A disciplinary hearing will be conducted by
the director of the Department of Licensing or an administrative law judge.
(The director or an administrative law judge will conduct the hearing. Attorneys can represent the Department of Licensing, the licensee, and the person making the accusation.)
There are no exceptions to fair housing law for
racial considerations.
The case of Jones v. Mayer in 1968 upheld the Civil Rights Act of 1866 and prohibits racial discrimination without exception.
Taxes levied on a property owner to pay for installation of sidewalks or sewers are called
special assessments.
Special assessments are taxes levied on real estate to fund public improvements.
A prepaid item by the seller is a(n)
credit to the seller.
Prepaid items are expenses that have been paid by the seller but are not fully used up, such as fuel oil. These items are prorated and appear as a credit to the seller.
Schools would be considered part of which real estate classification?
Special-purpose
Special-purpose properties include schools, churches, cemeteries, and government-held lands.
When a lien against a parcel of real estate may result from a lawsuit currently before the court, someone examining the public records would look for
a lis pendens.
A lis pendens is a notice of a possible future lien and is filed because there is often considerable delay between the time a lawsuit is filed and the time final judgment is rendered.
Which of the following gives the BEST evidence of the buyer's intention to carry out the terms of the real estate purchase contract?
The earnest money deposit
The earnest money deposit is customary in real estate transactions to provide evidence of a buyer's intention to carry out the terms of the contract in good faith. It is also the seller's only remedy in a liquidated damages contr
The date and time a document was recorded help establish which of the following?
Priority
Time of recordation is an important consideration in establishing the priority of claims in the event of a sale.
Khalid has been making periodic payments of principal and interest on a loan, but the final payment will be larger than the others. This is a(n)
balloon payment loan.
When the periodic payments are not enough to fully amortize the loan by the time the final payment is due, the final payment is larger than the others, and this is called a balloon payment loan.
That portion of the value of owners' property that exceeds the amount of their mortgage debt is called
equity.
The equity represents the increasing ownership interest (the paid-off share) in the property, as the mortgage debt, the principal, is reduced. The value of the property minus the mortgage debt equals equity.
The MOST common source of harmful lead in older residential property is in
alkyd oil-based paint.
Lead was used as a pigment and drying agent in alkyd oil-based paint that is common on doors, window, and other woodwork. The federal government estimates that lead is present in about 75 percent of all private housing built before
Under a percentage lease, a commercial lessee may agree to pay
a percent of sales.
With a percentage lease, the rent is based on a minimum fixed rental fee plus a percentage of the gross income received by the tenant doing business on the leased property. This type of lease is typically used for retail businesses.
In a dual agency situation, a broker may represent both the seller and the buyer if
both parties give their informed consent, usually in writing, to the dual agency.
Dual agency, in states that allow it, requires informed written consent from both parties.
In an executory contract, the
buyer receives equitable title to the property.
Equitable title occurs when the buyer and the seller have executed a sales contract, and the buyer acquires an interest in the land. Legal title will not pass until the transaction is closed.
The federal Fair Housing Act does NOT prohibit
discriminating on the basis of marital status.
Marital status is not one of the seven protected classes under the federal Fair Housing Act.
Every licensed real estate broker must maintain an office in Washington that is accessible to the
public.
Every licensed real estate broker must maintain an office in Washington that is accessible to the public.
Which of the following would be used to clear a defect from the title records?
Quiet title action
If ownership cannot be traced through an unbroken chain, then a suit to quiet title may be necessary to establish ownership and clear the cloud on the title.
The amount of money a property commands in the marketplace is its
market price.
Market value is what a property should sell for in an arm's-length transaction between informed parties, neither of which is under undue pressure, and the property has been exposed to the market for a reasonable length of time.
The primary activity of Fannie Mae is to
buy and pool blocks of conventional mortgages and sell bonds that use them as security.
Fannie Mae buys and gathers into bundles (pools) existing conventional mortgages and raises money to do this by selling bonds backed by these pools of mortgages.
In receiving a gift of a parcel of real estate, one of the two new owners was given an undivided 60 percent interest, and the other received an undivided 40 percent. They now hold their interests as
Tenants in common.
Unlike joint tenants, tenants in common do not need to hold equal ownership interests.
The real estate license law consists of
both laws and rules.
The license law consists of laws passed by the state legislature and rules promulgated by the director of the Department of Licensing. All real estate licensees are required to obtain a copy of the license law, which is available from
In Washington, the real estate license law is administered by the
Washington State Department of Licensing.
The Washington State Department of Licensing administers the real estate license law. License law consists of laws passed by the state legislature and rules promulgated by the director of the Department of Licensi
If the potential gross rental income from a property is $20,000, the vacancy rate is 5 percent, and the additional income from the laundry facilities and extra storage is $700, what is the effective gross income?
$19,700
Effective gross income is the result of all incomes minus any losses due to vacancy, bad checks, etc.: $20,000 (potential gross income) + $700 (other income) - $1,000 [vacancies at 5 percent (0.05)] = $19,700
A real estate broker wishes to maintain an office in a residential building. All of the following conditions must be met EXCEPT that the
broker must live on the premises.
A real estate broker may maintain an office in a residential building, provided that the office is separate from any living quarters, the office is identified as a real estate office by a sign at the office entrance that
When a company furnishes materials for the construction of a house and is subsequently NOT paid, it may file a(n)
mechanic's lien.
A mechanic's lien gives security to persons or companies that perform labor or furnish material to improve real property, and can be filed when the owner has not fully paid for the work.
Reconciliation is BEST described as
analyzing the results obtained from the three approaches to value.
Reconciliation is analyzing the results obtained from the three approaches to value and deciding how much weight to give to each approach. A final value is estimated from the results of th
Mortgagee title policies protect which parties against loss?
Lenders
A mortgagee title policy protects the mortgagee-the lender. An owner's policy protects the owner, heirs, and devisees.
A municipality establishes development goals that are often used to control growth in its
comprehensive plan.
Local governments establish development goals by creating a comprehensive plan, which is also known as a master plan.
A person who owns one unit in a multiunit structure together with a specified undivided interest in the common elements would own a
condominium.
A person who holds a fee simple title to a unit and a specified share of the undivided interest in the common elements would own a condominium.
Which of the following is a TRUE statement about interest on a fully amortized mortgage or deed of trust loan?
Interest may be paid in arrears, that is, at the end of each period for which it is earned.
Interest may-and typically is-paid in arrears. The February 1 payment pays for the use of the borrowed money in January.
Wella is a salesperson working for broker Vincent. Wella sells a $150,000 home listed with another brokerage. The listing commission is 6.5 percent of the selling price. Of this amount, 5 percent is payable to the referral network that referred the buyer,
$3,217.50
$150,000 (sales price) x 6.5 percent (0.065) = $9,750 (listing commission); $9,750 x 60 percent (0.60 = $5,850 (cooperating broker's commission); $5,850 x 55 percent (0.55) = $3,217.50 (Wella's commission)
Which of the following is a similarity between an open listing and an exclusive-agency listing?
Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.
Both open and exclusive-agency listings allow the owner to sell without broker aid and thus escape paying a commission.
Which lien affects all real and personal property of a debtor?
General
A general lien attaches to all of a debtor's property as opposed to a specific lien, which affects only a specific property.
The Real Estate Brokerage Agency Law requires that the licensee do all of the following EXCEPT
conduct a property inspection.
The law does not require that the licensee conduct a property inspection. The duties of a licensee and the duties of the seller's agent under Chapter 18.86 RCW, Real Estate Brokerage Relationships, include the following: kee
What is the 2 point funding fee on a $180,000 VA guaranteed loan?
$3,600
$180,000 loan x 2% = $3,600 funding fee
Under an existing ordinance, no signs that extend more than three feet above the highest point of a roof may be placed on any building. An owner wants to erect a nine-foot-high revolving sign on the roof of his store. In order to do this legally, the owne
variance.
A variance permits a landowner to use the property in a manner that is strictly prohibited by the existing zoning,
A listing taken by a real estate salesperson is technically an employment agreement between the seller and the
brokerage.
Only a licensed broker for the brokerage firm may enter into brokerage agreements. The broker's salespeople have authority only to assist in negotiating the agreements. The salesperson is merely the agent of the broker, but only the broker is t
The legal advisor for the director of the Department of Licensing is
The Washington state attorney general.
The Washington state attorney general is the director's legal advisor. The director may appoint an adequate staff to assist him or her. Neither the director nor any employees can be involved in any real estate busine
The title to real estate passes when a valid deed is
Delivered and accepted.
Title is not considered transferred until the deed is actually delivered to and accepted by the grantee.
An option to purchase binds which of the following parties?
Seller only
The potential buyer (optionee) who purchases an option to purchase is not bound to purchase the property. However, should the optionee decide to exercise the option, the optionor (seller) is bound to proceed with the sale in keeping with all t
The type of loan that will MOST likely have the lowest loan-to-value ratio is a(n)
conventional loan.
Conventional loans are viewed as the most secure loans because their loan-to-value ratios are often the lowest.
A personal assistant working under the direct instruction and supervision of a licensee must hold a real estate license in order to
show properties to prospective buyers.
A personal assistant is required to have a real estate license to show property to prospective buyers. According to the real estate commission, an unlicensed personal assistant who works under the direct instruction
A buyer should consider the disclosure statement to be a
disclosure statement only.
The disclosure statement is not considered part of any written agreement between the buyer and seller. The buyer should recognize that it is neither a warranty nor a guaranty. Because the seller is making the disclosures, the li
At a disciplinary hearing, all of the following may be represented by an attorney EXCEPT the
administrative law judge.
The director or an administrative law judge will conduct the hearing and thus will not be represented by an attorney. Attorneys can be present to represent the Department of Licensing, the licensee, and the person making the accu
Radon poses the greatest potential health risk to humans when it is
trapped and concentrates in inadequately ventilated areas.
When radon gas accumulates in a poorly ventilated area in a structure or in a mine, its harmful effects are increased.
When moving into a newly purchased home, the buyer discovered that the seller had taken the electric lighting fixtures that had been installed over the vanity in the bathroom at the time of purchase. The seller had not indicated that the fixtures would be
Lighting fixtures are normally considered to be real estate.
Whatever fixtures are present in the structure at the time of contract, and are not mentioned in the contract, convey (pass to the purchaser). If the seller removes them the seller is in breach
The practice of channeling families with children away from other buildings into an apartment building where other families with children reside is
illegal discrimination.
All the buildings in the community must be made available to families with children under the familial status protection of the Fair Housing Act, and families cannot be directed to any one building, as this is illegal discriminatio
The closing statements of all transactions in which a real estate broker participates must show all of the following EXCEPT
clear evidence of title.
There is no requirement on the closing statement for clear evidence of title. The dates of the adjustments will be shown, together with the names of the payees, makers, and assignees of all notes paid, made, or assumed.
A lot with a depth of 80 feet and an area of 4,800 square feet was sold for $350 per front foot. What was the total sales price?
$21,000
4,800 square feet � 80 feet (one side) = 60 front feet; 60 x $350/foot = $21,000 (sales price)
If the director makes a written finding of fact that the public interest will be irreparably harmed by a delay in issuing an order, the director may issue a
temporary cease and desist order.
The director may issue a temporary cease and desist order. Whenever possible, the director will give notice by telephone or otherwise of the proposal to issue the order before issuing the temporary cease and desist order.
When the director receives a statement or accusation concerning a licensee, the director will
carry out a preliminary investigation of the facts to determine whether formal action is warranted.
When the director receives a statement or accusation, the director will carry out a preliminary investigation of the facts to determine whether the stateme
An important characteristic of land is that it may be modified or improved at some point in time. Depending on its type, an improvement may increase the value of real estate greatly. All of the following are considered to be improvements EXCEPT
crops.
Crops are either considered part of the natural real estate (fructus naturales) or emblements (fructus industriales), which are personal property, but in neither case are they improvements-artificial things attached to the land.
Disciplinary sanctions will be warranted if the licensee misrepresents his or her membership in any
state or national real estate association.
Misrepresentation of a licensee's membership in any state or national real estate association will warrant disciplinary sanctions.
All of the following are true regarding public records EXCEPT they
guarantee marketable title.
Proof of ownership is evidence that title is marketable and cannot be found in public records, but it can be ensured through a certificate of title, title insurance, or a Torrens certificate.
Any vacancies on the Washington Real Estate Commission will be filled by
appointment by the governor.
The governor may fill any vacancies on the commission for the unexpired term.
A void contract is one that
was never legally enforceable.
A void contract lacks some or all of the essential elements of a contract and so was never a contract in the eyes of the law.
Which characteristic of a fixed-rate home loan that is amortized according to the original payment schedule is TRUE?
The amount of interest to be paid is predetermined.
The monthly principal plus interest payment will remain constant throughout the term of the loan. The interest rate in a fixed-rate loan does not vary. The loan will probably be sold on the secondary mar
Which of the following are traditionally covered by a standard title insurance policy?
Improperly delivered deeds
Rights of persons in possession (prior to purchase) are not insured against by the basic title insurance policy, but they are covered by extended coverage policies. Changes in land use related to zoning are not covered in any ty
A property owner signed a 90-day listing agreement with a broker. The owner was killed in an accident before the listing expired. Now the listing is
terminated automatically because of the death of the principal.
A listing agreement may be terminated if either party dies or becomes incapacitated.
Washington state agency law was designed to
eliminate vicarious liability and imputed knowledge as to consumers.
The law was neither created to confuse the public nor to create paperwork. Washington state's agency law has four primary objectives: (1) to clarify and codify the common law of agency a
In order to take the real estate examination, the applicant must do all of the following EXCEPT
provide a parent's signature.
To take the real estate exam, the applicant must apply on the prescribed form and pay the license exam fee. The applicant must also provide proof of honesty, truthfulness, and good reputation, as well as identity, which may i
What is the estimated replacement cost of a 65. x 30. building at an estimated cost of $128.50 per square foot?
$250,575.00
65 feet x 30 feet = 1950 square feet x $128.50 per square feet = $250,575.00.
When must licenses be renewed?
On or before the expiration date
Licenses must be renewed every two years on or before the expiration date, and a biennial license renewal fee must be paid. The director will issue license and pocket identification to each active licensee.
All of the following reasons are valid bases for terminating a listing agreement EXCEPT
death of the salesperson.
A listing agreement is a personal service agreement between a broker and a seller, not between a salesperson and a seller.
The listing and the buyer's brokerage agree to split a 7 percent commission 50-50 on a $196,900 sale. The buyer's brokerage gives the salesperson 35 percent of the commission. How much does the buyer's salesperson earn from the sale?
$2,412.03
$196,900 x 7 percent (0.07) = $13,783 (total commission); $13,783 divided by 2 (between both brokers) = $6,891.50; $6,891.50 x 35 percent (0.35) = $2,412.03 (salesperson's commission)
A licensee must turn over money or documents upon demand within
30 days.
Failure to return monies or documents held in trust within 30 days of a demand for their return may be considered a conversion of such money or documents and will warrant disciplinary sanctions.
A person who assumes an existing mortgage loan is
personally responsible for paying the principal balance.
A buyer who purchases property and assumes the seller's debt becomes personally obligated for the payment of the entire debt.
A broker showed an owner-occupied property that had window screens, custom venetian blinds, and a wall bed to a buyer whose offer was then accepted by the owner. Before the close of escrow, the seller may remove
none of the identified items.
Unless addressed differently on the contract, all of the items that are attached to the real estate must convey with the property.
Fee for services" means
offering real estate services in a piecemeal fashion.
"Fee for services" is a piecemeal arrangement where the consumer, not just a FSBO, decides which services he or she needs and works with and pays the licensee solely for those services. This is unlike
Joanne and Samuel are next-door neighbors. Samuel tells Joanne that she can store her camper in his yard for a few weeks until he needs the space. Samuel does not charge Joanne rent for the use of his yard. Samuel has given Joanne a(n)
license.
A license is a personal privilege to enter the land of another for a specific purpose, and the right is given orally or informally.
The final transaction to complete a purchase contract is called a(n)
escrow.
An escrow is a method of closing in which a disinterested third party is authorized to act as escrow agent and to coordinate the closing activities.
Which statement is true of real estate closings in MOST states?
The party that owns on the day of closing is set by state law or tradition.
The party that owns the home on the day of closing varies in each state. Accrued bills will be prorated between the seller and the buyer. Either the buyer or the seller, whichever
All of the following items are usually prorated between the buyer and the seller at closing EXCEPT
recording charges.
The seller usually pays for recording charges necessary to clear all defects and furnish the purchaser with a marketable title. The purchaser pays for recording charges that arise from the actual transfer of title.
The income approach as used by an appraiser makes use of which of the following?
Capitalization
Capitalization is a method of estimating today, the future value of an income stream.
The LEAST specific method for identifying real property is
street address.
A legal description is a precise method of identifying a parcel of land and includes metes and bounds, rectangular survey, and lot and block as methods that can be used for identification. A street address is not a legal description and, t
The director of the Department of Licensing is responsible for all of the following EXCEPT
setting the general real estate tax range for each county in the state of Washington.
The director is not responsible for setting the general real estate tax range for each county of the state. The director is responsible for holding hearings, granting or
The provision in a listing agreement that gives additional authority to the broker and obligates the broker to distribute the listing to other brokers is a(n)
multiple listing clause.
An MLS is a marketing organization whose broker members make their own exclusive listings available through other brokers.
A suit to quiet title refers to
the removal of a cloud on the title by court action
If there is a gap in the ownership chain, then this cloud on the title makes it necessary to establish ownership by court action; this is called a suit to quiet title.
What did it cost to construct a building that is worth $155,200 today if it has depreciated at the rate of 2% per year (50 years useful life) for the past four years?
$168,695.65
$155,200 current value � 92% = $168,695 original cost
The legal proceeding or legal action brought by either the buyer or the seller under a purchase contract to enforce the terms of the contract is known as
specific performance.
In a suit for specific performance, the court may force the buyer or seller to go through the sale and convert the property as previously agreed.
The salesperson received a $2,800 commission on her 35 percent share of the total commission on the sale of a property that sold for $160,000. What was the commission rate?
5 percent
$2,800 (agent's commission) � 35 percent (0.35) (agent's percentage) = $8,000 (total commission); $8,000 � $160,000 (sales price) = 5 percent (commission rate)
A licensee is hired as a buyer's agent. The buyer confides he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the licensee's responsibility regarding
required to disclose it because it is a material fact-information important to the seller's evaluation of the offer.
The agent is obligated to disclose any material fact-something that might make a party change his or her mind. Real estate brokers and sal
A buyer has been notified that her offer to purchase was accepted. What should the broker do with her earnest money deposit?
Put the deposit in an account, as provided by state law
Most states require brokers to place earnest monies and other funds of others held in trust in a specified company account used only for such monies. Brokers who mix their own money with deposits and
With the advice and approval of the real estate commission, the director of the Department of Licensing shall
issue rules and regulations to govern the activities of real estate licensees.
With the advice and approval of the real estate commission, the director of the Department of Licensing shall issue rules and regulations to govern the activities of real estat
To determine whether a location can be put to future use as a retail store, you would examine the
zoning ordinance or codes
Zoning ordinances deal with the uses to which properties in various parts of the jurisdiction can be put.
In a closing statement, a prepaid item is a(n)
item that is prepaid by the seller.
Prepaid items are items prepaid by the seller but not fully used up and appear as a credit to the seller on a closing statement.
A borrower obtained a $7,000 second mortgage loan for five years at 6 percent interest per annum. Monthly payments of principal and interest were $50. The final payment included the remaining outstanding principal balance. What type of loan is this?
Partially amortized loan
A partially amortized loan is a balloon payment loan. Principal is still owed at the end of the term, because periodic payments are not enough to fully amortize the loan and the final payment is larger than the others.
When title to trust property is transferred back to the trustor by the trustee, which deed is used?
Deed of reconveyanceTrustees who convey trust property back to the trustor use a deed of reconveyance.
Trustees who convey trust property to persons other than the trustor use a trustee's deed.
A portion of Walter's building was inadvertently built on George's land. This caused an
encroachment.
When all or part of a structure illegally extends beyond the land of its owner, this is called an encroachment.
A broker will be held liable for the conduct of his or her affiliated licensee under which of the following circumstances?
The broker was aware of, but did not participate in, the violation.
A broker will be held liable for the conduct of his or her affiliated licensee if the broker was aware of, but did not participate in, the violation. A broker will not be held responsible
A lender's refusal to lend money to potential homeowners attempting to purchase properties in areas with high crime rates is known as
redlining.
Failure to lend or to insure in areas largely populated by a protected group is a violation of the federal Fair Housing Act of 1968. It is redlining.
After Dan had purchased his house and moved in, he discovered that his neighbor regularly used Dan's driveway to reach a garage located on the neighbor's property. Dan's attorney explained that ownership of the neighbor's real estate includes an easement
the servient tenement.
Because Dan's property serves the property of the neighbor, it is the servient tenement (lot). The neighbor's property dominates and so is called the dominant tenement (lot).
Which statement about encumbrances on real estate is TRUE?
Easements and encroachments are always encumbrances on the land that is subject to them.
Easements and encroachments are encumbrances. Encumbrances may reduce the value of land that is subject to them. Encumbered land may be sold to anyone who is willing
A buyer prospect is interested in seeing a house listed with a real estate company but does not wish to enter into a buyer agency agreement. A broker from the real estate company can show the buyer an in-house listing if the
broker provides the buyer with an agency disclosure that the real estate company represents the seller.
A licensee who performs real estate brokerage services for a buyer is a buyer's agent unless the licensee has entered into a written agency agreement w
Under Washington licensing law, a partnership, limited liability company, or corporation will be granted a license only if
an officer, partner, member, or manager is designated as the broker.
An officer, partner, member, or manager must be designated as a broker before a license will be granted to a corporation, limited liability company, limited liability partnership, or par
Which appraisal method uses a rate of investment return?
Income approach
The income approach uses the rate of investment return, which is the relationship between the appraised value and the net annual income.
Carol and her husband bought their house in 1968 (when they were 21) for $25,000 and have lived in it ever since. Today, the neighborhood has become very fashionable, and they sell the house for $450,000. How much of the gain is taxable on the couple's jo
None
If Carol and her husband file jointly, they can exclude up to $500,000 in profits from capital gains tax.
All of the following would affect supply EXCEPT
population.
Population affects the demand for real estate. As population grows, so does the demand for housing. Construction costs, government controls, and the labor force affect supply.
A section
is 1 mile square.
Each township contains 36 sections, and each section is 1 square mile.
Which of the following BEST describes participants in the secondary market?
Institutional investors who buy and sell loans
Secondary market participants buy and sell previously originated loans.
When does a real estate license expire?
Every two years, on the date of issuance
Under the new RCW 18.85, the license expiration dates of first-time issued licenses isn't related to birth dates. All first time licences issued after July 1, 2010 will expire two years from the date they are issue
A document that protects against hidden risks such as forgeries and loss due to defects in the title, subject to specific exceptions, is called a(n)
title insurance policy.
Although a certificate of title is used as evidence of ownership, it is not perfect against unrecorded liens or hidden defects. A title insurance policy protects the policyholder from title defects.
All of the following are treated as personal property EXCEPT
an installed dishwasher.
Once an item of personal property is attached to real property, it becomes real property. The two exceptions are trade fixtures and emblements.
An applicant has passed the licensing exam and submitted the completed license application form and fee. The applicant may begin working as a real estate licensee using the completed license application as an interim license. This interim license is effec
45 days.
The completed license application form serves as an interim license for up to 45 days, by which time the licensee's permanent license should have arrived. The postmark date of the application or date of hand delivery to the licensing division is
A developer does NOT provide the buyer with a public offering statement before the buyer signs a purchase contract. How many days after receiving the statement does the buyer have to rescind the contract?
2 days
The developer must give a public offering statement to each buyer before the buyer signs a purchase contract. Otherwise, the buyer can rescind the contract within two days after receiving the statement. If no statement is received, the buyer can su
The term reconciliation refers to which of the following?
Analyzing the results obtained by the different approaches to value to estimate a final estimate of value
The three approaches to value typically produce three different values. An in-depth analysis of these values is required to determine the most valid,
A single man with two small children has been told by a real estate salesperson that homes for sale in a condominium complex are available only to married couples with no children. Which statement is TRUE?
The man may file a complaint alleging discrimination on the basis of familial status.
The salesperson and, by implication, the broker and the property owner-principals have violated the prohibition against familial status discrimination. Anyone in charge
A property was listed with a broker who belonged to a multiple listing service and was sold by another member broker for $253,500. The total commission was 6 percent of the sales price. The selling broker received 60 percent of the commission, and the lis
$6,084.00
Two steps to find the listing broker's commission: (1) Find total commission. (2) Using the total commission, find the listing broker's 40 percent share of it. (Note: If the selling broker gets 60 percent, it leaves 40 percent for the listing br
On Monday, the seller offers to sell his vacant lot to the buyer for $12,000. On Tuesday, the buyer counteroffers to buy for $10,500. On Friday, the buyer withdraws the counteroffer and accepts the original offer of $12,000. Under these conditions, there
not a valid agreement because the buyer's counteroffer was a rejection of the seller's offer and once rejected cannot be accepted later.
A counteroffer is a new offer; it voids the original offer.
A broker may establish one or more branch offices under a name or names that differ from that of the main office with the approval of the director only if
each branch office is clearly identified as a branch or division of the main office.
A broker may establish one or more branch offices under a name or names that differ from that of the main office if the director approves the name or names, so long as ea
If a seller needs to net $50,000 after the sale, how much must the real estate sell for if the selling costs include a 7 percent commission and $1,200 in other expenses?
$55,054
$50,000 (net) + $1,200 (costs) = $51,200; $51,200 � 0.93 [100 percent - 7 percent (0.07) commission] = $55,053.763 or $55,054 (sales price rounded up)
A house for sale was advertised, ''Fine executive home in an exclusive neighborhood, suitable for an older couple; near St. Mary's Church.'' Which statement is FALSE?
This is descriptive of the property for sale and a good ad.
This ad could be construed as discriminatory, as it indicates a preference for no children and possibly those of a certain faith.
Broker Janna was accused of violating antitrust laws. Of the following, she was MOST likely accused of
price-fixing.
Antitrust laws prohibit competing brokers from setting a standard commission rate, known as price-fixing.
It is the duty of an agent to disclose to the principal every material step taken in the transaction of the principal's business. This is because the
agent has fiduciary obligations to the principal.
It is the agent's duty to keep the principal informed of all facts or information that could affect a transaction.
Which of the following is an example of involuntary alienation?
Having a piece of land sold for delinquent taxes
Title to property transferred without the owner's consent, known as involuntary alienation, is usually carried out by operation of law and can include having the property sold to satisfy delinquent taxes.
Rent could BEST be defined as
consideration for the use of real property.
Consideration is the exchange of something of value by the tenant for possession of property owned by another person.
A broker is permitted to represent both the seller and the buyer in the same transaction when
both parties have been informed and agree to the dual representation.
Real estate licensing laws may permit dual agency only if the buyer and seller are informed and give written consent to the broker's representation of both in the same transaction.
Broker Joan shows properties listed for sale with her company to prospect Karl. Karl has refused buyer representation. Karl is Joan's
customer.
The third party or nonrepresented consumer for whom some level of service is provided is a customer and is entitled to fairness and honesty.
The purpose of the Real Estate Settlement Procedures Act (RESPA) is to
see that buyers know all settlement costs that will be charged to them.
RESPA seeks to ensure that borrowers will know all settlement costs that will be charged to them.
An appraiser has been hired to prepare an appraisal on a property that includes an elegant old mansion that is now used as an insurance company office. Which approach to value would the appraiser MOST rely on?
Income approach
The income approach would be used on the income-producing property such as an office if the entire mansion is used as such. Should the mansion have other uses along with the insurance company, then multiple approaches may be appropriate.
Because a homeowner failed to pay her real estate taxes on time, the taxing authority imposed a claim against her property. This claim is known as a(n)
lien.
Unpaid real estate taxes are a lien on the property as they are a charge against the property that provides security for a debt or an obligation of the property owner.
Reconciliation is an appraisal term used to describe
the appraiser's analysis and comparison of the results of all three appraisal approaches.
Reconciliation is the process used by the appraiser in determining how much weight should be given to each of the three approaches to value, if any. After considerin
Federal income tax regulations allow homeowners to reduce their taxable income by amounts paid for
real estate taxes.
Real estate taxes, mortgage interest, points for loans, and some origination fees can be deducted on income tax returns.
Generally, personal property can be distinguished from real property by its
lack of attachment.
Personal property is distinct from real property in that it is movable and not attached or adapted to the real property.
A wooded area with biking and hiking trails is situated between old cotton mills and a housing development. This area is considered a
buffer zone.
Buffer zones, such as parks, are used by municipalities to screen residential areas from nonresidential zones.
An apartment rule prohibits pets. Arlis, a prospective tenant with a physical disability, relies on a service animal to assist him. Which of the following is TRUE?
This restriction is unenforceable when a person uses an animal for disability related assistance in any way.
Support animals are not pets and must be allowed as a reasonable accommodation for a disabled person under the Fair Housing Act.
Kevin has fenced his property. By mistake, the fence extends one foot over Kevin's lot line onto a neighbor's property. The fence is an example of a(n)
encroachment.
To build over a property line is to encroach.
The agency responsible for the enforcement of the Fair Housing Act is the
Department of Housing and Urban Development.
The Fair Housing Act is administered by the Department of Housing and Urban Development (HUD).
The primary purpose of a deed is to
transfer title rights.
Title is a way of referring to ownership. The document by which the owner transfers his or her title is known as the deed.
A contract entered into while someone is under duress is considered to be
voidable.
Duress, fraud, misrepresentation, and minors make contracts voidable.
When properly recorded in the county where the real estate of the defendant is located, a judgment becomes a(n)
involuntary lien.
A judgment is a general, involuntary, equitable lien on both real and personal property owned by the debtor.
All of the following would affect demand EXCEPT
fiscal policy.
Government financial policies (fiscal policies) affect supply. Population, demographics, and wage levels affect demand for real estate.
From the reproduction or replacement cost of a building, the appraiser deducts depreciation, which represents the
loss of value due to any cause.
Depreciation is loss of value from any cause. Some examples of such causes are physical deterioration (wearing out and/or deferred maintenance), economic (external) obsolescence, and functional obsolescence (lack of moderni
All of the following are legal deed restrictions EXCEPT
allowable ethnic origins of purchasers.
No deed restrictions may limit ownership or occupancy based on an individual's ethnic origin.
Interest on an assumed mortgage loan is entered on the closing statement as a
debit to the seller and a credit to the buyer.
Interest, owed by the seller but paid later by the buyer, is a debit to the seller and a credit to the buyer on the closing statement.
After a broker takes a sale listing of a residence, the owner specifies that he will not sell his home to any family that is not of the same Asian background as the seller. The broker should do which of the following?
Explain to the owner that the instruction violates federal law and that the broker cannot comply with it
The situation places the broker in the position of either violating the fiduciary duty of obedience or violating the federal Fair Housing Act. To avoi
A state has recently updated its Rules and Regulations for the Real Estate Profession. Assuming this state is like all other states and provinces, which statement is TRUE regarding this publication?
The rules and regulations are a set of administrative rules adopted by the state real estate commission that define the statutory license law and have the same force and effect as the license law itself.
Each state has a licensing authority that has the p
Victor and Norman are co-owners in fee simple of a small office building. Norman dies intestate and leaves nothing to be distributed to his heirs. Victor is neither related to Norman nor his creditor. Which of the following would explain why Victor acquir
Joint tenancy
Upon death in a joint tenancy, all remaining interests do not pass to the heirs or according to the will but to the surviving joint tenant.
All of the following would acquire title to real property EXCEPT the
lessee.
The lessee is the tenant. Tenants are granted the right of possession, not ownership of the property.
A professional estimate of a property's market value, based on established methods and using trained, professional judgment, is performed by a
real estate appraiser.
Although brokers, counselors, and inspectors also look closely at a specific property, only an appraiser is qualified to produce a formal opinion of value-an appraisal.
Federal income tax law excludes gain realized on the sale of a primary residence for individuals filing separately and for couples filing jointly. The amount of this exclusion is (separately/jointly)
$250,000/$500,000
Reforms in the late 1990s changed tax considerations for most homeowners. Currently, an individual filing separately may exclude $250,000 profit from capital gains tax, and couples filing jointly can exclude up to $500,000 in profits.
A house with outmoded plumbing is suffering from
functional obsolescence.
Outmoded, although functional, design features that are no longer considered desirable would be considered functional obsolescence.
Sue signs a listing agreement with broker Ken to sell her home. The agreement states that Ken will receive a 7 percent commission. The home sells for $220,000. What is the net amount that Sue will receive from the sale?
$204,600
Two steps: (1) Find the commission. (2) Subtract the commission from the selling price to find seller's amount. (1) Brokerage rate (7 percent) x Selling price ($220,000) = Commission ($15,400). (2) Selling price ($220,000) - Commission ($15,400)
The balance of a loan being assumed by the buyer is entered on the closing statement as a
debit to the seller and a credit to the buyer.
The principal balance on an assumed mortgage loan is listed as a debit to the seller and a credit to the buyer.
When the supply of a commodity decreases while demand remains the same
price tends to rise.
Under the laws of supply and demand, if supply of a commodity decreases with demand remaining the same or increasing, prices go up.
Documents affecting real estate are recorded or filed in the county in which the property is located to
Enable interested parties to know where to look to discover the various interests of other parties to the transaction.
All recording acts provide that any written document affecting interests in land be recorded where the land is located in order to serve
Members of the Washington Real Estate Commission are appointed for terms of
six years.
Members of the Washington Real Estate Commission are appointed for terms of six years each.
The method of describing land that uses compass degrees, feet, and monuments is known as the
metes and bounds system.
A metes and bounds system starts at a POB (point of beginning) and proceeds around the property's boundaries by referring to linear measurements, monuments, and directions.
If an interest payment of $1,500 is made every 3 months on a $50,000 loan, what is the interest rate?
12%
$1,500 x 4 = $6,000 annual interest � $50,000 = 12%
Harry owns a building in a commercial area of town. Tina rents space in the building and operates a bookstore. In Tina's bookstore, she has installed large reading tables fastened to the walls and bookshelves that create aisles from the front of the store
The shelves and tables are trade fixtures and may properly be removed by Tina before her lease expires.
Common law protects business tenants who install fixtures for their business by treating these trade fixtures as their personal property and giving ten
A real estate broker wants to end racial segregation. As an office policy, the broker requires that salespeople show prospective buyers from racial or ethnic minority groups only properties that are in certain areas of town where few members of their grou
Because the effect of the broker's policy is discriminatory, it constitutes illegal steering regardless of the broker's intentions.
Steering is steering, regardless of the intentions of the broker.
Disciplinary sanctions will be warranted if the licensee fails to furnish a copy of any listing, sale, lease, or other contract relevant to a real estate transaction to all signatories thereof
at the time of execution.
At the time of execution, failing to furnish a copy of any listing, sale, lease, or other contract to all signatories of a real estate transaction will warrant disciplinary sanctions.
Which of the following describes the act by which real property can be converted into personal property?
Severance
When we sever something, we cut it loose. Severing (felling) a tree from its roots converts it from realty (real property) to personal property. The process is severance.
Which of the following is NOT a form of co-ownership?
Ownership in severalty
When there is one sole individual who owns the property, this is known as ownership in severalty.
Ed, Frank, and Gina were concurrent owners of a parcel of real estate. Frank died, and his interest passed according to his will to become part of his estate. Frank was a
tenant in common.
If Frank had been a joint tenant, the property would not have passed according to his will because joint tenancy supersedes a will. He was not a tenant by the entirety, a category reserved for husbands and wives. Nor was he an owner in s
In what way does a deed of trust differ from a mortgage?
In the number of parties involved in the loan
A deed of trust is a three-party instrument that conveys naked title to a third party, the trustee, who holds the title on behalf of the lender, also known as the beneficiary. The borrower is the trustor. A mo
How much will the seller be charged for interest on a loan with an outstanding balance of $133,801 at 7% annual interest that is being assumed. The purchase agreement calls for the interest to be prorated through closing and for the proration to be calcul
$754.49
$133,801 x 7% � 360 x 29 = $754.49
In Washington, most confidential information concerning a principal may not be disclosed. However, which information must be disclosed?
That which relates to material facts about the property
Information that relates to material facts about the property must be disclosed. One of the duties owed to a principal is the duty "not to disclose any confidential information from or about the prin
A salesperson received $2,250 as her 50% share of the brokerage fee on a $75,000 sale. At what rate was the full brokerage fee computed?
6.00%
$2,250 salesperson's commission � $75,000 sales price = 3% � 50% = 6%
A real estate broker decides to sell his or her own property without using a broker. When advertising the property, the broker
must disclose the fact that he or she is a real estate licensee.
A licensee advertising his or her personally owned real property must only disclose that he or she holds a real estate license.
At the closing of a real estate transaction, the buyer received a credit for certain accrued items. These items were
bills relating to the property that will have to be paid by the buyer.
Accrued items are those property-related expenses (bills) that remain on the property as it is sold and that the purchasers will have to pay later.
A small condo sold for $62,250, which was 75% of the list price. What was the list price?
$83,000
$62,250 sales price � 75% = $83,000 list price
The real estate license examination tests the applicant on all of the following EXCEPT
understanding of Washington criminal law.
The real estate exam does not test on an understanding of Washington criminal law. It does test on the principles of real estate, appropriate knowledge of English, including math, and the purpose and legal effect
Under the law of agency in Washington, the duty to disclose requires that the agent accomplish which of the following?
Disclose any material defect in the property that is known by the agent
A licensee must always disclose any known material defect in the property. Unless otherwise agreed, a licensee is not obligated to conduct an independent inspection of the property, a
Martin lists and sells a home for $825,000 at a 7.5% commission. How much does Martin receive after his broker deducts 20% for the company share plus a $500 transaction fee?
$49,000
$825,000 sales price x 7.5% = $61,875 total commission - 20% = $49,500 - $500 = $49,000 Martin's commission
When a person buys a house using a mortgage loan, the difference between the amount owed on the property and its market value represents the homeowner's
equity.
This equity was created by the down payment and is the portion of the property held free of any mortgage.
Which factor is MOST likely to influence demand for real estate?
Wage levels and employment opportunities
When wage levels and job expansion are increasing, workers are more likely to buy real estate; when job opportunities are scarce or wage levels low, demand for real estate usually drops.
Disciplinary sanctions will be warranted if the licensee directs any transaction involving his or her principal to any lending institution or escrow company in expectation of receiving a kickback or rebate without first disclosing such expectation to
his or her principal.
The licensee must first disclose any expectation of a kickback or rebate to his or her principal. Failure to do so will warrant disciplinary sanctions.
A person who has complete control of a parcel of real estate is said to own a
fee simple estate.
The highest interest in real estate recognized by law is the fee simple or fee simple absolute estate wherein the holder is entitled to all rights of the property.
All of the following loans to individuals are affected by the truth-in-lending law under Regulation Z EXCEPT those for
business use.
Regulation Z applies when credit is extended to individuals for personal, familial, or household uses, not for business use.
A contract for the sale of real estate that does not state the consideration and is not signed by the parties is considered to be
void.
A contract is void when a consideration is not stated, as it is an essential element of a contract.
Unless some other written agreement has been made, broker Hugo will usually receive his brokerage commission when
the transaction is closed.
Although a commission is usually earned when the buyer has been procured, it is usually payable when the sale is closed.
Change, contribution, and substitution are some of the basic principles that affect what aspect of real estate?
Value
They all affect value-the most probable price a property will bring.
To increase yield on a loan, the lender charges
discount points.
Discount points increase the lender's yield on loans.
The clause in a trust deed or mortgage that permits the lender to declare the entire unpaid balance immediately due and payable upon default is the
acceleration clause.
An acceleration clause gives the lender the right to declare the entire debt due and payable immediately if the borrower has defaulted.
How does a cooperative obtain the funds necessary to cover ongoing operating expenses and mortgage payments?
By collecting regular assessments from shareholders
Funds for the budget are assessed to individual shareholders, generally in the form of monthly fees.
Disciplinary sanctions are warranted if the licensee fails to keep an account of escrow or trustee funds deposited with him or her relating to a real estate transaction for a period of
three years.
In a real estate transaction, failing to preserve records for at least three years following its consummation will warrant disciplinary sanctions. The account must show to whom the funds are paid and other pertinent information as the directo
Each of two brokerage companies claimed full commission for the sale of a property that was listed by both of the firms under open listing agreements. The broker who is entitled to the commission is the one who
was the procuring cause of the sale.
The broker who can prove that the sale resulted from that broker's efforts will be considered the procuring cause of the sale and be entitled to the commission.
A title search for a property under contract has revealed several outstanding liens against the property. Which of the following liens has highest priority?
A real estate tax lien for the current year
Tax liens usually have priority over previously recorded liens.
For how much monthly PITI payment can Ryan qualify if he earns $6,600 monthly and the lender applies 28/36 qualifying ratios?
$1,848
$6,600 income x 28% = $1,848 monthly PITI payment
A mechanic's lien would be properly classified as a(n)
specific lien.
A mechanic's lien is a specific lien as it affects a specific property and only that particular property.
With a tenancy for years
no notice is required to terminate the lease.
An estate (tenancy) for years is a leasehold estate that continues for a definite period of time. Because it always has specific beginning and ending dates, notice is not required.
Which of the following is a legal activity and will NOT warrant disciplinary sanctions?
Depositing earnest money into the trust account
Depositing earnest money into the trust account is proper and will not warrant a disciplinary action. Disciplinary sanctions are warranted if acting as a vehicle dealer without a license, violating a cease a
Which of the following factors primarily affects supply in the real estate market?
Government financial policies
Population, demographics, and employment impact demand for a commodity, but government fiscal (spending and taxing) policies strongly influence availability and cost of credit for those who buy or sell properties.
In designated agency, all of the following apply EXCEPT
the same agent may represent both the buyer and the seller at the same time.
When a broker authorizes an agent to act as the agent of a specific principal, then that designated agent cannot represent both parties, or this would be dual agency.
Herta conveys a life estate to her grandson and stipulates that on her death the estate will pass to her son-in-law. The son-in-law has a(n)
emainder interest.
When a life estate ends, it is replaced by a fee simple estate. The future interest Herta's son-in-law has in the fee simple estate that will convey to him when the life estate ends is called a remainder interest.
Terry Johns pays $600 per month plus a percentage of gross annual sales in excess of $180,000 for a small retail space in a neighborhood shopping center. If gross sales were $264,000 in 2002 and the total rent paid was $13,080, what is the percentage rate
7.00%
$600 per month x 12 months = $7,200 annual base rent; $264,000 gross sales - $180,000 breakpoint = $84,000 overage; $13,080 total rent - $7,200 base rent = $5,800 percent rent; $84,000 � $5,800 = 7%
When advertising real property, real estate licensees
must indicate that the ads were placed in the name of a licensed real estate broker.
Advertising real property in any manner without including the broker's name is a violation.
Which of the following would be classified as a general lien?
Judgment
A judgment lien is not a lien just on specific assets but on the assets of the debtor in general.
A land contract provides for the
conveyance of legal title at a future date.
In a land contract, the seller, or vendor, retains legal title to the property.
Documents referred to as title evidence include
policies of title insurance.
Deeds are never considered title evidence. Policies of title insurance are the best title evidence.
A licensee lists a residence. The owner confides to the licensee that a lower price would be acceptable. The licensee tells a prospective buyer that the seller will accept up to $5,000 less than the asking price for the property. Based on these facts, whi
The disclosure was improper-and possibly illegal-regardless of the licensee's motive.
Such action is an example of the licensee's failure to obey and maintain confidentiality-both breaches of fiduciary duties.
At closing, the listing broker's commission generally appears as a
debit to the seller.
If the broker is the agent for the seller, the seller is normally responsible for paying the commission, and so it appears as a debit to the seller.
An inactive license may be placed on active status by
filling out an application and returning it to the director of the Department of Licensing.
An inactive license may be placed on active status by filling out an application and returning it to the director. If a license is inactive for more than three yea
In Washington, real estate commissions are
negotiable between the seller or buyer and the broker.
Commissions are always negotiable between the principal and the agent.
Alan, a real estate broker, lists a home as agent for the seller. Later that same day, a buyer comes into the office and asks for general information about homes for sale in the area. Based on these facts, which statement is TRUE?
The seller is Alan's client; the buyer is a customer.
The listing agreement creates the agency relationship and obligations between the seller and Alan. A prospective purchaser who asks for general information is a customer. Customers are not owed fiducia
If the director determines that the evidence supports the accusation against a licensee by a preponderance of evidence, the director
may impose sanctions.
The director is not required to initiate any of the suggested actions, but according to statue, the director may impose any one or more of the following sanctions: suspend or revoke licenses, deny applications for licenses, impose fi
Trade fixtures installed and attached by a tenant could become the landlord's if
not removed at lease expiration.
Trade fixtures are personal property, but if they are not removed by the tenant, they become part of the real property.
Which of the following would be considered lawful practice in real estate brokerage?
Exaggerated statements about the property
Puffing is legal exaggeration of a property's benefits.
Diana, a salesperson, took a listing on a house that sold for $329,985. The commission rate was 8 percent. Carol, a salesperson employed by another broker, found the buyer. Diana's broker received 60 percent of the commission on the sale; Carol's broker r
$11,087.50
Diana's broker received $329,985 x 8 percent x 60 percent = $15,839.28. He kept $15,839.28 x 30 percent = $4,751.78, leaving Diana with $15,839.28 - $4,751.78 = $11,087.50.
A real estate broker representing the seller knows that the property has a cracked foundation and that its former owner committed suicide in the kitchen. The broker must disclose
the cracked foundation, but disclosing the suicide could constitute a breach of duty to the client.
The broker must disclose the cracked foundation as a material fact. The suicide is considered a psychological impact or stigma and not a material fact; the
Last month broker Wanda took a listing on a property. She now learns that her client has been declared incompetent by the court. Her listing now is
terminated.
A listing agreement may be terminated if either party dies or becomes incapacitated.
Under the covenant of quiet enjoyment, the grantor
...
When the director receives a statement or accusation concerning a licensee, the director will
carry out a preliminary investigation of the facts to determine whether formal action is warranted.
When the director receives a statement or accusation, the director will carry out a preliminary investigation of the facts to determine whether the stateme