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Real Estate Practice Final Exam 2025:
Comprehensive Prep Test with Multiple-
Choice Questions, Answers, and
Explanations
Question 1: The amount that a seller takes away from a sale is termed? A) Net sale price B) Seller's proceeds C) Gross sales price D) Profit Margin Correct Answer: B) Seller's proceeds Rationale: Seller's proceeds refer to the actual amount of money the seller receives after all costs associated with the sale (such as closing costs, liens, and agent commissions) have been deducted from the gross sales price. The net sale price could refer to the price after some deductions, but "seller's proceeds" is the most accurate and commonly used term for the final amount received by the seller. The gross sales price is the total sale price before any deductions, and profit margin is the difference between the cost and the selling price. Question 2: which of the following best describes prospecting? A. Seeking buyers for your listing B. Seeking listing C. Seeking both buyers and sellers D. Seeking buyers for others agents listing Correct Answer: C. Seeking both Buyers and sellers Rationale: Prospecting in real estate involves actively searching for potential clients, which includes both individuals looking to buy property and those looking to sell. While agents need to find buyers for their listings (A) and seek new listings (B), a
comprehensive prospecting strategy encompasses both sides of the transaction. Seeking buyers for other agents' listings (D) is generally not considered prospecting for one's own business. Question 3: A property manger can refuse to rent to applicant Mike for any of the following reasons except which? A. Mike has changed jobs six time in the past six months B. He is married with two kids C. Mike has been late with his rent payments seven times in the past year D. He has a serious physical altercation with his downstairs neighbor Correct Answer: b. he is married with two kids Rationale: Fair housing laws prohibit discrimination based on familial status, which includes having children. Therefore, a property manager cannot refuse to rent to Mike simply because he is married with two kids. The other reasons (frequent job changes indicating financial instability, poor rental payment history, and violent behavior posing a risk to other tenants) are legitimate, non-discriminatory reasons for potentially refusing to rent, based on financial qualifications and safety concerns. Question 4: Which law extended discrimination to include handicap and familial status? A. jones v. mayer B. Housing and community development act C. civil rights acts of 1968 D. fair housing amendment act Correct Answer: d. fair housing amendment act Rationale: The Fair Housing Amendment Act of 1988 significantly expanded the protections of the Fair Housing Act of 1968 by adding handicap (disability) and familial status (the presence of children) as protected classes against discrimination in housing. Jones v. Mayer (A) dealt with racial discrimination. The Housing and Community Development Act (B) is a broader piece of legislation. The Civil Rights Act of 1968 (C) initially prohibited discrimination based on race, color, religion, sex, and national origin. Question 5:
C. discuss alternative properties that may be interest D. have the prospects sign the disclosure about agency relationship Correct Answer: b. ask the buyer to sign a real estate transfer disclosure statement Rationale: The Real Estate Transfer Disclosure Statement (TDS) in California is typically provided by the seller to the buyer to disclose any known material defects with the property. While the agent might explain the TDS, asking the buyer to sign it during the initial meeting with prospects is not the standard procedure. Giving a blank purchase agreement (A) for review, discussing alternative properties (C) to understand the buyer's needs, and obtaining the agency disclosure (D) are all common and necessary steps in the initial stages of working with prospective buyers. Question 8: When considering making a loan to a borrower, which of the following factors would probably exert the least amount of influence on the lender? A. the borrowers income B. the value of the property the borrower wants to purchase C. the borrower's job stability D. the neighborhood in which the property is located Correct Answer: d. the neighborhood in which the property is located Rationale: While the neighborhood (D) is a factor that lenders consider (as it can affect property value and risk), the borrower's financial qualifications are typically the most critical. The borrower's income (A) and job stability (C) directly indicate their ability to repay the loan. The value of the property (B) serves as collateral for the loan. While neighborhood trends can influence long-term value, the borrower's immediate financial capacity and the security of the collateral are usually the primary concerns for a lender during the loan approval process. Question 9: Which California Fair Housing law prohibits discrimination based on sexual orientation of source of income? A. civil rights act of 1964 B. rumored fair housing act c. holden act d. california civil rights act
Correct Answer: d. california civil rights act Rationale: The California Civil Rights Act (also known as the Unruh Civil Rights Act and Fair Employment and Housing Act - FEHA) prohibits discrimination based on various protected characteristics, including sexual orientation and source of income, in housing. The Civil Rights Act of 1964 (A) is federal legislation. The "rumored fair housing act" (B) is not a recognized legal term. The Holden Act (C) specifically addresses mortgage lending discrimination (redlining). Question 10: which of the following prospecting techniques do you have to use carefully because it has tended to upset people in recent years? a. Facebook and twitter advertising b. direct mail c. placing ads d. telephone calls Correct Answer: d. telephone calls Rationale: Unsolicited telephone calls, especially telemarketing, have become a source of frustration for many people due to their intrusive nature and the rise of "do-not-call" registries. While the other methods (social media advertising, direct mail, and placing general ads) can also be perceived negatively by some, they are generally less direct and intrusive than unsolicited phone calls. Question 11: Broker Jill has an agreement with seller Alice that says Jill will receive compensation if anyone except Alice sells Alice's home. What kind of agreement is this? a. exclusive agency b. net listing c. right-to-sell agreement d. open listing Correct Answer: a. exclusive agency Rationale: An exclusive agency listing agreement grants one brokerage the exclusive right to market and sell the property, but the seller retains the right to sell the property themselves without paying a commission to the brokerage.^1 If anyone other than the seller (including the exclusive agent) sells the property during the term of the agreement, the brokerage is entitled to a commission. A net listing (b) bases the
karen and Al obtained a 30year fixed rate, fully amortized loan when they purchased their home. Which statement is true? a. each of their payments is for the same amount b. they will owe a ballon payment at the end of the loan term c. the same amount will go towards the principal every month d. the interest payments is always smaller than the amount allocated to the principle - - correct ans- - a. each of their payments is for the same amount Dave and Nadine have decided that they want to become property investors. What is most likely their main motivational for investing? a. to plan for retirement b. to save on taxes c. to make money d. to have a second home to enjoy - - correct ans- - c. to make money the general law of agency applies to a. brokers dealing with the seller b. salesperson dealing with buyers c. insurance agents dealing with customers d. all business transactions - - correct ans- - d. all business transaction in a transaction that involves the purchase of a business, what document functions in the same way as the deed in a personal real-estate transaction? a. mortgage b. deed of trust c. warranty deed d. bill of sale - - correct ans- - d. bill of sale
which of the following is not an advantage of hosting an open house? a. generates leads for new listings b. please the seller by increasing activity c. identifies buyers for other properties d. allows viewing access to strangers - - correct ans- - d. allows viewing access to strangers which of the following would not be an essential component when researching the purchases of an apartment building? a. analyzing neighboring cities b. studying population trends in the area c. analyzing the income potential of the property d. understanding characteristics of the rental market - - correct ans- - a. analyzing neighboring cities which form advertising is considered the most cost-effective method for selling a home ? a. radio b. newspaper c. magazine d. television - - correct ans- - b. newspaper Jane sold her personal home for $148,000. Two months later she purchased and moved into a new home that cost $145,000. The adjusted cost basis of the first home was $140,000. For purposes of federal income tax, which statement is true? a. a basis of 148,000 and no taxable gain b. a basis of 145,000 and a taxable gain of 3, c. a basis of 130,000 and a table gain of 18, d. a basis of 140,000 and mo taxable gain - - correct ans- - d. a basis of 140,000 and no taxable gain
d. an exclusive listing must always be at least 30 days long - - correct ans- - c. a seller can sell his or own home and owe home and owe no commission if he or she signs an exclusive agency listing mr and mrs Haley are purchasing beachfront property in an upscale development. the home comes equipped with all furnishing. the Haleys want to get a mortgage that will cover the purchases price plus all the furnishings. what kind of mortgage are they looking for? a. package b. blanket c. wraparound bully down - - correct ans- - a. package abby applies for a federally-related loan to purchases a home. the lender must furnish a copy of the CFPB booklet to abby no later than the third business day from which date? a. the date abby receives the good faith estimate b. the date escrow is opened c. the date the lender receives her application d. the date abby makes the request to receive the booklet - - correct ans- - c. the date the lender receives her application which of the following is not a good direct mail technique? a. use a self-folding mailer b. hand address the mailers c. use an attractive first-class stamp d. offer something valuable to the reader - - correct ans- - a. use a self-folding mailer being prepared to handle incoming phone calls means all of the following except which ? a. knowing your inventory
b. understanding the kind of responses your advertising generates c. knowing the community d. being able to anticipates the caller requirements - - correct ans- - b. understanding the kind of responses your advertising generates Patrick has a written independent contractor agreement with his broker Tami. Last year, about 25% of his income came from sales commissions. The other 75% came from an hourly wage paid by Tami. For income tax purposes, the IRS would probably classify Patrick as a. an independent contractor b. a self-employment c. an employee d. a real estate assistant - - correct ans- - c. an employee Broker Alice has a listing agreement with Jack. If Broker Tom procures a buyer for Jack, Tom will get the commission and Alice will not. What kind of listing agreement does Alice have with Jack? a. exclusive agency b. net c. exclusive - authorization and rights to sell d. open - - correct ans- - d. open which statement is true about a loan that has a negative amortization? a. at the end of the term, the loan balance will be negative b. the borrower makes payment of the interest only over the term of the loan c. payments will not be enough to retire the loan d. all adjustable rate mortgages have negative amortization - - correct ans- - c. payments will not be enough to retire the loan
When using the straight-line depreciation method of deprecation, each year of economic age is given a rate that a. varies each year according to a table provided by the IRS b. is equal for each year over the life of the property c. is high during the first five year of the ownership period, then reduces gradually over the life of the property d. varies according to the expired life of the improvement made to the property - - correct ans- - b. is equal for each year over the life of the property when doing a competitive 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 - - correct ans- - d. recently renovated properties which of the following phrases should salesperson Brenda avoid when writing an advertisement for one of her listing? a. kosher meals available b. christian home c. fourth floor walk up d. walk to bus stop - - correct ans- - b. christian home agricultural land includes all of the following EXCEPT which? a. orchards b. pasturelands c. parks d. farms - - correct ans- - c. parks
Alice is planning her career and setting her goals. which of the following would be considered an intermediate goal? a. I will complete the GRI certification in the next four year b. I will do two practice listing presentation per week with an experienced agents for the next two months c. I will open my own office within nine years d. I will distribute 200 business cards every month for the next six month - - correct ans-
- a. I will complete the GRI certification in the next four year the equal credit opportunity act requires lenders to a. give credit to all potential borrowers b. give a discount to families with kids c. consider child support payments in the decision d. specialize by geographic area - - correct ans- - c. consider child support payments in the decision Jim owns a gift shop in a commercial building. he pays rent for occupancy, plus maintenance and operating expenses. what kind of lease does Jim have? a. net lease b. percentage lease c. gross lease d. graduated lease - - correct ans- - a. net lease Kirk wants to get an FHA loan. which of the following is Kirk himself not likely to do during the applicantion process? a. find a home that meets FHA requirements b. agree to pay mortgages insurance c. find a lender who is willing to do FHA loans d. all the above - - correct ans- - b. agree to pay mortgages insurance
harry has some buyer that he believes are ready to make an offer. he says to them, " would you prefer to take possession on September 1 or October 1? what kind of closing technique is harry using? a. assumptive b. alternative c. ownership d. standing-room-only - - correct ans- - b. alternative which statement is true about a homeowner's exemption? a. it must be filed every year. b. certain homeowners may qualify for a 10,000 exemption c. once filed, it remains until terminated d. none of the above - - correct ans- - c. once filed, it remains until terminated which statement is true about a listing contract? a. it must be in writing to be enforceable b. it can be considered an employment contract c. it creates an agency relationship d. all the above - - correct ans- - d. all of the above greg sold an apartment building he owned for 20 years. he paid 100,000 for it, and made 300,000 worth of improvements. his deprecation was 2,500 per year. he sold the building for 1,000,000 and paid 60,000 in commission to the broker. what is Gregs capital gain on the apartment? a. 450, b. 540, c. 590, d. 600,000 - - correct ans- - c. 590,
Jim and Jane are buying a home for $120,000. They have $20,000 for a down payment and assumed the seller's mortgage of $75,000. Jim and Jane financed the remaining $25,000 through the seller. What kind of a mortgage do they have? a. buy down loan b. ballon rate c. purchase-money mortgage d. wraparound - wrap around loan - - correct ans- - c. purchase-money mortgage greg is approved for a cal-vet loan. who will pay the points? a. the seller b. the state c. greg d. no one - there are no points - - correct ans- - c. greg which is not a true statement about the agency disclosure? a. the listing agent must provide the disclosure to the seller prior to securing the listing agreement b. the selling agent must provide the disclosure to the seller as soon as practicable prior to presenting a purchase offer c. is the selling agent does not deal directly with the seller, the selling agent is not required to provide the disclosure d. the selling agent must provide the disclosure to the buyer as soon as practicable prior ti the exection of the buyer offer to purchchase - - correct ans- - c. if the selling agent does not deal directly with seller, the selling agent is not required to provide the disclosure under federal income tax law the "basis " for a personal residence is which of the following a. the purchases price, plus depreciation b. the purchases price, plus improvements
c. ballon d. growing equity - - correct ans- - b. ARM when agent Hal shows a home he should never; a. ask questions of the prospects children b. start in the room with the best features c. allow indoor pets to leave their designated area d. avoid negative comments while he's inside the home - - correct ans- - c. allow indoor pets to leave their designated area Jenny's home appraised for $550,000. Her asking price was $560,000 and the property sold for $575,000. What will the new owners pay in property taxes? a. 5,000 the first year, plus a maximum 2% increase in market value per year b. 5,600 every year with no increase c. 5,750 the first year, plus a maximum 2% increase in market value per year d. 5,750 plus a maximum 1% increase in market value per year - - correct ans- - c. 5, the first year, plus a maximum 2% increase in market value per year which of the following is not a form of personal advertising? a. car signs b. business cards c. multiple listing service d. name tags - - correct ans- - c. multiple listing services which of the following items is usually not prorated at disclosing? a. real estate taxes b. title insurance c. mortgages interest d. homeowners - - correct ans- - b. title insurance
when doing a listing presentation, which of the following items would you not describe to the owner as being a benefit of listing with an agent? a. availability of multiple listing services b. amount of commission chargers c. broker-paid advertising and promotion d. assistance with filling out disclosure - - correct ans- - b. amount of commission chargers Hannah is a real estate assistance. her broker has asked her to be available for tasks in the field rather than in the office. what would we call Hannah? a. on-call assistant b. field staff c. part-time worker d. commission-only assistant - - correct ans- - a. on-call assistant Greg and Joyce have an adjustable rate mortgage on their home. What is the key feature of this type of loan? a. the principal never amortize b. the term of the loan can be shortened c. the interest rate can vary d. the monthly payments increase overtime - - correct ans- - c. the interest rate can vary according to ECOA, lender cannot discriminate against potential borrowers on the basis of all but which of the following? a. marital status b. age c. income d. religion - - correct ans- - c. income
