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Humber College Exam 4: Invigilated Theory Sample Questions:

1. When a property assessment of a new commercial property has not been completed prior to its resale, what should a salesperson do to protect the buyer?

A) Get a letter from the seller to guarantee a maximum amount of realty tax payment in the coming year.
B) Include the current tax assessment as a schedule of the agreement.
C) Ensure the offer contains a clause requiring the seller and the buyer to share the property taxes to be assessed for the next three years.
D) Ensure the offer contains a clause allowing for compensation for adjustments to the property taxes.

2. An agreement of purchase and sale for an industrial building is accepted conditional on financing with the expiry date of May 14. On May 11, the bank informs the buyer the mortgage cannot be approved until May
17. The salesperson for the buyer then prepares an amendment to the agreement of purchase and sale for the extension of the condition. Which of the following is NOT correct?

A) To play it safe, the salesperson should amend the condition with May 18 as the expiry date.
B) The buyer can still waive the condition before the expiry date if the seller refuses to sign the amendment, provided there is a waiver provision in the condition.
C) The salesperson should prepare the amendment with midnight, May 17 as the irrevocable time.
D) The buyer can use the same amendment to ask for a change of the closing date.

3. A salesperson discusses with a buyer the potential advantages of purchasing brownfields for redevelopment.
What is NOT an advantage for the buyer of a brownfield property?

A) Brownfield properties typically have the advantage of existing infrastructure such as roads, utilities, water/sewer servicing, schools, and transit facilities.
B) An owner who rehabilitates a brownfield property can receive tax incentives.
C) The contaminants in brownfields contain precious metals that can be sold to earn additional income.
D) Brownfield properties can often be purchased at well below their potential market value.

4. Which of the following is most likely to be a factor in an appraisal for an industrial property?

A) Proximity to museums and historical sites
B) Access to raw materials used in the region
C) Price trend for detached homes in nearby neighborhoods
D) Amount of advertising and publicity

5. The cost approach is one method of real estate evaluation that an appraiser may use to estimate the value of a commercial property. Which of the following is NOT an accurate statement regarding the cost approach?

A) The cost approach is useful for the appraisal of property types for which sales and income data are scarce, such as industrial and special-purpose properties.
B) The cost approach is typically used to appraise income-generating properties.
C) The cost approach is preferred for older construction properties, as calculating depreciation on them is fairly straightforward.
D) The cost approach is preferred for newer construction properties, as the appraiser would not need to make a subjective estimation of the accrued depreciation of the building.

Solutions: