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Over 500 questions and detailed answers related to the california real estate exam for 2025-2026. It covers various topics, including property valuation, real estate law, financing, and appraisal methods. The questions are designed to test the knowledge of aspiring real estate professionals and provide a comprehensive review of key concepts needed to pass the exam. This resource is useful for students preparing for their real estate licensing exam, offering insights into the types of questions they may encounter and the reasoning behind the correct answers. It includes topics such as elements of value, mortgage insurance, property descriptions, liens, documentary tax stamps, agency relationships, and appraisal methods.
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An appraiser's definition of "Value" would be:
between the thing desired and the potential purchaser. d. all of the above.
- 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?
$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 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?
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?
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:
capitalization rate. c. dividing the sales price by the gross monthly rental. d. multiplying the gross monthly rental by a reasonable cap rate.
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:
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:
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?
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:
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.
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.
In which of the following would you use а "pаckаge mortgаge"? а. When covering more thаn one pаrcel of lаnd in а subdivision.
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:
families.
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:
To revoke, or take away a license. (The Real Estate Commissioner has this power.) The legal purpose of police power is to:
general welfare. On which of the following dates do California real property taxes become a lien on the subject property?
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?
With more streets, there's more cost and less land for homes. Capitalization is a process by which an appraiser:
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 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 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:
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:
Appraisers use all three approaches to determine value. "Domicile" most frequently means:
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?
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:
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?
✅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:
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?
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:
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:
They have nothing to do with establishing value. The term "highest and best use," as the fundamental concept of value, is best defined as:
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?
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?
FHA has the requirement for such a premium, not the VA. Which of the following would NOT be considered a "fiduciary" relationship?