Arizona Real Estate Broker Exam — All Questions

A rectangular lot measures 150 feet by 290.4 feet. How many acres does it contain?

• a.1.25 acres
• b.0.75 acre
• c.1.0 acre✓
• d.2.0 acres

Multiply the dimensions: 150 x 290.4 = 43,560 square feet. One acre is 43,560 square feet, a figure the Arizona candidate handbook tells candidates to memorise because it is not supplied at the test centre, so 43,560 divided by 43,560 gives exactly 1.0 acre.

A home sells for $420,000 with a total commission of 6 percent. The listing brokerage keeps 40 percent of the total. What does it receive?

• a.$12,600
• b.$8,400
• c.$10,080✓
• d.$15,120

First find the total commission: $420,000 x 0.06 = $25,200. Then take the listing brokerage's share: $25,200 x 0.40 = $10,080. The other $15,120 is the 60 percent that goes to the cooperating side. Working the percentages in the wrong order, or applying 40 percent to the sale price, produces the distractor figures.

Annual taxes are $2,190 on a 365-day basis. Closing is April 15 and the day of closing belongs to the seller. What is the seller's share?

• a.$540
• b.$636
• c.$624
• d.$630✓

Daily tax is $2,190 divided by 365 = $6.00. Count the seller's days from January 1 through April 15 inclusive, since the day of closing goes to the seller: 31 + 28 + 31 + 15 = 105 days. Then 105 x $6.00 = $630. Giving the closing day to the buyer instead would produce 104 days and $624.

A buyer purchases for $455,000 with a loan of $364,000. What is the loan-to-value ratio?

• a.85 percent
• b.80 percent✓
• c.75 percent
• d.125 percent

Divide the loan by the value: $364,000 divided by $455,000 = 0.80, or 80 percent. Lenders use the lesser of appraised value or contract price as the denominator. Inverting the fraction gives 125 percent, which is the common trap on this calculation.

A lender charges 2.5 discount points on a $260,000 loan. What does the borrower pay in points?

• a.$5,200
• b.$6,500✓
• c.$2,600
• d.$9,750

One discount point is one percent of the loan amount, so 2.5 points is 2.5 percent: $260,000 x 0.025 = $6,500. Points are always calculated on the loan, never on the purchase price or the down payment. Charging one point would be $2,600 and two points would be $5,200.

An investment property produces net operating income of $84,000 and the market capitalization rate is 7 percent. What is the indicated value?

• a.$588,000
• b.$1,400,000
• c.$1,200,000✓
• d.$840,000

Capitalise the income by dividing net operating income by the rate: $84,000 divided by 0.07 = $1,200,000. Multiplying instead of dividing gives $5,880, and misplacing the decimal produces the other figures. Value moves inversely with the capitalization rate, so a higher rate on the same income indicates a lower value.

A property sold for $432,000 and produces monthly gross rent of $3,600. What is its gross rent multiplier?

• a.120✓
• b.12
• c.144
• d.10

The gross rent multiplier is the sale price divided by the gross rent, using the same period for every property compared. Here $432,000 divided by $3,600 monthly rent = 120. Using annual rent of $43,200 instead would give a multiplier of 10, which is the annual gross rent multiplier and a different measure.

A $300,000 loan carries interest at 6 percent per year. How much of the first monthly payment is interest?

• a.$1,250
• b.$1,500✓
• c.$2,000
• d.$1,800

Annual interest is $300,000 x 0.06 = $18,000. Divide by twelve months: $18,000 divided by 12 = $1,500 of interest in the first payment. Anything paid above that reduces principal. In later months the interest portion falls as the balance falls, which is what makes an amortisation schedule front-loaded with interest.

An investor bought a property for $325,000 and sold it for $377,000. What was the percentage of profit?

• a.18 percent
• b.16 percent✓
• c.13 percent
• d.14 percent

Profit is $377,000 minus $325,000 = $52,000. Divide the profit by the original cost, not by the sale price: $52,000 divided by $325,000 = 0.16, or 16 percent. Dividing by the sale price instead gives about 13.8 percent, which is the usual error on this question type.

How many acres are in the northwest quarter of the southeast quarter of a standard section?

• a.160 acres
• b.80 acres
• c.40 acres✓
• d.20 acres

A standard section contains 640 acres. Each quarter of a quarter divides the section by sixteen: 640 divided by 4 = 160 acres for the southeast quarter, then 160 divided by 4 = 40 acres for the northwest quarter of it. Reading the description from the smallest unit backwards and dividing at each step is the reliable method.

A lot measuring 100 feet by 130 feet sells for $91,000. What is the price per square foot?

• a.$7.50
• b.$7.00✓
• c.$6.50
• d.$9.10

Find the area first: 100 x 130 = 13,000 square feet. Then divide the price by the area: $91,000 divided by 13,000 = $7.00 per square foot. Dividing by the front footage or by the depth alone produces the distractor figures, so always reduce the parcel to square feet before dividing.