Principles, Property, and Land Use Practice Question

Question

A buyer asks a licensee for an exam-focused explanation for the North Carolina Real Estate Broker Exam involving income approach and material facts and due diligence practice. What should the licensee understand? (Item 58)

Answer choices

1. A. The rule applies only to commercial transactions and never to residential transactions.
2. B. Use income and capitalization concepts for income-producing property in a way that fits North Carolina exam practice.
3. C. Client funds may be mixed with business funds if the broker reconciles the account later.
4. D. The issue can be ignored if the parties want to close quickly.

Correct Answer

B. Use income and capitalization concepts for income-producing property in a way that fits North Carolina exam practice.

Explanation

The correct answer is B because income approach requires candidates to use income and capitalization concepts for income-producing property. The North Carolina reference keeps the scenario tied to state licensing practice, while the other options rely on unsafe assumptions about oral custom, escrow, client preference, independent licensee authority, or ignoring written duties.

Question details

• Difficulty: medium
• Domain: Principles, Property, and Land Use
• Objective: income approach

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