25 hours Final
Which of the following statements is true regarding seller disclosure?
Even with full disclosure, buyers should obtain an inspection Even with full disclosure, buyers should obtain an inspection. Caveat emptor means "let the buyer beware." Nearly two-thirds of states have made seller disclosure mandatory. Sellers in the 1950s were not required to disclose.
Under the ________ of the United States copyright statute, it is permissible to use limited portions of a work including quotes, for purposes such as commentary, criticism, news reporting, and scholarly reports.
Fair Use Doctrine Under the fair use doctrine of the United States copyright statute, it is permissible to use limited portions of a work including quotes, for purposes such as commentary, criticism, news reporting, and scholarly reports.
In spite of her best efforts, Emily's seller client has overpriced his property. Why would she advise against this?
It may become stale on the market, resulting in lowball offers. Overpriced properties may languish on the market tend to lose value from the market's perspective.
FHA loans tend to have ________.
Lower limits FHA loan amounts have lower limits. In general, a borrower is limited to modest loan amounts relative to home prices found in their respective areas.
What must a licensee do when preparing a CMA (or opinion of price) for a consumer?
Make a statement that the opinion isn't an appraisal. . Licensees may not refer to the opinion of value as an appraisal, nor present it as such. Licensees don't perform appraisals.
According to the U.S. Department of Housing and Urban Development (HUD), ________ appear to be over-represented in the subprime lending market.
Minorities According the U.S. Department of Housing and Urban Development (HUD), minorities appear to be over-represented in the subprime lending market.
Generally speaking, compared to a BPO, a CMA is ________.
More accurate A CMA is more accurate than a BPO because it involves visiting the property.
Your seller client feels your suggested list price is too low. He asks you to justify the pricing. What is the best way to respond?
Of course! I'm happy to walk you through and offer an explanation for my suggested range. Let's start with the market. Homeowners can be touchy when it comes to pricing their property. It's best to partner with them and share your expertise, then offer a suggestion on where you would price the home and ask for their input.
You shouldn't be expected to work for free; therefore it's within your rights to ________.
Prequalify any buyer before deciding to work with the buyer
To minimize risks associated with contracts, Edie, a real estate professional, always makes sure to ________.
Present all offers in writing You should always present all offers and counteroffers in writing.
When a seller and a licensee both know about an adverse material fact regarding the physical condition of a property, who bears liability for failure to disclose that fact?
The seller and the licensee While a seller is usually primarily liable for failure to disclose material facts, the licensee may also be found liable when adverse material facts were known and withheld.
When do most lenders require that a property must have been appraised?
Within the 12 months that precede the effective date of the appraisal Most lenders require that a property must have been appraised within the 12 months that precede the effective date of the appraisal.
After making a listing presentation to a prospective seller client, you learn they are meeting with a few more licensees before deciding which licensee gets their listing. You know these competitors. Which action best demonstrates good faith?
You tell the seller you hope they'll decide to work with you.
Sarah engages in ________ tactics to better control activities, events, or anything that can have an adverse effect on her business and expose her to increased risk.
Risk management
Generally, what's the common range for loan origination fees?
1% to 3%
You're working with a buyer who's purchasing a home that appraised at $80,000. The buyer is obtaining a 90% loan, and the lender will charge a one-point origination fee at closing. How much will the loan origination fee be?
$720
Who usually acts as a closing attorney?
An attorney who may or may not be the lender's attorney
The purpose of ________ is to protect a person's property and to provide economic incentive for authors to create new works.
Copyright law
A fee a lender charges for processing a loan is called a(n) ______.
Loan origination fee Loan origination fees are fees a lender charges for processing (or originating) a loan. Borrowers should be aware that these are nearly always negotiable.
The Appraisal Subcommittee ________.
Monitors state regulatory agencies and the Appraisal Foundation
Which type of listing is illegal in some states due to its inherent conflict of interest?
Net listing
When preparing a purchase agreement, when is it appropriate for a real estate licensee to offer legal advice to the buyer?
Never
By being certain that your outcome is ________, you will lead to a win-win result.
Positive
Who typically prepares a BPO?
Real estate licensee A broker price opinion is usually performed by a hired sales agent when a financial institution believes the expense of ordering an appraisal would be unnecessary and time consuming.
A properly prepared CMA supports ______ pricing.
Realistic A properly prepared CMA supports realistic pricing.
Where a home fits within a suggested price range will likely depend on all of the following EXCEPT ________.
Seller's outstanding loan balance The seller's outstanding loan balance will not determine the list price.
Which of the following statements is TRUE about AVMs (automated valuation models)?
They don't take into account property condition. Because of their broad sweep approach, AVMs do not take into account the property condition. No physical inspection of the property occurs, and therefore the valuation produced is an aggregate or average which may or may not reflect reality.
Stains on floors, walls, or ceilings frequently indicate which of the following?
Water damage
Jim, a buyer, asks your seller client Mitch if there's any mold present. Is Mitch legally required to answer this question?
Yes, because it is a direct, specific question. If the seller or the seller's agent is asked a direct, specific question by the buyer or the buyer's agent concerning the condition of a property, then they must answer the question honestly.
You're assisting a seller who tells you not to mention the termites in the attached garage to any prospective buyer. The seller did not disclose this information on the property condition statement. Should you disclose this information?
Yes, because the disclosure is required by law This is a material fact and must be disclosed as a matter of law.
Let's say you have an investor with an NOI of $40,000 and a debt service of $30,000. What is your investor's debt service ratio?
1.33 To get the debt service ratio, divide the net operating income by the debt service ($40,000/$30,000 = 1.33).
Ted wants to estimate the value of a commercial property leased to four retail tenants. In order to find the GIM he can use for his subject property, what's the minimum number of comparable properties he should try to find?
10 Finding the right comparables is an essential part of using GIM or GRM to estimate property value, so a minimum of 10 is recommended.
An office building with 15 tenants sold for $5 million. Your estimates show that the property can earn $400,000 in annual income from all sources. What is the GIM?
12.5 The GIM for this property is calculated by dividing the sale price by the annual gross income. $5M ÷ $400,000 = 12.5.
Over how many years is a residential income-producing property depreciated?
27.5 years A residential income-producing property is depreciated over 27.5 years.
Mitchell is buying a Fannie Mae property to use as his primary residence. He is hoping to secure a HomePath loan with a down payment as low as ______.
3% HomePath borrowers can benefit from down payment options as low as 3% for buyers and 10% for investors.
Kamal has a loan that is fixed for 3 years and then adjusts for the remaining 27. He has a(n) ________.
3/1 ARM
A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what is the total debt ratio?
31% The buyer's total debt ratio is 31%. Debt to income ratio equals the total of monthly debt obligations ÷ monthly gross income x 100 (($1,000 + $150 + $400) / $5,000 = .31 x 100 = 31%).
Calculate the total debt ratio based on the following information, assuming the lender does not consider any debt with 10 or fewer payments remaining: $1,500 condo payment; $100 monthly association fees; $150 monthly student loan payment; $300 car payment (with only four payments remaining); and a monthly gross income of $5,000.
35% The total debt ratio is 35%: ($1,500 + $100 + $150) / $5,000 = .35 x 100 = 35%. The $300 car payment doesn't factor into the calculation because there are only four payments remaining.
Zack, a buyer's agent, reveals to the seller that he can't stand his client. This act is considered ________.
A breach of loyalty While it is your responsibility to reveal certain information—such as material facts about a property—it is not your job to comment on the character of your client.
Which of the following describes total debt ratio?
A calculation that looks at all recurring (or installment) debt, such as monthly mortgage, car, credit, and loan payments, as a percentage of the borrower's monthly gross income
Which of these is a common structural issue that an inspector might note as a concern in an inspection report?
A leaning chimney
Which of these is a common structural issue that an inspector might note as a concern in an inspection report?
A leaning chimney A leaning chimney could be a sign on structural or foundation concerns.
Asbestos can best be described as ______.
A substance used in building materials prior to 1980, the dust from which causes lung cancer Prior to 1980, asbestos was used in many building products including flooring, ceiling tiles, insulation, and siding. Intact, asbestos isn't dangerous. Dust from damaged asbestos, when inhaled in certain quantities, has been shown to cause a form of lung cancer called mesothelioma.
The federal Fair Housing Act covers ______.
All types of housing with few exceptions The federal Fair Housing Act includes exemptions in selling real estate if the property is for sale by owner with no real estate professional involved (if no discriminatory advertising is used).
Because your clients and customers expect you to preserve their confidentiality, what should you do?
Always adhere to your company's policies as they pertain to privacy You should always adhere to your company's policies as they pertain to privacy and keep confidential information private.
A radon problem has been discovered in one of your listings. Radon is ______.
An odorless and invisible gas that is caused by a breakdown of uranium in soil An odorless and invisible gas, radon can cause lung cancer in those who are exposed to concentrated amounts.
Which of the following fees is commonly paid outside of closing?
Appraisal fee An appraisal fee pays for the independent appraisal that estimates the market value of the property. This is often required to be paid at the time of application and would appear on the settlement sheet as POC.
A seller licensee must disclose material defects to ____.
Both the seller and the buyer
Alexis is an appraiser who provided comparables that were five years younger than the subject property and five years older. This is an example of ________.
Bracketing Bracketing involves selecting properties that are both inferior and superior to the subject property in terms of age, for instance.
Which of the following is true about a broker's recordkeeping responsibilities?
Brokers must keep records of signed dual agency consent forms for three years. Brokers must keep records of signed dual consent forms—as well as other kinds of records—for three years.
Belinda is preparing a listing presentation for seller Clive. One of her key points is that ______.
Buyers won't pay more for a home than the market dictates Sellers need to know that buyers dictate price, not sellers and not real estate licensees.
Mixing trust funds with non-trust funds is called _______ and is illegal.
Commingling The term "commingling" comes from the term "to mix together" and means combining trust funds with non-trust funds.
Crew and his brother, Walt, each bought a house with a fixed-rate loan under very similar financial circumstances. Crew, however, will pay less total interest in the long run. Why might this be?
Crew's loan term is shorter than Walt's loan term. Although the rate of interest is fixed, the total amount of interest the borrowers will ultimately pay depends on the mortgage term. Traditional lenders offer fixed-rate mortgages in a variety of terms, including 30, 20, and 15 years.
When working with clients, you need to ______.
Demonstrate flexibility Maintaining a positive intention is essential. You also need to demonstrate flexibility and a willingness to see another person's model of the world.
Carlito always tries to disclose all issues in writing and in a timely manner, because he knows that a(n) ________ is among his safest risk management tools.
Disclosure A disclosure is one of your safest risk management tools, but you will want to make sure the disclosures are in writing.
At the listing presentation, your potential clients push back on your suggested list price range, insisting the house is worth much more. But their house needs major updates to command their desired price for the geographic area. What should you do?
Discuss the CMA and answer questions, but stay firm in your well-researched analysis. If the sellers don't agree with your price range, you can discuss it, but there's no reason to waste everyone's time pitching a listing you don't want. Taking an overpriced listing can be a waste of your time and efforts and make you look incompetent.
Your seller client learned of a material defect after completing the property condition disclosure statement. The property is now under contract. What can she do to rectify the situation?
Draft an addendum or amendment When sellers need to correct any sort of inaccuracies in the property condition statement, they can provide an addendum or amendment to the statement.
__________ occurs when an agent represents the seller and that same agent represents the buyer who wishes to view and/or purchase the seller's property.
Dual agency Dual agency occurs when an agent represents the seller and that same agent represents the buyer who wishes to view and/or purchase the seller's property.
______ insurance is separate from general liability insurance and other insurance you might need as a business professional.
E&O Errors and Omissions (E&O) insurance is separate from general liability insurance and other insurance you might need as a business professional. Return to Course Home View Exam Results
Juliette, a real estate professional, knows that she is required to carry ___________ to protect her from liability.
E&O insurance Errors and omissions (E&O) insurance is mandated as a condition of licensing in many states due to the complex nature of a real estate transaction.
An important step in risk management is risk analysis. Which of the following tasks does the broker complete in this step?
Estimates the likelihood of occurrence for each risk This step involves estimating the likelihood of occurrence and determining the severity of impact for each identified risk.
Which type of antitrust violation involves two or more businesses conspiring against another business?
Group boycotting Group boycotting means conspiring to not work with another business.
During his pre-listing appointment, Stan made notes of needed updates or repairs because ______.
He plans to give the sellers options within a suggested listing price range You can make notes of repairs or cosmetic enhancements needed to sell the property at its top market value. By noting these in advance, you can prepare a suggested listing price range that gives the sellers options: a higher price if certain work is done, a lower price as-is.
Kramer is a buyer who just signed a buyer agency agreement. He likely did this so that ______.
He would receive a higher level of service
Which motivation factor would impact pricing strategy when performing a market analysis?
How soon the seller needs to sell Pricing strategy shouldn't be influenced by the sales price on non-comparable properties, nor on what the seller paid. The seller's timing needs, however, may impact pricing strategy.
Which of the following is an exception to the material fact disclosure requirement?
Information about a past accidental death in the property Most stigmatized property issues don't require disclosure.
A buyer asks Sonny, a real estate professional, a question about a property. Sonny unknowingly makes a false statement. This is considered:
Innocent misrepresentation Innocent misrepresentation involves giving a false statement not known to be false; a misrepresentation that, though false, was not made fraudulently.
When an appraisal report will be more than four months old on the date of the note and mortgage, what is the appraiser required to do?
Inspect the exterior of the property and review current market data
The best definition of communication is ________.
Interaction with others Communication encompasses all of the aspects of our interactions with others.
Which of the following would NOT be reviewed in a drive-by BPO but is included in an interior BPO?
Interior property condition An interior BPO includes a review of interior property conditions, thus allowing for a more detailed report on condition, damage, debris, and necessary repairs.
Why isn't the cost approach usually used to determine the value of older properties?
It's difficult to accurately estimate depreciation with an older property. The cost approach isn't used as often with older properties, because it's difficult to accurately estimate depreciation. It's also hard to find a comparable constructed with the same materials and techniques.
Which of the following is a true statement about the Georgia Non-Exclusive Buyer Brokerage Agreement?
It's the same as the exclusive agreement other than the exclusivity. The non-exclusive agreement is the same as the exclusive agreement in all aspects other than working with multiple brokers rather than a single broker.
Frances has been working with a difficult client who might question her fair housing practices. She's diligently ______to help protect herself if she's accused of committing fair housing violations.
Kept a record of her conversations and communications with this client
Which of the following is a latent defect that should be disclosed by a seller?
Lack of insulation in external walls Latent defects are those that can't be seen or evaluated by a layperson, so missing insulation is considered latent.
What is the danger in sending listings to a buyer you've never met?
Lack of loyalty, and a waste of time Buyers who see you as an anonymous data provider behind the screen owe you no loyalty; serving them is a waste of your time.
As an agent, you owe fiduciary duties to your client. Among these are obedience, reasonable skill and care, confidentiality, accounting, and disclosure. What fiduciary duty is missing from this list?
Loyalty The fiduciary duties spell out the acronym OLD CAR. The L is for loyalty.
In order for fraud to be proven in a court, the misrepresentation has to be both ________, and must involve false information that was relied upon by another party.
Material In order for fraud to be proven in court, the misrepresentation has to be both material and involve false information that was relied upon by another party.
In addition to the Loan Estimate and the Closing Disclosure, lenders must provide consumers with the additional disclosures after the loan is consummated. Which of the following is one of those disclosures?
Mortgage servicing transfer With the mortgage servicing transfer, lenders disclose to borrowers whether they'll service the loan or sell/transfer it to another lender.
Bianca, a landlord, terminates a tenant due to smoking on the premises. Is this a fair housing violation?
No, because smokers aren't protected under fair housing law Smoking and smokers are not protected classes under fair housing law. As long as there is an anti-smoking policy, no laws have been violated.
After the sale closed, the buyer sued your seller client because he did not disclose the two broken windows in an upstairs bedroom. The damage was clearly visible. Does this case have any legal standing?
No, because the windows were a patent defect Buyers should hire qualified inspectors to identify disclosed and undisclosed defects, as the law does not allow them to recover for the nondisclosure of a material patent defect that could have been easily observed or discovered.
You are meeting with a new client, who's looking to buy a home. If you are customer-focused, with ________, then positive results will follow automatically.
Positive intention If your intention is positive, positive results likely will follow.
The Hensleys are interested in putting in an offer on the ranch they saw yesterday. One of the first steps you should take when preparing to write their purchase agreement is ________.
Print the tax information about the property After printing the tax records, also print the current MLS sheet, and then ask the buyer to contact their lender, if necessary, to clarify loan information. Finally, gather all forms needed to write the purchase agreement.
Which of these is a restrictive feature of an FHA loan?
Required mortgage insurance
Licensee Danielle notices some evidence of termite damage in a property she's just listed. What should she do about this?
She should investigate the damage, determine the extent of it, and then disclose this material fact to all potential buyers. As a licensee, it's not enough to peek at the property and then rely on the sellers to disclose material defects. Danielle should investigate the damage, determine how bad it is, and let potential buyers know about it.
Olive is in the process of selling her home to Vernon. Three days before the closing, Olive has second thoughts and decides that she wants to keep the home. To force Olive to sell him the home at the agreed upon price, Vernon can go to court and seek an order of ________.
Specific performance An order of specific performance, if granted by the court, would require Olive to sell the home to Vernon for the price specified in the purchase agreement.
Mazzy has been turned down by most traditional loans, so she is looking at a(n) ________.
Subprime loan A subprime loan is a type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans.
When you consciously choose to manage your state of mind, rather than simply reacting without thought to what happens to you, you are ________.
Taking responsibility for your responses
Thanks to _________, homebuyers and sellers are more informed than ever.
The Internet Thanks to the Internet, homebuyers and sellers are more informed than ever.
Chin is a real estate licensee who prepared a CMA for the Mitchells. She suggested a price range rather than a specific price. Why might she do this?
The Mitchells may want to select within the range depending on their motivation. Reasons to provide a price range include varying seller motivations, and demonstrating the price at which a home may sell if made market ready.
For loan prequalification, what do lenders base their estimates on?
The accuracy of a borrower's disclosures Prequalifying is based on a what a borrower chooses to disclose to a loan officer or broker about such issues as their regular income, credit score, total assets, and available down payment funding.
What's an order of specific performance that requires a seller to sell the home to the buyer generally based on?
The assumption that each piece of real estate is unique An order of specific performance for a seller to sell the home to the buyer is based on the assumption that each piece of real estate is unique and that money alone may not adequately compensate the buyer for loss of the desired property.
What's the listing broker's responsibility relative to the property's material defects?
The broker must disclose any known material defects to the buyer. As stated in the listing contract, Colorado law requires a listing broker to disclose all known adverse material facts.
What value would the lender use to calculate loan-to-value ratio?
The lower of the sales price or appraised value The value is used to calculate the LTVR. Value is determined by the lower of the sales price or appraised value.
After adjusting sales prices of comparables for a market analysis, which comparable carries the most weight in determining a list price range?
The one that required less adjusting The most weight is given to the comparable most similar to the subject property, which means the one that required less adjusting.
Once you've identified a desired outcome, look at your options. Which of these gives you the best chances for success?
Three choices or more
Which of these is a means by which radon may enter a home?
Through floor joists
Sally's buying a distressed property. To protect herself against title issues, she must also buy ______.
Title insurance Title insurance is written by title insurance companies that research the history of the house to see if there are any complications in its ownership.
Shelly is an appraiser and must abide by all of the following ethical rules EXCEPT
To not disclose confidential information to the client The appraiser must not disclose confidential information except to the client.
Macy is preparing a listing appointment for Tina and Sheryl, who are both on the deed to the property. Tina is out of town. Macy should ________.
Try to schedule the appointment when both owners will be present. It's best to make certain that all signers will be present for the listing appointment; this is not always possible, however.
