Practice Questions

Net operating income is calculated as a gross income divided by operating expenses. b gross income minus operating expenses. c gross income plus operating expenses. d operating expenses divided by gross income.

b. gross income minus operating expenses. In its simplest application, NOI is defined as gross income minus operating expenses.

Which would likely have the highest PMI cost? a 80% loan b 90% loan c 95% loan d house purchased with cash

c. 95% loan The higher the loan-to-value ratio, the higher the PMI costs, since the premium is based on the loan amount.

A conveys a life estate to his younger son B for as long as his wife C shall live, and then to his older son D. Whose life is the measuring life? a A, grantor of the estate b B, the younger son c C, the wife d D, the older son

c. C, the wife Wife C's life is the measuring life. She has no interest in the property, present or future.

A fee simple absolute estate is NOT a conditional. b inheritable. c perpetual. d transferable.

a. conditional. Correct! A fee simple absolute estate is not conditioned on any event. It is the most complete form of ownership.

When a buyer will not pay more for something than its cost, the buyer is influenced by a contribution. b opportunity cost. c substitution. d supply and demand.

a. contribution. Contribution is the theory that an item is worth only what it contributes in value to real estate.

If a mortgage loan payment consists of interest only, the final payment which includes the full amount borrowed is called a a amortized payment. b balloon payment. c monthly payment. d term payment.

b. balloon payment. A balloon payment is the final lump sum that pays any remaining principal and/or interest at the end of a loan term.

Calculate the cost of building a structure that is 120' x 75', if the cost is $11.25 per square foot. a $84,375 b $90,000 c $101,250 d $135,000

c. $101,250 120' x 75' = 9,000 square feet; 9,000 x $11.25 = $101,250.

The Real Estate Commission may levy fines up to ______ per license law violation. a $1,000 b $1,500 c $2,500 d $5,000

c. $2,500 Correct! The maximum fine per violation is $2,500, with no limit.

In Ohio, a land contract must be recorded within _________ of execution. a 5 days b 10 days c 20 days d 30 days

c. 20 days In Ohio, a land contract must be executed in duplicate, recorded within 20 days of execution.

Trade fixtures a are considered the landlord's personal property. b are considered real property and cannot be removed by the tenant. c can be removed by the tenant before the lease expires. d cannot be removed unless the lease specifically states they are personal property.

c. can be removed by the tenant before the lease expires A tenant is generally allowed to remove trade fixtures at the end of the tenancy.

A competitive market analysis is _________ equal to an appraisal. a always b more or less c never d sometimes

c. never Although a CMA is similar to an appraisal, it is never equal to an appraisal.

The most important physical factor in determining site value is a demographics. b improvements. c size. d taxes.

c. size. The most important physical factor is size, for example, width, depth, shape, size of usable area, etc. The appraiser must be very sure that this data is correct.

Which has its own underwriting standards? a Fannie Mae b the FHA c the VA d all of the above

d. all of the above Each of these has specific underwriting standards.

The provision that penalizes borrowers who pay off loans sooner than agreed is a(n) a alienation clause. b assumption clause. c incorporation clause. d prepayment penalty clause.

d. prepayment penalty clause. Prepayment penalties are fees a lender charges the borrower for paying off a loan early.

What is minimum age requirement in order to apply for an Ohio real estate salespersons license? a. 18 b. 19 c. 20 d. 21

a. 18 Correct! Anyone wanting to become a real estate salesperson in Ohio must be at least 18 years of age.

A borrower must provide how many years' worth of employment information? a 2-3 b 3-4 c 4-5 d 5-6

a. 2-3 A lender will expect to see the past two to three years of employment history from a prospective borrower.

D is selling his store but he refuses to sell it to L because she is Buddhist, Chinese, and has bad credit. D has violated the a Civil Rights Act of 1866. b Equal Credit Opportunity Act. c Federal Fair Housing Act. d Ohio Civil Rights Law.

a. Civil Rights Act of 1866. Because the refusal to sell is based in part on the fact that the buyer is Chinese, D is in violation of the Civil Rights Act of 1866.

Joe's real estate brokerage practices designated agency. Agent Sara brings Joe a listing agreement with a seller. Agent Ben brings Joe a purchaser agency agreement with the buyer for that property. Who is a dual agent in this scenario? a Ben b Joe c Sara d no one

b. Joe Correct! In Ohio, if a broker has different affiliated agents representing both clients in a single real estate transaction, the broker is considered to be a dual agent.

Which element CANNOT be separated from real property? a appurtenances b bundle of rights c fructus naturales d house and shed

b. bundle of rightsThis is the correct answer. Incorrect. The answer is B. The bundle of rights cannot be separated from real property. Appurtenances such as water rights, fixtures such as a house, and naturally growing plants can all be severed from real property.

Real property given in a will is a always subject to all encumbrances. b called a devise. c subject to adverse possession by the administrator. d usually worthless.

b. called a devise. In a will, money is called a legacy, personal property is called a bequest, and real property is called a devise.

Money obtained from a foreclosure sale in excess of the property debt and court costs belongs to the a court. b debtor. c lender. d sheriff.

b. debtor. Any surplus funds (left over after all debts, liens, expenses, and costs related to the property are paid) go to the debtor.

An unconstitutional law a can be enforced only retroactively. b exceeds the powers granted to the government. c may be used to modify a Supreme Court decision. d violates the statute of limitations.

b. exceeds the powers granted to the government. A law is said to be unconstitutional and cannot legally be enforced if the government exceeds its constitutional power in the passage of the new law.

Which term describes the process by which a borrower pledges property as security for a loan without giving up possession of it? a defeasance b hypothecation c redemption d subordination

b. hypothecation The concept of hypothecation allows a borrower to live in the house used as collateral for a loan.

Which is NOT a possible sanction that may be imposed on a licensee by the Real Estate Commission for violations of Ohio license law? a fine b imprisonment c license revocation d public reprimand

b. imprisonment Correct! The Real Estate Commission does not have the authority to impose jail time on someone, although the other sanctions are possible.

Which element of an adjustable rate mortgage determines whether the interest rate goes up or down? a cap b index c margin d period

b. index The interest rate on an ARM can move up or down based on the movement of a specific index, a statistical report that is generally a reliable indicator of the approximate change in the cost of money. The index is something that neither the lender nor the borrower has any influence over.

Private mortgage insurance is required when the loan-to-value ratio (LTV) is a 75% or higher. b over 80%. c 90% or higher only. d over 95% only.

b. over 80%. For conventional loans, lenders will require PMI if a borrower pays less than 20% down, meaning LTV over 80%.

A property has annual income of $75,000 and monthly building expenses of $3,200. Annual debt service is $19,200 and depreciation is 5% of value. Using a capitalization rate of 9%, determine the value of the building. a $365,000 b $386,333 c $406,667 d $756,111

c. $406,667 First, determine the annual building expenses: $3,200 x 12 = $38,400. Subtract expenses from annual income of $75,000 to find the net operating income (depreciation and debt service are not factors): $75,000 - $38,400 = $36,600. To determine value, divide the NOI by the capitalization rate of 9%: $36,600 / .09 = $406,667 (rounded).

An apartment building has 10 units, each of which rents for $600 per month. The building has an occupancy rate of 90%, monthly building expenses are $500, and depreciation is 2%. Determine the highest price the investor will pay if he demands a 9% rate of return on his investments. a $529,200.00 b $640,266.66 c $653,333.33 d $718,666.66

c. $653,333.33 First, you need to find the net operating income. The potential gross income is $6,000 per month (10 units at $600 each), which is $72,000 per year. Next, you need to subtract the 10% vacancy loss: $72,000 - 10% = $64,800. Next, subtract building expenses of $6,000 ($500 x 12) to get to the NOI: $64,800 - $6,000 = $58,800. Remember that depreciation is NOT part of the NOI calculation. Once you have the NOI, divide by the cap rate to find the value: $58,800 ÷ 9% = $653,333.33. The investor would be willing to pay $653,333.33 to buy this building.

How many acres are in a section? a 406 b 460 c 640 d 6,400

c. 640 The 36 square miles of a township, as defined by the government survey system, are subdivided into 36 sections, which are one square mile, or 640 acres. Each section in a township is numbered sequentially.

Lou is a broker. He contracts with licensee Ed to work for him as an affiliated real estate salesperson. What level of agency authority does Ed have? a general agent b limited agent c special agent d universal agent

c. nonconforming useThis is the correct answer. Incorrect. The answer is C. A nonconforming use occurs when land use does not conform to current zoning laws, but is legally allowed because the land use was established before the new zoning laws were enacted.

What duty would require an agent to limit showings to a one-hour block on Sunday mornings if the seller insists? a accounting b loyalty c obedience d The agent would actually be in breach of the duty of reasonable care if he did not make every appropriate effort to market the property.

c. obedience Agents must obey their clients' lawful instructions.

Private investors and government agencies that buy and sell real estate mortgages are known as the a intermediate market. b primary market. c secondary market. d tertiary market.

c. secondary market. The function of secondary markets is to buy and sell the mortgages of primary market lenders.

When a complaint is filed against a licensee, the first task is to determine whether or not the a complaint is valid. b evidence is admissible. c licensee is guilty. d Superintendent has jurisdiction.

d. Superintendent has jurisdiction. Upon receipt of the complaint, the Superintendent first reviews the facts and supporting documentation for jurisdiction.

Which statement regarding revocation of a license is TRUE? a It can happen only after the third offense b It is final and may not be appealed c It is for a set period of time with automatic reactivation on the day after the revocation is lifted d The licensee may submit a reapplication, which may be denied by the Ohio Real Estate Commission

d. The licensee may submit a reapplication, which may be denied by the Ohio Real Estate CommissionThis answer is correct. Correct! Once a license has been REVOKED, the former licensee may submit a reapplication to the Commission, which may take action on the application.

The accepted standards of ethics and appraisal practice are known as a BPO. b FIRREA. c URAL. d USPAP.

d. USPAP. The rules in the Uniform Standards of Professional Appraisal Practice (USPAP) are recognized throughout the United States as the accepted standards of ethics and appraisal practice.

When looking at highest and best use, what is the primary question the appraiser must answer? a Can the client afford to have existing improvements razed? b What is the best way to ensure value without tearing down the existing structure(s), if at all possible? c What is the ideal improvement for each possible zoning type? d What is the ideal improvement for the land if it were vacant?

d. What is the ideal improvement for the land if it were vacant? The goal of determining highest and best use is to determine whether or not the property is being used for its most profitable permitted use. So, if the land were vacant, what sort of structure would be most economically profitable?

An escrow agent may be from a(n) a independent escrow company. b in-house escrow department. c title insurance company. d all of the above

d. all of the above An escrow agent may be from the lender's in-house escrow department, an independent escrow company, or a title insurance company.

Governmental factors can affect the life cycle of a neighborhood by a changing tax rates. b changing zoning. c widening a road. d all of the above

d. all of the above Each of these actions taken by the government could have an impact on the life cycle of a neighborhood.

With a loan assumption, a veteran seller is still liable for the loan amount after the property is transferred, unless the a buyer gives written assumption of liability and the VA issues a release. b buyer is an acceptable credit risk approved by the lender. c loan is current. d all of the above

d. all of the above Each of these choices would release a veteran from liability when a VA loan is assumed.

The amount a qualified veteran can borrow is determined by the a financial qualifications of the veteran. b veteran's cash flow analysis for residual income. c veteran's previous use of the program and remaining eligibility. d all of the above

d. all of the above Each of these factors contribute to how much a veteran can borrow through the VA home loan program.

Typical "nontraditional financing programs" include a adjustable rate mortgages. b permanent buydowns. c temporary buydowns. d all of the above

d. all of the above Each of these is a type of nontraditional financing.

A buyer can get an FHA loan for a certain condominiums. b purchasing a home to live in that needs some repairs. c a reverse mortgage. d all of the above

d. all of the above The FHA will insure loans more each of these situations.

A loan in which total payments over the life of the loan pay off the entire balance of principal and interest due at the end of the term is referred to as a annualized. b compounding. c diminishing. d fully amortizing.

d. fully amortizing. A loan that is fully amortized means the total payments over the life of the loan will pay off the entire balance of principal and interest due at the end of the term.

Your client asks about when the cabinetry and light fixtures will be installed in her new home. You can tell her that these items are done during which phase of construction? a exterior finish work b foundation c framing d interior finish work

d. interior finish work Items like cabinetry and light fixtures are part of the interior finish work.

Mary Ann wants to avoid foreclosure, so she asks the lender to accept a purchase price that is less than the amount owed on her property. This type of arrangement is a a deed in lieu of foreclosure. b deficiency agreement. c fiduciary deed. d short sale.

d. short sale. A short sale occurs when the lender is willing to accept less than what is owed on the property as a purchase price to avoid the foreclosure process.

Question 4 Selling your home due to a death in your immediate household most likely is a(n) __________ factor. a economic b governmental c physical d social

d. social This would most likely be considered a social factor.

What factor is given the LEAST consideration when evaluating a mortgage loan application? a amount of income b credit history c debt d source of income

d. source of income Of these, an underwriter will give the least consideration to a potential borrower's source of income, as long as the income is stable and durable.

If one dies intestate, married with two children, what does the spouse (who is the natural parent of the children) receive? a Nothing, the kids get it all. b the first $60,000 c $60,000, plus one-third of the remainder of the estate d the entire estate

d. the entire estate Under Rule 3 of the intestate succession, when an intestate person is survived by his spouse and two or more children, and the spouse is the natural or adoptive parent of all the children, the spouse receives everything.

Which government restriction/police power could have the most direct impact on the value of property? a deed restrictions b eminent domain c restrictive covenants d zoning

d. zoning Zoning has a particularly significant impact on real estate since zoning ordinances may impose strict limits on development and land usage, and thus, affect property values.

How many persons may share ownership in severalty? a. one b. two, as long as they are married to each other c. two or more persons, as long as there is unity of title d. any number, regardless of unity of title

Ownership in severalty is ownership by a single individual or corporation, where one person's interests are severed (cut) from the interests of all others.

A home is valued at $100,000 and assessed for tax purposes at 35% of value. If mills are 47.5, calculate the annual taxes. a $1,662.50 b $3,087.50 c $3,500.00 d $7,368.50

a. $1,662.50 First, find the assessed value of the property: $100,000 x .35 = $35,000. Next, find the cost of each mill: $35,000 / 1,000 = $35.00. Finally, multiply the mill cost by the total mills: $35.00 x 47.5 = $1,662.50. The annual taxes are $1,662.50.

If in a comparable sale which sold for $80,000, the seller contributed $4,000 to buy-down the buyer's interest rate, what would be the percent of adjustment observed from this transaction? a 2% b 5% c 7.5% d 10%

b. 5% This financing concession is 4% of the sales price of the property: $4,000 / $80,000 = .05 or 5%.

A property is valued at $150,000 and generates annual income of $30,000. Building expenses run $1,500 per month, leading to a net income of $12,000. Calculate the gross rent multiplier. a 2.0 b 4.4 c 5.0 d 12.5

c. 5.0 The gross rent multiplier does not take expenses into consideration, only the gross income. To find the GRM, simply divide the value by the gross income: $150,000 ÷ $30,000 = 5

A property valued at $150,000 generates annual income of $30,000. Building expenses run $1,500 per month, leading to a net income of $12,000. Calculate the gross monthly rent multiplier. a 5 b 52.8 c 60 d 150

c. 60 The gross monthly rent multiplier is 60. First, find the monthly rent: $30,000 / 12 = $2,500. Then you can divide the value of the property by the monthly income: $150,000 / $2,500 = 60. Remember that with the GMRM, no consideration is given to expenses, vacancies, collection losses, debt service, or depreciation.

A gift letter a is never necessary. b may come only from a friend or family member of the borrower. c must be signed by the donor. d must state when the gift is to be repaid.

c. must be signed by the donor. Gift letters must be signed by the donor and clearly state that the donor does not expect the gift to be repaid.

A first-time borrower who served in active duty for more than six years wants a VA loan. The home costs $88,900, estimated closing costs are $1,100, and the borrower wants to finance the variable funding fee (assume a funding fee of 2.15%). The borrower has good credit, but little cash. What's the loan amount for this home? a $86,899.65 b $88,900.00 c $90,000.00 d $90,811.35

d. $90,811.35 If the borrower is financing the funding fee, multiply 2.15% by the sale price to determine how much more the buyer will borrow: $1,911,35. Add the sale price and the funding fee to find the loan amount: $90,811.35

The cost of money a does not affect demand for real estate. b greatly influences a homebuyer's decision. c has no influence on a homebuyer's decision. d is not the same as interest rates.

Selected: b. greatly influences a homebuyer's decision. Correct! Higher costs increase the overall cost of the housing decision, which greatly influences the decision.

After a buyer purchases a property, he has a survey made and finds that his neighbor recently built a fence 10 feet over onto the buyer's land. This is an example of a adverse possession. b an appurtenance. c an easement. d an encroachment.

Selected: d. an encroachment.This answer is correct. Correct! Encroachment occurs when a physical object intrudes on a neighboring property. An appurtenance literally means a right that runs with the land.

A buyer paid $1,000 per acre for the S 1/2 of the SW 1/4 of the SW 1/4 of Section 27. How much did he pay? a $20,000 b $40,000 c $80,000 d $160,000

a. $20,000 Each section is 640 acres. Working backward: 640 / 4 = 160; 160 / 4 = 40; 40 / 2 = 20. There are 20 acres in the NW 1/2 of the SE 1/4 of the S 1/2 of Section 27. At $1,000 per acre, he paid $20,000

A typical hybrid ARM loan might also be called a(n) a 7/1 ARM. b option ARM. c piggyback loan. d VA loan.

a. 7/1 ARM. A hybrid ARM offers an initial interest rate that is constant for a period, and then it adjusts. A 7/1 ARM means that the interest rate stays the same for the first seven years, then adjusts annually.

The Erie Railroad's tracks run through downtown Lumpington. The railroad owns the property around its tracks. The Colossus Corporation wants to buy the airspace above the tracks to build a shopping complex. Which statement is TRUE? a Colossus can buy the air rights from the railroad. b Colossus must buy the air rights from the federal government, since it has control over airspace. c Unlike other appurtenant rights, air rights cannot be sold separately from the property. d none of the above

a. Colossus can buy the air rights from the railroad. Property owners have the exclusive right to use the lower reaches of airspace over their property, so the railroad could sell the air rights to Colossus.

To calculate the gross monthly rent multiplier, which must be known? a recent sales of any residential homes in the area b recent sales of rental comparables with income figures c rental rate of the subject property only d rental rates of the comparables only

a. interest payments Debt service is not an operating expense. Operating expenses are the same whether or not the owner has a mortgage on the property.

The largest providers of residential market loans today are a mortgage companies. b mutual savings banks. c pension funds. d savings and loan associations.

a. mortgage companies The mortgage industry—mortgage companies—have replaced S&Ls as the leading provider of residential mortgages.

Under Regulation Z, which advertisement would require full disclosure of credit terms? a "Affordable rates available" b "Assume loan at 8% interest" c "Low down payment" d "Terms to please everyone"

b. "Assume loan at 8% interest" Regulation Z requires that once you state specific credit terms in advertising, such as 8% interest, you must disclose all finance charges and total annual percentage rate (APR).

All are potential expressions of steering EXCEPT a "Don't you think this neighborhood is a little low-rent for you?" b "I hope you'll like this house as it seems to have all the amenities you requested." c "I think you'd be more comfortable in another more familiar neighborhood." d "I think you'll be right at home here, this building is filled with elderly people."

b. "I hope you'll like this house as it seems to have all the amenities you requested." This hopeful statement is perfectly acceptable. The other choices are all examples of steering.

Which statement about an option to purchase is TRUE? a An option is a bilateral contract. b An option is enforceable by the optionee. c Any money paid with an option must be refunded. d An option does not require consideration to be enforceable.

b. An option is enforceable by the optionee.This is the correct answer. The answer is B. The optionee (buyer) enforces the option to purchase from the seller (optionor).

When determining the portion of a prorated item that a party pays, a always charge the day of closing to the buyer. b always charge the day of closing to the seller. c find out who agreed to pay for the day of closing. d split charges for the day of closing equally between the buyer and seller.

b. always charge the day of closing to the seller.T The seller always pays for the day of closing.

What is another word for principal? a agent b client c customer d fiduciary

b. client The principal in any fiduciary relationship is the client.

P agrees to rent an apartment for six months for $700 a month. At the end of the six months, the lease automatically renews for another six months. What does this situation describe? a estate for years b periodic tenancy c tenancy at sufferance d tenancy at will

b. periodic tenancy A lease that automatically renews like this is a periodic estate, also called an estate from year to year even if it is a month-to-month lease.

L is in the process of selling her house. On the closing date, the built-in microwave is at the repair shop. As a result, the microwave a is L's personal property and will not be considered part of the sale. b will be considered part of the sale under the doctrine of constructive annexation. c will have to be conveyed under a separate contract, since it was not actually in the house at the time of the sale. d none of the above

b. will be considered part of the sale under the doctrine of constructive annexation. The doctrine of constructive annexation says that an item may be a fixture even though it is not physically attached.

Members of the Federal Reserve Board of Governors are appointed for terms of a 1 year. b 4 years. c 10 years. d 14 years.

d. 14 years. The Board of Governors are appointed by the U.S. Senate to a 14-year term.

The gross monthly rent multiplier does NOT take into account a collection losses. b expenses. c vacancy losses. d all of the above

d. all of the above With the GMRM, no consideration is given to expenses, vacancies, collection losses, debt service, or depreciation.

An example of external obsolescence would be a peeling paint on a home's exterior. b an outdated floor plan. c a basement that leaks. d location in a declining neighborhood.

d. location in a declining neighborhood. External obsolescence (or economic obsolescence) occurs when something outside the control of a property makes is it less desirable.

Which appraisal approach is most common for an owner-occupied single-family home? a comparable market approach b cost approach c income approach d sales comparison approach

d. sales comparison approach The sales comparison approach is most commonly used for owner-occupied single-family homes. Although they use many common techniques, remember that a comparable market analysis is not an appraisal approach.

Which would most likely be considered real property? a lawn furniture b roll-away bed c sleeper sofa d window seat

d. window seat A window seat is attached to the house, which is attached to the land. It is, therefore, most likely to be considered part of the real property.

K buys a house from G. At the closing, who signs the new deed? a buyer K only b seller G only c both buyer K and seller G d buyer K, seller G, and a notary

Selected: b. seller G onlyThis answer is correct. c. both buyer K and seller G d. buyer K, seller G, and a notary Correct! The deed that grants property to the buyer is required to be signed only by the seller, also known as the grantor.

Who may bring a complaint to the Superintendent? a anyone b the Attorney General c the local board of REALTORS® d only a licensed attorney-at-law

a. anyone Anyone can file a written complaint against a licensee with the Superintendent.

The authority that state and local governments have to enact and enforce laws that protect the public's health, safety, morals, and general welfare is known as a constitutional authorization. b general interest license. c police power. d safety mandate.

The authority that state and local governments have to enact and enforce laws that protect the public's health, safety, morals, and general welfare is known as c. police power.

A run-down house in a good neighborhood a benefits from the principle of progression. b benefits from the principle of regression. c is hurt by the principle of progression. d is hurt by the principle of regression.

a. benefits from the principle of progression. The principle of progression says the value of a home is positively affected by the other homes in an area. This is usually said about the "worst" home in the "best" area.

In a criminal case, who is the plaintiff? a the attorney for the complainant b the government c the person accused of the crime d the person who was wronged

b. the government Criminal litigation is a lawsuit brought by the government against an individual to punish wrongdoing and protect society. The government is the plaintiff.

Agent Lenny and his client Hannah have just signed an open listing agreement that will pay Lenny a 6.5% commission only if he finds a willing and able buyer for her house, while he has no specific obligation to do so. Which option best describes this agreement at this time? a express, bilateral, executed b express, bilateral, executory c express, unilateral, executory d implied, bilateral, executed

c. express, unilateral, executory The contract is express because it is written, unilateral because only Hannah has made a binding promise, and executory because both parties have yet to perform the obligations of the agreement.

The load-bearing skeleton of a structure to which the interior walls, exterior walls, and roof system are attached is called a building envelope. b drywall. c framing. d joist.

c. framing. Framing is the load-bearing skeleton to which the walls and roof system is attached.

A loan repaid with periodic payments of both principal and interest so the entire loan amount is paid in full at the end of the loan term is a(n) a annualized loan. b conventional loan. c fully amortized loan. d partially amortized loan.

c. fully amortized loan. A fully amortized loan is self-liquidating, since when a borrower makes all payments on time, the loan will be paid off with the last scheduled payment.

The house has a storm cellar accessible only from a door and steps in the back yard. This might best be considered an example of a an amenity. b eminent domain. c functional obsolescence. d physical depreciation.

c. functional obsolescence. Functional obsolescence occurs when a building is less desirable because of something inherent in the design of the structure.

An appraiser has been contracted to determine the value of a large apartment building for a potential investor. Which appraisal method is probably the most useful for this situation? a cost approach b highest and best use approach c income approach d sales comparison approach

c. income approach Highest and best use is a point of analysis, but it's not an appraisal approach. Of the appraisal approaches, the income approach is a valuable appraisal method when determining the value of investment property.

Which data section appears in the Uniform Residential Appraisal Report? a neighborhood data b site data c subject data d all of the above

d. all of the above Page 1 of the URAR includes sections addressing the subject, the contract, the neighborhood, the site, and the improvements.

Mortgage brokers do NOT a act as intermediaries between borrowers and lenders. b have a variety of lenders from which they can obtain loans for borrowers. c invest little of their own money in the loans they arrange. d service the loan (collect the payments) after the loan closes.

d. service the loan (collect the payments) after the loan closes. Mortgage brokers act as intermediaries to bring borrowers and lenders together. They do NOT service loans.

Ohio property manager Ned was found guilty in a court of law of a civil rights violation. A month later, a second civil rights suit was filed against him. His Ohio real estate license will be a revoked. b suspended if he's found guilty of the second charge. c suspended for at least two months. d suspended for at least one year.

c. suspended for at least two months. A second or subsequent violation of any fair housing or civil rights law, regardless of final adjudication, is a violation that carries a minimum two-month suspension.

Observable depreciation does NOT include a economic obsolescence. b functional obsolescence. c physical deterioration. d wear and tear of the land.

d. wear and tear of the land. Land never depreciates, but the other choices are considered as examples of observable depreciation that factors into a property's value using the cost approach.

Full VA entitlement can be restored to a veteran a at no time—the program can be used only once. b if a dishonorably discharged veteran assumes the loan. c when half of the loan amount has been repaid. d when a veteran sells his home and pays off the loan.

d. when a veteran sells his home and pays off the loan. As long as there is a loan outstanding, full VA entitlement cannot be restored.

What is the underground base, usually made of concrete, which supports a foundation? a building envelope b footer c girder d slab

b. footer The underground base, usually made of concrete, which supports a foundation, is called a footer.

Under Ohio law, who does NOT have to have a real estate license? a. foreign real estate salespersons and brokers b. real estate auctioneers c. real estate salespersons and brokers d. a sheriff handling a foreclosure sale

a sheriff handling a foreclosure sale Correct! A public official who acts in an official capacity (e.g,. a sheriff's sale official) does NOT have to have a real estate license.

Which statement appears on the Equal Housing Poster? a "Blockbusting is also illegal." b "Puffing is also illegal." c "Redlining is also illegal." d "Steering is also illegal."

a. "Blockbusting is also illegal." If you read the fair housing poster promulgated by the Ohio Real Estate Commission, which is available from the Resources menu, you saw that it includes the phrase "Blockbusting is also illegal." Blockbusting, you'll recall, is the prohibited act of inducing or attempting to induce, for profit, any person to sell or rent property based on representations made regarding entry into the neighborhood of persons of a particular race, color, religion, sex, or national origin.

A loan guaranteed by the Veterans Administration (VA) requires a minimum down payment of a $0. b at least 3% of the loan amount. c 10% of the loan amount. d It depends on the property type.

a. $0. A great benefit of a VA-guaranteed loan is that it does not require a down payment.

Under the Truth in Lending Act, a consumer selling a home and buying another to live in has ____ day(s) to change her mind. a 0 b 1 c 3 d 5

a. 0 There is no right of rescission for a borrower when purchasing a home.

Once you pass the state licensing examination and receive your salesperson license, what are your education requirements? a 20 hours of approved post-licensing within 12 months b 20 hours of approved continuing education within 3 years c 30 hours of approved post-licensing within 12 months d 30 hours of approved post-licensing within 3 years

a. 20 hours of approved post-licensing within 12 months Once a license is issued to a salesperson, the licensee has 12 months in which to complete a required post-licensure education course. That education must consist of 20 hours of state-approved study for those who were licensed after April 6, 2017.

Private mortgage insurance typically covers ________ of the loan amount. a 20-25% b 50% c 75-80% d 100%

a. 20-25% The amount of coverage can vary but is typically 20%-25% of the loan amount.

If a bag of concrete makes one cubic yard, how many bags will it take to pour a 60' x 4' x 4" sidewalk? a 3 bags b 9 bags c 36 bags d 107 bags

a. 3 bags This is a problem of volume. First, find the volume of the sidewalk by multiplying length x width x depth. It's important to first ensure that all measurements are the same unit. To convert 4 inches to feet, you need to divide by 12: 4 / 12 = .3333. Now you can find the volume of the sidewalk in cubic feet: 60 x 4 x .3333 = 79.9920 cubic feet. Each bag of concrete makes one cubic yard. To convert cubic feet to cubic yards, you divide by 27 (there are 27 cubic feet in each cubic yard): 79.9920 / 27 = 2.962 bags. You would need 3 bags of concrete for the job.

Which statement about VA-guaranteed loans is FALSE? a A 3.5% minimum down payment is required. b The property must be owner-occupied. c There is no maximum loan amount. d There is no private mortgage insurance required.

a. A 3.5% minimum down payment is required. It's possible to obtain a VA-guaranteed mortgage with no money down. The other statements are true.

Who would NOT be considered a member of a protected class under the Equal Credit Opportunity Act when applying for a mortgage loan? a A and J, who have four children b K, who is African-American c T, whose primary source of income is public assistance d U, who is a 69-year-old Muslim

a. A and J, who have four children These are protected classes under the ECOA: race, color, religion, national origin, age, sex, marital status, receipt of income from public assistance programs. Familial status is not a protected class.

In most cases, which statement about condominiums is FALSE? a A blanket mortgage covers the entire condominium property. b Each unit owner has an undivided interest in the common areas. c Property taxes are assessed separately for each unit. d The unit owners association can levy assessments to pay for maintenance of the common areas.

a. A blanket mortgage covers the entire condominium property.T Generally, each unit owner has his or her own separate mortgage. This means, of course, that in the event of default, the lender can foreclose only on that one unit, not on the condominium development in its entirety.

Nora is going to buy Jake's house. They have a signed purchase contract and closing is set for next week. What legal interest does Nora have in Jake's property? a She has equitable title. b She has legal title. c She has pending title. d She has no legal interest.

a. She has equitable title. The legal interest created in favor of a party upon entering into a real estate sales contract is known as equitable title.

Which document provides a summary of a property's entire title history? a abstract b deed c survey d title report

a. abstract An abstract shows every title-related event in the public record for a particular piece of property.

What clause gives a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions? a acceleration clause b alienation clause c defeasance clause d prepayment clause

a. acceleration clause An acceleration clause gives the lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions. This is sometimes referred to as "calling the note."

The mortgage clause that permits the lender to declare the entire unpaid loan balance immediately due and payable on default of the borrower is a(n) a acceleration clause. b defeasance clause. c escalation clause. d forfeiture clause.

a. acceleration clause. An acceleration clause lets the lender call loan balance due if in default.

June owns a florist shop on the outskirts of town. As the town grows, more homes are built and the area where her shop is gets rezoned residential. What specific exception would allow June to still operate her shop? a area variance b conditional use c nonconforming use d special exception

a. accretion.This is the correct answer. Incorrect. The answer is A. This is an example of accretion, which is a gradual addition to dry land by the forces of nature.

Mortgage brokers a act as intermediaries between borrowers and lenders. b originate and service mortgage loans. c provide funding for mortgage loans. d underwrite mortgage loans.

a. act as intermediaries between borrowers and lenders. Mortgage brokers do not originate, service, fund, or underwrite loans to lenders. Instead, they earn a fee to act as an intermediary to bring together borrowers and the lenders who originate the actual loans.

In the sales comparison approach, comparables are compared to the subject property by a adjusting the features of the comparables to match the subject property. b adjusting the features of the subject property to match the comparables. c using any comparables, without regard to features, as long as they were sold recently and are from the same area. d using only comparables that are an exact match to the subject property.

a. adjusting the features of the comparables to match the subject property. An appraiser evaluates features of comparable properties and adjusts the value of the comps. The subject property is never adjusted.

One appointed by the court to distribute the assets of an estate is called a(n) a administrator. b executor. c intestate. d trustee.

a. administrator. The probate court appoints an administrator who is charged by the court with the responsibility of carrying out the statutory distribution of the property.

What is the term that describes how title to land is gained by the open and notorious, hostile and adverse, exclusive and continuous use of another's land for a designated period of time, as defined by laws of the state? a adverse possession b easement by prescription c eminent domain d intestate descent

a. adverse possessionThis answer is correct. b. easement by prescription c. eminent domain d. intestate descent Correct! This is acquisition through adverse possession.

The warranty that allows the grantee to seek recovery from the grantor on the basis of a secret lien is the covenant a against encumbrances. b of highest authority. c of quiet enjoyment. d of seizen.

a. against encumbrances. A lien, you should recall, is a financial encumbrance on real property. The covenant against encumbrances found in a general warranty deeds means that the grantor warrants that the property is free of all encumbrances not recited as exceptions in the deed.

Assuming that they are not limited by past transactions, all are legal appurtenances that go along with the transfer of real estate, EXCEPT unlimited _______ rights. a air b mineral c subsurface d surface

a. air Property owners have limited rights to the air over their property.

The principle of change says a all factors that influence real estate are constantly changing and, thus, the property value itself is subject to constant change. b the property value itself should only increase. c some factors that influence real estate are subject to change and, thus, the property value itself may change from time to time. d the appraiser and the method used will affect the market value of real estate.

a. all factors that influence real estate are constantly changing and, thus, the property value itself is subject to constant change. The principle of change says that all factors influencing real estate (economic, physical, etc.) constantly change, and therefore, so do property values. Because of this principle, the effective date of the appraisal is critical to placing the appraiser's opinion of value in proper context.

External obsolescence a always has something to do with things outside the boundaries of the property. b is always curable. c is always the same as functional obsolescence. d none of the above

a. always has something to do with things outside the boundaries of the property. External obsolescence occurs when something outside the boundaries of a property makes it less desirable. It is rarely curable since the change depends on a different property owner.

An "as is" clause in a purchase agreement a applies to patent defects in the purchase of residential real estate. b gives a buyer no recourse for problems with the property. c is a defense against a fraud lawsuit. d protects the seller from liability for nondisclosure of a latent defect.

a. applies to patent defects in the purchase of residential real estate. Such as clause applies to patent, or visible, defects. The seller has a duty to disclose latent defects in the property whether or not an "as is" clause is used in the contract. Nor does an "as is" clause protect the seller or agent if they commit fraud and deliberately conceal a defect from the buyer.

For which of these properties would the gross monthly rent multiplier method be MOST appropriate? a a single family home that is owner occupied b a duplex c a retail complex with three units d an apartment building with five units

b. a duplex The gross monthly rent multiplier method is generally used for residential rental property of one to four units. Only the duplex, sometimes called a two-flat or a double, meets this criteria.

Who funds FHA-insured loans? a approved lenders b the Department of Housing and Urban Development c the Federal Housing Administration d the Veterans Administration

a. approved lenders An FHA loan is originated by an approved lender and insured by the FHA to protect the lender from loss.

Hank is employed by a licensed property manager. Which task would require Hank to get an Ohio real estate license? a. approving lease applications from prospective tenants b. collecting rent checks made out to the landlord c. performing maintenance on specific units d. showing apartments to prospective tenants

a. approving lease applications from prospective tenants Correct! A license would be required to approve lease applications. Hank could perform these other duties without a license.

What term describes a right that transfers with ownership of real property? a appurtenance b encroachment c emblement d fixture

a. appurtenance When real property is sold, appurtenant rights are usually transferred along with it. They can, however, be sold separately and may be limited by past transactions, as you saw in the example of Jack and his subsurface rights. Remember: Appurtenant rights "run with the land."

Jerry operates a farm in a suburb of Urbana, Ohio. Later, the city expands and Jerry's farm is now in the middle of an R-1 residential zoned neighborhood. Jerry a can continue to operate the farm as a nonconforming use. b can keep his house, but he needs to tear down his silos and barn within the next five years. c cannot consider subdividing his farm because of the zoning change. d must sell his farm and move.

a. can continue to operate the farm as a nonconforming use. Correct! Jerry's property was "grandfathered" in because he was in compliance with zoning law when it was built, and as a result he has a legal, non-conforming use.

Landscaping is typically completed during the ______ stage. a completion b exterior finish c rough-in d site work

a. completion During the completion stage, it is time to finish outside features like patios, driveways, and landscaping.

The government sends you a notice stating that the houses on your street will be demolished to build a new off ramp for an interstate that runs through your town. You are paid fairly for your home and move. The act of demolishing your home is a condemnation. b eminent domain. c escheat. d zoning.

a. condemnation. Correct! Eminent domain is the government's constitutional power to appropriate private property for public use. The actual act of taking private property for public use is known as appropriation or condemnation.

The amount to build or obtain a property is known as a cost. b price. c reproduction. d value.

a. cost Cost is the dollars needed to build or obtain a property.

Failure to include the __________ on all written agency agreements is grounds for discipline under Ohio Revised Code § 4735.18. a expiration date b legal description c preferred title company d salesperson's name

a. expiration date Failing to put expiration dates on all written agency agreements is grounds for discipline.

Christina, Maura, Nathaniel, Mike, and Terry co-own a property as joint tenants with the right of survivorship. Terry dies. What is Christina's interest in the property? a 20% b 25% c 50% d whatever percentage is left after discharging Terry's will

b. 25% The main feature of this tenancy, also called statutory survivorship tenancy, is that it allows co-owners to take ownership shares of a deceased co-owner equally and automatically. A person can't will or inherit a survivorship estate. Christina now has a 25% interest, as do Maura, Nathaniel, and Mike.

Which USPAP Rule provides guidance on avoiding practices that would be considered unacceptable, misleading, or fraudulent? a Comptency Rule b Ethics Rule c Record Keeping Rule d Scope of Work Rule

b. Ethics Rule The Ethics Rule addresses personal obligations and responsibilities of the individual appraiser, as well as practices that are unacceptable or could be considered misleading or fraudulent.

Which statement about FHA-insured loans is FALSE? a FHA loans have less stringent qualifying standards. b FHA may impose a penalty on borrowers who pay the loan off early. c FHA loans require low down payments. d FHA offers an adjustable rate mortgage.

b. FHA may impose a penalty on borrowers who pay the loan off early. HUD, which has oversight of the FHA loan program, prohibits prepayment penalties on these loans. The other statements are true.

Which residential lending secondary market organization is the largest? a Federal Home Loan Mortgage Corporation b Federal National Mortgage Association c Federal Reserve Board d Government National Mortgage Association

b. Federal National Mortgage Association The Federal National Mortgage Association, better known as Fannie Mae, is the nation's largest investor in residential mortgages.

When must an individual affiliate with a principal broker? a. after passing the real estate exam b. before he submits his or her application c. before beginning the prelicense real estate education courses d. when he or she finds a prospective listing after licensure

b. before he submits his or her application Correct! A license candidate must choose an affiliated broker sponsor BEFORE submitting the application to the state of Ohio.

A buyer's agent must give an Agency Disclosure Statement to a buyer a at the same time a listing agreement is signed. b before the buyer's offer is written. c prior to marketing or showing the property. d upon initiating a pre-qualification evaluation.

b. before the buyer's offer is written The Agency Disclosure Statement is initiated by the buyer's agent when the buyer indicates a desire to write an offer on a property.

Angie, the seller, signs the agreement of sale from the prospective buyer and hands it back to her agent. What element is missing in order to make this a valid contract? a communication back to the offeree b communication back to the offeror c earnest money deposit d meeting of the minds

b. communication back to the offeror There has been a meeting of the minds, but the acceptance must be clearly communicated back to the person who made the offer, the offeror.

In Ohio, a deed is required to have a acknowledgement by the grantee. b consideration. c the property address. d two witnesses.

b. consideration.This answer is correct. Consideration recited on the deed is necessary to prove that a sale of land took place and that the transfer was not a gift. A deed should have a legal description and the signature of the grantor, not the grantee. Two witnesses are not required.

A buyer finances the construction of a new house through a local bank. If money is released to the builder through the buyer at various stages of construction, this mortgage is probably a(n) a budget mortgage. b construction mortgage. c option ARM. d package mortgage.

b. construction mortgage. A construction mortgage is a temporary loan to finance buildings.

_________ is an increase in the cost of goods or services. a The cost of money b Economics c Inflation d The interest rate

c. Inflation Correct! Inflation is an increase in the cost of goods or services.

A conforming loan is one that follows the a criteria and guidelines of the lender making the loan. b criteria established by the FHA and VA. c criteria established by national secondary market investors—primarily Fannie Mae and Freddie Mac. d Truth in Lending Act.

c. criteria established by national secondary market investors—primarily Fannie Mae and Freddie Mac. While FHA-insured and VA-guaranteed loans may indeed be conforming, it is the criteria of the secondary market that determines whether or not a loan is conforming or nonconforming. Lenders can decide whether or not they want to offer nonconforming loans or follow those secondary market guidelines.

The real estate market is said to be in balance when there are more a buyers than houses for sale. b buyers than sellers. c houses for sale than buyers. d houses than apartments.

c. houses for sale than buyers. When the real estate market is in balance, there will be slightly more properties available than there are buyers.

Under Ohio Agency Law, which form of dual agency is permitted? a A management-level licensee may represent a client in an in-company real estate transaction. b One licensee may represent both the buyer and seller (or lessor and lessee) as clients in the same real estate transaction. c Two licensees affiliated with the same brokerage, one representing the buyer or lessor while the other represents the seller or lessee, may be involved in the same real estate transaction. d all of the above

d. all of the above Ohio allows all three of these forms of dual agency, with proper disclosure and consent, of course. Note, however, that if there is more than one management-level licensee, that management-level licensee would not be considered a dual agent when representing a client in an in-house transaction.

Analyzing properties currently listed as part of the appraiser's analysis assists with a determining contributory value of a particular feature. b establishing replacement cost. c estimating land value. d evidencing competition and the upper limit of value.

d. evidencing competition and the upper limit of value. Currently listed properties evidence competition a subject property would be up against if it were available to the market on the effective date.

To sell loans to the secondary market, the primary market lender must a allow the secondary agencies to audit its books. b be a federal government-affiliated lender. c be willing to suffer significant discounting losses. d follow the underwriting guidelines of the secondary market agencies.

d. follow the underwriting guidelines of the secondary market agencies. A mortgage will be purchased by the secondary mortgage market only if the primary market lender conformed to the secondary markets' underwriting standards.

Which individual is NOT protected under the disability clause of the federal Fair Housing Act? a hearing impaired individual b individual with AIDS c individual with paranoid schizophrenia d individual who is addicted to illegal drugs

d. individual who is addicted to illegal drugs Individuals who are illegally addicted or have been convicted of manufacturing or distributing a controlled substance are not protected under the federal Fair Housing Act.

A person may soon begin practicing real estate as soon as he a. affiliates with a principal broker. b. begins his real estate education course. c. learns that he passed the test at the exam site. d. learns that the license was issued by the Ohio Division of Real Estate and Professional Licensing.

d. learns that the license was issued by the Ohio Division of Real Estate and Professional Licensing.This answer is correct. Correct! You may begin practicing real estate as soon as you learn that the license was issued by the Ohio Division of Real Estate and Professional Licensing, either by receiving a physical copy of the license OR looking up the license status on the Division web site.

For which type of mortgage must the borrower be a senior citizen? a hypothecated b open-ended c package d reverse

d. reverse A reverse mortgage is available only to homeowners who are aged 62 or older.

A notice to vacate must be given to a tenant at least a 3 business days before an eviction lawsuit is filed. b 30 days before an eviction lawsuit is filed. c 30 days before the lease expires. d 30 days before the writ of execution is issued.

a. 3 business days before an eviction lawsuit is filed. A notice to vacate must be served on the tenant at least three business days before the landlord files a lawsuit for eviction.

An equity exchange is treated as a tax-free exchange when property is a for profit and of like kind. b held for sale by a dealer only. c owner-occupied. d rental only.

a. for profit and of like kind. To be eligible for a 1031 exchange, the property must be investment property of like-kind.

J owns a tract of property in an area of the city that is zoned for light industrial use. The city council rezones J's tract for commercial use, although the surrounding properties are still zoned industrial. The zoning change enables J to build a very profitable commercial development. This is an example of a(n) a illegal spot zone. b illegal variance. c legitimate conditional use. d legitimate zoning modification.

a. illegal spot zone. Spot zoning is an illegal rezoning that favors or restricts one landowner without justification.

Property owner Al sold air rights on his property to a billboard marketing company. Such rights can best be described as a(n) a annexation. b appurtenance. c encumbrance. d fixture.

b. appurtenance. Appurtenances are legal rights that go along with ownership (e.g., access, surface, mineral, water, air). These are usually transferred with the property, but can be sold separately.

Abe sued Bob for breach of contract, claiming $28,000 in damages. In which Ohio court would Abe file suit? a court of appeals b court of common pleas c municipal court d supreme court

b. court of common pleas In Ohio, the court of common pleas tries cases in which the amount in controversy is more than $15,000.

Which is NOT a primary lender for residential properties? a commercial bank b insurance company c mortgage company d savings and loan association

b. insurance company An insurance company is more likely to make loans for large-scale commercial real estate projects.

Which would be most likely to issue an ordinance? a the Ashtabula County Court b the Dayton City Council c the Ohio Real Estate Commission d the Ohio State Senater

b. the Dayton City Council An ordinance is a law that was adopted by a county or a city council. Statutes are passed by the Senate. As you'll see shortly, commissions promulgate regulations and court decisions result in case

Which USPAP Rule provides guidance and obligations for appraisers when law or public policy contradicts an obligation or prohibition of USPAP? a Competency Rule b Ethics Rule c Jurisdictional Exception Rule d Scope of Work Rule

c. Jurisdictional Exception Rule The Jurisdictional Exception Rule provides guidance and obligations for appraisers when law or public policy contradicts an obligation or prohibition of USPAP.

Which FHA-insured loan program is used to finance the purchase of a single-family condominium unit? a Section 203(b) b Section 203(k) c Section 234(c) d Section 255

c. Section 234(c) Section 234(c) loans are used to purchase a condominium. Section 203(b) loans are for single-family homes; Section 203(k) loans are for rehabs; Section 255 loans are home equity conversion loan, sometimes called reverse mortgages.

The standard form an appraiser uses to report findings is known as the a CMA. b RPAP. c URAR. d USPAP.

c. URAR. URAR is the Uniform Residential Appraisal Report, the primary form used by lenders for residential property appraisal. It is the Uniform Standards of Professional Appraisal Practice (USPAP) that dictates a number of standards, rules, and guidelines that licensed appraisers must follow when completing an appraisal report.

G has an appurtenant easement to drive across her neighbor property to get to her house. G's property is known as a an affirmative tenement. b an appurtenant tenement. c a dominant tenement. d an encumbered tenement.

c. a dominant tenement. G's property is called a dominant tenement, since it is property that is benefited by an appurtenant easement.

The date for which the appraiser's value opinion is valid is known as the a appraised date. b date of the report. c effective date. d inspection date.

c. effective date. Change constantly happens, influencing value. As such, an appraisal is valid only on its effective date.

An appraisal a is a prediction of future worth. b guarantees the value of a piece of real estate. c is an opinion of value. d establishes the selling price of a property.

c. is an opinion of value. An appraisal is only an estimate or opinion. It is not a guarantee of value or the ultimate price that a buyer actually pays.

The economic base of an area refers to the a average wages and jobless rate in the area. b current rate of inflation for the area. c primary business or industry that supports the area. d supply and demand for homes in the area.

c. primary business or industry that supports the area. Correct! An area's economic base is defined by the goods and services that it produces through its business and industry.

he covenant of __________ is a guarantee that the grantor has the right to convey the property. a hypothecation b rescission c seizen d warranty forever

c. seizen Seizen is the ownership of a freehold estate. The covenant of seizen is a guarantee that the grantor has the right to convey that estate.

Chris is buying Lori's house. At settlement, Chris brings his money, and Lori signs the deed and hands it to Chris. Each of these has actual notice that Chris owns the property EXCEPT a Chris. b Lori. c the public. d the settlement officer.

c. the public. Chris, Lori, the settlement officer, and anyone else who was in the settlement room at the time Chris accepted the deed, have actual notice that he owns the property.

A licensee who is at least ____ years old is NOT required to complete any elective continuing education hours in order to renew his license. a 55 b 60 c 65 d 70

d. 70This answer is correct. Correct! Licensees who are 70 or older need only complete the 9 hours of required CE classes every renewal cycle beginning with the renewal cycle in which their 70th birthday falls.

How many square feet are there in the S 1/2, SW 1/4, NE 1/4 of Section 28? a 136,125 b 435,600 c 720,480 d 871,200

d. 871,200T First, find the acreage: 640 ÷ 2 ÷ 4 ÷ 4 = 20 acres. To find the square footage, then you need to multiply by 43,560, which is the number of square feet in an acre: 20 X 43,560 = 871,200 SF.

The FHA requires mortgage insurance (MIP) when the a buyer cannot pay the required down payment in cash. b LTV exceeds 80%. c LTV exceeds 90%. d All FHA loans must have MIP.

d. All FHA loans must have MIP. Every FHA-insured loan requires a mortgage insurance premium.

If Bob takes over Sue's mortgage, becoming personally liable for the debt, and he will pay the balance of the purchase price to Sue under a contract, they have a an assumption and release. b encumbered property cash out. c a land contract subject to an existing mortgage. d a land contract with assumption of an existing mortgage.

d. a land contract with assumption of an existing mortgage. This is two types of alternative financing, an assumption of the existing loan and a land contract to pay the balance.

Title insurance does NOT protect policyholders from a a forged deed. b improper deeds. c mistakes in the public records. d an unrecorded lien that the buyer knew about.

d. an unrecorded lien that the buyer knew about. Title insurance protects the homeowner from claimants not stated in the insurance policy, including defects in the public records such as forged documents, improper deeds, and other mistakes. If the buyer knows about a lien, that should be listed in the policy and, therefore, becomes an exception that is not covered.

A license may remain on inactive status a for 1 year. b for 2 years. c for 10 years. d indefinitely.

d. indefinitely.This answer is correct. Correct! A license that has been returned to the Division of Real Estate is considered inactive. It can remain on inactive status indefinitely, as long as the licensee continues to meet the renewal and continuing education requirements.

P has had enough with her tenant D. His rent check has bounced twice in the past six months. His neighbors have complained that he parks in their designated spots, and he leaves trash in the common hallway. P shuts off his electricity and water and posts an eviction notice on his door. This is an example of a actual eviction. b constructive eviction. c retaliatory eviction. d self-help eviction.

d. self-help eviction.This answer is correct. Correct! P has illegally bypassed the formal eviction process with this self-help eviction.

If the borrower is self-employed, he should provide a the average monthly income earned over the previous two years. b employment verification from the last employer. c profit and loss statements for the previous six years. d tax returns for the previous two to three years.

d. tax returns for the previous two to three years. Self-employment income is documented by personal and corporate tax returns for the past two to three years that the borrower provides.

In Ohio, how much equity in a residence co-owned and occupied by a married couple could be exempt from foreclosure proceedings due to default on a mortgage? a $0 b $10,000 c $136,925 d $273,850

a. $0This is the correct answer. Selected: b. $10,000This answer is incorrect. c. $136,925 d. $273,850 Incorrect. The answer is A. In Ohio, while some of a married couple's interest in the property is exempt from foreclosure, this is ONLY for a judgment or attachment lien. Any homestead exemption does not apply to mortgage foreclosure, nor does it apply to vendor's liens, mechanic's liens, or property tax liens.

M has four liens, which were recorded in the following order: $150,000 on the mortgage, $2,000 to a general contractor for a new roof; $3,000 for unpaid county property taxes; and a $12,000 judgment for credit card debt. The bank forecloses, and the house sells for $152,000. How is the money will most likely distributed? a on a prorated basis, so $2,738 to the county, $1,828 to the contractor, $136,507 to the bank; $10,927 to the creditor b in order, so $3,000 to the county; $2,000 to the contractor; $147,000 to the bank; $0 to the creditor c in order, so $3,000 to the county; $149,000 to the bank; $0 to the contractor; $0 to the creditor d in order, so $3,000 to the county; $2,000 to the contractor; $150,000 to the bank; $12,000 to the creditor

Selected: c. in order, so $3,000 to the county; $149,000 to the bank; $0 to the contractor; $0 to the creditorThis answer is correct. d. in order, so $3,000 to the county; $2,000 to the contractor; $150,000 to the bank; $12,000 to the creditor Correct! A property tax lien is superior and takes the highest priority, so $3,000 to the county. The mortgage is second, so $149,000 for the lender, leaving nothing for the contractor or the creditor.

A property has been sold and will close on October 15, 2016. The annual taxes are $4,987.50. If the taxes for the first half of the year are paid, using a calendar year, how much in prorated taxes will be due the buyer at closing? a. $1,462.09 b. $1,482.40 c. $3,525.41 d. $3,935.32

a. $1,462.09 First, find the daily rate of the taxes using a 365-day year: $4,987.50 ÷ 365 = $13.6643. Then, determine the number of days the seller lived in the home for which the buyer will pay taxes (remember the day of sale belongs to the seller): July=31 + August=31 + September=30 + October=15 is 107 days. Finally, multiply the daily rate by the number of days: $13.6643 x 107 = $1,462.09 (rounded). The buyer will be credited for $1,462.09 at closing.

The seller accepts a buyer's offer of $161,500 to buy a home. The appraisal on the property comes in at $163,000. If the lender requires an LTV of 80%, how much is the lender willing to lend? a $129,200 b $130,400 c $145,350 d $146,700

a. $129,200 The lender will use the sales price of $161,500 to consider the loan because it is less than the appraised value. With an LTV of 80%, the buyer could borrow $129,200 ($161,500 x .80 = $129,200).

A six-unit apartment building with a net operating income of $24,000 recently sold for $390,000. What is the indicated overall capitalization rate (carried to two places) derived from this data? a 6.15% b 6.95% c 7.10% d 7.25%

a. 6.15% The IRV formula allows you to find any missing component when you know two. To find the capitalization rate (R), you need to divide the net operating income (I) by the value, or selling price (V): $24,000 ÷ $390,000 = .0615, or a cap rate of 6.15.

When considering highest and best use, which is MOST LIKELY to be included within the test of "legally permissible"? a allowable to zoning b hazard insurance could be obtained c police protection is available d title is free of encumbrances

a. allowable to zoning The test of "legally permissible" looks at government and private restrictions, which primarily includes zoning.

O dies and, in his will, leaves his prized collection of model trains to his grandson E. E received a _____________ from Grandpa O. a. bequest b. devise c. gift d. legacy

a. bequestThis answer is correct. b. devise c. gift d. legacy Correct! An item of personal property designated in the will is a bequest. Real property is a devise, and money is a legacy.

Brett bought a farm, and two tractors were included in the sale. What is required at the settlement to transfer ownership of those tractors? a bill of sale b deed c purchase agreement d sales contract

a. bill of sale A bill of sale is used to transfer ownership of personal property.

A mortgage that includes more than one parcel of land is called a a blanket mortgage. b package mortgage. c purchase money mortgage. d wraparound mortgage.

a. blanket mortgage. A blanket mortgage covers more than one parcel of land.

When considering highest and best use, which is LEAST LIKELY to be included within the test of "physically possible"? a building materials b building set back lines c parking requirements d size of the building

a. building materials The test of "physically possible" looks at the physical limitations of the land. Is the lot big enough for the size of the building, the setback requirements, and the parking requirements? The building materials are more likely to be a question of legally permitted (zoning issues) or economically feasible.

Before funds can be disbursed, lenders require that the a buyer acknowledge the note and mortgage. b buyer and seller obtain a title insurance policy. c seller have a home inspection performed. d seller obtain a homeowners insurance policy.

a. buyer acknowledge the note and mortgage. Before the mortgage loans funds can be disbursed to a seller at closing, the buyer must sign the mortgage and a promissory note. The lender requires the buyer to get homeowners insurance, not the seller. Home inspections are generally up to the buyer and may not be required, and title insurance is a buyer responsibility, which we'll learn more about shortly.

Which is NOT one of the ways the Federal Reserve Board influences interest rates? a buying notes b discount rates c open market operations d reserve requirements

a. buying notes Correct! The Fed uses the Discount Rate, Reserve Requirements, and Open Market operations to influence interest rates.

A broker deposits a buyer's $5,000 earnest money check into the operational account of his brokerage. The broker is guilty of a commingling. b conspiracy. c cooperation. d condemnation.

a. commingling. Correct! Commingling is the mixing of brokerage funds with trust funds. This is a prohibited act that could result in license suspension or revocation.

The primary purpose of most civil lawsuits is to a compensate a person who has been harmed. b deter crime. c protect society. d punish a wrongdoer.

a. compensate a person who has been harmed. A civil lawsuit is brought to court when people believe that they have been wronged. If court rules in favor of the plaintiff, that person will usually receive damages or an injunction.

A nice, well-kept house located in the heart of an all-residential area, surrounded by other well-kept houses of similar style and value is an example of a conformity. b contribution. c regression. d substitution.

a. conformity. The principle of conformity says that a particular property achieves its maximum value when it's surrounded by properties that are similar in style and function. This actually goes for neighborhoods as well. Neighborhoods are more desirable when there's a general similarity in utility and value for all properties.

Vincent is tasked with deriving the value for a large, custom home that was constructed nine months ago on a secluded 10-acre lot. Which approach could be considered the most reliable for valuation? a cost approach b income approach c sales comparison approach d All are equally reliable.

a. cost approach The cost approach is an objective method to provide an accurate estimate of value for replacing or reproducing buildings, especially new or nearly new buildings with few comparable sales.

An appraiser is tasked with deriving the value for a large, custom home that was constructed nine months ago on a secluded 10-acre lot. Which approach could be considered the most reliable for valuation? a cost approach b income approach c sales comparison approach d All are equally reliable.

a. cost approach The cost approach is an objective method to provide an accurate value for replacing or reproducing buildings, especially new or nearly new buildings with few comparable sales.

Which would NOT be considered an operating expense? a debt service b fixed expenses c reserves d variable expenses

a. debt service Debt service is not an operating expense. This is because the cost to maintain a property would be the same regardless of whether the owner borrowed money to purchase it or owns with free and clear of any mortgage.

Which does NOT describe a real property interest for a limited period of time? a defeasible fee estate b leasehold estate c life estate d life estate pur autre vie

a. defeasible fee estate Correct! A fee estate, even if defeasible, is for an indefinite period of time

Title to real estate generally passes from grantor to grantee with a delivery and acceptance of the deed. b the payment of the broker's commission. c the recording of the deed. d words of conveyance.

a. delivery and acceptance of the deed. Even when a deed has been properly executed, it has no legal effect until the grantor actually places the document in the grantee's possession, or gives it to a third party with instructions to turn it over to the grantee, and the grantee accepts it. At that point, title has been successfully passed.

Appraiser Julia is rendering an opinion of value of a small office building. Which method of income approach would she be most likely to use? a direct capitalization rate b gross monthly rent multiplier c either would be appropriate d neither would be appropriate

a. direct capitalization rate The direct capitalization rate is generally used for commercial property and some larger residential rental property.

In Ohio, for all real estate purchase contracts, the seller is required to a disclose all known latent defects in the property to the buyer, whether or not the buyer asks about them. b disclose negative information about the property only if the buyer asks a direct question about a problem. c disclose negative information about the property only if the buyer has not signed an "as is" clause as part of the purchase contract. d make no statements regarding the condition of the property.

a. disclose all known latent defects in the property to the buyer, whether or not the buyer asks about them. The seller (and the seller's agent) must tell the buyer about any latent defects, which are defects that are not visible or apparent.

Listing agent Phil is told by client Susan not to disclose the fact that during heavy rains, water seeps into the basement through some small cracks in the walls. Phil must a disclose the defect to any interested buyers. b give up the listing. c not disclose the defect, due to the duty of obedience. d only show the property on sunny days.

a. disclose the defect to any interested buyers.This answer is correct. Correct! An agent's duty of obedience only applies to lawful instructions. Latent defects must be disclosed. Phil might decide, however, that he is not willing to work with this client, though he's not obligated to walk away.

H owns a property on the shore. The guest house is on the beach, and the main house is up a hill above the beach. She sells the guest house to T. After the sale, she continues to use the gate between the main house and the beach house to cross T's property and access the beach. This would most likely be considered a easement by implication. b easement by necessity. c easement by prescription. d trespassing.

a. easement by implication. Since the land was originally owned by H and she has established years of going through the gate to the beach, an easement is created by implication.

When housing prices fall due to the relocation of a major employer, it is an example of a(n) __________ factor. a economic b governmental c physical d social

a. economic Economic factors influencing the housing market include the economic base of an area. When a major employer relocates, resulting in job losses, the economic base is impacted, which, in turn, influences the housing market. This is an economic factor.

Given the circumstances in question #2, what should Mike do? a have Wendy execute a new listing agreement now that she is 18 b have Wendy's parents also sign the listing agreement c resign the listing (with Wendy's approval) now that she is 18 d turn himself in to the Superintendent of Real Estate for disciplinary action

a. have Wendy execute a new listing agreement now that she is 18This answer is correct. Correct! At 18, Wendy has the contractual capacity to legally enter into a contract. Mike can have her execute a new listing agreement, and it would be valid.

A building is being constructed for $4.80 per cubic foot. The building is 18' tall and contains 1,250 square feet. What is the cost of the building? a $60,000 b $108,000 c $225,000 d $333,333

b. $108,000 First, find the cubic feet: 1,250 SF x 18' = 22,500 SF. Once you know that, you can determine the price: 22,500 x $4.80 = $108,000.

If a subject property has a market rent of $625 per month and a GMRM of 183.75 is deemed applicable, what is the appraiser's indicated value conclusion (rounded to the nearest one thousand dollars)? a $103,000 b $115,000 c $132,000 d $184,000

b. $115,000 The gross monthly rent multiplier is 183.75, so multiply that by the monthly rent of $625 to find value: 183.75 x $625 = $114,843.75, rounded to $115,000.

A lot is 150' x 600'. The owner is asking $2.80 per square foot. What's the asking price? a $90,000 b $252,000 c $300,000 d $420,000

b. $252,000 The square footage of this lot is 90,000 square feet (150 x 600). At $2.80 per square foot, the asking price is $252,000.

A lot is listed for sale at $1,500 per acre. Calculate the listing price for the parcel described as the S 1/2, SE 1/4, NE 1/4 of Section 33. a. $15,000 b. $30,000 c. $60,000 d. $1,200,000

b. $30,000 First, find the acreage: 640 ÷ 2 ÷ 4 ÷ 4 = 20 acres. Then determine the price: 20 x $1,500 /acre = $30,000.

A commercial lot is priced at $1,800 per front foot. If the lot measures 170' x 550', what is the price of the lot? a $168,300 b $306,000 c $612,000 d $990,000

b. $306,000 There are 170 front feet: 170 x $1,800 = $306,000.

A property has a value of $300,000. If the capitalization rate is 12%, what is the net operating income? a $25,000 b $36,000 c $40,000 d $64,000

b. $36,000 Remember the IRV formula: Rate x Value = Income. In this case: .12 x $300,000 = $36,000. The NOI is $36,000.

A property was listed for $150,000 and sold for 90% of the listing price. Commission was 7% and was split 50/50 between two brokerages. The listing broker then split his portion evenly with a listing salesperson. How much did the selling company get (rounded)? a. $2,363 b. $4,725 c. $5,250 d. $6,975

b. $4,725T First, determine the sales price: $150,000 x .90 = $135,000. The commission on the sales price was 7%, so determine the total commission: $135,000 x .07 = $9,450. The commission was evenly split between two brokerages: $9,450 ÷ 2 = $4,725. The selling company earned $4,725 in commission on this sale.

Mr. and Mrs. Mason sold the lot adjoining their home for $15,000. If the lot measures 300 feet by 500 feet, how much did they get per front foot? a $30 b $50 c $300 d $500

b. $50 When indicating lot size, the frontage is always first. If the property sells for $15,000, you need to divide the selling price by front feet: $15,000 ÷ 300 = $50. The Masons got $50 per front foot for the lot.

The roof would cost $8,000 and it has been determined that 80% of its life has been used up. What is the amount of depreciation? a $1,600 b $6,400 c $8,000 d $16,000

b. $6,400 To find the amount of depreciation, you multiply the replacement cost by the amount used: $8,000 by .80 (or 80%) = $6,400 of depreciation. Therefore, when estimating the value, that amount would be subtracted from the value of the improvement.

The assessed value of a property is $35,000 and the annual taxes are $2,380. How many mills were charged on this property? a 42 mills b 68 mills c 83 mills d 147 mills

b. 68 mills First, find out the cost of each mill: $35,000 / 1,000 = $35.00. Next, divide the taxes paid by the cost per mill: $2,380 / $35.00 = 68 mills.

Jake is interested in buying a property with a net operating income of $14,400. If he paid the asking price of $200,000, what is the capitalization rate? a 2.9% b 7.2% c 8.6% d 13.8%

b. 7.2% Income (NOI) divided by Value (sales price) is .0072, or 7.2%. This cap rate indicates the annual rate of return on the property if it was purchased for cash.

By law, lenders must cancel PMI when the loan-to-value reaches what percent of the property's original value? a 80% b 78% c 75% d 72%

b. 78% The Homeowners Protection Act of 1998 (HPA) requires lenders to automatically cancel PMI when a home has been paid down to 78% of its original value, assuming the borrower is not delinquent.

By law, lenders must cancel private mortgage insurance (PMI) premiums when the loan-to-value reaches what percent of the property's original value? a 80% b 78% c 75% d 72%

b. 78% The Homeowners Protection Act of 1998 (HPA) requires lenders to automatically cancel PMI when a home has been paid down to 78% of its original value, assuming the borrower is not delinquent.

Which statement regarding the Ohio Division of Real Estate and Professional Licensing is TRUE? a It consists of five members appointed by the Governor b It investigates written complaints against licensees c It is run by the Superintendent who is appointed by the Governor. d It promotes a code of ethics.

b. It investigates written complaints against licensees It is the Division that has the authority to conduct investigations of complaints, a process that we will look at in Chapter 3. The other statements are false.

Which is most likely NOT a common element that is shared by everyone who lives in J's condominium community? a a stationary bike in the community gym b J's reserved parking place in the community parking garage c the roof of J's unit d the shrubs that surround the guard house

b. J's reserved parking place in the community parking garageThis answer is correct. c. the roof of J's unit d. the shrubs that surround the guard house Correct! That parking place is a limited common element since it's reserved just for her use. Everything else belongs to the entire condominium community as common elements.

Which ruling by the Supreme Court of the United States upheld the Civil Rights Act of 1866, confirming that one can NEVER discriminate on the basis of race or color? a Buchanan v. Wharley b Jones v. Alfred H. Mayer Co. c Plessy v. Ferguson d Shelley v. Kraemer

b. Jones v. Alfred H. Mayer Co. The Jones v. Alfred H. Mayer Co. ruling in 1968 prohibits any racially based discrimination in housing, holding that the Civil Rights Act of 1866 was constitutional and applied to actions by the state and by private parties.

T turns out to be a landlord's nightmare. Before L finally gets T evicted, T has caused at least $1,500 damage to the house. T's security deposit was only $500. Which statement is TRUE? a L can sue T for additional damages only if the lease states that T is required to repair any damage to the property that occurs during the tenancy. b L can sue T for damages in addition to keeping the security deposit. c Once a landlord has chosen to terminate the lease, the tenant is not liable for property damage. d The security deposit serves as liquidated damages, so T cannot be sued for additional damages.

b. L can sue T for damages in addition to keeping the security deposit. If a tenant (residential or nonresidential) caused severe damage and the repair costs are greater than the amount of the security deposit, the landlord may sue to collect the additional amount.

Comp #3 has five bedrooms; the subject property has four bedrooms. Through matched pair analysis, the appraiser has determined that a bedroom in that neighborhood is worth $7,500. What is the appropriate way to apply this information when performing the sales comparison approach to valuation? a Add $7,500 to Comp #3 value. b Subtract $7,500 from Comp #3 value. c Add $7,500 to the subject base. d Subtract $7,500 from the subject base.

b. Subtract $7,500 from Comp #3 value.This answer is correct. When making adjustments, you subtract the value of an extra feature from the comp's value.

Which is the best type of listing agreement for the real estate agent and why? a The exclusive agency, because then only the agent's brokerage may collect a commission on the sale of the property. b The exclusive right to sell, because the broker is guaranteed a commission no matter who sells the property. c The net listing, because the agent can make an unlimited amount of money over and above what the seller wants to get from the property. d The open listing, because increased competition will cause the agent to work harder to make sure he is the one who gets paid.

b. The exclusive right to sell, because the broker is guaranteed a commission no matter who sells the property.This is the correct answer. The answer is B. An exclusive right to sell listing agreement is one that entitles the broker to a commission if anyone, including the seller, finds a buyer during the listing term. Agents prefer this type of listing for that reason.

After producing indications of value using the three approaches, how does the appraiser present these figures as a final opinion of value? a The three figures are presented objectively, allowing the client to pick whichever is the most favorable outcome. b The three figures are reconciled, giving each an appropriate weight depending on the type of appraisal and its goals. c The three figures are simply averaged together. d The three figures are written down at random.

b. The three figures are reconciled, giving each an appropriate weight depending on the type of appraisal and its goals. In the previous chapter, you learned that the appraiser will reconcile the value opinions derived by each of the approaches to present a final opinion of value.

How are subprime loans different from conforming loans? a They allow for lower interest rates. b They allow for more risk. c They are only offered by banks. d They are sold in the secondary market.

b. They allow for more risk. A subprime loan allows the lender to assume more risk, whether it's a jumbo loan or the borrower has some credit issues. Either way, the lender is likely to charge a premium to make the loan in increased fees or higher interest rates.

A buyer's agent must give an Agency Disclosure Statement to a buyer a at the same time a listing agreement is signed. b before the buyer's offer is written. c prior to marketing or showing the property. d upon initiating a pre-qualification evaluation.

b. before the buyer's offer is written.This answer is correct. Correct! The Agency Disclosure form is initiated by the buyer's agent when the buyer indicates a desire to write an offer on a property.

Which item would NOT contribute to mold growth? a a tightly sealed home b bright sunlight c leaking roof d materials with high cellulose content

b. bright sunlight Mold usually grows in dark, wet places on a cellulose-based material. A leaking roof or tightly sealed house could contribute enough moisture to encourage mold growth.

Construction methods, including things such as electrical wiring for a structure or the use or particular materials, must meet minimum standards set forth in a blueprints. b building codes. c permits. d specifications.

b. building codes Building codes are a means of setting construction standards, requiring builders to use particular methods and materials.

Which would most likely be considered real property? a area rug b built-in bookcase c draperies matching the carpet d pool table

b. built-in bookcase Real property is the land and everything attached (appurtenant) to it, such as a built-in bookcase. Personal property is all tangible items not permanently attached to or annexed as part of real estate, such as an area rug, draperies, or a pool table.

A listing broker knew a termite infestation had caused structural damage but told the buyer, "You don't have to worry about termites here. This house is solid." The buyer signed a contract that included an "as is" clause. He discovered the termite damage when he moved in and sued. The broker a can be held liable because the "as is" clause is void in all real estate transactions. b can be held liable because her statements to the buyer were fraudulent. c cannot be held liable because her statements were merely an opinion. d cannot be held liable because of the "as is" clause.

b. can be held liable because her statements to the buyer were fraudulent. If the broker knew about the damage and intentionally misrepresented the facts, the broker could be held liable for fraud. An "as-is" clause can never protect the seller or agent if they deliberately conceal a defect from the buyer.

The proceeds of a foreclosure sale did not yield enough money to pay off the first mortgage holder. The mortgage holder a can file a mechanic's lien or a materialman's lien, depending on why the original lien was granted. b can seek a deficiency judgment against the debtor by filing a separate court action. c could choose to transfer the mortgage interest to another piece of property owned by the debtor. d has absolutely no recourse against the debtor because only the piece of property with a lien on it was subject to foreclosure.

b. can seek a deficiency judgment against the debtor by filing a separate court action. If the property does not bring enough money to pay off the mortgage, the creditor may bring a separate court action to obtain a deficiency judgment against the debtor for the rest of the debt.

In which step of the appraisal process would an appraiser determine highest and best use? a apply the approaches of value b collect data/analyze data c define the problem d reconcile the final estimate of value

b. collect data/analyze data Determining the highest and best use of the property occurs during the analysis of the collected data.

Which is an area of specialization within real estate sales? a. cemetery sales b. commercial and industrial c. line and staff organization d. NAR listings only

b. commercial and industrial Correct! Commercial and Industrial, and residential are areas a licensee can specialize in.

Which is NOT considered a fixture to real property? a built-in washer that is at the repair shop on the day of closing b curio cabinet in the living room that the buyer thought looked perfect with the room décor c keys to the house d white picket fence around the house

b. curio cabinet in the living room that the buyer thought looked perfect with the room décor The answer is B. The curio cabinet is not permanently attached, and thus NOT considered a fixture to real property.

A real estate salesperson may a. deposit earnest money into a personal checking account as long as it does not pay interest. b. do most things a broker can do. c. sponsor salespeople to work for him. d. prepare a deed.

b. do most things a broker can do. A salesperson license allows the licensee to perform the same tasks as a licensed broker, but the salesperson performs those tasks on behalf of his or her employing broker.

M's brother, S, finished college last June and has not been able to find the job he wants. M lets him live in the other half of his duplex while he looks for a "real" job. S occasionally gives M some money for bills from his job delivering pizza. What does this situation represent? a estate at sufferance b estate at will c estate for years d periodic estate

b. estate at will A tenancy at will, or estate at will, is a leasehold estate with no specified termination date and with no regular rental period. Sometimes no rent is paid; other times, any rent paid has no reference to time periods.

What is the priority of adjustments (beginning with the most important)? a financing concessions, location, terms of sale, physical features, and date of sale b financing concessions, terms of sale, date of sale, location, and physical features c physical features, location, date of sale, terms of sale, financing concessions d physical features, terms of sale, date of sale, financing concessions, and location

b. financing concessions, terms of sale, date of sale, location, and physical features The first adjustment to be made would be in financing concessions, for example if the seller took back a mortgage. This would be followed by terms of sale, date of sale, location, and finally, physical features. Some adjustments must be made first because they are adjusted as a percentage of the comparable's sales price, rather than a set dollar amount.

The Division of Real Estate and Professional Licensing does NOT issue a citations for certain agency law violations. b fines to licensees found guilty of a fair housing violation. c real estate licenses. d subpoenas.

b. fines to licensees found guilty of a fair housing violation. Correct! The Division has the authority to administer license laws, issue licenses, issues orders necessary to implement license laws, investigate written complaints against licensees, place brokers' licenses on deposit, audit brokers' records and trust accounts, subpoena witnesses for investigations, apply for injunctions, administer the Recovery Fund. It is the Superintendent who has the authority to issue citations.

A conforming loan is a loan that a exceeds the maximum loan amount established by Fannie Mae/Freddie Mac. b follows the secondary market criteria set by Fannie Mae/Freddie Mac. c is for more than $417,000 on a single-family home, also called a jumbo loan. d is offered to borrowers who do not meet qualifications for Fannie Mae/Freddie Mac.

b. follows the secondary market criteria set by Fannie Mae/Freddie Mac. A conforming loan follows the Fannie Mae and Freddie Mac criteria in order to be eligible for sale in the secondary mortgage market.

A permanent buydown plan can reduce the borrower's payments a early in the loan only, but will require a balloon payment at the end of the term. b for the entire life of the loan. c for the entire life of the loan, but with an automatic prepayment penalty. d through gradual payment decreases throughout the life of the loan.

b. for the entire life of the loan. A permanent buydown reduces the interest rate for the entire life of the loan.

What are the two main types of possessory interest in real property? a easements and freehold estates b freehold and leasehold estates c easements and liens d liens and leasehold estates

b. freehold and leasehold estates The two types of possessory interests are freehold and leasehold estates. Easements and liens are non-possessory interests.

Which deed guarantees title against all encumbrances occurring during any previous ownership, usually with the phrase "convey and warrant forever"? a bargain and sale deed b general warranty deed c quitclaim deed d referee's deed

b. general warranty deed A general warranty deed gives the grantee the greatest possible protection.

A neighborhood is undergoing much rehabilitation and property improvement. The movement is not part of any public movement or initiative but rather from a general trend toward people desiring to live there. What phase of the neighborhood life cycle is MOST LIKELY being evidenced? a expansion b gentrification c growth d transition

b. gentrification Gentrification, also known as revitalization, occurs when properties are again seen as attractive for their location, architectural features, or perhaps price. Whatever the reason, people begin to spend money to fix up these homes, and they again become desirable.

The four life cycle stages a neighborhood normally goes through, in order, are a decline, revitalization, stability/equilibrium, and growth. b growth, stability/equilibrium, decline, and revitalization. c revitalization, growth, decline, and stability/equilibrium. d stability/equilibrium, decline, growth, and revitalization.

b. growth, stability/equilibrium, decline, and revitalization. In order, the stages are: 1. Growth; 2. Stability/equilibrium; 3. Decline; 4. Revitalization.

All are representative of 15-year mortgages, EXCEPT a the borrower loses his Federal tax deduction faster because his loan is paid off earlier. b higher interest rates. c higher monthly payments. d lower interest rates.

b. higher interest rates. A 15-year mortgage usually has a LOWER interest rate than a 30-year mortgage.

Which is NOT a duty of the Ohio Real Estate Commission? a. administer the Education and Research Fund b. issue real estate licenses c. revoke real estate licenses d. set licensing standards

b. issue real estate licenses Correct! Licenses are issued by the Ohio Division of Real Estate, not the Real Estate Commission. The Commission does have authority over the other duties indicated.

Upon debtor default, which remedy is available to a mortgagee? a forfeiture b judicial foreclosure c non-judicial foreclosure d power of sale clause

b. judicial foreclosure When a borrower defaults on a mortgage, the lender—known as the mortgagee—can pursue a judicial foreclosure action. Non-judicial foreclosure is not an option available to a mortgagee. If the instrument used is a trust deed, however, a power of sale clause allows the trustee to pursue a non-judicial foreclosure. Forfeiture is a remedy available to the vendor (seller) in a land trust.

A lender typically requires title insurance to cover the a buyer. b mortgagee. c mortgagor. d seller.

b. mortgagee. The lender requires insurance only to protect itself, the mortgagee. It may be advisable, or even customary, for insurance to be purchased for the borrower (the mortgagor), but usually it is not required.

When a debtor in default pays what is due—which may include principal and interest owed, lender costs, court costs, and attorneys' fees—to stop a judicial foreclosure, this is known as a collateral. b redemption. c rescission. d voluntary conveyance.

b. redemption.This is the correct answer. Selected: c. rescission.This answer is incorrect. d. voluntary conveyance. Incorrect. The answer is B. A debtor can redeem (save) the property from the time the foreclosure action is brought up until the confirmation of the foreclosure sale. This is done by paying what is due, which may include principal and interest owed, lender costs, court costs, and attorneys' fees.

Comp #2 has a deck; the subject property does not have a deck. The appraiser has determined that a deck in that neighborhood is worth $3,000. What is the appropriate way to apply this information when performing the sales comparison approach to valuation? a add $3,000 to Comp #2 value b subtract $3,000 from Comp #2 value c add $3,000 to the subject base d subtract $3,000 from the subject bas

b. subtract $3,000 from Comp #2 value When making adjustments, you subtract the value of an additional feature from the comp's value.

A buyer is purchasing a property for $100,000 and will make a 20% down payment. If charged two points, how much will be owed in points? a $800 b $1,000 c $1,600 d $2,000

c. $1,600 First, find the mortgage amount. The buyer is borrowing 80% of the sales price: $100,000 x .80 = $80,000. Each point is 1% of the loan amount, so each point costs $800: $80,000 x .01 = $800. Two points would cost $1,600 ($800 x 2).

A property is sold and will close on September 15, 2017. The annual taxes, last paid for 2016, are $2,436. Calculate the buyer's credit using a 365-day year. a. $714.11 b. $1,621.76 c. $1,721.87 d. $1,745.80

c. $1,721.87 First, find the daily rate of the taxes using a 365-day year: $2,436 ÷ 365 = $6.6739. Then, determine the number of days the seller lived in the home for which the buyer will pay taxes (remember the day of sale belongs to the seller): Jan=31 + Feb=28 + Mar=31 + Apr=30 + May=31 + Jun=30 + Jul=31 + August=31 + September=15 is 258 days. Finally, multiply the daily rate by the number of days: $6.6739 x 258 = $1,721.87 (rounded). The buyer will be credited for $1,721.87 at closing.

A borrower is purchasing a home for $120,000 and loan origination fees of 4% of the purchase price. The seller has agreed to contribute 2% of the purchase price toward the buyer's closing costs. How much cash would the borrower need at closing in order to obtain an 85% LTV loan? a $18,360 b $18,720 c $20,400 d $20,800

c. $20,400 The borrower would need 15% of the $120,000 purchase price, or $18,000, plus the additional 2%, or $2,400, for closing costs that the seller is not providing.

A property is being financed through the VA. If the sale price is $75,000 and the points are four, the points will total what dollar amount? a $750 b $1,500 c $3,000 d $7,500

c. $3,000 Each point is 1% of the loan amount: $75,000 x .01 = $750. Four points will cost $3,000 ($750 x 4).

Deb offers to buy Stan's home for $200,000, which he accepts. When she applies for a loan, the loan originator tells her that she can borrow $160,000 at 4.75% for 30 years. She can bring the interest rate down to 4.50% if she wants to pay two points upfront. How much would these points cost her? a $1,600 b $2,000 c $3,200 d $4,000

c. $3,200 A point is 1% of the loan amount. Since her loan would be for $160,000, each point would cost her $1,600. Deb could bring the interest rate down by 1/4 percent by paying $3,200 upfront.

The rent for each unit of a 10-unit strip mall is $1,000 per month. The annual vacancy rate averages 5% (or $6,000). The expenses for the property come to $30,000 per year, with depreciation of $15,000 and debt service of $10,000. What is the net operating income? a $49,000 b $54,500 c $84,000 d $96,000

c. $84,000 You remembered the formula: NOI = Annual potential gross income - Vacancy loss - Expenses. 10 units x $1,000 per month x 12 months in a year = $120,000 annual gross income. Subtract vacancy loss ($6,000) and expenses ($30,000) to get $84,000. Depreciation and debt service do not figure into the calculation.

The rent for each unit of a 10-unit strip mall is $1,000 per month. The annual vacancy rate averages 5% (or $6,000). The expenses for the property come to $30,000 per year with depreciation of $15,000 and debt service of $10,000. What is the net operating income? a $49,000 b $54,500 c $84,000 d $96,000

c. $84,000 Net operating income (NOI) = Annual gross income - Vacancy loss - Expenses. 10 units x $1,000 per month x 12 months in a year = $120,000 annual gross income. Subtract vacancy loss ($6,000) and expenses ($30,000) to get $84,000. Depreciation and debt service do not figure into the calculation for NOI.

Using IRV, what would be the indicated value (rounded to the nearest one hundred dollars) of a property that has NOI of $8,000 if the overall capitalization rate is indicated at 9.25%? a $65,300 b $74,000 c $86,500 d $92,400

c. $86,500 Since you know the net operating income and the cap rate, you can use the IRV formula to find value: net Income ÷ Rate = Value. So: $8,000 ÷ .0925 = $86,486.49, rounded to $86,500.

When Gianna called landlord Steve about an apartment she saw advertised, he told her it was rented. A week later, the sign was still up in front of the building. Gianna is convinced that Steve did not show her the apartment because she was a woman and she had a strong accent. If Gianna decided to file a complaint against Steve, she would have to do so within ____________ of the incident. a 90 days b 6 months c 1 year d 2 years

c. 1 year Anyone can file a complaint of discrimination with HUD's Office of Fair Housing and Equal Opportunity (FHEO) within one year of the incident.

Jake borrows $150,000 on a 30-year loan. Assuming no other bank fees, at an interest rate of 4.75%, he will owe his lender about $782 every month for 360 months to cover the principal and interest. If he brings the interest rate down to 4.5% by paying 2 points, his monthly payment will be about $760. How many years does Jake have to pay on that loan to recover his upfront payment? a 7 years b 9 years c 11 years d 13 years

c. 11 years His points will cost him $3,000 ($150,000 x .02). He is saving $22 a month, so $3,000 ÷ 22 = 136.36 months. It will take him just over 11 years to recoup his $3,000 upfront discount points (136.36 ÷ 12 = 11.36).

How many Federal Reserve Banks are there? a 6 b 8 c 12 d 14

c. 12 There are 12 regional Federal Reserve Banks.

How many hours of prelicensing education must be successfully completed before taking the Ohio real estate salespersons licensing examination? a. 40 b. 90 c. 120 d. 150

c. 120 Correct! Before a person can apply to take the licensing exam, 120 hours of approved prelicensing courses must be successfully completed.

A property is currently valued at $3,500,000. If it generates an annual income of $175,000 and annual expenses total $40,000, what is the gross rent multiplier? a. 5 b. 19.77 c. 20 d. 25.92

c. 20 To find the gross rent multiplier, divide the value by gross income: $3,500,000 ÷ $175,000 = 20. Expenses are not part of the GRM calculation.

Which is NOT one of the required core continuing education topics? a 3 hours legal issues and recent legislation b 3 hours civil rights updates c 3 hours contract preparation techniques d 3 hours Canon of Ethics

c. 3 hours contract preparation techniques Contract preparation is not a required topic, but could be an appropriate topic for some of the 21 elective hours.

Which will terminate an offer? a The agent dies. b The broker's license is suspended for 15 days and 10 of those days are waived. c A counteroffer is made. d No earnest money is deposited.

c. A counteroffer is made.This answer is correct. An offer is between the buyer and the seller. In a real estate transaction, a licensee is merely a messenger, and so the death of the agent or the suspension of the agent's license has no bearing on the validity of an offer. Earnest money is not a requirement for a valid contract, so a buyer is not required to provide that when making an offer. If the seller rejects the terms of the offer and makes a counteroffer, the original offer is terminated.

Which statement about liens is FALSE? a A lien does not prevent the transfer of property. b A lien is a financial encumbrance. c A lien is a possessory interest. d A lien may be placed against personal property.

c. A lien is a possessory interest. This answer is correct. d. A lien may be placed against personal property. Correct! A lien does NOT give the lienholder a right to possess the property. The other statements are true.

Which situation is an example of misconduct by a licensed salesperson that could result in administrative discipline by the Real Estate Commission? a Alice did not disclose that the occupant of the house she listed committed suicide. b Ben gave multiple offers to his seller client as they were made instead of all at once. c Cameron did not tell the owner of home he had listed that he was one who made an offer. d Danita solicited a listing from a seller the day after his listing agreement with another broker expired.

c. Carly pays her unlicensed assistant a salary for the clerical work he does. Correct! A licensee may pay an unlicensed assistant as long as his pay is not based on real estate transactions and he is not performing any activities that require a license. The other choices, however, are examples of misconduct that could be investigated by the Real Estate Commission and result in some sort of sanction.

Question 3 The document given to the buyer within three business days after completing a loan application is the a disclosure of APR. b Good Faith Agreement. c Loan Estimate. d Truth in Lending disclosure.

c. Loan Estimate. The APR is disclosed in the Loan Estimate, which is given to a borrower within three business days of submitting a loan application.

Harvey owns a small commercial building He rents it to Lucy, who opens a ceramics shop. Lucy installs a kiln. Four years later, Harvey sells the property to Ann, who wants to start her own pottery business. When Lucy's lease is up, who owns the kiln? a Ann b Harvey c Lucy d It's impossible to tell without more information.

c. Lucy This answer is correct. Correct! Lucy the tenant installed the kiln for her business. It's a trade fixture and it's her personal property. Lucy would have to remove it when her lease is up or she could sell the kiln to Ann, if they could agree to terms.

Which is NOT a characteristic of adjustable rate mortgages? a. An index is stated in the contract that will determine the interest rate adjustment. b. The lender will add a margin to the index to determine the interest rate. c. Negative amortization can never occur because of federal regulations. d. The rate or payment changes can be capped.

c. Negative amortization can never occur because of federal regulations. Negative amortization can occur when the balance on an ARM grows if payments do not keep up with the rate change. While there are indeed federal regulations that protect consumers against negative amortization, it can still occur, which is one of the reasons why an ARM can be risky.

In Ohio, to learn more about first-time homebuyer loans, you should check with the a Federal Reserve Bank. b Home Loan Bank Board. c Ohio Housing Finance Agency. d Veterans Administration.

c. Ohio Housing Finance Agency The Ohio Housing Finance Agency (OHFA) is a state agency that assists first-time homebuyers or people who haven't owned a home in the past three years.

Receiving a cash incentive for referring a buyer to a lender is a violation of a the Fair Housing Act. b Regulation Z. c RESPA. d the Truth in Lending Act.

c. RESPA. Kickbacks are prohibited under Section 8 of the Real Estate Settlement Procedures Act (RESPA).

Which statement regarding the broker-salesperson relationship is TRUE? a. It is not a fiduciary relationship since a salesperson works for the client. b. It is usually a subcontractor relationship. c. Salespeople are agents of their broker. d. All of the above

c. Salespeople are agents of their broker.This answer is correct. Correct! A licensed salesperson is considered to be an agent of his or her employing broker, working on behalf of the broker, generally as an independent contract, not a subcontractor. This is a fiduciary relationship.

When T rented her apartment three years ago, it was in decent condition, but now it is infested with cockroaches, the living room heater does not work, and the stairs are rickety. In spite of T's frequent complaints, the landlord has not taken care of these problems. Which statement is TRUE? a The landlord is not required to fix these problems unless the lease says the landlord has a duty to keep the property habitable during the tenancy. b These problems are not the landlord's responsibility if the lease expressly states that the landlord has no duty to repair the property. c Until these problems are fixed, T can be held liable only for the reasonable rental value of the property in its substandard condition. d Until these problems are fixed, T cannot be evicted if she stops paying rent.

c. Until these problems are fixed, T can be held liable only for the reasonable rental value of the property in its substandard condition. When residential property falls below the standards of habitability set by the Landlords and Tenants Act, the tenant is not liable for the full amount of rent he agreed to pay. Instead, the tenant owes the landlord only the reasonable rental value of the property in its substandard condition.

A buyer's broker has actual knowledge of structural damage to the floor boards of a home due to termite infestation. He informs his client that there are no termites in the home. The buyer signs a contract to purchase the property. Could the broker be susceptible to claims of fraud? a No because he is protected by the "as is" clause in the purchase agreement. b No, because he said there were no termites, which could be true at present. c Yes, because he knowingly made a potentially untrue statement that could be seen as an inducement to buy. d Yes, unless there are visible signs of termites, the broker is justified in indicating that there are no termites within the property's structure.

c. Yes, because he knowingly made a potentially untrue statement that could be seen as an inducement to buy.This answer is correct. Correct! The broker can be held liable because his statements to the buyer were possibly fraudulent and could be looked upon as an inducement to enter into the purchase agreement.

The cost approach is NOT the most applicable method for a determining an insurance replacement value. b a recently constructed building. c a residential condo in a complex with 50% occupancy and many recent sales. d an unusual building for which there are no comparable sales available.

c. a residential condo in a complex with 50% occupancy and many recent sales. The cost approach is typically a more reliable method of indicating a value opinion for most newer structures, for the replacement cost for a building, or for buildings that are unusual, with few comparable sales. When there are a lot of comps, the sales comparison approach would be more applicable.

Daphne, a victim of identity theft, can't currently qualify for a loan but wants to buy her friend's condo for $90,000. She could give him $1,000 now, if he promised not to sell to anyone else in the next six months, giving her the opportunity to purchase the property within that time period. This is a a land contract. b a lease purchase agreement. c an option agreement. d a right of pre-emption.

c. an option agreement. This is an option agreement. Consideration of $1,000 is given with an option to purchase the property any time within the six-month period.

Daphne, a victim of identity theft, can't currently qualify for a loan but wants to buy her friend's condo for $90,000. She could give him $1,000 now, if he promised not to sell to anyone else in the next six months, giving her the opportunity to purchase the property within that time period. This is a a land contract. b a lease purchase agreement. c an option agreement. d a right of pre-emption.

c. an option agreement. This is an option agreement. Consideration of $1,000 is given with an option to purchase the property any time within the six-month period.

A partial interest is a also known as fee simple interest. b an interest that is the entire bundle of rights, plus some additional rights. c any interest in real estate that is less than the entire bundle of rights. d none of the above

c. any interest in real estate that is less than the entire bundle of rights. A partial interest is any interest in real estate which one may have, other than the full bundle of rights. This could involve, for example, a property that has sold its mineral rights, a property that is leased, or a property with a life estate.

A run-down house in a good neighborhood a benefits from the principle of regression. b is hurt by the principle of regression. c benefits from the principle of progression. d is hurt by the principle of progression.

c. benefits from the principle of progression. When the value of a property is helped up by the other properties in an area, this is known as the principle of progression.

Immobility in the real estate market can be defined as the inability a of customers to readily move from city to city. b to move a piece of real estate. c both a and b d neither a nor b

c. both a and b Correct! Homes are very immobile, as are owners due to employment, family, geographic preferences, etc.

Question 2 Stacy contracted with Biff (a big, burly guy) to "coerce" her neighbor into signing an easement release she has been after for the past five years. Which statement is TRUE? a Stacy and Biff's contract is void due to unlawful purpose. b Stacy and her neighbor's contract is voidable due to duress. c both a and b d neither a nor b

c. both a and bThis answer is correct. Correct! Stacy and Biff's contract had an unlawful objective and is, therefore, void. Also, if the neighbor signed that lien release under duress, as it appears to be the case, that contract is also void.

A nice, well-kept house located in the heart of an all-residential area, surrounded by other well-kept houses of similar style and value, is an example of a conformity. b highest and best use. c both conformity and highest and best use. d neither conformity nor highest and best use.

c. both conformity and highest and best use. This is an example of both. Highest and best use is the most profitable, legally permitted, feasible, and physically possible use of a property. A home in a residential area is property that is being put to its highest and best use. Conformity says that a particular home achieves its maximum value when it is surrounded by homes that are similar in style and function.

Which document indicates an opinion of the status of the title as of the day it is issued? a abstract of title b affidavit of title c certificate of title d title report

c. certificate of title A certificate of title (also known as an opinion of title) is a document prepared by an attorney stating the attorney's opinion of the status of the title to a piece of property as of the date it is issued.

S granted a deed to M using these words: "I, S, hereby convey and warrant 12 acres of my estate to M, to have and to hold forever." In all likelihood, what type of deed did M receive? a bargain and sale deed b fiduciary deed c general warranty deed d limited warranty deed

c. general warranty deedThis answer is correct. d. limited warranty deed Correct! A general warranty deed gives the grantee the greatest possible protection and usually includes the covenant of warranty forever, by which the grantor will defend the grantee's interest against all lawful claims of title.

Which is not an accepted appraisal approach? a cost approach b income approach c highest and best use approach d sales comparison approach

c. highest and best use approach Determining the highest and best use is something that may be considered in every appraisal approach; it is not a recognized appraisal approach in and of itself.

The Consumer Guide to Agency Relationships does NOT a apply to sellers of real estate, only buyers. b describe the types of agency relationships a brokerage practices. c indicate who works for whom in a specific real estate transaction. d require a prospective buyer to acknowledge its receipt.

c. indicate who works for whom in a specific real estate transaction.This answer is correct. Correct! The Consumer Guide merely explains the available agency relationships. It must be given to prospective buyers and sellers at first substantive contact, and It must be acknowledged. It is the Agency Disclosure Statement that discloses the actual agency relationship that will result in a property specific transaction and lets the buyer and seller know exactly who is working for whom in a particular transaction.

Floor coverings would be installed during the ______ stage. a completion b foundation c interior finish d rough-in

c. interior finish Once rough-in work has been completed and inspections have been made, the next step is for interior finish work to begin, which includes drywall and floor coverings.

A valid will must be made by a testator who a has property to dispose of. b is married. c is of sound mind and memory. d is survived by someone.

c. is of sound mind and memory. The testator must have testamentary capacity, which means a person who is at least 18 years old and who is of "sound mind and memory."

Jim made an earnest money deposit of $8,000 when entering into a contract to buy Allen's house. The contract indicated that the injured party would get the earnest money in the event of a breach. Before closing, Jim backs out of the contract, citing health issues, and Allen gets a check for $8,000. This is an example of a compensatory damages. b consideration. c liquidated damages. d novation.

c. liquidated damages.This is the correct answer. The answer is C. In purchase contracts, there's often a clause calling for forfeiture of the earnest money deposit to the seller if the buyer breaches. This is an example of a liquidated damages provision.

The most important economic factor in determining site value is a land is more valuable with improvements than vacant. b land is valuable no matter where it is. c location of the lot with regard to market demand. d the size of any existing improvements.

c. location of the lot with regard to market demand The most important economic factor is the specific position or location of the lot with regard to market demand for that type of property.

Which does NOT show evidence of marketable title? a abstract of title b certificate of title c location survey d title report

c. location survey There are generally four ways to show evidence of marketable title: Abstracts of title, certificates of title, title reports, and title insurance.

With an ARM, the index is added to the ______ to determine the _________ . a APR / cost of funds b home value / amount borrowed c margin / interest rate charged d qualifying ratio / maximum monthly mortgage payment

c. margin / interest rate charged With an adjustable rate mortgage, the index is added to the agreed-upon margin to determine the interest rate due on the loan.

Which is an involuntary, specific lien? a easement created by express agreement b judgment lien c mechanic's lien d mortgage

c. mechanic's lien A mechanic's lien attaches to specific property, and it is an involuntary lien. A judgement lien is a general lien, meaning it attaches to real and personal property. A mortgage is a voluntary lien. An easement, while an encumbrance, is not a lien.

The multiple listing service (MLS) was created so that a. agency agreements and disclosures would not be necessary. b. brokers could have a secure place to record a client's confidential information. c. member brokers could share listings with a blanket offer of cooperation and compensation. d. sellers and buyers could find each other.

c. member brokers could share listings with a blanket offer of cooperation and compensation. Correct! The multiple listing service was created so that member brokers could have a common place to share property listings. The other statements are FALSE.

The type of legal description that references fixed monuments and landmarks is a government survey. b lot and block. c metes and bounds. d rectangular survey.

c. metes and bounds. The metes and bounds description describes property by starting at an easily identifiable point of beginning and ending up back at the point of beginning.

Which is a voluntary, specific lien? a attachment lien b judgment lien c mortgage lien d property tax lien

c. mortgage lienThis answer is correct. d. property tax lien Correct! A mortgage lien is a voluntary, specific lien.

The constitutional basis for governmental regulation of the use of private property is a. eminent domain. b. the National Environmental Policy Act. c. police power. d. the zoning clause.

c. police power. Police power is the constitutional power of state and local governments to enact and enforce laws that protect the public's health, safety, morals, and general welfare. On occasion, that power involves restricting the use of private property.

Which is NOT an element of an ARM? a index b margin c positive amortization cap d rate

c. positive amortization cap There is no such thing as a positive amortization cap.

Which site valuation method uses adjustments to make other properties closer to the subject property? a allocation method b ground rent capitalization method c sales comparison method d subdivision analysis method

c. sales comparison method Using the sales comparison method, an appraiser obtains data on other similar properties that sold recently in the same market area and makes adjustments for any difference for which a typical buyer might pay more or less.

A licensee is on a listing appointment with the prospective seller client who states that he wishes to sell only to members of a particular race. Of these options, what do you think would be the licensee's best response? a check to ensure the brokerage errors and omissions premiums are current and take the listing b comply with the seller's wishes as long as he signs a listing agreement and becomes a client c say he must consult with his employing broker before making a decision about taking the listing d take the listing but ignore the seller's request and show the house to any interested prospect

c. say he must consult with his employing broker before making a decision about taking the listing Racial discrimination is prohibited by the federal Fair Housing Act and the Civil Rights Act of 1866. Failure to comply constitutes an unlawful act, so it's likely that the employing broker will refuse to take the listing.

Which is NOT a function of the secondary markets? a moderate effects of local real estate cycles b provide lenders with money to make more loans c serve as a depository for consumer assets d standardize underwriting guidelines

c. serve as a depository for consumer assets The secondary market exists to standardize loan qualifying criteria and buy loans from the primary market as a stabilizing influence. The secondary markets do not loan money nor do they accept deposits from consumers.

Which is NOT a function of the secondary markets? a moderate effects of local real estate cycles b provide lenders with money to make more loans c serve as a depository for consumer assets d standardize underwriting guidelines

c. serve as a depository for consumer assets The secondary market exists to standardize loan qualifying criteria and buy loans from the primary market as a stabilizing influence. The secondary markets do not loan money nor do they accept deposits from consumers. If a primary market lender wants to sell a loan to the secondary market, it must follow the secondary market guidelines. This is known as a conforming loan.

ABC Construction builds Marcia's new house. Subcontractor Tim delivered lumber and drywall to the building site and ABC did not pay him. Tim filed a mechanic's lien against Marcia. This lien is a general and involuntary b general and voluntary. c specific and involuntary. d specific and voluntary.

c. specific and involuntary.This is the correct answer. Incorrect. The answer is C. A mechanic's lien is involuntary and attaches only to the property in question, which makes is specific.

Under the Federal Fair Housing Act, who can legally refuse to rent to a couple because they have a ten-year-old daughter? Assume no real estate agent is involved and no discriminatory advertising is used. a the owner of five-unit apartment house in Akron b the owner of a large apartment complex in Cincinnati, who has a long, established policy of not renting to young couples with children c the owner of a single-family home in Canton, who owns one other single-family home d all of the above

c. the owner of a single-family home in Canton, who owns one other single-family home Under federal law, the owner of a single-family home is exempt from provisions of the Fair Housing Act, assuming no broker is used. An owner-occupant of a building for four or fewer units would also be exempt under federal law.

Blockbusting is a channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, or ethnic background. b refusing to make loans secured by property located in certain neighborhoods for discriminatory reasons. c trying to induce owners to sell their homes by saying that the ethnic or racial makeup of an area is changing, implying that property values will decline. d none of the above

c. trying to induce owners to sell their homes by saying that the ethnic or racial makeup of an area is changing, implying that property values will decline. Blockbusting (also called panic selling) is inducing owners to sell their homes by suggesting that the ethnic or racial composition of an area is changing, implying that property values will decline.

The Jones family is considering an offer on their home. They must pay off a $115,000 loan, pay closing costs of $1,000, and a survey fee of $425. Their broker is charging them a five percent commission. Determine the minimum acceptable offer. a $110,603.75 b $110,880.95 c $122,246.25 d $122,552.63

d. $122,552.63T First, figure the costs: $115,000 + $1,000 + $425 = $116,425. Since the commission rate is 5%, you can now divide the costs by 95% (100% - 5%) to find the minimum acceptable: $116,425 ÷ .95 = $122,552.63.

You purchase an investment property for $125,000. You later sell it at a loss of $20,000. What is your percent of loss? a 6.25% b 8.4% c 11.9% d 16%

d. 16% When determining the percent of a loss, remember that you divide what you loss by what it cost: $20,000 ÷ $125,000 = 16%. Your loss percent is 16%.

Which homes should be considered when finding comps for a competitive market analysis? a homes currently listed for sale in the market b homes where the listing agreements have expired c homes that have sold recently in the subject's area d All homes should be considered.

d. All homes should be considered. When a real estate agent is developing a competitive market analysis, all of these properties should be considered. If an appraiser is performing an appraisal using the sales comparison approach, however, he or she will only look at homes that have sold recently.

A consumer was paid $20,000 after filing a claim with the Real Estate Recovery Fund against an Ohio licensee. How does this impact the licensee? a He will receive a citation, but his license is unaffected. b His license is revoked. c His license is suspended for two years. d His license is suspended until he repays the Fund $20,000 plus interest.

d. His license is suspended until he repays the Fund $20,000 plus interest. When a payment is made from the fund in the name of any licensee, that person's license is automatically suspended and is not subject to reactivation until the amount paid on his behalf is repaid with interest.

K signs a one-year lease with landlord L and moves into a new apartment. Which situation is NOT an example of novation? a A balcony unit opens up, so L substitutes a new lease for that unit and K moves. b K and L substitute K's sister's name on the rental agreement and K moves out. c K and L tear up her one-year lease and replace it with a two-year lease. d K's lease is up and L lets her remain in the apartment month-to-month.

d. K's lease is up and L lets her remain in the apartment month-to-month.This answer is correct. Correct! Novation is substitution of one contract for another or one party to the contract for another. If K stays on month-to-month after her lease is up, they have created a periodic tenancy at that point.

Which is FALSE under the Equal Credit Opportunity Act? a All income declared can count towards buying a home. b Homebuyers may not be discriminated against due to sex. c Homebuyers receiving public assistance may qualify for a loan. d Lenders cannot deny a homebuyer's application when income is not ongoing and/or verifiable.

d. Lenders cannot deny a homebuyer's application when income is not ongoing and/or verifiable. Lenders can indeed deny a loan application if the borrower's income is not ongoing or verifiable. The other statements are true.

At XYZ Brokerage, agent Amy represents the seller. Amy has a buyer client interested in the seller's house, but XYZ policy will not allow Amy to represent both buyer and seller in the same transaction. Which Consumer Guide does XYZ Brokerage use? a Exclusive Buyer Agency Only b Dual Agency in All In-House Transactions c Split Agency & Dual Agency d Split Agency but No Dual Agency

d. Split Agency but No Dual AgencyThis answer is correct. Correct! The Consumer Guide for Split Agency but No Dual Agency indicates that the brokerage will allow different licensees to represent a buyer client and a seller client in the same transaction, known as split agency, but will not allow the same licensee to serve as a dual agent and represent both clients.

Who would be considered exempt under the Civil Rights Act of 1866? a owner of a one to four family dwelling when he lives in one unit b owner of a single-family residence c private clubs renting to its members d There are no exemptions.

d. There are no exemptions. There are no exemptions under the Civil Rights Act of 1866. Racial discrimination is never acceptable.

A wealthy philanthropist owns some property that is zoned residential. He wants to donate the property for the construction of a charity hospital. Can a hospital be built on this property? a No, because area variances are illegal in Ohio. b No, because even a non-profit hospital is considered a commercial use, not a residential use. c Yes, because it is a nonconforming use. d Yes, if the zoning board or planning commission issues a conditional use permit for the project.

d. Yes, if the zoning board or planning commission issues a conditional use permit for the project Conditional uses are land usages that do not comply with the general zoning rules for its location, but are permitted there because they benefit the public good.

Depreciation is a always the result of external obsolescence. b always the result of functional obsolescence. c always the result of physical deterioration. d a loss in value for any reason.

d. a loss in value for any reason. Depreciation is a loss in value to property for any reason. That loss in value could be attributable to physical deterioration, functional obsolescence, or external (or economic) obsolescence.

Which of the following property transactions would NOT be exempt from federal fair housing laws (assuming that no broker was involved)? a a 6-unit residence owned by a church that will rent only to members of its faith b a cooperative building that will sell units only to persons who are at least 62 years old c the owner-occupant of a 4-unit apartment building who refuses to rent to families with children d a single-family home being sold by the owner who specifies "Whites Only"

d. a single-family home being sold by the owner who specifies "Whites Only" The only situation that would be subject to fair housing laws is the single family homeowner looking to limit tenants by race. As a protected class, race is NEVER exempt. Under the federal Fair Housing Act, however, the other situations would be exempt.

When determining the highest and best use of a property, the appraiser must take into account a characteristics of the land. b governmental regulations. c whether the current structure should be torn down. d all of the above

d. all of the above All of these factors should be considered when determining the highest and best use of the property.

One disadvantage to a lease/option agreement is that it a allows prospective buyers to occupy the property for an extended period of time before a commitment to buy is made. b can result in no sale (and no commission). c requires only a minimal cash investment from the tenant/prospective buyer. d all of the above

d. all of the above While a lease/option is a tool that could help someone make a purchase eventually, all of these are potential disadvantages from the perspective of the optionor (the seller). Allowing a prospective buyer to occupy the property without a firm commitment to buy is a disadvantage. Since the contract might not result in a sale, it is another disadvantage to the seller (as well as a real estate agent). This is the risk the optionor takes in exchange for what is likely to be only a minimal investment from the tenant. Of course, all of the issues that are disadvantages to the optionor are potential advantages to the tenant/prospective buyer.

All principal brokers a are bonded. b are REALTORS®. c must display the licenses of their salespeople. d must have a place of business to operate as brokers.

d. must have a place of business to operate as brokers. Principal brokers must maintain a definite place of business, with a sign indicating their status as a broker. The sign must be displayed outside of the brokerage office and be viewable by the public.

Which court has jurisdiction over the disposition of a will? a appeals b common pleas c municipal d probate

d. probate Probate is both the court of jurisdiction over estates and the process of proving the validity of a will.

In a judicial foreclosure, the debtor can get the property back through an act of a confirmation. b disintermediation. c non-judicial foreclosure. d redemption.

d. redemption. Debtors have the equitable right of redemption to regain property until confirmation of a foreclosure sale.

The implied covenant of quiet enjoyment in a lease a allows landlords to set limits on loud noises in the building. b is a promise that tenants will call landlords after business hours only in event of an emergency. c requires tenants to get permission from neighboring tenants to play music after 10 p.m. d restricts the landlord's right of entry to the property.

d. restricts the landlord's right of entry to the property. This is the correct answer. Incorrect. The answer is D. Privacy and the right of entry are part of the implied covenant of quiet enjoyment.

Each of these are social factors that may affect the real estate market EXCEPT a current trends in style. b demographic changes. c migration. d scarcity.

d. scarcity. Scarcity is a physical force that impacts real estate, while the rest are considered social factors.

Which site valuation method takes the total projected sales value of all lots and subtracts development costs to arrive at a land value? a allocation method b ground rent capitalization method c sales comparison method d subdivision analysis method

d. subdivision analysis method The subdivision analysis method is a method of valuing raw land that will become residential land for subdivision development, by taking the total projected sale value of all finished lots and subtracting out all costs of development.

A home developer has an existing mortgage for the purchase of land. If the new lender of a second construction mortgage wants to ensure that the second construction mortgage takes priority over the existing first mortgage, what type of clause must be contained in the construction mortgage? a acceleration clause b defeasance clause c power of sale clause d subordination clause

d. subordination clause A subordination clause in a contract gives a mortgage recorded at a later date the right to take priority over an earlier recorded mortgage.

The physical forces affecting real estate contribute to its value because a economies of scale will help those who buy more. b people can just move to a new area anytime they want. c a popular area will always remain popular and desired. d there is a limited supply that cannot be moved, destroyed, or created.

d. there is a limited supply that cannot be moved, destroyed, or created. Because property is immobile, indestructible, and unique, it has value by virtue of its existence.

Which type of evidence of title gives a homeowner or lender recourse if title defects are later discovered? a abstract of title b attorney's opinion c certificate of title d title insurance

d. title insurance Title insurance insures the policyholder against loss or damages from defects in the title. Title insurance offers the most protection to the homeowner or mortgagee.

Your role as a real estate salesperson in property held by an estate is a advisory. b probate avoidance. c to help the heirs to buy cheap. d to list property the executor or administrator has the power to sell.

d. to list property the executor or administrator has the power to sell. The tasks associated with the disposition of estates falls under the practice of law. As a real estate licensee, your role is to list property and market for your client, whether it's an administrator or executor.

Which may NOT be found in a metes and bounds legal description? a compass directions b monuments c point of beginning d township markers

d. township markers The metes and bounds system starts at an easily identifiable point of beginning (POB), then describes the property's boundaries in terms of courses (compass directions) and distances, ultimately returning to the POB. It may also refer to monuments, which are fixed physical objects used as reference points. Township markers are not an element of a metes and bounds legal description.

A residential landlord got rid of a bad tenant by shutting off the heat in January. That was legal a if the tenant was causing a problem that materially affects health and safety. b if the tenant was holding over after the lease expired. c only if the lease expressly stated the landlord had that right. d under no circumstances.

d. under no circumstances. A self-help eviction is when a landlord uses physical force, a lockout, or a utility shut-off to get rid of a tenant, instead of the legal process. Under the Landlords and Tenants Act, "self-help" provisions are strictly illegal on residential properties.

Blockbusting is an acceptable practice a only if the buyer and seller are notified and agree to participate. b only when approved by HUD or the Ohio Real Estate Commission. c under federal law but not under Ohio law. d under no circumstances.

d. under no circumstances. Blockbusting (also called panic selling or panic peddling) relates to selling and is defined as the practice of predicting the entry of minorities into a neighborhood, and stating or implying this will result in lower property values, higher crime rates, or other undesirable consequences. It is NEVER acceptable.

Which is NOT a valid time period for an estate for years? a April 1 to April 14 b May 1 to July 1 c April 1, 2018 to April 1, 2020 d until all inventory is sold

d. until all inventory is soldThis answer is correct. Correct! An estate for years simply means that there is a definite beginning and definite end date to the tenancy. It could be a week, a month, a year, etc. A condition such as the level of inventory would have no impact on an estate for years.

F moved out of his Toledo apartment when his lease was up, leaving his unit in perfect condition, beyond a little normal wear and tear. His landlord has ______ to return F's security deposit or give F an itemized statement describing any portion of the deposit the landlord intends retain. a 15 days b 30 days c 60 days d 90 days

Selected: b. 30 daysThis answer is correct. c. 60 days d. 90 days Correct! Within 30 days after a residential tenant moves out, the landlord must return the security deposit, or give the tenant a written itemized statement explaining why all, or part, of the deposit has been retained.

A property listed for $100,000 sold in a co-op transaction for $90,000. If the commission rate was seven percent and the brokerages split it evenly, how much did each company get? a $3,150 b $3,500 c $6,300 d $7,000

a. $3,150 The "whole" is the $90,000 selling price. The percent is actually 3.5% (half of the 7% commission). To find the commission amount, multiply the whole by the percent: $90,000 x .035 = $3,150.

A borrower wants an FHA loan for a home that costs $103,500 and appraised for $107,000. Estimated closing costs are $1,500. The borrower also wants to finance the initial MIP premium. The borrower has good credit, a six-figure income, and meets all other FHA standards. How much is the minimum investment the buyer must make to buy this home? a $3,622.50 b $3,667.78 c $3,745.00 d $5,122.50

a. $3,622.50 FHA requires a minimum investment of 3.5% of the sale price or the appraised value, whichever is lower. In this case, the borrower must pay a minimum of 3.5% of the sales price of $103,500, or $3,622.50.

Luther makes an offer of $105,000 on a house that was appraised for $112,000. If the seller accepts his offer, what is the minimum down payment to get an FHA-insured loan? a $3,675 b $3,920 c $5,250 d $5,600

a. $3,675 Most FHA-insured loans require a down payment of at least 3.5% of the home's purchase price or appraised value, whichever is less. So if the purchase price is $105,000, Luther would have to make a down payment $3,675 ($105,000 x .035).

Under Ohio law, a local government can require the property owner to submit a plat for approval whenever a piece of property is subdivided into a 2 or more lots, if any of the lots is smaller than five acres. b 10 or more lots, if all of the lots are larger than five acres. c 10 or more lots, if any of the lots is larger than five acres. d 25 or more lots, if all of the lots are smaller than two acres.

a. 2 or more lots, if any of the lots is smaller than five acres. A local government can require an owner to submit a plat if the property is being subdivided into two or more lots and any one of the lots is smaller than five acres. If all the lots are five acres or larger, a plat can be required if the subdivision will make it necessary to establish any new streets or access easements, or to widen or extend existing streets.

Which exemption to the Federal Fair Housing Act is recognized in Ohio? a lodging offered by nonprofit religious, fraternal, or charitable organizations b the Mrs. Murphy exemption c refusing to sell to someone whose family originated in Italy d the sale or rental of a single-family home by a private individual

a. lodging offered by nonprofit religious, fraternal, or charitable organizations Ohio does NOT recognize the federal exemptions for homeowners selling their own property or for those who live in one unit of a building with up to four units (Mrs. Murphy). Ohio does recognize the exemptions for lodging offered by nonprofit religious, fraternal, or charitable organizations, however.

Which of these unities is required for there to be tenancy in common? a possession b interest c time d title

a. possession The only unity required for tenancy in common is possession.

When may a person use the term REALTOR? a. After closing their first successful real estate transaction b. If the broker says it is OK c. After becoming a member of the National Association of Realtors d. As soon as they pass their Real Estate license exam

a. steady income Correct! Real Estate careers reward the licensee with income based upon productivity. Steady income is not the usual result.

In determining whether an item is a fixture, the most important test is a the intention of the annexer. b the relationship of the parties. c the size of the item. d whether it is physically attached to the realty.

a. the intention of the annexer. The Ohio Supreme Court indicated that the most important considerations are the intention of the annexer (the person who owned the item as personal property and brought it onto the real property) and the purpose of the annexation.

T tells B that he will buy her house. She tells him that she'll sell the house to him for $149,000, and they shake on it. This oral contract is MOST LIKELY a valid but unenforceable. b valid but voidable by B. c valid but voidable by T. d void.

a. valid but unenforceable. This oral contract would likely be unenforceable in a court of law since most states require that real estate sales contracts be in writing. It could be valid, however.

When is a borrower more likely to consider an adjustable rate mortgage (ARM)? a when interest rates are high b when interest rates are low c when they have a large down payment d when they have no down payment

a. when interest rates are high Generally, as interest rates rise, so does the popularity of ARMs.

A borrower wants to buy a $150,000 home, and plans to make a $15,000 down payment. The borrower is seeking a conventional loan but doesn't want to pay more than 6.5% interest. The lender agrees to make a 6.5% interest loan if it is discounted three points. How much will the lender will receive in points for making this loan? a $3,000 b $4,050 c $4,500 d $8,775

b. $4,050 The lender will receive three discount points, which are calculated based on the loan amount of $135,000 ($150,000 - $15,000). Each point is 1 % of the loan amount, so three points is $4,050: $135,000 x .03

A buyer is purchasing a home for $150,000. He will make a $25,000 down payment and will borrow $125,000 from a local savings and loan association. What will the amount of the transfer tax be? a $125 b $150 c $225 d $300

b. $150 Determine the transfer tax by dividing the sales price by $1,000: $150,000 / $1,000 = $150. The seller owes $150 in transfer taxes.

A comparable property which sold for $150,000 required $10,000 in upward adjustments and $5,000 in downward adjustments. What was the percent of total gross adjustments applied? a 5% b 10% c 17% d 20%

b. 10% There was a total of $15,000 in adjustments made ($10,000 up and $5,000 down) on a property that sold for $150,000. The percent of total gross adjustments, therefore, is 10% (15,000 / 150,000 = .10 or 10%.

What is the length of a building that has 15,000 cubic feet if the height is 15' and the width is 20'? a 30' b 50' c 75' d 100'

b. 50 Cubic feet is length x width x height. The height x width of this structure is 300 SF (15' x 20' = 300). Since you know the cubic feet, you can divide by 300 to find the unknown length: 15,000 ÷ 300 = 50'.

For which situation would the sales comparison approach be best? a a commercial building in a residential neighborhood b a condo in a complex with high turnover c a recently constructed building with custom features d a unique, octagon-shaped home in neighborhood of split levels

b. a condo in a complex with high turnover The sales comparison approach is ideal when there is recent sales data in the subject property's area. It's not suitable for special purpose properties or investment properties for which there are not recent sales data to analyze.

Potential gross income, less vacancy and collection losses is the a capitalization rate. b effective gross income (EGI). c gross rent multiplier (GRM). d net operating income (NOI).

b. effective gross income (EGI). PGI minus collection and vacancy losses gives you the effective gross income. From that, you must subtract expenses to get to net operating income.

Which is NOT an essential element for a valid and enforceable contract? a consideration b execution c legal purpose d mutual assent

b. execution The four essential elements for a valid and enforceable contract are mutual agreement, contractual capacity, lawful and possible objective, and consideration.

The margin is the difference between the a APR and the cost-of-funds index (COFI). b index value and the interest rate charged to the borrower. c value of the home and the amount borrowed. d none of the above

b. index value and the interest rate charged to the borrower. The interest rate on an adjustable rate loan is found by adding the agreed upon margin to the current index value.

The issue in a will contest is a the issue of holography. b the validity of the will. c whether the testator was married. d whether to appoint an ancillary trustee.

b. the validity of the will. When a will is contested, it is the validity of the will that is at question. Does it meet the requirements to be valid? It must be in writing, show testamentary intent, be signed by the testator and two disinterested witnesses, and signed by a testator who has testamentary capacity.

E has lived in a house on the lot behind T's property for 25 years, driving across T's vacant front property to get to the road without an easement. When T finally decides to build on that property, she puts a fence all around the perimeter, blocking E from the road. Other than an easement by necessity, what option might E have to travel from her property to the road? a easement by condemnation b easement by implication c easement by prescription d She has no other option.

c. easement by prescription E has been using that land for a very long time in an open and hostile way. She meets the state's 21-year requirement to request an easement by prescription from the court to continue to cross T's property.

What are the qualifying standards for FHA loans? a housing expense ratio: 28%; total debt service ratio: 33% b housing expense ratio: 28%; total debt service ratio: 36% c housing expense ratio: 31%; total debt service ratio: 43% d housing expense ratio: 36%; total debt service ratio: 28%

c. housing expense ratio: 31%; total debt service ratio: 43% The FHA allows a maximum housing expense ratio of 31% of stable monthly income and a maximum total debt service ratio of 43% of stable monthly income.

When the value of an additional feature is worth more than the actual cost of the item, this is an example of the law of a decreasing returns. b diminishing returns. c increasing returns. d none of the above

c. increasing returns. The law of increasing returns is an economic principle that says the added value of an additional feature, addition, repair, etc., is more than the actual cost of the item.

When using the sales comparison approach to arrive at an opinion of value, an appraiser a looks into the future to anticipate the home's appreciation. b looks at current prices of all homes on the market in a given neighborhood. c looks into the recent past to analyze similar sales. d looks into the past to see what an owner originally paid for a property.

c. looks into the recent past to analyze similar sales. The sales comparison approach looks at past sales that are similar to the subject property and that have recently sold in the area.

Gary has moved out of the country for his job and does not have time to deal with selling his house. He signs a statement granting best friend Louis the authority to list the house and negotiate with prospective buyers. Louis would most likely be considered a a general agent b implied agent c special agent d universal agent

c. special agent A special agent, also called a limited agent, has limited authority to perform a specific task or conduct a specific transaction. This is generally a short-term relationship.

Lois and Clark are married and decide to buy some investment property together. Lois wants to make sure that if she dies, her daughter from a previous marriage will be able to inherit her interest in the property. How should Lois and Clark take title to the property? a joint tenants b tenants by the entirety c tenants in common d tenants in severalty

c. tenants in common Tenancy in common allows one co-owner to transfer his or her share of the property to others by deed or through a will.

A buyer is purchasing a home for $100,000 and will finance it with a VA loan. If the lender is charging three points, how much will be owed in points? a. $1,000 b. $1,500 c. $2,000 d. $3,000

d. $3,000 Each point is 1% of the loan amount: $100,000 x .01 = $1,000. Three points will cost $3,000 ($1,000 x 3).

A real estate property manager must a. be certified in property management. b. join the local Building Owners and Managers Association. c. be knowledgeable in real estate, and may be voluntarily certified. d. be licensed.

d. be licensed.This answer is correct. Correct! Managing property of others for a fee requires a real estate license in the state of Ohio.

Which is NOT part of an arm's length transaction? a buyer and seller are acting in their own best interest b buyer and seller are not related c buyer and seller are reasonably informed about the property and its uses d buyer and seller have agreed upon payment terms for a land contract

d. buyer and seller have agreed upon payment terms for a land contract An arm's length transaction is one that occurs under typical conditions in the marketplace, with each of the parties acting in their own best interests, meaning that they are reasonably informed and are unrelated. A land contract, which is a form of seller financing, is not a typical transaction.

The age that a building appears to be based on wear and tear from physical, functional, or external obsolescence is its a accrued age. b actual age. c chronological age. d effective age.

d. effective age. The effective age indicates how old the building appears to be.

A conventional loan a follows the secondary market's underwriting guidelines. b has an adjustable interest rate. c has normal seller financing terms. d is not insured or guaranteed by any government entity.

d. is not insured or guaranteed by any government entity. A conventional loan is any loan not insured or guaranteed by a government agency.

Which alternative form of dispute resolution attempts to reach a negotiated settlement and avoid a trial? a arbitration b injunction c litigation d mediation

d. mediation Mediation is the process whereby cases already filed with the court are moved forward by referring certain matters to a court referee who holds a conference to facilitate a voluntary settlement of the case.

A novation is a(n) a amendment to a contract. b assignment of a contract. c assumption of a contract d new contract.

d. new contract. This answer is correct. Novation occurs when one party to a contract withdraws and a new party is substituted. For all intents and purposes, therefore, it is a new contract and the original party is relieved of any liability.

John has been a licensed salesperson for 10 years. His license expires every three years a at the end of the state fiscal year. b on December 31. c on the date his license was originally issued. d on his birthday.

d. on his birthday Correct! All real estate licenses expire on the licensee's birthday every three years.

Of these types of deeds, which would most likely be used to clear a cloud on a title, such as a misspelled name? a bargain and sale deed b fiduciary deed c limited warranty deed d quitclaim deed

d. quitclaim deed Quitclaim deeds convey any interest in real estate a grantor may have at the time the deed is executed. It could be used to clear a cloud on the title such as a misspelled name on a deed.

The act of pooling mortgages, then selling them as mortgage-backed securities is known as a disintermediation. b hypothecation. c Intermediation. d securitization.

d. securitization. Securitization is the act of pooling mortgages, then selling them as mortgage-backed securities, which is what happens in the secondary mortgage market.

In a particular suburb of a city, all of the fast food signs are at least 20 feet from the road and no more than 10 feet high. This is a result of a building codes. b subdivision regulations. c variances. d zoning ordinances.

d. zoning ordinances.This answer is correct. Correct! Zoning ordinances set forth the type of use permitted under each zoning classification and specific requirements for compliance.

Governments (local, state, or federal) can control or restrict private land use and have an influence on real estate markets through a adverse possession. b guaranteeing loans to veterans. c taxation. d zoning restrictions and building codes.

d. zoning restrictions and building codes. Zoning determines what the use of the land will be, which can affect its values.

A home is appraised at $125,000 and the assessment level is 35%. There are a total of 40 mills in the taxing area. What are the annual taxes? a $1,750 b $1,853 c $2,361 d $3,215

a. $1,750 First, find the assessed value: $125,000 x .35 = $43,750. Find the cost of each mill by dividing the assessed value by 1,000: $43,750/ 1,000 = 43.75. Finally, multiply the cost of each mill by total mills: 43.75 x 40 = $1,750

Annual property taxes are $1,776. If closing is on May 1, what is the seller's portion? a $588.75 b $623.40 c $628.60 d $1,484.07

a. $588.75 First, find the daily rate: $1,776 / 365 = $4.8657. Then determine the number of days that the seller lived in the house: 31 (January) + 28 (February) + 31 (March) + 30 (April) + 1 (May) = 121 days. Then, multiply the number of days by the daily rate to find the seller's portion: 121 x $4.8657 = $588.749, or $588.75 rounded to the nearest penny.

T takes out a $230,000 loan on a straight note at 4.5% for 10 years. What is his monthly payment? a $862.50 b $1,035.00 c $1,916.67 d $2,002.92

a. $862.50 Multiply the whole, which is the principal amount of the loan, by the rate, which is the percentage rate of 4.5%, or 0.045: $230,000 x 0.045 = $10,350, then divide by 12 to find the monthly payment of $862.50.

Continuing education for active salesperson licensees under the age of 70 requires students to take a 3 hours of core law, 3 hours of civil rights law, and 3 hours of ethics as part of the 30-hour requirement. b 10 hours of post-licensing training within six months of licensure. c 30 hours of education every five years. d classes at a two-year college or university.

a. 3 hours of core law, 3 hours of civil rights law, and 3 hours of ethics as part of the 30-hour requirement. All active salesperson licensees under age 70 must complete 30 hours of CE every three years, including 3 hours of legal issues, 3 hours of civil rights updates, 3 hours on the "Canon of Ethics," and the 21-hour balance of approved CE electives.

Which situation is LEAST LIKELY to represent a conflict of interest? a Alex is a disclosed dual agent, representing both buyer and seller. b Kaye is a buyer's agent whose commission is based on the sales price of the home. c Paul is showing his buyer client a house that is owned by his co-worker. d Susan is negotiating the purchase of a home for her client, who is also her sister.

a. Alex is a disclosed dual agent, representing both buyer and seller.This answer is correct. Correct! Dual agency should not be a conflict of interest if it is disclosed and the licensee adheres to the agency law provisions regarding the duties of a dual agent. Alex is obligated to remain completely neutral in this transaction, however.

Listing broker Allie has found a ready, willing, and able buyer for Jay's house. When Jay sees that the buyers are from another country, he refuses to sell. Which statement is TRUE? a Allie could sue Jay for the commission. b The buyers could file a complaint against Allie. c Jay is guilty of redlining. d Jay is within his rights to refuse, as he's selling a single-family home.

a. Allie could sue Jay for the commission. If the seller refuses to go through with a transaction because of the buyer's race, religion, ethnic background, etc., she may sue the seller for the commission. Transactions involving a licensee are never exempt, and a single-family homeowner is not exempt in Ohio. Allie is not the one discriminating, so she's not liable.

John's house has asbestos coating the water pipes. What does he need to be concerned about? a Asbestos can contaminate the house further if removal is done improperly since airborne particles are the issue. b Asbestos is dangerous only when wet and therefore should be encapsulated in waterproof material. c Asbestos is inexpensive to remove. d Removal is required if asbestos is found in a residential property.

a. Asbestos can contaminate the house further if removal is done improperly since airborne particles are the issue. Since asbestos is dangerous when inhaled, its removal can contaminate the house if not done properly. That is why it is expensive to remove.

When salesperson Jack terminates his association with broker Barry, what happens to Jack's license? a Barry must immediately return Jack's license to the Superintendent of the Division of Real Estate and Professional Licensing. b Barry must immediately give Jack his license, and then Jack has 10 days to return it to the Superintendent of the Division of Real Estate and Professional Licensing. c Barry must return Jack's license to the Superintendent of the Division of Real Estate and Professional Licensing within 10 days. d Jack must immediately return his license to the Superintendent of the Division of Real Estate and Professional Licensing.

a. Barry must immediately return Jack's license to the Superintendent of the Division of Real Estate and Professional Licensing. Immediately upon the salesperson's leaving the broker or termination of a real estate salesperson's association with the broker, the broker shall return the salesperson's license to the Superintendent of the Division.

Mary, Donna, and Meg have a statutory survivorship tenant in a vacation home. Mary and Meg are killed in a car accident. What is Donna's interest in the property? a Donna owns the property in severalty. b Donna is a joint tenant with 100% interest. c Donna still owns 33%, and the rest is split between the heirs of Mary and Meg. d The estate ends at the death of the majority of the co-owners.

a. Donna owns the property in severalty. Donna is now the sole owner, which means that she owns the property in severalty.

Which prevents senior citizens from being discriminated against in the loan process? a Equal Credit Opportunity Act b Federal Fair Housing Act c Real Estate Settlement Procedures Act d Regulation Z

a. Equal Credit Opportunity Act The ECOA prohibits discrimination in lending based on age.

Which agency helps to even out the money supply for mortgage loans? a Fannie Mae b FHA c FHFA d HUD

a. Fannie Mae As a secondary market participant, Fannie Mae helps to even out the supply of funds for mortgage loans.

Conforming loans follow the guidelines of a Fannie Mae/Freddie Mac. b the FHA. c RESPA. d the VA.

a. Fannie Mae/Freddie Mac. In an earlier module, you learned that conforming loans follow the guidelines of secondary market leaders Fannie Mae and Freddie Mac.

Which is NOT an official reporting option specified by USPAP? a Narrative Report b Restricted Use Report c Self-Contained Report d Summary Report

a. Narrative Report Report options permitted under the Uniform Standards of Professional Appraisal Practice (USPAP) are the Self Contained Appraisal Report, Summary Appraisal Report, and Restricted-use Appraisal Report.

Jane is a licensed salesperson who works for XYZ Realty Inc. As such, Jane would be considered what type of agent of the employing broker? a She is a general agent. b She is a special agent. c She is a universal agent. d She is not an agent of the employing broker.

a. She is a general agent. A real estate salesperson is actually a general agent of his or her employing broker. The employing broker, the principal in that employment relationship, gives general authority to his agents to conduct real estate business.

A home is appraised at $130,000 and is insured for 80% of value. The premium for two-year coverage is $5 per thousand. The seller purchased and paid for the two-year policy on August 1, 2014. The property has been sold and will close on May 15, 2016. Calculate the seller's credit. a. $27.78 b. $54.85 c. $137.12 d. $205.15

b. $54.85 First, find out the premium cost. The house is insured at 80% of value: $130,000 x .80 = $104,000. The premium is $5 per thousand, so: $104,000 ÷ 1,000 = 104; then multiply by cost: 104 x $5 = $520. This is the premium for a two-year policy. Next, determine the annual cost: $520 ÷ 2 = $260. Then find the daily rate: $260 ÷ 365 = 0.7123. Next, determine the number of days that the buyer will take advantage of this prepaid policy: May=16 + Jun=30 + Jul=31 is 77 days. Finally, multiply the days by the daily rate: 78 x 0.7123 = $54.85 (rounded). The seller will be credited $54.85 at closing.

How many business days after a borrower submits a loan application must the lender disclose the annual percentage rate? a 2 days b 3 days c 5 days d 10 days

b. 3 days Lenders must disclose the APR and an estimate of other closing costs in the Loan Estimate form within three business days after the submission of a loan application.

What is the minimum down payment requirement for an FHA-insured loan? a 2.5% b 3.5% c 5% d There is no down payment required.

b. 3.5% The FHA will insure loans with a loan-to-value of up to 96.5%, meaning, they require a down payment of at least 3.5%.

A listing broker knew a termite infestation had caused structural damage but told the buyer, "You don't have to worry about termites here. This house is solid." The buyer signed a contract that included an "as is" clause. He discovered the termite damage when he moved in and sued. The broker a can be held liable because the "as is" clause is void in all real estate transactions. b can be held liable because her statements to the buyer were fraudulent. c cannot be held liable because her statements were merely an opinion. d cannot be held liable because of the "as is" clause.

b. Actual fraud is intentional and constructive fraud is unintentional. Actual fraud is also when a person actively hides information, or makes statements known to be false or misleading. Constructive fraud, on the other hand, is a negligent misrepresentation or concealment of a material fact.

Which statement about objections is FALSE? a Asking open-ended questions may reveal the reason behind an objection. b An objection is a person's rejection of another person's position. c An objection is an opportunity to provide additional information. d An objection may identify a genuine concern or just be a smokescreen.

b. An objection is a person's rejection of another person's position. An objection is not a rejection: It is an opportunity to respond. The other statements are true.

Under the Ohio Civil Rights Law, complaints relating to housing discrimination are handled by the a Ohio Board of REALTORS®. b Ohio Civil Rights Commission. c Ohio Fair Housing Council. d U.S. Department of Human Rights.

b. Ohio Civil Rights Commission. A person who has been discriminated against in violation of the Ohio Civil Rights Law may file a charge with the Ohio Civil Rights Commission. The charge must be in writing and under oath.

A 1.75 acre lot sells for 40 cents per square foot. What is the selling price? a $17,424 b $21,780 c $30,492 d $76,230

c. $30,492 A 1.75 acre lot has 76,230 square feet (1.75 x 43,560). At 40 cents per square foot, the selling price is $30,492.

H has been using a remote cabin in Hocking County during deer hunting season for years, without the knowledge of the property owner. In order to claim title to the cabin, H would have to occupy it in an open and hostile manner for at least how many years? a 7 b 15 c 21 d 30

c. 21This answer is correct. d. 30 Correct! In Ohio, possession and use of property can mature into title if the claimant's possession is continuous for more than 21 years.

John purchased a property for $125,000 and received an 80% loan. He paid $3,000 for points. How many points did John pay? a 1 point b 2 points c 3 points d 4 points

c. 3 points First, determine the loan amount, which is the "whole": $125,000 x .80 = $100,000. The "part" is $3,000. To find the percent, divide the part by the whole: $3,000 / $100,000 = .03 or 3%. Since each point is 1% of the loan, we know that John paid 3 points.

Darlene is getting an FHA-insured loan to purchase a house. The purchase price is $278,000, and she's paying 3.5% down. She will have to pay an upfront mortgage insurance premium of $4,865, which will be financed as part of the loan. What is the loan-to-value on this loan? a 93.50% b 94.75% c 96.50% d 98.25%

c. 96.50% She's paying 3.5% down, so the loan-to-value is 96.5% (100% - 3.5% = 96.5%). The UFMIP does NOT figure into the loan-to-value, whether she finances it or pays it in cash at closing.

Alice sued Betty for breach of contract, claiming $175,000 in damages. Which kind of state court did Alice file suit in? a Circuit Court of Appeals b County Court c Court of Common Pleas d Municipal Court

c. Court of Common Pleas Any case in which the amount in controversy is more than $15,000, the case is heard in the court of common pleas. The court of common pleas also hears any case involving real property foreclosure, a real estate contract, or other areas that are beyond the municipal or county court's jurisdiction.

Which is the largest secondary market participant? a Federal Home Loan Mortgage Corporation b Federal Housing Administration c Federal National Mortgage Association d Government National Mortgage Association

c. Federal National Mortgage Association Fannie Mae is the nation's largest investor in residential mortgages.

Jane and Paul are licensees who are working for broker Evan. Buyer Maggie has no purchaser agency agreement. Jane shows a house to Maggie, then submits Maggie's offer to purchase to Paul, who is the designated agent for the seller. Which of these statements is TRUE? a Broker Evan is a dual agent. b Jane can tell Maggie that the seller is desperate to sell. c Jane is not obligated to advise and assist Maggie during contract negotiations. d Jane must protect the best interests of her client Maggie.

c. Jane is not obligated to advise and assist Maggie during contract negotiations. This answer is correct. Correct! If Maggie didn't sign a purchaser agency agreement, she is simply a customer. No one in Evan's agency has an obligation to provide Maggie with the services due a client, such as assisting in negotiations.

Madge files a lawsuit against licensee Louie for breach of contract. Who has the burden of proof at trial? a Louie b Louie's broker c Madge d Real Estate Commission

c. Madge The plaintiff has the burden of proof in most cases. Madge must, therefore, offer evidence in support of her claim.

Which is an example of steering? a Agent Tom tells homeowners that their property values will drop when an immigrant family moves in. b Mortgage banker Brad refuses to make loans for a particular inner city neighborhood. c Property manager Amy suggests Jake would be happier in a more diverse building. d Seller Oscar tells his listing agent to find only Caucasian buyer prospects.

c. Property manager Amy suggests Jake would be happier in a more diverse building. Steering relates to buyers or renters and is defined as channeling prospective buyers or renters to or away from specific neighborhoods.

______ is what property is expected to sell for; ______ is what the property actually sold for. a Cost / price b Price / value c Value / price d Value / cost

c. Value / price Market value is what property is expected to sell for; market price is what the property actually sold for.

Joan is selling her home. She needs to pay off a $65,000 first mortgage, a $15,000 second mortgage, and wants $10,000 in cash for herself. If her closing costs will total $1,200 and she must pay a seven percent commission, how much must she sell the property for? a $84,816.00 b $85,887.85 c $97,584.00 d $98,064.52

d. $98,064.52 First, determine how much she needs to cover her costs and desired cash: $65,000 + $15,000 + $10,000 + $1,200 = $91,200. Since she's paying a 7% commission, you next divide the costs by 93% to find the minimum selling price: $91,200 ÷ .93 = $98,064.52.

Marian has an adjustable rate mortgage loan that has an initial interest rate of 4%. The margin on the loan is 2%. If the index is 5% in the second year, what is the interest rate charged to Marian? a 4% b 5% c 6% d 7%

d. 7% The interest rate adjusts up and down based on the index, but the margin remains the same (2%). If the index is 5% interest rate, add the margin to find the interest rate: 5% + 2% margin = 7% interest charged.

For the loan described above, what is the highest rate the borrower would ever have? A borrower secures a 5/1 ARM for $152,000. The initial interest rate is 4.5%, but after five years, the rate will go to the LIBOR index (currently at <1% plus 3% margin). The interest rate will be adjusted annually. Rate caps are 2% per year and 5% over the life of the loan. What's the highest the rate can be at the beginning of the sixth year?

d. 9.5% There's a 4.5% start rate and the lifetime cap is 5%. Therefore, the highest rate the borrower would ever have is 9.5%.

Calculate the number of acres in the parcels described as the N 1/2, NW 1/4, and the SW 1/4, NW 1/4, NE 1/4 of Section 33. a 10 acres b 50 acres c 80 acres d 90 acres

d. 90 acres There are two parcels. The first is N 1/2, NW 1/4: 640 ÷ 2 ÷ 4 = 80 acres. The second parcel is SW 1/4, NW 1/4, NE 1/4: 640 ÷ 4 ÷ 4 ÷ 4 = 10 acres. Add them together to find the total acreage: 80 + 10 = 90 acres.

Which offense is LEAST LIKELY to be considered a civil case? a Ann backed out of a sales contract and refused to release the earnest money to the seller. b Bob died and his relatives are fighting over the disposition of his 20-acre farm. c Carla negligently changed lanes on the freeway, causing an accident. d Dave embezzled $30,000 from his broker's trust account.

d. Dave embezzled $30,000 from his broker's trust account. Embezzlement is a criminal offense. The other cases would be civil: Ann's case relates to contracts; Bob's case is a property case; and Carla's case would be considered a tort.

Kim is a licensee at ABC Brokerage. She tells licensee Lou, who sits at the next desk, that her client is desperate to sell because he's being transferred. What is the impact of Kim sharing this confidential information? a ABC Brokerage cannot represent a potential buyer. b ABC's broker now becomes a dual agent. c Kim is in violation of Ohio agency law. d Lou is considered an agent of the seller.

d. Lou is considered an agent of the seller.This is the correct answer. The answer is D. Any licensee affiliated with the brokerage who receives confidential information from an agent of the client is also considered an agent of that client.

Regulation Z implements what federal lending law? a CRA b ECOA c RESPA d TILA

d. TILA The Truth in Lending Act, which requires lenders to disclose the actual/total costs involved in acquiring credit, is implemented by Regulation Z.

A stigmatized property a is irrationally shunned by an uneducated buyer. b is one that may be undesirable to some people because of a past event. c need not be disclosed to a potential buyer by the real estate agent. d should be avoided at all costs.

. is one that may be undesirable to some people because of a past event. Stigmatized properties are undesirable due to a past event(s), like properties where a crime took place or which had a past environmental hazard. Depending on the stigma, an agent may be required to disclose it.

Which is LEAST LIKELY to be an example of an illegal kickback under RESPA? a ABC Brokerage allows XYZ Title to use its downtown offices to conduct closings as a convenience to downtown clients. b Every month, PDG Title Company pays for a one-page ad in the local newspaper for the real estate brokerage that sends them the most referrals. c Home inspector H gives broker K tickets to a football game to thank him for the business he's sent his way this year. d XYZ Mortgage puts a link to ABC Realty's website on its website in exchange for ABC sending buyer clients their way.

a. ABC Brokerage allows XYZ Title to use its downtown offices to conduct closings as a convenience to downtown clients. There's no implication that the arrangement between XYZ Title and ABC Brokerage includes any kickback for referrals. The other examples are clear violations of Section 8 of RESPA.

Pat is buying a house from Terry, subject to an existing mortgage. What will happen if Pat cannot make the payments? a The lender will sue Pat to try and collect the debt because buying the house subject to the existing mortgage was the same as an assumption. b Pat will lose the equity in the home, but will not be liable to repay any other money for the debt. c Pat will lose the house and have to pay the entire debt. d Since Pat bought the house subject to the existing mortgage, the old mortgage is of no concern and Pat can continue to live there.

Selected: b. Pat will lose the equity in the home, but will not be liable to repay any other money for the debt. Correct! Since this is a subject to purchase, Terry remains liable on the mortgage. Pat will lose credit for her payments and any potential equity, but is NOT liable on the underlying debt, as she was not a party to that contract. She is liable only to Terry.

If the net operating income is $40,000 and the capitalization rate is 16%, what is the value of the property? a $250,000 b $400,000 c $640,000 d $1,040,000

a. $250,000 Remember the IRV formula: Income / Rate = Value. In this case: $40,000 / .16 = $250,000.

X agrees to build Q a house for $250,000, but before construction begins, X breaches the contract in order to take on a more profitable job. Q has to hire another builder, who charges her $285,000. Q sues X for breach of contract and wins. The court will probably award Q a $35,000 in compensatory damages. b $250,000 in punitive damages. c rescission and $35,000 in punitive damages. d specific performance.

a. $35,000 in compensatory damages. The extra cost of $35,000 would like be compensatory damages to repay the plaintiff for the harm caused when the other party breached the contract. The reward is generally intended to put the non-breaching party in the same position she would have been in if the other party had fulfilled the terms of the contract.

The Jones family is buying a home for $105,000 and it appraised for $102,000. On an $80,000 loan, six points is equal to a $4,800. b $4,896. c $6,120. d $6,300.

a. $4,800. A point is equal to 1% of the loan amount, so $80,000 x .06 = $4,800.

Which statement about VA-guaranteed loans is FALSE? a Applicants must have a service-connected disability to qualify. b Loan approval can be made only for veterans with an honorable discharge. c The loan proceeds must be used for the purchase of an owner-occupied residential property. d The veteran must have a certificate of eligibility.

a. Applicants must have a service-connected disability to qualify. Any veteran who meets the requirement for time in the service and who was honorably discharged is eligible for a VA-guaranteed loan. These loans are not only for those with a service-connected disability.

X and Y are neighbors. Y cannot stand Spanish tile roofs, so he asks X to promise never to put a tile roof on her house. Y pays X $200 and X signs a binding agreement, but Y does not record it. Later, X sells her house to B. B can put a tile roof on the house because a B did not have notice of the restriction. b private restrictions that control the appearance of buildings are unenforceable. c restrictive covenants do not run with the land. d the tile roof will not lower the value of the neighboring property.

a. B did not have notice of the restriction. The best answer is that B did not have notice of the restriction if it was not recorded in the public record. If drawn up correctly, a restrictive covenant can run with the land and can be enforceable with regards to the appearance of the property.

A borrower applying for a VA loan must provide a a Certificate of Eligibility and DD-214. b Certificate of Value. c military ID card. d referral from a superior officer.

a. Certificate of Eligibility and DD-214. Borrowers on VA-guaranteed loans must be prepared to provide a Certificate of Eligibility and a DD-214 (discharge papers).

Which statement regarding the Ohio Real Estate Commission is TRUE? a. It consists of five members appointed by the Governor. b. It investigates written complaints against licensees. c. It is run by the Superintendent who is appointed by the Governor. d. It promotes a code of ethics.

a. It consists of five members appointed by the Governor. Correct! There are five members of the Ohio Real Estate Commission: Four real estate licensees and one non-licensed member. They are appointed by the Governor. The other statements are false. It is the Canon of Ethics that the Real Estate Commission promotes. It does not have the authority to investigate complaints; that tasks belongs to the Division of Real Estate, which we'll look at shortly. The Commission does not have an appointed Superintendent, although the Division of Real Estate does.

Rick was the buyer's agent for Tom, whose offer for Jim's house was countered at $5,000 below list price. This was still more than Tom wanted to pay. Tom finds another house and buys that instead. Now Rick is a buyer's agent for Harry, who wants to make an offer on Jim's house. Can Rick tell Harry that Jim would accept $5,000 below list? Why or why not? a No, Tom's negotiations with the seller are confidential. b Yes, Rick has no fiduciary obligation to seller Jim. c Yes, Rick must act in Harry's best interest. d Yes, Rick's relationship with Tom was over when he found another house.

a. No, Tom's negotiations with the seller are confidential.This is the correct answer. Incorrect. The answer is A. The details of client Tom's negotiations with the seller are confidential information. That fiduciary obligation never ends unless Rick is given written permission to divulge that.

_________ cost is more commonly used because ____________. a Replacement / most of the time, a similar building is an acceptable, less expensive alternative. b Replacement / people are always interested in replacing a damaged home with one that is exactly like their old one. c Reproduction / most of the time, a similar building is an acceptable, less expensive alternative. d Reproduction / people are always interested in replacing a damaged home with one that is exactly like their old one.

a. Replacement / most of the time, a similar building is an acceptable, less expensive alternative. Usually, cost estimates are performed for replacing a building with one that's of similar size and utility. Most of the time, a similar building is an acceptable, less expensive alternative.

Which situation would MOST LIKELY result in the suspension of a broker's license by the Ohio Real Estate Commission? a The broker has committed a second fair housing offense. b The broker has committed a fourth fair housing offense. c The broker pled no contest to the first fair housing complaint filed against him in court. d Checkers from HUD filed a third fair housing complaint against the broker.

a. The broker has committed a second fair housing offense. For a second offense, the Commission must suspend the license for a minimum of two months. If there are any subsequent offenses, the license must be revoked: Suspension is no longer an option. If it is the licensee's first offense, the licensee must have been found guilty of a violation by a court before his license could be suspended. Also, the rules do not apply if the case involves checkers from a fair housing organization instead of real buyers, sellers, or renters.

Which lease does NOT have to be in writing? a a month-to-month lease for a single-family home b a one-year lease that will begin immediately and has an option to renew for one additional year c a one-year lease that will begin in three weeks d a two-year commercial lease with no option to renew

a. a month-to-month lease for a single-family home To comply with the statute of frauds, a lease must be in writing if it will last for more than one year, or if it will expire more than one year after the date on which the parties agreed to it. A lease for a periodic tenancy, also known as a month-to-month tenancy, does NOT have to be in writing.

Which property transaction would most likely be EXEMPT from fair housing laws in Ohio (assuming that no real estate licensee was involved)? a a two-unit apartment owned by a church that will rent only to members of its faith b the owner-occupant of a four-unit building who refuses to rent to families with children c a single-family home being sold by the owner who advertises "No Foreigners" d a woman who lives in one half of the duplex she owns who only rents to other women

a. a two-unit apartment owned by a church that will rent only to members of its faithT The only situation that would be exempt from fair housing laws in Ohio is the church apartment. Under both federal and state law, religious organizations or affiliated nonprofit organizations may limit occupancy, or give preference, to their own members—provided membership is not restricted on the basis of race, color, or national origin. While federal allow does allow some exemptions for home owners and owner-occupants of buildings with four or fewer units (except race-based discrimination), Ohio does not recognize those exemptions.

The term describing the conversion of personal property to real property is a annexation. b appropriation. c capture. d platting.

a. annexation. Annexation is the process of taking an item of personal property and bringing it onto real property, thereby making it a part of the real property. For example, when a chandelier is purchased and carried home in a box, it is personal property. Once it is installed, it becomes real property though the process of annexation.

An apparent agent is one who a appears to be the agent of another, but does not have actual authority. b appears to be working for the buyer instead of the seller. c has actual authority from the principal. d has implied authority from the principal.

a. appears to be the agent of another, but does not have actual authority. Apparent agency occurs when someone who has not been authorized to represent another acts as if she is that person's agent.

Each of these terms could be used to describe a tractor EXCEPT a appurtenance. b chattel. c personal property. d personalty.

a. appurtenance. An appurtenance is a right that goes along with ownership of real property. The other choices are synonymous terms to describe moveable property that is not attached to the land.

A licensee who tells homeowners that property values are declining because the ethnic or racial makeup of the neighborhood is changing could be found guilty of a blockbusting. b disclosure. c steering. d stigmatizing.

a. blockbusting. Blockbusting is defined as inducing or attempting to induce, for profit, any person to sell or rent property based on representations made regarding entry into the neighborhood of persons in a protected class. Blockbusting is also referred to as panic selling or panic peddling.

Derrick purchased a fee simple interest in a house on the lake with an 8% interest in the parking area, recreation center, laundry room, and docks. What kind of ownership interest did Derrick buy? a condominium b cooperative c syndicate d timeshare

a. condominium Derrick has exclusive ownership of his cottage and a shared interest in the common areas of the condominium complex.

A debtor has an equitable right of redemption until which event? a confirmation of sale issued b foreclosure action filed c order of execution issued d sheriff's deed issued

a. confirmation of sale issued The debtor can redeem (save) the property from the time the foreclosure action is brought up until the confirmation of the foreclosure sale. This is done by paying the court what is due, which may include court costs and attorneys' fees. Once the redemption is made, the court will set aside the sale, pay the parties, and the debtor gets title to the property again.

Which is NOT a necessary element for a valid and enforceable contract? a consequence b contractual capacity c lawful and possible objective d mutual agreement

a. consequence Consideration, not consequence, is another essential element for a valid and enforceable contract, as is offer and acceptance, of course.

The term "steering" refers to a directing customers to different listings based on their race or ancestry and the racial or ethnic composition of the neighborhoods. b directing customers toward affordable property, based on their income and assets. c giving minority customers special treatment as a form of affirmative action. d refusing to accept listings from members of a particular minority group.

a. directing customers to different listings based on their race or ancestry and the racial or ethnic composition of the neighborhoods. Steering relates to buyers or renters and is defined as channeling prospective buyers or renters to specific neighborhoods based on their race (or religion, national origin, or other protected class) to maintain or change the character of a neighborhood.

A nonpossessory interest in real property is also called a(n) a encumbrance. b leasehold estate. c license. d servient tenement.

a. encumbrance. Nonpossessory interests are also called encumbrances, since they encumber or burden the title or use of the land.

Licensee Jake was hosting an open house for a seller client of his brokerage. Lucy went to the open house. She expresses interest in the property but declines to enter into an agency relationship. What duty does Jake owe to buyer customer Lucy? a fairness b loyalty c obedience d none, she is not his client

a. fairnessThis answer is correct. Correct! Even though Jake is not Lucy's agent, he still owes her fairness and good faith as a customer.

The Federal Fair Housing Act prohibits discrimination against a families with children. b people more than 55 years old. c students. d unmarried couples.

a. families with children. The familial status provision of the Federal Fair Housing Act prohibits discrimination against someone who is a parent or guardian with custody of a child under 18 years old.

The term "amenities," in reference to real property valuation, refers to the a features, both tangible and intangible, that enhance the desirability of real estate. b increase in the value of property, either due to a positive improvement of the area or elimination of negative factors. c valuation placed on real property that is the basis for the amount of tax levied. d value of real property, established for purposes of computing taxes.

a. features, both tangible and intangible, that enhance the desirability of real estate. Amenities, including a historically desirable location, preferred floor plan, or anything with value to a buyer, enhance the desirability of the real estate.

The Real Estate Settlement and Procedures Act (RESPA) covers buying a a first home. b share of a shopping center. c small restaurant. d storage warehouse.

a. first home. RESPA applies to purchases of 1- to 4-unit residential property.

Tenancies by the entireties a automatically confer dower rights. b is illegal in Ohio c cannot exist in common law marriage. d may be formed by two consenting adults.

a. goes to his heirs. Tenants in common do not have the right of survivorship. If one dies, his interest in the property goes to his heirs, not the other co-owners, unless, of course, Ted had named them in his will as heirs.

"S 1/2 of NW 1/4" represents which type of legal description? a government survey system b lot and block system c metes and bounds system d none of the above

a. government survey system A legal description using the government survey system starts from the end of the description and works backwards. This example indicates the upper left corner of the section (the northwest), and then the bottom half (south) of that quarter.

Under a novation, the original party a is relieved of liability. b remains primarily liable. c remains secondarily liable. d shares liability equally with the new party.

a. is relieved of liability. Novation occurs when one party to a contract withdraws and a new party is substituted, relieving the withdrawing party of liability.

A forcible detainer or unlawful detainer action is a lawsuit brought by a a landlord against a tenant to evict the tenant. b landlord against a tenant who removes fixtures at the end of the lease. c tenant against a landlord who does not refund a security deposit. d tenant against a landlord who wrongfully refuses to perform repairs.

a. landlord against a tenant to evict the tenant. A forcible entry and detainer action is a lawsuit filed by a landlord to evict a defaulting tenant and regain possession of the property.

Which may NOT be held liable for housing discrimination? a landlord who will not rent to a drug addict b multiple listing service c real estate licensee d seller who will not sell to Catholics

a. landlord who will not rent to a drug addict Someone who is addicted to drugs is not a member of a protected class, therefore, a landlord who choose not to rent to a drug addict is not in violation. The other instances, however, are examples of actions that could result in liability for violating state and federal anti-discrimination laws.

Life insurance companies prefer making loans for a large-scale commercial real estate projects. b resale to the secondary market. c short-term business purposes. d single-family homes.

a. large-scale commercial real estate projects. An insurance company is more likely to make loans for large-scale commercial real estate projects.

Your client Rob is selling his lakefront cottage. On one side of the property, Rob tells you, he discovered an old underground storage tank when doing some landscaping. He left it alone and planted ground cover in that part of the yard. What type of defect would this be considered, and is Rob required to disclose it? a latent defect; must disclose b latent defect; not required to disclose c patent defect; must disclose d patent defect; not required to disclose

a. latent defect; must disclose This is a latent, or hidden, defect. If Rob knew about it but does not disclose it, he could be held liable and the buyer might be able to recover damages. Either way, the buyer would most likely be able to rescind the contract.

Of these, which agency termination is due to operation of law? a The listing broker abandons the seller before the listing period ends. b The listing broker does not find a buyer before the listing period ends. c The listing broker sells the house. d The seller dies before the listing period ends.

a. latent defect; must discloseThis answer is correct. Correct! This is a latent, or hidden, defect. If Bob knew about it but does not disclose it, he could be held liable, and Henry might be able to recover damages. Either way, Henry would most likely be able to rescind the contract.

Which is NOT a condition of an arm's length transaction? a no marketing of the property b no relationship of the parties to the transaction c no undue haste to complete the transaction d no unusual concessions or payment terms

a. no marketing of the property An arm's length transaction is one that occurs under typical conditions in the marketplace where each party was acting in their own best interests. Typical conditions include: Cash sales or a mortgage from a lender; no owner financing or unusual payment terms; the buyer and seller are not related and are acting in their own best interests; there has been no undue haste or duress; parties are reasonably informed about property and market; and the property has been on the market for a reasonable period of time.

A Ranch style home is typically a one-story. b one-and-a-half-stories. c split-level. d two-stories.

a. one-story. A ranch-style home has one level of living area.

A budget mortgage is best defined as one that includes a payments covering principal, interest, taxes, and insurance. b people with lower incomes. c personal as well as real property. d principal and interest payments.

a. payments covering principal, interest, taxes, and insurance. A budget mortgage includes PITI (principal, interest, taxes, insurance)—borrower pays extra 1/12 of taxes and insurance each month (escrowed, then paid when due).

Question 2 What dictates the procedures that an escrow agent follows to conduct escrow closings? a procedures detailed in the sales contract or escrow agreement b procedures outlined by the escrow company or title company c real estate licensing laws d Real Estate Settlement Procedures Act (RESPA)

a. procedures detailed in the sales contract or escrow agreement Act (RESPA)This answer is incorrect. Incorrect. The answer is A. With an escrow closing, the escrow agent is responsible for performing the closing procedures as detailed in the purchase contract or in a separate set of escrow instructions, signed by both the buyer and seller. The sales contract also dictates the closing procedures in a roundtable closing.

The federal regulation prohibiting discrimination in the lending process is a the Equal Credit Opportunity Act. b the Fair Housing Act. c redlining. d the Truth in Lending Act

a. the Equal Credit Opportunity Act. It is the ECOA that prohibits discrimination in lending.

Which broker is required to take 30 hours of approved CE in order to renew her license? a Ann, who is 72 years old. b Betty, whose license is currently on deposit. c Carol, whose license is in voluntary hold status. d Dana, whose license is in resigned status.

b. Betty, whose license is currently on deposit. A broker whose license is on deposit must complete the mandatory 30 hours or CE in order to renew the license and maintain it on deposit. A 70-year-old licensee does not need all 30 hours, just the 9 core hours. Licenses that are in voluntary hold or resigned status are not required to take CE.

Which statement about regulations is FALSE? a Regulations carry the force of law. b Regulations are passed by the legislative branch of the government. c Regulations may be passed at the local, state, and federal level. d Violating a regulation could result in license revocation or fines.

b. Regulations are passed by the legislative branch of the government. Administrative agencies, which are part of the executive branch, have the authority to adopt regulations that carry the force of law, including discipline such as license revocation. A licensee should know and follow both the statutes passed by the legislature and the regulations adopted by the Ohio Real Estate Commission.

Which is an example of real estate put to its highest and best use? a a flat, paved parking lot in downtown Cleveland b a house in a residential subdivision c an old house on a major highway surrounded by commercial buildings d a vacant lot

b. a house in a residential subdivision Highest and best use is the use that is the most physically possible, legally permissible, economically feasible, and maximally profitable or productive. A home in a residential neighborhood meets these criteria.

When liens are paid off out of the proceeds of foreclosure sale, a a judgment lien generally has lowest priority. b a lien for delinquent property taxes always has highest priority. c a mortgage always has highest priority. d priority depends on the amount of the lien.

b. a lien for delinquent property taxes always has highest priority. In general, liens are paid in the order in which they were recorded. An exception is a property tax lien, which is always paid first.

Agency may NOT be terminated by a accomplishment of purpose. b action by NAR if either party is a member. c renunciation by the agent. d revocation by the principal.

b. action by NAR if either party is a member. Correct! The National Association of REALTORS® does not have the authority to terminate an agency relationship. Agency can be terminated by accomplishment of purpose, expiration of agency agreement, operation of law, mutual agreement, renunciation by agent, or revocation by principal. Remember R-O-A-M-E-R.

A mortgage clause that permits the lender to call the outstanding balance due and payable should the property be sold by the borrower is a(n) a acceleration clause. b alienation clause. c balloon payment clause. d exculpatory clause.

b. alienation clause. An alienation clause gives the lender some stated rights if property is transferred (also called due on sale clause).

The combining of two or more parcels of land into one larger parcel is known as a annexation. b assemblage. c platted. d plottage.

b. assemblage Assemblage is the combining of two or more parcels of land into one larger parcel. Plottage occurs when the assemblage results in an increased value over the value of the two parcels individually.

Which element is NOT required in order for a deed to be valid in Ohio? a acknowledgment b attestation c consideration d words of conveyance

b. attestation Although attestation is required in some states, in Ohio, it is NOT necessary for the grantor to sign the deed in front of two witnesses. The other choices are required elements of a valid deed, along with a competent grantor's signature, an identifiable grantee, a description, and delivery and acceptance during the grantor's life.

Harvey owns a large home in a nice neighborhood. His house, impeccably maintained, is at the upper limit of its value. After he retired, Harvey spent $28,000 building a new deck and greenhouse on the back of his property. Although he enjoyed the new features, they did not add anything to the value of his home. This is an example of the principle of a conformity. b contribution. c regression. d substitution.

b. contribution. In this case, the deck and greenhouse didn't add any value, so this is an example of the principle of contribution, which states that a specific feature added to a home is only worth what it actually contributes in value to a piece of property.

Which statement about a property manager in Ohio is TRUE? a A real estate broker must earn a special certificate to practice as a property manager. b A property manager may not maintain security deposits in an interest-bearing account. c Property managers must maintain a separate ledger for each property owner. d Property managers must provide owners with an accounting at least twice a year.

b. court of common pleas In Ohio, the court of common pleas tries cases in which the amount in controversy is more than $15,000.

The first step of the appraisal process is to a collect data. b define the appraisal. c define the data sources. d determine highest and best use.

b. define the appraisal Defining the appraisal is also called stating the problem. This step involves identifying the subject property, identifying the purpose of the appraisal, and identifying the date of the appraisal as well as any other relevant facts.

An important part of the relationship between an employing broker and an independent contractor licensee is that the licensee a cannot be charged for office space or supplies provided by the employing broker. b earns commission based on the results of his or her work efforts. c is not subject to any direction or control by the employing broker. d is paid for the number of hours worked.

b. earns commission based on the results of his or her work efforts. Correct! An independent contractor is paid commission for finding a ready, willing, and able buyer. It doesn't matter how many hours he or she put in to do that.

A thunderstorm knocks down power lines on John's property. Big City Electric enters John's property without his permission to fix the lines. This is an example of a easement appurtenant. b easement in gross. c encroachment. d trespassing.

b. easement in gross.This answer is correct. Correct! An easement in gross burdens one parcel of land for the benefit an individual or a corporation.

A new company that moves to an area helps the local real estate market by helping maintain a healthy a balance. b economic base. c economy of scale. d environment.

b. economic base. The economic base of an area is the main business or industry which a community uses to support and sustain itself. While the presence of a healthy economic base is important for all businesses, it's critical for the real estate market.

At which point in a neighborhood's life cycle are property values at their highest and supply is more likely to be limited? a decline b equilibrium c growth d revitalization

b. equilibrium After a period of growth, a neighborhood experiences a state of stability or equilibrium. This is when property values are at their highest level and there is little vacant property.

Which of these is a protected class under the federal Fair Housing Act? a age b familial status c marital status d sexual orientation

b. familial status As of today, the federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, sex, national origin, disability, or familial status in the sale or lease of residential property.

The U.S. Treasury is responsible for __________ policy. a economic b fiscal c monetary d social

b. fiscal The Treasury Department is the fiscal manager of the United States.

FHA programs are directed primarily at a investors looking to generate high-return government subsidized housing. b low- to middle-income homebuyers. c luxury homebuyers. d middle- to high-income homebuyers buying second homes.

b. low- to middle-income homebuyers. FHA loans have less stringent qualifying standards, which provides more opportunities for low- to middle-income homebuyers.

The Federal Reserve (or the Fed) is responsible for a determining levels of taxation. b managing the supply of money. c regulating real estate markets. d setting the interest rate.

b. managing the supply of money. The Federal Reserve is responsible for managing the supply of money.

A disadvantage of a 15-year loan versus a 30-year loan is a a greater tax deduction for overall interest paid. b monthly payments are usually higher. c the down payment required is usually lower. d total of repayments made over the life of the loan are lower.

b. monthly payments are usually higher. A disadvantage to a 15-year loan is that monthly payments are usually higher.

Ron and Deb just got married, and Deb moves into the house Ron owned prior to the wedding. Which of these unities is present with respect to the ownership of the house? a interest b possession c time d title

b. possession Rob and Deb have unity of possession, since they both live in the house. The deed is in Ron's name, so there is no unity of interest, time, or title. He could sign a new deed that lists both him and Deb as owners, making them either tenants in common or joint tenants with the right of survivorship.

Lenders making loans directly to real estate purchasers are part of the a pension market. b primary market. c secondary market. d tertiary market.

b. primary market. Primary mortgage markets are lenders who make mortgage loans directly to borrowers.

Mortgage bankers typically make loans in the a money market. b primary market. c secondary market. d stock market.

b. primary market. The primary market consists of lenders making mortgage loans directly to borrowers, such as commercial banks, savings and loans (S&Ls), savings and mutual savings banks, and mortgage bankers.

When appraiser completes an assignment for a lender, he should be prepared to analyze at least ____ comparable properties in order to reach a conclusion of value. a two b three c four d five

b. three A minimum of three comparables is required by most secondary market lenders to ensure an accurate appraisal from sufficient data.

Why are documents recorded? a to give actual notice b to give constructive notice c to give inquiry notice d to give legal notice

b. to give constructive noticeThis answer is correct. The law holds that everyone has constructive notice of recorded documents. Even if someone did not know about a particular recorded document, he could have found it by searching the public record.

The sales contract between homeowner Peyton and buyer Eli indicates a March 1 closing date. The contract contains a "time is of the essence" clause. On the morning of March 1, Peyton calls and tells Eli that it's going to be a few days before he can transfer title. As of March 2, this sales contract is a invalid. b void. c voidable by Eli. d voidable by Peyton.

b. void. When there is a "time is of the essence" clause in the contract, failure to meet the deadline is a material breach, and the contract is void.

A licensee is convicted of violating a local civil rights/fair housing ordinance. He must notify the Superintendent of the conviction a before his next renewal date. b within 15 days. c within 60 days. d He is not required to disclose local violations.

b. within 15 days. A licensee must notify the Superintendent within 15 days if the licensee is convicted of a violation of any federal, state, or municipal civil rights law pertaining to discrimination in housing.

Of these, which is MOST LIKELY to be considered an example of puffing? a "Beautifully-maintained colonial located in historic district" b "Country charm on this 5-acre beauty" c "Great bargain on the most prestigious street in town" d "Stunning lakefront views from this modern condominium"

c. "Great bargain on the most prestigious street in town"This answer is correct. Correct! Puffing is generally considered to be an opinion that is not necessarily intended to be a statement of fact. The use of an adjective such as "stunning" is not necessarily puffing. Calling a street the "most prestigious in town," however, would qualify as puffing.

If the sales agent received half of the total commission, or $5,122, and the home sold for $157,600, what rate did the broker charge for commission? a 6% b 6.25% c 6.5% d 6.75%

c. 6.5% The total commission paid is $10,244 ($5,122 x 2). That is the "part" that goes at the top of the circle. The "whole" is the sales price of $157,600. To find the percent, divide the part by the whole: $10,244 / $157,600 = 0.065, or 6.5%.

The real estate investment that enjoys special tax treatment is the a insurance company. b mortgage company. c REIT. d savings and loan association.

c. REIT. With a real estate investment trust, investors get flow-through tax advantages of a partnership but keep some benefits of a corporation.

What law regulates settlement and closing procedures and practices? a CRA b ECOA c RESPA d TILA

c. RESPA The Real Estate Settlement Procedures Act, RESPA, sets forth procedures and guidelines for disclosing settlement costs.

Which appraisal report option is usually the most comprehensive? a Form Report b Restricted Use Report c Self-Contained Report d Summary Report

c. Self-Contained Report A Self-Contained Appraisal Report is the most detailed. The Summary Appraisal Report summarizes the information. A Restricted Use Appraisal Report is the most abbreviated reporting option.

Seller Steve has a listing agreement with broker Bob. Which is NOT a way in which their agency relationship could be terminated? a The listing agreement expires. b The property sells. c Steve renounces Bob's authority to represent him. d Steve's house burns to the ground.

c. Steve renounces Bob's authority to represent him.This is the correct answer. Incorrect. The answer is C. A client may revoke—or withdraw—the authority he gives to an agent, but he cannot renounce it. Renunciation means that someone who was granted authority rejects it, so it would be agent Bob who would renounce the relationship. The relationship can also be terminated by accomplishment of purpose (the property sells), mutual agreement, or operation of law, which includes destruction of the property or the death or bankruptcy of either party.

How do the government programs administered by the FHA and VA affect the real estate market? a They build additional low-income housing. b They make fewer houses available for the general public. c They provide insurance or make loan guarantees to lenders. d They service only veterans.

c. They provide insurance or make loan guarantees to lenders. The FHA provides insurance and the VA offers loan guarantees to lenders, allowing lenders to loan money to people who might otherwise have trouble qualifying. These programs affect real estate markets by making housing more (or less) accessible.

ABC Company just opened in a new suburb of Pittsburgh. Potential workers are hoping to move into the area but there are limited houses for sale and no new construction underway. What type of market has been created? a a balanced market b a buyer's market c a seller's market d a trader's market

c. a seller's market A seller's market is a situation in the real estate market where property offerings are scarce and buyers have fewer properties being offered on the market to choose from.

Under Ohio's statute of frauds, which contract does NOT have to be in writing to be enforceable? a an option to buy a single-family home b a real estate sales contract c a three-month listing agreement for vacant land d none of the above

c. a three-month listing agreement for vacant landThis answer is correct. Ohio's statute of frauds applies to any contract or document that conveys an interest in real property (e.g., purchase contracts, options, mortgages, deeds). A written contract or document is needed to enforce these agreements. A listing agreement, however, does not convey an interest in real property. It is, essentially, a service contract. To comply with the statute of frauds, it would legally need to be in writing ONLY if it is for more than one year. However, note that all listing agreements SHOULD be in writing.

An appraiser develops an opinion of value of a property a based on an assessment of future events. b based on calculated assumptions. c based on the gathering and analysis of objective facts and data. d consistent with the value needed by a client.

c. based on the gathering and analysis of objective facts and data. An appraisal is an opinion of value that must be supportable and based on evidence—even though appraisers use their experience and judgment for interpretation of the evidence.

When using the income approach to value, the direct capitalization method is seen as more accurate than the gross monthly rent multiplier because it a uses annual income. b uses monthly income. c considers expenses. d doesn't consider depreciation.

c. considers expenses. Gross monthly rent multiplier is held to be not as reliable as the direct capitalization rate method to perform an income approach appraisal for a property because the monthly GMRM does not take into account expenses and losses.

Listing agreements are NOT required to a be in writing to satisfy the License Law. b comply with the rules of contract law. c contain the Ohio Division of Real Estate's address and telephone number. d have an expiration date.

c. contain the Ohio Division of Real Estate's address and telephone number.This answer is correct. Ohio License Law requires listing agreements to be in writing. The Ohio License Law also requires listing agreements to include a definite expiration date. Of course, as a contract, a listing agreement should meet the general requirements for validity required for any contract. A listing agreement is NOT required to include contact information for the Division of Real Estate.

Which element does NOT need to be determined for the cost approach? a cost of the building or other improvement on the land b depreciation of the building c depreciation of the land d value of the vacant land/site

c. depreciation of the land Land never depreciates, so that is not a factor in the cost approach.

If a tenancy is terminated before a crop is ready to harvest, a tenant farmer has the right to re-enter the land later to harvest the crop. This rule is known as the doctrine of a appurtenance. b constructive annexation. c emblements. d fructus industriales.

c. emblements. Under the legal theory of the doctrine of emblements, a tenant farmer is allowed to re-enter the land to harvest crops that were planted by the tenant farmer even after the tenancy ended.

The purpose of using PITI to structure mortgage payments is to a allow the borrower to obtain actual cash from the equity built up in the property. b allow the lender to participate in any earnings, income, or profits generated. c ensure that enough funds are collected to cover taxes and insurance premiums. d include the financing of personal property, such as appliances or furnishings.

c. ensure that enough funds are collected to cover taxes and insurance premiums. The lender provides this service to a mortgagor by adding one-twelfth of the insurance premiums and taxes to the monthly mortgage payment amount.

An option agreement a can always be revoked, until it has been exercised. b is not a contract. c is supported by consideration. d is terminated by the death of the optionor.

c. is supported by consideration. The optionee pays the optionor for the option right, for example, the right to purchase property at some point in the future. An option, therefore, is supported by consideration. If the optionee chooses not to exercise the option, the optionor generally is entitled to keep the option money.

T owns two tracts of property. Fierce Creek runs through one tract, but the other tract is across the road and does not adjoin the creek. T uses water from the creek to irrigate his crops on both tracts. This use of the water is a illegal. b illegal, unless Fierce Creek is navigable. c legal, if T has an appropriation permit. d legal, since T has a riparian right to the use of the water.

c. legal, if T has an appropriation permit. Appropriative rights are water rights granted by government permit, and do not depend on ownership of riparian land. Since the second tract does not adjoin the creek, T would need a permit to take water from the other tract.

Lenders are often willing to charge lower interest rates for 15-year mortgages because the a borrower is always a better risk. b interest rate is fixed for a longer period of time. c loan funds will be repaid more quickly. d loan qualifications are much more stringent.

c. loan funds will be repaid more quickly. Since the loan is paid off more quickly, there is less risk for the lender. Therefore, a 15-year mortgage usually has a lower interest rate than a 30-year mortgage.

With an adjustable rate mortgage, the index is added to the ______ to determine the _________ . a APR / cost of funds b home value / amount borrowed c margin / interest rate charged d qualifying ratio / maximum monthly mortgage payment

c. margin / interest rate charged With an adjustable rate mortgage, the index is added to the agreed-upon margin to determine the interest rate due on the loan.

The process of inflating the sale price of a property with a fraudulent second mortgage is considered a customer service. b good selling skills. c mortgage fraud. d a way to increase your commission.

c. mortgage fraud. This is a prime example of mortgage fraud.

Y owns some land in Ohio. X started living on Y's land in 2010. The soonest that X could acquire the title by adverse possession is a 2017. b 2020. c 2025. d 2031.

d. 2031. Ohio, the time required to obtain title to property through adverse possession is 21 years.

Buyer Bill and seller Sally have a signed purchase contract. Which statement about the Residential Property Disclosure Form is FALSE? a Bill can rescind the contract within 3 days of receiving the form. b Bill can rescind the contract if Sally does not give him the form within 30 days after they sign the contract. c Bill can rescind the contract if Sally does not give him the form before closing. d Bill can rescind the contract after closing if Sally never gave him the form.

d. Bill can rescind the contract after closing if Sally never gave him the form.This answer is correct. Correct! Sally is supposed to give him the Residential Property Disclosure Form BEFORE they enter into a purchase agreement. But if she does not, Bill does have some rights of rescission. Once they go to closing, however, Bill cannot rescind the purchase contract even if Sally never gave him the form. The other statements are true.

Borrower P defaulted on his mortgage loan with ABC Bank. What is the first step ABC will take in the foreclosure procedure? a Ask the court to issue an order of execution directing seizure of the property. b Auction the property to the highest bidder at a sheriff's sale. c File a foreclosure action lawsuit in the county court of common pleas. d Give P a notice of default demanding the entire loan balance be paid at once.

d. Give P a notice of default demanding the entire loan balance be paid at once. Upon default, the lender will first accelerate the due date of the mortgage debt, demanding payment through a notice of default. Next, the lender would file a foreclosure action. The court would next issue an order of execution. After the property is seized, it could be sold at a sheriff's sale.

B makes an offer to buy W's home. The offer contained a provision limiting the time for acceptance to 48 hours. W immediately rejected the offer as inadequate. After thinking about it overnight, W called his agent and said, "I've changed my mind. I'll take the offer." What is the status of B's offer? a It is a binding contract now that W has accepted it b It is still open because B hasn't formally withdrawn it. c It is still open because it still has 24 hours before the deadline. d It was terminated when W first rejected it.

d. It was terminated when W first rejected it. Rejection automatically terminates an offer. A rejected offer does not have to be formally withdrawn or revoked. An offer may also be terminated by lapse of time, communication, or notice of revocation before acceptance, qualified acceptance (counteroffer), or death or insanity of either the offeror or the offeree before acceptance.

Kyle's brokerage company practices split agency with dual agency. Tom and Don are two of his licensed brokers. Tom is appointed to represent the seller, and Don is appointed to represent the buyer in an in-house transaction. In this situation, who is a dual agent? a no one b Kyle, Tom, Don, and all other licensees of the brokerage c Kyle, Tom, and Don only d Kyle only

d. Kyle onlyThis answer is correct. Correct! Tom and Don have been appointed to represent their specific clients as split agents. In this situation, only the broker, Kyle, takes on the role of dual agent.

D was four months into his one-year lease when landlord P died. Which statement is TRUE? a D can stop paying rent. b P's heirs can give D a notice to vacate. c P's heirs can raise D's rent to force him to leave. d P's heirs must honor the lease until it expires.

d. P's heirs must honor the lease until it expires. This answer is correct. Correct! A lease with a definite timeframe is an estate for years, and the death of one of the parties to this lease does not terminate the lease or allow modification of its terms. Assuming D continues to pay rent, he can stay until the lease expires.

Appraiser certification in Ohio a is voluntary. b requires passing written exams. c requires a minimum of two years of appraisal experience. d all of the above

d. all of the above All of these are requirements for certification as an appraiser. Following licensure, a certain number of hours of continuing education must be completed annually, as well as annual license renewal.

The city just adopted a stricter electrical code. T owns a store that was in compliance with the old code, but is not up to the new standards. Which statement is TRUE? a The new code can be applied only to new buildings, so T will not have to change his wiring. b State law requires T to comply with the new code within 120 days. c T can be required to comply with the new code only if he expands or modifies his building. d T may be required to comply with the new code whether or not he modifies his building.

d. T may be required to comply with the new code whether or not he modifies his building. Every structure must comply with building codes, not just new or remodeled structures. The best answer is that T may be required to comply with the new code, although it's possibly he might not even know about the new code requirements unless he were to apply for a building permit to make renovations to the building.

L rents apartments for $500 a month. What is the most L can require a tenant to give as a security deposit? a $250, since this is a residential tenancy b $500 c $1,500 d The law does not set a limit on the amount of the deposit.

d. The law does not set a limit on the amount of the deposit Ohio law does not limit the amount a landlord may demand as a security deposit, but the Landlords and Tenants Act requires a residential landlord to pay interest of 5% on any deposit, or portion thereof, which exceeds $50 or exceeds one month's rent, whichever is greater.

Which would NOT be considered a typical condition in the marketplace? a The buyer and the seller are not related. b The buyer and the seller are reasonably informed about the property. c The buyer pays cash for real estate. d The property has been on the market for seven years.

d. The property has been on the market for seven years. Typical conditions would be a property that has been on the market for a reasonable amount of time. Seven years is not typical. Typical conditions include a cash transaction, a transaction where the buyer and seller are not related, and a transaction where each party is reasonably informed about the property. Other typical conditions are that both parties are acting in their own best interests and not acting out of duress.

Two checkers attempt to buy a home and find evidence of discrimination. What will happen to the salesperson's license? a It will be placed on inactive status. b It will be revoked. c It will be suspended. d There is an insufficient amount of information to determine what will happen.

d. There is an insufficient amount of information to determine what will happen. There's not enough information to determine the outcome at this point. While the Ohio Real Estate Commission has rules about license suspension and revocation for fair housing violations, those rules do not apply when the discrimination complaint is based on the experiences of a checker. If the checkers file a complaint, it's investigated, and the licensee is found guilty, the Commission could take a number of disciplinary actions.

Which is recognized throughout the U.S. as the accepted standards of appraisal practice? a Appraisal Foundation b Appraisal Institute c FIRREA d USPAP

d. USPAP The Uniform Standards of Professional Appraisal Practice (USPAP) is recognized throughout the U.S. as the accepted standards of appraisal practice.

Defining the appraisal consists of identifying the a effective date of the appraisal. b purpose of the appraisal (type of value). c relevant characteristics of the property being appraised. d all of the above

d. all of the above An appraiser must identify all of these elements, as well as the client and intended users, the intended use of the appraisal, and other assignment conditions.v

J's neighbor has an oak tree whose branches and roots are extending across the lot line into J's backyard. What rights are being violated? a air b surface c subsurface d all of the above

d. all of the above The tree is violating all of J's rights. The branches are in the air space, and the roots are in the subsurface. Even if there are no roots on the surface of the ground, you can expect that J has to deal with the acorns and the leaves that the tree drops into his backyard.

Which is necessary to develop the direct capitalization technique? a expenses b income c rate d all of the above

d. all of the above To find the net operating income, the appraiser needs to know the expenses. After deriving the capitalization rate from the marketplace, the appraiser has the information necessary to develop an estimate of value using the IRV formula.

The Marketable Title Act says that proper title is established by a buying adequate title insurance. b making sure that no wild deeds exist. c searching the public records for 40 years. d an unbroken chain of title deeds dating back 40 years to the root of title.

d. an unbroken chain of title deeds dating back 40 years to the root of title. Under the Marketable Title Act, an owner with an unbroken chain of recorded titles going back at least 40 years has a marketable record title. This improves the marketability of title and simplifies the title search process by extinguishing certain old, dormant claims against a title.

An amenity is a always adjusted for in an appraisal. b always a physical, tangible feature. c any feature for which there is a ready substitute in the marketplace. d any tangible or intangible feature that enhances and adds value to real estate.

d. any tangible or intangible feature that enhances and adds value to real estate. An amenity is any tangible or intangible feature that enhances and adds value to real estate.

According to USPAP, appraisal reports must a be prepared on an industry form. b be provided to the client in written form only. c be provided to the property owner, even if he is not the client. d clearly and accurately set forth the appraisal in a manner that will not be misleading.

d. clearly and accurately set forth the appraisal in a manner that will not be misleading. Under the standards of USPAP, each written or oral property appraisal report must clearly and accurately set forth the appraisal in a manner that will not be misleading.

Vacancy and collection losses a are always 10%. b are considered when using a GMRM. c are not considered when doing a direct capitalization method appraisal. d determined by analysis of market data.

d. determined by analysis of market data. Vacancy losses are subtracted from potential gross income, usually as a percentage, when determining the net operating income for use with the direct capitalization technique. The percentage applied in the development of NOI is determined by analysis of market data.

Under a land contract, the vendor (seller) a is a holder in due course. b holds a mortgage lien as security. c holds equitable title. d holds legal title as security.

d. holds legal title as security. Under a land contract, the vendor (seller) holds legal title to land as security, not just a mortgage lien against it. The vendee's (buyer's) present interest in a land contract is referred to as equitable title.

Evercrusty Pie, Inc. just bought an old warehouse to turn into a state-of-the-art bakery. How does Evercrusty take title to the property? a as joint tenants b as a real estate investment trust c as tenants in common d in severalty

d. in severalty Within a corporation, property is owned in severalty as the legal person.

Andrew conveys a life estate to youngest son Bart for as long as his wife Carla shall live. What type of estate does this describe? a conventional life estate b fee simple c leasehold estate d life estate pur autre vie

d. life estate pur autre vieThis answer is correct. Correct! When a life estate is based on the life of someone other than the beneficiary, it is called "pur autre vie." In this case, Bart is the beneficiary of the life estate and Carla is the measuring life.

Which is NOT a function of the secondary market? a buying and selling mortgages of primary lenders b establishing loan standards c giving primary lenders a place to invest surplus funds d making loans to low-income families

d. making loans to low-income families The secondary market does not make loans. Instead, the secondary market buys and sells the mortgages of primary market lenders, allowing lenders the opportunity to invest surplus funds. An important by-product of secondary mortgage markets is the standardization of loan criteria.

B's property has an easement appurtenant that allows B to hunt on the neighbor's land. When the neighbor sells his land to B, the easement terminates through a abandonment. b destruction of the dominant tenement. c failure of purpose. d merger.

d. merger. Merger is the uniting of two or more separate properties by transferring ownership of all to one person. When one person becomes owner of both the dominant tenement and the servient tenement, the easement is extinguished by merger.

X owns a small office building in Springfield. She puts the property up for sale and Z makes an offer to buy it. X refuses to sell the property to Z because he is a born-again Christian. X has violated the a Civil Rights Act of 1866. b Federal Fair Housing Act. c Ohio Civil Rights Law. d none of the above

d. none of the above The Civil Rights Act prohibits discrimination in any property transaction based only on race. The Federal Fair Housing Act and the Ohio Civil Rights Law apply only to residential property transactions. Therefore, X is not in violation.

Appraiser Alan developed all three approaches to value. What is Alan's next step in the appraisal process? a analyze the data b determine highest and best use c prepare the appraisal report d reconcile the approaches

d. reconcile the approaches After developing the approaches to value, the next step is reconciliation, where the appraiser analyzes the values derived from the different appraisal approaches to find a final value opinion.

The concept of escheat means that property a can be appropriated by the state when there's a public need. b can be confiscated for nonpayment of taxes. c must meet specific zoning requirements before it can be developed. d reverts to the state when a person dies with neither a will nor an heir or creditor.

d. reverts to the state when a person dies with neither a will nor an heir or creditor.This answer is correct. Correct! Escheat is a police power that provides for the state to take ownership of property of a deceased person who leaves no will, heirs, nor creditors.

When property escheats, the title a passes to the heirs. b passes to the next of kin. c reverts to the remainderman. d reverts to the state.

d. reverts to the state. Escheat is when property ownership reverts to the state because a person dies intestate without leaving a valid will and no living heirs.

B blackmails S into signing a contract to sell him her home for less than half its value. This contract is a severable due to unlawful purpose. b unenforceable because the consideration is inadequate. c void due to fraud. d voidable due to duress.

d. voidable due to duress. Duress could include the threat of injury to reputation or to take some action that will be financially disastrous for the victim. Any contract signed under duress is voidable.

J rents an apartment in Akron for $800 a month. Her landlord charges a security deposit of $1,000. At the end of the year, the landlord would owe J how much in interest? a $10 b $60 c $120 d nothing; this is an excessive security deposit that would not be allowed under Ohio law.

a. $10 This answer is correct. b. $60 c. $120 d. nothing; this is an excessive security deposit that would not be allowed under Ohio law. Correct! The Ohio Landlords and Tenants Act requires a residential landlord to pay interest of 5% on any deposit, or portion thereof, which exceeds $50 or exceeds one month's rent, whichever is greater. The accrued interest must be turned over to the tenant annually. Since the security deposit is $200 more than the rent for one month, the landlord owes J 5% of $200, or $10, annually.

Property taxes on a home are $2,200 per year. They are paid through the first half of the year. The property has been sold and the closing will take place August 1 of the same year. What amount of prorated taxes will be due to the buyer? a $192.88 b $207.19 c $916.16 d $1,283.84

a. $192.88 First, find the daily rate of the taxes using a 365-day year: $2,200 / 365 = $6.0274. Then, determine the number of days the seller lived in the home for which the buyer will pay taxes (remember the day of sale belongs to the seller): July=31 + August=1 is 32 days. Finally, multiply the daily rate by the number of days: $6.0274 x 32 = $192.88 (rounded). The buyer will be credited for $192.88 at closing.

Six-unit buildings in a particular neighborhood have been selling for about $480,000. A survey of several owners indicates that a typical NOI is $36,000. What is an appropriate cap rate for six-unit buildings in this area? a 7.5% b 9% c 13.3% d 17.3%

a. 7.5% The capitalization rate can be found by dividing the income by the value ($36,000 / $480,000 = .075 or 7.5%).

The relationship between the cost of money and the total amount financed is the a APR. b cost of goods sold. c interest rate. d prime rate.

a. APR. The annual percentage rate (APR) is the relationship between the cost of borrowing money and the total amount financed, represented as a percentage.

Which USPAP Rule requires appraisers to have the knowledge and experience necessary to complete an assignment? a Competency Rule b Ethics Rule c Jurisdictional Exception Rule d Scope of Work Rule

a. Competency Rule The Competency Rule requires appraisers to have the knowledge and experience necessary to complete assignments competently, and also contains specific requirements and procedures for appraisers who don't have sufficient competence at the beginning of an assignment.

Who has the authority to investigate written complaints against real estate licensees? a Division of Real Estate b Governor c Real Estate Commission d Secretary of State

a. Division of Real Estate Correct! It is the Ohio Division of Real Estate that investigates written complaints against licensees.

What issue is NOT included on the Ohio Residential Property Disclosure Form? a Has anyone ever died on the property? b Has there been a mold inspection? c Is the property located in a flood plain? d Is there any smoke damage?

a. Has anyone ever died on the property? Correct! A seller is not required to disclose whether or not someone has died on the property. The seller is required to disclose material facts about the condition of the property, including mold, smoke damage, insects, issues with mechanical systems, presence of hazardous materials, and issues related to the location of the property, such as a flood plain or homeowners association.

What would a commercial lot, 150' x 600', priced at $2,000 per front foot cost? What would it cost at $2.50 per square foot? a If sold by the front foot, the lot would cost $300,000. If sold by the square foot, the lot would cost $225,000. b If sold by the front foot, the lot would cost $300,000. If sold by the square foot, the lot would cost $360,000. c If sold by the front foot, the lot would cost $1,200,000. If sold by the square foot, the lot would cost $360,000. d If sold by the front foot, the lot would cost $1,200,000. If sold by the square foot, the lot would cost $2,250,000.

a. If sold by the front foot, the lot would cost $300,000. If sold by the square foot, the lot would cost $225,000. Front feet is always the first number in a lot measurement. If the lot is $2,000, the cost is $300,000 (150 x $2,000). If that same lot were sold per square foot, first find the square footage by multiplying length x width: 150 x 600 = 90,000 square feet. At $2.50 per square foot, the lot would cost $225,000 (90,000 x $2.50 = $225,000).

Who would NOT be considered a member of a protected class under the Equal Credit Opportunity Act when applying for a mortgage loan? a John, who has four children b Joseph, who is African-American c Tabitha, whose primary source of income is public assistance d Usama, who is a 69-year-old Muslim

a. John, who has four children These are protected classes under the ECOA: race, color, religion, national origin, age, sex, marital status, receipt of income from public assistance programs. Familial status is not a protected class under this particular law.

L leases her house to T for a two-year term. Three months after L signs the lease, X makes a very tempting offer to buy the house. Which statement is TRUE? a L can sell the house, but X will take title subject to the lease. b L cannot sell the house unless T agrees to surrender the lease. c L cannot sell the house until the lease expires, because it is a lease for a fixed term. d L cannot sell the house without T's consent, since this is a residential lease.

a. L can sell the house, but X will take title subject to the lease. A landlord is free to sell the leased property at any time, however, the new owner takes the property subject to the existing leases, unless they provide otherwise.

B sends S a letter offering to buy his house. S calls B and rejects the offer, but a few hours later, S changes his mind. He mails B a letter accepting the offer. Do they have a binding contract? a No, because the offer was terminated when S rejected it. b No, because they have not had a lawyer draw up a formal agreement yet. c Yes, because an offer can be accepted by any reasonable method. d Yes, because an offer cannot be rejected over the telephone.

a. No, because the offer was terminated when S rejected it.This answer is correct. An offer is terminated when it is rejected by the offeree. That is not to say that S and B could not mutually agree to revisit the offer, but there is no binding contract at this point.

Which statement about pre-approval of a buyer is TRUE? a Pre-approval can improve a buyer's negotiating position. b Pre-approval is not binding on the lender. c Pre-approval may be performed by a real estate licensee. d Pre-approval must be performed before showing any properties.

a. Pre-approval can improve a buyer's negotiating position. Only a lender can pre-approve a prospective buyer, since it is binding on the part of the lender. While it's helpful to be pre-approved before showing the buyer properties because it can improve the buyer's negotiating position, it's not necessarily required. A licensee should, however, at least pre-qualify a buyer to get a clear idea about what he or she can afford.

Under Ohio license law, if a licensee notices a crack in the wall while showing a house to a potential buyer, what is the licensee legally required to do? a The licensee should point out the crack as he walks past it. b The licensee should stand in front of it so the buyer cannot see it. c The licensee should take the buyers through a different room so they do not walk past it. d Unless the buyer asks, the licensee is not required to say anything since the crack is visible.

a. The licensee should point out the crack as he walks past it. Ohio license law requires a licensee to disclose any material fact, even if it would be obvious on any reasonable tour of the property.

Of these, which termination of agency would NOT be due to operation of law? a The listing broker abandons the seller before the listing period ends. b The listing broker declares bankruptcy. c The seller dies before the listing period ends. d The seller's house is destroyed in a hurricane.

a. The listing broker abandons the seller before the listing period ends. Abandonment prior to the end of the listing period is an example of renunciation. The other choices are examples of termination through operation of law.

When looking at highest and best use, what is the primary consideration that the appraiser must take into account? a What is the ideal building for the land if it were vacant? b What is the most radical zoning change that the owner could try to get for the property? c What is the best way to ensure value without tearing down the existing structures if at all possible? d What is the best way to move the existing building to a new site?

a. What is the ideal building for the land if it were vacant? The first step that an appraiser does when determining highest and best use is to estimate the value of land as if it were vacant and available for any permitted use.

Which of these would be considered functional obsolescence? a a bedroom through bedroom floor plan b a home facing a busy four-lane highway c a home with broken furnace d a home with severe structural damage to the foundation

a. a bedroom through bedroom floor plan This answer is correct. Functional obsolescence is when a building is less desirable because of something inherent in the design of the structure.

Which is an example of real estate being put to its highest and best use? a a house in a residentially-zoned subdivision b an old house on a major highway surrounded by commercial development c a parking lot in a major city where building sites are in demand d a vacant lot in a growing neighborhood

a. a house in a residentially-zoned subdivision Highest and best use is the most profitable, legally permitted, financially feasible, and physically possible use of a property. Of these choices, a house in a residential neighborhood is a property that is being put to its highest and best use.

Who is protected by the Broker Lien Law? a a licensee who sells or leases commercial real estate only b a licensee who sells or leases residential real estate only c any property owner who contracts with a broker to sell or lease d every real estate licensee

a. a licensee who sells or leases commercial real estate only Any broker that enters into a written contract for services related to selling, leasing, or conveying any interest in commercial real estate has a lien on that commercial real estate.

You live next to a coastal inlet. Over the last several years, the tide has been depositing silt into the inlet, adding land to your property. This is an example of a accretion. b avulsion. c erosion. d reliction.

a. accretion. This is an example of accretion, which is a gradual addition to dry land by the forces of nature.

To be a holder in due course, one must a acquire a negotiable instrument in good faith for consideration. b be a national secondary market investor, such as Fannie Mae. c be the original mortgagor. d be an original payee on a promissory note.

a. acquire a negotiable instrument in good faith for consideration. A holder in due course is one who acquires a negotiable instrument in good faith and for consideration, and thus has certain rights above the original payee.

What acronym can be helpful for remembering the basic fiduciary obligations? a BAD CAT b NEW CAB c OLD CAR d RED DOG

a. acts, or has the power to act, for another.This answer is correct. Correct! An agent works for a principal. The person for whom the agent works is owed a fiduciary duty. A customer is not owed any fiduciary duty. A person who acts on behalf of another agent is known as a subagent.

When S made an offer on C's house, she asked if there were any liens. C's broker discloses that the homeowners association is preparing to file a special assessment lien of $1,200 against the property. Since she's moving, C will not be paying off the lien. S now has _________ notice of the lien. a actual b constructive c inquiry d patent

a. actual Actual notice exists when individuals have actual knowledge of a fact. Actual notice includes what someone personally saw, heard, read, or observed.

Seller Mike is signing a listing agreement with agent Alice of River Realty. He purposely leaves out the fact that he is still married to wife Wendy, although she has moved out of the house. He does not want to share the proceeds of the sale with her. Mike has likely committed a actual fraud. b constructive fraud. c material misstatement. d negligent misrepresentation.

a. actual fraud. Actual fraud is an intentional misrepresentation or concealment of a material fact. He intentionally omitted material facts about a co-owner on the listing agreement, which could void any transaction.

Where might an appraiser include supporting evidence for her value opinion, such as photographs or floor plans, when completing an appraisal report? a addenda b improvements section c reconciliation section d scope of work section

a. addenda The addenda of an appraisal report include supporting evidence used by the appraiser in defense of the appraiser's estimate or opinion of value.

A nuisance a affects some of the owner's bundle of rights. b always emanates from within an individual's property's boundaries. c can always be removed. d none of the above

a. affects some of the owner's bundle of rights. A nuisance is something from outside of a property's boundaries—such as a noise or an odor—that interferes with the property owner's right of quiet enjoyment, which is one of rights in the owner's bundle of rights.

When may a person use the term REALTOR®? a. after becoming a member of the National Association of REALTORS® b. after closing the first successful transaction c. as soon as the person passes the real estate license examination d. upon the sponsorship of his or her broker

a. after becoming a member of the National Association of REALTORS® Correct! A person can use the term REALTOR® only after becoming a member of the National Association of REALTORS®. Using this professional designation without NAR membership is a violation of trademark law. Remember, also, that if a person's sponsoring broker is an NAR member, the licensee must also join.

To qualify for a conventional loan, stable monthly income may include a alimony received (which a borrower chooses to reveal). b a Christmas bonus received last year for the first time. c erratic unemployment earnings. d income from other family members.

a. alimony received (which a borrower chooses to reveal). Stable monthly income is the monthly income amount that can reasonably be expected to continue in the future. This can include alimony, if the borrower chooses to disclose it. The other sources of income would not be considered stable.

A salesperson who is NOT an agent of the buyer is responsible for telling the buyer a all known latent defects in the property, whether or not the buyer asks about them. b all known patent defects in the property, whether or not the buyer asks about them. c everything, since the agent has the duties of good faith and fair dealing. d nothing, since a fiduciary relationship does not exist.

a. all known latent defects in the property, whether or not the buyer asks about them. The answer is A. A licensee must tell buyers—clients and customers—about latent (hidden) defects, even if not directly asked. Because of the caveat emptor rule, however, they usually do not have to tell buyers about patent defects that could be discovered by a reasonably thorough inspection.

An "as is" clause in a purchase agreement a applies to patent defects in the purchase of residential real estate. b gives a buyer no recourse for problems with the property. c is a defense against a fraud lawsuit. d protects the seller from liability for nondisclosure of a latent defect.

a. applies to patent defects in the purchase of residential real estate. Correct! Such as clause applies to patent, or visible, defects. The seller has a duty to disclose latent defects in the property whether or not an "as is" clause is used in the contract. Nor does an "as is" clause protect the seller or agent if they commit fraud and deliberately conceal a defect from the buyer.

RESPA does NOT a apply to one- to six-family residences and condos. b prohibit kickbacks or limit the amount of escrow reserves. c require a booklet and estimate of settlement costs be given to the buyer. d require the use of the Closing Disclosure or give the buyer the right to inspect the settlement Statement at least three days prior to closing.

a. apply to one- to six-family residences and condos. RESPA applies to most sales of one- to four-unit residential properties (including condos, co-ops, and mobile homes) where the purchase loan is secured by a first mortgage on the property. RESPA does prohibit kickbacks. It does require that borrowers by given a Loan Estimate showing the expected closing costs. It does require the use of a standardized settlement statement, called the Closing Disclosure. Borrowers may request this disclosure three business days prior to settlement.

To enact a zoning ordinance, an unchartered city in Ohio must a appoint a planning commission to prepare a comprehensive plan for the city. b appoint a zoning commissioner to prepare a zoning plan for the city. c get the approval of a majority of the voters in a local referendum. d get the approval of the state board of zoning appeals.

a. appoint a planning commission to prepare a comprehensive plan for the city. In order for a city or village to enact its own zoning, the city council or village council must first set up a planning commission, which is responsible for preparing a long-term comprehensive plan for development.

A landowner needs water. His land contains no available water source. However, the landowner is given the right to cross over his next-door neighbor's property to run a pipeline from a river to his land. Which right grants this permission? a appropriative b littoral c reliction d riparian

a. appropriative Appropriative rights are permits granted by the government, allowing an individual to use water from land he or she does not own. Eminent domain is the right of the government to take private property for public use. Littoral and riparian refer to the rights of landowners to use either flowing or lake water on their own property for their own use.

An easement allows the present and any future owner of Lot D to drive across a neighbor's (Lot S) property to reach her own. This is a(n) a appurtenant easement. b defeasible easement. c easement in gross. d encroachment.

a. appurtenant easement. Appurtenant easements burden one piece of land (Lot S, the servient tenement) for the benefit of another piece of land (Lot D, the dominant tenement). When the dominant tenement is transferred (sold, willed, or given away), the easement is also transferred.

Punitive damages a are awarded in addition to compensatory damages in some tort suits. b are awarded only in criminal cases. c may be awarded instead of exemplary damages in some tort suits. d must be paid out of the Real Estate Recovery Fund.

a. are awarded in addition to compensatory damages in some tort suits. In civil lawsuits, a court may award punitive damages, also known as exemplary damages, in addition to compensatory damage to punish the wrongdoer and attempt to deter others from similar acts.

A reverse mortgage is available to persons who a are over age 62. b are under age 55. c own a home with a large outstanding mortgage. d all of the above

a. are over age 62. A reverse mortgage allows borrowers who are age 62 or older take advantage of the equity they have in their existing homes.

A disabled veteran in a wheelchair wants to put a ramp up on the side of his house so he could easily go from his car, up the ramp, and into his kitchen. The ramp would be too close to the property line based on the current zoning ordinance. He will need to go to the zoning board to obtain a(n) a area variance. b grandfather clause. c nonconforming use. d use variance.

a. area variance. An area variance allows a property owner to bend the rules regarding building size and height limits, setbacks, side yards, etc. The zoning board can issue an area variance to reduce the setback and allow him room to build his ramp.

An appraisal is valid a as of the effective date on the appraisal report only. b for 30 days after it is completed. c for one year from the date stated on the appraisal report. d indefinitely, until a new appraisal is performed.

a. as of the effective date on the appraisal report only The value opinion in an appraisal is valid only on the effective date, which is the date on the appraisal report.

If a buyer has an objection to buying a house, a licensee should a ask questions to understand the objection and answer it if he can. b dismiss the objection and point out the reasons why the house is perfect for the buyer. c forget about the house and move on to another because the buyer is not interested. d let the buyer talk to the seller about the objection.

a. ask questions to understand the objection and answer it if he can. A good way to respond to objections is by asking questions. This helps the licensee understand the objection, the prospect's thinking, and the real reason for the objection. In addition, it can help a prospect answer his objection himself.

T leases an apartment for a one-year term—from November 1 through October 31. But in January, T's brother buys a house and asks T to come live with him. So, T rents his apartment to X from February 15 through October 31. This is called a(n) a assignment. b novation. c reconveyance. d sublease.

a. assignment. An assignment is when a tenant transfers his entire right of possession or other interest in lease property to another person for the entire remainder of the lease term. With an assignment, the X and T share legal responsibility for paying rent to a landlord.

Which is NOT a purpose of the net to seller form? a assures that the seller will accept the offer b gives the seller an estimate of money he will receive from the transaction c lets the seller make an informed decision about accepting a specific offer d prepares the seller as to what amount to expect from the closing proceeds

a. assures that the seller will accept the offer The net to seller is not an assurance that the seller will accept the offer. It does, however, allow the seller to make an informed decision about the offer and the expected proceeds from the sale.

The real estate broker who works with a buyer must provide the buyer with the Consumer Guide to Agency Relationships form a at the first substantive contact. b only if the buyer requests one. c only if it is a residential transaction. d when the seller directs the broker to provide one.

a. at the first substantive contact. A licensee working with a buyer, regardless of what agency relationship may develop, must provide the buyer with the Consumer Guide to Agency Relationships form at the first substantive contact, but no later than before initiating a pre-qualification evaluation, requesting specific financial information, showing a property to a buyer (other than at an open house), discussing making an offer to buy real property with the buyer, or submitting an offer to buy or lease real property on behalf of the buyer.

The Commission does NOT a. audit the broker's records b. promote the Canons of Ethics c. publish a newsletter d. suspend or revoke licenses

a. audit the broker's records Correct! The Ohio Real Estate Commission: Promotes Canon of Ethics for the real estate industry in Ohio, reviews all acts of the Superintendent of the Division of Real Estate, sets licensing standards, suspends and revokes licenses, sets rules of conduct for hearings, sets licensing exam standards, sets criteria for continuation in business, places brokers' licenses on deposit (military), reviews all educational requirements for brokers and salespersons, updates continuing education requirements, publishes a newsletter (emphasis on civil rights and fair housing laws), and administers the Education and Research Fund. It does not audit records.

Murray, Lou, and Ted own a house as tenants in common. When Ted dies, his 25% interest a goes to his heirs. b goes to Murray and Lou, split equally. c goes to Murray and Lou in proportion to their ownership interests. d It's impossible to know.

a. automatically confer dower rights. A tenancy by the entireties is a form of co-ownership in which a married couple own the property with right of survivorship, and neither spouse can convey or encumber his or her interest without the consent of the other spouse. Tenancy by the entireties was abolished by the Ohio General Assembly in 1985. However, many of the tenancies by the entireties that were created between 1971 and 1985 still exist.

Radon gas a can present a problem indoors if allowed to build up to dangerous levels. b is expensive to remediate. c is a man-made waste byproduct. d makes a house worthless because it must be condemned by the EPA.

a. can present a problem indoors if allowed to build up to dangerous levels. Radon is a naturally-occurring gas that can present a problem indoors if allowed to build up to dangerous levels. It is generally not very expensive to mediate, and so its impact on value is not typically significant.

When real property is devised through a will, the conveyance is handled with a a certificate of transfer. b executor's deed. c limited warranty deed. d probate declaration.

a. certificate of transfer.This is the correct answer. Selected: b. executor's deed.This answer is incorrect. c. limited warranty deed. d. probate declaration. Incorrect. The answer is A. When property is devised, the probate court issues a certificate of transfer, which acts like a "deed" to convey a decedent's real property.

Steering is a channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, or ethnic background. b refusing to make loans secured by property located in certain neighborhoods for discriminatory reasons. c trying to induce owners to sell their homes by saying that the ethnic or racial makeup of an area is changing, implying that property values will decline. d none of the above

a. channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, or ethnic background. Steering is channeling prospective buyers or tenants to particular neighborhoods based upon their race, religion, national origin, or ancestry.

Which is NOT an approach to value in appraisal? a comparable market analysis b cost c income d sales comparison

a. comparable market analysis A comparable market analysis is an opinion o f value formulated by a real estate licensee. It is not an appraisal approach, nor can it ever be called an appraisal.

Which is NOT an approach to value? a comparative market analysis b cost approach c income approach d sales comparison approach

a. comparative market analysis Value opinions for a property can be developed using the sales comparison approach (value opinion by performing market analysis of area where subject property is located), cost approach (value opinion by figuring cost of building, minus depreciation, plus site value), or income approach (value opinion by analyzing income a property could potentially generate). We'll look at each of these in detail in later modules.

The primary purpose of most civil lawsuits is to a compensate a person who has been harmed. b deter crime. c protect society. d punish a wrongdoer.

a. compensate a person who has been harmed. The goal of most civil suits is to compensate the injured person for the harm done. Monetary damages are usually the remedy granted to the injured party and paid by the person who caused the harm.

L signs a contract to buy K's house. The contract is conditional on K installing new carpet throughout. K installed the carpet at a cost of $12,500. Before closing, L tells K that he does not want to buy the house. K sues L for $12,500 and wins. The court awarded her a compensatory damages. b liquidated damages. c mitigated damages. d punitive damages.

a. compensatory damages Money damages awarded by the court to compensate the victim for their financial loss are compensatory damages.

The purpose of an ancillary trustee is to a complete brokerage business when a broker dies. b handle the sale of foreclosed property. c hold security deposits for a property manager. d mediate a resolution between parties in dispute.

a. complete brokerage business when a broker dies. An ancillary trustee is responsible for completing the business of a brokerage when a licensed broker dies or loses his license. The ancillary trustee is put in charge of all real estate transactions that are already in the process of closing.

Ollie shows a property to his buyer client. Jan, the listing broker, calls Ollie to ask for feedback. She asks, "Is the buyer interested in making an offer?" Ollie tells Jan his client is still in the process of looking at other properties. Jan replies, "I can tell you, my seller is really desperate for an agreement." At this point, Jan is violating the duty of a confidentiality. b disclosure. c accounting. d obedience.

a. confidentiality. Correct! With this breach of confidentiality owed to her client, the seller, Jan is acting in the buyer's best interest at this point by divulging this information about her seller client. She is also breaching the duty of loyalty.

Maximum value for a property can be achieved only when a demand, utility, scarcity, transferability, and purchase ability are present. b the market is in balance. c supply outweighs demand. d there is a buyer's market.

a. demand, utility, scarcity, transferability, and purchase ability are present. These critical characteristics must be present in order for a property to achieve its maximum value: Is there demand for the property? Can the property be used as desired or needed? Can the property be transferred free of encumbrances? Can the prospective buyer actually purchase the property?

An appraiser used various cost manuals and regional multipliers, as well as her own experience, to determine that it would cost $72 per square foot to replace the subject property. At 1,775 square feet, she determines it would cost $127,800 to rebuild the house. To find the value of the subject property, she must also factor in a depreciation and land value. b depreciation and inflation. c inflation and labor costs. d labor costs and land value.

a. depreciation and land value. The cost approach must also take into account the accrued depreciation as well as the value of land.

When housing prices fall due to the relocation of a major employer, it is an example of a(n) __________ force influencing value. a economic b governmental c physical d social

a. economic The success or failure of a local employer would be considered an economic factor that impacts the health of a local real estate market, thus influencing the value of the properties in the area.

A standard form of title insurance policy does NOT protect against loss resulting from a encroachment on the property. b forgery in the chain of title. c lack of capacity of the grantor. d undisclosed liens or encumbrances.

a. encroachment on the property. The title insurance company is insuring that all previous documents in the public record are valid, which includes looking for forgeries and incapacity. An encroachment is the intrusion of a physical object onto the property, and would be disclosed by a survey, not a title search.

T rents a house. The lease gives T the right to occupy the house from August 1, 2018 through December 31, 2018. This is called a(n) a estate for years. b periodic tenancy. c tenancy at will. d tenancy pur autre vie.

a. estate for years. An estate for years is a leasehold estate set to last for a specific period, after which it automatically terminates. Duration of an estate for years can be any amount of time, even just one day.

Which CANNOT define a neighborhood's boundaries? a ethnic origin of residents b income level of residents c natural and artificial boundaries d upkeep and maintenance

a. ethnic origin of residents Almost anything can define neighborhood, except for race, ethnicity, and other protected classes).

Trisha wants to sell her house quickly because her new job in another city begins the first of next month. She tells Ed to do whatever it takes to sell her house. Ed's fiduciary duty requires him to a find a suitable buyer as quickly as possible, even if this means Ed must make less of a commission on the deal than he had anticipated. b have his friend buy the house at a lower price because he feels that Trisha's primary interest is in selling the house quickly, not the price. c tell prospective buyers that Trisha wants her house sold as quickly as possible because he must follow all instructions of the client. d weed out offers that seem unreasonable or for which Ed knows the buyers cannot obtain financing to keep Trisha from wasting her time.

a. find a suitable buyer as quickly as possible, even if this means Ed must make less of a commission on the deal than he had anticipated. The answer is A. The duty of loyalty requires Ed to put his client's needs ahead of his own. He should find a buyer quickly, even if it impacts the commission he could earn. Unless she gives him permission to disclose her motivation for selling, he must keep that fact confidential. He must present all offers to his client, because it's up to her to decide what's acceptable. Finally, if he has a friend buy that house without disclosing the relationship, Ed would also be violating his fiduciary duty to Trisha.

The federal government influences the money supply through a fiscal and monetary policy. b physical and social factors. c rules of equilibrium. d supply and demand.

a. fiscal and monetary policy.T The government influences the supply of money through fiscal and monetary policies.

The component of a house on which the foundation rests is known as a a footer. b lateral. c pier. d sill plate.

a. footer. Concrete footers are the base that a foundation sits on. Local building codes will dictate how footers must be built (their size and placement), based on the ground being built upon, the type of foundation to be used, and the frost depth common in the area (footers go below the freeze line—the deepest that ground freezes in winter).

What is another term for emblements? a fructus industriales b fructus naturales c leasehold improvement d trade fixture

a. fructus industrialesT Fructus industriales, also called emblements, are crops, forests, or other plants intended to benefit the farmers of such plants.

A property manager is usually considered a a. general agent.This answer is correct. b. limited agent. c. special agent. d. universal agent.

a. general agent. Correct! A property manager or property management company is a general agent because of the broad range of duties that must be performed under property management.

In relationship to their brokers, real estate licensees are usually considered a general agents. b inadvertent agents. c special agents. d universal agents.

a. general agents. A general agent is one who is authorized to handle all of the principal's affairs in one area or in specified areas. A real estate salesperson, who works on the behalf and under the supervision of an employing real estate broker, is that broker's general agent.

Karen, Sue, and Lucy own a house as tenants in common. When Sue dies, her 25% interest MOST LIKELY a goes to her heirs. b goes to Karen and Lucy, split equally. c goes to Karen and Lucy in proportion to their ownership interests. d It's impossible to know.

a. goes to her heirs. Tenants in common do not have the right of survivorship. If one dies, her interest in the property goes to her heirs, not the other co-owners, unless, of course, Sue had named them in her will as heirs.

A person who commits a tort a has violated the standards of reasonable conduct imposed by law. b must serve a jail term. c will be held liable for breaking a contract. d will be prosecuted by the government.

a. has violated the standards of reasonable conduct imposed by law. People commit torts when they don't follow the standards of reasonable conduct. Examples of torts are malpractice lawsuits or selling defective products.

A person who commits a tort a has violated the standards of reasonable conduct imposed by law. b must serve a jail term. c will be held liable for breach of contract. d will be prosecuted by the government.

a. has violated the standards of reasonable conduct imposed by law. The law requires everyone to take reasonable care to avoid injuring others or damaging others' property. A tort is a breach of the standards of reasonable conduct imposed by law that causes harm to another person.

When performing the cost approach, reproduction cost, as opposed to replacement cost, is typically considered for which type of structure? a historical buildings b restaurants c single-family residential d schools

a. historical buildings Cost estimates for the reproduction of a building are typically done for historical buildings, where it is important for a new structure to have the exact same look and feel as the original.

A seller instructs her listing agent NOT to disclose the carpenter ant damage that she painted over. The agent must a file a complaint with the State Attorney General's office. b follow all commands of the principal. c not follow the instruction of the principal and disclose the damage. d turn the seller in to the appropriate real estate licensing authorities.

a. honesty Even though Jake is not Lucy's agent, he still owes her honesty and fair dealing as a customer.

Lucy went to listing agent Jake's open house, but declined to enter into an agency relationship with him. What duty does Jake owe to buyer customer Lucy? a honesty b loyalty c obedience d none, he is not her agent

a. honesty Even though Jake is not Lucy's agent, he still owes her honesty and fair dealing as a customer.

If you use this calculation when evaluating income—PITI ÷ Gross Monthly Income—you have just determined what? a housing expense ratio b loan-to-value c net income d total debt service

a. housing expense ratioT PITI (principal, interest, taxes, and insurance) divided by gross monthly income determines the amount of the borrower's income that can be used to pay housing expenses. Underwriters have a maximum housing ratio that can be used to approve a mortgage loan.

Which is NOT considered an operating expense? a interest payments b lawn service c repairs and maintenance d trash removal

a. interest payments Debt service is not an operating expense. Operating expenses are the same whether or not the owner has a mortgage on the property.

Matched pair analysis a is a means of determining the contributory value of specific property characteristics or features by comparing pairs of similar properties. b is a means of using comparable sales to determine the value of a subject property. c is unimportant as appraisers attempt to find comparables which are as similar to the base as possible. d all of the above

a. is a means of determining the contributory value of specific property characteristics or features by comparing pairs of similar properties.This answer is correct. Correct! Appraisers use matched pair analysis of comparable properties to determine the contributory value of specific property characteristics or features by comparing pairs of similar properties.

When platform framing is used in construction, each story of the structure a is built one story at a time. b is constructed simultaneously. c has a crawl space. d has its own footer.

a. is built one story at a time. In platform framing, the house or building is constructed one story at a time, with each story serving as a platform upon which to build the next story.

Which type of lien would be considered involuntary and general? a judgment lien b mechanic's lien c mortgage lien d property tax lien

a. judgment lienThis answer is correct. b. mechanic's lien c. mortgage lien d. property tax lien Correct! A property tax lien and a mechanic's lien are involuntary and specific; a mortgage lien is voluntary and specific. A judgment lien, however, attaches to real and personal property, so it is considered a general, involuntary lien.

An apartment building generates $150,000 in yearly income. Building expenses total $2,000 per month. Using a capitalization rate of 9%, what is the building's value (rounded)? a. $1,350,000 b. $1,400,000 c. $1,644,445 d. $1,666,667

b. $1,400,000 First, you need to find the net operating income (NOI) by subtracting expenses ($2,000 x 12 = $24,000) from income: $150,000 - $24,000 = $126,000. Then, divide the "part," which is income, by the cap rate of 9%: $126,000 ÷ 0.09 = $1,400,000. The building value using the 9% cap rate is $1,400,000.

Using the breakdown method, what is the amount of depreciation of carpeting costing $6,000 with 75% of its life remaining? a $800 b $1,500 c $3,000 d $4,500

b. $1,500 If 75% of its life is remaining, it has depreciated 25% (100% - 75%). To find the amount of depreciation, therefore, multiply the cost of the carpet by 25%: $6,000 x .25 = $1,500. The value of the carpet has depreciated by $1,500.

Nicole has a stable gross monthly income of $5,400; her monthly bills include a car payment of $420 with four payments left and a student loan payment of $220. What is the maximum mortgage payment (PITI) she would qualify for under both ratios if she is getting a conventional loan? a $1,304 b $1,512 c $1,724 d $1,944

b. $1,512 Under the housing expense ratio, she would qualify for $1,512 ($5,400 x .28). Using a debt-to-income ratio of 36% for a conventional loan, Nicole would qualify for a total housing expense of $1,944 ($5,400 x .36). From that, however, you need to subtract her recurring debt of $220 (there are fewer than 10 payments left on the car, so it does not count as debt), resulting in a maximum housing expense of $1,724. Remember that she must qualify under both ratios, so she will be able to borrow only the lesser of the two amounts.

A warehouse that is 700' x 300' can be built for a cost of $8.00 per square foot, but part of that space is a 100' x 100' office area that will cost $12.75 per square foot. What is the total building cost? a $1,680,000 b $1,727,500 c $2,175,500 d $2,757,500

b. $1,727,500 First, determine the total square footage: 700' x 300' = 210,000 SF. Then determine the square footage of the office area: 100' x 100' = 10,000 SF. The warehouse is 200,000 SF (210,000 - 10,000). At $8 per SF, that part of the building will cost $1,600,000. The office area of 10,000 costs $12.75 per SF: 10,000 x $12,75 = $127,500. Add them together to find total cost: $1,600,000 + $127,500 = $1,727,500.

A parcel described as the S 1/2, NE 1/4, NW 1/4 sells for $31,500 per acre. If the commission rate is 6%, calculate the commission. a $25,200 b $37,800 c $75,600 d $151,200

b. $37,800 First, find the acreage: 640 ÷ 2 ÷ 4 ÷ 4 = 20 acres. Then determine the price: 20 x $31,500/acre = $630,000. Finally, find the commission on the sale: $630,000 x .06 = $37,800.

The premium for two-year insurance coverage on a home is $460. The policy was purchased and paid for August 1, 2016 and a closing takes place June 2, 2018. Using a 365-day year, calculate the seller's credit. a $29.61 b $37.18 c $74.36 d $96.41

b. $37.18 Since this is a two-year policy, first, determine the annual cost: $460 / 2 = $230. Then find the daily rate: $230 / 365 = 0.6301. Next, determine the number of days that the buyer will take advantage of this prepaid policy: June=28 days + July=31 days is 59 days. Finally, multiply the days by the daily rate: 59 x 0.6301 = $37.18 (rounded). The seller will be credited $37.18 at closing.

A property is appraised at $150,000 and assessed for tax purposes at 35% of value. Calculate the annual taxes if the mills total 80. a $1,200 b $4,200 c $6,562 d $7,800

b. $4,200 First, find the assessed value: $150,000 x .35 = $52,500. Find the cost of each mill by dividing the assessed value by 1,000: $52,500 / 1,000 = 52.5. Finally, multiply the cost of each mill by total mills: 52.5 x 80 = $4,200.

Lakeview Church has a replacement cost of $495,000 and the site value is $110,000. If the building has an effective age of 10 years and an economic life of 50 years, what is the property value? a $500,600 b $506,000 c $600,500 d $605,000

b. $506,000 First, determine the accrued depreciation using the age-life ratio: 10 / 50 = .20. The depreciation is $99,000 ($495,000 x .20). Subtract the depreciation from the cost to find the value of the structure: $495,000 - $99,000 = $396,000. Finally, add in the site value for the final opinion of value: $396,000 + $110,000 = $506,000.

The sale of a property will close on April 30, 2017. Taxes are $1,575 per year, and are paid through the last half of 2016. Calculate the seller's share of taxes using a 360-day year. a $517.81 b $525.00 c $787.50 d $1,050.00

b. $525.00 First, find the cost per day using a 360-day year: $1,575 / 360 = $4.3750. Then, determine how many days for which the seller is responsible. When using a 360-day year, each month is simply 30 days, so four months is 120 days. Finally, multiply the daily rate by the number of days: $4.3750 x 120 = $525.00. This is the seller's share of the taxes.

A borrower wants an FHA loan for a home that costs $103,500 and appraised for $107,000. Estimated closing costs are $1,500. The borrower also wants to finance the initial MIP premium. The borrower has good credit, a six-figure income, and meets all other FHA standards. How much is the minimum investment the buyer must make to buy this home? With the loan described above, what is the most that the seller can pay to the buyer? a $1,500 b $6,210 c $6,420 d $7,710

b. $6,210 Assuming that the FHA's limit on seller contributions is 6%, the seller could pay the buyer up to $6,210 for an FHA loan: $103,500 x .06 = $6,210

A borrower's stable monthly income is $3,000. He has three monthly debts: $350 car payment, $50 personal loan payment, and $50 credit card payment. What is the maximum monthly mortgage payment he would qualify for on a conventional loan? a $390 b $630 c $840 d $1,080

b. $630 The housing expense ratio for a conventional loan in 28%. The total debt service ratio is 36%. Looking at the total debt service: $3,000 (income) multiplied by (x) 0.36, which equals $1,080. From the $1,080, you must subtract his monthly debts ($350 +$50+ $50), which totals $630.

The apartments in a 12-unit apartment building rent for $475 per month. Vacancy and collection losses total 5% and monthly building expenses are $4,000. Calculate the effective gross income. a. $16,980 b. $64,980 c. $68,400 d. $69,980

b. $64,980 The effective gross income is the potential gross income minus vacancy/collection losses. The potential gross income each month is $5,700 (12 x $475), making the annual potential gross income $68,400 (12 x 5,700). Subtract the vacancy/collection losses: $68,400 - 5% = $64,980. This is the effective gross income (EGI). If you were to subtract the building expenses, you would find the net operating income (NOI).

Your investor client is interested in looking at commercial property. An available strip mall has an effective gross income of $112,000 and a net operating income of $84,000. The capitalization rate in the area for similar properties is 12%. What is the likely asking price for the property? a $336,000 b $700,000 c $933,333 d $1,008,000

b. $700,000 Using the IRV formula to find value, you start with Income (NOI = $84,000) and divide by the Rate (cap rate = 12%) to find Value. $84,000 / .12 = $700,000.

A company sold another company's listing. It received 50% of a six percent commission. If the company receive $2,250, what was the price of the home? a $37,500 b $75,000 c $135,000 d $270,000

b. $75,000T The seller paid total commission of $4,500 ($2,250 x 2), which is the "part." To find the "whole," which is the sales price, divide the part by the percentage: $4,500 / .06 = $75,000. You could also divide the selling company's commission of $2,250 by 3%, their portion of the commission, and you would get the same answer: $2,250 / .03 = $75,000.

At the end of the year, what form will a real estate salesperson who files a tax return as an independent contractor receive that details his or her compensation for the year? a. 1040 ICA b. 1099-MISC c. W-2 d. W-4

b. 1099-MISC Correct! An independent contractor receives a 1099-MISC form detailing any commission-based income.

Lucy just obtained her real estate salesperson license after April 6, 2017. She must now complete ____ hours of Commission-approved post licensing education within ____ months. a 8 / 12 b 20 / 12 c 20 / 24 d 30 / 36

b. 20 / 12 The answer is B. New licensees must complete an approved twenty-hour post-licensing course(classroom or online) within 12 months if they are licensed after April 6, 2017. For those licenses issued prior to April 6, 2017, they must complete 10 hour Sales Post Licensing in the classroom (only).

Patricia, a first-time home buyer, requests to see the Closing Disclosure settlement statement prior to the closing. The lender must provide this at least _______ prior to closing. a 1 business day b 3 business days c 3 calendar days d 5 business days

b. 3 business days Under the provisions of RESPA, a lender must allow the borrower at least three business days to inspect the Closing Disclosure settlement statement.

What is the minimum number of comparable properties that an appraiser must consider when developing an appraisal for a conventional loan that could be purchased by Fannie Mae? a 2 comparables b 3 comparables c 4 comparables d 5 comparables

b. 3 comparables Fannie Mae (and others) requires a minimum of three comparable sales when developing the sales comparison approach.

Paul is doing an appraisal for Fannie Mae. What is the minimum number of comps he needs to consider when using the sales comparison approach? a 2 comps b 3 comps c 4 comps d 5 comps

b. 3 comps A minimum of three comparables is required by most secondary market lenders to ensure an accurate appraisal from sufficient data.

How many business days after a borrower submits a loan application must the lender provide the Loan Estimate? a 2 days b 3 days c 5 days d 10 days

b. 3 days Lenders must disclose an estimate of closing costs, including the annual percentage rate, within three business days after the submission of a loan application.

To calculate the maximum monthly payment allowable for an FHA-insured loan using the payment-to-income ratio, you would take the stable monthly income and multiply by a 28%. b 31%. c 36%. d 41%.

b. 31%. The payment-to-income ratio for an FHA loan is calculated by taking the borrower's stable monthly income and multiplying by 31% (0.31).

A borrower secures a 5/1 ARM for $152,000. The initial interest rate is 4.5%, but after five years, the rate will go to the LIBOR index (currently at <1% plus 3% margin). The interest rate will be adjusted annually. Rate caps are 2% per year and 5% over the life of the loan. What's the highest the rate can be at the beginning of the sixth year? a 4.5% b 6.5% c 8.5% d 9.5%

b. 6.5% The rate remains at 4.5% for the first five years, and the rate cap is 2% per year. So the highest the rate could be after one year of adjustment is 6.5%.

What is an advantage of a VA loan? a An appraisal is not required. b A down payment is not required. c Interest rates are at least 1/2% lower than on a conventional loan. d PMI is required only for loans exceeding 95% LTV.

b. A down payment is not required. VA-guaranteed loans permit an eligible buyer to purchase with no money down.

Which is NOT dual agency? a A brokerage represents both the buyer and seller as clients in the same real estate transaction. b A licensee is dealing with both the buyer/customer and seller/client in the same real estate transaction. c The only manager in the company represents a client in an in-company real estate transaction. d Two licensees in the same company represent their own individual clients in the same transaction.

b. A licensee is dealing with both the buyer/customer and seller/client in the same real estate transaction. The answer is B. There is always a dual agency situation with an in-house transaction involving a seller client and a buyer client. Even when separate licensees are representing buyer and seller, the broker or management-level licensee would be a dual agent. If one of the parties to the transaction is merely a customer, there is no dual agency.

Which situation describes blockbusting? a A bank refused to lend to residents of certain neighborhoods because of their racial makeup. b A licensee moves a minority person into a neighborhood with the intent of buying other houses in the neighborhood at a greatly reduced price. c A licensee shows a minority client only properties in areas mostly populated by the same minority. d Despite the all-white character of a neighborhood and the implication the seller would like to see it remain that way, the licensee insists on showing the property to minority buyers who've expressed an interest in the area.

b. A licensee moves a minority person into a neighborhood with the intent of buying other houses in the neighborhood at a greatly reduced price. It is defined as "Inducing or attempting to induce, for profit, any person to sell or rent property based on representations made regarding entry into the neighborhood of persons of a particular race, color, religion, sex, or national origin." Blockbusting is also referred to as panic selling or panic peddling.

Ohio tenant Alice believes she has been discriminated against by an apartment property manager. Which of the following would NOT be an appropriate action to pursue? a Alice should file a complaint with HUD by going to the closest HUD office. b Alice should file a complaint with the local sheriff. c Alice should file a complaint with the Ohio Civil Rights Commission. d Alice should file a civil lawsuit in common pleas court.

b. Alice should file a complaint with the local sheriff. Alice should work with a national, state, or local fair housing agency when pursuing a fair housing complaint. She could also file a civil lawsuit in a court of common pleas. This is not something a sheriff could address.

The VA sets the maximum loan amount by looking at the a county the home is located in. b CRV. c current interest rates. d type of dwelling (e.g., one to four units).

b. CRV. The CRV, or certificate of reasonable value, is similar to an appraisal and determines how much the veteran can borrow in order to purchase the property.

Which statement about dower rights is FALSE? a Dower rights attach to property owned by spouses during their marriage. b Dower rights create a present possessory interest. c Life estates do not carry dower rights. d Real estate agents should obtain a release of dower rights when listing property.

b. Dower rights create a present possessory interest. As long as the married person owns the property, or remains alive, the spouse's dower rights are contingent or incomplete. These contingent rights are not possessory—merely potentially possessory. The other statements are true.

At ABC Brokerage, ALL licensees in the company represent the seller client, and ALL licensees represent the buyer client in a real estate transaction. Which Consumer Guide should ABC Brokerage use? a Exclusive Seller Agency Only b Dual Agency in All In-House Transactions c Split Agency & Dual Agency d Split Agency but No Dual Agency

b. Dual Agency in All In-House Transactions Correct! The Consumer Guide describes Dual Agency in All In-House Transactions this way: "When (brokerage) lists property for sale, all agents in the brokerage represent the seller. Likewise, when a buyer is represented by a (brokerage) agent, all of the agents represent that buyer." If ABC practiced one of the variations of split agency, licensees who are not involved in the transaction would not be considered agents of the clients.

At ABC Brokerage, ALL licensees in the company represent the seller client, and ALL licensees represent the buyer client in a real estate transaction. Which Consumer Guide should ABC Brokerage use? a Exclusive Seller Agency Only b Dual Agency in All In-House Transactions c Split Agency & Dual Agency d Split Agency but No Dual Agency

b. Dual Agency in All In-House Transactions The Consumer Guide describes Dual Agency in All In-House Transactions this way: "When (brokerage) lists property for sale, all agents in the brokerage represent the seller. Likewise, when a buyer is represented by a (brokerage) agent, all of the agents represent that buyer." If ABC practiced one of the variations of split agency, licensees who are not involved in the transaction would not be considered agents of the clients.

Which is NOT an example of avulsion? a After a storm, part of J's property collapses in a mudslide. b During a drought, the lake dries up, giving U more land on which to grow a garden. c A flash flood pulls L's barn and the land on which it sat into the river. d T's hillside is torn away in an earthquake.

b. During a drought, the lake dries up, giving U more land on which to grow a garden. Avulsion is the erosion of land through natural causes, such as flooding or earthquakes, which may remove soil or cause the collapse of riverbanks. U is gaining land through the process of reliction.

Which USPAP Rule requires appraisers to avoid actions that could be considered misleading or fraudulent? a Competency Rule b Ethics Rule c Jurisdictional Exception Rule d Scope of Work Rule

b. Ethics Rule [feedback} The Ethics Rule includes personal obligations and responsibilities of the individual appraiser, as well as practices that are unacceptable or could be considered misleading or fraudulent.

Which statement about FHA-insured loans is TRUE? a FHA defines income limits to determine who is eligible. b FHA loan qualification standards are less stringent than conventional loans. c FHA provides funds directly to borrowers. d Only first-time homebuyers can qualify for an FHA loan.

b. FHA loan qualification standards are less stringent than conventional loans. Of these statements, the only factual one is that FHA-insured loans have less stringent qualification standards than conventional loans. The other statements are false, but represent a number of misconceptions about FHA financing.

Title VIII of the Civil Rights Act of 1968 is also called the a Equal Opportunity in Housing Act. b Federal Fair Housing Act. c HUD. d Ohio Civil Rights Law.

b. Federal Fair Housing Act. Title VIII of the Civil Rights Act of 1968 is commonly called the Federal Fair Housing Act.

Which of the following is NOT part of the secondary market? a Federal National Mortgage Association b Federal Housing Administration c Government National Mortgage Association d Federal Home Loan Mortgage Corporation

b. Federal Housing Administration The Federal Housing Administration, or FHA, is not part of the secondary mortgage market. Nor is it part of the primary mortgage market. The FHA insures loans made by primary market lenders. The others are part of the secondary market, better known as Fannie Mae, Ginnie Mae, and Freddie Mac.

Which agency is the conservator of Fannie Mae and Freddie Mac? a Federal Housing Administration b Federal Housing Finance Agency c Housing and Urban Development d Office of Federal Housing Enterprise Oversight

b. Federal Housing Finance Agency Both agencies are under the conservatorship of the Federal Housing Finance Agency (FHFA).

Licensee Ken has worked long hours with buyer client Patrick to negotiate an agreement to buy Jordan's house. A day before closing, Patrick tells Ken that he just lost his job, and he's sure that the mortgage won't close. However, he doesn't want to abandon the deal yet, "just in case." What should Ken do? a He cannot disclose this information without breaching his fiduciary duty of confidentiality. b He must disclose this information as it is a material fact. c He must follow his client's lawful orders and let things stand for the time being. d Ask his broker to terminate the agency agreement with Patrick.

b. He must disclose this information as it is a material fact. This is the correct answer. Incorrect. The answer is B. The buyer's financial situation could jeopardize the entire transaction and is a material fact. If the seller turned down another offer with the expectation of Patrick getting a mortgage, and the deal falls through, Ken will have breached his duty of disclosure, which he owes to clients and customers.

BigTime Manufacturers are getting ready to build a new factory in Smithton that should attract hundreds of new workers to the small town. What would you expect the immediate effect on home prices in the area to be? a Home prices should fall initially. b Home prices should rise initially. c Home prices should not be affected. d It's not possible to predict.

b. Home prices should rise initially. Correct! If more people want to move into an area where there are fewer housing options, the prices of existing homes would likely rise initially.

Which statement regarding dual agency is TRUE? a It is listed as unethical conduct in the Ohio Real Estate Commission's regulations. b It must be disclosed in writing and consented to by the parties when the agent has an ongoing business relationship with one party and not the other. c It requires the agent to reveal everything one client tells him to the other client. d It was recently made illegal in Ohio.

b. It must be disclosed in writing and consented to by the parties when the agent has an ongoing business relationship with one party and not the other. A dual agency situation can be entered into only if both the seller and buyer have full knowledge of the dual representation and consent to it in writing.

Karen is selling her house and contracts with Yvonne to be her agent. What information is Yvonne LEAST LIKLEY to be required to disclose to prospective buyers? a The insulation in attic was determined to contain asbestos. b Karen's husband was murdered in the basement of the home. c Mold was discovered behind the walls of the basement. d The well water may be contaminated by a chemical dump upstre

b. Karen's husband was murdered in the basement of the home. A licensee is not required to disclose information that is immaterial to the condition of the property, such as the murder. While this creates a potential stigma against the property, it is not required to be disclosed.

Each of these borrowers is getting a conventional loan. Who will NOT be required to pay PMI? a K, who is borrowing $85,000 to purchase a house for $100,000 b L, who is borrowing $150,000 to purchase a house for $200,000 c M, who is borrowing $205,000 to purchase a house for $250,000 d None of them; PMI is only for nonconforming loans.

b. L, who is borrowing $150,000 to purchase a house for $200,000 Private mortgage insurance (PMI) is required on conventional loans that have a loan-to-value in excess of 80%. L's loan-to-value is 75% ($150,000 ÷ $200,000 = .75 or 75%), so she will not have to pay PMI. K and M have LTVs above 80%.

Which is a post-licensing requirement for those licensed after April 6, 2017? a. Licensees may take no more than ten hours of education per day. b. Licensees must complete a 20-hour post-licensing course within the first year of being licensed. c. Licensees must provide evidence to the Ohio Real Estate Commission that they satisfied their post-licensing requirements. d. Licensees must register their licenses with the Clerk of Courts.

b. Licensees must complete a 20-hour post-licensing course within the first year of being licensed. A new licensee has 12 months after the license is issued to complete an approved 20-hour post-licensing course.

Marsha is a broker at Johnson Realty and has listed a rundown property. The owner has not made any effort to fix it up over the years and has ignored Marsha's suggestions. Ron, one of Marsha's non-management-level licensees, wants to buy the property. Which statement is TRUE? a Marsha does not need to do anything as long as she keeps any confidential information she received from the seller confidential. b Marsha should again suggest some improvements to the seller, and then make all necessary disclosures and have forms signed in regard to Ron as a potential buyer of the property. c Marsha should again suggest some improvements to the seller, but nothing else. d Since Ron is a non-management-level licensee, Marsha does not need to make any further disclosures to the seller.

b. Marsha should again suggest some improvements to the seller, and then make all necessary disclosures and have forms signed in regard to Ron as a potential buyer of the property. Incorrect. The answer is B. Marsha is obligated to disclose her relationship with prospective buyer Ron, since it could be considered a conflict of interest. She should also make another attempt to inform her client about minor repairs that could affect the property value.

Which statement about the membership of the Ohio Real Estate Commission is FALSE? a Members are appointed by the Governor. b Members serve a four-year term. c No more than three members of the Commission may be members of the same political party. d There are four real estate broker members and one unlicensed member.

b. Members serve a four-year term. The members serve five-year terms, staggered so that one appointment is made each year. The other statements are true.

For the loan described above, do you think that negative amortization is likely to occur? A borrower secures a 5/1 ARM for $152,000. The initial interest rate is 4.5%, but after five years, the rate will go to the LIBOR index (currently at <1% plus 3% margin). The interest rate will be adjusted annually. Rate caps are 2% per year and 5% over the life of the loan. What's the highest the rate can be at the beginning of the sixth year?

b. No No, negative amortization will not occur on this loan since its rate will reset on its anniversary, which is annually.

Which statement about the continuing education requirement for an Ohio real estate salesperson is FALSE? a Required topics include 3 hours on civil rights and 3 hours on core law. b No more than 8 hours of CE may be carried over to the next renewal period. c A licensee who is 70 years old is required to take 9 hours of CE. d A total of 30 hours of CE is required every renewal period.

b. No more than 8 hours of CE may be carried over to the next renewal period. Correct! The State allows licensees to carry over as much as 10 extra hours of CE into the next renewal cycle, not 8. Licensees must complete 30 hours of CE for every renewal period, including 3 hours on core law, 3 hours on civil rights/fair housing, and 3 hours on the Canons of Ethics; these are the 9 hours required for licensees age 70 and over.

Broker Betty has three licensed salespersons working at her brokerage. What is Betty required to do with the licenses? a All licenses must be displayed in a public area of Betty's business location. b Only broker Betty's license must be displayed in a public area of her business location. c No licenses are required to be displayed, but all must be on file at Betty's business location. d Each licensee is required to maintain his or her own license somewhere on the premises.

b. Only broker Betty's license must be displayed in a public area of her business location. The broker's license (and only the broker's license) must be displayed in a public area of the broker's place of business. The associated salespersons' licenses must be kept on file at Betty's principal office.

Which statement about the loan process is FALSE? a Lenders who wish to sell loans to the secondary market require the use of standardized loan application. b Pre-qualification is binding on the part of the lender. c A real estate agent cannot pre-approve a buyer client for a mortgage loan. d A seller may be more likely to accept an offer from a buyer who has a pre-approval letter from a lender.

b. Pre-qualification is binding on the part of the lender. A real estate agent can perform a preliminary pre-qualification for a buyer. Such analysis is not binding on the part of a lender. The other statements are true.

How does the appraiser determine the appropriate weight to be given to the cost approach? a The appraiser always uses the cost approach as supporting evidence for the other appraisal methods. b The appraiser considers what the purpose of the appraisal is before deciding how much weight to give the cost approach. c If the figure for the cost approach is very different from the other figures, the appraiser uses a weighted average to bring it in line. d If the figures for the cost approach and the sales comparison approach come out very different, the appraiser knows not to give the cost approach much weight.

b. The appraiser considers what the purpose of the appraisal is before deciding how much weight to give the cost approach. An appraiser must determine the purpose of an appraisal assignment and use his experience and judgment to determine how much weight to give any of the approaches to value when performing reconciliation. If the building is relatively new, has few comps, and is not an income property, the appraiser will likely give more weight to the cost approach.

Which would NOT be a reason for charging points? a The borrower wants to lower the interest rate. b The broker wants to make extra commission. c The lender wants a bigger yield. d The lender wants extra loan origination fees.

b. The broker wants to make extra commission. The lender is the beneficiary of mortgage points, not the broker. Points increase the lender's yield and are a way of charging origination fees. A borrower may decide to pay points to lower the interest rate. You can think of points as a sort of prepaid interest: The borrower pays more at closing, but less for the life of the loan.

The county Board of Commissioners establishes a rural zoning commission to complete a zoning plan for unincorporated areas of the county. The zoning commission proposes a new zoning ordinance. How does the ordinance become law? a The citizens of the county vote, and if they approve it, the ordinance becomes law for everyone in the county. b The citizens of the county vote, and the ordinance becomes law only in the townships where it was approved. c The county Board of Commissioners votes, and if they approve it, the ordinance becomes law for everyone in the county. d The county Board of Commissioners votes, and if they approve it, the ordinance must then be approved by the state legislature before it become law.

b. The citizens of the county vote, and the ordinance becomes law only in the townships where it was approved. This is the correct answer. c. The county Board of Commissioners votes, and if they approve it, the ordinance becomes law for everyone in the county. d. The county Board of Commissioners votes, and if they approve it, the ordinance must then be approved by the state legislature before it become law. Incorrect. The answer is B. The Board of Commissioners first votes on the plan. If the Board adopts the plan, it becomes a zoning resolution. It then goes to the citizens of the county in a referendum vote. It becomes law only in those townships where a majority of voters approve it.

A new tenant signs a two-year lease that begins on March 1, but on March 1, the previous tenant is still living in the apartment. Which statement is TRUE? a It is up to the new tenant to start eviction proceedings against the old tenant. b The landlord has a duty to get the old tenant out so the new tenant can take possession. c The new tenant is entitled to damages, but does not have the right to rescind the lease. d The new tenant will not owe rent for the period that the old tenant remains in the apartment.

b. The landlord has a duty to get the old tenant out so the new tenant can take possession. There is an implied covenant in every lease that the landlord will deliver possession of the property to the tenant on the date the lease term begins. If the tenant is prevented from taking possession, the landlord has breached this implied covenant. When the covenant to deliver possession is breached, the tenant has the option of rescinding the lease.

Which statement about the Ohio Real Estate Commission is FALSE? a. The licensed members must be active for at least 10 years prior to their appointment. b. The members are appointed by the Superintendent of the Division of Real Estate and Professional Licensing. c. The members serve a five-year term. d. There are four licensed members and one unlicensed member.

b. The members are appointed by the Superintendent of the Division of Real Estate and Professional Licensing. Correct! The members of the Real Estate Commission are appointed by the Governor. The other statements are true.

Which statement about the Real Estate Recovery Fund is FALSE? a It is used to satisfy unpaid judgments against licensees for misconduct. b The payment ceiling is $40,000 per violation. c There must be at least $2 million in the Fund or licensees may be assessed a special fee at renewal. d When a payment is made from the Fund, the licensee's license is suspended until the sum is repaid with interest.

b. The payment ceiling is $40,000 per violation. The answer is B. The payment ceiling is $40,000 for each licensee involved in a transaction, NOT for each violation. The other statements are true.

L owns a home within the city limits. In a corner of his property, he has an elaborate garden where he likes to sit quietly. He gets new neighbors who have a teenager. The teen is in a band, which practices in the garage right next to L's garden most evenings until late. What activity is happening, and what right is being infringed upon? a This is encroachment, which is infringing on Lenny's right of disposition. b This is nuisance, which is infringing on L's right of enjoyment. c This is trespassing, which is infringing on L's right of enjoyment. d This is trespassing, which is infringing on L's right of use.

b. This is nuisance, which is infringing on L's right of enjoyment. The noise caused by the band is a nuisance, which is interfering with L's quiet enjoyment of his land.

A owns some undeveloped property that is zoned for commercial use. The city later rezones that area to allow only residential use. A's property could be used for residential purposes, but commercial development would be much more profitable. In fact, the property would be worth $500,000 for commercial development, but only $100,000 for residential development. Which statement is TRUE? a A has a right to develop the property commercially as a nonconforming use. b This zoning law is constitutional, since it does not prevent the only kind of development the property is suited for. c This zoning law is unconstitutional because it prevents A from putting the property to its most profitable use. d Zoning laws that allow only residential use of property are unconstitutional in Ohio.

b. This zoning law is constitutional, since it does not prevent the only kind of development the property is suited for To claim a case of unconstitutional inverse condemnation, the owner has to prove the zoning law rendered the property virtually useless by preventing the only kinds of development it was suited for. The land could be developed for single-family home, and the property owner would not be entitled to compensation.

H has lived in her home for 30 years with her sister-in-law W. H has one daughter, E. If H dies before W, H wants to make sure that W is still allowed to live in the home, so she grants W a life estate. H dies. After ten years, W also dies, and the property goes to daughter E. Which statement is TRUE? a W has a life estate where she is the life tenant and H is the measuring life. E is the remainderman. b W is both the life tenant and the measuring life for the estate; E has a reversionary interest. c W is the measuring life of this life estate and E is the life tenant with a reversionary interest. d W's life estate ends when H dies, at which point E will take possession of the property as reversioner.

b. W is both the life tenant and the measuring life for the estate; E has a reversionary interest. The property goes to E when the life estate ends; she has a reversionary interest and is not the remainderman. The life estate continues as long as the life tenant, W, lives and cannot be terminated except by death or W's choice. W is the measuring life for the estate.

Wendy decides to accept Tyler's offer, so she signs the offer and gives it to her agent. At this point, which statement is TRUE? a Because of the mailbox rule, Wendy and Tyler are in contract. b Wendy and Tyler have a binding contract. c Wendy can still withdraw her acceptance until Tyler is notified of the acceptance. d Wendy has made a counteroffer.

b. Wendy and Tyler have a binding contract.This is the correct answer. The answer is B. They have a binding contract.

XYZ Brokerage uses the Split Agency but No Dual Agency business model. Agent Amy represents the seller and agent Bob represents the buyer in the same transaction. Who, if anyone, is a dual agent? a Amy and Bob b XYZ's broker c XYZ's broker and all other licensees d no one

b. XYZ's broker Incorrect. The answer is B. In a split agency situation, the broker is always a dual agent. The difference between "Split Agency but No Dual Agency" and "Split Agency & Dual Agency" is whether or not a single licensee can represent both buyer and seller. In either variation of split agency, the associated licensees who are not involved in the transaction are not considered dual agents. This occurs only with the "Dual Agency in All In-House Transactions" model.

Which is the most important consideration in developing the cost approach? a a building's actual age b a building's effective age c both a and b d neither a nor b

b. a building's effective age Of the choices given, an appraiser will be more concerned about the effective age, which is an analysis of how the structure has deteriorated and, therefore, addresses the depreciation of the structure. It allows the appraiser to determine what the replacement cost for the structure might be. The effective age is not necessarily equal to its actual age.

Unless the listing agreement says otherwise, a broker is entitled to a commission only if a a buyer with a good credit rating makes a reasonable offer. b a ready, willing, and able buyer offers to buy on the seller's terms. c the sale actually closes. d the seller and buyer sign a binding contract.

b. a ready, willing, and able buyer offers to buy on the seller's terms. Under the terms of most listing agreements, once a ready, willing, and able buyer has submitted an offer, the broker has earned a commission—even if the sale never closes.

Who does NOT need a real estate license? a a property manager under contract by the owner b a salaried employee of ABC Corporation when selling the company's own property c someone selling a friend's raw land d your uncle who is selling real estate options

b. a salaried employee of ABC Corporation when selling the company's own property A person who deals with their own property, including partnerships and corporations dealing with property through regular salaried employees, is exempt from the requirement to be licensed.

Which variables must be known to estimate property value using the income approach? a any two of the following: Gross income, cap rate, or value b any two of the following: Net income, cap rate, or value c gross income, cap rate, and value d net income, cap rate, and value

b. any two of the following: Net income, cap rate, or value Remember IRV to recall the three factors in the capitalization rate equation: I=net income; R=cap rate; V=value. When you know any two of these, you can find the third

The developer established a general plan of restrictions that applies to every home in the subdivision. This includes a provision prohibiting vegetable gardens. The owners of Lot 60 have planted corn, tomatoes, and rutabagas in their front yard. Who can enforce the restriction against the owners of Lot 60? a any lot owner who can see the vegetable garden from his property b anyone who owns a lot anywhere in the subdivision c only the developer or the homeowners association d only the next-door neighbors (the owners of Lots 59 and 61)

b. anyone who owns a lot anywhere in the subdivision When there is a general plan, any homeowner in the subdivision can enforce the CC&Rs against any other homeowner there.

Ohio's statute concerning abandoned mineral interests a applies only to unused coal rights. b applies only when the holder of the mineral interest is someone other than the owner of the surface property. c does not apply to oil and gas rights. d terminates interests that have been inactive for five years or more.

b. applies only when the holder of the mineral interest is someone other than the owner of the surface property. The statute terminates unused mineral interests that have been completely inactive for more than 20 years, but only where these mineral interests are held by someone other than the surface owner of the property.

The agent may terminate the agency relationship by renouncing it a as long as the agency agreement did not specify an expiration date. b at any time. c only if it is coupled with an interest. d only if the principal consents.

b. at any time.T Renunciation is when someone who has been granted something, or has accepted something, later gives it up or rejects it. While an agent could renounce the relationship at any time, it's critical to note that renunciation may likely be a breach of contract, making the agent liable to the principal for damages.

A buyer's agent must give a Consumer Guide to Agency Relationships to the buyer a after the buyer's offer is presented. b at the open house, if the buyer wants to write an offer on the home. c at the same time a listing agreement is entered into. d immediately after marketing or showing the property.

b. at the open house, if the buyer wants to write an offer on the home. Typically, a buyer attending an open house does not receive a Consumer Guide to Agency Relationships, since that is typically not perceived to a substantive contact. However, a licensee must provide a buyer with the form no later than discussing making an offer to buy real property with the buyer, so if this were to occur at an open house, the buyer should have been given the form before he writes an offer.

A buyer's agent must give a Consumer Guide to Agency Relationships to the buyer a after the buyer's offer is presented. b at the open house, if the buyer wants to write an offer on the home. c at the same time a listing agreement is entered into. d immediately after marketing or showing the property.

b. at the open house, if the buyer wants to write an offer on the home.This answer is correct. Correct! Typically, a buyer attending an open house does not receive a Consumer Guide to Agency Relationships, since that is typically not perceived to a substantive contact. However, a licensee must provide a buyer with the form no later than discussing making an offer to buy real property with the buyer, so if this were to occur at an open house, the buyer should have been given the form before he writes an offer.

When must a buyer's agent give an Agency Disclosure Statement to a seller? a at the same time a listing agreement is signed b before the buyer's offer is presented c immediately after marketing or showing the property d It is not required unless the agent requests confidential information from the buyer.

b. before the buyer's offer is presentedThis answer is correct. Correct! The seller must receive a copy of a buyer's signed Agency Disclosure Statement before an offer is presented.

Which is important to the data collection process? a analysis of data only b both analysis of data and verification of data c neither analysis of data nor verification of data d verification of data only

b. both analysis of data and verification of data Data collection is an important part of the appraisal process. Just as important is the verification and analysis of the data. In fact, verification is the most important aspect of an appraisal.

H wrote a will leaving everything to his son. When H dies, his wife a automatically takes title to the house and H's other assets, in spite of the will. b can exercise her right of election and receive no more than half of the net estate. c is entitled to $60,000 out of the estate, in spite of the will. d will receive nothing, unless she can prove the will is invalid.

b. can exercise her right of election and receive no more than half of the net estate.This is the correct answer. Selected: c. is entitled to $60,000 out of the estate, in spite of the will.This answer is incorrect. d. will receive nothing, unless she can prove the will is invalid. Incorrect. The answer is B. A legal spouse cannot be disinherited and, in Ohio, can elect to take the first $40,000 of the estate or take the intestate share, which can never be more than half of the net estate.

A sales associate a can collect commissions directly from the seller. b can personally buy a listing only after disclosure to the seller that the sales associate is a principal. c can sue a buyer for backing out of a deal. d may take listings in his own name.

b. can personally buy a listing only after disclosure to the seller that the sales associate is a principal. A licensee cannot act as an undisclosed principal, so if he wants to buy a listed property, he must disclose that he is the buyer.

A, the seller, signs the agreement of sale from the prospective buyer and hands it back to her agent. What element is missing in order to make this a valid contract? a communication back to the offeree b communication back to the offeror c earnest money deposit d meeting of the minds

b. communication back to the offeror There has been a meeting of the minds, but the acceptance must be clearly communicated back to the person who made the offer, the offeror.

The largest and most expensive house in the neighborhood could likely be experiencing regression through which economic principle? a anticipation b conformity c contribution d substitution

b. conformity Conformity is the theory that a home achieves maximum value when surrounded by like homes.

T has a five-year lease for an office in a small building. In the lease, the landlord agreed to keep the common areas in good condition and to perform all major repairs. One rainy autumn, the roof starts leaking badly in several places. The leaks threaten T's furniture and papers and make the office impossible to work in. T informs the landlord, but the landlord does not send anyone around to repair the problem, so T moves out. This is an example of a actual eviction. b constructive eviction. c self-help eviction. d wrongful abandonment.

b. constructive eviction The inability to keep the property is a safe condition allows a tenant to move out of the property and stop paying rent under a claim constructive eviction. To make such a claim, the problem must substantially interfere with the tenant's use of the property and it must be the landlord's responsibility.

When showing a listing, a broker is asked about the condition of the basement. Without having seen the basement, the broker states that, to the best of her knowledge, the basement is free of dampness. In fact, the basement leaks steadily whenever it rains. The broker most likely has committed a actual fraud. b constructive fraud. c innocent misrepresentation. d no error; this is protecting the homeowner's interest.

b. constructive fraud. The broker has negligently misrepresented a material fact about the condition of the property, which can be considered constructive fraud. Actual fraud is an intentional misrepresentation with the purpose to deceive. While the broker did not intentionally misrepresent the condition of the basement, she was obligated to exercise reasonable care and should have viewed the basement before making any statements concerning its condition.

In order to use the Recovery Fund, one must be a an attorney whose client was damaged by a licensee. b damaged by a licensee in a real estate transaction. c a licensee seeking commissions in a real estate transaction. d seeking relief from an ancillary trustee.

b. damaged by a licensee in a real estate transaction. The Real Estate Recovery Fund is used to satisfy unpaid judgments against real estate licensees for activities in violation of the license law that caused financial loss to the claimant.

The first step of the appraisal process is to a collect data. b define the appraisal. c define the data sources. d determine highest and best use.

b. define the appraisal. Defining the appraisal is also called stating the problem. This step involves identifying the subject property, identifying the purpose of the appraisal, and identifying the date of the appraisal as well as any other relevant facts.

The first step in the appraisal process is to a collect data. b define the problem. c determine the highest and best use. d estimate value.

b. define the problem. The first step an appraiser takes is to define the problem by identifying the client, the intended use, purpose, relevant property characteristics, the date, and other conditions. This leads to step 2: defining the scope of work.

Title is passed once a deed is a acknowledged and recorded. b delivered and accepted. c granted and transferred. d signed and delivered.

b. delivered and accepted. Title can transfer once a deed meets validation requirements and there is delivery and acceptance.

Title is passed once the deed is a acknowledged and recorded. b delivered and accepted. c granted and transferred. d signed and delivered.

b. delivered and accepted.This answer is correct. c. granted and transferred. d. signed and delivered. Correct! Title can transfer once a deed meets validation requirements and there is delivery and acceptance.

Upon arrival to a listing appointment, the licensee dealing with an elderly lady realizes that she would be happy receiving an offer for much less than market value. The licensee decides to make a cash offer for the list price that the seller chooses. The licensee then sells the property for market value. Which duty has the licensee breached? a confidentiality b disclosure c obedience d no breach has occurred

b. disclosureThis answer is correct. Correct! A licensee has a duty to disclose the property's true value. The licensee's behavior is regarded as self-dealing. The licensee also breached the duties of loyalty and reasonable care.

Tools used by the Fed to implement monetary policy include a Congressional Acts. b discount rates and reserve requirements. c fiscal assertiveness. d prime rates and subprime rates.

b. discount rates and reserve requirements. The Fed uses discount rates and reserve requirements, in addition to open market operations and moral suasion, to implement its monetary policy.

Gareth inherits a plot of land from Jessie. A year later, he sells half of the property to Kim. A year later, she gives her half to Alex, who sells the mineral rights. This series of events best represents the legal property right of a control. b disposal. c enjoyment. d use.

b. disposal. The right of disposal gives a property owner the ability to transfer all or some of the property.

Every month, borrower Steve pays an additional $385 to his lender to cover the costs of his property taxes and homeowners insurance. The bank maintains these funds in a(n) a beneficiary account. b escrow account. c promissory account. d trustee account.

b. escrow account. Escrow accounts, also called impound accounts or reserve accounts, allow the lender to protect its investment by ensuring that the borrower's property taxes are paid and the property will not be foreclosed. Hazard insurance policy payments are usually included in this escrow payment as well. The principal and interest that Steve pays would NOT go into this impound account.

A net to seller is a(n) a declaration of how much the agent will make in commission from the transaction. b estimate of the amount of money a seller will receive from a transaction. c guarantee of the amount of money a seller will receive from a transaction. d safety feature for the seller in case she does not receive as much money as she wants.

b. estimate of the amount of money a seller will receive from a transaction. A net to seller form is an estimate of the money a seller should receive from a real estate transaction based on a certain selling price after all costs and expenses have been paid. This is not a guarantee but rather an approximation of what the seller should receive.

Company X is a general partnership. Partnership funds were used to purchase a building for the company's offices. The building is partnership property a as long as the partners are not married. b even though the title is in one partner's name alone. c only if the title is in the partnership's name. d only if the title lists all partners and expressly states they are tenants in partnership.

b. even though the title is in one partner's name alone. Title to partnership property does not have to be held in the partnership's name. Anything purchased with partnership funds is also presumed to be partnership property, regardless of what name is on the deed.

Y tells Z, "I'll pay you $15 to mow my lawn on Saturday." Z says, "Sure, I'll do that." What type of contract do they have? a executed unilateral contract b executory bilateral contract c express unilateral contract d implied bilateral contract

b. executory bilateral contract This is a bilateral contract, as each party has made a promise. It's executory since it's in the process of being completed.

V posts a flyer around town offering a reward of $100 for the return of her lost dog. K sees the flyer, finds the dog, and calls the number of the flyer. This might be described as an a express bilateral contract. b express unilateral contract. c implied bilateral contract. d implied unilateral contract.

b. express unilateral contract V is the only party making a promise, and the inducement is specifically expressed in words. This is an express unilateral contract.

A marketing technique used to create an image of working on a specific area over a period of time for prospects is described as a expanding the sphere of influence. b farming an area. c qualifying prospects. d tapping the network.

b. farming an area. Farming is a term for a marketing technique used to create an image of working on a specific area over a period of time for prospects.

M inherited the duplex he owns from his grandmother. Her will indicates that M could keep the property as long as he does not build a bar on the land. What type of possessory interest does M have in the property? a fee simple absolute estate b fee simple defeasible estate c leased fee estate d leasehold estate

b. fee simple defeasible estate A fee simple defeasible estate means that grandmother put a condition in the deed that prohibits M from building a bar on the property.

You own 20 acres of land in the mountains. You decide to deed the land to your niece. However, you want to make sure that the pristine beauty of the property is not marred by development, so you indicate that at least 10 acres must remain undeveloped. This is an example of a fee simple absolute. b fee simple defeasible. c fee tail estate. d life estate.

b. fee simple defeasible.This answer is correct. Correct! Since you put a condition on the property, you limited what could be done with the property. This type of freehold estate is also called qualified fee.

If a grantor is 17 years old, the only type of deed presented at close would be a a deed of trust. b fiduciary's deed. c general warranty deed. d nefarious deed.

b. fiduciary's deed. A fiduciary is someone one who is in an appointed position of trust and is acting on another's behalf. Since a minor does not have contractual capacity to execute a deed, a fiduciary deed may be executed on the minor's behalf.

The law of supply and demand says that a for all products, goods, and services, when demand exceeds supply, prices will fall and when supply exceeds demand, prices will rise. b for all products, goods, and services, when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise. c real estate prices will always rise because real estate is unique and scarce. d there will always be a shortage of housing due to population growth.

b. for all products, goods, and services, when supply exceeds demand, prices will fall and when demand exceeds supply, prices will rise. Correct! When the supply of something, for example, homes, is in low supply but great demand, the price will rise. Conversely, when supply is high and demand is low, prices fall.

Errors and omissions insurance does NOT cover a buying and selling someone else's real estate. b fraud. c mistakes. d negligence.

b. fraud E&O insurance is professional liability insurance that protects licensees from mistakes or negligence in real estate activities. It does not cover fraud.

ABC Corporation wants to sell some of its land. The broker needs to a find out how many stockholders there are to determine if land is being held in severalty or in co-ownership. b get a corporate resolution authorizing the land to be sold and appointing him as broker in order to sell the land. c get an employee of the company to sign the listing agreement. d all of the above

b. get a corporate resolution authorizing the land to be sold and appointing him as broker in order to sell the land.This is the correct answer. The answer is B. The person representing the corporation who has the power and authority to carry out the transaction must provide the broker with a copy of the corporate resolution allowing the corporation to list and sell the asset.

A real estate licensee can begin the practice of real estate when a her broker receives the license. b her license has been issued by the Division of Real Estate. c she finds a sponsoring broker. d she passes the exam.

b. her license has been issued by the Division of Real Estate. It is the Ohio Division of Real Estate that issues real estate licenses. A license will not be issued until an applicant has associated with a broker and passed the exam. Once that license is issued, she can begin practicing real estate.

A credit report shows the borrower's a current purchase or sale agreement. b history of making payments on past debts and obligations. c housing expense ratio. d tax returns for the previous two years.

b. history of making payments on past debts and obligations The purpose of a credit report is to provide a historical picture of a borrower's credit, for example, what their debts are, their record of repaying the debts, etc.

What are the qualifying standards for Fannie Mae/Freddie Mac 90% LTV conventional loans? a housing expense ratio: 28%; total debt service ratio: 33% b housing expense ratio: 28%; total debt service ratio: 36% c housing expense ratio: 29%; total debt service ratio: 41% d housing expense ratio: 36%; total debt service ratio: 38%

b. housing expense ratio: 28%; total debt service ratio: 36% For conventional loans, the maximum housing expense ratio is 28% of stable monthly income, and the maximum total debt service ratio is 36% of stable monthly income.

Which is NOT a violation for which the Superintendent might issue a citation? a failure to meet requirements related to dual agency b improper maintenance of the brokerage trust account c improper usage of required fair housing language d placement of improper advertisements

b. improper maintenance of the brokerage trust account Correct! The Superintendent can issue a citation in lieu of a initiating a formal investigation for violations of advertising law, agency/dual agency requirements, and fair housing language. A citation is also an option for improper administration of the Consumer Guide to Agency Relationships. A violation related to the improper maintenance of a trust account, however, would not result in a citation, but would likely require a formal investigation.

Which does NOT contribute to land's inherent value? a immobility b improvements c indestructibility d scarcity

b. improvements While improvements obviously contribute value to property, land's inherent value is based on its immobility, indestructability, and its scarcity separate from any structures.

Most salespeople are hired as a. employees. b. independent contractors. c. interns initially. d. telephone solicitors.

b. independent contractors. Correct! Most real estate licensees are hired as independent contractors. They are in control of their own time and results.

Which element of an adjustable rate mortgage determines whether the interest rate goes up or down? a cap b index c margin d rate

b. index The interest rate on an ARM can move up or down based on the movement of a specific index, a statistical report that is generally a reliable indicator of the approximate change in the cost of money. The index is something that neither the lender nor the borrower has any influence over.

The Consumer Guide to Agency Relationships does NOT a disclose that confidential information from a client will be kept confidential. b indicate who works for whom in a specific real estate transaction. c describe the types of agency relationships a particular brokerage has chosen to practice. d require you to ask for a signature.

b. indicate who works for whom in a specific real estate transaction. All the above answers are what it does do except B. An Ohio Agency Disclosure Statement indicates the exact players in a specific real estate transaction. The Consumer Guide indicates which of the five ways a brokerage has chosen to represent their clients: Buyer, Seller, Dual, Split (or what some call Designated), and Split but never dual. Only one relationship can be used once the brokerage decides. It also discloses that a client's confidential information will be kept confidential. While you can't force someone to sign something, you are required to ask for a signature. If they refuse to sign any document, you must date and explain the reason. Just remember this form discloses to the public how a particular broker practices real estate.

Betty owned real property with her daughters, Bonnie and Beatrice. When Betty died suddenly, her husband did not get the property, even though her will said that all her worldly possessions would go to him. Instead, it went to her daughters, Bonnie and Beatrice. How did Betty, Bonnie and Beatrice own the property? a co-owners of a common area b joint tenancy with the right of survivorship c tenancy in common d undivided interest tenancy

b. joint tenancy with the right of survivorship The chief feature to joint tenancy with the right of survivorship, also called the statutory survivorship tenancy, is that co-tenants take the ownership share of a deceased co-tenant equally and simultaneously. A joint tenant cannot will her share.

A buydown means the a buyer purchased mortgage insurance. b lender charged extra points to lower the interest rate. c lender had special rates because of the Community Reinvestment Act. d seller helped the buyer with a down payment.

b. lender charged extra points to lower the interest rate. A buydown allows a borrower to pay points to reduce the rate early on or for the life of the loan. There are a number of buydown plans, some permanent and some temporary.

A discount point costs 1% of the a appraised value. b down payment. c loan amount. d sale price.

b. lender charged extra points to lower the interest rate. A buydown allows a borrower to pay points to reduce the rate early on or for the life of the loan. There are a number of buydown plans, some permanent and some temporary.

Which is NOT a license status? a license active b license in escrow c license inactive d license on deposit

b. license in escrow Correct! Besides active licenses, other license statuses are license on deposit, inactive, suspension, resigned and revoked status. There is no status known as license in escrow.

What factor is NOT likely to contribute to a buyer's market? a increased layoffs at a local factory b limited new construction c low construction costs for labor and materials d migration away from the area

b. limited new construction Correct! When there is limited new construction, there are fewer houses available for sale, which is more likely to contribute to a seller's market.

You live in a house on the shores of Lake Erie. You are best described as a ________ owner, which means that you ________ own the land under the water and ________ keep people from walking along the beach. a littoral, do, can't b littoral, don't, can't c riparian, do, can d riparian, don't, can't

b. littoral, don't, can'tThis is the correct answer. Incorrect. The answer is B. You are a littoral owner since your house is on the shores of a commercial lake. You own the land to the high-water mark and not the land under the water. Plus, you can't keep people from walking along the beach.

A competitive market analysis is ___________ the equivalent of an appraisal. a always b never c sometimes d usually

b. never A CMA is performed by a real estate agent to assist clients in determining a suggested figure at which they could buy or sell a home. It is never the equivalent of an appraisal.

When reconciling indications of value, an appraiser ________ mathematically averages them. a always b never c rarely d sometimes

b. never Reconciliation involves giving each approach to value an appropriate weight, depending on the type of property being analyzed and the amount and quality of data available. The indications from each of the three approaches are never mathematically averaged.

Uniqueness and scarcity help the value of real estate because a it's impossible to find exactly what you want in a house. b no two properties are exactly the same. c real estate is difficult to find. d real estate is unlimited.

b. no two properties are exactly the same Uniqueness goes to the very heart of real estate ownership—no two properties are exactly alike. Scarcity means that there is a limited supply of land, thus resulting in greater value.

A section of the neighborhood has recently been rezoned for residential use only. Z's store is located in this section. He will be allowed to continue to use his property as a store. This is known as a a conditional use. b nonconforming use. c spot zone. d variance.

b. nonconforming use. Nonconforming uses occur when land use does not conform to current zoning laws, but is allowed because the land use was established before the new laws were enacted.

Down Town's new zoning law contains no discriminatory language but has the effect of keeping minorities out of the city by restricting subsidized housing. So, the law is a not okay because it does not state its intent of exclusionary zoning. b not okay because it has a disparate impact on minorities. c okay because it does not state any discriminatory intent. d okay because people in subsidized housing are not a protected class.

b. not okay because it has a disparate impact on minorities. Even if the outcome is unintended, exclusionary zoning ordinances that have a disparate impact on minorities, a protected class, are prohibited.

A candy maker has a five-year lease. The lease states that any improvements the tenant makes to the premises will become part of the real property and pass to the landlord at the end of the lease. The candy maker installs a marble counter on which to roll the candy. When the lease is up, the candy maker may a not remove the counter because he did not ask the owner if he could install it. b not remove the counter because of the written agreement. c remove the counter because it is not a fixture. d remove the counter because it is a trade fixture.

b. not remove the counter because of the written agreement. If there is a written agreement between the parties stipulating how a particular item is to be treated, a court will enforce the agreement.

When qualifying for a conventional mortgage loan, which would be LEAST LIKELY to count as allowable income? a annual bonuses b occasional overtime c retirement income d salary

b. occasional overtime Income should be stable and durable. Occasional income would likely not be allowed when determining a borrower's qualifications for a loan.

A Cape Cod style home is typically a one-story. b one-and-a-half-stories. c split-level. d two-stories.

b. one-and-a-half-stories. A Cape Cod style home has one-and-one-half levels of living area, with the upper level being about half the size of the lower level, typically with dormer windows.

Broker Rita likes to reward her employees for a job well done. Her unlicensed assistant Mark really helped keep her organized and on track to close several huge deals. To show her appreciation, Rita can a give Mark a 10% split of her commission. b pay Mark an annual bonus of 10% of his salary. c pay Mark a bonus for every lead he passes on to her. d pay Mark a referral fee for introducing her to the client.

b. pay Mark an annual bonus of 10% of his salary. A licensee cannot pay a transaction-based fee or split commission with someone who is unlicensed. She can, however, pay him a bonus based on his excellent work all year long.

The most reliable resource for gathering specific data about the subject property is a the FHA or other government agencies. b personal inspection. c professional journals. d the property owner.

b. personal inspection. Despite the availability of data through technology, one of the best means for verifying much of the data about the subject property is still a personal inspection.

Nick is preparing to build a pool and deck in his backyard. The contractor just delivered a load of lumber and concrete to his house in preparation for construction beginning next week. That lumber and concrete would be considered a improvements. b personal property. c real property. d trade fixtures.

b. personal property. At this point, those building materials are personal property. Once construction gets underway, they will become part of the real property.

A detailed survey map of a subdivision is called a a county recorded map. b plat map. c plot map. d all of the above

b. plat map. A plat (or plat map) is a detailed survey map of a subdivision, or other grouped lots of land, recorded in the county where the land is located.

A mortgage lending company refuses to make loans for homes in a minority neighborhood. This is an illegal action called a blockbusting. b redlining. c steering. d transferring.

b. redlining. The refusal to make loans on property in certain neighborhoods for discriminatory reasons is called redlining and is prohibited under the Federal Fair Housing Act.

Chris owns land next to a lake and near a mountain and needs to quickly come up with some money for a stock investment. Which would NOT be an appropriate option for Chris? a sell air rights b sell appropriative rights c sell an easement d sell mineral rights

b. sell appropriative rights Correct! Appropriative rights cannot be sold. They are governed by legislation and best use.

The tenant in Apartment 6 has a two-year lease. He has so much trash in his apartment that it is a fire hazard and the landlord wants to evict him as quickly as possible. The landlord's first step is to a file the eviction lawsuit. b send him a notice stating the tenancy will terminate in 30 days if the trash is not removed. c send him a notice to vacate. d None of the above—a residential tenant cannot be evicted for this type of problem.

b. send him a notice stating the tenancy will terminate in 30 days if the trash is not removed. For a residential eviction based on breach of an obligation affecting health and safety, the landlord's first step is to send a notice stating the tenancy will terminate on a particular date unless the tenant takes care of the problem by then. The termination date must be at least 30 days after the notice is delivered to the tenant.

Question 3 Jim, Jack, and Joe bought real property together. Jim died and his 1/3 share went immediately to Joe and Jack. How did Jim, Jack, and Joe own their real property? a severalty b statutory survivorship tenancy c tenancy by the entireties d tenancy in common

b. statutory survivorship tenancy Statutory survivorship tenancy is a form of co-ownership in which each co-tenant has an equal undivided interest in real property, and the right of survivorship.

Which is an example of a nuisance? a a furnace that keeps breaking down b stench from a nearby egg farm c the owner's own kids leaving their bikes in the driveway d toxic mold growing in the crawl space

b. stench from a nearby egg farm A nuisance means that the problem originates from another person's property.

During the reconciliation process, a the appraiser decides which approach to give the most weight, then throws out the other approaches. b the appraiser decides which approach or approaches to give the most weight. c the appraiser must always determine an exact dollar amount to present as his final opinion of value. d value approaches are mathematically averaged.

b. the appraiser decides which approach or approaches to give the most weight. As part of the reconciliation, the appraiser must determine the strengths and weaknesses of each appraisal approach used—reflecting on the quality and quantity of data analyzed and the relevance of a particular approach.

A buyer and seller cannot agree on whether a particular item should be included in the sale of the house. What consideration will the court weigh most heavily? a how complete the house will look without the item b the intention of the annexer and the purpose of the annexation c the opinion of the real estate agent d that, after closing, the annexer said she always intended to remove the item

b. the intention of the annexer and the purpose of the annexation Correct! Courts will give the highest regard to the intention of the annexer and the purpose of the annexation in determining whether a particular item should be included in the sale of a house.

R needs to finance $215,000 to get the house he wants. He'd like to get a 15-year mortgage, and the lender quotes him an interest rate of 6.5%. If the factor for that particular loan is 8.72 per $1,000, what is the estimated monthly P&I payment? a $1,603.90 b $1,744.00 c $1,874.80 d $1,932.85

c. $1,874.80 Using a factor of 8.72 from the amortization table, you multiply that by 215 ($215,000 ÷ $1,000) to get an estimated monthly payment of $1,874.80 for principle and interest.

H purchases a $180,000 home, taking out a 80% LTV, fully amortized 30-year fixed rate first mortgage at 5.0% and a 10% LTV interest-only second mortgage at 7.25% for 5 years. What is the monthly payment on the second mortgage? a $69.96 b $72.00 c $108.75 d $217.50

c. $108.75 Find the amount of the second mortgage: $180,000 purchase price x 10% = $18,000. The annual interest is $1,305 ($18,000 x 0.0725) and the monthly payment of interest for that second loan is $108.75 ($1,305 ÷ 12).

Laura paid $265,000 for her new home. She is putting 45% down, paying 3 points, and $2,650 in closing costs. How much money will she need to bring to the closing? a. $10,600.00 b. $125,477.50 c. $126,272.50 d. $129,850.00

c. $126,272.50 Correct! The down payment is $119,250 ($265,000 x .45), which means the loan amount is $145,750. Each point is 1% of the loan amount: $145,750 x .01 = $1,457.50. Three points costs $4,372.50 (1,457.50 x 3). Now add all the money she must bring to closing: $119,250 + $4,372.50 + $2,650 = $126,272.50.

A borrower wants to buy a $150,000 home, and plans to make a $15,000 down payment. The borrower is seeking a conventional loan but doesn't want to pay more than 6.5% interest. The lender agrees to make a 6.5% interest loan if it is discounted three points. How much will the lender will receive in points for making this loan? Referring to the scenario above, if the seller agrees to pay the discount points, how much will the seller net from the transaction? (Assume seller pays no other costs.) a $130,950 b $135,000 c $145,950 d $150,000

c. $145,950 If the seller pays the three points on the loan amount (which is equal to $4,050), you simply subtract that from the sale price of $150,000. The seller will net $145,950.

A home sold for $147,500. The seller agreed to carry a second mortgage for the buyer in the amount of $20,000. Calculate the transfer tax. a $127.50 b $137.50 c $147.50 d $167.50

c. $147.50 Divide the sales price by $1,000. Don't be distracted by extra information in the question: $147,500 / $1,000 = $147.50 in transfer tax owed by the seller.

What is the maximum fine that may be imposed on a licensee for each violation of the license law? a $500 b $1,000 c $2,500 d $5,000

c. $2,500 A licensee could face a fine of up to $2,500 per violation, plus possible public reprimand and additional continuing education requirements. Of course, the license could also be suspended or revoked.

What is the maximum fine that can be imposed on a licensee for violations of the Ohio Revised Code? a $1,000 per violation, up to $2,500 b $1,500 per violation, no limit c $2,500 per violation, no limit d $5,000 per violation, up to $50,000

c. $2,500 per violation, no limit A licensee may be fined up to $2,500 by the Commission for each violation of the Ohio Revised Code. There is no limit to the amount of fines that the Commission can levy.

A house costs $100,000. The buyer is making a down payment of $32,000 and getting a $68,000 loan. If there are 4 points, how much money will be paid out of the closing for the points? a $400 b $1,280 c $2,720 d $4,000

c. $2,720 Points are based on the loan amount. If each point is 1% of the loan amount, each point costs $680. The buyer is paying four points, so $680 x 4 = $2,720.

W died intestate. She is survived by her husband of two years and her 40-year-old daughter from a previous marriage. To what share of W's estate is her husband entitled? a half of the entire estate b the entire estate c $20,000, plus half of the remainder of the estate d $60,000, plus one-third of the entire estate

c. $20,000, plus half of the remainder of the estate When an intestate person is survived by a child and a spouse who is not the natural or adoptive parent of that child, the spouse receives the first $20,000, and divides the remainder of the estate with the child.

A property has an annual income of $50,000 and monthly building expenses of $2,500. Annual debt service is $16,000 and depreciation is 3% of value. Using a capitalization rate of 8%, determine the value of the building. a $48,500 b $243,062 c $250,000 d $381,938

c. $250,000 First, you need to find the net operating income (NOI). This is found by subtracting the operating expenses ($2,500 x 12 = $30,000) from the annual income. Debt service and depreciation do NOT figure into the NOI calculation. So, $50,000 - $30,000 = $20,000 NOI. Then, divide the "part," which is income, by the cap rate of 8%: $20,000 ÷ 0.08 = $250,000. The building value using the 8% cap rate is $250,000.

If the same lot is priced at $2.75 per square foot, calculate the price of the lot. a $218,450 b $212,245 c $257,125 d $396,000

c. $257,125 First, find the square footage: 170 x 550 = 93,500 square feet. Multiply by price: 93,500 x $2.75 = $257,125.

Deb offers to buy Stan's home for $180,000, which he accepts. When she applies for a loan, the loan originator tells her that she can borrow $150,000 at 4.75% for 30 years. She can bring the interest rate down to 4.50% if she wants to pay two points upfront. How much would these points cost her? a $1,500 b $1,800 c $3,000 d $3,600

c. $3,000 A point is 1% of the loan amount. Since her loan would be for $150,000, each point would cost her $1,500. Deb could bring the interest rate down by 1/4 percent by paying $3,000 upfront.

Sadie owns a four-unit apartment building she's getting ready to sell. Expenses are $5,200 annually and the monthly income is $2,400. With a gross monthly rent multiplier of 125 in her area, what might be an appropriate asking price? a $205,000 b $295,000 c $300,000 d $305,000

c. $300,000 To estimate the value, multiply $2,400 (monthly rent) x 125 (multiplier) = $300,000. Expenses are not considered in the GMRM calculation.

You are going to build a building. It will be 40' x 40' and consist of two floors. If the price per square foot of the building is $90, and the cost of a 150' x 500' lot is $100 per front foot, what is the total cost of the project? a. $159,000 b. $288,000 c. $303,000 d. $315,500

c. $303,000 First, find the total square footage of the building: Each floor is 1,600 SF, for a total of 3,200 SF. The price for the building is $288,000 ($90 x 3,200). Then determine the cost of the lot: $100 x 150 = $15,000. The total cost is $303,000 ($288,000 + $15,000).

What is the price of a parcel of land selling for $ 9,000 per acre and that is a quarter mile squared? a $297,000 b $337,022 c $360,000 d $980,100

c. $360,000 First, determine the length of a quarter of a mile: 5,280 linear feet divided by 4 = 1,320 feet. The parcel is a quarter mile square, so 1,320 x 1,320 = 1,742,400 square feet. To find acreage: 1,742,400 ÷ 43,560 = 40 acres. Now you can determine the price: 40 x $9,000 = $360,000.

Olivia is interested in purchasing a two-unit residential building as an investment. Appraiser Luke researches recent sales in the area and finds a similar though slightly nicer duplex in another neighborhood that just sold for $420,000 where each tenant pays $1,400/month. The two tenants in the building Olivia wants to buy each pay $1,200 per month. Using the gross monthly rent multiplier, what might be an acceptable offer for Olivia to make? a $180,000 b $192,000 c $360,000 d $420,000

c. $360,000 First, find the GMRM: Divide value (sales price of the comp) by income (total monthly rent) to find the gross rent multiplier: $420,000 / $2,800 = 150. Then multiply the total monthly rent of the building Olivia wants to purchase by the GRM to find the value: $2,400 x 150 = $360,000. Olivia would likely be willing to pay $360,000 for the building.

The replacement cost of a dwelling has been estimated at $193,500. The dwelling, determined to have an economic life of 75 years, is estimated to have an effective age of 15 years. What is the amount of depreciation? a $37,900 b $38,500 c $38,700 d $39,200

c. $38,700 If the effective age is 15 and the economic life is 75, the age-life ratio is 20% (15 / 75 = .20 or 20%). Apply that to the cost to find depreciation: $193,500 x 20% = $38,700 depreciation.

A developer purchased a lot that measures 348' x 1,000'. If the land cost $5,000 per acre, what was the total cost (rounded)? a. $37,406 b. $37,540 c. $39,945 d. $41,867

c. $39,945 First, find the square footage of the lot: 348 x 1,000 = 348,000 SF. To find acreage, divide the square footage by 43,560: 348,000 ÷ 43,560 = 7.9889 acres. Multiply by the cost per acre to find the cost: 7.9889 x $5,000 = $39,945.

An appraiser determines that the value of the site is $118,000. She decides it would cost $322,000 to replace the building. She further decides that the building is exhibiting $30,000 of depreciation. What is her overall opinion of value? a $234,000 b $385,800 c $410,000 d $470,000

c. $410,000 Cost of the building ($322,000) minus depreciation ($30,000) gives us a total building value of $292,000. To that, add the value of the site, or land, to find the overall value: $292,000 + $118,000 = $410,000.

V gets a 10-year straight loan for $60,000 at an interest rate of 4% to finance the purchase of a vacation cottage in the hills. Every month, she pays the lender $200. In 10 years, how much will she owe the lender? a $0 b $24,000 c $60,000 d $84,000

c. $60,000 A straight loan is interest only. At the end of the loan term, V would have a balloon payment for the principal of $60,000.

Bill expects a return of 8% on his investments and is considering a property with an asking price of $670,000. The records show a potential income of $6,200 a month, expenses of $1,500 a month, and a vacancy factor of 10%. With this information in mind, what would Bill's highest bid be? a $137,000 b $343,250 c $612,000 d $818,250

c. $612,000 First, you need to find the net operating income. The potential gross income is $6,200 per month, which is $74,400 per year. Next, you need to subtract the 10% vacancy loss: $74,400 - 10% = $66,960. Next, subtract building expenses of $18,000 ($1,500 x 12) to get to the NOI: $66,960 - $18,000 = $48,960. Once you have the NOI, divide by the cap rate to find the value: $48,960 ÷ .08 = $612,000. The investor would be willing to pay $612,000 to buy this building.

A seller must pay off an existing $42,000 mortgage and pay $1,700 in closing costs. If the seller wants to net $22,000 after paying a brokerage fee of 7%, for how much must the home be sold? a. $68,989.25 b. $70,299.00 c. $70,645.16 d. $71.264.76

c. $70,645.16 First, determine how much is needed to cover costs and desired cash: $42,000 + $1,700 + $22,000 = $65,700. With a 7% commission, divide the costs/desired net by 93% to find the minimum selling price: $65,700 ÷ .93 = $70,645.16.

A property has a gross monthly income of $12,600 and a vacancy and collection loss rate averaging 11%, with monthly expenses of $1,500 and depreciation of 6% a year. What would be the highest offer the prospective buyer should come up with if he insists on a 15% rate of return and the asking price is $850,000? a $723,293 b $730,493 c $777,120 d $833,293

c. $777,120 First, you need to find the net operating income. The potential gross income is $151,200 per year ($12,600 x 12 months). Next, you need to subtract the 11% vacancy loss: $151,200 - 11% = $134,568. Next, subtract building expenses of $18,000 ($1,500 x 12) to get to the NOI: $134,568 - $18,000 = $116,568. Remember that depreciation is NOT part of the NOI calculation. Once you have the NOI, divide by the desired cap rate to find the highest offer: $116,568 ÷ .15 = $777,120. The investor would be willing to pay no more than $777,120 to buy this building, regardless of the asking price.

What is the value of a property that has a gross monthly income of $5,000 if the GMRM in the area is 160? a $312,500 b $375,000 c $800,000 d $960,000

c. $800,000 To apply a gross monthly rent multiplier, simply multiply the GRMR by the gross monthly income: 160 x $5,000 = $800,000.

Abe's stable monthly income is $3,500. Every month he pays: $250 car payment, $100 student loan payment, and $50 gym membership. What is the maximum monthly mortgage payment he would qualify for on a conventional loan? a $1,260 b $980 c $910 d $860

c. $910 For conventional loans, we assume a payment-to-income ratio of 28% and a debt-to-income ratio of 36%. Using the payment-to-income ratio, we get $980. But using the debt-to-income ratio, we find: $3,500 (income) multiplied by 0.36, which equals $1,260. From that, you subtract monthly debts ($250 + $100) which total $350 (the gym membership is not considered a debt since it can be cancelled). So, this leaves $910.

A's stable monthly income is $3,500. Every month he pays: $250 car payment, $100 student loan payment, and $50 gym membership. What is the maximum monthly mortgage payment he would qualify for on a conventional loan (assume a payment-to-income ratio of 28% and a debt-to-income ratio of 36%)? a $1,260 b $980 c $910 d $860

c. $910 Using the payment-to-income ratio, we get $980. But using the debt-to-income ratio, we find: $3,500 (income) multiplied by 0.36, which equals $1,260. From that, you subtract monthly debts ($250 + $100) which total $350 (the gym membership is not considered a debt since it can be canceled). So, this leaves $910.

Abe's stable monthly income is $3,500. Every month he pays: $250 car payment, $100 student loan payment, and $50 gym membership. What is the maximum monthly mortgage payment he would qualify for on a conventional loan (assume a payment-to-income ratio of 28% and a debt-to-income ratio of 36%)? a $1,260 b $980 c $910 d $860

c. $910 Using the payment-to-income ratio, we get $980. But using the debt-to-income ratio, we find: $3,500 (income) multiplied by 0.36, which equals $1,260. From that, you subtract monthly debts ($250 + $100) which total $350 (the gym membership is not considered a debt since it can be cancelled). So, this leaves $910. You must use the lower amount.

Calculate the gross rent if a property valued at $900,000 had a GRM of 9.5. a $79,540.35 b $85,500.00 c $94,736.84 d $105,555.00

c. $94,736.84T When using the gross rent multiplier, you can determine the gross rent (income) by dividing the value (sales price) by the stated GRM: $900,000 ÷ 9.5 = $94,736.84.

Mr. and Mrs. Williams want to net $90,000 when they sell their home. They have to pay closing costs of $3,200 and the broker a 6% commission. What is the least the home can sell for to net $90,000 (rounded to the nearest dollar)? a $93,200 b $98,945 c $99,149 d $99,500

c. $99,149 First, add the closing cost to the desired net: $90,000 + $3,200 = $93,200. Since the commission rate is 6%, you can now divide the costs by 94% (100% - 6%) to find the minimum acceptable: $93,200 ÷ .94 = $99,149.

Irina wants to rent a two-bedroom unit for herself and her two kids. Landlord Jack says she would not be happy there because there are no other kids, just young single professionals. Besides, he says, no Russians in the neighborhood. She should look elsewhere. If Irina decides to file a complaint with the Ohio Civil Rights Commission, she must do so within a 180 days. b 6 months. c 1 year. d 2 years.

c. 1 year. Fair housing complaints to the Ohio Civil Rights Commission must be filed within one year of the alleged discrimination. They must be in writing and under oath.

K and S buy a $200,000 house together. K puts up $150,000, and S puts up $50,000. The deed indicates that K owns a 75% interest, and S owns a 25% interest. How much of that property can S occupy? a 25% b 50% c 100% d whatever K and S agreed to

c. 100%This is the correct answer. Selected: d. whatever K and S agreed toThis answer is incorrect. Incorrect. The answer is C. S can occupy 100% of the property, even though she has only a 25% interest in the property. Co-ownership involves an undivided interest in the property, known as the unity of possession.

For the loan described above, what is the lowest rate the borrower would ever have? A borrower secures a 5/1 ARM for $152,000. The initial interest rate is 4.5%, but after five years, the rate will go to the LIBOR index (currently at <1% plus 3% margin). The interest rate will be adjusted annually. Rate caps are 2% per year and 5% over the life of the loan. What's the highest the rate can be at the beginning of the sixth year?

c. 3% The lowest rate this borrower would ever have would be the lender's margin, which is 3%.

A landlord or tenant who wants to terminate a residential month-to-month lease must give the other party notice at least a one week in advance. b 15 days in advance. c 30 days in advance. d two months in advance.

c. 30 days in advance. To terminate a residential month-to-month tenancy, at least 30 days' notice must be given before the end of the period and written notice is not required. If neither party gives notice, the tenancy is automatically renewed for another month.

The qualifying requirements on an FHA-insured loan are ____% housing expense ratio and ____% debt-to-income ratio. a 28% / 36% b 31% / 41% c 31% / 43% d 36% / 43%

c. 31% / 43% To qualify for an FHA-insured loan, the borrower's housing expense ratio (PITI to gross monthly income) should not exceed 31%. The ratio of all long-term debt, including PITI, to gross monthly income should not exceed 43%.

A lot measures 80' across the back, 50' deep, and 110' across the front. What is the sq. ft. of the lot? a 4,030 SF b 4,500 SF c 4,750 SF d 5,500 SF

c. 4,750 SF One method to determine the square footage of a trapezoid-shaped property is to first average the two uneven sides, known as side opposite averaging, then multiply: 80' + 110' = 190'. Then, 190' / 2 = 95'. Finally, 50' x 95' = 4,750 SF.

In Ohio, a title abstractor would have to go back _______ to get to the root of title. a 20 years b 30 years c 40 years d 50 years

c. 40 years An unbroken chain of documents going back 40 years to the root of title is sufficient to establish proper title.

Joan has an adjustable rate mortgage (ARM). It has an initial interest rate of 7% adjusted annually with a 2/5 interest rate cap. If interest rates go up, what is the highest interest rate Joan could pay in the second year? a 7.2% b 7.25% c 9% d 12%

c. 9% With a 2/5 interest rate cap, even if the interest rate increase according to the standard index is greater than 2%, the interest rate adjustment for Joan is capped at 2%. The highest interest rate possible would be 9% (7% + 2% = 9%).

Which of the following is NOT required in order for an offer to be considered accepted? a Acceptance can be made only by the offeree. b Acceptance must be clearly communicated to the offeror. c Acceptance must be made in writing. d Acceptance must not vary the terms of the offer or otherwise impose conditions.

c. Acceptance must be made in writing. Acceptance must be made in whatever manner specified in the offer. Although acceptance is generally conveyed in writing, it is not a requirement. The other conditions are required.

Which of the following is NOT required in order for an offer to be considered accepted? a Acceptance can be made only by the offeree. b Acceptance must be clearly communicated to the offeror. c Acceptance must be made in writing. d Acceptance must not vary the terms of the offer or otherwise impose conditions.

c. Acceptance must be made in writing.This answer is correct. Correct! Acceptance must be made in whatever manner specified in the offer. Although acceptance is generally conveyed in writing, it is not a requirement. The other conditions are required.

Which property transaction is NOT subject to provisions of the Ohio Civil Rights Law? a Ann is leasing an apartment in a duplex. b Bob is selling a vacant lot. c Carl is renting a warehouse building. d Dan is selling a single-family home.

c. Carl is renting a warehouse building. The Ohio Civil Rights Law applies only to transactions involving residential property or any vacant land.

Which situation is NOT an example of misconduct by a licensed salesperson that could result in administrative discipline by the Real Estate Commission? a Abe guarantees that the value of the home he has listed will increase. b Brad has his twin brother take the real estate licensing exam for him. c Carly pays her unlicensed assistant a salary for the clerical work he does. d Dave neglects to give seller Sue a copy of the listing agreement when she signs it.

c. Carly pays her unlicensed assistant a salary for the clerical work he does. Correct! A licensee may pay an unlicensed assistant as long as his pay is not based on real estate transactions and he is not performing any activities that require a license. The other choices, however, are examples of misconduct that could be investigated by the Real Estate Commission and result in some sort of sanction.

Abe bought 100 acres of land in Eastern Ohio in 1970, recording his deed in Belmont County. Which claim against his property today could MOST LIKELY be extinguished under the Ohio Marketable Title Act? a ABC Corp. has a public utility easement dating from 1950. b DEF Mining has owned the mineral rights under the land for 80 years. c G has a deed from 1965 granting her ownership of two acres. d H is a tenant whose lease has expired.

c. G has a deed from 1965 granting her ownership of two acres These interests cannot be extinguished under the Marketable Title Act: A lessor's right to possession at the end of a lease, a railroad or public utility easement, any interest in coal, a mortgage, or any interest held by the federal, state, or local government. A claim using deed that is more than 40 years, when a later deed exists, would not be successful. G's claim could be extinguished under the Act.

Licensee Jake was hosting an open house for a seller client of his brokerage. Lucy went to the open house. She expresses interest in the property but declines to enter into an agency relationship. What duty does Jake owe to buyer customer Lucy? a fairness b loyalty c obedience d none, she is not his client

c. Gary must sign Betty's Agency Disclosure Statement before Tom presents Betty's offer.This is the correct answer. Incorrect. The answer is C. Tom would not help Betty write an offer; that task belongs to Betty's agent, Alice. Alice must give Betty's signed Agency Disclosure Statement to seller agent Tom, not to Gary. Tom would give it to his client Gary and explain it to him. Gary must then sign it before Tom can present Betty's offer.

Which complaint against a listing agent would MOST LIKELY be covered by the licensee's errors & omissions insurance? a He did not disclose he was the buyer of his seller client's house. b He decided not to tell a buyer about the crack behind the paneling in the seller's basement. c He transposed numbers in the asking price when listed it in the MLS. d He refused to show a client's house to a minority couple.

c. He transposed numbers in the asking price when listed it in the MLS. A typical E&O policy protects licensees from mistakes or negligence in the practice of real estate. It does not cover discrimination, fraud, or licensee's buying and selling their own property

Question 2 Which statement regarding suspension of a license is TRUE? a It can happen only after the third offense. b It is final and may not be appealed. c It is for a set period of time with reactivation after the suspension is lifted. d The licensee may submit a reapplication, which may be denied by the Ohio Real Estate Commission.

c. It is for a set period of time with reactivation after the suspension is lifted. Suspension means that a license is withdrawn for a specified period of time and calls for the performance of a condition prior to reactivation. Non-performance of a condition during suspension may result in license revocation.

Broker X takes the seller's listing, but later decides he wants to buy the property himself. Which statement is TRUE? a It is legal for X to buy the property only if he agrees not to resell it for two years. b It is legal for X to buy the property only if he turns the listing over to another broker before making an offer. c It is legal for X to make an offer only if the seller understands that X himself is the prospective buyer. d It is not legal for a broker to buy a client's property.

c. It is legal for X to make an offer only if the seller understands that X himself is the prospective buyer. It is not automatically improper for an agent to buy property from the principal, but the agent must inform the seller that the agent is the buyer.

Which statement regarding the Ohio Real Estate Commission is FALSE? a It administers the Education and Research Fund. b It promotes the Canon of Ethical Practice. c It subpoenas witness for investigations. d It suspends and revokes licenses.

c. It subpoenas witness for investigations. It is the Division of Real Estate that has the authority to subpoena witnesses, not the Real Estate Commission. The other statements are true.

J owns property along a navigable river in Ohio. Which statement is TRUE? a The federal government owns the riverbed. b J is not entitled to use the water because it is owned by the federal government. c J owns the section of the river bed adjoining her property out to the middle of the river. d The state government owns the riverbed.

c. J owns the section of the river bed adjoining her property out to the middle of the river. J has the right to use the waterways for transportation and recreation. In Ohio, a riparian landowner has title to the riverbed out to its midpoint, even if the river is navigable.

Which situation do you think is LEAST LIKELY to go through probate? a H dies without a will and with heirs. b J dies and leaves everything to his brother in his will. c K dies and the house she shared with her husband goes to him. d L dies intestate and without heirs.

c. K dies and the house she shared with her husband goes to him.This is the correct answer. d. L dies intestate and without heirs. Incorrect. The answer is C. Probate is both the court of jurisdiction over estates and the process of proving the validity of a will. Of these, the only situation that does not require probate is when property passes to a surviving spouse.

Which is NOT an important assumption of highest and best use? a Highest and best use gives maximum economic advantage to the owner. b Highest and best use implies the right mix of capital improvements and land. c Land devoted to highest and best use will always result in a loss of income. d There is only one highest and best use for land at a given point in time.

c. Land devoted to highest and best use will always result in a loss of income. When land is NOT devoted to highest and best use, a loss of income is the result. The other statements are valid assumptions when considering highest and best use.

Which is the license expiration and/or renewal procedure? a Licenses are automatically renewed at the end of each year. b Licenses expire on December 31 unless the licensee files a notice of continuation with the Division of Real Estate and Professional Licensing. c Licenses expire on the licensee's birthday and are renewed by the licensee filing a certificate of continuation (notice of renewal) with the Division of Real Estate and Professional Licensing. d Licenses expire unless the licensee can prove continued usage.

c. Licenses expire on the licensee's birthday and are renewed by the licensee filing a certificate of continuation (notice of renewal) with the Division of Real Estate and Professional Licensing. Correct! All new licenses expire on the licensee's birthday every three years thereafter. Licensees are mailed their own renewals about 60 days before their birthday, and each must renew their own license by filing a Certificate of Continuation on or before their birthday.

Who promulgates the Ohio Canons of Ethics? a Ohio Association of REALTORS® b Ohio Division of Real Estate c Ohio Real Estate Commission d Secretary of the Division of Real Estate and Professional Licensing

c. Ohio Real Estate Commission The Ohio Real Estate Commission promulgates the Canons of Ethics for the Real Estate Industry, and all Ohio licensees are bound by it.

The formula for estimating property value using the cost approach is a Building Cost (using cost manuals) + Site Value + Depreciation b Building Cost (using the quantity survey method) + Depreciation + Site Value c Site Value + Building Cost - Depreciation + Extras d Site Value + (Cost Per Sq. Ft. x Land Size) - Depreciation + Extras

c. Site Value + Building Cost - Depreciation + Extras Add the value of the site and improvements (building cost), subtract depreciation, and add any extras, such as landscaping. The formula will provide an estimate of value using the cost approach.

__________ factors are NOT a force influencing housing cycles. a Economic b Social c Structure d Supply

c. Structure There are many broad forces influencing housing cycles, including P-E-G-S (physical, economic, governmental, and social) as well as supply and demand. Structure is not a factor.

Which transaction, exempt from the Federal Fair Housing Act, is also exempt from the fair housing provisions of the Ohio Civil Rights Law? a J owns a duplex and lives in one of the units; he refuses to rent the other half to K because she is female. b The Qs refuse to sell their single-family home to Y because he is of Iranian ancestry. c The Travelers Club (a private club that admits only men) refuses to let M stay in its lodgings because he is not a club member. d all of the above

c. The Travelers Club (a private club that admits only men) refuses to let M stay in its lodgings because he is not a club member. Of these situations, only the private club would be exempt from the provisions of Ohio's fair housing laws.

Why is the effective date important in an appraisal? a The appraisal is valid for one year from the date of the appraisal. b The appraisal is valid for six months from the date of the appraisal. c The appraisal is valid only as of the effective date on the appraisal. d The date is not important because of the principle of change.

c. The appraisal is valid only as of the effective date on the appraisal. The effective date establishes the context for the value opinion and so, the value opinion is valid only as of that date.

Abe granted an easement across the back of the land to Phil, who recorded the easement. A couple of years later, Abe sold the land to Jacob. Jacob claims he doesn't have to honor the easement since he couldn't tell it existed by looking at the land, and Abe never told him about it. Which statement is TRUE? a The easement is not valid because Jacob bought the land without being told of the easement. b The easement is not valid because Jacob was not given actual notice as required. c The easement is valid because Jacob is deemed to have constructive notice. d The easement is valid because Jacob is deemed to have inquiry notice.

c. The easement is valid because Jacob is deemed to have constructive notice. The easement is still valid because Jacob is deemed to have constructive notice of it. He could have found out about the easement granted to Phil by checking the public records.

A disabled individual applies to rent an apartment and states that the property would need to be made handicap accessible. Which action would NOT be lawful in this situation? a The landlord makes the renovations, but requires the tenant to pay the actual cost of the materials. b The landlord makes the renovations to the property at the landlord's expense. c The landlord refuses to allow the individual to make the renovations to the apartment. d The landlord requires the tenant to make the renovations at the tenant's own expense and requires the tenant also return the property to its original condition at the end of tenancy.

c. The landlord refuses to allow the individual to make the renovations to the apartment. The federal Fair Housing Act requires landlords/owners to allow a tenant to make reasonable modifications, but it does not require the landlord to bear the expense of the renovations. The landlord is also allowed to require the property be returned to its original condition upon termination of occupancy.

Rachel wants to make sure that her disabled son, Earle, has a place to live when she dies. She also wants to give the property to her daughter, Jane, after her son passes away. Who will own the property when Rachel dies and what is that person called? a The owner of the property will be Earle and he is the life tenant. b The owner of the property will be Earle and he is the reversionary owner. c The owner of the property will be Jane and she is the remainderman. d The owner of the property will be Jane and she is the reversionary owner.

c. The owner of the property will be Jane and she is the remainderman.This is the correct answer. Incorrect. The answer is C. Jane will own the property but will not completely possess the property until Earle passes away. She is the remainderman since she has a future interest in the property. Earle actually doesn't own the property but only has the right to live in the property for as long as he lives. He is the life tenant.

Which is NOT an element required to acquire property through adverse possession? a The nature of the possession must be hostile to the owner's interest. b The possessor must be the exclusive user of the property. c The possession can have only been by a single possessor. d The possessor must use the property openly and notoriously.

c. The possession can have only been by a single possessor. Possession and use of property can mature into title if the claimant's possession is open and notorious; hostile or adverse; exclusive; and continuous for the statutory of time. It does not necessarily have to be the same person adversely possessing the property the entire time: A court could tack together contiguous periods of possession from a series of adverse possessors.

Which statement about land contracts in Ohio is FALSE? a A buyer has 10 days to correct a default and reinstate the terms of the contract. b The land contract must be recorded within 20 days of execution. c The seller can initiate forfeiture proceedings whenever a buyer defaults. d The vendor holds legal title, and the vendee holds equitable title.

c. The seller can initiate forfeiture proceedings whenever a buyer defaults. If the contract has been in effect for five or more years, or the buyer has paid 20% or more of the price, upon default, the seller must use foreclosure proceedings order to protect the buyer's substantial investment. Forfeiture proceedings are only an option if the contract has been in effect for less than five years or the buyer has paid less than 20% of the purchase price before default. The other statements are true.

Which statement regarding an agency relationship is FALSE? a An agency relationship may be created between a licensee and a buyer. b It is illegal for a salesperson to represent a client directly, without a broker. c The seller has a fiduciary responsibility toward the buyer. d Subagency is when a licensee is an agent of an agent.

c. The seller has a fiduciary responsibility toward the buyer. Incorrect. The answer is C. It is the licensee who owes fiduciary duties to a seller client, not the other way around. Agency relationships may be created between brokers and buyers, as well as between brokers and sellers. And note, that legal relationship is with the broker; a salesperson cannot represent a client directly. Instead, a salesperson acts as a subagent of the broker, essentially, an agent of an agent.

Which circumstance would NOT be grounds for a landlord to initiate an eviction proceeding? a. The tenant brings a cat into a property that prohibits non-service animals. b. The tenant is two months behind in paying rent. c. The tenant filed a complaint against the property owner with the city.. d. The tenant refuses to take out the garbage, resulting in a rat infestation.

c. The tenant filed a complaint against the property owner with the city. This answer is correct. d. The tenant refuses to take out the garbage, resulting in a rat infestation. Correct! All of these situations, with the exception of the tenant who filed a complaint against the landlord, could be grounds for eviction. To attempt to evict a tenant for filing a complaint could be considered retaliatory eviction, which is illegal.

You are showing a home that was built in the 1940s to your client. You notice signs of peeling paint falling from the ceiling in the second floor bedroom. The client is concerned with potential health issues. Which is the most likely hazard? a Because of the age of the house, there is a much higher chance of radon gas being a problem. b The peeling paint indicates that black mold is growing in the ceiling of the second floor bedroom. c There could be a lead-based paint hazard. d Urea-formaldehyde foam insulation was probably used in the house.

c. There could be a lead-based paint hazard. Lead-based paint was often used in homes built before 1978; it is the most likely hazard. Peeling paint doesn't mean mold is growing (only a potential problem.) Older homes are no more likely to have radon gas than new homes, nor can you automatically assume that hazardous insulation was used.

After Mike gets Wendy's listing straightened out, his client, Tyler, decides to put an offer on the property. What is the first thing Mike should give Wendy? a Tyler's earnest money deposit b Tyler's offer c Tyler's signed Agency Disclosure form d All of the above should be given to Wendy simultaneously.

c. Tyler's signed Agency Disclosure formThis is the correct answer. Incorrect. The answer is C. In Module 4, you learned that a licensee working with a buyer must give the seller the buyer's signed Agency Disclosure form before he presents an offer. Of course, if buyer Tyler is a client, both Wendy and Tyler must give informed written consent to dual agency as well.

The rule of capture provides that a oil and gas remain real property even after being captured. b oil and gas rights cannot be sold separately from the land. c a property owner who drills a well owns all of the oil or gas it produces, even though some migrated under a neighbor's land. d all of the above

c. a property owner who drills a well owns all of the oil or gas it produces, even though some migrated under a neighbor's land. The rule of capture says that whoever drills a well on his land owns all the oil or gas the well produces, even though it may have migrated from under a neighbor's land.

What is a dual agent NOT allowed to share with his clients in a real estate transaction? a closing costs that each should expect to pay b a description of real estate closing procedures c a recommended offer price d sale prices of comparable properties

c. a recommended offer priceThis answer is correct. Correct! Information or advice about negotiating terms of the transaction is off limits to a dual agent. The other information can certainly be shared as part of a dual agent's services to his clients.

Equitable title is a actual lawful ownership of real property. b evidence of title. c an interest in real property created by the execution of a valid sales contract or land contract. d an instrument that conveys ownership of real property.

c. an interest in real property created by the execution of a valid sales contract or land contract.This answer is correct. Correct! Equitable title is an interest in property created upon execution of a valid sales contract when actual title will be transferred by deed at a future date (closing).

Which features are adjusted for in the sales comparison approach? a any feature that is different between the subject property and the comparables, even if that feature had no effect on the sale price of the comparable b any feature that is different between the subject property and the comparables, up until the day of the appraisal c any significant feature that is different between the subject property and the comparables as of the day the comparables were sold d any significant feature that is different between the subject property and the comparables, up until the day of the appraisal

c. any significant feature that is different between the subject property and the comparables as of the day the comparables were sold The adjustment is necessary for each significant feature that is different between the subject property and the comparables on the day they were sold.

A large mirror that a buyer wants to remain with the property should a be agreed upon verbally, with its price stated in the contract. b be disregarded as having no consequence. c be identified as a fixture in the sales contract. d never be included in the sales contract.

c. be identified as a fixture in the sales contract. A fixture is defined as a piece of personal property that stays with the real property. Even though the large mirror might be removable, if it is identified as a fixture and made part of the real estate contract, it will remain after the sale. Remember, these issues are usually negotiable between the buyer and the seller.

The Civil Rights Act of 1866 prohibits a ethnic discrimination in all property transactions. b racial discrimination in all property transactions. c both ethnic and racial discrimination in all property transactions. d neither ethnic nor racial discrimination in all property transactions.

c. both ethnic and racial discrimination in all property transactions. The Civil Rights Act of 1866 prohibits discrimination based on race or ancestry in any personal or real property transaction in the United States.

Sally was interested in renting a unit in an owner-occupied duplex. She called a broker about it who told her that the owner, his client, does not allow children. Who, if anyone, could be held liable for violating fair housing laws in this situation? a the broker b the owner c both the broker and the owner d neither the broker nor the owner

c. both the broker and the owner Once the owner chose to use a real estate licensee, the exemption to familial status was no longer available to him. Sally could file a complaint against both the owner and the broker.

The process of escheat a allows the next of kin to take title to real property. b allows the surviving spouse to elect against the will. c can exist only when there are no next of kin and the decedent had no will. d determines to whom and in which order the estate will be distributed.

c. can exist only when there are no next of kin and the decedent had no will. The process of escheat protects the productivity of real property by transferring title to the state when the property owner dies without leaving a will or and without any legal descendants.

Age a can be a legitimate reason for turning down any borrower. b can be a legitimate reason for turning down a borrower over 65. c can't be considered in the loan underwriting process under any circumstances as long as the applicant is over the age of 18. d should always be considered in the loan underwriting process.

c. can't be considered in the loan underwriting process under any circumstances as long as the applicant is over the age of 18. As long as a prospective borrower has achieved the age of majority, which is 18 in most states, a lender cannot discriminate on the basis of age, under provisions of the Equal Credit Opportunity Act.

Which is NOT a method for deriving the value of land SEPARATE from the value of the land plus improvements? a allocation b capitalization of ground rents c comparative market analysis d extraction

c. comparative market analysis Value of land or site is often derived separately (mostly for cost approach). There are four methods: Sales comparison, allocation, extraction, or capitalization of ground rents.

Which is NOT considered a purpose of the real estate sales contract? a buyer's offer b contract between the buyer and the seller c contract between the seller and the broker d receipt for the earnest money deposit

c. contract between the seller and the brokerThis answer is correct. The contract between the seller and the broker is the listing agreement or buyer brokerage agreement. The purchase agreement serves all of these other purposes.

If the wording of a restriction in a deed is ambiguous, a court usually interprets the restriction as a a condition rather than a covenant, because a condition can result in forfeiture of title. b condition rather than a covenant, because a covenant can result in forfeiture of title. c covenant rather than a condition, because a condition can result in forfeiture of title. d covenant rather than a condition, because a covenant can result in forfeiture of title.

c. covenant rather than a condition, because a condition can result in forfeiture of title. Because forfeiture of title under a condition is an extremely harsh punishment, a court will always try to interpret a deed restriction broadly as a covenant rather than a condition whenever possible to allow the property owner as much freedom as possible under the terms of the covenant.

Your brokerage practices split agency. You bring in a listing for Marilyn's house. She also asks you to represent her in her search to find a new house, signing a purchaser agency agreement. This makes you a a designated buyer's agent only. b designated seller's agent only. c designated seller's agent and a designated buyer's agent. d dual agent.

c. designated seller's agent and a designated buyer's agent. Correct! If your broker has a listing agreement with Marilyn, as well as a purchaser agency agreement, and you are designated to represent her in both transactions, you are both a designated seller's agent and a designated buyer's agent. You're not a dual agent unless you represent both buyer and seller in the same transaction.

Your brokerage practices split agency. You bring in a listing for Joe's house. He also asks you to represent him in his search to find a new house, signing a purchaser agency agreement. This makes you a a designated buyer's agent only. b designated seller's agent only. c designated seller's agent and a designated buyer's agent. d dual agent.

c. designated seller's agent and a designated buyer's agent. If your broker has a listing agreement with Joe, as well as a purchaser agency agreement, and you are designated to represent him in both transactions, you are both a designated seller's agent and a designated buyer's agent. You're not a dual agent unless you represent both buyer and seller in the same transaction.

Which is NOT a requirement that must be met before becoming a licensed appraiser? a be 18 years old b complete a 2-year apprenticeship c earn a college degree d successfully complete prelicensing education

c. earn a college degree While some level of college education is required, a licensed appraiser is not required to have a college degree. The other elements are required.

Tammy signs a contract with XYZ Real Estate to represent her in her search for the perfect house. She intends for the seller to compensate XYZ. What type of agency situation does this represent? a indirect agency b implied agency c express agency d tacit agency

c. express agency There is a written contract between Tammy and XYZ, making this an express agency.

Which is LEAST LIKELY to be a factor that influences migration trends? a aging population b changes to the economic base c federal environmental laws d local taxation policies

c. federal environmental laws The answer is C. Migration may actually be the result of an economic factor, a governmental factor such as local tax policies, or a social factor such as an aging population. Federal laws would tend to impact property owners regardless of where they live, so would least likely be a factor in migration.

The economic base of an area a creates buyer's markets but not seller's markets. b does not influence the local housing market. c gives stability to a region and supports real estate values. d is responsible for government money coming in to support an area.

c. gives stability to a region and supports real estate values. Correct! The stronger the economic base, the more positive impact on regional stability and real estate values.

A similarity between an easement and a license is that both a can be revoked at any time. b create an encumbrance. c grant someone access to another's property. d run with the land.

c. grant someone access to another's property. Both allow someone else to enter or cross another's property. A license, however, can be revoked at any time and is much less restrictive than an easement, which creates an encumbrance and runs with the land.

Which appraisal approach is best for an investment or rental property? a comparable market approach b cost approach c income approach d sales comparison approach

c. income approach The income approach considers the value of a property in connection to the income that it can produce. This is a critical factor for someone deciding how much to offer when purchasing rental property.

The process of verifying that an improvement properly sits within the boundaries of the property, and that there are no encroachments from neighboring land onto the subject property is called a a encroachment survey. b location analysis. c location survey. d survey.

c. location survey. A location survey is the process of verifying that an improvement properly sits within the boundaries of the property and there are no encroachments from neighboring land onto the subject property.

A primary purpose of gathering general data is to a act as a means of verifying and cross-checking specific data. b correlate general data with a specific subject property and its selling price. c look at general trends that may affect value in the real estate market. d make specific predictions about future interest rate levels.

c. look at general trends that may affect value in the real estate market. Typically, when looking at general data resources, the appraiser is interested in trends in the economy, in interest rates, in governmental regulations, and in demographic changes that could impact value.

An advantage to a No PMI loan for the homebuyer is a higher interest rates. b the loan is paid sooner. c lower monthly payments as compared to a loan with PMI. d None of the above—these loans are risker.

c. lower monthly payments as compared to a loan with PMI. The monthly payment is initially lower when there is no PMI, however, that PMI payment will eventually be canceled.

Which is NOT an action that could result in discipline against a licensee? a encouraging a homeowner to break his listing contract with ABC and sign a listing agreement with XYZ b guaranteeing a buyer that the lakeside cottage he's considering will increase in value c maintaining property management security deposits in an interest-bearing account d making an offer on a listed property without telling the seller client that she is the buyer

c. maintaining property management security deposits in an interest-bearing account While a brokerage trust account for real estate sales cannot be in an interest-bearing account, a licensee can maintain a property management trust account in an interest-bearing account. The other situations are specific prohibited acts.

The main purpose of the doctrine of stare decisis is to a clarify confusing statutes. b limit access to the courts. c make court decisions more consistent and predictable. d prevent courts from exceeding their subject matter jurisdiction.

c. make court decisions more consistent and predictable. The doctrine of stare decisis means that a judge's decision in a specific case can become a rule of law applied to all cases. The doctrine holds that once a judge has decided a particular point of law, other judges faced with the same issue must decide it the same way.

Which is LEAST LIKELY to be a factor when qualifying a borrower for a loan? a credit history b income c marital status d net worth

c. marital status Marital status is NOT a factor that can be considered when qualifying a borrower. The underwriter will look at the borrower's credit history, amount and stability of the borrower's income, as well as the borrower's assets or net worth.

A GMRM is applied to ___________ to produce a value indication. a contract rent b effective gross income c market rent d net operating income

c. market rent The gross monthly rent multiplier (GMRM) is derived from market data and then applied to the subject property's market rent or income.

During reconciliation, the value indication produced by the sales comparison approach for a residential property a is always used as the final opinion of value. b is never used as the final opinion of value; it is used as support for either the income or cost approach. c may be given the most weight if the data is reliable and the approach is applicable. d none of the above

c. may be given the most weight if the data is reliable and the approach is applicable. The appraiser must decide which of the approaches to value is the most applicable to solving the valuation problem at hand for the subject property. If the appraiser has solid comparable sales and the data is reliable, he may give the most weight to that approach.

Maximum loan limits for FHA loans depend on the a amount of the buyer's down payment. b average home price in the city in which the property is located. c median home price in the community in which the property is located. d type of dwelling (e.g., one to four units).

c. median home price in the community in which the property is located. Loan limits are set by the median home price in the community in which the property is located. In most cases, the community is defined as the county.

FHA and VA debt-to-income ratio formulas are __________ than conventional ratios. a harder to calculate b less generous c more generous d the same

c. more generous It may be easier to be approved for an FHA-insured loan or a VA-guaranteed loan because the underwriting standards are not as stringent.

The influence of the cost of money on real estate is a irrelevant because interest rates are not important to real estate. b less than other big ticket items because mortgages have adjustable rates. c more than other big ticket items because mortgages are long term. d negligible because people are not always rational.

c. more than other big ticket items because mortgages are long term. While high interest rates affect most big ticket items, high interest rates hinder real estate more than other goods since mortgages are long-term commitments.

Of these expenses, which would NOT be included in the calculation to find net operating income? a property management fees b reserves for replacement c mortgage payments d property tax

c. mortgage payments Of these, the net operating income should take into consideration property taxes, property management fees, and reserves for replacement. Debt service is NOT counted toward the NOI, nor is depreciation.

The borrower who pledges property to a lender as collateral is referred to as the a beneficiary. b mortgagee. c mortgagor. d trustee.

c. mortgagor The borrower who pledges property as collateral is called the mortgagor. The lender is called the mortgagee.

In a mortgage document, the borrower is known as the a builder. b mortgagee. c mortgagor. d trustor.

c. mortgagor. The borrower who gives a mortgage to the lender is known as the mortgagor. The lender is the mortgagee.

A real estate agency agreement a is required by Ohio's Statute of Frauds to be in writing. b must be ratified by the principal. c must have an expiration date. d should be created by estoppel.

c. must have an expiration date. A real estate agency agreement is required by Ohio Licensing Law to have an expiration date. This ensures the agency relationship is brought to a conclusion, either through accomplishment of purpose or expiration.

Agency coupled with an interest should be terminated by a bankruptcy of the principal. b death of the principal. c mutual agreement. d revocation by the principal.

c. mutual agreement. Correct! A principal cannot revoke an agency coupled with an interest, nor can such a relationship be terminated by death, incapacity, or bankruptcy of the principal. Such an arrangement can only be terminated by mutual agreement.

Agent Ollie is working with seller Sue to evaluate two offers on her house. Sue needs to know if the offers are enough to cover her closing costs, pay off her current mortgage, and have enough for a down payment on a new house. Ollie should prepare a a comparative analysis. b multiple listing. c net to seller. d residential work sheet.

c. net to seller. A net to seller is an estimate of the money a seller should receive from a real estate transaction after all costs and expenses have been paid.

Question 2 A grantor acknowledges a deed before a a federal official. b lender representative. c notary public. d witness.

c. notary public.This answer is correct. In the case of a deed, the grantor acknowledges before the notary public that the act of selling the land is an act of free will.

When a new person takes the place of one of the parties to a contract, and the withdrawing party is relieved of all liability, it is called a accord and satisfaction. b assignment. c novation. d substantial performance.

c. novation. Novation is when one party to a contract withdraws and a new party is substituted, relieving the withdrawing party of liability.

Credit scoring refers to a the dollar amount of the loan a lender is willing to make to the borrower. b the lender's decision to approve the loan application. c numerical values the lender assigns to qualify the borrower. d the review of a loan application by the underwriting department.

c. numerical values the lender assigns to qualify the borrower. Credit scoring involves the lender assigning specified numerical values to different aspects of the borrower. These numbers may be adjusted up and down based on the strength or weakness of a particular borrower's qualification.

Lester is a licensed real estate broker in Indiana and wants to list warehouses in an Ohio industrial park for sale. Lester is NOT required to a deposit escrow funds in an Ohio broker's trust fund. b file an irrevocable written consent for legal service. c obtain an Ohio real estate license. d work in cooperation with a licensed Ohio broker.

c. obtain an Ohio real estate license. As long as Lester meets the requirements, such as working in cooperation with an Ohio broker, filing an irrevocable consent, and including the Ohio broker's name on all advertising, he is not required to be licensed in Ohio.

A real estate licensee may a draft deeds for sellers. b keep the earnest money if the deal falls through. c offer real estate to the market only on the terms allowed by the seller. d use an open-ended expiration date on an open listing agreement.

c. offer real estate to the market only on the terms allowed by the seller A licensee cannot offer real estate without the consent of the owner, including offering unauthorized terms of sale.

Tina is a principal broker at ABC Realty. She decides to go to school to get an MBA. If she wants to be a salesperson for awhile, the Superintendent can place her broker's license a in inactive status indefinitely and reissue a new salesperson license. b in suspended status for up to three years and reissue a new salesperson license. c on deposit indefinitely and reactive her salesperson license. d on hold for up to three years and reactivate her salesperson license.

c. on deposit indefinitely and reactive her salesperson license. The Superintendent can put her broker's license on deposit and reactivate her salesperson's license. Tina could also choose instead to be an associate broker.

Broker Ben wishes to go back to school to get a law degree and wants to cut back on his real estate activities. He returns his broker's license to the Division of Real Estate and Professional Licensing and reactivates his salesperson license. What is the status of his broker's license? a inactive b in escrow c on deposit d suspended

c. on depositThis answer is correct. Correct! License on deposit is a special license status that is available only to brokers who wish to return their broker's license to the Division in order to reactivate their license as a salesperso

Dora is interested in renting an apartment, but believes she was discriminated against by the landlord. If she wants to file a complaint with the Ohio Civil Rights Commission, she must do so within _______ of the incident. a 180 days b six months c one year d two years

c. one year She must file a complaint, in writing and under oath, within one year after the discriminatory incident occurred.

RESPA applies to ___________________________ financed by a federally regulated loan. a any commercial or residential property. b any residential property. c one- to four-family residences. d single-family dwellings only.

c. one- to four-family residences. RESPA applies only to one- to four-family residential properties (including condominiums and cooperatives) financed by a federally regulated loan.

The Landlords and Tenants Act of 1974 applies a only to cities with a population of 20,000 or more. b only to residential and commercial property. c only to residential property. d to all leased real property in Ohio.

c. only to residential property. The Landlords and Tenants Act of 1974 establishes a set of guidelines and imposes duties and responsibilities on both parties that cannot be waived. The law applies only to residential tenancies, although, as you'll see later, there are a couple of exceptions.

An appraisal is a(n) a determination of value. b guarantee of value. c opinion of value. d projection of future value.

c. opinion of value. An appraisal is an opinion of value based on a professional's evaluation of data.

K contracts with D to paint her house and garage. She gives him $500 before he begins the job with a promise of $2,000 more when he finishes. D paints the garage first, but then an early blizzard hits, and he is not going to be able to finish the job before he moves. K and D agree that he can keep the $500 just for painting the garage. She won't pay him any more, and he won't be obligated to paint the house. She'll find someone else to paint the house next year. This could now best be described as an example of a cancellation. b novation. c partial performance. d rescission.

c. partial performance K didn't cancel the contract, since she and D came to some agreement. It's not rescission, since they did not return consideration. It's not novation, since it involves personal services. They mutually agreed to accept partial performance.

Sally is a licensed Ohio real estate salesperson. She is ready to step out on her own and become a broker. Which is NOT a requirement for Sally to become a licensed real estate broker? a be active as a full-time salesperson for at least two of the preceding five years b complete additional education courses c participate in and complete at least 30 transactions d pass a broker licensing examination

c. participate in and complete at least 30 transactions Correct! In order to apply for a broker's license, she must participate in and complete at least 20 transactions. Recall that a listing or sale counts as 1/2; a rental counts as 1/4.

Which is NOT an encumbrance on real property? a appurtenant easement b judgment lien c personal license d restrictive covenant

c. personal license Correct! A personal license is a privilege that can be revoked by the grantor of the license. It is not an encumbrance.

Someone buys two adjacent parcels of land for $20,000 each. An appraisal shows that the combined larger parcel is now worth $50,000. This increased value is an example of a assemblage. b frontage. c plottage. d subdividing.

c. plottage. Plottage is an increase in value (over the cost of acquiring the parcels) by successful assemblage, usually due to a change in use. By creating a larger parcel with more utility and higher and better use than the individual sites, the owner has successfully achieved an increase in the inherent value of the land.

The simple process of asking prospective clients general questions about income, expenses, and debts is known as a credit reporting. b pre-approval. c pre-qualification. d underwriting

c. pre-qualification. This describes pre-qualification. This is NOT binding on the lender.

If a borrower wants to pay more toward principal every month to reduce the total amount of interest he pays, what mortgage clause should he be most concerned about? a acceleration clause b alienation clause c prepayment clause d subordination clause

c. prepayment clause A prepayment clause imposes a fee on a borrower who pays off his mortgage before the term ends. If a borrower wants to pay more toward principal, which in effect would retire the loan earlier, he should check and see whether his mortgage and/or promissory note includes such a clause and if so, its timeframe.

If a borrower wants to pay more toward principal every month to reduce the total amount of interest he pays, what mortgage clause should he be most concerned about? a acceleration clause b alienation clause c prepayment clause d subordination clause

c. prepayment clause A prepayment clause imposes a fee on a borrower who pays off his mortgage before the term ends. If a borrower wants to pay more toward principal, which in effect would retire the loan earlier, he should check and see whether his mortgage and/or promissory note includes such a clause and if so, its timeframe.

Title to real estate CANNOT pass from grantor to grantee without a an attorney's letter of opinion. b a policy of title insurance for the bank. c present donative intent of the grantor. d recording the deed.

c. present donative intent of the grantor. Recording the deed is not required in order to pass title of real property from one owner to another. When the grantor signs a deed that includes donative intent, a phrase you learned about in Module 6, it means that the grantor intends to transfer title immediately and unconditionally. This is required.

A seller's agent must give a Consumer Guide to Agency Relationships to a seller a at the same time a listing agreement is signed. b before the buyer's offer is presented. c prior to showing a buyer the property. d upon initiating a pre-qualification evaluation.

c. prior to showing a buyer the property.This answer is correct. Correct! A licensee working as a seller's agent must give the seller a Consumer Guide to Agency Relationships form prior to marketing or showing the seller's property.

Which is LEAST LIKELY to be a penalty imposed on someone found guilty in federal court of violating Civil Rights Act of 1866? a compensatory damages b injunction c prison time d punitive damages

c. prison time Case law shows that a claimant who proves discrimination that violates the 1866 Act may be entitled to an injunction, compensatory damages, and punitive damages.

Which cost might NOT appear on a settlement statement? a escrow company fees b lender fees c professional home inspection fee d title insurance fees

c. professional home inspection fee Costs that are paid directly to a professional outside of closing might not appear on the Closing Disclosure. The other closing costs should be documented.

NEPA requires an environmental impact statement to be prepared for certain development projects. This requirement applies only to a industrial projects. b projects built on federal land. c projects that would have a significant impact on the environment. d public projects, such as dams and highways.

c. projects that would have a significant impact on the environment. The National Environmental Policy Act (NEPA) requires federal agencies to prepare an environmental impact statement (EIS) for any action that would have a significant effect on the environment. NEPA applies to all kinds of federal development projects, such as dam and highway construction and waste control plans. NEPA also applies to private action when the use or development of land requires a license or permit from a federal agency, or even a federal loan.

Which document is evidence of debt, showing who owes what to whom? a deed b mortgage c promissory note d purchase agreement

c. promissory note Promissory notes are written promises to pay money. They are negotiable instruments and are freely transferable so creditors can sell them for cash.

Which instrument serves as evidence of debt? a land contracts b mortgages c promissory notes d trust deeds

c. promissory notes A promissory note is an instrument that serves as evidence of the debt. A security instrument such as a mortgage, trust deed, or land contract, is held as security for payment of the note.

A settlement statement a is required for all property transfers. b is simply an updated Loan Estimate with final loan terms. c provides a financial accounting of a buyer's and sellers' closing costs. d removes any cloud on the title.

c. provides a financial accounting of a buyer's and sellers' closing costs. Settlement statements itemize all credits and debits for a buyer and seller.

Broker Steven was so eager to make a sale that he intentionally doctored the seller's disclosure form before presenting it to the buyer. After the transaction, the buyer sued Steven in civil court. He was found guilty of actual fraud and ordered to pay for the buyer's repair expenses. In addition, the court imposed a fine of $12,000 as a warning to others. The $12,000 fine would be considered a actual damages. b compensatory damages. c punitive damages. d restitution.

c. punitive damages. Punitive damages are imposed to punish the wrongdoer and attempting to deter others from similar acts. Generally, punitive damages are only awarded when the act was intentional or malicious.

What are the protected classes under the federal Fair Housing Act and its amendments? a age, race, color, national origin, religion, familial status, disability b color, race, sex, age, religion, familial status, sexual orientation c race, color, national origin, religion, sex, disability, familial status d sex, race, color, sexual orientation, religion, familial status, disability

c. race, color, national origin, religion, sex, disability, familial status The federal Fair Housing Act prohibits discrimination in the sale or lease of residential property based on these protected classes: race, color, national origin, religion, sex, disability, and familial status.

Which lender practice is outlawed by the Federal Fair Housing Act? a blockbusting b conversion c redlining d steering

c. redlining A lender cannot refuse to make loans secured by property in a certain neighborhood because of the racial or ethnic composition of the neighborhood. This prohibited act is called redlining. While blockbusting and steering are prohibited by the Fair Housing Act, those are violations more likely to be committed by real estate licensees.

Which activity is NOT prohibited under the Fair Housing Act? a inserting a provision in a deed limiting the transfer of ownership based on someone's race b prohibiting a single mother from renting an apartment in a complex with a pool c refusing to enter into a listing agreement with a 17-year-old Hispanic woman d telling someone with an accent that an apartment is rented when it is not

c. refusing to enter into a listing agreement with a 17-year-old Hispanic woman It is not against the law to refuse to enter into a contract with someone who has not yet attained the legal age of majority. If the refusal to contract was based only on one's membership in a protected class, however, that would be a violation.

X granted R a life estate in some property. When R dies, the property will pass to B or B's heirs. B is called the a measuring life. b primary owner. c remainderman. d reversionary owner.

c. remainderman. B has a remainder interest and is known as the remainderman. In this case, when R dies, B (or his heirs) takes title to the property in fee simple. If X were to die before R, R would still have the present life estate, and B would still have just the future remainderman estate.

Under an assignment, the original party a is relieved of liability. b remains primarily liable. c remains secondarily liable d shares liability equally with the new party

c. remains secondarily liableThis answer is correct. In an assignment, one party (the assignor) transfers her rights or interests under a contract to another (the assignee). The assignor, however, remains secondarily liable to the other party and can be sued if the assignee does not perform.

A license can be suspended or revoked for a advertising in the newspaper, in which case the paper was responsible for an error or omission b paying non-licensees salaries or wages as telemarketers c representing more than one party in a transaction, with the consent of only one of the parties d unknowingly making a misrepresentation, because the seller/client gave the licensee the wrong information

c. representing more than one party in a transaction, with the consent of only one of the parties Correct! The key point is disclosure to and consent of all parties, OR the license will be suspended or revoked.

When a contract is terminated and each party returns whatever consideration the other had provided, it is called a cancellation. b repudiation. c rescission. d a tender offer.

c. rescission Rescission is when a contract is terminated and each party gives anything acquired under the contract back to the other party. When a contract is rescinded, each party returns any consideration given by the other.

A roof's pitch is the a rise of the roof. b rise of the roof in feet, divided by the span of the roof in inches. c rise of the roof in inches, divided by the span of the roof in feet. d run of the roof.

c. rise of the roof in inches, divided by the span of the roof in feet. The pitch of the roof is found by determining the vertical rise of the roof from where the ceiling rafters come to the center peak of a roof and is calculated as the rise in inches, divided by the roof's horizontal span in feet.

The home's plumbing would be installed during the _______ stage. a completion b interior finish c rough-in d site work

c. rough-in Rough-ins, including plumbing, are added once the frame is complete.

Electrical wiring and heating ductwork installed in a house as a step in the construction process, and later connected to their main service points and hidden from view, are known as a basic essentials. b framing. c rough-ins. d temporary utilities.

c. rough-ins. Rough-ins are items that will not be seen because they will be hidden later by the finished walls, but are vital to the operation of a home, such as electrical wiring, plumbing, heating and air-conditioning.

A competitive market analysis is most similar to which appraisal approach? a cost approach b income approach c sales comparison approach d It has elements of all three.

c. sales comparison approach The tasks and analysis that a real estate licensee performs to do a CMA are very similar to those an appraiser performs when doing an appraisal using the sales comparison approach. Remember, however, that a CMA can NEVER be called an appraisal.

B owes $145,000 on her mortgage loan and back property taxes of $5,400. The bank foreclosed on the property, selling it for $140,000 at a sheriff's sale. The costs associated with the proceeding were $1,200. If the bank wants to recover the balance of what B owes, it can a garnish B's wages. b levy B's bank account. c seek a deficiency judgment against B. d sue B in the court of common pleas.

c. seek a deficiency judgment against B.This answer is correct. d. sue B in the court of common pleas. Correct! If the sale of the collateral property through foreclosure sale does not raise enough to repay the lender, it may be able to obtain a deficiency judgment against the debtor.

A real estate agent representing the seller is a fiduciary in relation to the a buyer. b buyer's agent. c seller. d seller's subagent.

c. seller. The relationship between an agent and a principal is described as a fiduciary relationship. In a real estate brokerage relationship, therefore, the agent is the fiduciary of the client, in this example, the seller.

The purpose of private mortgage insurance is to a share all of the lender's risk of default by insuring the entire loan amount. b share none of the lender's risk of default by checking the borrower's credit. c share some of the lender's risk of default by insuring part of the loan amount. d take over all of the lender's risk of default by servicing the loan.

c. share some of the lender's risk of default by insuring part of the loan amount. Private mortgage insurance (PMI) is offered by private companies to insure a lender against default on a loan by a borrower. When insuring a loan, the mortgage insurance company shares part of the lender's risk— the upper portion of the loan that exceeds the standard 80% loan-to-value ratio.

A valid will in Ohio needs two witnesses who a can read and write. b are not related to each other or to the testator. c sign in the presence of each other and the testator. d have no interest in the will.

c. sign in the presence of each other and the testator.This answer is correct. d. have no interest in the will. Correct! The will has to be signed in front of two witnesses who signed in the presence of each other and the testator. If a witness has an interest in the will; then the gift to that person is void, but the will is not void.

Which of these elements is NOT a requirement for a valid deed in the State of Ohio? a identifiable grantee b legal description of the property c signatures of two witnesses d words of conveyance

c. signatures of two witnessesThis answer is correct. d. words of conveyance Correct! A valid deed must have the signature of a competent grantor, an identifiable grantee, words of conveyance, a legal description, considerations, acknowledgement before a notary, and delivery and acceptance. While required in some states, Ohio does NOT require a deed to be signed in the presence of two witnesses.

An Ohio real estate license is NOT valid for a commercial real estate transactions. b multi-unit residential real estate transactions. c single-family homes sold at auction. d vacant land sales.

c. single-family homes sold at auction. There are separate applications, requirements, and examinations for real estate auctioneers.

To be entitled to a use variance, a property owner ordinarily is required to show that a the character of the neighborhood has changed and the zoning designation is no longer appropriate. b none of the neighbors object to the proposed use. c strict application of the zoning law would cause unnecessary hardship. d strict application of the zoning law would prevent the most profitable use of the property.

c. strict application of the zoning law would cause unnecessary hardship. To obtain use variances, property owners must show that strict compliance with the zoning would cause unnecessary hardship. To meet this standard, the owner must demonstrate that the permitted uses of the property are not economically feasible and that the property really cannot be used without the variance.

Debts that are considered as part of a borrower's obligations when qualifying for a loan include a life insurance premiums. b membership fees. c student loan payments. d utility payments.

c. student loan payments. Student loan payments are a recurring monetary obligation that cannot be cancelled. The others may be monthly expenses but are not considered as debts because they can be cancelled.

Which is NOT a typical clause found in a real estate mortgage? a acceleration clause b alienation clause c subliminal clause d subordination clause

c. subliminal clause Typical clauses one might find in a mortgage include acceleration, alienation, defeasance, subordination, prepayment. There is no subliminal clause.

This is the second time that B, an Ohio real estate broker, has been held liable for violating fair housing laws. As a result, the Real Estate Commission is required to a issue a restricted license to the broker. b revoke his license. c suspend his license for at least two months, or else revoke his license. d suspend his license for at least one year, or else revoke his license.

c. suspend his license for at least two months, or else revoke his license. For a second offense, the Commission must suspend the license for a minimum of two months or revoke it. If there are any subsequent offenses, the license must be revoked.

Licensee Larry misses the deadline to renew his real estate license. What is the status of his license? a inactive b resigned c suspended d revoked

c. suspended Correct! When a licensee fails to renew a license on time, or fails to provide proof that he has completed the required continuing education, his license is automatically suspended.

Gene missed the deadline to renew his salesperson license. His license is now in _______ status and he has a ______ grace period to reactivate. a inactive / 3-year b resigned / 6-month c suspended / 12-month d terminated / 90-day

c. suspended / 12-month If he fails to renew prior to the filing deadline, his license is suspended. A suspended license may be reactivated within 12 months of the date of suspension.

Age life depreciation a is not concerned with a building's economic life. b is not concerned with a building's effective age. c takes the effective age of a building divided by the total economic life to arrive at a depreciation percentage. d all of the above

c. takes the effective age of a building divided by the total economic life to arrive at a depreciation percentage. To find the percentage of depreciation using the age life method, divide economic life by effective age.

Which is an example of a fixed expense? a payroll b repairs c taxes d utilities

c. taxes Taxes are a fixed expense that occur on a regular basis and have regular payment amounts, whether the property is vacant or fully leased. Variable expenses depend on a number of issues including the type, size, age, and condition of the property.

Which type of leasehold estate would probably be most affected by the death of either party? a estate for years b periodic tenancy c tenancy at will d All are equally affected.

c. tenancy at willThis is the correct answer. Incorrect. The answer is C. A tenancy at will leasehold usually ends on the death of the landlord or tenant.

After Hank and Julie got married in Gallipolis, Ohio, in 2012, they bought a house. Which is NOT an ownership option for them? a joint tenancy with the right of survivorship b statutory survivorship tenancy c tenancy by the entireties d tenancy in common

c. tenancy by the entireties Tenancy by the entireties, while common in many states as a way for married couples to take ownership of property, was abolished by the Ohio General Assembly in 1985. Hank and Julie could take ownership of the new home with any of the other options.

Which authority revokes licenses? a the Department of Real Estate b the Governor's task force to promote safe real estate c the Real Estate Commission d the Superintendent

c. the Real Estate Commission It is the Ohio Real Estate Commission who has the authority to suspend and revoke real estate licenses.

A complaint procedure may NOT result in a an appeal to Common Pleas Court. b a formal hearing. c the investigation proceedings becoming a matter of public record. d a license suspension or revocation and a fine of up to $2,500 per violation.

c. the investigation proceedings becoming a matter of public record. Correct! The investigation and its results are confidential, as are all reports prepared by Division employees.

Sunshine Property is a REIT that owns and operates 39 strip malls. Sunshine Property has 420 shareholders and is managed by a seven-member board of directors. Who, if anyone, are the beneficiaries in this arrangement? a no one is a beneficiary b the board of directors c the investors d the tenants of the strip malls

c. the investorsThis answer is correct. d. the tenants of the strip malls Correct! In a real estate investment trust, the investors—or shareholders—are the beneficiaries.

A main disadvantage of the gross monthly rent multiplier is a the capitalization rate is not accurate enough. b it can be used only to support the cost approach, not the sales comparison approach. c the lack of very similar comparable data. d using the GMRM is more complicated than the capitalization rate.

c. the lack of very similar comparable data. Since the GMRM is used for small investment properties, such as single-family homes that are rented, there could be a lack of comparable properties to compare sale price and monthly rents from which reliable value indications can be produced.

New licensee Lois is excited about placing her first advertisement in the local real estate circular. What must she be sure to include in the ad? a her business address b her license ID c the name of her employing broker d her phone number

c. the name of her employing broker When a salesperson posts an advertisement, the broker's name must be at least as prominent as the salesperson's name.

When a dollar amount of difference attributable to a particular property feature cannot be observed by comparing the sale prices of a matched pair, a an adjustment must be applied to address the difference. b the appraiser is using an unacceptable technique. c the need for an adjustment is not supported. d the properties in the matched pair should be discarded.

c. the need for an adjustment is not supported. If there is no dollar amount difference in the property value despite the presence or absence of a different amenity, it is not necessary to make an adjustment.

An "arm's-length transaction" means that the transaction occurred a between a buyer and a seller who have a close family relationship. b only after the seller made concessions for closing costs. c under typical conditions where each of the parties were acting in their own best interests. d when the buyer purchased the property sight-unseen.

c. under typical conditions where each of the parties were acting in their own best interests. An arm's-length transaction is a typical transaction, for example, where the buyer and seller aren't related, are not acting under duress, and do not involve unusual payment concessions.

Ruth is disappointed when her 21-year-old daughter Beth drops out of college. She and Beth sign a contract that states Beth promises to go back to school and graduate, and in exchange, Ruth will give her a new SUV on the day she gets her diploma. This contract is best described as a bilateral and valid. b bilateral and voidable. c unilateral and valid. d unilateral and void.

c. unilateral and valid.This answer is correct. Correct! There's nothing to suggest that the contract would not be valid. It's unilateral because it's simply an inducement to get Beth back in school. The contract does not require Beth to graduate, but she would have to graduate before Ruth's promise is binding.

M promises to pay F $10,000 to set fire to M's house so he can collect the insurance. F agrees and they shake on the deal. This oral contact could be described as a invalid. b valid. c void. d voidable.

c. void. This contract is for an illegal action; therefore, it is void.

G, age 16, inherits a parcel of land, and she agrees to sell it to B, age 45. This contract is a unenforceable. b voidable by B. c voidable by G. d voidable by either B or G.

c. voidable by G. The contract would be voidable by G, because she's under age and lacks legal capacity. She can change her mind about selling it, and legally back out of the deal without penalty.

PMI must be canceled a at the discretion of the borrower. b only if the lender is satisfied the buyer is no longer a credit risk. c when a home has been paid down to 78% of its original value for loans made after July 1999. d whenever a new appraisal is ordered, regardless of the value.

c. when a home has been paid down to 78% of its original value for loans made after July 1999. The federal Homeowners Protection Act of 1998 says that for all loans made after July 29, 1999, lenders must automatically cancel PMI when a home has been paid down to 78% of its original value, provided the borrower is not delinquent.

A buyer agrees to purchase a property for $150,000. The buyer will make a cash down payment of $30,000, the seller will carry a second mortgage of $10,000, and the buyer will get a first mortgage in the amount of $110,000 from a local savings and loan. How much is the transfer tax? a. $110 b. $120 c. $140 d. $150

d. $150 Simply divide the sales price by $1,000. Don't be distracted by extra information in the question: $150,000 ÷ $1,000 = $150 in transfer tax owed by the seller.

Arnold wants to net $132,000 for his home. He has to pay off an existing mortgage of $19,700. His closing costs will run $5,400 and he owes the broker a fee of 7%. For Arnold to get the net figure he wants, what must he sell the home for (rounded to the nearest dollar)? a $141,935 b $157,100 c $163,118 d $168,925

d. $168,925 First, figure the costs: $19,700 + $5,400 = $25,100. Add the desired net: $25,100 + $132,000 = $157,100. Since the commission rate is 7%, you can now divide the costs/desired net by 93% (100% - 7%) to find the minimum acceptable: $157,100 ÷ .93 = $168,925.

Bill sold his real estate for $234,900 and made a 28% profit. What did he originally pay for that property? a $65,772.00 b $83,892.86 c $169,128.00 d $183,515.62

d. $183,515.62 When you know the percent of profit and want to find the original purchase price, you need to first add the profit percent (28%) to the percent of the original price (100%). Then, divide selling price by 128%: $234,900 ÷ 1.28 = $183,515.62. Bill originally bought the property for $183,515.62, and he made a profit of $51,384.38 ($234,900 - $183,515.62).

A property is valued at $125,000 and is assessed at 35% of value for tax purposes. Taxes are calculated at $5 per $100 of assessed value. Using a 365-day year, calculate the daily rate of taxes. a. $1.11 b. $2.18 c. $4.37 d. $5.99

d. $5.99 First, find the assessed value: $125,000 x .35 = $43,750. To find the total taxes paid, first divide the assessed value by $100: $43,750 ÷ $100 = 437.50 "taxing units." Next, multiply by $5 to find the total taxes: 437.50 x $5 = $2,187.50. Finally, to calculate the daily rate, divide by 365: $2,187.50 ÷ 365 = $5.99.

The Ohio Civil Rights Commission found a landlord guilty of racial discrimination for the second time this year. What's the maximum penalty that could be imposed as punitive damages? a $11,000 b $16,000 c $20,000 d $55,000

d. $55,000 The landlord could be required to pay the complainant compensatory damages, attorney's fees, and punitive damages up to $55,000 for two previous unlawful discriminatory practices in the last seven years.

To sue someone for violating the fair housing provisions of the Ohio Civil Rights Law, the plaintiff has to file suit in the court of common pleas within _______ after the violation. a 60 days b 90 days c 120 days d 1 year

d. 1 year A victim of housing discrimination may file a civil lawsuit in the court of common pleas within one year after the discriminatory incident.

What is the appropriate order of steps necessary to evict an Ohio tenant who breaches his lease? a 1. The landlord files an unlawful detainer action. 2. The landlord sends a notice to vacate. 3. The court issues a writ of execution. 4. The sheriff removes the tenant. b 1. The landlord files an unlawful detainer action. 2. The court issues a writ of execution. 3. The sheriff delivers a notice to vacate. 4. The landlord removes the tenant. c 1. The landlord sends a notice to vacate. 2. The court issues a writ of execution. 3. The court issues an unlawful detainer action. 4. The landlord removes the tenant. d 1. The landlord sends a notice to vacate. 2. The landlord files an unlawful detainer action. 3. The court issues a writ of execution. 4. The sheriff removes the tenant.

d. 1. The landlord sends a notice to vacate. 2. The landlord files an unlawful detainer action. 3. The court issues a writ of execution. 4. The sheriff removes the tenant. This answer is correct. Correct! The eviction process is comprised of three basic steps: 1. The landlord files a notice to vacate. 2. The landlord files a forcible entry and detainer action with the court. 3. The court issues a writ of execution. Only after these three steps are completed through the judicial process can a sheriff enforce the writ and remove the tenant from the property. The landlord cannot remove the tenant.

A commercial property sells for $319,200. A look at its operating statement shows an effective gross income of $70,000 and operating expenses of $32,000. What would be an appropriate cap rate to use when evaluating a similar property? a 2.2% b 4.5% c 8.4% d 11.9%

d. 11.9% The net operating income is $38,000 ($70,000 - $32,000). Dividing the income (the NOI) by the value (the sales price) indicates a cap rate of 11.9% ($38,000 / $319,200= 0.119 or 11.9%). Remember IRV.

A duplex recently sold for $200,000. It brings in monthly rental income of $900 per unit. The expenses for this property run $8,000 per year. What is the GMRM for this property?

d. 111.11 To determine gross monthly rent multiplier, take the sales price ($200,000) and divide by the $1,800 monthly income ($900 x 2 units = $1,800): $200,000 / $1,800 = 11.11 GMRM. Remember, when figuring GMRM, you do not consider expenses.

A man purchases land for $50,000. He divides it into three lots that are sold for $20,000 each. What is his return on investment? a 1.2% b 5% c 8.33% d 20%

d. 20% The property sold for $60,000 (2 x $20,000), which is $10,000 more than what he paid. To find the return on investment (ROI), remember to divide what was made by what was paid: $10,000 ÷ $50,000 = 20%. The man's profit is 20%.

An unfurnished house rents for $8,100 per year, which is determined to represent market level. The property recently sold for $147,000 in an arm's length transaction. What is the GMRM indicated (rounded to two places)? a 5.51 b 18.15 c 181.48 d 217.78

d. 217.78 The gross monthly rent multiplier is 60. First, find the monthly rent: $8,100 / 12 = $675. Then divide the value of the property by the monthly income: $147,000 / $675 = 217.78.

An individual purchased two lots last year for $10,000 each. The lots just sold for a total of $25,000. What is the percent of profit? a. 8% b. 12.5% c. 15% d. 25%

d. 25% The property sold for $25,000, which is $5,000 more than what he paid ($10,000 x 2). To find the return on investment (ROI), remember to divide what was made by what was paid: $5,000 ÷ $20,000 = 20%. The profit is 25%.

How many hours of continuing education are required during every renewal cycle? a. 10 hours b. 15 hours c. 20 hours d. 30 hours

d. 30 hours Correct! All licensees must complete 30 hours of continuing education (CE) requirements during every renewal cycle.

The FHA allows a maximum housing expense-to-income ratio of _____ and a total debt service-to-income ratio of _____. a 28%; 33% b 28%; 36% c 29%; 36% d 31%; 43%

d. 31%; 43% The underwriting standards for a FHA-insured loan are 31% housing expense ratio and 43% total debt service ratio.

Under the Truth in Lending Act, a consumer refinancing a home has ____ day(s) to change his mind after closing. a 0 b 1 c 3 d 5

d. 5 The right to rescind a refinancing credit transaction extends until midnight of the third business day after a transaction closes.

Which is an example of liquidated damages? a A broker reimburses a former client who sued for breach of agency obligations. b A court orders a reluctant seller to pay the commission due a broker. c A court orders a seller to return the earnest money deposit when he backs out of the sale. d A seller keeps the earnest money deposit when the buyer backs out.

d. A seller keeps the earnest money deposit when the buyer backs out. Liquidated damages reflect the amount of money specified in a contract to be returned in the event the contract is terminated.

Which statement regarding the Ohio Division of Real Estate is FALSE? a It administers the Recovery Fund. b It investigates written complaints against licensees. c It issues licenses. d It sets licensing exam standards.

d. It sets licensing exam standards. It is the Real Estate Commission that sets licensing exam standards. The Division of Real Estate that has the authority over these other areas.

What is the renewal timeframe for an Ohio real estate licensee? a Licenses must be renewed every two years on or before the date of original licensure. b Licenses must be renewed every two years on or before December 31. c Licenses must be renewed every three years on or before December 31. d Licenses must be renewed every three years on or before the licensee's birthday.

d. Licenses must be renewed every three years on or before the licensee's birthday. Each broker and licensee must renew his own license every three years on or before his birthday.

Mr. and Mrs. Davis sold their home for $182,000 and it is due to transfer on August 13. The buyer, Miss Fairchild, took out a loan for $162,000 and is planning on moving in on August 15. Who pays the conveyance fee and how much is it? a Miss Fairchild—$20 b Miss Fairchild—$182 c Mr. and Mrs. Davis—$20 d Mr. and Mrs. Davis—$182

d. Mr. and Mrs. Davis—$182 The seller pays the transfer tax. To determine the tax, divide the sales price by $1,000. Don't be distracted by extra information in the question: $182,000 / $1,000 = $182 in transfer tax.

What is NOT an advantage of a career in Real Estate sales? a. steady income b. setting your own hours c. potential for unlimited earnings d. possibility of owning your own brokerage with additional training, experience, education, and licensure

d. National Association of REALTORS.This answer is correct. Correct! Real Estate licensees MUST join the National Association of Realtors (NAR) and affiliated state and local boards if their broker is a member.

Which is NOT a benefit of the secondary mortgage market? a Banks have funds they can lend again to other potential homebuyers. b It moderates real estate cycles by providing local banks and others with stable investments from other regions of the country. c It standardizes loan criteria. d Primary mortgage lenders can charge higher interest rates.

d. Primary mortgage lenders can charge higher interest rates.This answer is correct. Correct! Because of the secondary market, risk is spread and lenders can charge more competitive rates.

Which USPAP Rule contains obligations of an appraiser in determining the extent and level of research and analysis that must be performed in a particular assignment in order to achieve credible results? a Competency Rule b Ethics Rule c Jurisdictional Exception Rule d Scope of Work Rule

d. Scope of Work Rule The Scope of Work Rule contains obligations of an appraiser in determining the extent and level of research and analysis that must be performed in a particular assignment in order to achieve credible results.

At ABC Brokerage, agent Harry represents the seller. Harry has a buyer client interested in the seller's house, but ABC policy will not allow Harry to represent both buyer and seller in the same transaction. Which Consumer Guide does ABC Brokerage use? a Exclusive Buyer Agency Only b Dual Agency in All In-House Transactions c Split Agency & Dual Agency d Split Agency but No Dual Agency

d. Split Agency but No Dual Agency The Consumer Guide for Split Agency but No Dual Agency indicates that the brokerage will allow different licensees to represent a buyer client and a seller client in the same transaction, known as split agency, but will not allow the same licensee to serve as a dual agent and represent both clients.

The Residential Real Property Condition Disclosure Form must be presented a prior to the closing of the transaction. b prior to an offer to purchase from a buyer. c prior to showing the property to a buyer. d prior to the signing of a listing agreement.

d. Split Agency but No Dual Agency The Consumer Guide for Split Agency but No Dual Agency indicates that the brokerage will allow different licensees to represent a buyer client and a seller client in the same transaction, known as split agency, but will not allow the same licensee to serve as a dual agent and represent both clients.

T is leasing commercial space from L for an art gallery. The lease states that L cannot be held liable for injuries that occur on the property during the tenancy. One of T's customers trips over a loose board in the gallery floor and breaks a leg. The board was okay when T moved in. Which statement is TRUE? a Both L and T could be held liable, because an exculpatory clause in a lease is always void. b L could be held liable, but T could not, because a landlord always has a duty. c L could be held liable, but T could not, because T is not the landowner. d T could be held liable, but L could not, because an exculpatory clause in a nonresidential lease is valid.

d. T could be held liable, but L could not, because an exculpatory clause in a nonresidential lease is valid. While the law imposes on all landowners a duty of care toward other people who enter their property, if a nonresidential lease contains an exculpatory clause, it relieves the landlord of liability. Such a clause would not be enforceable for a residential lease, however.

What is the first step necessary to kick off a foreclosure proceeding in Ohio? a The judge issues a judgment against a borrower. b The lender puts the property up for sale. c The lender files a foreclosure action. d The lender provides a notice of default.

d. The lender provides a notice of default The first thing that must happen is that the lender provides a notice of default to the borrower. Then the lender files a foreclosure action in the county in which the property is located. If the judge issues an order of execution, the lender can put the property up for sale.

Shane lists his home with Eve, a real estate agent, and tells her about the leaks in the roof because he thinks a new buyer will likely see them. Shane does not tell Eve that the house will also need a new well because the old one is not deep enough. Eve has the home inspected and discovers Shane's house also has termites. Months later, Eve has shown the house to 13 buyers with no interest. Eve decides not to tell her new prospect about the leaky roof because she thinks that it is easy to spot, but also decides not to mention the termites because the inspection report was not required and the new prospect never asked her about it. Are any of these items considered to be actual fraud or constructive fraud? a All three items represent actual fraud for both Shane and Eve. b All three items represent constructive fraud. c The roof is a non-issue; the well is actual fraud by Eve; the termite issue is constructive fraud by Shane. d The roof may be an issue depending on how visible it was to prospective buyers; the well is actual fraud by Shane; the termite issue is actual fraud by Eve.

d. The roof may be an issue depending on how visible it was to prospective buyers; the well is actual fraud by Shane; the termite issue is actual fraud by Eve. The answer is D. The leaks should probably be disclosed by the seller and the listing agent, even if the problems are clearly visible on a reasonable examination. If the problem is visible, however, Shane and Eve would have no liability if they chose not to disclose. The seller Shane intentionally did not disclose the known problem with the well, which is a material fact. Therefore, this is an incident of actual fraud by Shane. Since agent Eve knew about the hidden termite damage and chose not to disclose that, she, too, could be accused of actual fraud.

Henry is buying Bob's farm. On the back of the property is an underground storage tank that is not apparent from a normal inspection of the land. What type of defect would this be considered, and is Bob required to disclose it? a latent defect; must disclose b latent defect; not required to disclose c patent defect; must disclose d patent defect; not required to disclose

d. The seller dies before the listing period ends.This answer is correct. Correct! When a party to a contract—in this case, a listing agreement—dies, the agency relationship terminates as an operation of law.

Seller Gary listed his property with agent Tom. Agent Alice's client, Betty, is ready to make an offer on Gary's house. Which statement is TRUE? a Alice must explain the Agency Disclosure Statement options to Gary before presenting the offer. b Alice must present Betty's signed Agency Disclosure Statement to Gary before presenting the offer. c Gary must sign Betty's Agency Disclosure Statement before Tom presents Betty's offer. d Tom must present an Agency Disclosure Statement to Betty before helping her write an offer.

d. The seller dies before the listing period ends.This answer is correct. Correct! When a party to a contract—in this case, a listing agreement—dies, the agency relationship terminates as an operation of law.

Which is NOT a characteristic of a VA loan? a can be assumed by a qualified veteran b no due on sale clause c no prepayment penalty d Veterans can buy investment property with zero down.

d. Veterans can buy investment property with zero down. A VA loan cannot be used to purchase investment property.

Licensee Tom shows one of his listed properties to a buyer client. The seller knew that the buyer was also Tom's client, but Tom did not tell the buyer that he was the listing agent. Did Tom do anything wrong? a No, as long as buyer and seller agree on a price, Tom has done nothing wrong. b No, as long as the seller has given consent, Tom has done nothing wrong. c Yes, Ohio law does not allow a single agent to represent both buyer and seller. d Yes, Tom is acting as an undisclosed dual agent without the consent of both parties.

d. Yes, Tom is acting as an undisclosed dual agent without the consent of both parties. Grounds for discipline under O.R.C. § 4735.18 includes acting for more than one party in a transaction without the knowledge and consent of all parties involved. Tom is an undisclosed dual agent. If both parties give informed written consent, dual agency is acceptable.

On May 15, B offers to buy S's property. On May 18, S mails B a letter accepting the offer. On May 19 (before she receives S's letter), B calls S and tells him the offer is revoked. Do they have a binding contract? a No, because B had not received the acceptance letter before she revoked her offer. b No, because S should have accepted over the telephone instead of by mail. c Yes, because B waited more than three days to revoke her offer. d Yes, because S's acceptance became effective when he mailed it.

d. Yes, because S's acceptance became effective when he mailed it. This answer is correct. Correct! The "mailbox rule" says when an acceptance is not communicated directly, either in person or over the phone, it is effective as soon as it is sent in the mail to the offeror, even though the other party has not received it yet. The timing of this situation is that offer has been accepted, and they have a binding contract. A later revocation could be a contract breach that would have to be dealt with in a number of ways.

V, a Japanese American, tries to rent an apartment in a four-unit building. The real estate broker who manages the building rejects V's application because her credit rating is not very good and also because she is Japanese. Does the real estate broker's refusal violate the Federal Fair Housing Act? a No, because a poor credit history is a legitimate reason for rejecting a rental applicant. b No, because residential buildings with four units or less are exempt from the Fair Housing Act. c Yes, because credit history is a protected class under the Federal Fair Housing Act. d Yes, because V's race was a factor in the manager's decision, even though it was not his only reason for rejecting her.

d. Yes, because V's race was a factor in the manager's decision, even though it was not his only reason for rejecting her. Even though the building has four-units, which allows some leeway, when a real estate licensee is involved, there are no exemptions. Also, her race was a factor in the refusal, and that is a clear violation. If his only reason for rejected her application was her credit issues, there would be no problem.

Nowhere City's new zoning ordinance contains no discriminatory language but has the effect of keeping minority families out of the city. Does this ordinance violate the Fair Housing Act? a No, because the Act does not prohibit discrimination against poor people. b No, because the ordinance does not express intent to discriminate. c Yes, because the Act prohibits discrimination based on income. d Yes, because the ordinance has a disparate impact on minority groups.

d. Yes, because the ordinance has a disparate impact on minority groups. Although source or amount of income is not a protected class for the purposes of fair housing, this ordinance appears to have had a disparate impact on minority groups. Even if that was not the intention of the city council, this ordinance could be held up as discriminatory.

Defining the problem primarily assists the appraiser with a defining highest and best use. b the final opinion of value. c quoting the appraisal fee. d a scope of work decision.

d. a scope of work decision. Defining the problem consists of identifying information the appraiser uses to determine the scope of work in an assignment.

Assuming they are being paid for their services, who is EXEMPT from the requirement to have an Ohio real estate license? a. an auctioneer selling commercial property b. an employee of a property management company who negotiates leases c. a man who advertises he will help prospective tenants find apartments d. a sheriff selling foreclosed houses for the bank

d. a sheriff selling foreclosed houses for the bank Correct! Ohio law requires that anyone who, for a fee, sells, lists, leases, exchanges, negotiates, or otherwise deals in the real estate of others, or represents publicly that he or she does so, must be licensed. A public official who acts in an official capacity is a specific exemption.

Which borrower is eligible for a VA-guaranteed loan? a a borrower whose income is at or below 80% of the county's median income level b a borrower who cannot qualify for an FHA-insured loan c a veteran who has been dishonorably discharged from service d a veteran who has been issued a certificate of eligibility

d. a veteran who has been issued a certificate of eligibility Eligibility for VA loans is based on the length of continuous active service in the U.S. armed forces. Eligibility is validated by the discharge papers (DD-214).

Which can limit a court's jurisdiction? a amount of money at issue in a case b geographical boundaries c subject matter of the case d all of the above

d. all of the above A court's jurisdiction can be limited to a particular geographical area (territorial jurisdiction) or to a certain type of lawsuit based on subject matter. There may also be monetary limits on a court's jurisdiction.

Which is considered to be a right in the bundle of rights? a J loves fresh corn, so he plants half of his backyard with corn. b K is fond of lawn ornaments and places 20 gnomes down her sidewalk. c M never uses his detached two-car garage, so he rents it as storage. d all of the above

d. all of the above All are examples. Seeing a corn field or 20 gnomes in your neighbor's yard might not be fun, but these are examples of the right of use and enjoyment. M renting his garage is the right of disposition.

Which type of data may be relevant to an appraisal? a general data covering the great forces in the marketplace b specific data for comparative purposes (such as other sales or cost information) c specific data on the subject property (such as legal description) d all of the above

d. all of the above All of these may be relevant. An appraiser needs to collect and analyze any relevant general data and specific data, which includes data on the subject property and data for comparative purposes.

In the final appraisal report, the appraiser a details the reasoning he used in arriving at the final opinion of value. b explains why one or more of the appraisal methods may not have been used. c notes any specific conditions, unusual circumstances, or assumptions. d all of the above

d. all of the above An appraisal report should provide details of the appraiser's reasoning and logic used in forming his final opinion of value and must be clear, understandable, and not misleading.

Negative amortization occurs when a interest rate adjustments occur more frequently than mortgage payment adjustments. b the interest rate rises but payments are locked at a low amount due to payment caps. c the loan balance grows from deferred interest. d all of the above

d. all of the above Any of these situations could result in negative amortization.

The types of data an appraiser may collect in preparing an appraisal are: a general data on a national and local level. b specific data about the subject property. c specific data for comparative purposes. d all of the above

d. all of the above Appraisers use a number of data resources in their data collection process, including local and national general data, as well as specific data about the subject property and comparable properties.

The advantages of a permanent buydown for borrowers include a easier qualifying standards. b lower monthly payments. c the possibility of qualifying for a larger loan. d all of the above

d. all of the above Because a permanent buydown reduces the monthly mortgage payment, its benefits include all of these.

The bundle of rights that are transferred with real property ownership are a right of disposal. b right of enjoyment. c right of use. d all of the above

d. all of the above Bundle of rights are all real property rights that are conferred with ownership, including (but not limited to) the right of use, the right of enjoyment, and the right of disposal.

To comply with EPA lead-based paint regulations for houses built before 1978, a buyers must be given a 10-day period to conduct lead tests. b known lead paint hazards must be disclosed. c a lead paint brochure must be given to buyers and prospective tenants. d all of the above

d. all of the above Each of these are required for compliance with the EPA and HUD guidelines on addressing lead-based paint hazards in homes that were built prior to 1978.

Which is an advantage of FHA financing? a less stringent qualifying standards b long-term loans c low down payments d all of the above

d. all of the above Each of these is an advantage of FHA-insured loans.

Adjustable rate mortgages a allow the lender to adjust the interest rate in accordance with a chosen index at specified intervals. b may cause mortgage payments to increase or decrease over time. c pass part of the risk of interest rate fluctuations from the lender to the buyer. d all of the above

d. all of the above Each of these statements describe characteristics of an ARM.

__________ can be used to offset a marginal or high total debt service ratio. a Above-normal net worth b A co-borrower c High credit scores d all of the above

d. all of the above If a borrower has a marginal total debt service ratio, an above-average net worth can offset this deficiency, as can high credit scores and a co-borrower, assuming the co-borrower does not have bad credit.

Which issue is considered by the court when deciding if something is real property or personal property? a Is the item securely attached to the property? b What was the intention of the annexer? c What was the purpose of the annexation? d all of the above

d. all of the above If the court determines that the property is securely attached, it will then look at these two main questions: 1. What was the intention of the annexer? and 2. What was the purpose of the annexation?

Which is considered an improvement? a garage b septic system in place c utility line d all of the above

d. all of the above Improvements are additions to real property; they can be natural (e.g., trees, lot feature) or they can be man-made. All of these are examples of man-made improvements.

The Treasury Department is responsible for a federal spending. b managing the federal deficit. c tax collection. d all of the above

d. all of the above The U.S. Treasury Department is responsible for carrying out the nation's fiscal policy through spending, debt management, and taxation.

Which of the following are necessary to perform the sales comparison approach? a comparable sales b matched pair analysis data for significant features c subject property d all of the above

d. all of the above The subject property is the property being appraised or for which a value opinion is sought. With the sales comparison approach, the value of the subject property is determined by comparing it to other similar properties that are ideally from the same market area, called comparable properties. Adjustments are made based on the findings of matched pair analysis.

A licensee who breaches his fiduciary duties to a client would NOT be subject to a. civil lawsuits filed by the client. b. criminal charges. This answer is incorrect. c. disciplinary action by the Ohio Division of Real Estate and Professional Licensing. d. disciplinary action by the Ohio Real Estate Commission.

d. disciplinary action by the Ohio Real Estate Commission. This is the correct answer. Incorrect. The answer is D. The Real Estate Commission does not impose penalties on licensees for breach of duty. That authority belongs to the Ohio Division of Real Estate and Professional Licensing. An aggrieved party could file a civil lawsuit against a licensee, and the licensee could also face criminal charge. In addition, a licensee who is a member of professional association, such as the National Association of REALTORS®, could face sanctions.

Which is NOT a section of the Ohio Canons of Ethics for the Real Estate Industry? a duties to clients and customers b duties to fellow licensees c duties to the public d duties to the Real Estate Commission

d. duties to the Real Estate Commission The Ohio Real Estate Commission promulgates the Canons of Ethics for the Real Estate Industry, but the Canons do not impose any specific duties due to the Commission. The Canons are divided into three sections: General Duties to the Public and Industry, Specific Duties to Clients and Customers, Duties to Fellow Licensees

A deed is a the actual ownership of rights to real estate. b better than title. c a document that must be recorded. d evidence of title, if any.

d. evidence of title, if any. This is the correct answer. The answer is D. A deed is the instrument that conveys a grantor's interest in land, if any, and that serves as evidence of title. It does not have to be recorded.

M sold his land to P with the condition that she does not disturb the spring house built in 1750 that's on the back of the property. When P tore the spring house down to put up a barn, M exercised his right of re-entry. What type of estate did M grant P, and what did M have to do to get the land back? a fee simple determinable; M gets the property automatically b fee simple determinable; M goes to court c fee simple subject to a condition subsequent; M gets the property automatically d fee simple subject to a condition subsequent; M goes to court

d. fee simple subject to a condition subsequent; M goes to court The right of re-entry that is an element of a fee simple subject to condition subsequent estate means that the original grantor has to prove in court that the condition occurred; it is not automatic. The possibility of reverter that is an element of the determinable fee estate is automatic.

A loan in which total payments over the life of the loan pay off the entire balance of principal and interest due at the end of the term is referred to as a annualized. b compounding. c diminishing. d fully amortized.

d. fully amortized. A loan that is fully amortized means the total payments over the life of the loan will pay off the entire balance of principal and interest due at the end of the term.

When using the URAR form, which income approach technique does the form accommodate? a comparative unit b direct capitalization c gross income multiplier d gross rent multiplier

d. gross rent multiplier The URAR accommodates only one line for the reporting of the income approach, and asks for estimated monthly market rent and the gross rent multiplier, also known as the gross monthly rent multiplier.

Clarence, real estate agent, helped his client sell his house that was built in 1960. To comply with EPA lead-based paint regulations, he must do all of the following EXCEPT a disclose known lead paint hazards. b give the buyers a lead paint brochure prior to accepting a contract. c give the buyers time to conduct lead tests (usually a ten-day period), if they desire. d have the seller conduct lead tests.

d. have the seller conduct lead tests.This answer is correct. Correct! Sellers do not have to conduct lead tests, however, if any prior lead tests have been done, sellers must provide the results of those tests.

Under Ohio's Real Estate License Law, who must be licensed to sell real estate? a. executor of a will who is selling the land for an estate b. lawyer performing the duties of a lawyer selling land on behalf of a deceased client c. someone selling a mobile home in Ohio that is NOT attached to land d. human resources director of a real estate company who is paid a referral fee for a successful real estate transaction

d. human resources director of a real estate company who is paid a referral fee for a successful real estate transaction Correct! Ohio law requires that any person, partnership, association, limited liability partnership, limited liability company, or corporation who, for a fee, sells, lists, leases, exchanges, negotiates, or otherwise deals in the real estate of others, or represents publicly that he does so, must be licensed.

There has been __________ dependence on the secondary mortgage market, which has brought a high degree of __________ to loan underwriting. a decreasing; creativity b decreasing; standardization c increasing; creativity d increasing; standardization

d. increasing; standardization Lenders are increasingly looking to the secondary market to buy their mortgage loans. As a result, there is a high degree of standardization in underwriting.

A house with a poor floor plan that would be very difficult and costly to change would likely suffer from a curable external obsolescence. b curable functional obsolescence. c incurable external obsolescence. d incurable functional obsolescence.

d. incurable functional obsolescence. Functional obsolescence occurs when a building is less desirable because of something inherent in the design of the structure. The test for classification as curable or incurable is whether the cost of the renovation can be recovered when the property is sold. If the change is not economically feasible, the obsolescence would be considered incurable.

Severe structural damage to a basement and foundation would likely be considered a curable functional obsolescence. b curable physical deterioration. c incurable external obsolescence. d incurable physical deterioration.

d. incurable physical deterioration. Physical deterioration is actual wear and tear on something due to age, the elements, or other forces. If the cost to repair is more than the value the repair would contribute to the sale value, then physical deterioration is incurable.

An appraisal a always determines market price. b does not allow the appraiser to use his judgment skills. c is completely subjective in defining market value. d is only an opinion of value supported by objective data.

d. is only an opinion of value supported by objective data. Appraisal is the act or process of developing an opinion of value, or simply an opinion of value. An important element of an appraisal is that the opinion of value must be defendable and supported by objective evidence and data.

The Ohio Real Estate Commission a consists of five real estate brokers. b is elected every five years. c is overseen on a day-to-day basis by the Superintendent. d is part of the Department of Commerce.

d. is part of the Department of Commerce. The Ohio Real Estate Commission, part of the Department of Commerce, consists of five members, only four of which are brokers. The members are appointed by the Governor, although they do serve a five-year term. It is the Division that has a Superintendent.

The Real Estate Recovery Fund a can cover any budget deficits. b can result in unlimited payment of judgments for fair housing violations. c is used to help licensees get unpaid commissions. d is used to satisfy unpaid judgments against real estate licensees.

d. is used to satisfy unpaid judgments against real estate licensees. Correct! The purpose of the fund to make the damaged party whole as a result of the actions against a licensee. It is used solely to satisfy unpaid judgments against real estate licensees.

Bob, the buyer, takes over Sally's, the seller, mortgage. Bob is now personally liable for the debt and agrees to pay the balance of the purchase price to Sally under a contract. Bob and Sally now have a(n) a assumption and release. b encumbered property cash-out. c land contract subject to an existing mortgage. d land contract with assumption of an existing mortgage.

d. land contract with assumption of an existing mortgage. The buyer and seller are using two nontraditional financing tools. In this instance, the buyer has assumed liability for the seller's mortgage. Since the buyer is paying the balance of the sales price directly to the seller, there is also a land contract in place.

Within the government, who is responsible for statutory law? a administrative agencies b executive branch c judicial branch d legislative branch

d. legislative branch It is the legislative branch of government that is responsible for statutory law. This could be the federal (U.S. Congress), state (Ohio Legislature), or local (city councils).

The CC&Rs for the Lowland Heights subdivision were recorded in 1954. They restrict all lots to single-family residential use. The city has grown and Lowland Heights is now surrounded by a commercial district. The value of the homes in the subdivision has dropped sharply, but the lots would be quite valuable as commercial property. The residential use restriction a cannot be enforced, since the zoning allows commercial use of the lots. b has been terminated by abandonment. c is enforceable unless a majority of the homeowners vote to abandon it. d may no longer be enforceable, because the character of the surrounding neighborhood has changed.

d. may no longer be enforceable, because the character of the surrounding neighborhood has changed. Like a restrictive covenant, a subdivision's CC&Rs may no longer be enforceable if the character of the restricted neighborhood has changed

A deed that is NOT recorded a is invalid. b is unable to be delivered. c makes conveyance impossible. d might not be enforceable.

d. might not be enforceable. A deed does not have to be recorded in order for title to transfer from the grantor to the grantee. The purpose of recording the deed is to provide notice to others. If it's not recorded, and a later deed IS recorded, the earlier grantee may have problems enforcing his claim to the title.

A fully amortized loan means that the loan will be paid off in a equal monthly installments over 30 years. b equal monthly installments with a balloon payment. c monthly installments covering interest only. d monthly installments that pay off the entire balance during the loan term.

d. monthly installments that pay off the entire balance during the loan term. A fully amortized loan is one where the total payments over the life of a loan will pay off the entire balance of principal and interest due at the end of the term. Even though the payment stays the same for the life of the loan, the amounts applied to principal and interest are adjusted each month. If all payments are made on time, the loan will be paid off with the last scheduled payment.

When a loan balance for an adjustable rate mortgage grows because of deferred interest when payments are not covering the interest portion of the loan, this is known as a full amortization. b margin. c mortgage payment cap. d negative amortization.

d. negative amortization. Negative amortization means a loan balance grows because of deferred interest when payments are not covering the interest portion of the loan.

An advertisement for a home says, "Low Down Payment." What other disclosures are required? a the annual percentage rate b the terms of repayment only c both the annual percentage rate and the terms of repayment d neither the annual percentage rate nor the terms of repayment

d. neither the annual percentage rate nor the terms of repayment The phrase "low down payment" does not trigger the requirement for any additional required disclosures.

The annual percentage rate (APR) is a both the interest rate and fees being charged on the loan. b the fees being charged on the loan only. c the interest rate being charged on the loan only d neither the interest rate nor the fees being charged on the loan.

d. neither the annual percentage rate nor the terms of repayment The phrase "low down payment" does not trigger the requirement for any additional required disclosures.

J is selling his store but he refuses to sell it to A because he is a Muslim. J has violated the a Civil Rights Act of 1866. b Federal Fair Housing Act. c Ohio Civil Rights Law. d none of the above

d. none of the above While the Civil Rights Act of 1866 applies to ALL property sales, it is only on the basis of race, color, or ancestry. The Ohio Civil Rights Law and the federal Fair Housing Act prohibit discrimination in residential real property transactions. J has not violated any of these laws.

A house is listed at $180,000 and your buyer client wants to offer $125,000. Which fiduciary duty are you following by presenting the offer to the seller or the seller's agent? a accounting b confidentiality c disclosure d obedience

d. obedienceThis answer is correct. Correct! You may feel uncomfortable doing this, and you may mention to your clients that such a drastic price cut is unusual, but you must honor the wishes of the client you're representing as long as it's a legal request.

A wraparound mortgage a allows homeowners to finance expensive purchases or pay off credit card debt. b allows the borrower to redo or expand a loan on an existing property. c occurs between the termination of one mortgage and the beginning of the next. d occurs when a new mortgage plus an existing mortgage are structured as a single obligation.

d. occurs when a new mortgage plus an existing mortgage are structured as a single obligation. This is when a new mortgage wraps around an existing mortgage. The total debt (a new loan plus an existing loan) is treated as a single obligation by the buyer, with one payment made on the entire debt.

The purpose of subprime loans was to a allow lenders to justify charging excessive fees. b give borrowers, with no income or means of repaying, a mortgage loan. c let lenders add additional unnecessary fee items (like credit insurance) beyond the mortgage amount. d offer borrowers with less-than-perfect credit or other qualifying difficulties an opportunity to obtain a mortgage loan.

d. offer borrowers with less-than-perfect credit or other qualifying difficulties an opportunity to obtain a mortgage loan. Subprime loans filled a need by helping these customers with less-than-perfect credit reach their goal of home ownership.

When an appraiser decides to use one particular approach as a primary indicator of value in an appraisal, a any other approaches developed are not reported in the appraisal report. b he has violated USPAP as it prohibits correlating with only one approach. c he must not discuss in the report the other approaches developed. d other approaches may be used to support that opinion.

d. other approaches may be used to support that opinion. Even if an appraiser determines that one of the approaches provides the most appropriate and reliable data for a particular assignment, one of the other approaches may serve to support that opinion of value.

You're representing Roger, who is selling his condo to Jessica. Due to a recent hail storm, the patio door off the kitchen has a huge crack. Because he doesn't want to spend the money to replace the door, Roger just put some duct tape on the crack to stabilize it. What type of defect would this be considered, and are you required to disclose it? a latent defect; must disclose b latent defect; not required to disclose c patent defect; must disclose d patent defect; not required to disclose

d. patent defect; not required to disclose This is a patent defect because it should be clearly evident to anyone looking at the house. Unless it happened after Jessica made an offer and she was unaware of it, you should have no obligation to disclose this.

VA loans are available for a apartment buildings. b commercial buildings. c multiple-family residences of five or more units. d primary residences.

d. primary residences. An eligible veteran can purchase a primary residence with a VA-guaranteed loan.

There may be a difference in interest rates among lenders who use the same index primarily because of the a commissions paid to real estate agents. b lender's stock value. c loan balance. d profit and/or the administrative expenses of the lender.

d. profit and/or the administrative expenses of the lender. The lender's margin to cover profit and administrative expenses will affect the interest rate, even if another lender uses the same index.

Which document accompanies the mortgage for a home loan? a abstract of title b contract of sale c deed d promissory note

d. promissory note The promissory note is the financing instrument that shows who owes what to whom; it is the basic evidence of the debt.

Market price is what the a appraiser thinks the property should sell for. b property is listed for. c property should have sold for. d property sold for.

d. property sold for. Market price is what the property actually sold for; market value is what the property is expected to sell for.

The purpose of the licensing law is to a legally separate brokers and agents. b limit the number of agents to reduce competition. c make it hard to get a license to discourage part-time workers. d protect the public against fraudulent practice.

d. protect the public against fraudulent practice. The licensing laws protect the public at large from fraud, misrepresentation, and deceit through imposition of education standards and a code of conduct.

Ohio license law a. limits an agent's earning potential. b. permits the Commissioners to pass laws in favor of their brokerages. c. protects licensees from fraud, misrepresentation, and deceit.. d. protects the public from fraud, misrepresentation, and deceit.

d. protects the public from fraud, misrepresentation, and deceit. the purpose of licensing law is to protect the public.

The Federal Fair Housing Act declares that it is the policy of the United States to a build public housing for minority groups throughout the U.S. b eliminate prejudice throughout the U.S. c guarantee separate but equal housing in all states. d provide for fair housing throughout the U.S.

d. provide for fair housing throughout the U.S. The first section of Title VIII states: "It is the policy of the United States to provide, within constitutional limitations, for fair housing throughout the United States."

Which document is the most critical to settlement, basically laying the foundation for the closing? a abstract of title b bill of sale c mortgage d purchase agreement

d. purchase agreemen Much of the closing is based on what is outlined in the purchase agreement.

The deed that offers the grantor the greatest protection against claims is the a fiduciary's deed. b general warranty deed. c limited warranty deed. d quitclaim deed.

d. quitclaim deed. A quit claim deed gives the grantor the broadest possible protection, because there is NO warranty, express or implied in a quit claim deed.However, most real estate transfers in Ohio are carried out with a general warranty deed, which provide the greatest protection for a grantee.

Of these types of deeds, which would most likely be used to clear a cloud on a title, such as a misspelled name? a bargain and sale deed b general warranty deed c limited warranty deed d quitclaim deed

d. quitclaim deedThis answer is correct. Correct! Quitclaim deeds convey any interest in real estate a grantor may have at the time the deed is executed. It could be used to clear a cloud on the title such as a misspelled name on a deed.

The Federal Fair Housing Act prohibits discrimination based on a race, color, religion, sex, age, national origin, disability, or familial status. b race, color, religion, sex, ancestry, national origin, disability, familial status, or handicap. c race, color, religion, sex, marital status, national origin, disability, or familial status. d race, color, religion, sex, national origin, disability, or familial status.

d. race, color, religion, sex, national origin, disability, or familial status. The Federal Fair Housing Act (Title VIII of Civil Rights Act of 1968) prohibits discrimination based on race, color, religion, sex, national origin, disability/handicap, or familial status in the sale or lease of residential property.

The Civil Rights Act of 1866 prohibits a all housing discrimination. b any discrimination in the provision of government services. c only discrimination in lending. d racial discrimination in the sale or lease of any property.

d. racial discrimination in the sale or lease of any property. The Civil Rights Act of 1866 prohibits racial discrimination in any property transaction in the United States.

Gentrification is the a aging of a neighborhood. b aging of the population. c rapid deterioration of the neighborhood. d rapid revitalization of the neighborhood.

d. rapid revitalization of the neighborhood. Rapid revitalization of a neighborhood is called gentrification.

In the event of a default, which debt is normally paid first from the proceeds of the foreclosure sale? a deficiency judgment b first recorded lien c mechanic's lien d real estate taxes

d. real estate taxes This answer is correct. Correct! Real estate taxes and the associated costs of the sale are always paid first.

In the event of a default, which debt is normally paid first from the proceeds of the foreclosure sale? a deficiency judgment b first recorded lien c mechanic's lien d real estate taxes and associated costs of sale

d. real estate taxes and associated costs of sale Real estate taxes and the associated costs of the sale are always paid first.

As the lender's underwriters evaluate the borrower's loan application to decide whether to make the loan, they may NOT consider the borrower's a employment history. b field of employment and its economic viability. c history of making payments on past obligations. d receipt of public assistance.

d. receipt of public assistance. All people must be considered for credit equally based on of income adequacy, sufficient net worth, job stability, and satisfactory credit rating. Regardless of whether the borrower meets all other criteria, it would be a violation of the Equal Credit Opportunity Act (ECOA) to consider the source of that borrower's stable monthly income.

An appraiser has developed all three approaches to value. What is the next step in the appraisal process? a analyze the data b determine highest and best use c prepare the appraisal report d reconcile the approaches

d. reconcile the approaches After developing the approaches to value, the next step is reconciliation, where the appraiser analyzes the values derived from the different appraisal approaches to find a final value opinion. After reconciliation, the appraiser then must report the findings to the intended users by preparing the appropriate report.

Once the analysis of data is complete, the appraiser considers the three appraisal approaches and ___________ the estimates of value to arrive at a final opinion. a averages b finds the mean of c finds the median of d reconciles

d. reconciles An appraiser must use his skill and expertise to reconcile the data, and should NEVER average it.

When an appraiser analyzes the values derived from the different appraisal approaches to arrive at a final value opinion, he a averages the sums of each approach. b capitalizes the approaches. c mitigates the approaches. d reconciles the approaches.

d. reconciles the approaches. Reconciliation is the appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value opinion.

JJ gets a personal easement in gross to hunt on CC's land. Later, CC changes her mind. How can CC terminate the easement? a buy JJ's property b post a "No Trespassing" sign on her property c prove in court that there is no remaining wildlife to hunt on her land d record a release from JJ that he will not hunt on her land anymore

d. record a release from JJ that he will not hunt on her land anymoreThis answer is correct. Correct! As an easement is an encumbrance, it generally needs to be terminated by recording a release from the grantee.

A candy maker has a five-year lease and installs a marble counter to roll candy on. When the lease is up, the candy maker may a not remove the counter because he did not ask the owner if he could install it. b not remove the counter because it is a fixture. c not remove the counter because of a verbal agreement. d remove the counter because it is a trade fixture

d. remove the counter because it is a trade fixture. This answer is correct. Correct! The candy make is able to remove the counter because it is considered a trade fixture, and not considered permanently attached.

Big City is growing rapidly, and the planning commission has proposed several critical projects as part of its comprehensive plan. Which project is LEAST LIKELY to require an EIS? a dam a creek and create a reservoir to supply water to city residents b develop a new landfill on 100 acres of land that is currently vacant c expand the main street from 2 lanes to 6 and build a new freeway interchange d renovate its historic courthouse to bring it up to current building and electrical code

d. renovate its historic courthouse to bring it up to current building and electrical codeThis answer is correct. Correct! The National Environmental Policy Act (NEPA) requires federal agencies to prepare an environmental impact statement (EIS) for any action that would have a significant effect on the environment. Of these proposed projects, the renovation to the courthouse would least likely have a significant environmental impact.

Which is the final step in the appraisal process? a apply the approaches of value b collect and analyze data c reconcile the final estimate of value d report the findings to the intended user(s)

d. report the findings to the intended user(s) The final step in the appraisal process is to report the findings to the intended users.

In addition to total debt service ratios, the VA loans rely on a. cost averaging of housing. b. housing expense averaging. c. residual housing analysis. d. residual income analysis.

d. residual income analysis. The VA allows a total debt service ratio of 41%, as well as an additional qualifying component based on residual income, which is the amount of income a borrower has remaining after subtracting taxes, housing expenses, and all recurring debts and obligations. A veteran's residual income must meet the VA's minimum requirements.

The type of mortgage that may provide the borrower with a monthly check instead of the borrower paying a monthly payment is known as a(n) a blanket mortgage. b graduated payment mortgage. c package mortgage. d reverse mortgage.

d. reverse mortgage. A reverse mortgage allows qualified homeowners age 62 or older to convert equity in the home into a monthly cash stream or line of credit.

The type of mortgage that may provide the borrower with a monthly check instead of the borrower paying a monthly payment is known as a(n) a blanket mortgage. b bridge mortgage. c package mortgage. d reverse mortgage.

d. reverse mortgage. A reverse mortgage provides monthly income, a lump sum of cash, or a line of credit to borrowers aged 62 or older, based on the equity in their homes.

When property escheats, the title a passes to the named heirs. b passes to the next of kin. c reverts to the named remainderman. d reverts to the state.

d. reverts to the state.This answer is correct. Correct! When someone dies intestate and has no heirs, the property reverts to the state through the process of escheat. Note that in same states, property escheats to the county in which the property is located, not the state.

You live in a house on the shores of Lake Erie. You are a(n) ________ owner, which means that you ________ own the land under the water. Select the best answer. a appropriative / don't b littoral / do c riparian / do d riparian / don't

d. riparian / don't While littoral rights technically refer to property on a lake, in a more general sense, you are a riparian owner since your house adjoins the water. This gives you certain rights of use. You do not own the land under the water, however. The state of Ohio has title to the land submerged beneath Lake Erie, held in trust for its citizens.

The covenant of __________ is a guarantee that the grantor has the right to convey the property. a habendum b hypothecation c rescission d seizen

d. seizen This answer is correct. Correct! Seizen is the ownership of a freehold estate. The covenant of seizen is a guarantee in a deed that the grantor has the right to convey that estate.

When there are more home buyers than there are homes for sale, it is a a buyer's market. b conveyance of deed. c equal market. d seller's market.

d. seller's market. The sellers have the advantage when there a more buyers than homes for sale.

A real estate salesperson working for the listing broker is the a buyer's agent. b buyer's subagent. c cooperating agent. d seller's subagent.

d. seller's subagent. A subagent is an agent of an agent, therefore, the broker's salespersons are agents of the broker and also technically subagents of the clients with whom their broker has entered into contracts.

T has a proprietary lease on an individual unit in the prestigious Triumphant Estates. Most likely, what does T own? a an apartment b a condominium unit c a deeded timeshare d shares in a cooperative unit

d. shares in a cooperative unit This is the correct answer. Incorrect. The answer is D. A proprietary lease is commonly used in a cooperative type of ownership. T is a shareholder of the corporation that owns Triumphant Estates.

Question 3 The roofing material installed during the framing process which will serve as a base layer for the final roof covering is known as a a ledger. b a rafter. c rebar. d sheathing.

d. sheathing. The final step in framing is the roof sheathing. It is on the sheathing that one would then install the roofing material, such as shingles, tile, slate, etc.

A valid will in Ohio needs two witnesses who a are not related to each other or to the testator. b can read and write. c have no interest in the will. d sign in the presence of each other and the testator.

d. sign in the presence of each other and the testator. The will has to be signed in front of two witnesses who signed in the presence of each other and the testator. If a witness has an interest in the will; then the gift to that person is void, but the will is not void.

The majority of new licensees begin their work in what market? a. commercial properties b. multi-family residential c. property management d. single-family residential

d. single-family residential Correct! Buying and selling single-family homes is the typical entry-level position in real estate.

Commercial banks a focus on long-term investments. b invest primarily in single-family residential housing. c rely on savings deposits for most of their funds. d specialize in short-term commercial lending activities.

d. specialize in short-term commercial lending activities. Although adding more residential loans to their portfolio, commercial banks have been focused on relatively short-term commercial and consumer loans.

The rezoning of a single parcel of land or a small area to benefit one or more property owners rather than carry out objectives of the master plan is an example of a as of right zoning. b cluster zoning. c incentive zoning. d spot zoning.

d. spot zoning.This answer is correct. Correct! This is known as spot zoning, and it is illegal.

Which term refers to the legal doctrine that requires a judge to follow precedent to make the law consistent and predictable? a ipse dixit b lis pendens c mens rea d stare decisis

d. stare decisis The doctrine of stare decisis means that a judge's decision in a specific case can become a rule of law applied to all cases. "Stare decisis" is a Latin phrase that means, roughly, "to abide by the decision."

Joe wants to buy a $100,000 home with a conventional loan but cannot come up with the required minimum 5% down payment he needs from his own cash reserves. Joe has also used up his VA loan eligibility. What option does Joe have? a ask the seller for secondary financing b buy more PMI (private mortgage insurance) c pay more points at closing to lower the interest rate d start looking at cheaper houses

d. start looking at cheaper houses A VA loan is not an option if he has no eligibility. And if he cannot get a loan from a lender, paying more points or PMI is not an option. Secondary financing comes from another lender, not the seller. His best bet is to look for a more affordable house.

A state law that requires all real estate contracts to be in writing to be enforceable by the courts is the a doctrine of part performance. b parol evidence rule. c specific performance act. d statute of frauds.

d. statute of frauds. A state's Statute of Frauds requires real estate contracts to be in writing in order for the courts to enforce the contract.

A buyer finds her dream house, which includes the stainless steel appliances she wanted, but thinks it's priced high. She decides to buy a house two blocks away with nearly identical features, minus the appliances, for $20,000 less, figuring she can replace the appliances later if she chooses and still come out ahead financially. What theory is at work? a anticipation b conformity c contribution d substitution

d. substitution The principle of substitution says that an informed buyer will not pay more for a property than a comparable substitute. All of these factors and principles are considered by an appraiser when making an estimate of the value of real property.

Tom and Margo find their dream house, which includes the stainless steel appliances they wanted, but it's priced high. They decide to buy a house two blocks away with nearly identical features, minus the appliances, for $20,000 less. They figure they can replace the appliances later if they choose and still come out ahead financially. What theory is at work? a conformity b contribution c regression d substitution

d. substitution The principle of substitution says that an informed buyer will not pay more for a property than a comparable substitute. All of these factors and principles are considered by an appraiser when making an estimate of the value of real property.

If the buyers are ready to sign an offer but want to consult their lawyer first, the agent should a have his broker go over the contract with the buyers to make them feel more at ease. b stress that time is of the essence with this sale. c tell them normal procedure is for them to talk with a lawyer after signing the offer. d tell them they should feel free to talk with their lawyer first.

d. tell them they should feel free to talk with their lawyer first.This answer is correct. Agents should encourage buyers to have their attorney look over the documents because it often makes people feel more secure.

What is the only form of co-ownership that permits division of property in unequal proportions? a joint tenancy b severalty c tenancy by the entirety d tenancy in common

d. tenancy in common Tenancy in common would allow one co-owner to own a greater interest than another co-owner. Joint tenancy and tenancy by the entirety require the unity of interest. Severalty is sole ownership, not co-ownership.

Question 2 Bill, Bob, and Ben bought a home for $90,000, with each putting in $30,000. If their ownership intent is not specified in the deed, how did they take title? a joint tenancy with right of survivorship b severalty c tenancy by the entireties d tenancy in common

d. tenancy in commonThis is the correct answer. Tenancy in common is a form of co-ownership in which two or more persons each have an undivided interest in the entire property. Each tenant in common may own equal shares or shares of different proportions; it does not matter. A court will set up a tenancy in common if there is no wording in the deed regarding the intent of the parties.

Which house is the best value? a a $50,000 house that overlooks a huge landfill b a $500,000 house surrounded by apartment complexes c the "best" house in the "worst" neighborhood d the "worst" house in the "best" neighborhood

d. the "worst" house in the "best" neighborhood The value of the "worst" home in a given area is positively affected by being surrounded by better homes in the area. The desirability of the location and the other homes in the neighborhood are major influences on the value of the "worst" home. This is known as progression.

An offer can be revoked at any time before it is accepted UNLESS a it is an offer to purchase real property. b the offer has a specific termination date. c the offer states that it is irrevocable. d the offeree gives the offeror consideration for keeping the offer open.

d. the offeree gives the offeror consideration for keeping the offer open.This answer is correct. If an offeree pays the offeror a sum of money to keep the offer to purchase open, the offer cannot be revoked during that specified period. For all intents and purposes, a preliminary contract has been formed in this situation.

Houses built before 1978 do NOT require that a buyers be given the opportunity to conduct their own lead paint inspections. b known lead paint hazards be disclosed to buyers. c a lead paint booklet be given to buyers. d the seller mitigate all lead paint.

d. the seller mitigate all lead paint. For houses built before 1978, known paint hazards must be disclosed. The buyer must be given a lead paint booklet and a chance to perform a lead paint inspection. The seller, however, is not required to mitigate lead paint issues.

General data does NOT include a employment rates. b local employment statistics. c regional economic indicators. d the subject's site dimensions.

d. the subject's site dimensions. The site dimensions would be considered specific data about the property. General data covers broad forces such as physical, economic, governmental, and social factors.

A seller's real estate agent drafted a purchase contract for the transaction instead of using a form. This is a completely legal; although, it is discouraged by the Ohio Bar Association and the National Association of REALTORS®. b legal as long as the buyer does not object. c standard practice in rural communities in Ohio. d the unauthorized practice of law.

d. the unauthorized practice of law. In Ohio, a real estate agent is permitted to complete standard listing forms, purchase agreement forms, and promissory note forms. The agent should never draft an original agreement, or even add complicated clauses to the forms as that will likely be considered the unauthorized practice of law.

Market value is the a dollars needed to rebuild the property. b price determined by Freddie Mac, Fannie Mae, and/or USPAP. c price a property actually sold for. d theoretical price that real estate is most likely to bring in a typical transaction.

d. theoretical price that real estate is most likely to bring in a typical transaction. Market value is the most probable price that a property should bring in a competitive and open market.

An arbitration agreement would MOST LIKELY be unenforceable for a dispute over the a amount of rent that is due. b breach of a real estate sales contract. c position of a fence on a property line. d title to real estate.

d. title to real estate. An arbitration agreement is not enforceable for most disputes over title or possession of real estate.

The purpose of the appraisal should always be a an assumption of the appraisal. b highest and best use of the property on the date viewed. c to determine market value. d to develop an opinion of value appropriate to the intended use of the appraisal.

d. to develop an opinion of value appropriate to the intended use of the appraisal. The purpose of an appraisal is to determine a value opinion. The use of the appraisal is a key determinant of the research and analysis performed during the appraisal's development.

Why are real estate instruments recorded in the county in which the property is located? a because the law requires that such instruments be recorded b because the broker cannot get his commission until these documents are recorded c to comply with the terms of the statute of frauds d to give constructive notice of an interest in a particular parcel of real estate

d. to give constructive notice of an interest in a particular parcel of real estate Documents are recorded to give the world constructive notice of legal transactions involving property. The public can gain actual notice by going to the county courthouse and seeing the records.

Aaron is showing a house to the Joneses and they ask him about the school district. Aaron should tell them a he has no opinion. b he thinks the school district is great. c he thinks the school district is unsatisfactory. d to talk to the superintendent of the school district.

d. to talk to the superintendent of the school district. If an agent makes a positive or negative assessment of a school district, he may be opening himself up to a lawsuit or fair housing violation. The best approach in this situation is to direct the couple to sources that can provide objective answers to their questions, such as the public library or superintendent of the school district.

The triangular structure that creates a beam of support to hold up the roof of a structure is known as a a foundation. b gusset plate. c ledger. d truss.

d. truss Truss roofing is a type of roof frame that consists of several pieces attached together to a triangular structure that creates a beam of support to hold up the roof covering.

The Superintendent CANNOT issue a citation for what type of violation? a discriminatory housing language b false advertising c lack of agency disclosure d trust account mismanagement

d. trust account mismanagement Citations may be up to $200 for each violation (up to a maximum total of $2,500) related to advertising, agency disclosure, or fair housing language. Citations could not be used in lieu of an investigation for charges of mishandling escrow accounts.

Joan has power of attorney to care for all aspects of her sister's life while her sister is serving in the military overseas. She handles her bills, signs legal papers, and even took on the task of selling her sister's house. Which type of agency does this represent? a general agency b limited agency c special agency d universal agency

d. universal agency Joan is a universal agent. She is authorized to do anything and everything that can be lawfully delegated to a representative.

Susan really wanted her children to go to a particular school, so she was not interested in looking at an otherwise perfect house in a neighboring district. How would you classify Susan's objections? a invalid but answerable b invalid and not answerable c valid but answerable d valid and not answerable

d. valid and not answerable The house may be perfect, but if it's not in the specific school district that the buyer wants, the sales associate may not be able to provide a reasonable answer to that objection.

The theory of anticipation says a a buyer won't pay more for the subject than for a comparable property. b a property is worth more if an investor is excited about acquiring the property. c real estate will always appreciate in value. d value is created by the expectation of future benefits.

d. value is created by the expectation of future benefits. Anticipation is an economic theory that says value is created by the expectation of future benefits, whether it's profit on resale, increased equity, or income, such as from an income-producing property.

Mike later learns that Wendy was only 17 years old when she signed the listing agreement, but had a birthday last week and is now 18. The listing agreement is a valid. b void. c voidable by Mike. d voidable by Wendy.

d. voidable by Wendy. This answer is correct. Correct! A contract that is signed by a minor is voidable by the minor only.

Which is NOT a possessory interest in real estate? a fee simple absolute b fee simple defeasible c fee simple indeterminable d life estate

A fee simple absolute estate is NOT a conditional. b inheritable. c perpetual. d transferable.

The seller accepts a buyer's offer of $161,500 to buy a home. The appraisal on the property comes in at $163,000. If the lender requires a loan-to-value (LTV) of 80%, how much is the lender willing to lend? a $129,200 b $130,400 c $145,350 d $146,700

a. $129,200 he lender will use the sales price of $161,500 to consider the loan because it is less than the appraised value. With an LTV of 80%, the buyer could borrow $129,200 ($161,500 x .80 = $129,200).

An apartment building has four units; each rents for $550 per month. The building has an occupancy rate of 88% and monthly building expenses of $460. If the capitalization rate is 12%, what is the building's value? a $147,600 b $189,767 c $193,600 d $324,960

a. $147,600 First, determine the annual potential gross income for four units that rent for $550 a month: $550 x 4 x 12 = $26,400. Next, if the occupancy rate is 88%, the vacancy/collection loss is 12%, which is $3,168 ($26,400 x .12 = $3,168). Subtract that from PGI to find the effective gross income: $26,400 - $3,168 = $23,232 EGI. Next, determine the annual building expenses: $460 x 12 = $5,520. Subtract that from EGI to find the net operating income: $23,232 - $5,520 = $17,712. Once you have the NOI, you can divide by the capitalization rate to find value: $17,712 / .12 = $147,600.

A property is appraised for tax purposes at $150,000 and assessed for tax purposes at 35% of value. Using a total of 95 mills, calculate the annual taxes. a. $4,987.50 b. $5,526.32 c. $9,262.50 d. $10,263.16

a. $4,987.50 First, find the assessed value: $150,000 x .35 = $52,500. Find the cost of each mill by dividing the assessed value by 1,000: $52,500 ÷ 1,000 = 52.5. Finally, multiply the cost of each mill by total mills: 52.5 x 95 = $4,987.50.

A borrower has a stable monthly income of $3,200 and recurring monthly debts of $370. What is the maximum mortgage amount (PITI) he could get for a conventional loan? a $782 b $896 c $928 d $1,152

a. $782 With a conventional loan, the housing expense ratio of 28% would mean he could afford a mortgage of $896. But you have to consider the total debt service ratio, too. On a conventional loan, that's 36%, so multiply gross month income of $3,200 x .36 to get $1,152. From that, subtract monthly debts of $370 to get $782. The lesser number is the maximum mortgage amount.

If the sale price of a home is $120,000, it appraises for $122,000, and the buyer takes out a loan for $96,000, the discount points charged by the lender are computed on a $96,000. b $114,000. c $120,000. d $122,000.

a. $96,000. Points are computed on the loan amount, not the sales price or appraised value.

The primary purpose for the passage of FIRREA was to a bailout the savings and loan industry and try to prevent future insolvency. b develop, interpret, amend, and publish the Uniform Standards. c establish the Appraisal Foundation. d establish professional standards in real estate appraisal.

a. bailout the savings and loan industry and try to prevent future insolvency. The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) was passed in 1989 as a comprehensive savings and loan bailout and preventive measure against future S&L insolvency. FIRREA recognizes USPAP as the current industry standard for appraisals and identifies the Appraisal Foundation as the authority for professional appraisal standards. FIRREA mandates that each state's appraisal licensing and certification standards meet or exceed those established by the Appraiser Qualifications Board.

Which would most likely be considered personal property? a barbecue grill b deck at the back of a house c patio d porch

a. barbecue grill Personal property is all tangible items not permanently attached to or annexed as part of real estate, such as a grill.

The lender usually does not allow the source of a borrower's down payment to be a borrowed funds. b a gift from a relative. c proceeds from the sale of a house. d savings.

a. borrowed funds Savings, the previous sale of a home, and gifts are all acceptable sources of down payment, but the buyer is usually not allowed to use borrowed funds.

When reconciling value indications, an appraiser determines that the most important factor about the subject property is that it is newly built and unique. Given that, the appraiser is likely to give the most weight to which appraisal approach? a cost approach b income approach c sales comparison approach d All are equally valid.

a. cost approach Since the appraisal is for a new and unique property for which there is unlikely to be sufficient comparable data, the cost approach may be the most relevant.

In deciding who will be paid from a foreclosure sale, which is first in lien priority? a county's lien for real property taxes b first lien recorded c mechanic who filed a mechanic's lien d mortgagee or original lender

a. county's lien for real property taxes Correct! Real property taxes have the highest priority among all liens, whether recorded or not.

When a seller makes a counteroffer, the buyer a does not have any responsibility to accept it. b has a three-day right of rescission before there is a binding contract. c may not make another offer or counteroffer. d must agree to his original offer if the seller later decides to accept the terms of the original offer.

a. does not have any responsibility to accept it.This answer is correct. Correct! A counteroffer is the seller's rejection of the buyer's offer and is, essentially, a new offer. The buyer could choose to accept it, reject it, or make an counteroffer.

A broker can buy property in his own name only if a he discloses his license. b he places his license on a voluntary hold. c his wife releases dower. d the other side is properly represented.

a. he discloses his license. Brokers are allowed to purchase property in their own name, but they must disclose their licensee status.

Larry wants to rent out a unit in the four-unit flat he owns and lives in. Larry is 65 years old and is uncomfortable around certain types of people. He hires Jack, a licensee, to help him. Unknown to Jack, Larry puts an ad in the paper which says: "No college students." This ad is a permitted because "college students" are not a protected class. b permitted but only if Jack is the one who placed the ad. c not permitted because a licensee is involved. d not permitted because it is discriminatory.

a. permitted because "college students" are not a protected class This would be a permitted advertisement because it does not discriminate against anyone based on their membership in a protected class. "College students" are not a protected class. It's important to note, however, that Larry is not exempt from following fair housing laws, it's just that his restriction is not against a protected class.

A real estate agency is terminated by operation of law if a the broker loses his real estate license. b it is coupled with an interest. c the principal fires the broker. d all of the above

a. the broker loses his real estate license. If the broker loses his real estate license, the agency is terminated by operation of law. If the principal fires the broker, that is termination by revocation. Agency coupled with an interest cannot be terminated by terminated by the death, incompetency, or bankruptcy of the principal, which are considered terminations based on operations of law.

A first-time borrower who served in active duty for more than six years wants a VA loan. The home costs $88,900, estimated closing costs are $1,100, and the borrower wants to finance the variable funding fee (assume a funding fee of 2.15%). The borrower has good credit, but little cash. What's the loan amount for this home? Using the loan information described above, how much will the buyer pay at closing, including the down payment and closing costs? a $0 b $1,100.00 c $1,911.35 d $3,011.35

b. $1,100.00 The buyer does not have to make a down payment, but he will have to pay $1,100 in closing costs, because those fess cannot be financed. Note that if he had not financed the funding fee, the buyer would have to bring $3,100.35 to closing.

The sale of a property closes on May 10. Taxes are $3,600 per year and paid in arrears. What is the seller's share of taxes, based on a calendar year (assuming it's not a leap year)? a $1,200.00 b $1,282.19 c $1,300.00 d $1,374.16

b. $1,282.19 To find the daily rate: $3,600 annual taxes / 365 days in a year= 9.8630. There are 130 days between January 1 and May 10. To find the seller's share: 130 x 9.8630 daily rate = $1,282.19 seller's share.

A house sold for $165,000 and the commission paid was $5,775. What was the rate of commission? a. 2.8% b. 3.5% c. 6.2% d. 9.5%

b. 3.5% The total commission paid of $5,775 is the "part" that goes at the top of the circle. The "whole" is the sales price of $165,000. To find the percent, divide the part by the whole: $5,775 / $165,000= 0.035, or 3.5%.

Broker Ben deposited a buyer's earnest money check into the general business account. Ben could be found guilty of a blockbusting. b commingling. c redlining. d steering.

b. commingling. Commingling is the act of mixing trust funds and brokerage business funds. This is grounds for discipline.

A counteroffer represents a(n) a acceptance. b change. c new offer while keeping the first offer in primary position. d new purchase contract.

b. change. A counteroffer is essentially a rejection, a change of terms, and a new offer. It is not a new purchase contract.

The fullest and most complete real property ownership interest is called a a defeasible fee. b fee simple absolute. c leasehold estate. d life estate.

b. fee simple absolute. A fee simple absolute is the fullest interest in property.

Redlining is a channeling prospective buyers or tenants to particular neighborhoods based on their race, religion, or ethnic background. b refusing to make loans secured by property located in certain neighborhoods for discriminatory reasons. c trying to induce owners to sell their homes by saying the ethnic or racial makeup of an area is changing, implying that property values will decline. d none of the above

b. refusing to make loans secured by property located in certain neighborhoods for discriminatory reasons. Redlining is refusing to make loans secured by property located in certain neighborhoods for discriminatory reasons.

The VA underwrites loans using the a residual down payment method. b residual income/cash flow analysis method. c total debt expense-to-income ratio. d total housing expense-to-down-payment ratio.

b. residual income/cash flow analysis method. The VA will look at a borrower's residual income after all bills are paid when underwriting in lieu of a housing expense ratio.

Which type of roof allows for vaulted ceilings? a joists and rafters b sloped joists c truss roofing d none of the above

b. sloped joists Sloped joist roofing is a type of roof frame where joists go from the outer load bearing walls to a central load bearing wall, allowing for a vaulted ceiling.

Constructive fraud is also known as a actual misrepresentation. b breach of contract. c intentional fraud. d negligent misrepresentation.

c. Yes, because he knowingly made a potentially untrue statement that could be seen as an inducement to buy.This answer is correct. Correct! The broker can be held liable because his statements to the buyer were possibly fraudulent and could be looked upon as an inducement to enter into the purchase agreement.

To establish the value of a property for a VA-guaranteed loan, the required documentation is a a broker price opinion. b certificate of eligibility. c certificate of reasonable value. d competitive market analysis.

c. certificate of reasonable value. For VA-guaranteed loans, a certificate of reasonable value is required.

The amount a commercial bank must keep on deposit is known as a equilibrium. b monetary policy. c reserve requirements. d supply and demand.

c. reserve requirements. Banks are required to keep a certain amount of deposits in reserve.

Generally speaking, all are requirements for a valid deed EXCEPT a an acknowledgment before a notary public. b an adequate description of the property conveyed. c the signature of a competent grantee. d the signatures of two competent witnesses.

c. the signature of a competent grantee. It is the grantor who must sign the deed, not the grantee. There must be an identifiable grantee, however. While in Ohio, a grantor is not required to sign a deed in front of two witnesses, this is a very common requirement in many other states. Other requirements include: Consideration, words of conveyance, and delivery and acceptance.

Which is NOT a physical characteristic of real property? a immobility b indestructibility c transferability d uniqueness

c. transferability The three physical characteristics of real property are immobility, indestructibility, and uniqueness. Transferability is considered a value characteristic. The other value characteristics are demand, utility, and scarcity (remember D-U-S-T).

The parties involved in a trust deed are a maker and payee. b mortgagor and mortgagee. c trustor, beneficiary, and trustee. d vendor and vendee.

c. trustor, beneficiary, and trustee. A trust deed is a three-party instrument. The borrower is called the trustor. The lender is called the beneficiary. There is also an independent third party called the trustee.

Alice and Conrad bought a house and received a general warranty deed. Later, they discover that the previous owner's wife did NOT release dower. The easiest way to take care of this is to have the a owner execute a quitclaim deed. b owner and his wife execute another general warranty deed. c owner and his wife issue a wild deed. d wife execute a quitclaim deed.

d. wife execute a quitclaim deed. The answer is D. Quitclaim deeds convey any interest in real property the grantor has at the time the deed is executed and are often used to clear up a cloud on the title.

The board of township trustees has just rezoned an area of the township to allow multi-family residences to be built there. This zoning change will become law a as soon as it is published in a newspaper of general circulation within the township. b only if a 2/3 majority of the township voters approve it in the next election. c within 30 days, unless the board of county commissioners unanimously votes to overturn it. d within 30 days, unless a petition for zoning referendum is filed.

d. within 30 days, unless a petition for zoning referendum is filed. An amendment to a township or county rural zoning resolution becomes law 30 days after its adoption by the board, unless local citizens submit a petition for zoning referendum, signed by a specified number of voters. In that case, the rezone will go into effect only if a majority of the voters approve it.

Mike signed a listing agreement with Wendy to sell her home. The listing agreement specifically stated in paragraph four that Mike could put a "For Sale" sign in the yard and show the home. Can Mike market the home in other ways? a no, since the listing agreement did not specifically mention that he could b no, unless he wants his license suspended c yes, because the listing agreement gave him express authority to do so d yes, because the listing agreement gave him implied authority to do so

d. yes, because the listing agreement gave him implied authority to do soThis answer is correct. Correct! In an earlier chapter, you learned that an agency relationship between a seller and a licensee, created by a listing agreement, gives the licensee implied authority to market the property. If the client had wanted to limit Mike's ability to market the property, that should be expressly written into the listing agreement.

A property generates $100,000 in annual income. If monthly expenses are $3,000 and the capitalization rate is 9%, what is the value of the property? a $711,111.11 b $1,077,777.70 c $1,111,111.11 d $1,293,333.00

a. $711,111.11 Step #1: Find the net (annual) income. Take the gross annual income minus annual expenses (monthly expenses x 12): $100,000 _ $36,000 = $64,000 in annual net income. Step #2: The value of the property can be found by IRV: net Income ÷ Rate = Value. So: $64,000 ÷ 9% = $711,111.11 as the value of the property.

A house has an effective age of 15 years. If the remaining economic life is 45 years, what is the percent of depreciation (rounded)? a. 25% b. 33% c. 40% d. 60%

a. 25% The economic age of the house is 60 years, since it is 15 years old and has a remaining life of 45 years (15 + 45). To find the percentage of depreciation, divide economic life by effective age: 60 / 15 = .25 or 25%.

A property generates gross rents of $40,000 yearly. It recently sold for $300,000. If it has a vacancy rate of 10% and expenses are $1,200 per month, calculate the gross rent multiplier. a 7.5 b 8.19 c 11.1 d 13.8

a. 7.5 To find the gross rent multiplier, divide the value by gross income: $300,000 ÷ $40,000 = 7.5. Vacancy rate and expenses are not part of the GRM calculation.

How is an agency relationship with a seller created? a listing agreement b purchaser agency agreement c sales agreement d subagency agreement

a. listing agreement Incorrect. The answer is A. Agency relationships are created with written agreements. The relationship between a broker and a seller is created with a listing agreement. The relationship between a broker and buyer is created with a purchaser agency agreement. A sales agreement is between a buyer and seller; it creates no agency agreement.

Which type of title insurance policy will the lender hold? a mortgagee's policy b mortgagor's policy c owner's policy d The lender cannot hold title insurance.

a. mortgagee's policy A lender is also known as a mortgagee. The borrower is generally obligated to obtain a mortgagee's policy for the lender.

The borrower who pledges property to a lender as collateral is referred to as the a beneficiary. b mortgagee. c mortgagor. d trustee.

c. mortgagor. The borrower who pledges property as collateral is called the mortgagor. The lender is called the mortgagee.

Which of these is NOT considered when determining whether an item is a fixture or personal property? a intention of the annexer b manner of annexation c value of the annexed item d relationship of the parties

c. value of the annexed item Correct! The value of the item is not considered. Most often, the item is valuable. Intention and manner of annexation are the most heavily weighed factors.

L signed a contract to buy B's house. However, the deadline in the contract has passed and L has not finalized the loan with his mortgage company. There is NOT a "time is of the essence" clause in their contract. The contract is considered a discharged. b rescinded. c void. d voidable.

d. voidable. The contract is voidable by B because L did not perform by the stated deadline. B could choose to wait for the loan to clear and go forth with the contract. Had there been a "time is of the essence" clause, the contract would more likely be void when the deadline passes.

Which is an example of personal property? a custom-made draperies in an arched window b minerals lying under the surface of the land c a picket fence around the yard d wheat just harvested in the field

d. wheat just harvested in the field Once a harvested crop is no longer attached to the land, it becomes personal property.

Which is an example of personal property? a custom-made draperies in an arched window b minerals lying under the surface of the land c a picket fence around the yard d wheat just harvested in the field

d. wheat just harvested in the fieldThis answer is correct. Correct! Once a harvested crop is no longer attached to the land, it becomes personal property.

The most important governmental factor in determining site value is a census data. b private deed restrictions. c public utility easements. d zoning.

d. zoning The most important governmental factor is zoning, since most land would be worth more if used for commercial purposes instead of for residential homes. Zoning ordinances, however, limit the way a piece of property may be used.