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Real Estate License Review 2025 Questions &Answers
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A property sold for $60,000 and was financed bya 80% ltv mortgage. On the buyer's portion of the settlement statement the 2 % loan origination fee would be shown as - ✔✔a debit to the buyer How does the buyer's earnest money deposit appear on the closing settlement statement? - ✔✔as a credit to the buyer In a state where real property taxes are paid a year in arrears, how would the accrued taxes that were not due and payable appear on the closing settlement statement? - ✔✔as a prorated credit to the buyer A seller's existing loan is assumed at the closing. On the buyer's settlement statement, this item will appear as - ✔✔a credit to the buyer Which appraisal approach to value is usually employed to value vacant land? - ✔✔Market data approach What is an appraisal? - ✔✔An impartial estimate or opinion of value Probably the most important factor contributing to property's value is: - ✔✔the location of the property
Which of the following correctly states the principle of substitution? - ✔✔When choices offer essentially the same amenities, the buyer will select the one with the lowest price. In making adjustments between a subject property and a comparable, the appraiser - ✔✔subtracts from a superior comparable to adjust it to the subject. An appraiser would apply accrued depreciation in the - ✔✔cost approach which term relates to the process of estimating the value of income producing real estate? - ✔✔capitalization What appraisal approach is most often used when a broker does a market analysis for a property owner. - ✔✔market value approach Reconciliation is an appraisal term used to describe: - ✔✔the appraiser's analysis and comparison of the results of each appraisal approach. Within a neighborhood, the principle of "conformity" would be violated by - ✔✔underimprovement or overimprovement of a property What approach is best used in appraising a now vacant school house? - ✔✔the cost or summation approach
Regarding a personal residence, which of the following federal tax deductions is currently allowed? - ✔✔certain mortgage interest The present loan balance is equal to 60% of the property's appraised value. If the property is encumbered by a term note with an interest rate of 6% that calls for semi-annual interest payments of $360, what is the full appraised value of hte property? - ✔✔$20, A homeowner who wishes coverage greater than that provided by a basic insurance policy may choose a broad form policy for coverage of which of the following additional perils? - ✔✔Falling objects The accrued interest on an assumed mortgage loan is entered on the closing statement as a - ✔✔debit to the seller and a credit to the buyer A lot containing 3.5 acres is to be divided into building lots of 100 feet by 200 feet. Of the total land area, 15 % must be reserved for roads. How many full size lots will be obtained? - ✔✔six a 75% LTV bridge loan on a property valued for loan purposes at $28,000 requires a $140 per month 'interest only' payment. What is the loan interest rate? - ✔✔8% An income property produces a monthly net income of $1,500 and is valued at $430,000. What is the approximate rate of return? - ✔✔4.2%
This year, the owner of a 110 - acre apple orchard earned a net profit of $13,000. In the event he/she decides to sell the property and invest the proceeds at 5%, what must be the selling price per acre to match the earnings from the orchard? - ✔✔$2, Prorations of items in a real estate closing are made usually as of the date of the - ✔✔title transfer a mortgage balance is currently $3,627.14 and the amount of interest applied to the loan this month is $25.75. What is the annual interest rate? - ✔✔8.5% A home of 1545 square feet sells for $62,500. What is the price per square foot? - ✔✔$40. What is the Internal Revenue Service's Form 1099 - S? - ✔✔A form that summarizes and reports transaction data from a closing. A home has a market value of $72,500 and an assessed tax value of $59,450. The community tax levy is 1.33%. What will be the monthly payment for taxes? - ✔✔$65. A rectangular lot has 90' frontage and is 140' deep. The building setbacks are 15' front, 30' rear. and 10' on each side. If a three-story office building was constructed on the lot, what would be the maximum square footage contained in the building? - ✔✔19,950 square feet If a tract of land that measures 1,320 feet by 1,980 feet is sold for $2,000 per acre, what is the total selling price? - ✔✔$120,
It is illegal for a lending institution to refuse to make a residential real estate loan in a particular area only because of the - ✔✔location of the property A property manager is typically - ✔✔a general agent In order to file a complain of discrimination the complainant must - ✔✔suspect that discrimination has occured An owner-tenant relationship would most likely be established by - ✔✔periodic estate A prospective home buyer who is black inquires about the availability of a home in a predominantly white residential neighborhood. What should the broker say to the prospect? - ✔✔"I'll be pleased to show you any houses that you're interested in." The commercial lease likely to be the most advantageous for the owner would be a - ✔✔net lease Discrimination based on familial status was prohibited with the passage of the - ✔✔Fair Housing Amendments Act of 1988 The lease that would be the least affected by the death of either party is - ✔✔an estate for years A lease would be terminated by which of the following - ✔✔the expiration of the term of the lease
The lessee's interest is called the - ✔✔leasehold interest Jim holds $800 in security deposits from the six tenants in his apartment building when he sells the building to Harry. The tenants can expect a return of their security deposits from; - ✔✔Harry upon termination of the lease When a leasehold tenancy is terminable immediately by notice of either party, the tenancy is known as a: - ✔✔tenancy at will The principal difference between an estate for years and an estate from year to year is that - ✔✔an estate from year to year has no expiation date The leasehold estate which is characterized by a fixed period of time is - ✔✔an estate for years When a tenant sublets all or any part of the premises rented under a written lease, - ✔✔the original lease is unaffected unless it contains a provision that prohibits such subletting A broker negotiates a "sale-leaseback" agreement on behalf of a client. After the buyer locates acceptable financing, the sale closes. Who will be the tenant - ✔✔the seller The tenant leases a heated apartment, but the landlord fails to provide heat because of a defective central heating plant. The tenant vacates the premises and refuses to pay any rent. This is an example of - ✔✔constructive eviction
By means of an oral agreement, the landlord of a commercial business center leased an office space to an encyclopedia sales company for a 6-month period. The first month's rent was paid and the company moved in. One week later, the landlord realized the company's activities were causing more vehicle traffic than anticipated. Fearing the other tenants in the center might complain at the sudden lack of parking spaces, the landlord notified the encylcopedia company that their lease was being unilaterally terminated. The company refused to vacate and continued per the terms of the lease. The landlord: - ✔✔cannot unilaterally terminate the lease until the 6 - month lease term has expired. When a lessee transfers a portion of his/her remaining interest in a lease to another party, it is called; - ✔✔a sublease the rockland corp leases office space under a 5 - year lease which calls for monthly rent payments based on an annual charge of $20 per gross square foot. The building owners provide custodial services and pay the costs for property insurance, repairs to the building and real estate taxes. Which of the following would best describe this type of lease? - ✔✔gross lease The real estate agent has qualified a prospective buyer and determined he/she is financially ablet to purchase property costing up to $150,000. The prospect asks to see a $500,000 piece of property and the agent suggests they stay viewing homes within the buyers price range Under the fair housing act the agent is guilty of - ✔✔nothing The first line of a homeowners advertisement appearing in the company newlsetter reads "for sale to minorities only" persuant to the fair housing act this is an example of illegal - ✔✔steering
During the initial "rent up" of an apartment building, which of the following practices would violate the federal fair housing laws? - ✔✔rejecting a physically handicapped prospective tenant because the apartment interior doors and hallways are too narrow for wheelchair access an unscupulous real estate agent began soliciting listings in the honey dew subdivision. The agent told homeowners that a "non'white" had moved into the area, that as a result it was likely the area would soon become a mixed neighborhood and that property values would decline. The agent sugg ested that if the owner listed now, perhaps the property could be sold before the neighborhood deteriorated. The agents actions constitute - ✔✔blockbusting or panic pedaling The liberal bank had several defaults in the happy acre subdivision on its multi family mortgages. For this reason they decided not to make further multi family loans in that particular neighborhood. until they could investigate why the delinquincies occured. the decision of liberal bank is not unlawful because - ✔✔the federal fair housing act does not cover banks the statute of limitations for an agreived party to bring civil suit in federal district court for an alleged violation of the fair housing acts if he or she has previously filed a complaint to HUD is - ✔✔ 2 years from date of alleged occurence. Who is required to hold a managing broker license? - ✔✔Any self-sponsored licensee and anyone who has been appointed a managing broker by a sponsor. The method of computing a real estate commission on a residential real estate sale is: - ✔✔negotiated between the principal and the agent
Illinois licensees may - ✔✔act for more than one party in a transaction A real estate listing contract establishes a fiduciary relationship between - ✔✔the principal and any agent representing the principal Of the following which is imperative if the agent wishes to collect a selling commission - ✔✔a valid real estate license The maximum real estate commission that may be charged by law is - ✔✔there isn't one The Illinois Real Estate License Act requires that a real estate licensee must disclose - ✔✔the fact that the property was built on a flood plain Real Estate commission fees are established by - ✔✔negotiation with the principal The term fiduciary means: - ✔✔in a position of trust Which of the following statements best applies to the laws regarding designated agency? - ✔✔The written agency disclosure can be included in a brokerage agreement or be a separate document. Which of the following statements is true concerning an exclusive listing agreement? - ✔✔The listing contract must contain a definite termination date
Jim, a licensed real estate agent, lists Karen's home. Bill, a licensed real estate agent, lists Karen's home. Bill, a licensed real estate agent, shows the home to Suzy, who instructs Bill to write an offer. Which relationship demands client-level service? - ✔✔Jim Karen and Bill to Suzy A sponsoring broker added a relocation referral division to his brokerage firm. Which of the following statements is true regarding the payment of referral fees? - ✔✔compensation from sponsoring broker to sponsoring broker is allowed even if the broker collecting the compensation is licensed in a different state. The purpose of the Illinois Real Estate License Act is to - ✔✔evaluate the competence of persons engaging in the business A broker has the duty to disclose to a prospective buyer - ✔✔any known structural defects in the property Although Broker smith believed the seller was demanding too high an asking price, he took an exclusive right to sell listing on the home anyway. Several months later SMith met with the seller and urged the listing price to be reduced. The seller refused. Now, just as the listing is about to expire, Smith advertises the property at a price below that shown on the listing and immediately receives a written offer which the seller accepts. Broker Smith's act: - ✔✔constitutes a breach of the agency agreement All of a sponsoring broker's escrow records and related documents must be kept for - ✔✔five years
Managing broker Hagen is in violation of the Real Estate License Act if she - ✔✔allows sponsored licensees to put only their name on yard signs Real Estate Brokers who hold escrow money must maintain a bookkeeping system that includes - ✔✔a reconciliation of the bank statement within ten days of receipt Broker Goldman must maintain her escrow monies in which of the following? - ✔✔a federally insured depository A sponsoring broker learned that he needed an employment agreement with all the licensees he sponsored. He entered into an employment agreement with all his sponsored licensees who were active in sales. He did not do this for people who worked as licensed personal assistants of his licensees. Did the sponsoring broker act correctly? - ✔✔No, because sponsoring brokers must enter into employment agreements with licensed assistants. Which of the following would be a possible penalty when a licensee is found guilty of a single violation of the license act? - ✔✔Maximum $25,000 fine Hildred, a real estate broker licensed in another state, wishes to apply for reciprocity in Illinois. Which of the following statements is most true in regard to license reciprocity? - ✔✔Reciprocity is granted only licensees in states with similar licensing requirments Jeff's agent lists his home in the local MLS. Johan, an Illinois licensed real estate agent, shows the home to Jay. John is acting as: - ✔✔Jay's agent
Which of the following statements is true regarding the continuing education requirements? - ✔✔you must earn 6 hours of credit in the "core/mandatory" category the broker must withdraw earned commissions from an escrow or trust account - ✔✔the day of closing or the next business day after closing of the transaction A promissory note - ✔✔promises payment of principal and interest, if any If a borrower is behind in his loan payments, the lender can call for the entire balance immediately based on the - ✔✔acceleration clause In the mortgage arrangement, whose interest is benefited by an acceleration clause? - ✔✔the mortgagee A mortgage is - ✔✔a document which makes property security for a debt To use property as security for a debt without giving up ownership is called - ✔✔hypothecation Provisions for the release of a mortgaged property are found in the - ✔✔defeasance clause Unless there is a specific agreement to the contrary, the mortgage having first priority will be - ✔✔the mortgage first recorded
A final loan payment that is larger than previous payments is called a: - ✔✔balloon payment To apply for an FHA loan a borrower should contact: - ✔✔an authorized lending institution The FHA 203b loan program - ✔✔insures the lender against loss from default An existing FHA loan is being paid off early due to a sale of the property. How will the prepayment penalty be calculated? - ✔✔there is no prepayment penalty conventional loans have: - ✔✔no government backing The maximum amount a veteran can borrow on a VA loan is - ✔✔the amount of the CRV Under the federal truth in lending law, the cost of credit extended must expressed as - ✔✔an annual percentage rate If a lender charges more than the legal rate of interest, this is called - ✔✔usury A borrower obtains a 15-month term loan for $8,400. The annual interest rate is 11% and accrued interest is paid quarterly. A balloon payment will retire the principal. What is the total amount of all payments? - ✔✔$9,
A $55,500 loan will require a monthly principal and interest payment of $8.25 per $1,000. In addition, the annual property taxes of $560 and the 3 - year hazard insurance premium of $549 are to be prorated and added to the monthly payment. What will be the approximate amount of the monthly payment? - ✔✔$ To obtain funds to pay for a small remodeling project on a lease property, the tenant borrowed $4,300 at 12 1/2% interest for an 8 - month term loan. What was the total of accrued interest and principal paid? - ✔✔$4, When the borrower pledges real property as security for a loan the property is said to be: - ✔✔hypothecated The clause in a mortgage instrument that imposes a penalty should the loan be paid off early, is called: - ✔✔a prepayment clause Upon the payment in full of a mortgage, the borrower should receive from the mortgagee: - ✔✔a satisfaction of mortgage certificate In an installment land contract, title passes when: - ✔✔the deed is delivered to the buyer Which of the following is a conventional mortgage? - ✔✔a mortgage which requires the mortgagor to have private mortgage insurance
