Alabama 60-Hour Real Estate Course Practice Exam

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• What is a key element of maintaining an ethical standard in real estate?
• How often must a real estate licensee complete continuing education to maintain their license?
• What distinguishes a special assessment tax from other taxes?
• What information must be included in a purchase agreement?
• Which authority does the Alabama Real Estate Commission NOT have?
• What is the main impact of the Alabama Real Estate Commission on the industry?
• Unintentional misrepresentation is generally considered?
• What distinguishes a fixed-rate mortgage from an adjustable-rate mortgage?
• Which of the following is a requirement for obtaining a real estate license?
• In real estate, what does "due diligence" refer to?
• Which of the following is an example of a life estate?
• Which of the following would affect a homeowner's adjusted basis?
• If a property has an effective income of $180,000 and expenses of $80,000, what is the pre-tax cash flow assuming no other financial obligations?
• What action did an agent take when advising a pregnant working woman that a neighborhood is not safe for single women working late hours?
• What is the primary function of a board of equalization?
• If a seller accepts a buyer's counteroffer but mails the contract two days later, and the contract takes four days to arrive while the buyer's offer has expired, what is the situation?
• What rights are included in full ownership of real property?
• What is a comparative market analysis (CMA)?
• If an agent does not inform a minority buyer that a property is under contract as instructed by the principal, what is the agent's liability?
• Why are appraisal determinations critical in financing?
• What is most likely the source of a requirement for a property owner to have a shake roof in a development?
• What type of lease allows a tenant to pay a low rental rate while covering all operating expenses?
• What is NOT a requirement for obtaining a real estate license in Alabama?
• What is a mortgage?
• A landlord agrees to pay a broker unless someone else finds a tenant first. This is an example of what type of listing?
• What does the Real Estate Settlements and Procedures Act prohibit?
• What role does the appraiser play in the mortgage process?
• How does the Veteran's Administration support qualified mortgage loan applicants?
• Which of the following is a characteristic of a stock sale in business acquisition?
• What is the primary focus of the appraisal process in real estate?
• What is the primary role of a real estate broker?
• What does the highest and best use of a property refer to?
• Which of the following ways of specializing is common in the real estate brokerage business?
• Which lien will be the last one to be paid from the proceeds of the sale of a house with five recorded liens?
• What does the term “escrow” refer to in real estate transactions?
• What is the purpose of the "Code of Ethics" in real estate?
• What is the term for the tax assessed on real estate?
• Which factor can influence employment levels in real estate markets?
• What is a deed?
• Which of the following is true of a homestead?
• What is the primary outcome of a board of equalization's function?
• What is a tenant's right to habitability?
• What characterizes an “as-is” sale?
• Which factor is a mortgage lender most concerned about when evaluating a loan application?
• Define “closing” in real estate transactions.
• What does fiduciary duty require from a real estate professional?
• A condominium estate is distinguished by:
• In a transaction where the seller pays the commission split with an owner broker, what type of agency is the owner broker acting as?
• What is a listing agreement?
• What is the primary risk associated with overpricing a property?
• What makes real estate unique as an economic product?
• In the context of real estate, what is functional obsolescence?
• What term describes the ownership interest of a buyer during the period between signing a sale contract and closing?
• What is the significance of a loan-to-value ratio in a mortgage?
• What distinguishes a buyer’s agent from a seller’s agent?
• How is taxable income from an investment property estimated?
• What are the dimensions of a township?
• What is a critical determinant of property demand in a market?
• Which of the following best defines "property's highest and best use"?
• What is the primary purpose of a real estate contract?
• Which approach to value does not rely on comparable sales data?
• What is an important function of the secondary mortgage market?
• What does "pre-approval" mean in home buying?
• What is an option available to a seller concerning a contract for deed when the vendee has made timely payments?
• Which of the following best describes the term ‘fiduciary’?
• Which of the following is often a result of setting a too-high asking price for a property?
• What is zoning?
• A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 Section 16. What is its acreage?
• Which type of fund is designed to ensure funds are available for state real estate expenses?
• What is the term for the risk management strategy that reduces the chance or severity of potential loss?
• If a person dies without a valid will but has legal heirs, what happens to their real property?
• A major employer relocates, leaving homes vacant. This situation is an example of?
• What does the term 'fiduciary duty' refer to in real estate?
• What law addresses unexpected financing costs at closing?
• What is a lease?
• A retailer installs special display counters to exhibit her products. At the end of the lease term, the retailer moves to another state, leaving the counters in the store. At this point the counters are considered which of the following?
• What is one of the main goals of property disclosures?
• When a licensee is sued by the Federal Trade Commission, it is usually for?
• When does dual agency occur?
• Under a special agency agreement, which action is a broker not authorized to perform?
• What does the loan-to-value ratio help determine for lenders?
• What primary benefit does mortgage insurance provide to a lender?
• Which of the following is included in the legal concept of land?
• What does a home inspection typically involve?
• How can a master plan be described?
• What term describes a practice where an agent discourages clients from living in certain areas based on discriminatory factors?
• What is the primary goal of marketing in real estate?
• What is a key feature of a fixed-rate mortgage?
• What is one of the main purposes of zoning laws?
• If rents are declining in office properties, what does this suggest?
• A property abuts a non-navigable stream. What does the property owner own?
• A borrower earning $4,000 a month pays $600 in debt obligations. Based on an FHA debt ratio of 41%, how much can they afford for housing expenses?
• What is the function of a homeowner association (HOA)?
• What is foreclosure?
• A property sells for $180,000 after one year with a 10% annual appreciation. How much did the original buyer pay?
• Which of the following is NOT a main type of property ownership?
• What is a key strength of the sales comparison approach to value?
• What is Spenser's commission when selling a house listed by broker Adams at a price of $425,000, if the total commission is 7% and Spenser is on a 65% commission schedule?
• What does a real estate investment trust (REIT) do?
• Which of the following items are paid in arrears?
• What is earnest money?
• Who is classified as a licensee in Alabama?
• What is the primary role of appraisers in real estate transactions?
• What is the significance of the multiple listing service (MLS)?
• If a buyer representative locates a suitable property for a buyer, who pays the commission?
• An apartment building has an effective income of $150,000. Given expenses of $64,000 and depreciation of $12,000, what is the property's pre-tax cash flow if interest payments total $40,000 and principal payments are $5,000?
• A miner claims ownership of a ranch after living there for twenty years. What is the likely outcome?
• Why do lenders use the loan-to-value ratio in underwriting?
• If a buyer makes a full-price offer after learning of a mortgage lending curtailment and the seller instructed the agent to inform them, what is the status of the contract?
• What might happen if a licensee fails to complete the required continuing education?
• What aspect of professional conduct does the Alabama Real Estate Commission emphasize?
• What defines agency relationships in real estate?
• When should the nature of an agency relationship be disclosed to the client?
• In a 40-60 commission split agreement, which statement is true about the agreement?
• A buyer and seller reach an agreement via email, but the seller sends the contract by postal mail and it takes a week to arrive. What is the result for the buyer?
• In real estate transactions, what is earnest money primarily used for?
• When is the agent required to disclose the nature of the agency relationship with a client?
• What is a contingency in real estate?
• What is a key benefit of having a real estate agent in the buying process?
• What does “intellectual property” refer to in real estate practice?
• For a conveyance by deed to be valid between private parties, what is required?
• What are common defects found in properties?
• A buyer cancels an offer while the seller considers it. What is true regarding the canceled offer?
• What does mortgage insurance do?
• In the event that the seller decides not to accept a canceled offer, what happens to the buyer's rights?
• In the cost approach, what are the two important tasks in identifying value?
• What might a zoning board of adjustment consider for favorable land use variance?
• What is a common consequence of a breach of contract in a real estate transaction?
• How is a legal life estate created?
• How is a property's market value typically determined?
• Exceeding the limits of the authority granted is a major risk in?
• What is a common consequence of declining property rents in an area?
• How do a warranty deed and a quitclaim deed differ?
• What is the consequence of an agent commingling funds from real estate transactions?
• What does opportunity cost refer to in real estate investment?
• What is the primary responsibility of a real estate licensee regarding property disclosures?
• What are the potential consequences of failing to disclose property defects?
• What is an equity line of credit?
• What is a key responsibility of real estate appraisers in the market?
• How is a short sale defined in real estate terms?
• If a buyer has a financing contingency for one month and has not secured a loan after thirty-two days, what can the seller do?
• Why is fair market value important in real estate transactions?
• Which document typically outlines the terms of a mortgage loan?
• Which of the following items are typically prorated between the buyer and the seller?
• Which of the following documents is essential for closing a real estate transaction?
• What defines a “down payment” in real estate?
• A business buyer wants to acquire a business including all rights, obligations, and assets. What type of transaction should they pursue?
• In a lien-theory state:
• What is the purpose of the Fair Housing Act?
• Who benefits from the information provided in property disclosures?
• In a standard real estate transaction, what is one consequence of a buyer failing to secure financing within the agreed time frame?
• During the executory period of a sale contract, what interest does the buyer have?
• How is a tax rate derived?
• Which type of property ownership allows multiple people to own shares of a single property?
• What is a title search?
• What is a primary goal for a principal during a real estate transaction?
• What is an investment advantage of owning a principal residence?
• Three people have identical rights in a property, share an indivisible interest, but may sell or transfer their interest without consent of the others. This type of ownership is:
• According to the statute of frauds, how long must a lease be in writing to be enforceable?
• In which scenario would Fair Housing Laws permit discrimination?
• What is the primary role of the Alabama Real Estate Commission?
• Which of the following actions could lead to a loss of real estate license?
• What does commingling refer to in real estate practices?
• If an investor desires an 11% return on an investment but finds a property priced at $360,000 with a gross income of $60,000 and expenses of $22,000, how much is the property overpriced for the investor to achieve the desired return?
• Which statement is true regarding maintaining a real estate license in Alabama?
• When can a seller legally decide to put a property back on the market?
• What is defined as the most profitable and legally permissible use of a property at a particular time?
• How is "real property" defined?
• Which law helps provide transparency for consumers regarding loan terms?
• What is the purpose of zoning regulations?
• What does property management encompass?
• What is an appraisal?
• Where is the money used for Alabama Real Estate Commission (AREC) expenses held?
• A homeowner bought a property for $180,000, added a porch costing $7,000, and sold it for $220,000 with closing costs of $18,000. What is the capital gain tax?
• What is the purpose of property disclosures?
• An easement by prescription requires that:
• What is the annual tax on a property with a net income of $50,000, interest payments of $35,000, principal payments of $3,000, and annual cost recovery of $7,000 with a tax rate of 28%?
• If an agent fails to disclose obvious problems like crumbling wallboard, what could they potentially be guilty of?
• How can a property be transferred through a will?
• When is due diligence typically conducted?
• What type of real estate does a REIT primarily deal with?
• If a lender determines that a homebuyer can afford to borrow $120,000 with an 80% loan to value ratio, what maximum property price can the borrower afford?
• What does conducting due diligence help a buyer avoid?