PEARSON VUE REAL ESTATE EXAM: 278 PRACTICE QUESTIONS COMPLETE WITH 100% VERIFIED ANSWERS & DETAILED EXPLANATIONS

PEARSON VUE REAL ESTATE EXAM: 278 PRACTICE QUESTIONS COMPLETE WITH 100% VERIFIED ANSWERS & DETAILED EXPLANATIONS 1. In stating a seller's price and terms to a prospective buyer, the seller's broker is required by the law of agency to state ONLY those terms that are A) based on the broker's evaluation of prevailing prices and terms B) favorable for the seller, as determined by the broker C) attractive to buyers, as determined by the broker D) included in the listing agreement Correct Answer: D Explanation: A seller's broker is an agent of the seller and must act within the scope of authority granted by the listing agreement. The broker may only state terms that are specifically authorized in that agreement. ________________________________________ 2. A lot measuring 110 feet wide by 140 feet deep has a required setback of 30 feet in front, 20 feet in the rear, and 20 feet on each side. If a builder wants to put a one-story building on the lot, the MAXIMUM square footage it can contain is A) 3,300 sq ft B) 3,600 sq ft C) 6,300 sq ft D) 6,600 sq ft Correct Answer: C Explanation: Buildable width = 110 ft − 20 ft (left side) − 20 ft (right side) = 70 ft. Buildable depth = 140 ft − 30 ft (front) − 20 ft (rear) = 90 ft. Maximum area = 70 ft × 90 ft = 6,300 sq ft. ________________________________________ 3. A house with a market value of 80,000islocatedwherepropertyisassessedat704 per $100 of assessed value, the property taxes are A) $224 B) $960 C) $2,240 D) $3,200 Correct Answer: C Explanation: Assessed value = 80,000×0.70=56,000. Tax = (56,000÷100) × 4=560×4 = $2,240. ________________________________________ 4. A broker charges a leasing fee of one-half of the first month's rent and a management fee of 8% of all rents collected. The broker negotiates a two-year lease at a monthly rental of $550. Which of the following amounts will the broker earn on this lease? A) $1,378 B) $1,331 C) $1,287 D) $1,056 Correct Answer: B Explanation: Leasing fee = 550×0.5=275. Total rent over 24 months = 550×24=13,200. Management fee = 13,200×0.08=1,056. Total earnings = 275+1,056 = $1,331. ________________________________________ 5. A property manager works in the BEST interests of the A) tenant B) owner C) agent D) bank Correct Answer: B Explanation: A property manager is an agent of the property owner and owes fiduciary duties to the owner, including loyalty, obedience, and accounting. ________________________________________ 6. In reviewing the deed to a listed property, a licensee noted a number of limitations regarding its use. These limitations are commonly known as A) codicils B) constraints C) building codes D) restrictive covenants Correct Answer: D Explanation: Restrictive covenants (also called deed restrictions) are private limitations on the use of property contained in a deed or other recorded document. ________________________________________ 7. The price at which a willing and informed buyer would buy and a willing and informed seller would sell is called the A) assessed value B) book value C) income approach to value D) market value Correct Answer: D Explanation: Market value is defined as the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale. ________________________________________ 8. The income approach is MOST likely to be used when determining the value of a A) vacant residential lot B) office building C) single-family home D) cooperative apartment Correct Answer: B Explanation: The income approach (capitalization approach) is primarily used for income-producing properties such as office buildings, apartment complexes, and shopping centers. ________________________________________ 9. The G's purchased a house from the T's. The G's agreed to the following terms: monthly payments of $650 to the T's and the balance to be paid in full after 7 years. At the time the balance is paid, the T's will give the G's a warranty deed transferring title. In this situation, what type of financing was used? A) FHA loan B) wrap around mortgage C) package mortgage D) contract for deed Correct Answer: D Explanation: A contract for deed (also called land contract or installment contract) is an arrangement where the seller retains legal title until the buyer completes all payments. ________________________________________ 10. The provision in a mortgage or deed of trust that gives the lender the right to call the entire balance due upon a default in any payment is called a A) acceleration clause B) prepayment penalty clause C) prepayment privilege clause D) right of redemption clause Correct Answer: A Explanation: An acceleration clause allows the lender to demand immediate payment of the entire outstanding loan balance if the borrower defaults on any payment. ________________________________________ 11. A broker who represents a buyer is trying to negotiate on the buyer's behalf in a potential transaction. The broker realizes that by negotiating a reduced price for the buyer, the broker's commission will also be reduced. In this situation, the broker is obligated to negotiate the BEST price for the A) buyer and broker B) buyer C) seller D) brokerage