-disclosure case file.

657. Which of the following is true regarding ministerial acts performed by the seller’s licensee for the buyer?

A.      Performing such ministerial acts is a violation of the broker’s brokerage engagement with the seller.

B.      Performing such ministerial acts for the buyer forms a brokerage engagement with the buyer.

C.      Performing such ministerial acts for the buyer cannot be construed to form a brokerage engagement with the buyer.

D.      It is not permissible for a broker engaged by a seller to show alternative properties to prospective buyers.

658. What action should a non-licensed staff member take when a caller asks about listing commission rates?

A.      Respond to the question.

B.      Provide the information from a scripted response card.

C.      Explain that commission rates are negotiable.

D.      Refer the caller to a licensee.

659. Which of the following best describes discretionary acts?

A.      Acts that follow a set of written directions.

B.      Acts that require decision making and judgment.

C.      Acts that deal with administrative aspects of the brokerage

D.      Acts that deal with enforcement of real estate laws.

660. Agent Bob frequently sends a part-time licensee along on each home inspection. Is that allowed?

A.      Yes, provided the inspection company clears it with the home office

B.      Yes

C.      No

D.      Yes, provided Agent Bob holds a security bond on the part-time employee

661. In what situations can non-licensed staff legally perform discretionary acts?

A.      Under the supervision of the licensee

B.      Under the supervision of the broker

C.      Never

D.      Always

662. Al Dobbs, a licensee, 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 Al Dobbs under Ministerial Acts?

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.

663. A competitive market analysis is an attempt to

A.      Find things in the home a seller needs to repair.

B.      Establish a home’s fair market value.

C.      Discover why some homes haven’t sold.

D.      Convince a seller to list with you.

664. Based on the Illinois License Act the licensee must disclose any material facts about the physical condition of the property OR the transaction about which the licensee has

A.      Appurtenant knowledge

B.      Actual knowledge

C.      Subjacent knowledge

D.      Extra-territorial knowledge

665. Bob and Linda Todd are buyers with $60,000 of stable income. Using the typical conventional loan qualifying percentage and assuming about 20% of that amount would be for taxes and insurance, how much of a monthly payment (principal and interest) could the Todd’s qualify for?

A.      $1,120.00

B.      $1,400.00

C.      $1,680.00

D.      Cannot be determined.

666. Broker Will represents a young couple who is preparing an offer on a home. Through preapproval, Will knows the couple can only afford to pay $100,000. The couple insists on offering $120,000. What should Will do?

A.      Go to the listing agent and ask if the sales price can be dropped to $100,000.

B.      Do nothing; it isn’t Will’s business.

C.      Encourage the couple to offer only what they can afford.

D.      Suggest that the couple pay more in earnest money.

667. Using or altering existing listing information or keywords that are copied from one Internet site and posted or displayed for the benefit of the general public in front of a firewall at another site, without written or electronic authorization and disclosure of ownership is known as:

A.      Scraping

B.      Copywriting

C.      Spam

D.      Virus

668. At times, the woman’s shelter at St. Mary’s Catholic Church has rental units open to the public. Are they allowed to advertise for female renters only?

A.      Yes, gender based ads for shared living housing is acceptable.

B.      Yes, provided all renters are Catholic.

C.      No, ads cannot target specific gender types.

D.      Religious-type institutions do not have to comply with fair housing laws.

669. Agent Jim wants to send out an e-mail to all the local real estate agents to inform them about an open house he is holding. What must he do to be in compliance with the CAN-SPAM Act?

A.      Jim must give the agents a way to opt out of any future e-mail messages.

B.      He must be sure to include the entire mailing address of the home he is hosting.

C.      Jim must be sure his name and phone number are prominently displayed in the e-mail.

D.      He cannot give any indication of the listing price of the home in the e-mail. FINAL

670. When collecting property information for a CMA, a licensee should focus on

A.      the condition of the subject property and surrounding properties.

B.      the builder’s original plans.

C.      the chain of title of the property.

D.      what the seller originally paid for the property.

671. To complete the sales comparison approach, the appraiser

A.      averages the adjustments.

B.      weighs the comparables.

C.      discards all comparables having a lower value.

D.      identifies the subject’s value as that of the nearest comparable.

672. A significant difference between an appraisal and a broker’s opinion of value is

A.      the appraiser tends to use only one or two of the approaches to value.

B.      the broker is a disinterested party.

C.      the broker is subject to government regulation in generating the opinion.

D.      the appraiser uses less current market data.

673. Who decides the final listing price of a property?

A.      The listing agent.

B.      The appraiser.

C.      The seller.

D.      The buyer.

674. Appraisals are performed by

A.      any licensed real estate professional.

B.      licensed professional appraisers.

C.      competitive market analysts.

D.      state-appointed tax officials.

675. Which of the following best describes the outcome of a CMA?

A.      An opinion of market value.

B.      A listing price that is the average of the prices of comparable sales.

C.      A range of listing prices based on adjusted comparable values.

D.      A market value.

676. The three approaches to value employed by appraisers are the sales comparison approach, the income approach, and the

A.      construction approach.

B.      measurement approach.

C.      adjustment approach.

D.      cost approach.

677. What is meant by “amenities” in a property description?

A.      The good will of neighbors.

B.      Special features that distinguish the property.

C.      Property fixtures.

D.      Improvements.

678. Appraisals make all of the following assumptions EXCEPT

A.      payment is made in cash or a cash equivalent.

B.      buyer and seller are unrelated.

C.      buyer and seller are uninformed consumers.

D.      the property is exposed on the market for a reasonable time.

679. Which of the following statements provides the best definition of appraisal?

A.      It is a professional appraiser’s opinion of the value of a property as of a specific date.

B.      It is a professional appraiser’s estimate of market price.

C.      It is an estimate of value offered by a knowledgeable real estate professional.

D.      It is a broker’s opinion of value, based on comparison with recent comparable sales and current listings in the multiple listing.

680. How does an appraiser using the cost approach estimate the value of the land?

A.      By applying the sales comparison approach to comparable land sales.

B.      By applying a building-to-land ratio to the estimated property value.

C.      By applying a standard figure for vacant land in the area.

D.      By applying an appreciation factor to the original sale price of the land.

681. An appraisal that seeks the cost of constructing, at current prices, a “precise duplicate” of the subject improvements is seeking the

A.      replacement cost.

B.      unit cost.

C.      reproduction cost.

D.      cost index.

682. The cost of constructing a similar structure at current prices and using current materials and methods is called

A.      reproduction cost.

B.      replacement cost.

C.      book value.

D.      depreciated value.

683. Which of the following methods of estimating cost adds together estimates of individual cost components such as material and labor?

A.      Unit Comparison Method.

B.      Unit-in Place Method.

C.      Quantity Survey Method.

D.      Index Method.

684. The loss of value due to adverse changes in the surroundings of the subject property is considered to be

A.      an incurable loss.

B.      a curable loss.

C.      a functional design feature that is sometimes curable.

D.      a value contribution factor that cannot be accounted for in an appraisal.

685. Which of the following statements best describes the cost approach to appraisal?

A.      Apply a depreciation factor to the reported actual cost of acquiring and improving the subject property.

B.      Estimate the cost of building the improvements on the subject property.

C.      Estimate the land value and add to this the actual cost of the improvements adjusted for competitive differences with similar properties.

D.      Add the estimated land value and cost of improvements and subtract the accrued depreciation of the improvements.

686. One weakness of the cost approach for appraising market value is that

A.      builders may not pay market value for materials or labor.

B.      market value is not always the same as what the property cost to construct.

C.      comparables used may not have similar quality of construction.

D.      new properties have inestimable costs and rates of depreciation.

687. One of the strengths of the cost approach is that it

A.      takes into account the amount of money required to develop a similar property.

B.      reveals the owner’s return on money invested in the cost of development.

C.      is very accurate for a property with new improvements that represent the highest and best use.

D.      results in an actual price in dollars instead of an estimated value.

688. A property is being appraised by the cost approach. The appraiser estimates that the land is worth $10,000 and the replacement cost of the improvements is $75,000. Total depreciation from all causes is $7,000. What is the indicated value of the property?

A.      $68,000.00

B.      $92,000.00

C.      $82,000.00

D.      $78,000.00

689. The cost approach is used for ___________ properties, which cannot be valued by other methods because of lack of comparable sales or income data.

A.      multi-use

B.      special-purpose

C.      rental

D.      old

690. The principle underlying straight-line depreciation from physical deterioration is that

A.      eventually, a property loses all of its value.

B.      a property loses a portion of its value each year because of economic obsolescence.

C.      a property loses the same increment of value each year over the economic life of the property.

D.      the value lost to depreciation is incurable.

691. Which of the following statements best describes the income capitalization approach?

A.      Apply a desired rate of return to the price paid for an income property.

B.      Divide the income a property generates or might generate by a capitalization rate.

C.      Estimate the amount of income a property must generate to return the capital amount invested in it.

D.      Estimate the rate of return a property owner receives from income generated by the property.

692. A strength of the income capitalization approach is that it

A.      uses a rate of return that is required for all potential purchasers in a market.

B.      yields an accurate projection of investment income.

C.      uses a method that is also used by investors to determine how much they should pay for an investment property.

D.      can be used with any type of property in any market.

693. A weakness of the income approach is that it

A.      is difficult to determine an appropriate capitalization rate.

B.      cannot be used with the other approaches to value.

C.      depends on published income and expense figures.

D.      yields a result that is unrelated to market value.

694. Potential gross income minus an allowance for vacancy and credit losses equals

A.      net operating income.

B.      effective gross income.

C.      gross income.

D.      total operating expenses.

695. A property is being appraised using the income capitalization approach. Annually, it has an estimated gross income of $30,000, vacancy and credit losses of $1,500, and operating expenses of $10,000. Using a capitalization rate of nine percent, what is the indicated value (to the nearest $1,000)?

A.      $206,000.00

B.      $167,000.00

C.      $222,000.00

D.      $180,000.00

696. The capitalization rate represents

A.      the amount of capital an investor will invest in a property.

B.      the discounted price of an investment property.

C.      the cost of borrowing money to acquire a property.

D.      an investor’s desired rate of return on capital invested in a property.

697. A property is estimated to produce a net operating income of $1,000,000. Which of the following capitalization rates would produce the greatest estimated value for the property?

A.      5%

B.      6%

C.      7%

D.      8%

698. An income property recently sold for $200,000, and the net operating income was $21,000. What was the capitalization rate for this property?

A.      12.50%

B.      9.50%

C.      10%

D.      10.50%

699. Effective gross income minus total operating expenses equals

A.      net gross income.

B.      net loss.

C.      net operating income.

D.      debt service.

700. Why is the income capitalization method generally considered less effective than other methods for appraising single-family residences?

A.      Single-family residences generate no income.

B.      There is often little market data to use in setting rents and cap rates for the analysis.

C.      Fixed and variable operating expenses cannot be distinguished.

D.      Owners and investors are generally the same people.

701. The income capitalization approach, or income approach, is most effectively used for appraising

A.      special-purpose properties.

B.      income or rental properties.

C.      owner-occupied single family residential properties.

D.      rural properties.

702. When must a seller receive a copy of the listing contract?

A.      At the time of signing.

B.      At the time of closing

C.      When the first offer is presented

D.      When an offer is accepted.

703. What is the purpose of license laws?

704. The level of government that focuses on land-use regulations and taxation is the:

705. Of the principal forms of title evidence in Illinois, the one that provides the best evidence is:

706. A break in the chain of title to a property results in:

707. With regard to environmental issues:

708. The Illinois Residential Disclosure Act requires that material defects related to which of the following must be disclosed by the seller:

709. What can terminate a private deed restriction?

710. What best describes discretionary acts?

711. What action terminates terms of the agency?

712. Fiduciary duty is primarily based on:

713. Care, Obedience and Disclosure are fiduciary duties of:

714. How might a licensee hide the true identify of his or her client on a sales offer?

715. What charges does the buyer usually pay?

716. What deeds are exempt from transfer tax?

717. What charges does the seller usually pay?

718. What best describes the cost approach to appraisal?

719. The cost approach is used for:

720. What best describes the income capitalization approach?

721. A listing agreement can be modified, but only if:

722. What is an important difference between a sublease and a lease?

723. What is a good safety strategy to follow?

724. Which of the following best defines risk?

A.      A loss

B.      The chance of experiencing a loss

C.      Recklessness

D.      Responsibility for damages

725. Which of the following is considered a variable expense?

A.      Real estate taxes

B.      Utilities

C.      Advertising

D.      Insurance

726. Another name for a program of routine maintenance is

727. How many days notice does a landlord have to give to evict a tenancy-at-will?

click here for all-in-1 page

Recommended Real Estate Schools:Colibri SchoolCe shop school

Trusted site secured by: positivessl