Practice Final Exam Questions
Nina and Rob prepaid some of their interest to their lender when financing their new home. What's the called?
A buydown (With a buydown, the borrowers pay a lump sum to buy down the interest rate, lowering their monthly payment)
What does "cash-on-cash return" mean?
A comparison of before-tax cash flow to cash invested. (Cash-on-cash return measures the amount of cash flow relative to the amount of cash invested in a property investment and is calculated on a pre-tax basis.)
Florida's Brokerage Relationships Disclosure Act requirements apply to transactions involving which one of the following properties?
A duplex (applies to residential transactions; sale of improved 1-4 units, the sale of unimproved residential property intended for use as 1-4 units, & agricultural property of 10 acres or less)
What is a bound?
A physical feature that defines the boundaries of the land
What's a datum?
A point, surface, or line used as a reference for measuring elevations
Britney is selling her bungalow via an installment contract. The buyer made payments dutifully for five years, but has not made any payments for more than a year. Which of the following is true? A) Britney can keep all of the proceeds received and repossess the property. B) Britney must petition the court to receive title to the property. C) Britney must return the proceeds received, but she can repossess the property. D) The buyer can sell the property for a profit.
A) Britney can keep all of the proceeds received and repossess the property.
When a leased property is sold, the previous owner must transfer the security deposit and __________ to the new owner.
Advanced rent payments
Volatile organic compounds can make indoor air quality toxic. Where are VOCs likely to be found?
Air fresheners
What's a quiet title action?
An action to locate and notify all who may have some claim on the title, and determine the validity of all claims
Which of the following is true about the statute of frauds? 1. All types of written contracts, with the exception of email or other online communication, may be considered "in writing" and binding 2. Any form of written contract, including email communication, may be considered "in writing" and binding 3. Only contracts that are handwritten are considered to be "in writing" and binding 4. Only pre-printed contracts, the blanks of which have been filled in in ink, are considered to be "in writing" and binding
Any form of written contract, including email communication, may be considered "in writing" and binding.
Which of the following is a mortgage where the consumer cannot later claim that the lender did not comply with the ability to repay requirements? A) Qualified mortgage with ability to repay B) Qualified mortgage with a safe harbor status C) Qualified mortgage with cash payment option D) Qualified mortgage with the rebuttable presumption
B) Qualified mortgage with a safe harbor status
A ______ is often used in commercial applications when two or more properties are pledged as security for repayment of the loan.
Blanket mortgage
At the closing table, who examines all documents for buyers and represents their best interests?
Buyer's attorney
If a Florida property owner fails to pay their property taxes and a tax certificate is issued on their property, which of the following is true? a) A public auction is held. b) The property owner may not redeem the property. c) The property owner may still pay the taxes and redeem the property. d) The state can file a tax deed application
C?
Who typically performs an appraisal?
Certified appraiser
Renae moved to the U.S. from Nigeria and became a citizen. Which act specifically provides Renae with the right to buy, sell, convey, inherit, and possess property?
Civil Rights Act of 1866
When the buyer and seller both have costs to pay, which form shows who pays what?
Closing statement (It shows each payment that each party will make at closing, and each payment that each party will receive at closing.) (It also shows the totals—the buyer's total cost, and the seller's proceeds from the sale.)
In what type of market could a buyer's strategy be to ask the seller to pay closing costs?
Cold market
When licensees follow through on what prospects have asked, arrive for meetings on time, and come prepared, what trait are they exhibiting?
Competence
Which loans involve increased risk for the lender and therefore usually come with a higher rate? a. Construction b. Land Contract c. Reverse d. Shared equity
Construction
Which of the following is an included covenant(s) in a warranty deed?
Covenant of right to convey
Shirley's lender discharged the mortgage lien on Shirley's property after processing her final payment. Which clause requires the lender to take this action?
Defeasance
Alienation of Title
Transferring or conveying ownership from one party to another -may be voluntary or involuntary
How many parties does a mortgage involve?
Two: borrower and lender
How long will a real estate license be suspended if funds from the Florida Real Estate Recovery Fund are paid out against a license holder?
Until the money is all paid back, plus interest
When must a buyer client give written consent for a licensee to transition to a transaction broker role?
When the buyer is in a single-agency relationship with the licensee (Written consent to transition to the transaction broker role only applies when a single agency relationship has been established.)
The property management agreement between owner Susan and property manager Phil creates a relationship where Phil is the agent for Susan. Which of the following is NOT addressed in the agreement
Whether or not the owner will accept lease applications requesting accommodation of an emotional support animal
Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title?
Yolanda (the seller retains the title in a land contract. When the loan balance is paid in full, the seller gives the buyer the title)
Elmer died and left a will. Before his estate can be distributed according to his wishes, it must go through ______.
Probate (w/o probate, he heirs cannot sell/convey/transfer the real estate. Process of an attorney opening a court file, procedurally moving what the deceased had to the rightful heirs, formally transferring title, is probate- once title is transferred, the heirs have authority to sell/convey/transfer the real estate)
Property expense reimbursements are paid to the ______.
Property owner (Property expense reimbursements are paid to the property owner. Real estate taxes are one type of property expense that an owner can bill to the tenant)
Which of the following describes how brokers/licensees go about obtaining their commission?
Providing the attorney or closing agent with a broker statement that shows how much each broker should receive
If a landlord removes the tenant's right of _______, the tenant can claim constructive eviction and vacate the property with no further financial responsibility to the landlord.
Quiet enjoyment
Real estate, plus all of the interest, benefits, and rights included in ownership, is also known as ____________.
Real Property
Drew and Hank were camping at Hank's riverfront cabin. Hank told Drew that he rarely used the cabin and was thinking of selling it. Drew said that he'd buy it from Hank for $80,000, which Hank agreed was a fair price. It's two months later, and Hank is upset that Drew now says he won't buy it. Why isn't this contract enforceable?
Real estate contracts must be in writing.
In 1934, when the Federal Housing Administration was created, it adopted the practice of crossing off cities and neighborhoods it considered risky and withheld mortgage funds from those areas. What is this action called?
Redlining
Jayne was tired of waiting for her subcontractor to get his part of the deal done. The agreed-upon deadlines came and went, and Jayne lost money waiting for the subcontractor to come through. She decided that if the subcontractor wasn't going to honor his commitments, neither was she, so Jayne consulted with her attorney and then terminated the contract. This is an example of ______.
Rescinding the contract unilaterally
The Florida Real Estate Recovery Fund has a maximum payout limited to $150,000 for what?
Each licensee
Which of the following is included with real property rights? 1. Enjoyment 2. Hazardous acts 3. Right to destroy 4. Right to encroach
Enjoyment
Mark is a buyer who wants to know which words in a deed make it clear that the property is being conveyed with the full bundle of rights. What words should Mark look for?
Fee Simple (The words, "fee simple," refer to the highest level of ownership - ownership of the full bundle of rights)
In Florida, applicants for the sales associate license are required to disclose any criminal history on the application and submit _________________ for a background check.
Fingerprints
Which entity is responsible for regulating professional practices and administrative matters?
Florida Real Estate Commission (FREC)
Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this?
Improvements
Why would you not be able to accept tickets in exchange for referring business to a settlement service provider?
It would be considered a kickback.
The _______ is the price at which an owner has offered to sell the property, and is the amount that's found on the MLS when a property is listed for sale.
List Price
Which practice involves talking the consumer into refinancing over and over so a lender can charge fees?
Loan flipping
Which entity typically enforces the code restrictions and licensing and insurance requirements for contractors, thereby enforcing the building code?
Local building department
Income from a vending machine on a rental property is an example of what?
Miscellaneous income
The main difference between puffery and misrepresentation is that _______.
Misrepresentation falsely represents material facts that a reasonable person would rely upon
How is the documentary stamp tax rate usually calculated?
Multiply the tax rate by the number of $100s in the sales price.
You've been studying real estate for a while, and you're a few weeks from taking the exam and getting your real estate license. Which activities are you able to do?
Negotiate and buy your own property. (You're not yet licensed, so the only activity you can perform from among these options is to negotiate and buy your own property)
How long can a license remain in involuntary inactive status?
No more than two years
Which of the following is provided at the time of a buyer's offer and shows what the seller's proceeds will be if the seller accepts the offer?
Seller net sheet
How many members serve on the Florida Real Estate Commission?
Seven
Changes in the national market may have little (or significantly delayed) impact on local markets. This is because the real estate market is ______.
Slow to respond
Tim's license is in voluntary inactive status and it's time for renewal. What happens if he does not renew before the license expiration date?
The license reverts to involuntary inactive status (Real estate licenses that are not renewed by the expiration date automatically revert to involuntary inactive status. Tim needs to renew his license to retain his voluntary inactive status)
Donald purchased a property five years ago. He lived in the property for a year, then rented it out to a family friend. Now he is selling the property for a capital gain of $10,000. Can he exclude the gain from his taxes?
No, he did not live in the home for two of the preceding five years.
What's one purpose of a BPO?
To assist lenders in determining the marketability and potential sales price for distressed properties
In which of the following scenarios is impossibility of contract performance occurring? a. Both parties fully meet the terms of the contract. b. Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do. c. One or both parties have completed only a portion of the terms agreed to in the contract. d. One party didn't meet the terms of the contract in the specified timeframe and is being required to do exactly what was agreed to in the contract.
b) Due to circumstances beyond their control, the parties can't legally or practically do what they've agreed to do.
Alyssa's mortgage loan is secured by the note and the mortgage. Which of the following is true if she lives in a lien theory state? a) Her lender can foreclose on her without advance notice. b) She holds title to the property, and the mortgage becomes a lien on the property. c) The lender can never legally foreclosure on her home. d) The lender doesn't need to involve the court to foreclose.
b) She holds the title to the property, and the mortgage becomes a lien on the property. (The lender holds the mortgage and the note)
Which of the following is a piece of specific data an appraiser may gather? a. Cost of living b. Employment figures c. Population size d. Property lot size
d. property lot size
Which type of insurance must a buyer obtain if a mortgage is involved?
Homeowners fire and hazard insurance
In a mortgage, the property is used as collateral for the loan. What's the term for the process of pledging something as collateral?
Hypothecation
Lot and Block Realty received a cease-and-desist order from the FTC due to misleading ads the firm was running. When does the order become effective?
Immediately upon issuance
Where are mortgages recorded?
They're recorded at the recorder's office in the county where the property is located.
How would you respond if your seller makes the following request? "We've lived here 10 years and love our neighbors. They're really concerned about the changes happening to the blocks around us, so we want to be careful about who we sell this house to. You know what we mean. You'll help us find the 'right' kind of buyer, won't you?"
"It would be illegal to limit the search based on race or religion or anything like that, but I promise I'll find you the most qualified buyer I can, and we'll sell this house for the highest price possible."
Which of the following is an example of puffery?
"This condo has the best view this side of the river!"
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?
$208,000 (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])
Thom and Josie have lived in their Florida home for 15 years and it is their permanent residence. The value of their home is $350,000. What amount of their home's value can they exempt from school taxes?
$25,000 (Homeowners can exempt $25,000 from school taxes, and $50,000 from non-school taxes.)
Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice's mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar?
$370,500
A 4-bedroom, 4-bath 4,875 square feet house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house?
$86.72 $445,000 x 0.95 = $422,750 $422,750 ÷ 4,875 = $86.72
In certain cases, antitrust violators may be subject to court-ordered supervision. How long can this supervision last?
10 years
A lot measuring 108,900 square feet is for sale. How many acres is this?
2-and-a-half
A lot measuring three-fourths of an acre is for sale. How many square feet is this?
32,670 43,560 sq ft x 0.75 = 32,670
John wants to do a 1031 tax exchange with a property he just sold. How many calendar days does he have to identify a new property for the exchange?
45
How many feet are in a mile?
5,280
Your client Ellis is purchasing a property for $520,000. He made a down payment of $200,000 and plans to finance $320,000. What is the LTV ratio as rounded to the nearest percentage?
62% LTV = Loan Balance ÷ current value
A broker has designated one sales associate to work with a seller and another sales associate to work with a buyer on the same commercial transaction. What must the parties disclose?
Assets of $1M or more
Which of the following is a true statement about deducting interest on mortgages taken out in tax years between 2018 and 2025? A) Interest on the first $500,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately. B) Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately. C) The loan can be used for purchase or making improvements, as well as for other purposes. D) The loan cannot be for more than the borrower's most recent year's salary.
B) Interest on the first $750,000 of mortgage debt is deductible for married couples filing jointly or $375,000 for married couples filing separately.
What does the income approach to value rely on when valuing properties that are five or more units?
Gross Income Multiplier (5 or more units)
George failed to renew his real estate license before the expiration date. What status will George's license automatically change to?
Involuntary Inactive
Jevon just learned that his employer's broker license has been suspended. What status will his own license become?
Involuntary inactive
Rob and Jill obtained a mortgage from Taylor Bank & Trust in 1998. In 2014, they obtained a second mortgage from Quail Loans. What is the loan with Quail Loans considered?
Junior mortgage
Lester is interested in a two-bedroom unit in a cooperative. A residence in a cooperative, unlike a condominium, is legally considered ______.
Personal property
Which of the following is a legitimate reason to counter an offer? a. $50 curtain b. cracked tile c. free-standing fire pit d. price
Price
Kurt is pricing a home for a client in a cold market. It's a great property, and he knows it would sell for above market value if the market were better. All things considered, what's the best pricing strategy for the home?
Price the home below market value.
What well-known economic principle says that a property's value is determined by what it would cost to purchase a similar property?
Substitution
What is the 200% rule as it relates to tax-deferred exchanges?
The combined fair market value of the property (or properties) being exchanged into cannot be more than 200% of the relinquished property. (The 200% rule allows you to identify unlimited replacement properties as long as their cumulative value doesn't exceed 200% of the value of the property sold.)
Which of the following is true of the disclosure requirements of Florida's Brokerage Relationship Disclosure Act?
The disclosure may be provided in a separate document or included in another document, as long as it's conspicuous.
Which one of the following elements does a valid option contract contain?
The sales price of the property or the way in which the price will be determined (A valid option contract clearly states the sales price of the property, or the way in which the price will be determined if the optionee chooses to purchase the land during the option period.)
When looking at a rectangular government survey system map, where would Section 36 be located?
The southeastern-most section of the township
Which of the following is true about Florida homesteads? a) Non-governmental creditors cannot pursue liens against these properties. b) Non-governmental creditors can pursue liens against these properties for debts over $10,000. c) They are not protected from creditors. d) They are protected from all creditors
a) Non-governmental creditors cannot pursue liens against these properties.
Cheryl is getting her mortgage through her small-town credit union, called Mid-State Meadows Credit Union. Mid-State recently needed extra funding. Which of these agencies most likely provided that funding? a. A Federal Home Loan bank b. The Federal Housing Finance Agency c. The Federal Mortgage Lending Institution d. The Federal Reserve System
a. A Federal Home Loan Bank (The Federal Home Loan banking system provides low-cost funding to financial institutions, which enables those institutions to provide home mortgage loans, like Cheryl's.)
Which one of the following statements about the designated sales associate method of representation is true? a. A designated sales associate acts as a single agent. b. Agricultural transactions cannot use the designated sales associate method of representation. c. In the request for designated sales associate representation, the buyer or seller fills in the name of the sales associate they are requesting. d. The designated sales associate method of representation may only be used when the buyer and seller's combined assets equal $1 million.
a. A designated sales associate acts as a single agent.
Which of the following is true about ownership or title to a property? a. Constructive notice to the public of real property ownership occurs when the deed is recorded. b. The last to record has priority. c. The seller is responsible for paying for the owner's and lender's title insurance. d. Title isn't finalized until the deed has been recorded.
a. Constructive notice to the public of real property ownership occurs when the deed is recorded.
Which of the following is regulated by the Federal Housing Finance Agency? a. Fannie Mae b. Farmer Mac c. Ginnie Mae d. Real Estate Licensees
a. Fannie Mae
Which of the following statements is true of investment properties? a. They can be leveraged b. They're guaranteed to make a profit c. They're highly liquid d. They're very low risk
a. They can be leveraged.
Which of the following is a possible outcome if a brokerage is found guilty of violating antitrust law? a. The brokerage may be required to place 10% of its profits in the Sherman Act Foundation for a period of three years. b. The brokerage may have to sell its assets to its nearest competitor at below-market rates. c. The brokerage may have to undergo court-ordered supervision for up to 10 years. d. The brokerage's listing fees may be limited to 80% of its former charges.
c) The brokerage may have to undergo court-ordered supervision for up to 10 years.
When pricing a property, which of the following is a reason a licensee would consider expired listings? a. To determine approximately how long it will take the home to sell. b. To determine the price at which a property is most likely to sell. c. To determine the price at which a property won't sell. d. To determine the property's competition.
c. To determine the price at which a property won't sell.
Cassandra is a business opportunity broker. Which of the following must be true? a. She does not deal with the sale and purchase of personal property. b. She is not required to have a real estate license. c. She primarily deals with the sale and purchase of larger businesses. d. She primarily deals with the sale and purchase of smaller businesses.
d. She primarily deals with the sale and purchase of smaller businesses. (As a business opportunity broker, Cassandra primarily deals with smaller businesses, like sole-proprietors or partnerships, with limited amounts of fixed assets.)
In Florida, the FDEP maintains a list of contaminants and their Total Maximum Daily Load (TMDL) contaminant level. Where is this information available?
the FDEP website