Real Estate Quiz
Questions: 16 · 10 minutes
1. A home is worth $400,000, and its owner still owes $250,000 on the mortgage. Ignoring selling costs, how much equity does the owner have?
$400,000
$250,000
$150,000
$650,000
2. A property appraises below the buyer's agreed purchase price. What is a likely financing implication?
The seller must automatically accept the appraised value as the new price
The lender may limit the loan using the lower appraised value
The appraisal automatically cancels every existing purchase contract
The buyer's interest rate must legally fall to offset the difference
3. Before buying a house, a buyer wants a general assessment of its roof, foundation, plumbing, and electrical systems. Which professional is most directly suited to that task?
A real estate appraiser
A home inspector
A land surveyor
A title examiner
4. What is the usual purpose of an earnest money deposit in a real estate purchase?
To pay the seller's remaining mortgage balance immediately
To demonstrate the buyer's serious intent and provide a deposit handled under the contract
To replace the buyer's entire down payment
To guarantee that the property will appraise at the offer price
5. Which valuation method relies most directly on the recent sale prices of similar nearby properties?
The cost approach
The income approach
The sales comparison approach
The replacement reserve approach
6. On a standard fully amortizing fixed-rate mortgage, how do the principal and interest portions of the payment generally change over time?
Both portions remain equal throughout the loan
The principal portion rises while the interest portion falls
Both portions rise at the same rate
The principal portion falls while the interest portion rises
7. A recorded right allows one property owner to use part of a neighbor's driveway for access. What is this right called?
A lien
An encroachment
A deed restriction
An easement
8. When calculating a rental property's net operating income, which item is generally excluded as a financing cost rather than a property operating expense?
Mortgage principal and interest payments
Routine maintenance costs
Property insurance premiums
Property taxes
9. If the supply of comparable homes for sale rises substantially while buyer demand stays steady, what pressure would basic market economics generally predict?
Upward pressure on prices because buyers have more options
No effect because supply does not influence real estate prices
Downward pressure on prices because sellers face more competition
Automatic elimination of mortgage interest
10. Which feature defines a fixed-rate mortgage?
Its loan balance never decreases
It has no scheduled repayment date
Its property tax and insurance costs cannot change
Its interest rate remains unchanged for the agreed loan term
11. An investor spreads the same total capital across properties in several different local markets rather than one market. What is the main potential benefit?
It reduces concentration in the conditions of a single local market
It guarantees that every property will appreciate
It eliminates transaction and management costs
It prevents vacancies across the portfolio
12. An investment property produces $24,000 in annual net operating income and is valued at $300,000. What is its capitalization rate?
80%
12.5%
24%
8%
13. A buyer purchases a property for $300,000 using a $240,000 mortgage. What is the loan-to-value ratio based on the purchase price?
20%
125%
100%
80%
14. In a completed real estate sale, what is the primary function of a deed?
To estimate the property's market value
To give a tenant temporary occupancy rights
To transfer ownership interest in the property
To secure repayment of the buyer's mortgage debt
15. A buyer's contract depends on obtaining a suitable mortgage by a stated deadline. Which contract provision most directly addresses this condition?
A financing contingency
A deed covenant
A property tax proration
An appraisal adjustment
16. During an inspection period, a buyer discovers a major defect covered by the contract's inspection contingency. What is the most relevant next step?
Use the contingency rights before the contractual deadline, such as requesting a remedy or withdrawing if permitted
Ask the appraiser to order repairs directly
Stop making mortgage payments on the property
Wait until after closing because contingencies apply only to sellers