California Real Estate Exam Multiple Choice
Questions/ 510 Qs & Correct Ans.
The county tax assessor is the best source for establishing the age of a home.
"Gross multiplier" is used to determine value of certain types of income
properties. It is determined by:
a. dividing the gross rental income by the appraised value. b. multiplying the
market price by the capitalization rate.
c. dividing the sales price by the gross monthly rental.
d. multiplying the gross monthly rental by a reasonable cap rate. - Answer: c.
dividing the sales price by the gross monthly rental.
Page 1 of 243
,Gross Rent Multiplier is a rough, quick way of converting gross rent into market
value.
Which of the following could be used with a purchaser without the immediate
involvement of a title change?
a. Grant deed
b. Land contract
c. Quit claim deed
d. Warranty deed - Answer: b. Land contract
The land contract does not pass title until some later time, whereby the buyer
(vendee) has performed certain requirements (i.e., accumulate a minimum
amount of equity for down payment); title in the meantime remains with the
seller (vendor).
It is preferable to use the replacement cost method of appraisal on new buildings,
as opposed to old buildings, because:
a. it is easier to estimate depreciation.
b. values of land change.
c. it is difficult to estimate historical values.
d. local codes are changed from time to time. - Answer: a. it is easier to estimate
depreciation.
Page 2 of 243
,As the age of the improvements on a property increases, it becomes more difficult
to forecast the allowable depreciation.
The following are essential to the creation of an "agency" relationship, except:
a. parties are competent.
b. agreement to pay consideration.
c. agreement between principal and agent.
d. fiduciary relationship. - Answer: b. agreement to pay consideration.
"Gratuitous agent" would not necessitate consideration.
SHE owns a single-family residence in which SHE lives. SHE trades HE for another
residence which HE is renting to a tenant. Both parties intend to use their newly
acquired properties for rental income. Which of the following is true?
a. SHE can negotiate a tax-free (deferred) exchange.
b. HE can negotiate a tax free (deferred) exchange.
c. Both parties can negotiate tax-free exchanges.
d. Neither can negotiate a tax-free exchange. - Answer: b. HE can negotiate a tax
free (deferred) exchange.
HE is exchanging income property for the same—like-for-like; SHE is not.
Page 3 of 243
, Examination of the records indicate there are conflicts between the local zoning
restrictions and private restrictions contained within the deed that conveyed the
property. Which of the following statements is true?
a. The deed restrictions would prevail.
b. The zoning restrictions would prevail.
c. Since they are in conflict, the earlier restriction would prevail.
d. The more restrictive of the two (deed vs. zoning) requirements would prevail. -
Answer: d. The more restrictive of the two (deed vs. zoning) requirements would
prevail.
The more restrictive of conflicting zoning restrictions would prevail.
Three general partners borrowed money and agreed to be liable for the
repayment, either individually or collectively. They signed the security instrument:
a. jointly.
b. singularly.
c. jointly and collectively.
d. jointly and severally. - Answer: d. jointly and severally.
They are jointly (collectively) and severally (individually) responsible.
Page 4 of 243
Questions/ 510 Qs & Correct Ans.
The county tax assessor is the best source for establishing the age of a home.
"Gross multiplier" is used to determine value of certain types of income
properties. It is determined by:
a. dividing the gross rental income by the appraised value. b. multiplying the
market price by the capitalization rate.
c. dividing the sales price by the gross monthly rental.
d. multiplying the gross monthly rental by a reasonable cap rate. - Answer: c.
dividing the sales price by the gross monthly rental.
Page 1 of 243
,Gross Rent Multiplier is a rough, quick way of converting gross rent into market
value.
Which of the following could be used with a purchaser without the immediate
involvement of a title change?
a. Grant deed
b. Land contract
c. Quit claim deed
d. Warranty deed - Answer: b. Land contract
The land contract does not pass title until some later time, whereby the buyer
(vendee) has performed certain requirements (i.e., accumulate a minimum
amount of equity for down payment); title in the meantime remains with the
seller (vendor).
It is preferable to use the replacement cost method of appraisal on new buildings,
as opposed to old buildings, because:
a. it is easier to estimate depreciation.
b. values of land change.
c. it is difficult to estimate historical values.
d. local codes are changed from time to time. - Answer: a. it is easier to estimate
depreciation.
Page 2 of 243
,As the age of the improvements on a property increases, it becomes more difficult
to forecast the allowable depreciation.
The following are essential to the creation of an "agency" relationship, except:
a. parties are competent.
b. agreement to pay consideration.
c. agreement between principal and agent.
d. fiduciary relationship. - Answer: b. agreement to pay consideration.
"Gratuitous agent" would not necessitate consideration.
SHE owns a single-family residence in which SHE lives. SHE trades HE for another
residence which HE is renting to a tenant. Both parties intend to use their newly
acquired properties for rental income. Which of the following is true?
a. SHE can negotiate a tax-free (deferred) exchange.
b. HE can negotiate a tax free (deferred) exchange.
c. Both parties can negotiate tax-free exchanges.
d. Neither can negotiate a tax-free exchange. - Answer: b. HE can negotiate a tax
free (deferred) exchange.
HE is exchanging income property for the same—like-for-like; SHE is not.
Page 3 of 243
, Examination of the records indicate there are conflicts between the local zoning
restrictions and private restrictions contained within the deed that conveyed the
property. Which of the following statements is true?
a. The deed restrictions would prevail.
b. The zoning restrictions would prevail.
c. Since they are in conflict, the earlier restriction would prevail.
d. The more restrictive of the two (deed vs. zoning) requirements would prevail. -
Answer: d. The more restrictive of the two (deed vs. zoning) requirements would
prevail.
The more restrictive of conflicting zoning restrictions would prevail.
Three general partners borrowed money and agreed to be liable for the
repayment, either individually or collectively. They signed the security instrument:
a. jointly.
b. singularly.
c. jointly and collectively.
d. jointly and severally. - Answer: d. jointly and severally.
They are jointly (collectively) and severally (individually) responsible.
Page 4 of 243
