Real Estate Final Exam: Set B With Correct Verified Answers (2026/2027)

Real Estate Final Exam: Set B With Correct Verified
Answers (2026/2027)
1. A property is valued at $300,000. If the assessment rate is 40% and the tax rate is 50 mills, what
is the annual property tax?

 A) $6,000

 B) $15,000

 C) $1,200

 D) $4,000
CORRECT ANSWER: A) $6,000

2. Which of the following is considered a "Latent Defect"?

 A) A cracked window visible from the street

 B) A hole in the living room carpet

 C) A cracked foundation hidden behind wood paneling

 D) Faded paint on the exterior
CORRECT ANSWER: C) A cracked foundation hidden behind wood paneling

3. In a real estate transaction, "Earnest Money" is:

 A) Required by law for a contract to be valid

 B) Evidence of the buyer's good faith intent to perform

 C) The same as the down payment

 D) Non-refundable under all circumstances
CORRECT ANSWER: B) Evidence of the buyer's good faith intent to perform

4. A "Listing Broker" who acts as a "Special Agent" has the authority to:

 A) Sign a sales contract for the seller

 B) Bind the seller to a lower price

 C) Represent the seller in one specific transaction

 D) Manage the seller's entire investment portfolio
CORRECT ANSWER: C) Represent the seller in one specific transaction

5. Which of the following would be considered "Boot" in a 1031 Tax-Deferred Exchange?

 A) The value of the replacement property

 B) Cash or debt relief received by the investor

 C) The commission paid to the broker

 D) The land itself
CORRECT ANSWER: B) Cash or debt relief received by the investor

,6. A "Net Listing" is generally discouraged or illegal because:

 A) It is too complicated to calculate

 B) It creates a conflict of interest for the broker

 C) The seller pays no commission

 D) It requires the buyer to pay the broker
CORRECT ANSWER: B) It creates a conflict of interest for the broker

7. If a landlord's interest in a property is the "Leased Fee," the tenant's interest is the:

 A) Life Estate

 B) Fee Simple

 C) Leasehold Estate

 D) Remainder Estate
CORRECT ANSWER: C) Leasehold Estate

8. The "Unit-in-Place" method is used in which appraisal approach?

 A) Sales Comparison Approach

 B) Income Approach

 C) Cost Approach

 D) Gross Rent Multiplier
CORRECT ANSWER: C) Cost Approach

9. A "Defeasance Clause" in a mortgage ensures that:

 A) The lender can foreclose quickly

 B) The lien is cancelled once the debt is paid in full

 C) The borrower can sell the property easily

 D) The interest rate is fixed
CORRECT ANSWER: B) The lien is cancelled once the debt is paid in full

10. "Plottage" value is the result of:

 A) Selling land in small pieces

 B) Combining two or more lots to increase total value (Assemblage)

 C) Changing the zoning from residential to commercial

 D) Increasing the property taxes
CORRECT ANSWER: B) Combining two or more lots to increase total value (Assemblage)

11. Which document is used to transfer ownership of "Personal Property"?

 A) Warranty Deed

 B) Bill of Sale

,  C) Title Insurance

 D) Settlement Statement
CORRECT ANSWER: B) Bill of Sale

12. The "Right of Quiet Enjoyment" refers to:

 A) The neighbor's duty to be silent at night

 B) The owner's right to use the property without interference from others

 C) A zoning law for libraries

 D) The right to build a fence
CORRECT ANSWER: B) The owner's right to use the property without interference from
others

13. A "Fannie Mae" loan refers to a loan that is:

 A) Insured by the government

 B) Purchased in the secondary mortgage market

 C) Only for low-income families

 D) Originated by Fannie Mae itself
CORRECT ANSWER: B) Purchased in the secondary mortgage market

14. An "Agreement of Sale" is considered:

 A) A unilateral contract

 B) An executory contract

 C) A voidable contract by the broker

 D) An executed contract
CORRECT ANSWER: B) An executory contract

15. The "Reciprocal" of a Cap Rate is the:

 A) Gross Rent Multiplier

 B) Income Factor

 C) Multiplier

 D) Net Operating Income
CORRECT ANSWER: C) Multiplier

16. "Asbestos" is most dangerous when it is:

 A) Wet

 B) Friable (crumbles into dust)

 C) Solid and undisturbed