MARCH2

A borrower has a 30-year, $500,000 loan with an interest rate of 6.25%. His monthly principal and interest payment is $3,078.59. What's the total amount he'll pay over the life of the loan?

$1,108,292.40 To find the total amount paid back, multiply the monthly payment by the total number of payments: $3,078.59 x 360 = $1,108,292.40.

Gunther's gross monthly income is $3,800, and he has no monthly debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford?

$1064 Calculate the debt and housing ratios that buyers need to meet both lending ratios. While Gunther qualifies for a payment of $1,368 under the total DTI, he only qualifies for $1,064 under the housing ratio ($3,800 x 28%).

A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value?

$200,000 The formula is: income ÷ capitalization rate = value (I ÷ R = V). Remember to convert the 15% to a decimal by moving the decimal point over two places to the left: $30,000 ÷ .15 = $200,000.

Lance purchased a home, but he won't own any real estate—just shares in a corporation. This is because his new home is ______.

A cooperative Co-op ownership doesn't involve owning real estate, but rather owning a proprietary lease and shares in the corporation that owns the cooperative.

Select the statement that accurately reflects the type of deed used for the transfer.

A deed of trust conveys real estate to a trustee for the beneficiary named in the deed.

What's the penalty for violating federal do not call rules?

A fine of more than $40,000 for each violation

Wrap-around Mortgage

A form of secondary financing for the purchase of real property. The seller extends to the buyer a junior mortgage which wraps around the existing in addition to any superior mortgages already secured by the property.

Straight Term Loan

A loan in which only interest is paid during the term of the loan, with the entire principal amount due with the final interest payment.

Which statement best describes an adjustable rate mortgage?

A loan is considered an adjustable rate loan if the interest rate is adjusted based on the behavior of the economic index with which it is associated.

In which of these situations would a listing be most likely to terminate due to listing agreement expiration?

A market with high inventory and low demand

When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "north for 314 feet" represent?

A mete Metes (measures) are the direction and distance of a line forming the boundary of the property.

Purchase Money Mortgage

A mortgage given by the seller to the buyer to cover all or part of the sale price. Seller financing.

What is it called when all parties sign a contract, but before the seller's acceptance is delivered to the buyer?

Acceptance(Acceptance occurs when all parties have signed a given contract. Binding acceptance occurs when the accepted offer is delivered.)

Clayton Act

Act that minimally restricted the use of injunctions against labor and legalized peaceful strikes, picketing, and boycotts.

Janice is extremely excited to have purchased her first home. She was able to lock in her monthly payment at a very low rate for the first five years. In year six, Janice's payments will become significantly larger based on the going market rates. What type of loan does Janice have?

Adjustable rate mortgage Janice has a 5/1 adjustable rate mortgage (ARM) where the payment and interest rate is locked for the first five years, then the interest rate is adjusted based on the behavior of the economic index it's associated with and changes each year.

Your client, Cassandra, asks you at what stage in her property ownership life cycle she'll be impacted by income tax issues. You tell her that it's likely that she'll be affected at ______.

All three stages of homeownership-acquisition, ownership, and reversion-can be affected by income taxes.

The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this?

Amendment

_______ is a standardized measure for interest rates and other costs of the loan. Annual percentage rate Discount rate Federal funds rate Prime rate

Annual percentage rate Regulation Z requires lenders to use a standardized measure for interest rates, which includes costs for obtaining the loan or the APR.

Even though the Federal Trade Commission is concerned with all ad claims, what sort of ads would most likely concern the commission?

Any ad that makes a health or safety claim or any claim that's difficult for the consumer to evaluate The FTC is concerned with all ad claims, but it's most concerned by any ad that makes a health or safety claim or any claim that is difficult for the consumer to evaluate.

Allen and Lewis are friends who each recently purchased real estate. Allen purchased a patio home in a small town an hour from the city, while Lewis purchased a condo in a really hot area near the city center. Although they paid similar amounts for their properties, Lewis' condo is worth much more two years later. Which economic characteristic does this demonstrate?

Area preference Just remember the mantra "location, location, location!" A property's value is largely dependent on where it is and the desirability of that location.

Desmond has a signed listing agreement with his clients, the Harpers. In exchange for helping the Harpers list, market, and sell their home, the Harpers have agreed to pay Desmond a commission. What type of agreement do Desmond and the Harpers have?

Bilateral

One area of town has maximum building height requirements and setbacks for the front, side, and rear yards. These requirements are all indicative of ______.

Bulk zoning These requirements are all indicative of bulk zoning, which may be seen in both commercial and residential areas, and which decreases density.

What is a superfund site?

CERCLA is informally called Superfund. It allows EPA to clean up contaminated sites. It also forces the parties responsible for the contamination to either perform cleanups or reimburse the government for EPA-led cleanup work.

What's the biggest security issue with using social networking sites to market your listings?

Criminals may use social networking sites to identify properties that are vacant or have high-end possessions.

A trustee is holding title to Cassandra's house until the loan is paid in full. Which type of security instrument was used?

Deed of trust Three parties are involved when a deed of trust is used: the lender (beneficiary), the borrower (trustor), and a neutral third party (trustee). The trustee holds the title on loans when a deed of trust is used.

Kurt bought a vacant lot in a development that was 85% completed. When he started working with the builder to lay out where the house and driveway would be, they found he would need an easement because his driveway would spill over onto the adjacent lot by a few feet. Kurt owns the _______ estate or tenement.

Dominant The dominant estate (or tenement) is the one that receives the benefit from the other owner, also called the servient estate.

Seth is a licensee representing seller Dora. Which of these items is Seth required to disclose to prospective buyers about the property?

Dora doesn't use the back door because the steps leading to the yard are rotted.

Select the statement that accurately depicts property ownership income tax implications.

During the ownership stage, both investors and homeowners may be able to deduct mortgage interest paid. Eligibility for deductions related to property ownership depend on circumstances, and tax questions should always be directed to a qualified expert. In general, homeowners and investors may be eligible to deduct mortgage interest.

Smalltown is building a new interstate exchange to facilitate access to shopping and restaurants. In order to do so, it purchased two homes and tore them down so the ramps to and from the interstate could be constructed. What principal allowed Smalltown to do this?

Eminent domain

Federal Trade Commission Act (1914)

Established the Federal Trade Commission to monitor business practices, false advertising, and dishonest labeling

Janice wanted to sell her townhome, and her neighbor was considering buying it. She wanted to put it on the market while she waited to find out if her neighbor was going to buy. In order to receive the best possible representation but avoid paying a commission if her neighbor buys the property, which type of listing agreement would best suit Janice's needs?

Exclusive agency

Leases can end in several key ways. Mutual agreement and eviction are two. What is another way that a lease can terminate?

Expiration

Which act created an agency to investigate antitrust practices? Attorney General Act Clayton Act Federal Trade Commission Act Sherman Antitrust Act

Federal Trade Commission Act The Federal Trade Commission Act created the FTC. This agency investigates practices and will stop companies and individuals from committing antitrust violations.

To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which element is applied first?

Financing terms and cash equivalency When using the sales comparison approach, appraisers consider elements in a specific order: financing terms and cash equivalency, conditions of sale, market conditions at the time of contract and closing, location, and physical characteristics.

Sherman Antitrust Act

First federal action against monopolies, it was signed into law by Harrison and was extensively used by Theodore Roosevelt for trust-busting. However, it was initially misused against labor unions

Basement wall cracks and leaks can be indicators of ______ problems.

Foundation problems

The cost approach method Burt used before investing in his new community was highly dependent on his depreciation estimates. As they begin building the homes they realize the guest bedroom in each has a point of entry that prospective buyers do not like in the layout of the house. The depreciation of this design defect is ______.

Functional obsolescence Burt's investment is experiencing functional obsolescence, a form of depreciation or loss in value caused by defects in design, such as an atypical floor plan.

You need to perform a sales comparison for your clients. Comparable A's adjusted sales price is $277,000. Comparable B's adjusted sales price is $255,000. How might you use this data to determine a list price range for the clients' home?

Give more weight to the list price on the comparable that's most similar to the property. When faced with a range of prices, give more weight to the comparable that's most similar to the subject property.

Jason's having trouble paying his monthly rent. His landlord agrees to float him the rent for the next few months with 20% interest. The deal with his landlord is in violation of the state's usury law. Which of these statements must be true?

His state's personal loan interest rate cap is less than 20%. Usury prohibits excessive interest charges on personal and consumer loans. Many states have a cap on the percentage that can be charged. Jason's deal with his landlord would be in violation if the interest rate is higher than the cap.

To meet the requirements of the statute of frauds, an agreement must clearly identify the contract's subject matter, present the contract's essential terms and conditions, and ______ to be enforceable.

Identify the contracting parties

Your client, Eric, is interested in purchasing an industrial property to start a new business. You've recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn't feel these tests are necessary. What should you do?

Keep records of your recommendations and a written response from Eric.

Which of these is an example of puffery?

Kevin's MLS remarks note that the condo has the city's "most beautiful twilight view of downtown and the bay."

Which of the following describes a right-of-way easement?

Land that a railroad company runs its track through Right-of-way easements allow pass-through and can be as short as a driveway or as long as a railroad track.

Your buyers love the 1891 Victorian they have under contract, but they want to get both the water and the paint tested as soon as possible. What are they testing for in both water and paint?

Lead Both pipes (and thus water) and paint can be a source of lead, as well as dust and soil surrounding the home.

Steven owns 114 acres of wooded, rural land. The abundance of wildlife on his property means that his friends are always asking for permission to hunt on it during various game seasons. If Steven gives a friend permission to hunt on his land, it can be said that he has given his friend a ______.

License A license is permission to do something on another's land without actually possessing any interest or ownership in the land.

Marcus, a listing agent, told a potential buyer that his seller client's property had no flooding issues, though the seller had mentioned water in the basement a few years back when there was a particularly heavy rainy season. Which of these statements is true?

Marcus committed intentional misrepresentation because he knew his statement was false.

Marsha's title insurance policy was issued on closing day, June 18. The policy lists the standard exclusions as well as requirements for the company to issue the policy, such as paying off existing recorded liens. Which of these will NOT be addressed in the schedule of exceptions?

Marsha's second mortgage on the property, which she plans to get next January. Title insurance typically covers events or claims filed on the public record before the title insurance policy's effective date but excludes disclosed and undisclosed easements.

Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?

Multiple listing clause An MLS capital is a marketing organization who brokers members make their own executive listings available through other brokers page 89

Leases may be terminated by expiration, eviction, or ______.

Mutual agreement Leases may be terminated by expiration, eviction, or mutual agreement.

When a buyer finances a newly built home with a Federal Housing Administration loan, what does the FHA require the builder to do?

Purchase a third-party home warranty to protect the buyer The FHA requires builders of new homes to provide a third-party warranty to buyers.

Bargain and Sale Deed

Quitclaim Deed.

The buyer you're working with doesn't want to enter into an agency relationship. However, the buyer begins to rely more and more on your advice and, indeed, implied agency has begun! You could have avoided this issue by providing appropriate disclosures, but now that you've created implied agency, what should you do?

Ratify the implied agreement by getting a signed agency agreement.

Melisa's mother gave her house to Melisa, along with a signed copy of the deed granting ownership to Melisa. Years later, Melisa decides to downsize by selling the property. The title company shows that the property is still in Melisa's mother's name. What does Melisa have to do to clear this up?

Record the signed deed. To preserve the chain of title, Melisa needs to record the signed deed. Then future records will show an unbroken chain of title.

Which legal description method is regulated by the U.S. Department of the Interior's Bureau of Land Management?

Rectangular government survey The U.S. Department of the Interior's Bureau of Land Management regulates the rectangular survey system.

External Depreciation

Reduction in a property's value caused by outside factors (those that are off the property).

Right of way easement

Right-of-way easements allow pass-through and can be as short as a driveway or as long as a railroad track.

What classification of water rights includes the two smaller sub-classifications of navigable and non-navigable waterways?

Riparian water rights may apply to one of two sub-classifications: navigable or non-navigable waterways.

What is the name of the federal law that sets forth guidelines regarding telephone solicitation?

Telephone Customer Protection Act

Which statement about radon testing is true?

Test kits are available for purchase but must be sent to a laboratory for analysis. A radon technician can also place the test, pick it up and send it in for testing. Licensees should advise all buyers to have homes tested for radon regardless of the location.

Which of these regarding the impact of the Brownfields Law is true?

The Brownfields Law may provide funds to help them clean up the site. The Brownfields Law provides direct funding, typically in the form of grants, to property owners to assist in the assessment and cleanup of contaminated sites.

Which act encompasses a series of laws intended to lay out the standardized responsibilities and rights of both tenants and landlords but isn't mandatory?

The Uniform Residential Landlord Tenant Act The URLTA encompasses a series of laws intended to lay out standardized responsibilities and rights of both tenants and landlords. Although it isn't mandatory, many states have included parts of it in their state statutes.

What is put at risk if a buyer misses a contingency deadline?

The buyer's earnest money

John and Michelle received a general warranty deed when they purchased their house from Ted. A couple of months after they moved in, their neighbor, Bryant, drove his four-wheeler across their property to access the lake front. John discovered that Ted and Bryant agreed to an easement over Ted's property several years earlier. Which general warranty deed covenant does this represent?

The covenant against encumbrances The covenant against encumbrances assures the grantee that no encumbrances exist other than those that are publicly recorded or noted in the deed.

Carly's closing on an REO property was suddenly delayed due to an internal audit. What does this mean?

The lender has requested a title audit to ensure that the foreclosure was properly handled. Lenders may request a title audit to ensure that the bank that owns Carly's property performed the foreclosure correctly.

When a licensee is working with a property located near a Superfund site, what does that mean?

The licensee must disclose the existence of an environmental hazard in the area. A property with a known Superfund site in the vicinity requires disclosure, as this is a material fact.

Which of the following is an example of easement termination by merger?

The owner of a servient estate buys the property of the dominant estate.

Your buyer clients have access to property tax information for each listing that you've given them. Why are they asking you about county tax assessment schedules?

The property taxes may change drastically after reassessment. Some property tax assessments are tied to market value and will only change when a property is sold, while others are reassessed on two-, three-, or five-year schedules. Property taxes may increase or decrease dramatically after reassessment, so knowing when this might happen is important for buyers to know.

What Is the 28/36 Rule?

The term 28/36 rule refers to a common-sense rule used to calculate the amount of debt an individual or household should assume. According to this rule, a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans and credit cards. Lenders often use this rule to assess whether to extend credit to borrowers.

Developer A has a project planned that does not conform to the community zoning regulations and wants to make a change request. Which local land use group would the developer ask, and for what? The city council for a special use permit The planning board for a special use variance permit The town board for a variance The zoning board of appeals for a variance.

The zoning board of appeals for a variance. The developer would make a request to the zoning board of appeals for a variance.

In which of these situations would the property most likely be conveyed with a trustee's deed?

Tim's property will be sold at auction in a foreclosure action. In states that use a deed of trust as security for a mortgage, the trustee conveys foreclosed property with a trustee's deed.

Which statement correctly identifies a federal fair housing law and what it addresses?

Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion. Title VIII of the Civil Rights Act of 1968 (aka the Fair Housing Act) prohibits housing discrimination based on race, color, national origin, and religion.

Why does the closing agent review the purchase contract?

To gather closing-related information agreed to in the contract The closing agent uses the purchase contract to be sure that the closing process and prorations follow the parties' wishes as agreed to in the contract.

Which of the following is one reason a lender might charge a prepayment penalty?

To recover the money lost in anticipated interest Lenders expect to make a certain amount of interest when making loans. If the loan is paid off before the interest is paid, a lender may reserve the right to charge a prepayment penalty.

Referee's Deed

Used to convey real property sold pursuant to a judicial order in an action for the foreclosure of a mortgage or for partition.

What is the most common way that asbestos enters the body?

When asbestos fibers decay or are disturbed, the friable particles can be inhaled. Asbestos is a fibrous material found in certain types of tile, insulation, and siding. The fiber particles become friable and can damage the lungs if inhaled.

Buyer Susie's a little nervous about the $20,000 earnest money check she just deposited with the title company. When should she expect to see this money applied toward her purchase of the property?

When conditions are met at closing

You've listed a 1918 Craftsman with some significant foundation issues—so significant that the buyers walked away after the inspection. They provided you and your sellers with a copy of the inspection report, which also points out some wiring concerns. At today's open house, a prospective buyer asks to see a copy of any inspections done on the property. What should your response be?

You should disclose any adverse material facts, but you don't have to provide the report. You're under no obligation to provide copies of old inspection reports to any new prospective buyers.

Functional Obscolescense

a form of depreciation or loss in value caused by defects in design, such as an atypical floor plan.

Adjustable Rate Mortgage (ARM)

a mortgage with an interest rate that increases or decreases during the life of the loan

Deed of Trust

deed that transfers property to trustee for benefit of creditor

Physical Depreciation

loss in value resulting from wear and tear

Quitclaim Deed

transfers only whatever interest the grantor has in the property and does not warrant that the grantor has any interest