Download California Real Estate Exam Prep: 500+ Questions & Answers (2025-2026) and more Exams Real Estate Management in PDF only on Docsity!
CALIFORNIA REAL ESTATE EXAM| 2025 - 2026|ACTUAL
500+QUESTIONS AND CORRECT DETAILED
ANSWERS|ALREADY GRADED A+
An appraiser's definition of "Value" would be:
a. present worth of all rights to future benefits arising out of ownership.
b. the ability of one commodity to command other commodities in exchange. c. relationship
between the thing desired and the potential purchaser. d. all of the above.
- ANS:->>> ✅d. all of the above. These are elements of value. Which of the following abbreviations is associated with the FHA?
a. NAR
b. CPM
c. MIP/MMI
d. MBA
- ANS:->>> ✅ c. MIP/MMI MIP - Mortgage Insurance Premium/Mutual Mortgage Insurance. An investor group recently sold a parcel of land for $217,500, which was 45% more than they paid for it. The land is described as follows: N½ of the NW¼ of the SE¼ of Section 13 plus the W½ of the NE¼ of Section 13. What was the original price they paid per acre for the property?
a. $1,
b. $1,
c. $1,
d. $750 - ANS:->>> ✅a. $1,
$217,500 ÷ 145% (1.45) = $150,000 original price Acreage: N½ of the NW¼ of the SE¼ = 20 acres W½ of the NE¼ = 80 acres Therefore, price per acre = $150,000 ÷ 100 = $1,500. Which of the following is NOT a lien?
a. Encumbrance
b. Homestead
c. Zoning
d. All of the above - ANS:->>> ✅d. All of the above
A lien is a charge against property, whereby the property is made security for payment of the debt, i.e., attachment. A property sells for $121,000. The purchaser gives $10,000 down payment, agrees to place an additional $5,000 down, and ta ke over an existing VA first loan of $100,000, with the remainder to be in the form of a 2nd note and trust deed. For these cond itions, how much would the documentary tax stamps be?
a. $1.
b. $5.
c. $133.
d. $23.10 - ANS:->>> ✅d. $23.
Do NOT pay on old existing loan being taken over. Therefore, ($121,000 - 100,000) ÷ 1,000 x ($1.10) = 21.0 x $1.10 = $23.10. If an appraiser were called upon to evaluate a public building, which had unique and distinctive architecture, he would employ which of the following methods of valuation?
a. Replacement (cost approach)
b. Comparison
d. either a or b. - ANS:->>> ✅ a. county tax assessor.
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.
- ANS:->>> ✅c. dividing the sales price by the gross monthly rental. 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 - ANS:->>> ✅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. - ANS:->>> ✅a. it is easier to estimate depreciation.
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.
- ANS:->>> ✅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. - ANS:->>> ✅b. HE can negotiate a tax free (deferred)
exchange. HE is exchanging income property for the same—like-for-like; SHE is not. 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. - ANS:->>> ✅d.
The more restrictive of the two (deed vs. zoning) requirements would prevail.
When all expenses, including taxes and insurance, are paid by the lessee along with a new amount of "rent" as agreed upon to the landlord, this is referred to as a:
a. gross lease.
b. net lease.
c. percentage lease.
d. sandwich lease. - ANS:->>> ✅b. net lease.
Net lease. Lessor receives a net amount for lease payment, lessee pays for expenses; property taxes, fire insurance, and operating expenses. A lending institution hires an appraiser to evaluate a property for loan purposes. Select one of the following factors which would have the greatest influence on her appraisal.
a. The type of neighborhood surrounding the property
b. The size of the loan
c. The credit rating of the loan applicant
d. None of the foregoing - ANS:->>> ✅а. The type of neighborhood surrounding the property
The аpprаiser would hаve а bаsic interest in the kind of neighborhood аnd its resulting effect on mаrket vаlue. The other items in the question would be а mаtter of concern only to the lender. On FHA аnd VA loаns, the lender is аllowed to chаrge the borrower а fee (percentаge of the loаn) аs аn initiаl service fee. This is generаlly referred to аs а(n): а. subordinаtion fee.
b. аccommodаtion fee.
c. аccelerаtion fee.
d. originаtion fee. - ANS:->>> ✅d. originаtion fee.
In which of the following would you use а "pаckаge mortgаge"? а. When covering more thаn one pаrcel of lаnd in а subdivision.
b. When encumbering real property and using personal property as additional collateral.
c. When securing additional financing from the lender at a later date without rewriting the original loan.
d. None of the above. - ANS:->>> ✅b. When encumbering real property and using personal
property as additional collateral. A loan that is secured by the basic lot and improvement, plus fixtures attached to the home (appliances, carpeting, drapes, air conditioning, and other kinds of personal property). The primary purpose of the Federal National Mortgage Association (FNMA) is to:
a. provide large sums of money for the building industry.
b. finance the construction of low cost residential housing.
c. lend money in the residential marketplace lower than normal interest rates for lower income
families.
d. Expand available home loan funds by buying and selling VA, FHA, and conventional loans in the
secondary money market. - ANS:->>> ✅d. Expand available home loan funds by buying and selling VA, FHA, and conventional loans in the secondary money market. For a straight-line schedule of depreciation:
a. earlier years receive more weight.
a. revise.
b. transfer.
c. resale.
d. revoke. - ANS:->>> ✅d. revoke.
To revoke, or take away a license. (The Real Estate Commissioner has this power.) The legal purpose of police power is to:
a. keep all types of commercial property out of residential neighborhoods.
b. keep the land in every area as similar as possible.
c. preserve or protect public health, safety, morals, or general welfare.
d. none of the above. - ANS:->>> ✅c. preserve or protect public health, safety, morals, or
general welfare. On which of the following dates do California real property taxes become a lien on the subject property?
a. December 10
b. April 10
c. July 1
d. January 1 - ANS:->>> ✅d. January 1
On January 1 of the preceding the tax year, the lien is placed on the property. December and April dates above are dates taxes become delinquent for their respective periods, and July 1 is the beginning of the tax year.
In the development of a subdivision of single-family homes, which of the following would be the least economical?
a. Cul-de-sacs
b. Long blocks
c. Right angle (90%) intersections into major streets
d. Short blocks - ANS:->>> ✅d. Short blocks
With more streets, there's more cost and less land for homes. Capitalization is a process by which an appraiser:
a. converts income into value.
b. determines depreciation.
c. establishes cost.
d. finds gross income. - ANS:->>> ✅a. converts income into value.
When he ascertains the true net income for investment, an appraiser uses the "capitalization approach" to estimate value. Net income is determined by an appraiser using which one of the following?
a. Real property taxes
b. Leaseback
c. Leverage
d. Syndication - ANS:->>> ✅d. Syndication
A syndication participant would be able to convert property interests into cash, without having to sell the property. For a "blanket encumbrance," the typical release clause requires the debtor to pay more to the lender than each released property is worth because:
a. better lots are sold first.
b. compensates for unsold lots.
c. lender desires to increase security on overall loan.
d. all of the above. - ANS:->>> ✅d. all of the above.
A fire station building and a small appliance sales and repair store were recently leased on long-term leases at the same lease payment. Between the two, the fire station building would probably have a stable capitalization rate, which would be:
a. higher.
b. lower.
c. same as.
d. varying; sometimes higher, sometimes lower than the other property. -
ANS:->>> ✅b. lower. Since the lessee of the fire station building would be the government, classified as a more stable tenant, the
owner would probably be willing to accept a lower return on investment. In determining the value of a property, an appraiser would use the:
a. cost approach.
b. market approach.
c. income approach.
d. any or all of the above. - ANS:->>> ✅d. any or all of the above.
Appraisers use all three approaches to determine value. "Domicile" most frequently means:
a.
b. semi-circled ceiling.
c. relationship of parties.
d. home or residence.
e. none of above. - ANS:->>> ✅c. home or residence.
An investor who owned a 16 - unit apartment complex has evaluated a newly installed freeway near his property, which has caused a decrease in monthly rent in the amount of $320. When an 11% "cap rate" for the area is applied, what is the resulting loss in value he has experienced due to the freeway?
a. $45,
b. $40,
c. $34,
d. Parties properly described - ANS:->>> ✅d. Parties properly described
The five essential elements of a valid deed are: (1) In writing; (2) Parties properly described; (3) Adequate property description; (4) Operative words (granting); (5) Signed by Grantor. In contracting, if one of the parties enters the agreement under duress, the contract would be:
a. valid.
b. voidable.
c. void.
d. Illegal. - ANS:->>> ✅b. voidable.
Until proved either valid or void, it is voidable. Under a real property sales contract, Buyer "A" makes a $2,000 down payment to Seller "B" on a property he had been renting. The agreement is filed with the county recorder. Subsequently, "A" moves to Florida, without making any further payments, and with no notice of his intentions being made to "B." Which of the following would be true?
a. Seller could resell the property and obtain a deficiency judgment against "A."
b. New buyer should not be concerned about the previous sales to "A."
c. "A's" activity has no effect upon the marketability of the property.
d. There would be a cloud on the title to the property. - correct answers
✅d. There would be a cloud on the title to the property. Seller "B" would need a quitclaim deed from "A," or would need to seek a "quiet title action" in court to clear the cloud on his title so he could sell the property to another.
Appraisal fees:
a. may vary.
b. are always a fixed amount.
c. are based on a percentage of the appraised value.
d. are set by the loan broker. - ANS:->>> ✅a. may vary.
An appraiser's fee is set by the difficulty of the work and by the level of expertise required to complete the work. Percentage fees are illegal. An unlawful detainer action may be filed by a landlord in all but one of the following. Which is it?
a. Tenant holds over after termination of lease.
b. Tenant fails to pay rent.
c. Tenant exercises lease option agreement, but fails to make payment as required.
d. Tenant breaches lease by permitting nuisance on the property. - ANS:->>> ✅c. Tenant exercises
lease option agreement, but fails to make payment as required. By process of elimination, this is the exception. The others are three of five lawful situations for exercising this action, the others being: (4) failure to perform any lease covenant, and (5) failure to give up possession when he had previously given written notice of intention to do so. All the following statements are incorrect, except:
a. a real property security can be created from a note on a home not located in any subdivision.
c. abstraction.
d. alienation. - ANS:->>> ✅b. accession.
Accession - addition to property through efforts of man or by natural forces. Accretion - Accession to property through natural forces, for example, alluvium. Alluvium - Gradual increase of the earth on ocean front or bank of stream resulting from action of water. Past expenditures for residential improvements are called:
a. costs.
b. investments.
c. price.
d. value. - ANS:->>> ✅a. costs.
They have nothing to do with establishing value. The term "highest and best use," as the fundamental concept of value, is best defined as:
a. that which produces the greatest net return on the investment over a given period of time.
b. that which produces the highest gross income.
c. that which complies with all laws and restrictions.
d. that which makes the highest general contribution to the community. - ANS:->>> ✅a. that which
produces the greatest net return on the investment over a given period of time. Appraisers always consider the highest net income as the basis for the highest value. A home sold for $150,000 on which the seller was to pay a 6% brokerage fee. Additional costs were: 2%
prepayment penalty on existing loan balance of $102,800, escrow fees of $210, new loan discount fee of $534. The seller's cost of sale will be what percent of gross equity?
a. 20.5%
b. 25%
c. 23.4%
228% - ANS:->>> ✅b. 25% Commission = $150,000 x 6% = 50,000 x .06 = $9,000 Escrow Fees = 210 New Loan Discount Fee = 534 Prepayment Penalty = 2% x $102,800 = 2,056 Total Seller Costs = $11, Equity = Sale Price minus 1st loan = $150,000 - $102,800 = $47,200 Costs as "%" of Equity = $11,800 ÷ 47,200 x (100) = 25% To whom is the Mortgage Insurance Premium (MIP) on a VA loan paid?
a. The broker
b. The mortgage company
c. The Veterans Administration
d. To no one - ANS:->>> ✅d. To no one
FHA has the requirement for such a premium, not the VA. Which of the following would NOT be considered a "fiduciary" relationship?
