National Exam practice
Home Warranty
A _______________ often covers items that weren't inspected. Also, even the systems that WERE inspected are subject to problems or failure.
$608,292.40
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 of interest he'll pay over the course of the loan? First, multiply the monthly payment by the total number of payments. Then subtract the original loan value: $3,078.59 x 360 = $1,108,292.40 ‒ $500,000 = $608,292.40.
Pay licensees a regular salary regardless of the revenue they generate
A brokerage firm that hires licensees as employees instead of as independent contractors must ______.
$3,200
A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a 1% loan origination fee. How much is the loan origination fee? An 80% LTVR means the buyer is financing 80% of the purchase price. This equates to $320,000, and 1% of this amount is $3,200.
$3,200
A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee? An 80% LTV ratio means the buyer is financing 80% of the purchase price. Eighty percent of the purchase price is $320,000, and one point, or 1%, of this amount is $3,200.
Escalator
A buyer, hoping to beat out all other offers, included a clause in the offer that reads, "Buyer to beat all competing offers by $1,000 up to a price of $700,000. Seller to provide copies of competing offer to buyer on acceptance." What type of offer is this an example of?
Loan-to-Value
A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.
The client may owe a commission anyway.
A client terminates a listing agreement before its expiration date. What happens now?
Refuse to rent to a female tenant.
A homeowner has converted two rooms in his home to a rental unit. What does the "Mrs. Murphy" exemption permit him to do?
Transfer ownership before death and avoid probate
A living trust differs from a testamentary trust in that a living trust is established to convey property as well as to ______.
$1,335.67
A seller received $800,000 for a 5.5 acre rectangular parcel alongside a road frontage. The property is 400' deep. What was the price per front foot of the property? First, find the square footage (5.5 x 43,560' = 239,580). You're given one dimension of the rectangle, so find the other: 239,580 ÷ 400' = 598.95 front feet. To find the price per front foot, $800,000 ÷ 598.95' = $1,335.67 per front foot.
$276,596
A seller wants to net $10,000 after the broker's commission of 6% and a loan balance of $250,000 are paid. For how much does the property need to sell? To calculate this, start with 100% minus a 6% commission, which is 94% or .94. Take $250,000 plus $10,000 and divide this amount by .94.
7.9%
A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall? The cap rate formula is: net operating income ÷ value = rate (I ÷ V = R). So $67,500 ÷ $850,000 = .079 or 7.9%. This formula can work in reverse as well: value (purchase price) × cap rate = net operating income (V × R = I).
Price fixing
According to the U.S. Department of Justice, which type of antitrust violation is an agreement between competitors to set contract terms for a certain length of time?
By paying four points up front
According to the rule of thumb, how can a borrower lower the interest rate on a loan by 1%?
Special use permit
Adamsburg, a bedroom community outside the city, is growing by leaps and bounds. There's been a boom in the number of children under age 12. Mia wants to open an in-home daycare, but she lives in a neighborhood that isn't zoned for home occupations. She applied for a/n _________ and, after a public hearing, was granted one to operate the daycare.
Acceleration
After getting into a fender bender, Parker had to buy a new car. To make the down payment on the car, he had to skip a couple of his mortgage payments. He received a notice from his lender indicating the remaining amount of his loan is due immediately and in full. What clause in his mortgage stipulates this?
The house is probably not required to meet the current code.
Aidan accepted a contract for the sale of his home. The home inspection report reveals that certain aspects of the house don't meet the current building code. What's the most likely result?
Yes, because title defects not revealed in a title search can crop up even with marketable title.
Aldrich is conveying marketable title to a property buyer. Should he also furnish a title insurance policy? Even though marketable title carries a higher standard of assurance than insurable title, unknown defects can occur. A marketable title that carries title insurance is the safest option for buyers.
Conform to the deed restriction.
Alice owned a double lot on the waterfront. She sold the lot to Ronesha and included a deed restriction prohibiting construction of any building taller than one story. Ronesha wants a three-story house. What should she do? Once placed in a deed, restrictions are binding on current and future owners. Litigation or zoning board appeals won't change or remove them.
$9,005.85
Alistair bought a townhouse for $285,900. He got a 90% loan and the lender charged him 3-1/2 discount points. How much did Alistair pay in discount points? The sales price is $285,900, and 90% of that (aka our loan amount) is $257,310. The discount amount is 3-1/2 points, (.035) multiplied by $257,310 = $9,005.85.
A brownfield
An abandoned or otherwise unused commercial or industrial site with suspected contaminants is known as what?
Tie-in arrangement
An agent is trying to drum up business for a friend's mortgage company. She offers to charge a lower commission rate to clients who use her friend's mortgage company for their financing. What's this an example of?
The duty of accounting
Antje's clients closed on their property yesterday, but Antje still has some paperwork that she needs to deliver to them as soon as possible. Under which fiduciary duty is Antje acting?
General
As a residential property manager, Finn can independently make decisions regarding the day-to-day operations of the apartment building he manages. He can hire contractors, screen tenants, pay bills, and enforce lease provisions. What kind of agent is Finn?
Voidable
As part of the sales contract, Garth, the seller, was supposed to provide a copy of the seller's disclosure to the buyer, Melanie, but he failed to do so. What type of contract is this? A voidable contract can be cancelled by one or more parties because it's missing an essential element.
Insurable title is one that may have known defects but is still insurable. Ashish should carefully review the title policy.
Ashish is purchasing a bank-owned property. His real estate agent tells him the bank is offering insurable, not marketable, title. What does this mean to Ashish?
As soon as possible
At what point must a listing agent disclose material facts to all parties involved in the transaction?
Rescission
Bob signed a contract to purchase Ingrid's apartment building. Bob decided he didn't want to be a landlord, and Ingrid decided she didn't want to sell and move to Maui. They mutually agreed to cancel the contract and Ingrid returned Bob's earnest money. This is referred to as ______. A rescission is a definitive end of the parties' commitments under an agreement—one in which the parties are returned to their pre-contract status. Each party gives back anything he or she received under the contract.
Offerors
Brynn's listing agent told potential buyers that all offers on Brynn's property would be considered at 5 p.m. on May 3. By that date and time, there were four offers. The persons making these offers are the _______.
Cost Approach
Burt owns a development company that specializes in constructing new, energy-efficient houses. The best approach for an appraiser to use in the appraisal of Burt's newly built homes is the ______.
Amendment
Buyer Daphne and seller Kurt signed a sales contract with a definite closing date of May 15. Daphne then learned that she needs to move the closing date to June 15. She'll accomplish this with an ______ to the sales contract.
$842.74
Buyer Maria and seller Doug are closing on June 1. Maria's mortgage loan is $927.86, and $871.86 will go to interest in the first month. Maria will have to pre-pay interest for June using the 360-day proration method. If Doug owns the closing day, what Maria's prepaid interest cost be at closing? Calculate the daily interest rate for 30 days ($871.86 ÷ 30 = $29.06). Because Doug owns the closing day, Maria will pre-pay interest for 29 days, June 2 - 30, so $842.74 ($29.06 x 29).
An offer
Casey signed a contract form offering a purchase price of $309,000 on a home, and gave his agent a $5,000 earnest money deposit. The owner is out of town and her agent can't reach her. At this point what does Casey have?
The air lot is the same perimeter as the condo and the lot on which it's built.
Centennial Development is constructing a new condo. The exterior of the building is 60 feet square. Which of these about the air lot is true?
Implied agency
Christy found a property that was For Sale by Owner and made an offer. The seller accepted Christy's offer, but neither of them knew how to proceed. Licensee Zelda helped Christy complete the necessary purchase documents and walked her through the process. What kind of agency exists?
Covenant of Warranty
Colleen and Judy purchased a dilapidated townhome in an estate sale. Due to their fix-up work and the current economy, the property value has skyrocketed. They decide to sell it to get their equity out of it. After they list it, a woman comes forward, saying she is an heir to the previous owner and lays claim to the property. Which general warranty deed covenant protects Colleen and Judy?
FHA, VA, or conventional
Commander Halfback retires after 25 years of service in the Coast Guard. He is looking to buy a home. What type of loan should he use?
Katrina must follow the more restrictive of federal or state law.
Contrary to federal fair housing laws, the state where Katrina lives includes age as a protected class. Which of these statements about this conflict is true?
$4,700
Dale and Barbara, your buyer clients, aren't thrilled about the current interest rates on home loans. They opt to pay two discount points to their lender to bring down their monthly payment. They're financing $235,000 on their new $400,000 home, so how much can they expect to pay for points at closing? A point is 1% of the loan amount. Dale and Barbara's loan is $235,000, and they're paying two points (2%) at closing, which comes to $4,700 ($235,000 × 0.02).
Use Variance
Damien and Sandy bought a lot with a condemned house. They want to tear it down and build a duplex, so that they can live on one side and rent out the other. Unfortunately, the property is zoned single-family residential. If they can make a case for economic hardship, they may apply for and be granted a ________.
Consideration
Dean and Michael have an oral contract. Dean said he would sell Michael his bike in return for Michael's vinyl album collection. What does the record collection represent?
Enjoyment
Derrick was thrilled to find out that the land he purchased includes several small caves. He's been spelunking for about three years and looks forward to exploring the caves on weekends. Which real property right allows him to do so? The right of enjoyment gives the property owner the right to participate in any activities desired (as long as they are legal).
Bilateral
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?
Sellers would view an offer without that contingency as a stronger offer.
Eleanor is moving from a starter home into something a little larger. Her agent has cautioned her against making the offer on the new place contingent on the sale of Eleanor's starter home. Why the caution?
September 18
Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure? Lenders must provide the Closing Disclosure three days before closing
Obedience
Following all of the client's lawful instructions describes which fiduciary duty?
Indemnification
Hannah wasn't able to get the financing to open her boutique, so her mother came on as a silent partner and provided additional cash. Hannah and her mother have an agreement that states Hannah's mother can't be held financially or legally liable if there are any problems with the store. What type of contract clause is this?
The option expired.
Harini had a lease with an option to buy on her condo since she wasn't financially stable enough to purchase the condo when she first signed the lease. Two years later Harini was in great financial shape, but she found out that the owner legally sold the condo to another buyer. Harini has to move out next month. What must have happened?
$265,000
Henry submits an offer on a condo and includes an earnest money check for 10% of his offer, which the seller accepts. Later on at closing, he brings a cashier's check for $34,450 (comprising the remaining half of his 20% down payment and $7,950 in closing costs). What's the condo's purchase price in whole dollars? Subtract the closing costs from cashier's check amount ($34,450 - $7,950=$26,500) for half of down payment. The total DP was double this ($53,000). Next, divide $53,000 by 20% (to find purchase price ($53,000 ÷ .2=$265,000). Purchase price is $265,000.
The property manager can use information about the type of unit and current rent or lease amount to help set future rent or lease rates.
How can property managers use rent rolls?
It protects the lender from loss due to defective titles.
How does title insurance affect the lender?
Until the borrower reaches a 22% equity position
How long does the borrower have to pay private mortgage insurance?
Zoning Board of Appeals
If individuals want to use their property in a way that's not permitted by a zoning ordinance, they must submit a request for a variance or special use permit to which one of the following groups?
"Choose Your Neighbor"
If the ____________________ letter is used as one part of a complete marketing campaign, its effect is not restrictive.
Decreases
In an amortized loan, the interest portion of the mortgage payment generally ______ over the life of the loan.
The market for similar homes is good.
In completing a CMA, finding a comparable (competitive) property that had a quick sale may indicate which of the following?
Jefferson insists that Ronna interpret the implications of him breaching his contract with a buyer.
In which of these situations is Ronna's fiduciary duty of reasonable skill and care at odds with her duty of obedience?
The smaller number
Jacqueline found a ready, willing, and able buyer for her client's condo, with a sales price of $20,000 more than the asking price. However, the appraisal came in just under the asking price. Which number will the lender use to calculate the loan-to-value ratio?
Open
James, a seller, signed a listing agreement that allowed him to contract with multiple agents but only pay a commission to the agent who located a buyer. This type of listing agreement is called ______.
Exclusive agency
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?
$300,000
Jeffrey has accepted an offer of $310,000 for his house. The buyer is making a $50,000 down payment, and the buyer's appraisal came in at $300,000. On what number will the buyer's lender base the loan-to-value ratio?
The agreement terminates by force of law.
Jenson signed a seller agency agreement with Susan. Right before closing, a hurricane destroyed the property. What happened to Jenson and Susan's agreement?
Leases for periods of more than one year must be in writing.
Joan and Martha are entering into an 18-month lease with landlord Roger. Which of these statements is true?
The seller may not be required to attempt to clear the defect before closing.
Jorge accepted a seller's offer of insurable title. The transaction hasn't reached closing, and a previously unknown title defect has been revealed. What happens now?
$1,042.29
Juan secures a fixed rate amortized 30-year loan for $295,000 at 4.25%. If his monthly P&I payment is $1,750, how much interest does he pay in the second month of the loan? In the first month, Juan pays $1,044.79 in interest ([$295,000 x .0425] ÷ 12). His monthly payment (stated in the question) is $1,750, so that means he paid the principal down $705.21 ($1,750 - $1,044.79). His new principal balance is $294,294.79 ($295,000 - $705.21). We use the new principal balance amount to calculate interest for the next month. Juan pays $1,042.29 in interest ([$294,294.79 x .0425] ÷ 12).
Three
Julio's lender presents him with a loan for $275,000 for 30 years at a 4.75% interest rate. How many discount points does Julio need to pay upfront to lower the interest rate to 4%?
Take out new ads correcting the misinformation in his original ad
Ken, a licensee, has published an ad claiming that he can sell homes for 25% more than any of his competitors. The Federal Trade Commission determined this to be a deceptive ad. What might the FTC require Ken to do as a penalty for his deception?
Real Estate Owned (REO)
Kristin has been unable to make her mortgage payments. Her property went to auction, but the lender didn't accept the high bid. What stage of the foreclosure process is this property now in?
Riparian
Kyle owns six acres of land with 400 feet of river frontage. He wants to build a beach along the river bank to make it easier to swim in the river. He can do this because as the owner of river frontage, he has ________ rights.
A home warranty covers things the inspection didn't address, like appliances, as well as structural issues that occur.
Lamar closes on his new home next week. It's a 37-year-old split level, so his agent asked if he's interested in purchasing a home warranty. "Why would I need a warranty?" he wondered. "Didn't the home inspection identify all of the issues?" What's the agent's best response to Lamar's question?
The property management agreement
Lance is a property manager who receives his management fees on a bi-monthly basis. He draws them from a trust account set up in the property owner's name. What gives him the authority to take these disbursements as his fee? The property manager may disburse funds from a trust account if the property management agreement states that the manager may do so. This is true for disbursements for commissions and fees as well as for other expenses.
A cooperative
Lance purchased a home, but he won't own any real estate—just shares in a corporation. This is because his new home is ______.
Implied agency and undisclosed dual agency
Larry is assisting a buyer who's making an offer on his client's listing. If Larry is too helpful to the buyer, what might occur?
$54,150
Lenore makes a 95% offer on a townhouse that's listed at $285,000 and includes an earnest money deposit for 10% of her offer, which the seller accepts. She brings to closing a cashier's check for $35,025 comprising the balance of her 20% down payment and closing costs. What's the amount of her total down payment? Lenore's offer is $270,750 which is 95% of the list price ($285,000 x .95 = $270,750 ). Her total down payment is 20% of her accepted offer of $270,750, which is $54,150 (or $270,750 x .2).
Against Encumbrances
Li Meng purchased a property that had been owned by the same man for more than 40 years. The title search was clean. In the spring, she started seeing traffic on the path to her dock and discovered that the previous owner had always allowed the locals to use his path to get to the lake. What covenant may have been breached
Avulsion
Lowell used to own 17 acres of property on the bay. After last year's hurricanes, Lowell now owns 15.5 acres of bayfront property. Which natural process was responsible for Lowell's loss of acreage?
Reduced consumer confidence makes new buyers wary of purchasing and homeowners hesitant to trade up.
Many market conditions impact housing prices. Which of the following is a true statement?
The agency agreement only terminates if the broker or the principal declares bankruptcy.
Marcus listed his property with Home Sweet Home Realty and one of its listing agents, Ron Savage. About a month later, Ron filed for bankruptcy. Which of the following statements about this situation is true?
Compare it to the Loan Estimate.
Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it?
If property ownership changes, the new owner must abide by the lease terms.
Marge's broker, Geoffrey, told her that the lease on the property she wants to buy runs with the land. What does that mean?
Margo is in the ownership stage of the property ownership lifecycle.
Margo's accountant tells her that she's eligible to deduct the property taxes she paid last year. Select the statement about this deduction that's true.
Ask Steve to generate quit-claim deeds on the properties.
Margot and Steve owned several rental properties at the time of their divorce. The divorce decree gave ownership to Margot in return for a cash payment by Steve. Fast forward six years, and Margot is ready to sell the properties. She soon discovers, though, that Steve's name is still on the title. What's her best course of action?
The city or other governing authority establishes the air lot's height.
Marketo Building Designs is selling the air rights above its office building. The lot is 450 feet by 350 feet. How would you determine the air lot height in order to calculate the area? Because of safety and other concerns, municipalities typically establish the height of air lots in their jurisdictions.
Yes, because he should have known there would be major issues converting that room to a bedroom.
Marvin knows that three-bedroom properties with two bathrooms sell quickest in his market. In an ad for a new listing, he wrote, "Bonus room could easily be a third bedroom." Marla and Tom visit the property with their agent, and Tom, a construction supervisor, notes that the bonus room couldn't be easily converted to a bedroom because it's too small, it has no egress and no heat source, and it can only be accessed by walking through a bathroom. Is Marvin guilty of misrepresentation?
No; commercial and business loans are exempt from RESPA requirements.
Maxine is purchasing a small craft shop, including the underlying real estate. She applies for a commercial loan from her federally insured bank to complete the purchase. Is Maxine's transaction covered by the Real Estate Settlement Procedures Act?
After the seller accepts the purchase offer
Millie is a buyer who has given her agent an earnest money check for $10,000 with an offer to purchase. When will the check be deposited? Earnest money funds are typically deposited after the seller accepts the buyer's offer.
$106,250
Nico is buying a home for $625,000. His earnest money deposit is 8%. He wants to avoid private mortgage insurance (PMI) on his conventional loan, and he owes 5% of the purchase price in closing costs. How much money should he bring to closing? Conventional loans often require 20% down to avoid PMI ($125,000), and Nico has paid a $50,000 deposit ($625,000 x .08). Closing costs are $31,250 ($625,000 x .05). He needs $106,250 to close ([$125,000 - $50,000] + $31,250).
The lender tells the trustee to release the title to Olivia.
Olivia took out a 15-year loan secured with a deed of trust. She worked two jobs in order to pay the loan back and finally made her last payment this month. What happens now?
Prepaids
On a closing statement, ______ will go into the seller's credit column and the buyer's debit column.
27.5 years
Over how many years is a residential income-producing property depreciated?
Peter conveys the real estate to Tom.
Peter wants to set up a land trust so that his children can benefit from his real estate investments after he dies. He asked his financial advisor Tom to manage the trust, and Tom agreed. How is the trust created?
$1,152
Phoebe's gross monthly income is $4,200, and she has $360 in monthly non-housing 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 she can afford? The maximum house payment is the lesser of the amounts calculated using both ratios. DTI: $4,200 x .36 = $1,512. $1,512 - $360 = $1,152. Housing ratio: $4,200 x .28 = $1,176. Phoebe's maximum payment is $1,152.
Housing and Community Development Act of 1974
Prior to the _______, there was no legal protection for women who endured sexual harassment from landlords and sellers when they attempted to obtain housing.
Defaults on the loan
Private mortgage insurance protects the lender in case the borrower ______.
It describes the ability to separate one right from the others while leaving the rest of the bundle intact.
Property ownership gives the title holder a bundle of rights. What's significant about the concept of a bundle of rights?
Comprehensive Plan
Quentin brought an application before city council to build a shopping mall on 17 acres south of town that currently don't have a zoning designation. The council referred him to the planning commission, which will review the application in light of the city's ________.
Adaptability of item to land's use and agreement of the parties
Related to the legal test of a fixture, in the acronym MARIA, what do the two As stand for?
Void
Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?
In severalty
Rhonda and Oliver bought an old schoolhouse with the hope of transforming it into a residence. They owned the property as joint tenants. After Oliver died, how did Rhonda own the building?
Indestructibility
Sander and Ginny bought an old industrial site and plan to get grant money to put an environmental education center on the site. There are a few structures on the property, but they are in disrepair, and it will likely be less expensive to tear them down and build new than to rehabilitate them. However, the new owners are sure that they've made a great investment because the land is in great shape. This reflects which physical characteristic of real property?
Whether consent was voluntary
Sondra thinks the new business contract she signed with her business partner is valid. Both parties are legally competent, the contract has a legal purpose, an offer was made and accepted, and a fee has been negotiated and documented. Which essential element of a valid contract has Sondra not yet considered?
A lien theory state
Sondra, a buyer, signs all the required mortgage documentation, promising to make all payments to her lender. Unfortunately, Sondra falls on hard times and misses multiple payments, and the bank indicates that it's going to foreclose on her. The foreclosure proceedings are more difficult for the lender because Sondra holds the title to the land. What kind of state does Sondra live in?
Graduated
Stella owns a building in an area of town that's being revitalized. Local property owners believe property values will increase considerably over the next 10 years. Stella wants to entice long-term tenants with a low initial rent but have the flexibility to increase rent as her property's value increase. What type of lease should she consider?
License
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 ______.
$105,000
Stu's seller client, Gabi, wants to figure out how much equity she has in the home she's selling. Gabi paid $200,000 eight years ago and made several great renovations over the years. She still owes $125,000. Stu calculates that comparable home values in her area have risen about 15% since Gabi bought. Assuming Stu pulled appropriate comps, about how much equity does she have? Gabi's home value has risen $30,000 in the eight years since she bought it ($200,000 x .15). That brings her home's market value to $230,000. She owes $125,000, which brings her equity amount to $105,000. ($230,000 - $125,000).
Loan Flipping
Talking the consumer into refinancing over and over so a lender can charge fees is ______.
$1,055
The Davises pay the annual property tax of $1,825 on their lake house every January. On a whim, they sell the lake house to the Bennets to buy a Winnebago and travel the country. Closing is set for July 31, and the buyers own the day of closing (pay prorated expenses through the day of closing). Using the calendar year proration method (assume that it's not a Leap year), how much of the pre-paid property tax was the Davises' responsibility? The daily tax rate is $5 ($1,825 ÷ 365). The Davises owe taxes for January 1 through July 31 (212 days), minus the closing day (paid by buyers). Therefore, the Davises owe for 211 days, which is $1,055 ($5 x 211).
6.29%
The Gatlins' lender tells them they can afford a monthly payment of $1,830 on their new home loan. What interest rate are the Gatlins getting if this is an interest-only loan with a principal balance of $349,000? Annual payment ÷ loan balance = interest rate. $1,830 x 12 to get the annual payment of $21,960. Then divide the annual payment by the loan amount: $21, 960 ÷ $349,000 = .0629, or 6.29%.
Sex
The Housing and Community Development Act of 1974 added which protected class to federal fair housing law?
"Mrs. Murphy"
The ______________ exemption applies to owner-occupied buildings with no more than four units. The owner may choose to rent only to a like-sex tenant but may not discriminate on any other basis.
Substitution
The economic principle of ______ says that when there are two houses in the same neighborhood with the same size, appeal, and utility, the lower-priced one will tend to sell first.
One
The parcel of land Monty just bought is 43,891 square feet. Approximately how many acres does Monty have? There are 43560 Square Foot in one Acre.
The seller's lender
The seller and ______ must approve a short sale.
Conditions of sale
To make valid computations of adjustments for the market comparison approach to value, elements of comparison must be applied in a specific order. Which of these elements has the highest priority? The elements appraisers consider in the market comparison approach are applied 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.
Physical characteristics
To make valid computations of adjustments for the sales comparison approach to value, elements of comparison must be applied in a specific order. Which one of these elements listed is applied last?
The mortgage loan the buyer's obtaining
To which of the following are most of the buyer's closing costs typically related?
The statute of frauds
Tom and Jim are neighbors. Jim wants to buy Tom's rental property. In the contract they sign, Jim is identified only as "the neighbor." Which statute or contract element does this violate?
Third row, third from left
Townships in a section are numbered beginning in the upper right (NE) corner and continue in a zigzag pattern. Picture a drawing of a section of land. Where is Township 16 located?
The Closing Disclosure isn't required for a HELOC.
Trinity has applied for a home equity line of credit to perform some upgrades on her home. Within what timeframe must her lender provide the Closing Disclosure?
Void
Warren signed a contract with the Samsons for the sale of property he didn't own. What type of contract is this?
No down payment, no mortgage insurance, and no prepayment penalty
What are the main benefits to veterans of the VA-guaranteed loan program?
Curable and incurable
What are the two types of physical depreciation?
Market price range
What does a CMA determine?
The lender owns real estate after a foreclosure sale.
What does an REO on a lender's assets mean?
Any ad likely to mislead consumers acting reasonably under the circumstances
What does the FTC consider to be a deceptive ad?
Rate, index, and margin
What factors directly affect an adjustable rate mortgage?
Bilateral Contract
What is a contract involving an exchange of promises or other consideration between two parties
A 36-square-mile square formed in the use of the rectangular government survey system
What is a township?
The owner pays all property taxes, maintenance, and insurance costs.
What is an example of a gross lease?
Indestructibility
What is the physical characteristic that states that while improvements may deteriorate, land can't be destroyed.
To release homeowners from the responsibility of cleaning up hazardous substances if the homeowner didn't know they existed
What is the primary purpose of the Superfund Amendments and Reauthorization Act (SARA)?
VA
What loan requires no down payment, no mortgage insurance, and doesn't have a prepayment penalty.
Purchase money mortgage
What type of arrangement allows the buyer to retain title to the property but places a security interest in the property on behalf of the seller?
Zoning
What type of police power allows cities to identify specific uses for an area?
Use contingencies judiciously to protect the clients and the deal.
What's a good policy that a buyer's agent should employ regarding contingencies?
Its optional longer term means a lower monthly payment.
What's one benefit of a rural development loan?
When a loan's interest rate is higher than the maximum allowable rate
What's usury?
A mete
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?
This is illegal under RESPA because it's considered a kickback between settlement service providers.
When Stacy's clients ask her if she can recommend a mortgage broker, she promptly gives them the name of the best mortgage broker she knows, Gary Jones. Later, she always receives a check from Gary as payment for the referral. Is this legal or illegal under the Real Estate Settlement Procedures Act?
The presence of an environmental hazard would decrease the property's utility and restrict its use until the hazard is cleaned up, decreasing value.
When a property is found to contain an environmental hazard, what can generally be expected to happen to the property's value?
The length of time it takes to purchase a distressed property
When purchasing a short sale or foreclosure, what's one of the biggest frustrations buyers face? The purchase of a distressed property can take at least twice as long as the purchase of a traditional property.
Exclusive right to sell
When working with a seller, you signed a listing agreement that ensured you'd receive a commission, provided the property sold during the listing term. What type of listing agreement did you sign?
Federal Trade Commission Act
Which act created an agency to investigate antitrust practices?
Indemnification clause
Which clause in a contract states that one or more parties won't be held liable if there are losses or expenses related to the contract?
Contribution
Which economic principle pertains to how a change in a property affects its value as a whole?
Substitution
Which economic principle says that a property's value is determined by what it would cost to purchase a similar property?
The seller specifies a desired price for the property and agrees to pay the broker any amount received that's more than that price.
Which of the following best describes a net listing? A net listing means the seller is holding out for a specific price; the amount of commission to be paid to the listing agent depends on the price the seller receives.
Value
Which of the following can be defined as what a property is worth?
Time is of the essence clause
Which of the following clauses directs the parties to a real estate sales contract to proceed in good faith, and not unduly delay the process?
Busy street
Which of the following features is most likely to be the cause of an adjustment to a comparable (competitive) when preparing a CMA?
Get a low interest rate of 4.75% (4.925% APR) with as little as 10% down payment and a 30-year fixed rate with no points.
Which of the following is an acceptable ad based on Regulation Z?
Buyer offers $650,000 with clause that buyer will beat all competing offers by $3,000 up to $675,000.
Which of the following is an example of an escalator offer?
Two brokerages determine a standard commission rate.
Which of the following is an example of price fixing?
Cost
Which of the following is defined as what it would take to recreate that property if it disappeared off the face of the earth today?
Building code
Which of the following is most likely to establish workmanship standards when someone is building an addition to their property?
Exclusive right-to-represent agreement
Which of the following is the most common type of buyer representation agreement?
Mortgage value
Which of the following is the price a lender believes the property will bring at a foreclosure sale?
They often involve a conflict of interest.
Which of the following is true about net listings?
They're an antitrust violation.
Which of the following is true about tie-in arrangements?
Duplex built in 1959
Which of the following properties requires a lead disclosure?
Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.
Which of the following statements about escrow accounts is correct? Escrow accounts are most widely used in real estate to hold earnest money deposits. These accounts may be opened and managed by the brokerage firm, a title insurance representative who's serving as a closing officer, or an attorney.
A material fact may have more or less effect on a buyer based on the buyer's needs and values.
Which of the following statements about material facts is true?
A promissory note is a negotiable instrument and can be transferred to a secondary holder who has the right to enforce the note's terms.
Which of the following statements about the promissory note is true?
Listing the property on the MLS
Which of the following strategies would help to make a "Choose Your Neighbor" marketing letter non-discriminatory in its effect?
The seller will defend against all claims against the property's title.
Which of these guarantees is offered by a general warranty deed but not a special warranty deed?
The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.
Which of these is a TRUE statement regarding truth in advertising violation penalties?
An agent foregoes buyer agent commission, provided the purchasing developer gives the agent the listings on the developed lots.
Which of these is an example of agency coupled with interest?
Kevin's MLS remarks note that the condo has the city's "most beautiful twilight view of downtown and the bay."
Which of these is an example of puffery?
Jules and Katrina are under contract for the purchase of Katrina's house. A dispute arises over some contract terms, and they end up in court. The court rules one of the terms invalid but leaves the remainder of the contract in force.
Which of these is an example of severability? Severability refers to the concept that a court can strike down one or more contract terms while leaving the remainder in place.
The frontage for a lot that's 120 feet by 85 feet is 120 feet.
Which of these statements about frontage is true?
Marketable title carries a higher standard of assurance than insurable title.
Which of these statements about title marketability standards is correct?
The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin.
Which of these statements accurately describes finance- and housing-related legislation?
Ensure that the buyer receives copies of all signed paperwork.
Which of these tasks must a licensee perform for buyer clients?
Immobility
Which physical characteristic of land addresses the concept that the geographic location of a piece of land is fixed and can never be changed?
Enjoyment
Which real property ownership right protects the owner from harassment or interference?
Title VIII of the Civil Rights Act of 1968 prohibits housing discrimination based on race, color, national origin, and religion.
Which statement correctly identifies a federal fair housing law and what it addresses?
Recording the deed provides constructive notice of the property sale.
Which statement most accurately describes the type of notice provided by recording a change of ownership document?
Determine how earnest money is to be distributed in case of a dispute.
Which task is NOT the responsibility of an escrow officer?
Tie-in arrangement
Which type of antitrust violation occurs when the providing of one service is made dependent on the customer or client obtaining another recommended service?
A promissory note
While Martha's paying off her loan, her lender is holding on to something that includes her name, property address, the interest rate on her loan, what the late charge amount would be, and the amount and term of the loan. When her loan is paid off, the lender returns it to Mary, marked paid in full. What is this item?
Underground Storage Tank
While walking around the exterior of a rural home she's inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard? A pipe or a vent sticking out of the ground, or a metal cap plate, are clues that there may be an underground storage tank on the property.
Property owners and property managers
Who is responsible for ensuring accessibility requirements for a commercial property are met?
Offeror
Who is the party making the offer
To gather closing-related information agreed to in the contract
Why does the closing agent review the purchase contract?
Borrowers who can't afford loan payments may have taken out other loans against the property.
Why is a foreclosure more likely to have title issues than a non-foreclosure?
Buyer agency
You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer?
Void
You sign a contract to purchase a machine that will allow you to travel back in time and meet Abraham Lincoln. Assuming that time machines don't actually exist (for now), what type of contract is this? A party can't promise to do something that's actually impossible in a contract. This contract is void because the seller of the machine literally can't perform his side of it.
The UETA gives electronic signatures the same legal weight as "wet" signatures
You're explaining to your client that using electronic documents and signatures simplifies the home buying process. Your client is skeptical about these signatures. You describe the Uniform Electronic Transactions Act (UETA) and tell your client ______.
Yes, the contract is valid.
Your 15-year-old son just signed a contract joining a health club, which costs $50 a month. Is this contract valid? While legal capacity includes whether or not all parties are of legal age, contracts signed by minors are valid but voidable by the minor.
Addendum
Your brokerage firm uses pre-printed sales contract forms, but your seller, Marcus, wants to add some language about staying in the house and renting from the buyer for a month after closing. What should you use to add this information?
$208,000
Your buyer client Heather just signed a purchase agreement for a $520,000 home. The LTVR is 60%. How much is Heather putting down on the purchase? A 60% LTVR means that Heather is financing 60% of her purchase and putting down 40%. Forty percent of $520,000 is $208,000 ($520,000 x 0.40).
The property taxes may change drastically after reassessment.
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?
Plottage
_______ is an increase in property value caused by the joining of two neighboring parcels of land.
PMI
__________ is cancelled when a borrower reaches a 22% equity position. This is based on payments of principal made toward the original loan balance and not on current market value.
Consideration
__________ which is an essential element of a contract, is something of value which is given from one party to the other party in exchange for goods or services.
Commercial and business
___________ loans are exempt from RESPA.
Metes
____________ (measures) are the direction and distance of a line forming the boundary of the property.
Co-op ownership
____________ doesn't involve owning real estate, but rather owning a proprietary lease and shares in the corporation that owns the cooperative.
Avulsion
____________ is the loss of land by a sudden, large-scale change in water flow.
The promissory note
__________________ is evidence of the debt that specifies the borrower's financial obligations. Collateral for the note is typically the property on which the loan is made. It's a negotiable instrument.
Riparian Rights
___________________ are granted to property owners whose property is adjacent to flowing water, like a river.
Housing and Community Development Act of 1974
_____________________ included gender or a person's sex in the list of protected classes.
A special use permit
______________________ also called a conditional use permit, requires a public hearing and may be granted as long as the use is in harmony with zoning ordinances and doesn't adversely affect the community.
Home equity
lines of credit aren't subject to TRID disclosures.