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Chapters 1-5 Review
Chapters 1-5 Review
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Real Estate Course in Illinois
Flashcards
98 cards
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Questions
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Answers
1
In determining whether a prospective buyer can afford a certain home purchase, lenders will consider
credit score
all of these
ethnicity of the buyer
address of the home
2
A broker listed/sold a home. The seller said it was structurally sound. Who is held liable for a latent defect?
The sponsored licenseee
The seller and the sponsored licensee
The buyer
The seller
3
The term Realtor refers to
any real estate licensee
a real estate educator
a member of the National Association of Realtors
a real estate licenseee specializing in residential properties
4
All of these rights are included in the right to control one's property EXCEPT
sell the property to a neighbor
enjoy profits from its ownership
exclude utility meter readers
erect "No Trespassing" signs
5
Property management, leasing, appraisal, financing, and development are all examples of
specializations within the real estate industry
non-real estate professions
factors affecting demand
government regulation of the real etate industry
6
In real estate transactions, the term fiduciary typically refers to the
agent's relationship to the principal
sale of real property
person who has legal power to act on behalf of another
person who gives someone else the legal power to act on her behalf
7
Which of these events will terminate an agency in a broker-seller relationship?
The owner abandons property
The broker discovers the value of the property will not bring commission.
The broker appoints other brokers to help sell property.
The owner declares personal bankruptcy
8
The phrase bundle of legal rights is properly included in
a legal description
real estate transactions
leases for less than one year
the definition of real property
9
After a challenging transaction closes, the client gives the sponsored broker $500 for all the extra work.
The sponsoring boker is entitled to 80%.
The spons. broker should accept the check and deposit it in escrow account.
The sponosred broker may receive compensation only from the spon. broker
While compensation is irregular, it is apprpriate to accept.
10
An Illinois real estate licensee who is engaged as an independ. contractor
must be covered b workers' compensation
is considered an employee by the RIS for tax purposes
may work as an independent contractor for two or more sponsoring brokers
must have an employment contract with the sponsoring broker
11
A buyer is interested in a house that fits most of her needs, but it is located in a busy area. What characteristic?
permanence of investment
physical deterioration
area preference
immobility
12
Broker listed seller's home for 300k. The broker brought the seller a full-price offer. The seller decided not to sell.
the broker has no reason to collect a commission in this case
The seller's only liability is to the buyer
The seller probably is liable for the commission.
The broker must immediately file suit against the seller
13
An Auto Company is relocating on of it's factories, along with 2,000 employees to a small town. What effect will happen?
Housing will be more expensive
This involves industrial property; residential housing is not affected.
Housing will be less expensive
The annoucement involves an issue of demographics, not a supply and demand
14
Schools are considered part of which real estate classification?
Commercial
Special-purpose
Government-held
Industrial
15
To recover a commission for brokerage services a sponsoring broker must be emp. as the agent of the seller- what is true
The sp. broker must ask seller is ready, willing and able buyer
The sponsoring broker must work in a real estate office
The sponsoring broker must have one or more sponsored licensees employeed
The seller must have made an express or implied written agree. to pay comm.
16
A new sponsored real estate licensee wants to find new business among the firm's expired listings-how long do they have?
90 days
30 days
18 months
6 monts
17
Federal regulations on unsolicited email
require prior permission of recipients in order to send email to them
exepmpt phone calls to individuals with whom the R.E has prior relationship
require that email lists be scrubbed every 31 days
require commercial emails to include a physical address
18
Homeowners may deduct which of the following expenses when preparing income taxes?
Interest paid on maintenance and repairs
Flood insurance premiums
Insurance premiums
Real estate taxes
19
Which of the following is an example of price-fixing?
An agreement with ABC brokerage to not practice real estate in this area
In order to buy this new construction home, you must use us for 10 years
I'm going to tell every real estate agent I know not to refer X Inspector.
This is the same commission that every other real estate company charges
20
Which of these BEST describes an agent?
a person who gives someone else the legal power to act on her behalf
A person who is placed in a position of trust and confidence
A person who is in a customer-agen relationship
Two agents who work for the same brokerage firm
21
A real estate professional who performs a visual survey of peroperty's structure and systems and prepares a report...
an educator
a property manager
a home inspector
an appraiser
22
Which of these is NOT a cost or expense of owning a home?
Interest paid on borrowed capital
Homeowners insurance
Taxes on personal property
Maintenance and repairs
23
Which of these statements is TRUE of real estate broker acting as the agent of the seller?
The broker can disclose personal information to a buyer to benefit sale
The broker can agree to a change in price without the sellers approval
The broker is obligated to render faithful service to the seller
The broker can accept a commission from the buyer without telling seller
24
Which of these is an example of an appurtenance?
Personal property
Water rights
A trade fixture
A fixture
25
According to the Illinois license law, a sponsored real estate licensee may NOT
represent both buyer and seller
accept a commission from another sponsoring broker unless previously earned
buy or sell real estate for himself
engage in dual agency
26
Detailed information about the age, education, behavior, and other characteristics of members of a population group
demographics
population analysis
household data
family lifestyles
27
An active licensee entered into a contract with her spons. broker. She had 90% of her income come from sales. The IRS
would classify her as self-employed
a part-time real estate licensee
an independent contractor
an employee
28
Which factor MOST likely influences the demand for real estate?
Labor force
Wage levels and employment opportunities
Construction costs
Government financial policies
29
A sponsored licensee wants to receive a lump payment at the end of each transaction. The spon. broker must meet all BUT
have a written agreement
receive 9-% of income brom the brokerage
be free from supervision by the sponsoring broker
hold a current real estate license
30
The portion of an owers' property value that exceeds the amount of their mortgage debt is called
surplus
equality
escrow
equity
31
A licensee who has contracted with an apartment building owner to manage a highrise apartment is probably
a buyer's agent
a transactional broker
a general agent
a special agent
32
They buyer and seller of a home are debatin if an item is personal property. Courses would NOT consider the following:
whether the item is clearly adapted to the real estate.
whether it's removal would cause severe damage to the real estate.
the cost of the item when it was purchased.
any relevant agreement of the parties in their contract of sale
33
Parking spaces in multiunit buildings, water rights, and other improvements are classified as
trade fixtures
appurtenances
emblements
subsurface rights
34
A real estate licensee's responsibility to keep the principal informed of all the facts that could affect a transaction
care
accounting
disclosure
obedience
35
One result of the capital gains tax law is that MOST homeowners
may build more equity in their primary residence
may use the 250k or 500k capital gains exclusion if lived in house 2 years+
will be permitted to use the 125k over 55 exclusion more than once.
will pay capital gains tax at an 8% lower rate on their home sales
36
Which statement is TRUE regarding the National Do Not Call Registry?
Real estate licensees may not call their current listings for leads
Real estate licensees are exempt from telemarketing laws
Real estate licensees may phone any visitors to a open house up to 3 months
Real estate licensees are not required to search the national registry
37
In Illinois, which of these is TRUE concerning designated agency?
Designated agency is always illegal
License law requires the licensee to disclose, in writing designated agency
Designated agency is the same as creating an implied agency
License law requires that the seller and the buyer by rep by different comp
38
Which of these people are entitled to the 500k capital gains exclusion?
Single woman selling after owning for 18 months.
None of the above
A married couple selling their home after 3 years.
A single man selling after 17 years of ownership.
39
In Illinois, the usual "proof" that the listing broker has earned commission is the
closing of the sale
submission to the seller of signed offer from a ready, willing, able buyer
signing of an exclusive listing contract
deposit of the buyer's earnest money into escrow
40
According to law, a trade fixture is usually treated as:
an easement
personalty
license
a fixture
41
Theft, smoke damage, and damage from fire are covered under which type of homeowners insurance policy?
Broad form
National Flood Insurance Program policies
Basic form
Coinsurance
42
Which of the these BEST describes the economic characteristics of real estate?
Scarcity, immobility, and improvements
Location, uniqueness, and indestructibility
Scarcity, improvements, and location
Attachment, location and improvements
43
When an owner of real estate sells the property to someone else, which of the "sticks" in the bundle is she using?
Exclusion
Disposition
Legal enjoyment
Control
44
A bookstore owner rents space in a comm building. Tables are fastened to the walls. Shelves are bolted. Which is true?
Because they are attached they are treated the same way as other fixtures
Shelves & tables are trade fixtures and will be sold when owner sells bldg.
The bookstore is a tenant, the shelves and tables may not be removed
The shelves and the tables are trade fixtures and must be removed
45
A buyer is searching for a house in 190k-200k. The broker recalls a for sale by owner house in this range.
The for sale by owner seller is the broker's customer-the buyer is a client
The buyer is the broker's customer-the for sale by owner seller is a client
Both the buyer and for sale by owner seller are customers of the broker
The broker is now a dual agent
46
A broker received $2,520 as the firm's 50% share of a commission. Property sold for 72k, what was the commission rate?
6.5%
8%
6%
7%
47
A licensee who has several years of experience decided to retire. Now this licensee helps clients choose various alt.
Real estate counselor
Real estate educator
Real estate appraiser
Realtor
48
A couple paid $56k for their property 20 years ago. The market value is 119k, they owe 5k. Which is true?
The 114k difference is their replacement costs.
The 63k difference is their tax difference.
The 114k is the difference between value and owed is equity.
The 63k difference will be used for capital gains
49
Which of these is NOT covered in either a basic form or broad form homeowners insurance policy?
Windstorm and hail
Flood
Explosion
Fire and lightening
50
When responsible for maintaining a client's property and maximizing the return on the client's investment, a licensee..
an investment counselor
a building maintenance specialist
a property manager
serves as a rental agent
51
A professional opinion of a property's market value, based on established methods, professional judgment, is performed
A real estate broker
a home inspector
A real estate counselor
a real estate appraiser
52
In general, when the supply of a certain commodity increases,
demand tends to rise
prices tend to drop
demand is unchanged
prices tend to rise
53
A buyer informs their broker they are planning on operating a dog grooming business. Local zoning was not checked...
The agency duty the agent violates if loyalty
The agency duty the agent violated is care
The agency duty the agent violated is obedience.
The agency duty the agent violated is accountability
54
Which of these is considred personal property?
Bathtubs
Woodburning fireplace
Patio Furntiture
Awnings
55
Which of these may a sponsoring broker dictate to an independent contractor?
Number of vacation days the person would receive
Number of hours the person would have to work
Compensation the person would receive
Work schedule that the person would need to follow
56
A seller listed his property with a brokerage company. The agency relationship b/w the seller and the sponsoring broker
Special
General
Universal
Implied
57
A house was pre-assembled at a factory, driven to the building site, and a crane to lower to ground. What home is this
Mobile
Manufactured
Converted
Modular
58
The owner wants to sell their house quick; the broker tells a potential buyer the owner will accept 5k less. What TRUE?
The relationship between the broker and seller is a general agency.
The broker should have disclosed this information, regardless of accuracy
Unless given written permission from the seller to do so, it was improper
The broker has not violated his agency responsibilities to the seller.
59
A man inherited a farm. He removed the topsoil then sold the limestone and bedstone. He gave the farm away to his son.
The son inherits a large hold in the ground, but it is still a farm.
The man's estate must restore the land to it's original condition.
The son inherits nothing because the farm no longer exists.
The son owns the gravel, top soil and limestone no matter where it is.
60
When married homeowners who file jointly realize a profit from the sale of their home that exceeds 500k, which is true?
The gain exceeding 500k will be taxed at the current applicable cap. gains.
Up to 125k of the excess profit will be taxed as capital gains.
The excess gain will be taxed at the homeowners' income tax rate.
The homeowners will not pay capital gains tax if they are over 55.
61
In a dual agency situation, a licensee may represent both the seller and the buyer if
both parties give their informed consent, in writing, to the dual agency
the buyer and the seller are related by blood or marriage
the licensee informs either the buyer or the seller of this fact
both parties are represented by attorneys
62
What is the owners tax gain w/ expenses of 9,500 loan interest 800 real estate taxes, $450 late pymt, 1k loan orig. fee
11,750
10,500
11,300
9,800
63
Intent of the parties, method of attachment, adaptation to real estate are legal tests for determining if an item is
real property or real estate
an improvement
a trade fixture or personal property
a fixture or personal property
64
Under Illionis Law, which of these is TRUE
Sellers are not legally obligated to make any disclosures
Sponsoring brokers may designate which licensee represents the client
The law codifies the common-law concept of caveat emptor
Dual agency is illegal
65
Which of these factors tends to affect supply in the real estate market?
Employment and wage levels
Population
Demographics
Government financial policies
66
One general rule of the National Do Not Call Registry is
states must maintain separate do-no-call lists
Unless there is an established business relationship, it is illegal
the national registry must be updated once a year.
real estate offices are exempt from the laws
67
Tom has lived and owned his home in Dubuque, IA for 4 years. He spends a year in Italy and decides to sell his IA home.
Tom is single and can claim the 250k capital gains exemption
Tom is single and can claim a one-time exemption of 250k
Tom is single and can claim the 500k capital gains exemption.
Tom is single and can claim a 1031 exchange.
68
A person buys a parcel of natural forest. They cut down all the trees and build a shed. Which of these is TRUE?
The owners action constitutes improvements on the property.
The shed is personal property
Altering the property to construct a shed is not in the bundle or rights
If the owner is in business of storing subs., the shed is a trade fixture.
69
A building that is remodeled into a residential units and is no longer used for the purpose it was built for is...
urban homesteading
a modular home
a converted-use property
planned unit development
70
All of these would affect overall demand in the real estate market EXCEPT
population
wage levels
demographics
zoning ordinances
71
The six common law fiduciary duties are
care, obedience, loyalty, disclosure, accounting and confidentiality
obedience, negotiation, care, accounting, efficiency, loyalty
care, obedience, loyalty, disclosure, accounting, efficiency
accounting, appraisal, negotiation, confidentiality, obedience, loyalty
72
A sponsoring broker must have a written employment agreement with
a non-practicing licsensee
a licsensed managing broker
sponsored brokers
all of these
73
Which clause is found in MOST homeowners insurance policies?
Property improvement clause
Co-ownership clause
Property devaluation clause
Coinsurance clause
74
The amount of commission paid to a sponsored licensee is determined by
the local real estate board
mutual agreement with the client
Illinois Law
mutual agreement with the sponsoring broker
75
A community merges housing, recreation and commercial units into one self-contained development is called a:
cooperative
planned unit development (PUD)
mixed-use development (MUD)
condominium
76
When the supply of a commodity decreases while demand remains the same, price tends to
not be affected
drop
rise
go in the direction of supply
77
Real estate licensees who are paid in a lump sum and who are personally responsible for paying their own taxes are
buyer's brokers
nonexempt
independent contractors
employees
78
Chattels is another term for
Personal Property
Realty
Fructus Naturales
Fixtures
79
Examples of policy efforts to increase home ownership include
requiring higher down payments
requiring higher credit scores
penalizing first-time homebuyers for using funds from IRAs
lower closing costs for first-time homebuyers
80
Seller lists home with a broker and gave dual agency permission. A potential buyer asks Broker for general information.
The broker must decline because of the pre-existing agmt. with the seller
The broker owes fiduciary duties to both the seller and the potential buyer
The seller is the broker's client; the broker must have written dual agency
The seller and potential buyer are both the brokers customer
81
One defining difference between real estate (real property) and personal property is
the trees and air rights, while personal property includes the house/conten
land and the rights and interest inherent in the ownership of land
annual crops, while personal property includes mineral rights
Land and all things permanently attached, personal peropty is movable
82
A highrise development that includes office space, stores, theaters, and apartment units is an example of...
special clulster zoning
a converted-use property
a planned unit development (PUD)
a mixed-use development (MUD)
83
An owner decides to sell her house and takes the antique front door with her. No provisions exist. Is the owner allowed?
Yes, the owner can remove the door - accession
Yes, seperation
No, conversion
No, this act of severance is not allowed at time of selling -door is a fixt
84
Which of the following would NOT be like-kind property in a 1031 exchange of a rental single familly home?
A condo purchased as income property
Vacant land
Single-family home to be used as principal residence
Three-unit rental building
85
Local government can influence the supply of real estate by
all of these
zoning ordinances
land-use controls
building codes
86
Which of these is considered dual agency?
The two brokerage companies cooperating with each other
A licensee listing and then selling the same property
A licensee representing two or more sellers at the same time
A licensee acting for both the buyer and the seller in the same transaction
87
In Illinois, a real estate broker hired by an owner to sell a parcel of real estate must comoply with the
Concept of caveat emptor as codified in Illinois law
Concept of market value as codified in Illinois law
Illinois statute called the Real Estate License Act of 2000 amended in 2020
Federal common law of compensation
88
The term appraisal is defined as the
transfer of funds in the financing of real estate transactions
process of splitting a single property into smaller parcels
method of estimating a property's market value based on established methods
process of providing clients with competent independent advice
89
Puffing is
None of the above
Fraud
Intentional misrepresentation
An exaggeration of a description of a property
90
All of these are categories of the uses of real property EXCEPT
developmental
agricultural
industrial
residential
91
An unmarried homeowner has 80k in equity. The owner sells for 135k. The broker's commission was 5.5%. Taxable gain?
$47,575
$46,375
0
$61,425
92
Which of these is considered the MOST important characteristic of land?
Air rights
Location
Permanence
Subsurface rights
93
A homeowner is building a new enclosed porch. Lumber has been left on the driveway. At this point, lumber is considered
a trade fixture or a chattel fixture
personal property
a fixtures, because it will be permanently affixed to real property
Chattel that is real property
94
A Realtor is
any real estate broker who assists buyers, sellers, landlords, or tenants
a specially licensed real estate broker
a real estate licensee who is a member of the Nat. Assoc. of Realtors.
a member of the National Association of Real Estate Brokers
95
A Federal Reserve Board
monitors the Federal Housing Administration
establishes a real estate appraisal standards.
establishes a discount rate of interest for the money it lends
monitors nationwide construction costs
96
When demand for a commodity decreases and supply remains the same,
the market becomes stagnant
price tends to fall
price is not affected
price tends to rise
97
Two real estate companies agreed to boycott the services of a title company so that a new title company can take over.
Lincoln Fair Trade Act
Sherman Antitrust Act
Antiboycotting Act
Illinois Lincoln Antitrust Act
98
The seller took electric lighting units over the vanity. The seller had not indicated that in the contract What is true?
These lighting fixtures are trade fixtures and could be removed.
The lighting fixtures belong to the seller, he installed them as pers. prop
Original lighting fixtures are real property,but replacement lighting is PP
Installed lighting units normally are considered real estate fixtures.
