National Practice Both Law and Math questions sample exam
(Questions ONLY, ANSWERS WILL BE REVEALED WITH PROPER SUBSCRIPTION)
1. An apartment complex generates $905,000 in Effective Gross Income and $14,000 in other income. The same complex has $415,000 in operating expenses and $39,000 as reserves. What is the Net Operating Income of the complex?
A. $451,000
B. $465,000
C. $490,000
D. $504,000
2. To renew an inactive license as an inactive license, a licensee must
A. Complete the renewal forms and pay the fees.
B. Complete the forms only.
C. Complete the renewal forms, pay the fees, and complete the CE requirement.
D. Inactive licensees are not required to renew as inactive.
National Practice
3. A farmer wants to net at least $10,000/acre on the sale of his 80-acre property. If he allows for a total of 10% for commissions and closing costs, what should his listing price be per acre? Assume the farmer has no mortgage.
A. $11,111
B. $11,000
C. $10,900
D. $10,000
4. Non-resident license applicants
A. May request a waiver of the state portion of the exam.
B. May request a waiver of the state and national portions of the state exam.
C. Must pass the entire state exam, without exception.
D. Are exempt from taking the Arkansas state exam if there is reciprocity.
5. An investor paid $43,000 for a lot and $520,000 to have a strip mall constructed on it. He has depreciated the property for the past 15 years on a 39-year straight-line schedule. If he sells the property this year and realizes $710,000 after closing expenses, what is his capital gain?
A. $190,000
B. $233,000
C. $347,000
D. $433,000
6. When a principal broker discontinues business operations, the broker is required to
A. Surrender his license only.
B. File for inactive status.
C. Surrender all licenses of the brokerage.
D. Surrender all licenses except his own.
7. To maintain a minimum balance in the Real Estate Recovery Fund, the Commission is empowered to
A. Charge an override on real estate commissions earned on commercial transactions.
B. Levy a fee on brokerage companies based on licensee headcounts.
C. Increase licensing fees to a statutory maximum.
D. Charge licensees annual fees.
8. Tyler Holdlong owns a small retail property that he inherited from his father. There are no mortgages or interest expenses connected with the property. Tyler takes an annual cost recovery expense of $3,000. The property has a monthly gross income of $3,500 and monthly operating expenses of $1,100. Tyler’s taxable income from this property will be taxed at a rate of 25%. What is the tax liability for the year?
A. $10,500
B. $7,950
C. $7,200
D. $6,450
9. A seller’s closing statement at closing charged him with title insurance, contrary to the agreement between the seller and the buyer. The seller files a complaint, charging negligence. Does the seller have grounds for the complaint?
A. No, since the closing costs must be paid by the buyer by law.
B. No, since the title company has the final authority on who pays title insurance.
C. No, since the broker did not conduct the closing.
D. Yes, since the broker is responsible for disseminating closing instructions.
10. The name of a residential brokerage
A. Cannot imply the business performs commercial brokerage.
B. Must not be confused with other firm names.
C. Must contain the name of the principal broker.
D. Is the sole responsibility of the owner.
11. Which of the following is a regulation for branch offices?
A. All licensees in the branch must display their licenses.
B. The branch must have an associate broker designated as manager.
C. The branch office may not have a trust account.
D. The executive broker is responsible for all trust account activity.
12. An advance fee is
A. A security deposit.
B. Money received for services charged but not yet performed.
C. Moneys paid as an advance of rent.
D. Charges for any brokerage service.
13. A property has sold for $185,000. The listing agreement calls for a commission of 6.5%. The listing broker and selling broker agree to share the commission equally. What will the listing agent receive if the agent is scheduled to get a 65% share from his broker?
A. $2,109
B. $3,908
C. $4,209
D. $4,467
14. Anne obtains a new loan @ 80% of her home’s price of $740,000. The loan constant is 5.645. What is Anne’s monthly payment?
A. $2,883
B. $3,342
C. 4,177
D. $3,882
15. The lender quotes closing costs of $800 plus 2 points on a $610,000 loan. How much will the borrower have to pay?
A. $6,100
B. $11,400
C. $13,000
D. $16,050
16. The purpose of a temporary license is
A. To allow for short-term practice while the licensee awaits the permanent license.
B. To allow licensees to practice while they are awaiting a Commission hearing.
C. To allow licensees a grace-period following a suspension ruling.
D. To allow licensees to practice once they have affiliated with a principal broker.
17. An unlicensed leasing assistant may NOT perform which of the following?
A. Deliver a lease application
B. Receive a security deposit
C. Receive a rent payment
D. Negotiate a rental unit without instructions from the owner.
18. A property is being appraised by the Cost Approach. The appraiser estimates that the land is worth $33,000 and the replacement cost of the home is $110,000. A new $20,000 garage was recently added. Total depreciation from all causes is $7,000. What is the indicated value of the property?
A. $170,000
B. $156,000
C. $136,000
D. $123,000
19. Upon initial licensure, licenses are issued as
A. Active.
B. Inactive.
C. Temporary.
D. Active or inactive, depending on the applicant’s wishes.
20. A buyer will receive a power bill for an estimated $140 at the end of the month. At closing, the seller has used an estimated $67 in power. What should appear on the closing statement?
A. Credit the buyer $73 and debit the buyer $67
B. Credit the buyer $67 and debit the seller $67
C. Credit the seller $73 and debit the buyer $73.
D. Debit the power company $73 and debit the buyer $67
21. Phillip advised his clients they needed to paint their master bedroom before showing the property. The walls of this room were 11’ high. The wall lengths were 13’, 19’, 13’, and 17’. If a gallon of paint covers 180 SF, how many whole gallons would the homesellers have to buy?
A. 3 gallons
B. 4 gallons
C. 5 gallons
D. 8 gallons
22. A property’s taxes are $9,540 and are paid for in arrears. The property was sold, and closing took place on March 7. The seller was responsible for the day of closing. Using the 360 day method, how will taxes be prorated?
A. Credit the buyer $1775.50 and Debit the Seller $1775.50
B. Credit the seller $186 and debit the buyer $186.
C. Credit the buyer $1,590 and debit the seller $1,590.
D. Credit the buyer $1,675.50 and debit the seller $1,675.50.
23. A license applicant has how many days to pay the appropriate fees following successful completion of the state exam?
A. 30 days.
B. 60 days.
C. 90 days.
D. 120 days.
24. In Arkansas, claims for referral fees paid between licensees
A. Are illegal.
B. Are legal
C. Must have a reasonable cause.
D. Must have a bona fide, documented claim to be legitimate.
25. In what areas do the requirements for a broker’s license differ from those for a salesperson’s license?
A. The background check and age.
B. In the background check and experience requirements.
C. In the passing score percentage and experience requirements.
D. In the age and education requirements.
26. One’s real estate license may be suspended by the Commission
A. Provided that it is an active license.
B. If an active licensee fails to renew.
C. If an inactive licensee fails to renew.
D. Regardless of one’s license status.
27. Information contained in a license applicant’s criminal background check is made available to
A. The Commission only.
B. To the Commission, the applicant, and the applicant’s authorized representative.
C. To the Commission, the applicant, and any plaintiffs, if applicable.
D. To the general public via public records.
28. A license applicant’s criminal history indicates a prior plea of no lo contendere to fraud. In this case, what happens to his application?
A. It is approved due to the no lo contendere plea.
B. It is suspended pending a Commission hearing.
C. It is suspended pending an investigation.
D. It is denied.
29. A property is purchased for $480,000. The land is valued at 10% of the initial purchase price of the property. Given a 39-year depreciation term, what is the annual depreciation expense?
A. $5,333
B. $11,077
C. $12,308
D. $18,720
30. The primary task of an executive broker is
A. Managing the branch and supervising salespersons.
B. Delegating office tasks to assistants.
C. Managing the overall training effort of the company.
D. Accounting and reconciling branch trust funds.
31. Among other requirements for a salesperson’s license, applicants must have which of the following?
A. 30 hours of approved education.
B. 30 hours of approved education, including 15 hours in real estate principles.
C. 30 hours of approved education and one year experience.
D. 60 hours of approved education.
32. Dan is buying Jessica’s house. The closing date (day belongs to seller) of the sale transaction is March 9th. Current year real estate taxes are $1,900 (will be billed to Dan next year). Use the 365-day method for prorating. What is Jessica’s share of the real estate taxes for the current year?
A. $354
B. $364
C. $390
D. $1,546
33. Jeremy’s license has been expired for 4 years. What must Jeremy do to renew?
A. Complete the same requirements of a new license applicant.
B. Complete the same requirements as an inactive licensee.
C. Re-take the test, complete the CE requirements, apply, and pay the fees.
D. Re-take the test, apply, and pay the fees.
34. Licensees are charged with which of the following responsibilities when they obtain property listings?
A. They must certify that the property is in marketable condition.
B. They must develop an understanding of the seller’s background and motivations.
C. They must warrant to the seller that they will sell the property within the listing period.
D. They must acquire a certain degree of knowledge of the property.
35. A building has 9 apartments generating annual potential rent of $1,500 each month. Vacancy = 6% and annual expenses are $84,000. Vending machines yield $1,800 per year. What is the NOI?
A. $152,280
B. $88,550
C. $79,800
D. $70,080
36. In selling her home, Angela informs a buyer that she used to be a broker, but is no longer licensed. In this case, the broker
A. Is engaging in illegal self dealing.
B. Must disclose the identity of her former broker.
C. Is illegally practicing real estate without a license.
D. Did nothing illegal.
37. A licensee sells a parcel of land to a neighbor without going through his principal broker. This is an example of which of the following?
A. Dual agency.
B. Fraud.
C. Independent dealing.
D. Misrepresentation.
38. Management and transaction records
A. must be maintained as hard copies.
B. may be electronic.
C. may be electronic, but must be printable.
D. must be both electronic and in print.
39. A developer wants to develop a 18-acre subdivision. He figures that the streets and common area will take up about 20% of this overall area. If the minimum lot size is to be 10,000 SF, how many lots can the developer have on this property?
A. 18 lots
B. 48 lots
C. 62 lots
D. 78 lots
40. What is the overall purpose of the Arkansas Real Estate License Act?
A. To create brokers and affiliate brokers.
B. To protect the public and establish minimum levels of broker competence.
C. To regulate real estate markets and broker commissions in Arkansas.
D. To create a Real Estate Commission and a set of rules for it to enforce.
41. Natalie wants to make a 25% profit on her $70,000 land investment (there is no mortgage). She figures agents charge a 6% commission, and that closing costs will be an additional $1,200. What should she accept as a final sale price (to the nearest hundred)?
A. $87,500
B. $94,400
C. $100,500
D. $106,700
42. If a rectangular office space is 72 feet wide and has a 410-foot perimeter, what is its area?
A. 5,184 square feet
B. 7,755 square feet
C. 9,576 square feet
D. 19,152 square feet
43. Annette is renewing her license for the first time. What is her CE requirement for her first renewal?
A. 12 hours.
B. 9 hours; three from last year and six for the current year.
C. 6 hours.
D. no hours.
44. A lender offers an investor a maximum 85% LTV loan on the appraised value of a property. If the investor pays $160,000 for the property how much will the investor have to pay as a down payment?
A. $16,000
B. $24,000
C. $32,000
D. $136,000
45. A town has a tax base of $411,000,000 and a budget of $850,000. What is the tax rate in terms of mills?
A. 2.1 mills
B. 4.8 mills
C. 21 mills
D. 48 mills
46. A receiver acting under court order
A. Must be licensed.
B. Is exempt from licensure.
C. Must at least have a temporary license.
D. Is exempt provided the court specifically permits the activity.
47. A property sells for $140,000 two years after it was purchased. If the annual appreciation rate is 6%, how much did the original buyer pay for it?
A. $120,500
B. $121,000
C. $123,740
D. $124,600
48. In the year of license renewal, what is a broker’s deadline for renewing the license without incurring additional fees?
A. August 1st.
B. September 30th.
C. December 1st.
D. December 31st.
49. Licensee Alice has been licensed for two years. Her birthday is January 18th. When does her license expire?
A. On January 18th of the following year.
B. On January 18th two years later.
C. Twelve months from the date of last renewal.
D. The following December 31st.
50. Which of the following is an authorized duty of the Commission?
A. Establish procedures for auctions.
B. Establish brokerage office policy and procedures.
C. Regulate the number of licensees permitted licensure in Arkansas.
D. Adjudicate law violations in circuit and appellate courts.
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