Real Estate 1

A buyer wishes to assume a loan with an unpaid balance after the September 1 payment of $86,222.60. The interest rate is 8% paid in arrears. The closing date is September 9, and the seller will pay for the date of closing. What is the debit and credit for interest? $172.45 $168.54 $189.30 $143.87

$172.45. $86,222.60 x 0.08 = $6,897.80 $6,897.80 /12 = $547.82 $547.82/ 30 days = $19.16 $19.16 x 9 = $172.45

A house has an assessed value of $142,000. The property is taxed at 80% of the assessed value at a rate of $2.12 per $100. If the assessed valuation is increased by 18%, what is the amount of taxes to be paid on the property? $4,232.50 $2,638.49 $4,567.23 $2,841.82

$2,841.82. $142,000 x 1.18 = $167,560 increased valuation $167,560 x 0.80 = $134,048 new tax basis assessed value x tax rate = annual taxes 2.12/ 100 =0.0212 $134,048 x 0.0212 = $2,841.82 annual taxes

A farm, described as the "NW 1/4 of the SE 1/4 of Section 10," sold for $500 per acre. The sale price would be: $25,000.00 $40,000.00 $10,000.00 $20,000.00

$20,000.00. 640 ÷ 4 ÷ 4 = 40 acres.. 40 x $500 = $20,000

The net income on a parcel of income-producing units was $32,000 for the past year. This represented an 8% return on the market value of the property. The property changed so as to cause the owners to want a 10% return on their investment. In view of this increased percentage rate of return, how much would the property be worth? $400,000 $320,000 $80,000 $520,000

$320,000. | = R × V 32 32,000 = 10% × V 32,000/10% = 320,000 Note: value at 8% is irrelevant.

A property is appraised at $300,000 using a cap rate of 8%. What would be the value of the property using cap rate of 6%? $230,000 $456,100 $400,000 $299,000

$400,000. $24,000 (1) = 6% (R) × $________(V) V = $24,000 ÷ 6% V = $24,000 ÷ 0.06 V = $400,000

A buyer pays $45,000 for a lot. Five years later, he puts it on the market for 20% more than he originally paid. The lot then sells for 10% less than the asking price. What is the selling price of the lot? $44,100 $54,000 $48,600 $49,500

$48,600. $45,000 x 1.20 (120%) = $54,000 asking price $54,000 x 0.90 = $48,600 selling price

If a subdivider is selling lots that are 75 feet wide and 200 feet deep for $45,000, what is the price per front foot? $680 $450 $720 $600

$600. $45,000/ 75 = $600.

An established business relationship (EBR) exists if the consumer has made an inquiry with the company within how many months prior to the call? 6 3 18 12

3

The outside dimensions of a rectangular house are 35 feet by 26.5 feet. What is the square footage? 827.5 sq. ft. 927.5 sq. ft. 947.7 sq. ft. 950 sq. ft.

927.5 sq. ft.

A broker wrote an offer to purchase for a buyer, which the buyer signed. The offer did not provide for an earnest money deposit. Which of the following statements is TRUE concerning this situation? A contract will be formed on acceptance without the existence of a deposit. The broker may make a deposit for the buyer without informing the seller. The broker should not present the offer to the seller. Acceptance by the seller will not form a contract.

A contract will be formed on acceptance without the existence of a deposit.

Which of the following is the best real estate definition of contingency? The basic principles of right action. Obtaining a customer. Following rules and regulations. Depending on something not certain.

Depending on something not certain.

There are three main causes of depreciation. Which one of these finds its origin in social sources and is the basis for the old axiom: ""more houses are torn down than fall down""? Straight-line depreciation Physical deterioration Functional obsolescence Economic obsolescence

Economic obsolescence

Under what conditions may a contract be changed after it has become an executory contract? If either party elects to make the change Never Only after the original contract is void If all parties sign an amendment

If all parties sign an amendment

Closing occurs on April 23. When is the first mortgage interest payment due? June 1 May 1 July 1 May 23

June 1

Which of the following best defines real property? Land and the air above it. Land and mineral rights in the land. Land and the area below and above the surface to infinity and all the improvements thereon. The land, buildings thereon, and anything permanently affixed to the land and/or buildings.

Land and the area below and above the surface to infinity and all the improvements thereon.

Which of the following is a freehold estate? Estate for years Estate at will Leasehold Life estate

Life estate

Who holds the title to real property when a mortgage is given? FDIC FHA Mortgagor Specified lending institution

Mortgagor

On a salesperson's website, she has listed her name, area of specialty, the brokerage firm, and the firm's phone number. What else does she need to be in compliance? Her cellphone number Her email address Her license number Nothing

Nothing

Liquidated damages most likely to be found in which of the following? Closing documents Employment contract Listing contract Purchase contract

Purchase Contract

Which of the following is not a material fact that would require disclosure? The buyer cannot qualify for the loan as proposed in the purchase contract. The seller has discovered termites on the property. There is a superfund cleanup site 5 miles from the property. The buyer has HIV/AIDS.

The buyer has HIV/AIDS.

Whose obligation is it to disclose potential lead-based paint to buyers of homes built before January 1, 1978? The listing agent Either the listing or buyer's agent The buyer's agent The seller

The seller

When a lease is signed, is it legal for the lease to contain an option to renew? No, because an option is legal only if it is an option to buy Yes, but only if the option to renew also provides an option to buy No, because leases must be negotiated at expiration Yes, if the duration of the option is specified in the original lease agreement

Yes, if the duration of the option is specified in the original lease agreement

A licensee acting on behalf of a property owner is best described as: an implied agent. a dual agent. a fiduciary. ratified.

a fiduciary.

All of the following are protected under federal fair housing EXCEPT: children under 18 years of age. a gay married couple. a pregnant woman. a Muslim family.

a gay married couple.

Steering (or channeling) involves a real estate professional's steering protected classes toward: minority brokers. property they can afford. a limited number of choices. property in the area they have requested.

a limited number of choices.

The clause in a mortgage, contract, or deed of trust that allows the lender to call the entire unpaid balance upon default is called the: cancellation clause. balloon payment clause. acceleration clause. defeasance clause.

acceleration clause.

A mortgage broker: usually services the loans he or she makes. uses his or her firm's money for loans. is not required to be licensed. acts as an intermediary.

acts as an intermediary.

Adding a home warranty to the purchase contract for a resale home can do all of the following EXCEPT: give the buyer peace of mind if system fails after closing. lessen the seller's liability if an appliance or system fails after closing. add a new home warranty of habitability. lessen the liability of the seller and broker for items that may fail after closing.

add a new home warranty of habitability.

Crossing out part of the printed matter in a contract is: allowed but should allow a reader to see what was crossed out. unauthorized practice of law. illegal. a violation of Commission Rules.

allowed but should allow a reader to see what was crossed out.

Under the 1988 Fair Housing Amendments Act, the definition of protected handicapped or disabled individuals include all the following EXCEPT: an alcoholic with a history of violence. the mentally disabled. those with HIV/AIDS. a drug addict in treatment.

an alcoholic with history of violence.

When a title insurance policy is issued: both of these. an inspection of the records has been made. neither of these. premiums are paid on an annual basis.

an inspection of the records has been made.

broker representing the seller must: tell the buyer about the seller's motivation. help the buyer determine an offer. work with the buyer to locate other property. avoid giving false information to a buyer.

avoid giving false information to a buyer.

The private mortgage insurance on a conventional mortgage is usually paid by the: lender. seller and buyer. buyer. seller.

buyer.

A seller engages a real estate broker to find a buyer ready, willing, and able to purchase the seller's parcel of real property. The seller executes and delivers to the broker.an exclusive right-to-sell employment contract. A few weeks prior to the expiration date of the employment contract, the seller decides to revoke the contract before any sale occurs and prior to the broker finding a buyer ready, willing, and able to buy the property. The owner: will have to sell the real property at the listed price if the broker finds a buyer ready, willing, and able to buy at this price. cannot revoke this contract because it is irrevocable. can revoke this contract and will not be liable for damages to the broker. can revoke this contract but could be liable for damages.

can revoke this contract but could be liable for damages.

A poisonous gas given off as part of combustion is known as: carbon monoxide. carbon dioxide. radon. lead paint.

carbon monoxide.

When a seller breaches a sales contract, the buyer may do all of the following EXCEPT: sue for monetary damages. rescind the contract. collect liquidated damages. sue for specific performance.

collect liquidated damages.

A title plant is a: policy of title insurance. subdivision map. collection of real estate records. corner marker.

collection of real estate records.

The process used to take private land for public use is known as: attachment. police power. condemnation. eminent domain.

condemnation.

In a home sale, the seller promises to sell and the buyer promises to buy. This is known as: consideration. offer and acceptance. quid pro quo. mutual agreement.

consideration.

A written agreement wherein a seller agrees to sell and a buyer agrees to buy real estate on the terms and conditions set forth therein is called a: contract of sale. listing contract. bill of sale. purchase offer.

contract of sale.

Replacement cost is best described as the: original cost adjusted for inflation. cost of building a property of equivalent utility with the same or similar materials. cost of building an exact replica of the subject. cost of purchasing an equally desirable property, constructed of the same or similar materials.

cost of building a property of equivalent utility with the same or similar materials.

A quitclaim deed is most commonly used to: cure title defects. give notice to the world that an owner has rights in the property. convey fee simple title. deed any future rights to a certain piece of property.

cure title defects.

A valid promissory note provides legally acceptable evidence of: liquidity. alienation. debt. hypothecation.

debt.

A salesperson has given her broker an earnest money check for an accepted contract. The broker should: deposit it as soon as practically possible. turn it over to the seller immediately. deposit it immediately. give it to the seller as soon as possible.

deposit it immediately.

An agency listing agreement between the owner of real property and a real estate broker: does all of these. creates a fiduciary relationship. should contain all the responsibilities of both the broker and the owner. is an employment contract, employing the broker to secure a buyer.

does all of these.

In real estate, the term ""improvements"" is BEST defined as: everything artificial or constructed that is attached to the land. fences, wells, drains, and roadways. outbuildings. additions to the original structure.

everything artificial or constructed that is attached to the land.

If a seller signs an offer made by a purchaser, the first thing the listing agent should is: sign the contract for her broker. give a copy to the seller. take the contract to the broker. submit the contract to the buyer.

give a copy to the seller.

Recording a deed: insures ownership. guarantees title. gives constructive notice of ownership. verifies title.

gives constructive notice of ownership.

The broker working for the buyer must tell the seller: of the buyer's interest in other properties. of the buyer's criminal history. if the buyer cannot qualify for a loan. the buyer's place of employment.

if the buyer cannot qualify for a loan.

If a brokerage produces a ready, willing, and able buyer at the seller's terms and the seller refuses to sell, the commission: is paid by the buyer. must be negotiated. is not earned. is earned by the broker.

is earned by the broker.

All of the following statements concerning an appurtenant easement are true EXCEPT: it must be transferable. it must be a burden on one property and a benefit to another. the properties must have different owners. it must involve adjoinment of the properties at their respective boundary lines.

it must involve adjoinment of the properties at their respective boundary lines.

Where no time period for acceptance by the offeree is stipulated in an offer, the offer will: lapse in 24 hours. not lapse; it must be revoked by the offeror. lapse in 48 hours. lapse after a reasonable time.

lapse after a reasonable time.

Amortization is the process of: paying an acceleration clause in a mortgage. converting net income into an indication of value. liquidation of a debt. redemption.

liquidation of a debt.

The primary mortgage market is the market in which: mortgages are originated. mortgage insurance may be secured for existing mortgage loans. existing mortgage loans are bought and sold. secondary financing may be obtained.

mortgages are originated.

Offer and acceptance are required in order to have: consideration. no fraud. mutual agreement. legal objective.

mutual agreement.

Zoning ordinances control the use of private land through several kinds of restrictions. All of the following are zoning restrictios EXCEPT: setback requirements for buildings. building height limitations. designation of land area that building may occupy. nonconforming uses.

nonconforming uses.

A contract must have certain specific elements in order for it to be valid. All of the following are essential to a valid contract EXCEPT: consideration. offer. acceptance. notarization.

notarization.

When a mortgage is used in a real estate transaction, the evidence of the principal obligation is the: owelty. mortgage. note. associated warranty.

note.

To earn a commission, a listing broker with any exclusive listing must procure a ready, willing, and able buyer at the seller's listing terms and: arrange financing. nothing else. close the sale. demonstrate procuring cause.

nothing else.

Taxation is: set by federal law. set by county or local law. set by state law. one of the government's rights.

one of the government's rights.

An appraiser seeking to find market value would be concerned with all of the following EXCEPT: current market sales. original cost of the property. reproduction cost. income value.

original cost of the property.

An important characteristic of land is that it may be modified or improved. Such improvements tend to increase the value of real estate. All of the following are considered to be improvements EXCEPT: new houses. planted crops. utilities. new access roads.

planted crops.

A provision that prohibits a borrower from paying the loan in full for prescribed period of time without incurring additional charges is known as the: acceleration clause. prepayment penalty clause. lock-in clause. nonalienation clause.

prepayment penalty clause.

The loan document that creates the promise to repay money borrowed from a lender is called a: deed of trust. mortgage. promissory note. loan.

promissory note.

All of the following are a type of zoning control EXCEPT: regulating land use. providing for control of rents. restricting the area that a building may occupy. restricting height of buildings.

providing for control of rents.

Demand is one of the elements that help determine value. In order for demand to be effective, it must be implemented by: location. highest and best use. purchasing power. amenities.

purchasing power.

An easement appurtenant to real property can be terminated by all of the following EXCEPT: release by the dominant tenement owner. revocation by the servient owner. merger of both the servient and dominant parcels. prescription by the servient owner.

revocation by the servient owner.

An easement appurtenant: runs with the land. is a personal right of the grantee. is limited to one year by federal regulation. is removed when the holder of the servient tenement sells the property.

runs with the land.

A salesperson wants to show a property twice in one day. The second time she: should call again if she doesn't know the listing agent. does not need to call again. must call again only if it's for another buyer. should call the listing broker again.

should call the listing broker again.

The deed used to convey title in a property sale warranted only that the owner defend the title against defects arising during the period of her ownership of the property. The type of deed used was a: special warranty deed. quitclaim deed. trust deed. bargain and sale deed.

special warranty deed.

Influencing buyers to buy in certain areas only when done on the basis of a protected classification is known as: unethical but not illegal. blockbusting. steering. acceptable.

steering.

Real estate values are inflating rapidly. Despite having already signed a written contract of sale, the seller refuses to complete the sale. The remedy the buyer may choose is: liquidated damages. suit for specific performance. action to quiet title. rescission.

suit for specific performance.

The right of the government to impose taxes on land is called the right of: garnishment. assessment. attachment. taxation.

taxation.

When a handicapped person is allowed to make modifications to a rental property, the cost of such modifications is paid by: the landlord and tenant equally. the tenant. HUD. the landlord.

tenant.

The purpose of reviewing an offer with the buyer is to ensure that his or her wishes are expressed in the contract and: the contract is filled out correctly. the legal description is correct. the contract is legally binding. the buyer understands the financial and other obligations.

the buyer understands the financial and other obligations.

All of the following is an advantage to the purchaser of property who finances it by a package mortgage, EXCEPT: total payments are uniform throughout the life of the loan. the buyer deals with only one lender. the payments are distributed over a longer period. the interest rate is higher than through conventional installment financing.

the interest rate is higher than through conventional installment financing.

Which of the following is NOT an appurtenance? orchard fence A barn trade fixture

trade fixture

A broker lists a home for sale. The seller and broker are both aware that the roof leaks but conceal this information from the buyer. After the buyer moves in, she discovers the leaking roof. The actions of the seller and broker represent all of the following EXCEPT: unintentional misrepresentation. violation of the license law. fraud. gross misrepresentation.

unintentional misrepresentation.

An executory contract may be assigned: under no circumstances. unless prohibited in the contract. under any circumstances. if provided for in the contract.

unless prohibited in the contract.

The fact that land has a number of important uses is the basis for the essential element of value known as: scarcity. utility. transferability. demand.

utility.

A contract created to pursue an illegal objective is: breached. void. voidable. valid.

void.

A sales contract that does not include consideration is: voidable. valid. void. unenforceable.

void.

Coercion and duress of a buyer would make a contract: invalid. voidable, at the option of either the buyer or seller. voidable, at the option of the seller. voidable, at the option of the buyer.

voidable, at the option of the buyer.

A broker may hold earnest money without depositing it in a trust account: if the seller has given written permission. under no circumstances. if the buyer has given written permission. with written authority to do so.

with written authority to do so.

An endorser of a note who does not guarantee payment of the note to the person whom he immediately assigns it, and to all future holders, endorses it: in blank. with protest. with recourse. without recourse.

without recourse.