Real Estate MCQs

Which of the following scenarios MOST accurately describes the typical income tax implications of REIT dividends for pension funds?

The REIT would pay taxes on the income and the pension fund would pay taxes on the dividend
The REIT would not pay taxes on the income but the pension fund would pay taxes on the dividend
The REIT would pay taxes on the income but the pension fund would not pay taxes on the dividend
The REIT would not pay taxes on the income and the pension fund would not pay taxes on the dividend

What are the typical implications to an REIT investor of REITs being listed?

The investor enjoys higher liquidity but assumes an increase in systematic risk
The investor enjoys higher liquidity as well as a decrease in systematic risk
The investor suffers lower liquidity and assumes an increase in systematic risk
The investor suffers lower liquidity but enjoys a decrease in systematic risk

Which of the following describes a typical equity REIT?

Invests in the equities of publicly traded real estate investments
Receives its revenue from rental and lease payments
Does not issue debt, utilize leverage or otherwise borrow

What is NOT one of the major ways that a REIT can be structured?

As an indexed REIT
As a finite life REIT
As a single property REIT
As a dedicated REIT

Which of the following statements is LEAST accurate regarding UPREITs and downREITs?

An UPREIT facilitates the capitalization needed to go public
In a down-REIT, an older REIT typically forms a subsidiary
Unlike a down-REIT, an UPREIT directly owns real estate assets
Both UPREITs and down-REITs are driven by tax consequences

How would a histogram of US REIT returns over the last twenty years be described?

By a large value of excess kurtosis and a negative skew
By a large value of excess kurtosis and a positive skew
By near zero excess kurtosis and a negative skew
By near zero excess kurtosis and a positive skew

Past correlation of US REIT returns (over the last 20+ years) tends to indicate which of the following aspects of REITs as a diversifier?

REITs diversified a bond portfolio very well and diversified a large stock portfolio better than a small stock portfolio
REITs diversified a bond portfolio very poorly and diversified a large stock portfolio better than a small stock portfolio
REITs diversified a bond portfolio very well and diversified a small stock portfolio better than a large stock portfolio
REITs diversified a bond portfolio very poorly and diversified a small stock portfolio better than a large stock portfolio

How is the NCREIF Property Index calculated?

Monthly based on monthly appraisals
Monthly with varied appraisal intervals
Quarterly based on quarterly appraisals
Quarterly with varied appraisal intervals

Which of the following results is NOT an implication of the smoothing of real estate returns due to the use of appraisals?

Lagging of returns
Decreased average returns
Decreased volatility of returns
Decreased correlations (with stocks and bonds)

What is NOT a major method of unsmoothing a real estate index?

Using only the properties that have recently been sold
Using a hedonic price index to adjust for characteristic differences
Using simulated leverage to magnify the dispersion in the returns
Using econometrics to remove the embedded lag on the time series

Which of the following styles was NOT developed by the National Council of Real Estate Investment Fiduciaries (NCREIF) for analyzing direct real esta...

Core
Satellite
Value-added
Opportunistic

What style of real estate investing is characterized by being the most liquid, the most developed, the least leveraged, and the most recognizable?

Core
Satellite
Value-added
Opportunistic

Which of the following characteristics best describes PERE (private equity real estate) investments?

Low to moderate leverage
Low risk real estate holdings
Easily valued using transactions data
Often originating in Europe

Possession of a current and valid license will be considered by a court

to have no effect.
as undeniable proof that the holder of that license may perform the services of real estate.
as sufficient evidence to prove the license status unless stronger evidence to the contrary is introduced.
as certification by the Commission that the license is in good standing.

A sales associate gets a signed contract from a buyer and mails it to the seller. The seller has agreed to the terms and the escrow deposit is safely...

notify the state.
sue the seller for his share.
sue the broker.
forget it. He is not entitled to the commission.

A licensee who has passed the brokers state examination, but desires to continue to operate under an owner-employer will be registered as a

broker.
sales associate.
broker associate
Realtor-Associate.

A hardware store owner, who is neither a real estate licensee nor a licensed or certified appraiser, was appointed by the court to appraise another h...

be compensated for the appraisal.
not be compensated for the appraisal unless licensed or certified.
apply for a temporary license from the Commission.
appraise any hardware store in the state without a license.

In order to be a licensee member of the Florida Real Estate Commission, an individual must have been licensed a minimum of

1 year.
2 years.
4 years.
5 years.

Broker Bill has a listing contract to sell Janets condominium. A prospective buyer offers to pay $60,000, but refuses to give a binder deposit with t...

refuse to submit the offer until accompanied by valuable consideration.
present the offer and suggest that the owner counteroffer for a binder.
present the offer only if the buyer promises to pay a binder if accepted.
present the offer only if it is close to the asking price.

A buyer gives a sales associate a binder check made out to him. The sales associate should

hold the check in the file until the broker returns and turn it over to him.
endorse the check and deposit it in the broker business account.
endorse the check and give it to the broker within one business day.
put the check in his personal account, then write his personal check to the broker.

The F.R.E.C. is composed of

four brokers and three lay members.
five brokers and two lay members.
three brokers, two brokers or sales associates, and two lay members.
seven members.

Licensure may be suspended for what maximum period of time?

1 year
2 years
5 years
10 years

Broker Larry, Broker Linda, and Broker Susan form a partnership to buy a tract of land and develop and sell the land. Sales Associate Lee joins the p...

Profits may be divided three ways only. Sales associate Lee cannot be a partner.
Profits may be divided four ways.
Sales associate Lee may be a partner only if he has broker status.
a and c

Which is not correct?

A licensee may be paid a commission only by his employer.
A licensee may not work for more than one employer.
A real estate licensee may not appraise a single family residence unless she has been licensed as a state licensed or certified appraiser.
A licensee has no grace period for renewing a license, and may not operate while the license is expired.

The passage of rules require

the vote of all members of the Commission.
the full vote of the Commission and the Governor signature.
the decision of the Chairman.
a quorum vote of the Commission.

Jane is a broker and accepts a deposit made out to her firm for $3,000. What is her legal requirement?

She must place it in her personal account.
She must place it in her business account no later than the end of the next business day.
She must place it in her trust account within three business days.
She must hold it until acceptance of the offer, then deposit it immediately.

Broker Jacqui decides to move her branch office from Fort Walton to Panama City. The proper procedure is for Jacqui to

report the move to the Board of Realtors.
request that the Division transfer the license to the new location.
cancel the existing branch license and submit the request and a new fee for the Panama City branch office.
wait until it is time to renew the branch office license.

A real estate sales associate is a person who

at times may perform any of the services ordinarily performed by a broker.
may perform some of the services ordinarily performed by a broker.
may not perform any service of real estate for the public for compensation in Florida, unless employed by an owner-employer.
may perform any of the services ordinarily performed by a broker provided that the service is under the supervision of the employing broker.

A sales associate chooses not to renew his license at the appropriate time. His license will be

involuntary inactive.
canceled.
voluntary inactive.
suspended.

The license period at Florida is currently

1 year.
2 years.
3 years.
4 years.

Which category is exempt from licensing when performing real estate services?

funeral directors
CPAs acting within the scope of their duties
partners receiving more than their pro-rata share of profits for selling services.
employees of a corporation who are paid on a transactional basis for selling corporate property

Practicing real estate without a license is a

first-degree misdemeanor.
second-degree misdemeanor.
first-degree felony.
third-degree felony

During the week, Janet works for Wonder Works Realty, Inc. as a sales associate. On weekends, she holds open houses for Schultz Homes, and is paid a ...

This is a violation of FTC rule 21V-1.46 stating a sales associate may have only one real estate employer.
She can work for both companies provided full disclosure is made and both parties agree in writing.
She may do this provided the companies obtain a group license.
This is an illegal arrangement.

A sales associate properly licensed with a broker may

open his own branch office with permission from his broker.
manage a branch office.
not manage a branch office.
open his own office.

Who can receive compensation directly from an owner?

a broker
a sales associate, if licensed with a broker
a broker associate, if licensed with a broker
all of the above

Which is correct about a group license?

It is issued to sales associates who work for several employers.
A broker may have as many as she has offices.
It is issued to sales associates who work for several entities with a comm ownership.
It is issued to brokers for each branch office.

Which of the following is a legal brokerage office? I. permanent building with at least one office II. sign at or about entrance with "Licensed Real...

I only
I and II
I, II and III
I and III

Required brokerage relationship disclosures must be retained by the broker for:

five years.
three years.
two years.
one year.

Which of the following best describes the relationship of a broker and his principal?

caveat emptor
limited duties
fiduciary duties
confidentiality until the listing expires

A licensee fails to renew his license at renewal time, and desires to become active again 16 months later. What must he do?

Reinstate by filing a renewal request with a late fee.
Reinstate by taking 14 hours of continuing education and paying a late fee.
Reactivate by taking a 28-hour reactivation education course and paying a late fee.
Take the sales associate course and the state exam all over again

John Harrison, a sales associate, leaves the employ of Gilbert Miller, a licensed real estate broker. John wrote a sales contract prior to his termin...

Refer the matter to arbitration at the Board of Realtors.
Pay $1,850 to John.
Explain that the law allows him to pay only sales associates licensed with the firm at the time of closing.

A Kentucky lawyer and a Florida broker joint venture to sell property in Florida for a friend of the Kentucky lawyer. What can the Kentucky lawyer re...

a commission if he actually performs services in the transaction
no part of the real estate commission

Joyce owns property in Tallahassee which is 100 feet on the road and 125 feet deep. The city paves the street and agrees to pay 25% of the cost. The ...

$2,025
$2,700
$3,456
$4,050

Hinson forms a limited partnership to develop and sell real property. Hinson will be the general partner will do all the work. Bailey buys units as a...

Hinson is liable for the same amount as Bailey.
Hinson is not liable because of the limited partnership status.
Hinson is liable for the unpaid judgments, Bailey is not.
Bailey is jointly and severally liable as a partner.

A Fort Walton Beach real estate broker is the property manager for several condos on the beach which rent for $1,000 per month. He also manages sever...

has no problem. He actually manage units which rent for $850 per month.
has acted with bad faith, but is not guilty of a violation of Florida law.
has no problem if he can show all customers were satisfied.
is guilty of fraudulent and misleading advertising

Jill sells commercial property exclusively. Which is correct about her brokerage relationships?

She may have "no official brokerage relationship" status, may be a single agent or may be a transaction broker.
Her broker may appoint her to be a “designated salesperson” for one party, and another person in the firm to be a “designated salesperson” for the other party in the transaction.
She must provide the Notice of Nonrepresentation at first contact with potential buyers and sellers.
a and b.

Which of the following is most correct?

All sales associates work for brokers.
All brokers have sales associates.
All brokers are Realtors.
All Realtors must be members of NAR.

An example of institutional advertising would be

an ad about a private hospital for sale
an ad about the outstanding service offered by a real estate firm
an ad describing a duplex for sale in the northern part of the county
an ad describing a private academy for sale

Which of the notices shown below MUST be signed by a buyer or a seller.

Transaction Broker Notice.
Single Agent Notice.
Consent to Transition to Transaction Broker Notice.
Notice of Nonrepresentation

John and Edward were brokers with their own firms. An economic downturn made them decide to share office space. They did not put up signs which descr...

I only
I and II
I, II, and III
I and III

A broker decides to go to work for an owner-developer, and will be compensated on a salary plus commission basis. Which is correct?

She must be licensed as a sales associate.
She must be licensed as a broker.
She need not be licensed if she confines her sales activity to the one employer.
She must be registered as a broker-sales associate.

Which of the following situations requires disclosure of brokerage relationship to a customer? I. sale of improved property with four units or fewer...

I only
I, II and III
I and III
I and II

Which brokerage relationship status requires that a broker disclose known facts that materially affect the value of residential property?

any status requires the disclosure.
single agents
transaction brokers
licensees with no official brokerage relationship

A licensed sales associate of a brokerage corporation may

own stock in that corporation.
be an officer of that corporation.
be a director of that corporation.
none of the above

Dexter Bonham is purchasing property through Lawrence Hafner, licensed real estate broker. Hafner sold the same piece of property last year. Because ...

Bonham should write a letter of commendation to the local Board.
Hafner may not do this.
If no liens have, in fact, been filed, Hafner cannot be prosecuted.
Hafner may do this if he writes out a formal opinion of title and agrees to stand responsible in case of later problems.

A single agent broker who wishes to remain loyal to the principal yet be involved in both sides of a transaction

may be a transaction broker for the other party.
may transition to dual agent with the written approval of both parties.
must work with the other party in a "no official brokerage relationship" role.
are unable to do so if working with the other party in a transaction.

An easement created when a person has been using a roadway without permission for over 20 years is called an

easement by prescription.
easement in gross.
easement appurtenant.
easement by necessity.

All the following are methods of transferring legal title to real property except by

a will.
a patent.
a sales contract.
eminent domain.

Jim, Matt and Jack were co-owners of a parcel of real property. Matt died, and his coownership passed, according to his will, to become part of his es...

tenants by the entireties.
tenants in common.
tenants at will.
joint tenants.

Which of the following is immediately south of Township 2 South, Range 6 West?

Township 2 South, Range 7 West
Township 2 South, Range 5 West
Township 1 South, Range 6 West
Township 3 South, Range 6 West

An owner wishes to have a survey made of a commercially-zoned parcel. It is 90 feet on the front, 159 feet on the north side, 120 feet on the back an...

lot and block
rectangular
government survey
metes and bounds

Which of the following is not required on a contract?

offer and acceptance
both parties competent
legal object
execution and two witnesses

To be valid, a deed must be

signed and acknowledged.
signed and witnessed.
signed and recorded.
all of the above.

Title to real property passes to the grantee when the deed is

recorded.
signed and witnessed.
delivered and accepted.
acknowledged.

Henry has a capital gain on the sale of his home of $197,000. He has owned the property for two years. The sales price was $425,000. Costs of sale we...

$39,400
$98,500
$197,000
$ 0

If an owner arrives before the foreclosure sale and pays the entire debt, court costs and legal fees, and interest on the property, he is exercising ...

right of stay of homestead foreclosure.
rights of estoppel.
right of redemption.
rights of certiori

A subdivision developer gives the county title to streets in a subdivision. The county accepts the streets for maintenance. This transfer of title is...

a patent deed.
dedication.
a public grant.
eminent domain

Which of the following acts as an insurance agency?

Fannie Mae
Freddie Mac
FHA
VA

Which happens to the monthly payments on a fixed payment mortgage?

Principal and interest portions of each payment remain the same.
Interest portion of each payment increases.
Interest portion of each payment decreases.
Principal is reduced and interest rates change annually.

The most common method used by the Federal Reserve Board to control the supply of money is by

Urban Development Block Grants (UDAG).
affirmative action.
Tandem Plan.
Open Market Operations.

An example of functional obsolescence is which of the following?

increased traffic flow on the street in front of the house
community recycling plant next door
four bedroom, one bath house
leaking pipes

If the capitalization rate increases, the value

increases proportionately.
remains stable.
increases non-proportionately.
decreases.

Which is synonymous?

lender - mortgagor
seller - grantee
buyer - vendor
mortgagee - lender

Which is most closely related to the comparable sales approach?

reproduction cost
present value of the income stream
principle of substitution
level annuity capitalization rate

Plottage is

the plotting of a linear regression analysis curve on investment income.
plotting the direction of growth in a comprehensive plan.
an increase in value of individual parcels when joined with other parcels.
marking off cemetery lots.

Which of the following forms of depreciation is usually found in external obsolescence?

intrinsic
inherent
incurable
curable

What is not available to the Federal Reserve System in controlling the money supply?

open market operations
adjusting the discount rate
changing the reserve requirement
changing depreciation rules

Under the income approach, value equals

vacant land value plus depreciated building value.
rate times income.
rate divided by income.
income divided by rate.

Lien theory means that the mortgage

creates a lien on the property, with the mortgagee having title.
instrument conveys title to the mortgagee with mortgagor having a lien.
is a lien on the property, but property title is vested with the mortgagor.
is a lien on the property, but property title is vested with the mortgagee

What is the final step after an appraiser has utilized all three approaches to value?

average each approach
use primarily the comparable sales approach
reconciliation
correlating

Which of the following expenses is not deducted from effective gross income in calculating net operating income?

depreciation
utilities
advertising
management

John purchases a home, and the seller helps to finance the sale. The price is $100,000, and John is to make a $10,000 cash down payment. The amount o...

fully amortizing
term
partially amortizing
adjustable rate

A seller tells a real estate licensee that he does not want his house shown to ethnic buyers. The sales associate should say

“ will try my best to steer these buyers elsewhere.”
“I’m going to call HUD and report you immediately.”
“I can not handle the sale of your property if you expect me to discriminate.

Jim Singletary wishes to construct an office building containing 24,000 square feet. The zoning in the area requires 1 parking space for every 400 sq...

60
160
200
400

Which is not correct? I. Redlining is not a violation of state and federal laws. II. “Blockbusting” is a description of the practice of scaring ...

I only
I and II
I, II, and III
I and III

John is a broker in Tallahassee, and meets for lunch with Martha, his most important competitor. They agree that, effective January 1 of the followin...

This is legal if the sellers and buyers agree to pay.
This is a violation of FREC rules.
This is a violation of Regulation Z.
This is a violation of anti-trust laws.

A prospect enters Broker A office and requests to be shown houses in neighborhoods with certain racial characteristics. The broker advises the prospe...

He would have violated federal laws but not the Florida real estate license law.
He violated Federal and State law and could have been suspended or revoked.
He would not have violated any laws; he must follow his principals instructions.
He would not have violated any laws; he must follow his prospects instructions.

Which is deducted from gross income to arrive at net operating income?

taxes
insurance
vacancy
debt service

A reasonably good balance between supply and demand of apartments is

5% occupancy.
90% vacancy.
95% occupancy
87% occupancy

The Fair Housing Act of 1968 (with amendments) prohibits discrimination

on the basis of age.
on the basis of a couple having children.
on the basis of behavioral characteristics.
all of the above

What requires lenders to give a Good-Faith Estimate?

the "Little FTC" consumer protection act.
Regulation Z.
RESPA.
FHLBB consumer protection statutes

Which is correct about Regulation Z?

It is published by the Federal National Mortgage Association.
It requires the disclosure of pertinent information such as down payment and annual percentage rate if a "triggering" item such as interest rate is advertised.
It requires disclosure of estimate of settlement costs by the lender.
all of the above

Marilyn is applying for a loan to finance her new home in an area where there are minorities. The loan officer tells her that she should try to find ...

blockbusting.
redlining.
steering.
failure to disclose under RESPa.

A comparable property sold a year ago for $70,000, but would have sold for about eight percent more today. The appraiser should:

adjust the subject price upward by $5,600.
adjust the subject price downward by $5,600.
adjust the comparable price upward by $5,600.

A small apartment property is estimated to have potential gross income of $ 25,000. Vacancy and collection losses are expected to average 5 percent o...

$208,333
$138,542
$197,917
$145,833

A 3-year insurance policy costing $1,164 is taken out November 1, 1995. The property was sold on May 15, 1996, and the day of closing belongs to the ...

$179.97
$955.99
$954.91
$977.97

An appraiser values a 4-bedroom home with a pool. A pool normally adds $14,000 value to a property, and a bedroom is worth $9,000. She locates the fo...

$120,000
$125,000
$130,000
$135,000

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Real Estate MCQs