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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) Include the current tax assessment as a schedule of the agreement.
B) 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.
C) Get a letter from the seller to guarantee a maximum amount of realty tax payment in the coming year.
D) Ensure the offer contains a clause allowing for compensation for adjustments to the property taxes.

2. What is the best indicator of a strong office market?

A) When tenants have lots of options because of the amount of available space at favorable rates
B) Low rental rates and many concessions
C) The absorption rate, net absorption rate, and rising rental rates
D) The number of free months given to new and renewing tenants by landlords in the office marketplace

3. 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 preferred for older construction properties, as calculating depreciation on them is fairly straightforward.
B) 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.
C) 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.
D) The cost approach is typically used to appraise income-generating properties.

4. A buyer client is interested in purchasing a 30,000 sq. ft. industrial building in an industrial park. The buyer's salesperson drafts an agreement of purchase and sale that includes an environmental site assessment condition that must be met at the buyer's own expense, and to the buyer's satisfaction. Which of the following is NOT an accurate statement regarding the environmental site assessment condition?

A) The environmental site assessment condition makes the offer conditional upon all possible court actions regarding environmental matters being thought of and reported.
B) The environmental site assessment condition makes the offer conditional upon the buyer determining that the property is free from hazardous conditions or substances.
C) The environmental site assessment condition makes the offer conditional upon the seller delivering documents, records, and reports relating to environmental matters to the buyer upon request.
D) The environmental site assessment condition makes the offer conditional upon the buyer determining that no limitations or restrictions affecting the continued use of the property exist.

5. A buyer is interested in constructing a retail building and wants to use the most efficient method to save time and money. Which statement is true with regard to tilt-up wall panels and pre-cast panels?

A) Both tilt-up panels and pre-cast panels can lower construction costs.
B) Both tilt-up panels and pre-cast panels are formed off-site.
C) Pre-cast panels are more durable than tilt-up panels.
D) Pre-cast panels cost much more than tilt-up panels.

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