Real Estate Coursework 2

Federal laws define a person with a disability as ______.

"Any person who has a physical or mental impairment that substantially limits one or more major life activities; has a record of such impairment; or is regarded as having such an impairment"

Thad pretended to be a client. "We're looking for a three-bed, two-bath. We have two little kids, so we want to make sure we're in a good neighborhood—somewhere safe, where we'll find a lot of good families and neighbor kids that we'd want our children to play with." Nancy tried the following responses, but Thad said they were all somewhat discriminatory except ... which one?

"If you provide me with specific neighborhood names, I can certainly look for homes in those areas. You can learn about the different neighborhoods in the area at neighborhoodscout.com."

Ramon and Willis have other debt that equals $296 per month. With a gross income of $3,600, and assuming they've found a lender that uses the high end of the total debt-to-income ratio, what's the maximum house payment they can afford?

$1,000 *Total debt-to-income can't exceed 36% of gross income. The couple has gross income of $3,600, so 36% of this is $1,296. To find the housing payment the couple can afford, subtract existing known expenses ($296) from $1,296.

If Hal sold his client's listing for $230,000, but it appraised at $200,000 and the buyers agreed to put the extra $30,000 down, what will Hal's commission be if he charged 5%?

$11,500

Calculating Annual Debt Service Let's think back to the monthly payment we found using the amortization chart. The monthly payment was estimated to be $1,073.64. What is the debt service? Head back a slide if you need a reminder of what debt service is.

$12,883.68 *To get debt service, simply multiply the monthly payment by 12.

GRM and GIM can be valuable tools in estimating the value of a property, as the resource discussed. If the GIM in an area is 8X and the estimated annual rent is $24,000, what is the estimated property value?

$192,000 The GIM of 8X is multiplied by the annual rent ($24,000).

We know how often title insurance is paid, but how much does it cost?

$2 - $3 per $1,000 of insurance purchased

Joe and Susie have received confirmation that the home they're interested in will be subject to a special assessment for street paving next year. If the cost is $35 per front-foot, their lot frontage is 80 feet, and the city will pay 20% of the cost, how much will the Wangs' special assessment be?

$2,240 *calculated by multiplying 80 x 35 and then taking that result (2800) and multiplying it by the decimal tax percentage (.20). After, subtract that result (560) from the previous result (2,800).

If a cash investment of $125,000 results in a 25% ROR, what was the amount of cash flow?

$31,250

A property has a fair market value of $94,675. What is the assessed value?

$37,870 In Georgia, property is required to be assessed at 40% of the fair market value unless otherwise specified by law (O.C.G.A. 48-5-7). Multiply the fair market value by 40%

The lender will charge a 1.5-point origination fee and 3.5 loan discount points. What will be the total due for points on a $110,000 loan?

$5,500 *find the dollar value of each points and then add together.

A buyer is purchasing a property for $500,000. He has a down payment of $50,000 and is financing the rest. What's the amount of the loan origination fee if the lender charges one-and-a-half points?

$6,750 The amount paid for points = loan amount × number of points. The buyer is financing $450,000 ($500,000-$50,000). Multiply the loan amount of $450,000 by 1.5% (or 0.015) to get $6,750.

The disabled veterans exemption extends to surviving un-remarried spouses and minor children as long as they remain in the homestead or a subsequent homestead in the same county. What is the approximate maximum amount of this exemption?

$60,000

Now that we know our potential gross income is $900,000, we can calculate the effective gross income for the property. Remember, total vacancy and collection loss equals 6%. Assume this property has no other income. What is the effective gross income?

$846,000 potential gross income is $900,000 and deductions are 6%. Multiply these numbers, then subtract the answer, along with other income, from $900,000 to reach effective gross income.

The Home Mortgage Disclosure Act

(HMDA) Allows review of lending data to evaluate where mortgages are given and where they are not ex. A bank publicly discloses information about the mortgages it granted.

Which of the following is true about recording notary publics?

-A notary's stamp serves as the official acknowledgement requirement. -A notary's seal serves as the official acknowledgement requirement. -An example of common language is: "Before me appeared Robyn Banks, known to me to be the person whose name is subscribed ... "

What are the possible outcomes from a grievance hearing with the Board of Equalization?

-A partial reduction in the assessment -A full reduction of the assessment to the amount the taxpayer requested No reduction

these practices are prohibited and should be avoided by Prudence as she works with clients

-Advertising a property with buyer preferences indicated -Only showing Jewish clients neighborhoods with multiple synagogues -Listing a rental property with the phrase "no drinkers" **however, "no drinking" is acceptable as it is an activity

What should a real estate professional do if a transaction fails to close?

-Advise the client to consult an attorney about potential consequences. -Work with all involved parties to reach an acceptable termination resolution.

Senior Housing Exemptions

-All of the residents at Shady Pines are at least 62 years old. -HUD determined the complex was specifically designed for seniors. -Of the residents, 80% are 55 years old or older, and there's a policy in place to keep it that way.

Tax Assessor's Role in Assessing Property

-As a local government official, it is the tax assessor's job to estimate the value of real property within district boundaries, and to turn that estimated value into an assessment. -For all residential, vacant, and farm properties, the tax assessor determines market value by checking other properties in the area that have sold recently. -To determine the market value for unique properties, the tax assessor uses the cost approach method.

Licensee Duties in a Residential Lease Transaction: Once the agency disclosure form has been presented and the appropriate brokerage engagement form signed, does the licensee have anything else to do in a lease transaction?

-Assist the client in reviewing and filling out the lease agreement -Represent the client's interest in all negotiations and transactions regarding the property lease -Assist tenant clients in locating a suitable place to lease

Buyer's Closing Costs in Georgia In Georgia, buyers are customarily responsible for certain closing costs, including costs to close the loan if the purchase is being financed.

-Attorney's fees -Appraisal and credit report fees -Loan fees -Title insurance

Consuela mentioned that certain price changes require her, as the developer, to submit an amendment with the county land records office. In which of these scenarios would an amendment be needed?

-Based on initial interest in the building, the developer has decided to raise the price of all units on the top two floors by 10% more than the initially submitted price range.

these statements are true about MIP

-Borrowers will pay an upfront premium when they close on the loan and annual premiums for the life of the loan. -MIP is required of all FHA borrowers.

homeowner action against radon

-Buy a radon detection kit and test the home. -Hire a professional to test for the presence of radon. -Install a system to vent and filter radon out of the home. -Seal any cracks or spaces in concrete slab, foundation walls, chimney.

Members of a federally protected class who believe they've been victims of housing discrimination can file a complaint directly on HUD's website. Which four of these statements about filing a complaint are true?

-Complaints must be filed within one year from the time the suspected discrimination occurred. -The complaint form asks the consumer to describe the alleged discrimination. -Complaints must specify the victim's protected class status, who perpetrated the discrimination, and exactly where the discrimination occurred. -A fair housing specialist is the first to review a victim's claim.

In your resource, you'll see that licensee Soroush Azizi is meeting with his buyer, Vince, to go over Vince's responsibilities leading up to closing. After reading the resource, decide which three of these items Vince can check off of his closing prep to-do list because they've already been completed.

-Complete a loan application. -Obtain a home inspection. -Obtain clear and marketable title.

What is this thing called a closing?

-Consummation of the real estate transaction -Buyer is transferred title to the property -Seller receives payment -Broker receives commission

Common Real Estate Advertising Mistakes

-Corrine is selling an older home and decides to list the old furnace that was recently repaired as a "brand new furnace." -Jessica put out a new advertisement for a property that has a small pond out front. The ad claims "Waterfront Property!" She adds a winking smiley face to the ad so people will get the humor. -Nancy has been busy selling her listings and left a few primo listings online, even though they sold, to generate interest for her services.

What Happens to a Lease When a Rental Sells? How does the sale of a leased property affect the renter? Does it terminate the lease?

-Current lease contracts are transferred to the new property owner. -Any security deposits and advance payments a tenant have made are transferred to the new owner when a rented property changes hands.

Timeshare Ownership Facts

-Fee simple ownership for a vacation timeshare works in the same way as other types of real estate: Ownership can be enjoyed, sold, or passed down to heirs. -Resale timeshares often don't recoup the buyers' initial investment.

Georgia's Brownfields Program

-Funded by federal grant from U.S. EPA -enacted in 2002

Which of these are examples of predatory lending?

-Interest rates of 6% more than the current market rate -Very low introductory interest rate that rises sharply after the introductory period

Valid Contract Requirements

-Legal competence -Lawful objective -Sufficient consideration -Mutual agreement -Lessee and lessors' names -Agreement to Convey -Description of premises -Lease provisions -Starting date and ending date -Parties' signatures

Similar to other types of real property ownership, certain condo costs are tax-deductible. these items are tax-deductible.

-Mortgage interest -Property taxes

the following statements about FHA-insured loans are true

-Most closing costs and fees can be rolled into the FHA loan. -Both fixed-rate and adjustable-rate mortgages are available through the FHA. -The FHA is a part of the Department of Housing and Urban Development.

these borrowers are likely to benefit from using the FHA loan program

-Nicholas has some credit issues, though he's got a good job. -Sally has reasonably good credit, but only $2,000 to put toward a down payment.

these are the items to look at during the final walk-through

-No items have been removed that should remain, and no items remain that should've been removed. -The property's been cleaned. -The property is in substantially the same condition as it was when the buyer made his offer and after negotiated repairs were made -Trash and debris have been removed from the property. -Any last-minute repairs have been done to Vince's satisfaction.

So far, we've seen what the buyer and seller do to prepare for closing, but what is the closing attorney doing? Take a minute to read the resources and then decide which four of these items the closing attorney can check off of the closing checklist prior to closing.

-Order the title search. -Obtain the seller's loan payoff amount. -Prorate the property taxes. -Prepare closing statements.

Pre-Payment Penalty Facts

-Paying off a loan early saves the borrower interest. -Lenders lose out on anticipated interest payments when borrowers pay off their loans early. -A lender must disclose up front if it reserves the right to charge a pre-payment penalty.

the following statements are true of charges and fees regulated by GAFLA

-Prohibits excessive late charges -Prohibits financing of credit insurance -Prohibits fees for providing loan payoff quotes

Property Manager's Obligations to the Owner

-Property managers are responsible for managing leases. -The property manager's primary obligation to the owner is to produce the greatest net return.

some of the reports you'll be responsible for as a property manager

-Property managers are responsible for preparing reports the property management agreement requires as well as other reports the owner requests. -Monthly property management reports include information about maintenance, marketing, and tenants.

Ownership

-Property tax deduction -Mortgage interest deduction -Home acquisition financing -Refinanced loans -Home equity loans -Itemized deductions and depreciation (home-based work or business)

Per the property management proposal, the property manager has certain obligations to the owner regarding the management of the owner's property. Review each statement and determine which four describe the property manager's obligations.

-Provide monthly bank statements as well as information about monthly vacancies and fees collected. -Collect rent and track vacancies and turnover. -Report on the number of delinquency notices served and fees collected. -Prepare and oversee the budget for the property.

the following mean tax foreclosures

-Requires that the creditor file a lawsuit.

Consuela also discusses the multifaceted purpose of a title search. Which of these are a purpose of the title search?

-Reveal defects in the title to your unit. -Reveal any liens against the building. -Protect buyers from any condo association unpaid bills or liens. -Protect the lender's interest in the property.

buyer's responsibilities before closing

-Review Loan Estimate -Obtain an appraisal

What's the purpose of the pre-qualification stage of the loan approval process?

To determine the amount of money the buyer will qualify for based on initial information provided by the borrower

What is the primary purpose of the Brownfields Law?

To provide funds to both assess and clean up the many thousands of brownfields that are believed to exist nationally

Marketing Plan: Goal statement section

To reduce our vacancy rate to 10% by year's end, we have the goal of attracting more tenants and keeping them long term.

A jewelry store is relocating from a mall to a free-standing building and is pulling all of its display cases out of the storefront. These cases belong to the jewelry store because they are ______.

Trade fixtures

When George closes on his new condominium, which of the following will be calculated based on the sales price?

Transfer tax

Which term is defined as a tax that's applied when property changes ownership?

Transfer tax

When selling a condo, the condo association's board of directors sometimes has the first option to purchase the condo.

True

We've covered the tenant's responsibilities as far as abandonment is concerned, but what about the landlord? What responsibilities, if any, does the landlord carry when a tenant abandons a lease agreement? Is the following statement true or false? Even though Madeline abandoned her apartment, Mrs. Hudson is required to alleviate damages by trying to find another tenant.

True In Georgia, landlords have a duty in situations involving abandonment to do their best to find another tenant.

Regulation Z codifies the rules of the ______.

Truth in Lending Act

What does TILA stand for?

Truth in Lending Act

One of the pieces of information the depository institution provides is the average balance for the applicant's accounts. What time period does this average cover?

Two months

Requires property owners to show evidence that their property was unfairly assessed compared to similar properties.

Uniformity

What happens when a board decision in a condominium association goes against the will of the majority of unit owners?

Unless the bylaws provide for majority agreement, the board's will prevails

Of the following, which is considered a typical accrued adjustment?

Unpaid real estate taxes

Buyers agree to a one-time purchase price and an annual maintenance fee.

Vacation ownership

Home Equity Line of Credit (HELOC)

also uses the equity homeowners have in their property. However, because of how it's set up (as a line of credit), homeowners use this as an open-end account. In this way, a HELOC is similar to the revolving credit of a credit card from which the homeowner can take advances, repay money, and even borrow money again.

the following situations are a violation of GAFLA

-Rob, a mortgage broker, introduces his clients to XYZ Lending. XYZ Lending charges borrowers excessive fees to originate loans. -XYZ Lending rolls credit insurance into the borrowers' loan. -Loan documents from XYZ Lending don't address late payment charges. XYZ charged Charli a 5% late fee.

caveat emptor seller responsibilities

-Seller's licensee must notify the seller of the seller's duty to disclose those items that must be disclosed.

facts about the closing process

-Sometimes, because of the need for an adjustment, not all closing costs and prepaids are accounted for in the funds that the buyer brings to the closing. -The funds that a buyer brings to closing must generally be in the form of a cashier's check, a certified check, or a wire transfer.

these statements regarding MERS are true

-The MERS system was coordinated by major lenders that sell mortgages to each other on the secondary market. -Before MERS, millions of dollars were being spent just on recording fees. (because the loan can just be transferred to another lender rather than re-recording) -With MERS, the original loan is recorded, but if the original loan is transferred to another MERS member, it doesn't need to be recorded.

Which two of the following are characteristics of the VA guarantee?

-The maximum amount of a VA-guaranteed loan may vary from state to state. -VA loans made after March 1988 may be transferred or assumed only if the VA approves.

Which of the following are true of the parties' signatures on lease agreements?

-The signature acknowledges the parties' agreement. -Taking the property communicates a lessee's agreement. -The lessor must sign.

What else might landlords request?

-The tenant's name -The current landlord's name and contact information -Employment record for the last five years

Accrued Items

-Unpaid real estate taxes -Rent collected by the seller from the tenant for a period of time during which the buyer will own the property -Interest on the seller's mortgage assumed by the buyer

the following is true about recordation

-Until a deed is recorded, ownership can be legally challenged. -Recordation protects the owner's title against all claims of interest not recorded in any public record. -Recorded documents are used by title insurance abstractors and attorneys.

Property Management Proposal Sections Qualifications

-Years of experience and resume -Properties currently being managed and references from owners of non-competing properties

Identify each of the following prorated items as generally being prorated on either a banker's year (360 days) or a 365-day year basis in Georgia. Real estate taxes

365

Calculate the volume (in cubic meters) of a rectangular prism that's 5 meters long, 4 meters wide, and 2.5 meters high.

50 meters cubed

Which of the following can indicate issues with heating and cooling?

A furnace or air conditioning unit that does not kick on when the temperature is adjusted

True

A loan commitment is good only for a short period of time.

Which one of the following examples describe a prepayment penalty?

A monetary penalty imposed on a borrower for paying off a loan before its intended time

Package mortgage:

A mortgage in which personal property is included with the real property in the sale. This might be used in the case of a furnished condominium, for instance, but it's more commonly used in commercial real estate where business assets are included as collateral.

Which of these is an example of unrecorded interest?

A neighbor's right to cross over someone else's property to get to his own.

What happens when a document is recorded?

A photocopy is registered, filed in chronological order, and bound in a book.

What is the multiple listing service?

A shared database of real estate information

Cheri is the lessee of a house with a detached garage. Harriett has leased only the garage from Cheri. However, Cheri remains bound by the terms of the lease agreement with the lessor. This is an example of _______.

A sublease

In Georgia, what must be filed for the eviction process to begin?

An affidavit

Who usually acts as a closing attorney?

An attorney who may or may not be the lender's attorney

What is the name of a fibrous mineral naturally found in rocks and soil worldwide that was used in older homes and causes chronic lung disease and cancer?

Asbestos

In which of the following situations does a new tenant take the place of a departing tenant?

Assignment

Prior to signing the closing documents, what should the parties have already done?

Assured themselves that the conditions and contingencies of the purchase agreement have been met.

Which of the following is true about a tax lien sale?

Whoever purchases the lien at the sale must pay at least the delinquent tax and penalty owed.

depreciable basis

Basis used to calculate the tax deduction allowed for a property's depreciation each year Ex. The depreciable basis of an investment property excludes the value of the land it sits on

Loan balance prior to the monthly payment being applied

Beginning balance

Which borrower's net worth is the most favorable?

Borrower C's assets are twice as much as her liabilities.

What are the impacts of widespread predatory lending?

Borrower default on mortgage loans High foreclosure rates Reduced home values in areas with high foreclosure rates

The loan application is used to gather information needed to determine whether the applicant can repay the loan. What information is requested in the application?

Borrower information Loan information Property information

What four things might be covered by the home warranty the builder provides for James?

Broken gate or fence Leaky faucet Crack in foundation Improperly hung door

Who Closes Which Contracts? Close on the mortgage loan commitment

Buyer and lender

Who Closes Which Contracts? Close on the title insurance contract

Buyer and title company rep.

Chuck arrives at a vacant home for a showing. He thinks he sees a light on inside the home and distinctly remembers turning off all of the lights when he left yesterday. He decides to be safe and take a walk around the house and discovers a basement window propped open. What should he do?

Call the authorities to check it out.

What should a real estate professional do regarding property taxes?

Check the title report for property tax liens.

Copying a website for the purpose of obtaining money or data

Cloning

The Equal Credit Opportunity Act is regulated by the ______.

Consumer Financial Protection Bureau

This requires no federal agency participation in insuring or guaranteeing the loan.

Conventional

This type of mortgage requires PMI for down payments less than 20 to 25%

Conventional

Deborah obtained her eligibility certificate for a VA loan and has made an offer of $275,000 on a home. The home appraises at $270,000. What are Deborah's options?

Deborah can still purchase the home, applying funds from her own savings to make up the difference between the appraised value and the purchase price.

Age 62 or older with a total household income that must not exceed $15,000.

Deferred Tax Payment

Bethany has agreed to purchase Derrick's property using a land contract. Who holds legal title to the property during the term of the loan?

Derrick

This provision anticipates the possible damage of a property due to "acts of God" and protects the tenant.

Destruction of premises The provision for destruction of property outlines landlord expectations and possible compensation in the case of damage caused by natural causes.

Property Management Proposal Sections Property description

Detailed description of the land and building(s)

The Truth in Lending Act requires lenders to make certain ______ to consumers.

Disclosures

This type of point allows you to buy down your interest rate, therefore lowering your monthly payment.

Discount point

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

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

Which of the following could indicate a problem with the chimney flue or ventilation?

Drafts near the fireplace

Marketing Plan: Building analysis section

Due to our central location and proximity to restaurants, our building is experiencing a low vacancy rate of 17% and stable tenant base.

In addition to providing a disclosure of any lead-based paint hazards in homes built before 1978, what must a seller's agent provide to prospective buyers?

EPA lead safety pamphlet

Which of the following is true about getting to safety?

Each person and each situation is different.

the following statements about easements and encroachments are true

Easements and encroachments are considered material facts. In caveat emptor states, buyers will usually identify easements and encroachments while doing due diligence.

What is the primary focus of the Fair Housing Division?

Eliminate housing discrimination

With the advancement of technology, real estate licensees have reaped rewards and experienced pitfalls. Which of these are technology-related areas where licensees are prone to litigation exposure?

Email Social networking sites Websites

Loan balance after payment is applied

Ending balance

the five most common title issues

Errors in public records Missing heirs Forgeries Unknown liens Survey or boundary issues

What happens during an abatement period?

Existing properties are charged the usual property tax on the property's pre-improvement value only.

Which act attempted to eliminate discrimination caused by blockbusting, steering, and redlining?

Fair Housing Act of 1968

Raine is a new property manager. Which of the following will she need to know?

Fair housing laws

When it comes to landlord-tenant relations, a property manager needs to know ______.

Fair housing laws

Which entity established the disclosure requirements for insulation in new construction homes?

Federal Trade Commission (FTC)

Which of the following units of measurement is used when determining the length of a wall?

Feet

Hardware/software that controls network Internet access

Firewall

An estate that conveys possession, control, and title (ownership); also known as ownership

Freehold estate

Quality photos are a must. Imagine you're preparing a listing by taking pictures of the property. Take a photo of these rooms:

Front exterior of home Master bedroom Master bathroom Kitchen

Home Ownership and Equity Protection Act

HOEPA

The FTC pays extra attention to two types of advertisements. (Hint: These are different than the two types we discussed on the previous slide.) What are they?

Health and safety claims Ads that are difficult for consumers to evaluate

Compared with condominiums, the monthly fees for a cooperative owner are typically ______.

Higher

A lump-sum loan that must be repaid by the homeowner

Home equity loan

Which of the two loan programs noted in your resource may be paired for borrowers?

HomeReady Mortgage and Community Seconds

Lenders use credit scores when determining whether to approve a loan application. What does the score tell the lender?

How likely the applicant is to repay the money that's been borrowed

most common Mortgage Fraud schemes

Illegal property flipping Inflated appraisals Silent second Nominee loans/straw buyers Equity skimming False identity

net operating income (NOI)

Income projected after deducting losses for vacancy, collection loss, and operating expenses Ex. Larry checked his net operating income. After deducting for vacancy loss, uncollected debt and operating expenses, he would make 15% this year!

The Equal Credit Opportunity Act specifies that credit applicants must be judged using only what criteria?

Income, net worth, job stability, and credit rating

Landlord may adjust rents at pre-determined intervals according to changes in an economic index.

Index lease

What are the two most common ways to mitigate the effects of title issues?

Initiate an action to quiet title. Purchase title insurance.

Normal wages are considered when a lender is evaluating an applicant's income. Which of the following must be true for overtime pay to be considered?

It must have been received regularly over the last two years.

How does title insurance affect the lender?

It protects the lender from loss due to defective titles.

Which of the following is a true statement regarding Farmer Mac?

It provides credit primarily to homeowners and businesses in agricultural and rural areas.

Which of the following statements about flood insurance is true?

It's required if a buyer wants to finance a property that's in a floodplain.

Borrowers must list their assets when completing a residential loan application. What are assets?

Items of value a borrower owns

Which one of the following tasks helps Sherrod fulfill his property management duty of marketing to and acquiring tenants?

Keeping vacancies to a minimum

A form of seller financing with which the borrower makes installment payments to the seller and the seller retains title to the property while the borrower retains right of possession

Land Contract

The buyer has possession of the property, while the seller still holds the title.

Land contract

Lessor

Landlord

Gross Lease: Who pays the following expenses related to the property?

Landlord pays Taxes, Insurance, and Maintenance

We hope this will never happen to you, but if you're ever threatened by someone who's unhappy that you wouldn't violate fair housing law, to which entity should you report the threat?

Law enforcement

Children and pregnant women are especially vulnerable to poisoning caused by what hazard?

Lead

When lead is present, what rule covers remodeling of the property?

Lead Renovation, Repair, and Painting (RRP) Rule

Obtain homeowners insurance

Lenders require proof of homeowners insurance to ensure that the home is covered against any loss that could occur due to physical hazards.

Area Formulas: Rectangle

Length × width

Tenant

Lessee

Which of these is a recommended strategy for a real estate professional who wants to avoid being asked to violate fair housing laws?

Let consumers know upfront that you adhere to fair housing laws.

Tax ______ are a means of getting the property owner to pay their delinquent tax debt.

Liens

As a security precaution, which of the following is something you should do?

Limit the amount of personal information you post.

Contract Types and Resulting Actions The listing agent's broker receives the sales transaction commission in accordance with the listing agreement.

Listing agreement

Some items on a credit report may be viewed negatively by a lender. Which of these items would you expect to find in this section of the report?

Loan with a past due balance Bankruptcies Liens Court judgments Accounts sent to collections

Decrease in capital resulting from the sale of property owned more than one year -Net loss may be deducted from taxable income to offset capital loss of longer than one year (one year plus one day).

Long-term capital loss

Identifies what the owner agrees to pay to the property manager.

Management fees

MAAP

Material Adverse Actual Physical

Regarding information that licensees must disclose, what does the pneumonic MAAP stand for?

Material, Adverse, Actual, Physical

The Owner/Property Manager Relationship: Property manager primary duty

Maximize the net return for the owner

Most often, what's the first course of action for disputed home warranty claims?

Mediation

When you meet a new client for the first time, you should always do what?

Meet them at the brokerage office first.

What does the commercial property manager do that the residential property manager doesn't do?

Negotiate leases Unlike residential property managers, commercial property managers also negotiate leases, either on behalf of tenants or on behalf of building owners.

Tenant pays some or all expenses separately.

Net lease

The Federal Trade Commission Act includes rules to encourage what two kinds of advertising?

Non-deceptive Fair

Which agency is charged with enforcing fair housing laws and holding all parties accountable for compliance with these laws and regulations?

Office of Fair Housing and Equal Opportunity

Property Management Proposal Sections Additional documents

One-page sheet explaining the standard fee charged

What Kind of Discrimination? She avoids renting to everyone who seems Middle Eastern because she assumes they all have ties to terrorists.

Origin

gross income multiplier (GIM).

Properties with more than four units are considered commercial properties and use the....

Radon

Property managers and owners should have their properties tested for radon. If high levels of radon are found, steps must be taken to mitigate the issue.

the property manager's reporting obligations

Property managers will provide both monthly and annual reports based on the owner's requests and the property management agreement.

Hazardous and non-hazardous waste

Property owners and managers are required to ensure that all waste produced on their property, both hazardous and non-hazardous, is disposed of properly.

We know that the title company searches for any title defect that might exist on a property, but where does the title company find this information?

Public records

Real Estate Settlement Procedures Act

RESPA

What Kind of Discrimination? When prospects want to see a unit, she shows all of the whites the new building and shows African Americans the run-down building.

Race

Which three of these are regulations that were enacted to prevent predatory lending?

Real Estate Settlement Procedures Act (RESPA) Homeowner and Equity Protection Act (HOEPA) Truth in Lending Act (TILA)

Reassessment of property values to one or more properties in an area due to a property being sold.

Reassessment on sale

The Accounts in Good Standing section lists accounts that may be viewed favorably by a lender. These are generally accounts without any late payments or that have been paid off or closed. What type of accounts may be listed here?

Revolving Installment

Sarah tells Jerry about where asbestos can be found in your resource. Which of the following may contain asbestos?

Rocks and soil Flooring Walls Roofs Heating systems

Water buildup, ice damming, and a fascia damaged by moisture are common ______ issues.

Roof

Contract Types and Resulting Actions This allows the buyer to legally possess the property once all terms and conditions have been satisfied.

Sale agreement

This expense is the money the seller owes the mortgage lender. It's deducted from the seller's proceeds and then paid to the lender.

Satisfaction of existing liens

Where can a party reviewing a title commitment find basic details about the transaction?

Schedule A

Amount to be sent for payment

Scheduled payment/total amount

Three other types of evictions are:

Self-help eviction Constructive eviction Retaliatory eviction

Examines all legal documents and work in the best interest of clients.

Seller's or buyer's attorney

What is a peace officer?

Sheriff Police officer

Discoloration or curling

Shingles

Loan Types

Short-Term Residential Refinancing & Equity-Related Owner Financed Commercial

Truth in Lending Act

TILA

What is the formula used to calculate general property tax?

Tax assessed value x tax rate = property tax

What act was introduced to combat discriminatory lending practices against individuals and businesses in low- and moderate-income neighborhoods?

The Community Reinvestment Act

In a caveat emptor state, who or what entity has the burden to prove that a seller was dishonest about a property's condition?

The buyer

Pays for and receives clear title to the property being purchased.

The buyer

Who's generally responsible for ordering and reviewing a survey of the property?

The buyer

Who's responsible for doing the final walk-through of a property?

The buyer and the buyer's agent

Who should review the settlement statement before closing?

The buyer and the seller

In what way did the Supreme Court case of Brown vs. Board of Education affect the way fair housing laws are implemented today?

The decision overturned the doctrine of "separate but equal."

What is an abstract of title?

The document showing the chain of title for a property

Essential Information About TILA

The intent of the legislation was to safeguard the consumer in the use of credit by requiring full disclosure of the terms and conditions in any offers of credit.

Physical

The licensee has a duty to disclose any adverse material fact about the physical condition of the property. This means if you know something is wrong with the foundation, a window does not open correctly, or a public easement crosses the property (to name a few issues), then you must disclose it. You don't need to disclose everything, though. For example, it's not your job to disclose the neighborhoods crime stats or that the local school system is overcrowded.

Who's responsible for verifying that a client knows what documentation to bring to closing?

The licensee who's representing the client

Which of these situations would be exempt from most provisions of the federal Fair Housing Act?

The local Elks club owns a property that's rented only to Elks club members.

Specific prices are advertised when offering condos for sale to the public. Who or what influences the price for new condominiums?

The market

Grants the property that's being sold to the buyer and receives payment for the property.

The seller

the following is true of most government or government-sponsored affordable housing loan programs

These target mainly first-time homebuyers and low- to moderate-income borrowers.

Your client, Ray, is worried about title issues that may arise after closing. Remind Ray of his secret protection: ______.

Title insurance

mixed-use development.

an apartment above retail space

Government Loans

include participation from a federal agency as an originating, insuring, or guaranteeing party.

insurable title

is one against which there may be known defects (such as easements), but the title company has notified the parties of the defect and has agreed to insure against it and not list it as a policy exception.

Amortization

is paying off a loan over time by making scheduled, equal payments. A portion of each goes toward principal (reducing the loan balance) and interest. Typical amortized loans include mortgages, auto loans, lines of credit, and the like.

retaliatory eviction

is pretty much as nasty as it sounds, and it's actually illegal. Say a tenant files a complaint with the local health department about roaches on the property. The landlord can retaliate (or threaten to retaliate) by evicting the tenant.

Equity

is the amount of value a homeowner has in a property after any debts (such as a loan) are taken into account.

encroachment

is the intrusion of some structure or object across a property's boundary line.

Junk Fax Prevention Act of 2005

makes it unlawful to send an unsolicited commercial message via fax unless the sender has permission from the recipient or an established business relationship with the recipient.

constructive eviction

may occur intentionally or inadvertently. Constructive eviction is when the tenant is prevented from the quiet enjoyment of the premises.

means "let the buyer beware." In real estate, it means that the buyer is responsible for

means "let the buyer beware. In real estate, it means that the buyer is responsible for performing due diligence on the property, and the seller isn't responsible for disclosing everything, or for protecting the buyer.

Lets turn our attention to title defects. A title search on a home in escrow reveals that although the seller is the rightful owner and there are no liens on the property, it turns out there was a spelling error in the paperwork and the address is incorrect. Is the title still marketable?

no Unfortunately, as small as a typo seems, it can actually be a big problem when it comes to selling a property.

Homeowners who _____ the property they own in Georgia qualify for an annual tax exemption of $2,000.

occupy

sublease

occurs when the tenant leases to a third party.

A witness to recording can be unofficial.

true

Potential buyers, mortgage brokers, lenders, and the public are considered notified when a document is recorded.

true

Recording serves as the ultimate notification to the public, including future buyers and lenders.

true

To be recorded, a deed must be acknowledged.

true

Without recording, there's no way to guarantee that a person who holds a deed is actually the person who owns a property.

true

The Equal Credit Opportunity Act

(ECOA) Lists protected classes against whom lenders may not discriminate when making credit unavailable ex. A lender extends credit to a Muslim applicant and to an equally creditworthy Protestant applicant. ex. A lender sends a mortgage applicant a copy of the appraisal for the property being purchased.

Acceptable Advertising

"Reference required" "must be employed" is NOT acceptable

Let's apply the concept of proration to rent. Monthly rent for a property is $2,100. The tenant won't be moving into the property on the first of the month, so the entire rent isn't due. Instead, the lessor prorates the amount of the rent based on the number of days in the month the tenant will occupy the property. Assuming the tenant will occupy the property for 17 days (and also assuming a 30-day month), how much rent is due?

$1,190

Calculate the recording fees that Vince will pay to record a two-page security deed in Georgia.

$12 In Georgia, the cost to record a deed is $10 for the first page and $2 for each subsequent page. Make that font small, right?

The gross income multiplier for an area is 12x. If the estimated annual rent is $10,000, what's the property's estimated value?

$120,000

You're preparing to list a client's home, and you've got some comps that give you an estimated value of $265,000. Your clients have been in the home for seven years. They've put about $12,000 of improvements into the property, and have $130,000 left on their mortgage. Using these figures, how much equity do they have in the property?

$135,000

A property in Georgia sold for $137,500. What state transfer tax would apply to this transaction?

$137.50

Area Formulas: Triangle

(0.5 x base) × height

What Is a Tax Lien?

-A tax lien can affect a taxpayer's credit score. -A tax lien is a legal means of satisfying a delinquent property tax debt.

What are some of the actions that will take place to protect both buyers and their lenders?

-A title company representative reviews the title report with the buyer and discusses any red flags. -Title insurance is purchased as part of the transaction. -A title search/examination occurs to uncover any claims against the title.

facts about Chain of Title and Abstract of Title

-Abstract of title provides a summary of the title history. -If a break occurs in the chain of title, the search must go beyond the recorder's office. -Chain of title establishes the title history or the path and proof of ownership for a property.

MLS Membership Advantages

-Access to a wider range of property listings and authorization to show any listed property within the MLS pool -Broader market exposure of listed properties, which could lead to a greater number of potential offers, faster sales, and better prices -Ability to use the MLS data to generate a comparative market analysis

Index Lease: The fourth primary type of lease in Georgia is called an index lease. Which of the following are characteristics of this lease?

-An index lease is also called a variable lease. -Payments change according to changes in the economic index. -The payment amount is based on the Consumer Price Index, Cost of Living Index, or some other agreed-upon index.

You're representing a seller, and you've just gotten a dreaded call from the buyer's agent: The buyer's financing has hit a snag, so that closing you had scheduled for next week is going to have to get pushed back. what should you do?

-Call the buyer's agent to learn more about the financing snag and the expected length of the delay. -Communicate with your client to explain the issue.

Condominium Titles Facts

-Condo owners receive a title deed to their unit. -Title insurance will be required. -You will receive CC&Rs as part of the deed.

Condos have common charges. Buyers should know what these charges cover. Are any of these items generally covered by common charges?

-Exterior maintenance -Insurance -Building staff -Cleaning of common areas -Trash pickup

Property Manager Skills

-Knowledge of financial trends and local market conditions -Knowledge about appraisals and how they work -Command of generally accepted accounting principles (GAAP) -Knowledge about financing

Consequence for violating law

-Lawsuits, damages, fines, attorney fees -License suspension or revocation

Acquisition

-Points deduction -Penalty-free early IRA distribution option for first-time homebuyers -Note: Closing costs aren't deductible.

Mold

-Property owners and managers need to educate their employees and tenants on ways to prevent mold and how to remove mold should it appear. -Property owners and managers should document their mold prevention and cleaning policies and include a copy of the document with every signed lease agreement.

Property Tax Facts

-Property taxes are filed with the county between January 1 and April 1. -Special assessments can result in an increase in property taxes. -The money from property taxes collected by the local government is used to pay for public services.

What two things might the FTC have you do to correct the deceptive advertisements you've circulated?

-Publish new ads that correct the deception in the original ad. -Notify consumers who have bought the products based on deceptive claims.

Reversion

-Tax breaks ($250,000/$500,000 rule) -Leasing of secondary homes—if fewer than 15 days, no tax reporting required -Reporting of capital gains and losses

Mortgage lending disclosure laws have been around for many years. Which two of these statements about disclosure laws are correct?

-The Department of Housing and Urban Development originated RESPA; which is currently under the CFPB's purview. -The TILA-RESPA Integrated Disclosures, implemented by the Dodd-Frank Act in 2010, mandate the use and timing of loan disclosures.

Which three of the following are true about the conveyance tax?

-The conveyance is a state-wide tax. -The tax rate for transfer tax is $1 per $1,000. -Transfer tax must be paid before the deed can be recorded.

Piggyback financing is a legal way to avoid having to purchase private mortgage insurance. Which of the following statements are true about this type of financing and the concepts that make it work?

-The first mortgage in a piggyback loan must be 80% or less of the property's value. -The second mortgage amount in a piggyback loan is the difference between the remaining balance owed and the amount of the down payment. -Conventional loans require PMI if the loan-to-value ratio is over 80%.

What's required for a lease of a year or longer duration to be enforceable in a court of law in Georgia?

-The lease must be in writing. -Both the lessee and the lessor must sign the lease.

Commercial Lease Benefits

-The requirement for excellent credit is less of an issue

these statements are true about the security deposit

-There is no legal limit to what a landlord can charge for a security deposit. -The landlord has 30 days to return a security deposit after a tenant vacates the premises. -The landlord must document the reasons for any deductions from a security deposit. -A security deposit is typically (though not always) equal to one month's rent.

Congratulations, you passed the CAM exam! After all that hard work, you want to make sure you keep that certification. How many hours of continuing education must you complete over the next four years?

36

these percentages are a appropriate ratio for a conventional loan.

36% - Total debt ratio 28% - Total housing ratio

Identify each of the following prorated items as generally being prorated on either a banker's year (360 days) or a 365-day year basis in Georgia. Interest

360

Borrowers should be wary of lenders who offer mortgages at more than ______ over current market interest rates.

5%

How long is a mile?

5,280 feet

A property valued at $1 million is returning a net annual income of $85,000. What's its cap rate?

8.5%

A condominium sponsor appoints the board of directors, and the managing agent for the condo owners. In Georgia, what percentage of units need to be sold before the sponsor gives up board control to the members?

80%

Which of the following ratios are among those acceptable in a piggyback financing arrangement?

80/10/10

If a property is 800 feet by 900 feet, what is the frontage?

800 feet

Jane found a house she loved that was listed at $345,000. Her offer of $330,000 was accepted, but the appraisal came in at $300,000. Jane plans to finance $275,000. What's the loan-to-value ratio?

92%

"So this is where the drama comes in," Teddy said. "Let's say we get to a link in the chain and find that the rich widow who owned it last wasn't actually the owner, that her dead husband willed it to a secret love child he'd had with the family maid, then the link is broken. Oh no! Now we have to piece the chain back together!" Where might we find the information we need to do this?

A birth certificate If there's a question about whether a person is an heir who should have received property, the best way to find that be in a birth certificate.

Property Management Proposal Sections Duties provided

Accounting and bookkeeping functions

Which of the following may be considered a stigmatized property?

A home where a homicide, suicide, or haunting occurred

Which of these scenarios is legal?

A homeowner makes a room available for rent in her residence, but only interviews female applicants.

The contract that allows a tenant to live on the property is _______.

A lease

If you had to describe what a lease is in the simplest terms, which of the following statements would you use?

A lease is an agreement between a landlord and a tenant.

What is an eviction?

A legal action by the courts to remove the tenant and the tenant's belongings from the premises

pre-payment penalty

A lender makes its money off of the interest you pay on a loan; the longer you're paying it off, the more money it gets. Because of this, some lenders charge a pre-payment penalty if a loan is paid off early.

fixed-rate loan

A loan where the principal and interest payment remains the same over the life of the loan

What is a proration?

A proportionate calculation based on who actually owes an expense for a given period of time

As ______ property manager, you know there's a lot more turnover in your area of expertise.

A residential

What is the Torrens system?

A title search method that goes back as far as the previous title search

Sort the factors based on their importance to a credit score, from most important (first) to least (last).

1. Payment history 2. Credit utilization 3. Length of credit history 4.New credit and types of credit

The manufacturer of soundproofing, decorative material, shingles, and siding with asbestos was outlawed in which decade?

1970s

Cletis and Marcie are purchasing a property with a sales price of $175,000. They made a down payment of $140,000, and will be financing $35,000. What is their LTVR?

20%

A buyer anticipates a house payment of $1,000 per month, with monthly homeowner association fees of $150. The buyer also has a car payment of $400 per month. If the buyer earns a monthly gross income of $5,000, what's the housing ratio?

23% The housing ratio is 23%: ($1,000 + $150) / $5,000 = .23 x 100 = 23%.

What's the typical low end of the housing ratio to qualify for a conventional loan?

25 to qualify for a conventional loan, the minimum is 25%. So, if a lender is using 25% as its threshold, the borrower's house payment can't exceed 25% of gross income.

Traditionally, lenders' qualifying mortgage rules use a range of percentages to qualify for both the housing debt-to-income ratio and the total debt-to-income ratio. What are those ratio ranges?

25% to 28% for housing; 33% to 36% for total debt

Adam's ready to move out of the condo he's been leasing for the last five years. How much notice is he required to give?

30 days

Gregory has been bombarded with emails from a local real estate licensee. He keeps opting out of these emails, but they just keep coming. What federal law is the licensee possibly violating?

CAN-SPAM Act of 2003

States the rules and rights of condo owners

CC&Rs

The Community Reinvestment Act (CRA)

CRA Requires lenders to invest in development and rehabilitation of the communities they serve ex. A bank makes public the results of a federal agency review.

Money set aside for things like repairs, upgrades, improvements, and major maintenance

Capital reserve budget

Biff is completing a residential loan application. Which of the following would he include in the liabilities section?

Car loan

Which of the following units of measurement are used when determining volume?

Centimeters cubed

Why did the implementation of TRID impact closing dates?

Certain financing changes may trigger a new three-day waiting period.

Which of the following documents is used to create the title commitment?

Certificate of title

You're at Burt Richards' beautiful rural property helping him sign his listing agreement when his ex-wife Lizzy (who apparently still has a key) storms in. She screams that the house actually belonged to her father who passed it on to her before she and Burt got married. Burt, however, insists that he won it in the divorce because Lizzy had an affair with the landscaper, and he wants to sell it because of all the bad memories. How can you find out who really owns the property?

Check with the public recorder's office.

Manages the closing process, presents and explains all of the closing documents to the parties, and obtains signatures.

Closing attorney

Susan is negotiating a lease that would have her pay the property owner a portion of her sales once they've reached the natural break-even point. What type of property manager is Susan working with?

Commercial

Commission Formula

Commission = sales price × commission rate

The neighbors in South Mountain Village got tired of all the drug dealing and criminal activity surrounding a shop, the Mystery Market. The community boycotted the store, which eventually closed, and with the help of local financial institutions, a social services center was added to the area. What act is this an example of?

Community Reinvestment Act

To develop a marketing plan for the property owner, the property manager should ______.

Compare the competition to the rates, condition, amenities, and location of the owner's property

A small text file that remembers your preferences or tracks your browsing activities

Cookies

For DeeDee, finding the unit was actually the easy part. Who knew getting into this building would be such a process? Putting together a board package, going through an interview, providing documents, another interview ... DeeDee was certain the board would ask for her firstborn child, as well, but she decided it was all worth it when she received her proprietary lease and keys at closing.

Cooperative

As-needed repairs or replacements

Corrective

Your tenant, Tom, has called to complain about a broken water heater. You hire someone to replace it. What type of maintenance are you performing?

Corrective

Which of the following valuation approaches is used to assess unique properties?

Cost

who is exempt from property taxes

County courthouse church (boo) Hospital University campus

Which of the following is a common chimney or fireplace problem?

Creosote

Crystal, a real estate licensee, gave specific tax advice to her client. Which of the following is a true statement about this situation?

Crystal will be held to the same standard as a tax attorney.

How will a condo developer sometimes price units in phase one?

At lower prices to build initial interest and sales.

Property Management Responsibilities Office building manager

Attracts and keeps the right tenants and tenant mix by negotiating favorable leases with businesses.

Ron can explain that the choice of mortgage broker is completely up to the client.

Allowed under RESPA

Which of the following may represent an exemption from Georgia fair housing laws?

Angie owns a four-plex. She lives in one unit and rents out the others.

the Equation for Rate of Return

Annual cash flow / Initial cash investment = rate of return

Before condominium documents can be filed, condo developers must set up a Georgia corporation. What documentation must you file with the Georgia secretary of state in order to form a corporation?

Articles or incorporation

Large deposits that might indicate gifted money, confirmation of cash reserves and a consistent balance

Bank statements

Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan?

Buydown

How does the Federal Housing Administration fund its mortgage insurance program?

By charging borrowers a mortgage insurance premium

How is ad valorem property tax calculated?

By multiplying the property's assessed value by the tax rate

Which of these are common issues related to windows that an inspector might note in an inspection report?

Damaged seal Window won't stay open

Which three of the following does it verify?

Divorce Secured transactions Judgments

Which Georgia agency ensures that drinking water is safe and that the water quality in rivers and streams is protected?

Environmental Protection Division

Which of the following describes what proof of ownership is, within the real estate transaction?

Evidence that the title is marketable Proof of ownership is a part of the evidence of a clear and marketable title, and is necessary for the title transfer.

Having the cooperative board of directors ask questions about your personal lifestyle is ________.

Expected

What's one of the things a licensee must do in order to prepare a client for closing?

Explain who will be at the closing and what to expect.

Protects the lender or buyer from a greater range of defects

Extended coverage policy

Reduces total interest by accelerating reduction in the principal balance on which interest is calculated each month

Extra principal payments

A buyer must pay a mortgage insurance premium.

FHA

This type of mortgage allows down payments as low as 3.5%, and will insure the gap in the down payment for the lender.

FHA

GAFLA prohibits which of the following?

Financing of credit insurance

Which Georgia agency houses the Fair Housing Division?

Georgia Commission on Equal Opportunity

Which state agency in Georgia handles fair housing law enforcement?

Georgia Commission on Equal Opportunity

true

Georgia is a caveat emptor state

Obtain pre-qualification letter:

Getting pre-qualified is an informal process that involves the buyer being interviewed by a mortgage professional about her income and expenses. The purpose of this step is to give the buyer an idea of the price range she can afford. It can also let the seller know that, based on this initial information, the buyer will qualify for the loan.

So, based on the crazy intro and attached resource, what does an option clause do?

Gives the renter the right to purchase a rental or extend the lease.

Decommissioned landfills can be used for what other purposes?

Golf courses School playgrounds Parks Townhomes

What are the most commonly used indexing systems?

Grantor and grantee indexes Tract indexes

What are the four primary types of commercial property leases in Georgia?

Gross lease Net lease Percentage lease Index lease

GRM or GIM: Condominium complex with five units

Gross rent multiplier

GRM or GIM: Duplex

Gross rent multiplier

Fully amortizing monthly payments adjust upward over time. Amount of higher payments are applied to principal.

Growing equity

Jean, a police officer, was killed in the line of duty. Who is eligible for the line-of-duty property tax exemptions?

Her spouse

Used similarly to a credit card

Home equity line of credit

The property is purchased, falsely appraised at a higher value, and then quickly sold.

Illegal property flipping

the following statements is true regarding the source and availability of most government affordable home loan programs

In addition to federal government support, some loan programs are supported by local and state governments, employers, and nonprofit organizations.

What is true about carbon monoxide in the home?

It's odorless and tasteless.

Which of the following represents the real estate tax year for a tax bill provided on July 1, 2016?

January 1, 2016 - December 31, 2016

Discrimination is not allowed, even when you're selling your own property.

Jones vs. Mayer

Nicholas is a new licensee in an area where there are a lot of condominiums and dwellings geared toward tourism and seasonal residents. He tries to drum up business by sending faxes to dozens of condo complexes. Which federal act might he be violating?

Junk Fax Prevention Act of 2005

After the initial term, the remaining loan balance comes due.

Interest-Only

At first, the borrower pays nothing toward principal

Interest-Only

This type of loan is rarely used.

Interest-Only

Which of the following is a true statement about property tax exemptions for veterans in Georgia?

It adjusts annually according to an index published by the Secretary of Veterans Affairs.

Request for Verification of Deposit: Purpose

It allows the lender to verify the cash deposits listed on the applicant's loan application. it is completed by Applicant, depository institution and Lender Who completes the different parts of the form? Lender requests it and the depository institution verifies it

What is the purpose of the request for verification of employment?

It allows the lender to verify the employment listed on the applicant's loan application.

Which of the following is true about performing an Internet search on your name?

It can help you monitor your online reputation.

Why is asbestos an environmental issue?

It causes chronic lung disease.

Your home inspector Mason found some discoloration in the attic and near the windows on the second floor. Why does he think this may be a concern?

It could be a sign of fire damage.

Which one of the following is a reason mold is an environmental issue?

It damages what it grows on and can be unhealthy to humans.

Why is a home inspection recommended?

It gives the buyer a snapshot in time of the home's condition.

So what IS the point of chain of title?

It protects the buyer by ensuring that all people who have claimed to own the property actually owned it.

What's the purpose of the Community Reinvestment Act?

It requires that lenders invest in development and rehabilitation efforts that enable low- and moderate-income individuals and families to afford a home.

Capitalization rate is the return on investment other investors are receiving on similar properties in a given marketplace. Which three of the following are factors in the capitalization formula?

Income Value Rate

gross income

Income before expenses are deducted Ex. When Cari computed her gross income it looked fantastic! But by the time she deducted her expenses and found her net income, she thought, "Now that's gross!"

Ron was totally stoked. His neighboring beach houses were mostly vacant, and his favorite snacks were all going down in price at the corner market. If things kept on that path, his rent would go down, too. Score! What kind of lease does Ron have?

Index lease

An appraiser secretly works with a borrower and provides a misleading appraisal report to the lender.

Inflated appraisals

What is a pledged mortgage account?

It's a graduated payment mortgage in which borrowers deposit funds into a savings account held with the lender. Funds deposited and interest earned are used to supplement mortgage payments.

An estate that conveys possession and control; also known as a leasehold estate

Non-freehold estate

Ron can give his client the name of the best mortgage broker and accept a fee from that mortgage broker for doing so.

Not allowed under RESPA

Real estate licensees are seldom guilty of blatant discrimination, but unintentional discrimination does exist. What's one example of unintentional discrimination?

Not showing homes in neighborhoods where the client may become a victim of racial bias

Over the life span of owning a home, homeowners may be able to take advantage of what tax benefits?

Property tax deduction

What type of lien holds the highest priority level?

Property tax lien

Property taxes can be a reliable source of income for a municipality.

Property taxes are paid by a wide section of the community (residential, industrial, commercial, agricultural, utilities, etc.); therefore, the tax associated with property taxes is relatively stable and a high-revenue generator.

If you have clients who are thinking about purchasing a home and are concerned about the cost of ownership, why do they need to take what the property taxes are going to be into consideration?

Property taxes impact affordability.

How often is the policy owner required to pay for title insurance?

Once

At what point in the sales transaction process does the title insurance company issue the title insurance policy?

Once the requirements have been satisfied, and the seller has delivered the deed to the buyer

which of the following levels of radon (in picocuries per liter of air) are unsafe?

One Two Three Four Five

HMDA requires lenders to collect, maintain, and report data on which of the following

Lending practices

Volume Formulas: Rectangle Prism

Length by width by height

Identifies the dates that the management contract begins, ends, and can be renewed.

Length of the agreement

Reporting on local economic and other trends and activities will help you and the property owner plan and set goals. Which of the following trends would have the most negative impact on your property's vacancy rates?

One of your closest competitors has just finished a complete renovation of its property.

What are the advantages of tax abatements?

Lowers taxes

The resource discusses several avenues for marketing. Which of the following are appropriate ways to market a listing?

MLS Social media Craigslist Direct mail For sale sign Open houses

Mrs. Hudson hasn't heard from her tenant, Madeline, for a while. Madeline didn't pay rent for the last two months, and hasn't returned any phone calls. After delivering a written notice, Mrs. Hudson enters Madeline's apartment and finds it empty. Apparently Madeline moved out, even though the lease doesn't end for another two months. Which of the following is true regarding this scenario?

Madeline is legally obligated to pay rent, even though she's moved out.

Property Management Proposal Sections Duties provided

Maintenance and repair

A title officer will perform a title search in order to ______.

Make sure there are no clouds on the title

The gross rent multiplier is calculated by dividing the sale price by the gross monthly rent. The gross income multiplier divides the sale price by the gross annual income. Remember, the multiplier you should use is determined by the nature of the property.

One to four units: Sales price ÷ monthly gross rent = gross rent multiplier Five or more units: Sales price ÷ annual gross income = gross income multiplier

Not all leases are enforceable. In order to be enforceable, a lease of ________________ or longer must be in writing.

One year *A residential lease for one year or longer must be in writing to be legally enforceable. A month-to-month lease of less than a year can be oral and still be valid and enforceable.

Annual budget that includes income and expenses for the operation of the property

Operating budget

Right before the closing meeting happens, what should the closing attorney do to prepare?

Order final loan documents.

Which of the following tasks is a closing attorney's responsibility?

Order title work

So now that you know that the lessor and lessees' names are required on a valid lease, can you tell us more about what is required of the parties? The person signing a lease must be ___________.

Over 18 Legally competent

Which one of the following commercial property managers' duties requires that they keep the property and facilities in good condition and schedule and budget for needed repairs and upkeep work?

Oversee the maintenance of buildings on the property.

Lists the responsibilities that the owner agrees to undertake.

Owner's scope of authority

-Mortgage interest deduction -Itemized deductions and depreciation -Property tax deduction

Ownership

Vince Parker is purchasing a home for $150,000. He puts 10% down on a conventional loan. Will he be required to obtain PMI or MIP?

PMI Vince is required to get PMI because he's applying for a conventional loan and is unable to put at least 20% down toward the purchase.

Includes personal property with real property in the sale. Sometimes used for purchasing furnished condos.

Package mortgage

Identifies the names of the owner and property manager who are entering into the agreement and the current date.

Parties and date of agreement

Which of the following may a lender request to verify an applicant's work history and earning information?

Pay stub

Verify income from current job(s)

Pay stubs

Which five of these might a lender use to verify the data provided by loan applicants?

Pay stubs Verification of deposit Verification of employment Bank statements Credit report

How Special Assessments Are Paid

Pay the amount over time. Pay the amount in full.

Tenant pays a base rent, plus a percentage of gross sales.

Percentage lease

With which type of lease will you hear the term, "natural break-even point"?

Percentage lease Natural break-even comes into play with percentage leases. It means that the landlord won't charge the tenant a percentage of sales until the tenant's sales reach the break-even point.

The closing meeting has occurred—the buyer and seller are off to buy a celebratory margarita—but there are still several things that need to happen before we can truly say, "Olé." Based on this timeline, can you identify what's been completed and what hasn't?

Perform a title search - Completed Prepare closing statements - Completed Calculate prorated expenses - Completed

It's important that you present yourself both professionally and safely in your _____________.

Personal marketing plan

Misleads people into divulging confidential info by making fraudulent requests for information

Phishing

The right to use the property; to live or work there

Possession

Annual income that a property could bring in if it were leased at full capacity

Potential gross income

If Acme Properties is fully leased, it generates $252,000 in income.

Potential gross income

The Buyer's Loan Approval Process

Pre-Qualification Stage Loan Application Stage Mortgage Commitment Stage

Identify the three stages in the loan approval process.

Pre-qualification Pre-approval Mortgage commitment

______ lending was a contributing factor to the housing collapse in the mid-2000s.

Predatory

Lists the responsibilities that the owner is appointing to the property manager.

Manager's scope of authority

Assuming that each loan is to be secured by the property that is being purchased, which of the following transactions are covered by GRMFA?

Marie is refinancing her single-family home. Jon is buying a three-unit apartment complex. no commercial or business purchases are covered

How many times can a veteran use VA loan benefits?

More than once if previous loans have been paid off or properly assumed

Familial status includes families with children under age 18 living with parents or a legal custodian, people securing the custody of children, and what other group of people?

Pregnant women

Discusses the property, encumbrances, and what's covered by insurance

Preliminary report

What's part of the licensee's role in the closing process?

Preparing clients for closing

What HMDA data is available about loans?

Mortgage applications, loan amount, type of loan, and loan purpose

Periodic care to extend the life

Preventive

Fees for this protect the lender in the case of borrower default.

Mortgage insurance

What are the two primary types of deductions a homeowner who holds a primary residence is permitted to take?

Mortgage interest Property taxes

What does MLS stand for?

Multiple listing service

The organization that offers training, certification, and professional standard development to its members

NAR The National Association of REALTORS®

Amount of payment that will be applied to the loan balance

Principal

The amount actually borrowed

Principal

Current employers provide quite a bit of information to the lender. Which of these items are provided?

Probability of continued employment Gross base pay amount Overtime, bonuses, or commissions paid Likely continuance of bonus or overtime pay Information about last and next pay increase

Lists the responsibilities the property manager will perform without compensation from the owner.

Property manager's expenses

In 1934, when the Federal Housing Administration was created, it adopted the practice of crossing off cities and neighborhoods it considered risky and refused to insure loans for purchases in those areas. What is this action called?

Redlining

What's the name of a discriminatory lending practice whereby lenders limit the scope of their loans to exclude neighborhoods with certain ethnic or economic characteristics?

Redlining

Whether borrowers use a formal (shorter-term or bi-weekly mortgage) or an informal (making periodic additional principal payments) payment plan, they can significantly reduce the total amount paid back to the lender by taking which of the following actions?

Reducing the principal balance on the loan as quickly as possible

What is the name of the set of regulations used to enforce the Equal Credit Opportunity Act?

Regulation B

Tilly's lender explains to her that ____________ requires that she be provided with a disclosure statement within three days of receiving her loan application.

Regulation Z

Your resource describes some methods for owning that dream home free and clear in fewer than the typical 30 years. What are some advantages of the reduced term mortgage?

Shorter payoff term Less total interest paid

Volume Formulas: Cube

Side by side by side

Area Formulas: Square

Side × side

example of voluntary special assessment

Sidewalks requested by property owners

James Maher had been renting his condo for seven years when he discovered that it was being foreclosed upon. The foreclosure was started long after he signed the lease, so he's sure he can stay until at least June, when his lease expires. Which of the following is true regarding this scenario?

Since the foreclosure was recorded after he signed the lease, James has the right to stay in his condo until the lease is up.

gross rent multiplier (GRM).

Single-family homes and two- to four-family units are considered residential and use the...

If a private individual owner doesn't own more than three single-family homes at one time, which exemption from the Fair Housing Act could apply?

Single-family housing sold or rented without the use of a broker

Why was the Mortgage Electronic Registration Systems, Inc. created?

So lenders could avoid recording fees when buying and selling loans

Hire an accredited individual to test for asbestos.

Soil Private wells

Which of the following statements is true regarding the financing of a cooperative purchase?

Some lenders refuse to offer loans for cooperative purchases.

Software that secretly collects and sends information about your computer to others over the Internet

Spyware

The local government official who estimates the value of real property within a city, town, or village is named the ________.

Tax assessor

With a triple net lease, the tenant pays ______ separately from the base rent.

Taxes, insurance, and maintenance

A holdover tenant (someone who didn't leave when his lease expired) has this kind of possession.

Tenancy at sufferance

Who is the lessee in a lease agreement?

Tenant

Construction alterations done for commercial or industrial properties

Tenant improvements

Which one of the following is a true statement about radon testing?

Test kits are available for purchase.

What government agency handles ECOA complaints?

The Consumer Financial Protection Bureau

Office of Fair Housing and Equal Opportunity

The FHEO administrates and enforces federal fair housing laws; it also establishes policies to ensure equal access to housing choice and opportunity.

How does the Office of Fair Housing and Equal Opportunity support real estate consumers?

The FHEO provides support for protected classes through the fair housing complaint process.

Tax assessors have a big job when it comes to keeping tax data current. But they do have some help when it comes to property data. What factors are helpful in this regard?

Reported sales price State aid Building permits Onsite visits

Liz is assisting a client who's looking for a commercial space to lease. Which of the following duties will Liz be expected to perform on her client's behalf?

Represent her client's interest in all negotiations and transactions regarding the lease of the property.

What's the purpose of the Home Mortgage Disclosure Act?

Requires financial institutions to maintain, report, and publicly disclose information about their mortgages

Tilly is applying for a loan so she can buy the home of her dreams. She protects herself by making sure she understands the facts and her responsibilities regarding a mortgage. Meanwhile, TILA protects Tilly by ___________.

Requiring lenders to make full disclosure of the terms and conditions in any offers of credit

Phyllis lives in an apartment and has a lease with the landlord. What type of property manager is Phyllis most likely working with?

Residential

As funds are drawn by the homeowner over time, the bank gains ownership of the property

Reverse annuity mortgage

Monty retired 10 years ago and would like to see the world, but his retirement account won't support his desire to travel. Monty heard of a loan that would allow him to take advantage of the equity in his home by getting monthly payments from the bank by using his house as collateral. What is this type of loan called?

Reverse annuity mortgage (RAM)

-Capital gains -Capital losses

Reversion

When reviewing a title commitment, where will you find basic details about the transaction?

Schedule A

The tenant pays this in case of breach of lease or damage to the property.

Security deposits Tenants often pay security deposits to protect the landlord in the case of a tenant's breach of contract or damage to a property. The landlord is required to keep the security deposit in a bank account and return what isn't used at the end of the lease term.

What's a good way to learn the property management side of real estate?

Seek a mentor's advice

Who Closes Which Contracts? Close on the listing agreement

Seller and seller's agent

Seller and Buyer Closing Costs at a Glance

Seller: State and local transfer taxes Broker commission Attorney's fees Recording documents to clear title Satisfaction of existing liens Buyer: Appraisal and credit report fees Inspections Mortgage recording tax Title insurance Attorney's fees Loan fees Recording fees Mortgage insurance Tax reserves

How long is the mandatory cooling off period in Georgia during which a buyer can rescind a timeshare sales contract?

Seven days

Decrease in capital resulting from the sale of property owned one year or less -Net loss may be deducted from taxable income to offset capital loss of one year or less.

Short-term capital loss

Naomi is completing a residential loan application. On the application, she lists her assets and liabilities so that her net worth can be determined. What's net worth?

The difference between a borrower's items of value and obligations

Maria is applying for a loan. Maria's employer has been asked to provide employment verification. Who else must complete parts of the request for proof of employment form?

The lender

What's the definition of front footage?

The number of linear feet that the property has on the street

capitalization rate / cap rate

The return on investment that other investors in a given marketplace are receiving for a similar property; expresses the income a real estate investment produces as a percentage of its price Ex. When she worked with her investor clients, Maggie regularly calculated cap rates for similar properties.

Proration is the process of deciding who owes what at closing. For the purposes of proration in Georgia, who owns the property on the day of closing?

The seller owns it.

What is chain of title?

The sequence of historical transfers of title to a property

Laura's property is subject to a special assessment. Which of the following is true?

The special assessment must benefit Laura's property.

Which of these is a TRUE statement regarding truth in advertising violation penalties?

The Federal Trade Commission determines the severity of the penalty based on the severity of the violation.

Buydown Advantage

The advantage of a buydown is that it can help the borrower qualify for a larger loan, because it keeps housing payments lower for the first few years. The mortgage payment always includes principal and interest, reducing the loan balance over time.

A taxpayer filing an appeal based on uniformity of assessment would use what as evidence?

The tax assessment was unfairly assessed compared to similar properties

What's a title commitment?

The title insurance company's promise to issue a title insurance policy to the buyer

True

The underwriter determines if a loan is approved or rejected.

How will the buyer or seller know where and when the closing is being held?

Their agents will inform them of the date once it's set.

Tina is applying for a home loan. In order for child support payments she receives to be considered in the income evaluation by her lender, what must be true?

There must be a consistent track record of payment or the payments must be the result of a court order.

Marketing Plan: Market analysis section

There's a current vacancy rate of 20% in apartment complexes comparable to ours due to the businesses that have moved out of the area.

What does GAFLA require regarding late fees?

They must be clearly specified in loan documents.

Sophia and Antonio are expecting twins. They want to sell their old house and buy a larger home using a conventional loan. In order to be sure they'll get the PMI waived, what will they need to have?

They should have a loan-to-value ratio of 80% or less.

Which of these is illegal: disparate impact or disparate treatment?

They're both illegal.

Property Manager Types Resident manager

This type of manager is sometimes hired by the owner to live in the apartment building, working on a salary and rent stipend.

Property Manager Types Individual property manager

This type of manager might be employed by a property manager or an owner and manage a single property.

Property Manager Types Building manager

This type of manager might work for a property management firm or work as a sole proprietor.

The searches associated with this item verify that the seller has legal ownership of the property.

Title insurance

Notes the location of the CC&Rs recorded with the county

Title report

Why might a property owner ask you to prepare a report showing the trend in rental delinquency rates?

To assess the adequacy of tenant income screening processes

What is the purpose of acknowledgment?

To ensure signing parties are who they say they are.

Why do most lenders require that the borrower establish and maintain a reserve of funds?

To ensure sufficient funds for taxes and insurance in case of a missed payment

What is the purpose of marketable title acts?

To make creating abstracts easier and more accurate

Marketing Plan: Marketing approach section

To market using current tenants, we'll offer a free month's rent to any tenant who brings in new tenants who sign a six-month lease.

Why would a mortgage lender have a title policy?

To protect its investment on a loan it has extended on a property

Jake leases a commercial building from Tim. Jake is responsible for maintenance, insurance, and taxes. The rent increases every five years to compensate for increases in these items. This is called an escalator, or participation clause. What kind of lease does Jake have?

Triple net lease

A lease is both a conveyance and a contract.

True

A nondisturbance clause ensures that a lease contract between the tenant and the landlord will continue under any circumstances. This is done primarily to protect the renter from eviction by the mortgagor if the property's foreclosed upon.

True

A public records search can include whether a couple has filed for a divorce or is going through foreclosure, how much they still owe on their home, and whether they've made improvements without a permit.

True

Brokers are not required to use the MLS.

True

Foreclosed properties may have hidden title issues.

True

In some areas, documents can be scanned and uploaded to a courthouse using a computer.

True

Recording makes ownership rights and interests a matter of public record.

True

Tenants must give 30 days' notice before terminating a lease; landlords must give 60.

True

Sellers of new home construction must disclose certain insulation information. What three pieces of information must be disclosed?

Type Thickness R-value

If a plea to the local assessor doesn't provide resolution, the taxpayer may appeal the taxation amount. What are the four basic reasons for an appeal?

Unfair assessment Value oversight Taxability oversight Denial of homestead exemption

This provision tells tenants what they're allowed to do in and around the property.

Use restrictions Use restrictions clarify how the tenant can use the property. For instance, they may provide guidance on how many occupants are allowed or if a tenant can operate a business from home.

What type of timeshare involves a buyer agreeing to pay a one-time purchase price and an annual maintenance fee, and in return selecting an accommodation time and having the right to use the unit for a specified number of years?

Vacation

Requires property owners to prove that their property's assessed value was greater than the property's fair market value.

Value

Prior to the closing, one final inspection should take place. This is also known as the final what?

Walk-through

define these common land measurements: 43,560 square feet

acre

When a borrower defaults on an FHA insured loan, lenders file a claim for payment with FHA. How is payment of these claims funded?

With funds collected from the mortgage insurance premium (MIP) that each FHA borrower pays monthly

When does title legally change hands?

With the transfer of the deed from the seller to the buyer

Which of the following can be a valuable tool for protecting your personal safety, but can also be a risk?

Your cell phone

What two conditions create a prime environment for mold growth?

moisture Lack of air circulation

marketable title

has no defects or clouds to which a reasonable buyer would object.

Self-help eviction

is when a landlord acts without a court's involvement, violating statutory law by physically removing the tenant and the tenant's belongings from the premises, or prevents the tenant from accessing the premises by changing the locks, for example. It is illegal for landlords to lock tenants out of their apartments, shut off the utilities, remove apartment doors, or remove the tenant's possessions without a court order. Landlords who use illegal methods to force tenants out of their buildings are subject to both civil and criminal penalties. Tenants are entitled to recover triple damages in a legal action against the landlord, and are also entitled to be restored to occupancy.

Do Not Call Implementation Act of 2003

was enacted in response to consumer concerns regarding unwanted telemarketing calls.

assessed values

which are used to determine property tax rates, are also used to calculate state aid for education, which is the second largest revenue source for schools.

adjusted basis

which is usually what you paid for the asset plus or minus some items, is a capital gain or a capital loss.

This expense is usually paid by the seller to the seller's agent, who then pays the cooperating broker (the buyer's broker).

Broker commission

Rules that ban certain races from living in certain areas are unconstitutional.

Buchanan vs. Warley

You've just been ordered to cease and desist your deceptive advertising practices. Which of these statements about this penalty are true?

-If you receive a cease-and-desist order, you may be required to provide substantiation for any claims in future ads. -If you receive a cease-and desist order, you must stop running the deceptive ad immediately -The financial penalty for a cease-and-desist order includes fines up to $43,792 per ad, per day if you violate the law in the future.

these statemments are true

-In a reverse mortgage, the lender makes payments to the homeowner and slowly gains ownership. -Balloon loans can be paid as interest-only or partially amortized until the final balloon payment is due.

Condominium Facts

-A developer signs a declaration to create a condominium. -Owning a condominium unit brings fee simple ownership rights. -A condominium unit can be owned in different ways, such as in severalty, as joint tenants, or tenants in common.

What is a bridge loan?

-temporary loan that provides additional funds to an existing loan until permanent financing can be obtained. -A loan that may be used to purchase a new home when the existing home sale hasn't yet closed.

The monthly payment remains relatively consistent through the entire loan term.

Budget (Amortized)

This is the most common type of mortgage loan.

Budget (Amortized)

Find the difference between 90% and 2/5.

0.5 Before you can figure out this problem, you must first convert both numbers to decimals. Then you need to make sure you line them up properly (0.90 - 0.40 = 0.5).

Which of the following two are possible loan origination fee percentages borrowers might expect to incur?

1% & 3%

The property ownership life cycle consists of three primary stages:

1. Acquiring the property 2. Owning the property 3. Reverting/selling the property

In the resource, Mitch describes the general process toward getting approved for cooperative ownership. Which of these is the process he describes?

1. Contract of sale accepted. 2. Cooperative application and board package submitted. 3. Interview conducted.

Loan Application Stage

1. Find a home 2. Receive pre-approval letter: 3. Complete the Uniform Residential Loan Application: 4. Credit report: 5. Appraisal: 6. Title search: 7. Obtain title insurance: 8. Obtain homeowners insurance:

Calculate the volume (in cubic centimeters) of a rectangular prism that's 5 cm long, 4 cm wide, and 5 cm high.

100 centimeters cubed

If a property has been sold through a tax sale, how long does the original owner have for redemption?

12 months

The borrower's identity is concealed behind someone else's name and credit history.

Straw buyers

Loan origination points

are applied to recover the costs of making the loan. A lender may charge, say, one point (1% of the loan amount) just for doing the work of putting the loan together.

APN

assessor's parcel number

National Flood Insurance Program (NFIP)

floodplain

point

is a fee equal to 1% of the loan amount

A quit claim

quits someone from claiming interest in the property ex. -Sharon wants to give her son the property she inherited from her aunt. -Meredith is divorcing, and she's received the house in the settlement. -Oops. Shelby just noticed that the grantor misspelled his name on the deed.

Discount points

are one way that an interest rate buy down is accomplished. Discount points can be paid by borrowers, or others, to temporarily or permanently lower the interest rate of the loan. Discount points are calculated at 1% of the total loan amount, and act to both decrease the interest rate for the borrower, and increase the yield to the lender.

buydown

is essentially a lump sum prepayment of interest to the lender at closing that buys down the interest rate to below the market rate, either temporarily (e.g., for the first one to three years) or permanently (for the life of the loan). Most buydowns are temporary.

Budget mortgage:

A typical amortized mortgage loan that includes principal, interest, taxes, and insurance in each (usually monthly) amortized payment. A common acronym for this kind of loan is PITI (principal, interest, taxes, and insurance).

The interest rate fluctuates based on the economic index to which it's tied.

Adjustable-rate mortgage

Amortized loan:

Any loan in which periodic payments go toward both principal and interest. In a typical amortized loan, most of the initial payments go toward interest, with ever-increasing amounts going toward the principal (the loan balance), until the loan is paid off. For instance, a 30-year fixed-rate loan will be fully amortized in 30 years.

If Acme Bank, a primary lender, wants to sell its loans on the secondary market, it would be easier for it to do so if its loans meet ______.

Fannie Mae and Freddie Mac guidelines

Darryl's recently obtained a loan for the family farm. The lender will most likely sell the loan to __________________.

Farmer Mac

______ works with lenders to make long-term credit available to homeowners and businesses in agricultural and rural communities, including farmers and ranchers.

Farmer Mac

The first step is to calculate the first month's interest. Which formula do you need?

Principal balance x annual interest ÷ 12

VA loan

is another type of government loan and may involve 100% financing (0% down). However, VA loans never require mortgage insurance

Low documentation (low-doc):

This type of loan is designed for the self-employed or those paid on commission. A high credit score and slightly higher interest rates are characteristic of these types of loans. Since 2008, the standards for mortgage qualifying have become stringent to the point that low-doc loans are now rarely available.

Blanket mortgage:

Used in commercial applications. Two or more properties are pledged as security for loan repayment in a blanket loan. A release clause allows parcels to be removed from the lien, usually when the loan balance lowers to a specified amount.

Home Equity Line of Credit:

often called a HELOC, this loan isn't used for a home's primary financing, but is based on the equity in a home. Borrowers typically use HELOC for major purchases such as vacations, tuition, or home repairs or upgrades. The entire credit line may or may not be disbursed up front. Borrowers use what they need at a given time. Most HELOCS require a monthly interest-only payment. The balance may be paid back over time or as a lump sum (balloon payment) by the end of the term.

You have a listing for a three-bedroom, 1,000-square-foot home that needs work. Which description is better?

"Have you been looking for a home closer to the city? This cozy cape is perfect for commuters - only five minutes from public transportation. Close to shopping and other amenities, with a few small updates this house can be the home of your dreams. "

This time, Thad tossed out an example that's the most difficult for new licensees. "I know you technically can't show me just the white neighborhoods, but I'm paying for your help. My time is valuable, and I don't want to waste it looking at houses in neighborhoods I wouldn't live in. If you can't screen properties for me the way I want you to, I'll find someone who can." Which response is the appropriate one?

"I'm sorry that you feel that way. If I can't change your mind, I think we should terminate our agreement."

How would you respond if your seller makes the following request? "We've lived here 10 years and love our neighbors. They're really concerned about the changes happening to the blocks around us, so we want to be careful about who we sell this house to. You know what we mean. You'll help us find the 'right' kind of buyer, won't you?"

"It would be illegal to limit the search based on race or religion or anything like that, but I promise I'll find you the most qualified buyer I can, and we'll sell this house for the highest price possible."

Now Thad pretended to be a seller instead of a buyer. "We've lived here 10 years and love our neighbors. They're really concerned about the changes happening on the blocks around us. We want to be careful about who we sell this house to, as a consideration to the friends we're leaving behind. You know what we mean? You'll help us find the 'right' kind of buyer, won't you?" Nancy stumbled with this one, as well. Eventually, she found a suitable response. Which one is it?

"It would be illegal to limit the search based on race, religion, or anything like that, but I promise I'll find you the most qualified buyer I can, and we'll sell this house for the highest price possible."

Jones vs. Alfred H. Mayer Co. addressed a specific mindset that you'll still see today. Which one of the following statements is legally incorrect, based on the verdict of Jones vs. Mayer?

"It's my property. I have the right to choose who I sell it to, and that means I can discriminate against whomever I want."

Cletis and Marcie's loan is for $35,000 and their lender charges a 3% loan origination fee. How much will they pay in loan origination fees at closing?

$1,050

If your clients are considering financing $200,000 with a 30-year loan at a 5% interest rate, how much would their principal and interest payment be per month? Plug in the numbers using the amortization chart in your resources to determine the payment per month. Remember: The monthly payment multiplier is per $1,000 of the mortgage.

$1,073.64 Remember to divide $200,000 by 1,000. Then multiply the factor (5.36822) by 200.

In Georgia, buyers pay an intangible tax whenever a mortgage loan is secured by real estate. Calculate the intangible tax that Vince, our buyer, will pay on the purchase of a $450,000 residential property. He is financing $360,000.

$1,080 The intangible tax is $1.50 per each $500 or part thereof based on the face value of the note (which, in this case is $360,000, because that's what the buyer is financing). So in this case, it's ($360,000 ÷ 500) x 1.5.

Bryant Parker is purchasing a three-bedroom villa with a fair market value of $120,000, which has an assessed value of $48,000. If the mill rate is 30, about how much will Bryant pay annually in taxes?

$1,440 divide assessed value of 48,000 by 1000. You'll get $48. Then, multiply 28 by the mil rate and then you'll get 1440

Simi is a buyer's agent, and she'll receive a split of the commission paid from the sale of Tanner's listing. The property sold for $425,000. The total commission paid from the sale is 6% split evenly between the buyer's and seller's brokerages. Simi has an agreement to give her broker 20% of the commission she receives. How much will Simi be paid from this sale?

$10,200

A seller still owes $45,000 on her mortgage but wants to net $50,000 after the mortgage and 5% commission are paid. What's the minimum the house must sell for to net the seller the desired amount?

$100,000 To find the sales price, take the amount the seller wants to net plus the amount of the mortgage still owed ($50,000 + $45,000) and divide it by 95% or .95. This amount is 100% minus the 5% commission rate.

Eager to begin building her business, Dawn's started a telemarketing effort. If she violates federal do not call rules, she could be fined up to how much per call?

$11,000

Bonnie is another licensee with Top Hat Realty. She sells a house for $599,990. Her broker receives half of the 7.5% commission on the sales price, with the other half going to the cooperating broker who brought the buyer. Bonnie receives 65% of the amount that goes to her broker. How much is Bonnie paid for this sale?

$14,624.76 First, find the total commission: $599,990 x 0.075 = $44,999.25. Top Hat Realty receives half of that, or $22,499.63. Next, find 65% of the amount paid to Bonnie's broker: $22,499.63 x 0.65.

Vince is buying Karen's house for $150,000. He has a down payment of $35,000 (lucky Vince!), so he's financing $115,000. How much is his transfer fee?

$150

Let's look at a few more scenarios on this and the next couple of slides. Seller Angela's property is assessed real estate taxes of $900 for the year. Closing is held on February 29th (that's right, it's a leap year). What amount does Angela owe for taxes accrued and not yet paid that will appear as a debit for the seller and a credit for the buyer at closing? Use the statutory year and assume that Angela owns the day of closing.

$150 Yes, that's right! You calculate the taxes per month ($900 ÷ 12 = $75), and then calculate the accrued taxes owed and not yet paid by the seller ($75 × 2 months = $150).

Cletis and Marcie are thinking about paying off their mortgage loan early, even though a pre-payment penalty will apply. After they looked at their loan contract, they discovered that their lender figures the pre-payment penalty based off of the remaining principal due. The lender charges a 2% pre-payment penalty. Cletis and Marcie's outstanding principal is $8,000. How much will they owe in penalty fees?

$160 multiply 8,000 by .02

Georgia also charges an intangibles tax charge on the value of any mortgage debt created by a transaction. If a property were financed at $60,000, what would the intangible tax amount be?

$180 divide 3 by 1000 (.003) and multiply the financing

The Moores are purchasing a home for $300,000. They're financing $250,000. Their lender charges a loan origination fee of 1%. How much will they pay in loan origination fees at closing?

$2,500

Let's say you're working with your clients to determine the value of their property. You measured the front feet and found the total to be 150 feet, and you know that the value per front foot in the neighborhood is $1,400. Calculate the front foot value.

$210,000 *Make sure you multiple the front footage by the value per front foot.

A property in Georgia sold for $225,000. What state transfer tax would apply to this transaction?

$225 (divide by 1,000)

The capital gains exclusion for couples filing jointly who have lived in their primary residence at least two of the five years immediately preceding the sale of the home is up to $500,000. What is the capital gains exclusion for single taxpayers?

$250,000

A buyer is purchasing a property for $400,000. His loan-to-value ratio is 80%. The lender also charges a one-point loan origination fee. How much is the loan origination fee?

$3,200

Calculating Points Bob and Mary are financing $160,000 for a new home. Their lender will approve an interest rate of 6% if Bob and Mary pay two discount points at closing. How much is this?

$3,200 A discount point is 1% of the loan amount. Bob and Mary are paying two points (or 2% of $160,000).

A Top Hat licensee, Braxton, is having a good week: The property he'd listed sold for more than the list price! The commission the seller paid is $18,720. If the commission rate is 6%, how much was the selling price for this home?

$312,000

In Georgia, three taxes may apply to the transfer of real estate. The third tax is the mortgage tax, and it's a flat fee of $10 imposed on any loan subject to the Georgia Residential Mortgage Act. Philip and Evelyn purchased a house for $137,500. They had to finance $60,000, and they've agreed to pay the conveyance tax in their agreement with the seller. How much total tax will Philip and Evelyn have to pay to transfer the property to their name?

$327.50 get the transfer tax and then add 10 dollars for the mortgage tax

Maurice received an offer of $480,000 for his home. The commission on the sale is 6%. Maurice's mortgage payoff is $78,500. He has additional closing expenses totaling $2,200. What will Maurice net from the sale of his home, rounded to the nearest whole dollar?

$370,500

You built the formula. Let's play with some numbers now. Your seller wants to net $47,500 after the 5% commission is paid, but before other closing costs are figured in. At what price does the home need to sell for the seller to net this amount?

$50,000 A sales price of $50,000 will net the seller $47,500 after the 5% commission is paid.

A lot with dimensions measuring 400 feet by 500 feet sold for $275,000. What was the cost per front foot?

$687.50 per front foot *Remember, when given two dimensions for a piece of land, the first number is the frontage or width of the property. Take the price, $275,000, and divide it by 400, the frontage measurement.

Similar properties in the area of Jimmy's $800,000 property are returning a rate of 9%. What could he anticipate his net annual income to be?

$72,000 $800,000 times 9% is $72,000.

A property has 100 units and is 95% occupied. Total vacancy and collection loss equals 6%. What does the average rent per month have to be to achieve a potential gross income of $900,000 for the year?

$750 Remember, potential gross income assumes a fully occupied property (100 units) and does not factor in any losses or vacancies (no deductions). Divide $900,000 by the number of units (100). This is the total rent income needed to achieve the potential gross income. Divide this number by 12 (number of months in the year) to get average rent per month.

Let's try a slightly more difficult calculation. This time, seller Ricky's property is assessed real estate taxes of $1,400 for the year. Closing is held on August 15. If Ricky owns the day of closing, what is the amount that Ricky owes for taxes accrued and not yet paid based on the statutory year?

$875.04 First, you calculate the taxes per month ($1,400 ÷ 12 = $116.67), and then you calculate the accrued taxes owed and not yet paid by the seller for the number of full months ($116.67 × 7 = $816.69). However, because you have a partial month, you also have to calculate the taxes per day ($116.67 / 30 = $3.89; $3.89 × 15 = $58.35) and then add that to the taxes per month amount ($816.69 + $58.35 = $875.04).

Kay and Roger are thinking about paying off their mortgage loan early. They looked at the loan contract and found that their lender will charge them a pre-payment fee based on the balance owed and a percentage of interest paid within six months. The lender charges 60% of six months' interest. Kay and Roger's mortgage has $50,000 remaining and they pay 6% interest. How much would they owe in penalty fees?

$900 *First, divide the interest rate in half (6 ÷ 2 = 3). Then multiply this value by the outstanding balance to get interest paid in six months ($50,000 x 0.03). Next, multiply this result by 60% to find the pre-payment penalty ($1,500 x 0.60).

What Amount Can They Afford? You have an appointment to meet with Ramon and Willis, a young couple who are in the early stages of the homebuying process. They earn a gross monthly income of $3,600 and a net income of $2,900. The lender the couple is working with is conservative and only funds loans at the low end of the housing debt-to-income ratio. How large of a house payment can Ramon and Willis afford (according to their lender)?

$900 *Lenders consider gross income, not net income. Take their gross income of $3,600 and multiply it by the low end of the housing debt-to-income ratio 25% (.25).

Real Estate Settlement Procedures Act

(RESPA) The act impacts all settlement providers, including real estate licensees, lenders, title companies, closing attorneys, and appraisers. RESPA's ultimate goals are to increase consumer awareness and keep the open market just that—open.

Jen and Charley are buying a piece of property. They haven't been able to save much for a down payment, so they don't qualify for traditional financing. The seller has agreed to an installment sale method—or land contract with a $1,000 down payment. This situation benefits Jen and Charley, as well as the seller. Connect each statement to its corresponding advantage or disadvantage.

+ seller / - buyer: If Jen and Charley are unable to make the payments, the seller can keep all of the proceeds received and repossess the property. Disadvantage for buyer: Jen and Charley don't have ownership in the property until it is completely paid off. Advantage for seller: The seller can avoid paying federal capital gains all at once and can pay them through percentage payments each year. Advantage for buyer: The $1,000 down payment Jen and Charley are making on the property is much less than it would be for a traditional mortgage loan.

Clay and Myra just bought a home. Based on where they are in the property ownership life cycle, which tax-related item is likely to be of the most interest to them?

- Points deduction In the acquisition stage of property ownership, owners are typically more concerned with the deductibility of points they paid.

Georgia law requires a condo sponsor to relinquish control to a board of directors as soon as which two of the following things happen?

-80% of units are sold -Three years after closing

these statements are true about the Torrens system

-A Torrens search only goes back to the last time a title search was performed on the property. -The Torrens system assumes the last search performed was done accurately and legally. -A Torrens certificate is issued and lists the state as the title guarantor.

Initiate a Quiet Title Suit

-A cloud has appeared on the title to the property you own and want to sell. You need to locate a person who may have some claim on the title and obtain a document from that person to prove that a debt, for instance, has been paid or corrected. -A cloud has appeared on the title and, as the owner, you want to remove it.

these statements about quitclaim deeds and quiet title suits are true,

-A cloud on title caused by a foreclosure or inheritance claim may be resolved by the execution of a quitclaim deed. -A cloud on title caused by unpaid property taxes can be removed by paying the taxes.

items needed for a marketing plan (property management)

-A market analysis that compares the competition to your rates and the condition, amenities, and location of your property, as well as future trends -A building analysis that examines current and historical vacancy rates and tenant profiles -A measurable goal statement and the marketing techniques you are going to use to achieve the goal -A marketing budget that is realistic and that will enable you to reach your goals -A timeline for reaching your ultimate goal -A way to measure how well your plan succeeded and what you need to do differently going forward

Nancy's ads talking up the good things about the neighborhood resulted in a handful of calls. She spoke with Mrs. Jones, an African-American woman who said her family of five is looking for a four-bedroom, two-bath home with a great yard for their kids. After getting all of her agency paperwork in order, Nancy is going to send over a few area listings from her brokerage that might meet Mrs. Jones' needs. Which listings should she send?

-A newly listed four-bedroom, two bath condo that has African American neighbors. -A five-bedroom, two-bath townhome with walking trails and a community garden. -A four-bedroom, two-bath home with a small yard that's near the most prestigious school in the area. -A four-bedroom, two-bath home that could use a little work, but has a large back yard. Nancy thinks it would be better if the yard had a fence though, so it would be safer for kids.

Property Manager's Responsibilities

-A property manager is responsible for overseeing all activities related to the owner's property. -The property manager acts as the owner's fiduciary. -As a general agent for the owner, the property manager is authorized to perform all of the duties related to the property on the owner's behalf. -The primary function of the property manager is to produce the greatest net return for the owner.

Prohibited Actions

-A property manager refuses to show a property to a blind person with a guide dog because the owner doesn't allow pets. -A homeowner makes a room available for rent in her residence and specifies in the online advertisement that only women need apply. -A selling agent doesn't respond to a request to view a listed property because the person's foreign accent in the voicemail is very thick. -While reviewing offers with the sellers, an agent mentions that one of the potential buyers looked like a man wearing women's clothing. The sellers refuse to consider the offer, because they don't think the neighbors would be happy if they sold their house to someone who might be transgender or gay. -A landlord lies to a young pregnant woman and tells her there are no units available in the complex because the only one available is right next to his apartment, and he can't stand the sound of crying babies.

Which option best describes marketable title?

-A title that is free and clear of liens and only subject to loan payoff and any taxes owed

At closing, a property tax bill of $450 for the previous tax year remains unpaid. Is this an accrued or a prepaid expense? How will it appear on the settlement sheet?

-Accrued -Debit to seller, credit to buyer

facts about Operating Budgets

-An operating budget helps maximize profitability and avoid unforeseen major expenses and repairs. -An operating budget helps with planning and projecting for capital improvements. -An operating budget provides a baseline, as well as performance targets. -An operating budget provides income and expense projections based on the previous year's numbers. -There's a budgeted expense for having to physically evict tenants. -The projected income takes into account a specific percentage of anticipated vacancies, as well as projected gross income and expenses.

Let's talk through closing costs for a few different buyers. Suppose you have a buyer who decides to purchase a brand new Brighton Arms condominium for $1 million. Which of these costs can she expect to pay at closing?

-Appraisal -Transfer tax -Mortgage recording tax -Title insurance

What are the drawbacks of tax abatements?

-Area where an abatement is in place may not be a prime location -Unclear picture of what actual tax costs will be -Potentially significant increase in taxes after the abatement period ends

Purchase Title Insurance

-As the buyer, you want to be reimbursed after the sale if a title issue does arise. -As the buyer, you want to protect yourself before the sale.

the following are distinguishing characteristics of co-op living

-Attached residential building -The owner owns no real estate but instead owns shares

goals of abatement programs.

-Attract new homeowners. -Retain residents of a community. -Reduce development costs for homeownership. -Stimulate community revitalization.

So, you want to become a community association manager (CAM). here are the following requirements:

-Be a resident of Georgia. -Complete the state-mandated educational requirements.

the following is true about MLS usage & brokers/brokerages

-Brokers use the MLS to contribute and have access to a pool of listing information. -Each listing that a broker member inputs describes the terms of cooperation and compensation, if any. -Per agreements, individual brokerages exchange permission to display one another's MLS listings on their own company websites, as well.

the following statements about capping are true

-Capping is what is done to a landfill when the landfill is put out of commission. -Capping involves covering a landfill with soil, and then planting grass to enhance the site's aesthetic value. -Ventilation pipes are placed from the base through the cap to expel any accumulated natural gases caused by the decomposition of the waste. -Test wells are installed on the site and monitored to ensure that the groundwater doesn't become contaminated.

Sales of homes built prior to 1978 require licensees to provide buyers with a pamphlet about the hazards of lead paint. What makes exposure to lead paint such a hazard that this requirement exists?

-Children under the age of six are more severely affected. -Lead can cause behavior problems and learning disabilities in children. -adults are affected

the following is true about conveyance taxes

-Conveyance tax is tax that is applied to the transfer of property from one person to another. -The conveyance tax is payable when the deed is recorded. -Once paid, the clerk or deputy clerk of the superior court will attach a certification that the tax has been paid to the deed. -The transfer tax rate is usually calculated by multiplying the tax rate by the number of $1,000s in the sales price, or by a specified percentage.

Mrs. Peach clearly understands the order of the steps she must take to evict John. She's ready to send the eviction notice. What should she be sure to include in the written notice?

-Date of notice -Amount of rent due -Reason for the eviction notice

Which documents must be recorded in the county land records office to create a condominium in Georgia?

-Declaration, floor plans, plats

Disclosure Package Info

-Description of property -Unit size, floor plans, property amenities -Landscaping and common area maintenance

Requirements Under the R-value Rule

-Determine and disclose each product's R-value and related information (e.g., thickness, coverage area per package) on package labels and manufacturers' fact sheets. -Ensure R-value claims to consumers about specific home insulation products be based on specific R-value test procedures prescribed under the rule.

As a real estate agent, you have certain responsibilities when it comes to helping your clients understand property tax issues. Here are the real estate agent's responsibilities:

-Disclose to buyers what their property taxes will be -Disclose to buyers that a sale may prompt a reassessment -Understand how property taxes are calculated -Investigate tax abatements and tax assessments -Check the title report for property tax liens -Be aware of any tax exemptions or deductions that may apply to your buyers -When asked about the amount of taxes due, quote the tax due before all exemptions are taken

the statements are true

-Disclosing that a previous owner or resident had HIV or AIDS is a fair housing violation.

Characteristics of a Lender Policy

-Doesn't make exceptions for ownership claims that could be refuted or confirmed through a visual inspection of the property -Is assignable to future loan holders (for example, if the loan is sold to another lender in a loan package on the secondary mortgage market) Only offers protection up to the amount remaining on the mortgage loan

the following mean tax sales

-Doesn't require the creditor to go to court. -The past owner has up to 12 months to redeem the property after the initial sale.

the following is true about Tax Abatements

-During an abatement period, existing properties pay the usual property tax only on the property's pre-improvement value. -Existing properties may pay a lower amount on the total improved value during the abatement period. -After the abatement period ends, all properties are assessed at their full tax-assessed value.

Bylaw Info

-Duties of the board and scope of their powers -Annual meeting dates for unit owners -Rules or restrictions for pets, subletting, use of common areas

Leading up to closing, what responsibilities do both the seller's and the buyer's agent share?

-Ensure that all deadlines are being met. -Ensure that all agreed-upon repairs have been completed. -Ensure that all paperwork has been executed and delivered. -Ensure that all contingencies have been cleared.

Because title defects can snarl closings and even crop up after closing, making a resale problematic, what can a buyer do to avoid inadvertently buying a house that doesn't have a marketable title?

-Ensure the title company pulls a preliminary title report that would reveal any title defects. -include a contingency in the sales contract that states a title search will be conducted and show clear marketable title before the sale is complete.

Corrine and Soroush need to prepare their clients for closing. Here is how their agent can help them prepare for closing:

-Explain who will be present at the closing. -Describe what happens at the closing so your client has an idea of what to expect. -Tell your client what to bring to the closing, including identification, certified or cashier's check, and other necessary documentation. -Identify who will manage the closing.

The Georgia Fair Housing Division has requirements for an affected person to file a complaint. this is what has to be present for a complaint to proceed with the Fair Housing Division.

-Filing date within one year of alleged discrimination -Written and signed complaint -A complainant

Turns out even after all the great information Consuela provided, there's still a lot to know about condo ownership, such as the consequences if a unit owner fails to follow the condo association rules. Which of these are possible actions?

-Fines -Liens -Court hearing -Legal bills -Loss of property

The seller must provide certain information to the buyer in a disclosure package, and the buyer has seven days after all items are received to void the sales agreement. Which items are required to be in the disclosure package?

-Floor plan -Articles of Incorporation -Declaration -Bylaws -Budget

You'll design your own business cards soon. We've included information about business cards in the resource attached to this slide. What should you include?

-Full name -License type -Brokerage name -Brokerage address -Brokerage phone number

Selecting the Right MLS

-Generally, all brokerage firm members belong to at least one MLS. -Brokers generally select the MLS that carries the greatest number of listings in their market area.

Now that you've had a chance to learn about timeshare rules and regulations, let's see how much you remember. these statements about timeshares are true

-Georgia is among many states that have adopted timeshare regulations. -Many of Georgia's timeshare regulations mirror the Model Timeshare Act. -Timeshare laws in Georgia require consumer disclosures, the ability for the buyer to rescind the contract, and timeshares taxation. -If you have a client who's considering purchasing a timeshare, advise them to seek legal counsel to review all documents before signing.

the following are characteristics of Grantor and Grantee Indexes

-Grantor and grantee indexes show where to locate corresponding documents. -Grantor and grantee indexes are filed by grantor and grantee name.

the following statements about groundwater are accurate

-Groundwater forms the water table—the level at which the ground is saturated. -Severe weather can result in contaminated groundwater. -Groundwater is water that is accessible under the earth's surface.

The Home Mortgage Disclosure Act (HMDA)

-HMDA data is public. -Redlining is a discriminatory lending practice whereby individuals from neighborhoods with certain economic or ethnic characteristics are denied home loans.

these actions are ones that Prudence should take as she grows her real estate practice

-Have her broker supervisor review her qualification process. -Attend periodic fair housing continuing education. -Proofread all advertisements to ensure they don't include prohibited words or phrases. -Advocate for her clients regardless of their protected class status.

There are some actions homeowners can take to protect their homes from pests, but there are also some actions they shouldn't take. Looking at these actions, what can homeowners do?

-Hire professional to perform annual pest inspections -Ensure crawlspace or dirt basement has vapor barrier in place -Examine home for signs of infestation or damage -Keep unwanted moisture out of home

the following are true regarding Mortgage Interest and Property Tax Deductions

-Homeowners with loans taken out prior to December 14, 2017 aren't subject to the new $750,000 mortgage debt limit. -For tax years 2018 to 2025, homeowners can only deduct home mortgage interest on the first $750,000 of mortgage debt ($375,000 for married filing separately). -Homebuyers can deduct property taxes paid on their income tax returns.

these items are on the rent roll

-How much each tenant is paying -List of all current tenants -Type of unit each tenant is paying for -When the lease is up

What Happens to a Lease During a Foreclosure? Foreclosure of a property can also affect a renter. these statements are true

-If the lease were signed before the foreclosure recorded, the lease is valid until expiration. -If the foreclosure were recorded before the lease began, but the lease included a nondisturbance clause, the lease is valid until expiration.

the following is true regarding real estate taxes

-If the market value of a property increases, its tax-assessed value will also increase. -General taxes can be levied by the state, cities, towns, villages, and counties. -Ad valorem taxes are levied according to a property's assessed value. -Assessed value is usually a percentage of a property's market value.

the following statements about the capital gains exclusion are true

-In order for homeowners to qualify for the capital gains exclusion, they must have lived in their home at least two of the five years immediately preceding the sale. -The capital gains exclusion applies to profits of up to $500,000 for couples filing jointly. -After claiming the capital gains exclusion, a homeowner isn't required to invest immediately in another residence.

At the (eviction) hearing, both sides have an opportunity to present their cases to the judge. Common tenant challenges include:

-Incomplete repairs, such as a leaky roof or a broken furnace -Discrimination -"Self-help" procedures: Sometimes, a landlord won't follow the proper channels discussed above to evict a tenant, and will instead resort to tactics like cutting off utilities or changing the locks to try to force a tenant out.

Which of the following statements characterize the interest rates and fees charged on an FHA insured loan?

-Interest rates vary with the general mortgage loan interest rate available on the market. -Sellers may agree to pay part or all a buyer's points and mortgage insurance.

When a title isn't marketable, it can't be transferred. Four things must happen for a title to be considered marketable. What are they?

-It doesn't contain questionable validity. -It doesn't expose the buyer to possible future litigation. -It should allow the purchaser to sell or mortgage the property again in the future. -It doesn't contain any serious defects.

facts about Prorated Items

-Items to be prorated are either accrued (paid in arrears) or prepaid. -Examples of typical prorated items include taxes, rent, and utility bills. -At closing, a seller will give the buyer a credit for accrued expenses.

Fraud Under GRMFA GRMFA focuses on knowing or willful misrepresentation that occurs during the mortgage loan process. Which of the following scenarios would constitute fraud under GRMFA?

-Joann, a mortgage broker, encourages her clients, John and Michele, to omit any references to an undocumented loan owed to Michele's mother. -Caroline wants to sell her home to her son, Harvey, who's applying for an FHA-insured loan. Caroline gifts funds for the down payment to Harvey, but tells Harvey he must repay her once the loan has closed. -Randy is selling his home, appraised at $250,000, to Cynthia for $200,000, because he's in a hurry to leave the state. They agree to tell the lender that the purchase price is $237,000, and Cynthia gets a loan based on that amount. Randy will rebate $37,000 to Cynthia after the loan closes.

Not by the ECOA

-Joe applied for a mortgage loan and was charged a higher interest rate because he receives public assistance. -Ruth's lender refused to consider her alimony and child support payments as income. -Manuel was denied a mortgage loan and not provided a reason for the rejection.

Which five of these illustrate some of the skills required of property managers?

-Landlord-tenant relations and fair housing laws -Building systems -Purchasing and purchase orders -Lease renewal laws -Advertising and marketing -Supervisory skills -Ability to negotiate with union contractors -Knowledge of construction -Knowledge of ecology and how environmental issues and regulation impact property management

Why the Commercial World Likes Leases

-Lease arrangements allow new or financially strapped businesses to divert their capital to other business needs. -Business owners can often make more money on their business than they can on the appreciation of the building in which that business is conducted.

Requirements of the Community Reinvestment Act

-Lenders must post their lending policies. -Lenders must prepare annual statements about their compliance with the CRA. -Lenders are periodically reviewed by federal agencies for compliance.

the following statements about the TILA-RESPA Integrated Disclosures (TRID) are true

-Lenders must provide the LE to borrowers within three days of loan application receipt. -TRID disclosures are required for all federally-related mortgage loan transactions. -The CFPB is responsible for enforcing TRID disclosures be made

operating budget expenses

-Liability insurance -Both new and used appliances

Assume you've entered into a commercial lease agreement with a property owner/landlord. What might the owner/landlord expect you to do?

-List and market the property -Negotiate leases -Locate and qualify potential tenants

Commercial Lease Drawbacks

-Little or limited control over what the property owner decides to do -Lack of equity in the property

Similar to other cooperatives that limit subletting, Mitch lists the reasons Greener Grass prohibits or otherwise limits subletting of its units. What are these three reasons?

-Maintain stability -Owners take better care of property -Fannie Mae, Freddie Mac, and FHA requirements

seller's responsibilities before closing

-Make all negotiated repairs -Request loan payoff statement

the following is true about brownfields

-Many brownfields are suspected of containing hazardous waste. -In GA, the Hazardous Site Reuse and Redevelopment Act provides for rehabilitation and clean up of brownfields. -The limitation of liability makes it possible to purchase polluted property without shouldering all of the liability. -GA is offering tax breaks to developers who agree to put brownfields back into productive use.

MLS Guidelines

-Members of the MLS are authorized to show any of the properties in the pool of listings. -The MLS members are responsible for submitting data about their property listings to the MLS for online publication. -MLS systems aren't allowed to charge fees beyond their need to cover operating costs.

these statements are red flags or warning signs that a real estate professional should investigate further to avoid becoming unwittingly involved in mortgage fraud

-Missing or inconsistent information in the purchase and sales agreement -Significant sales price adjustments that are not supported by comparable market data -Buyer has a very limited credit history

Mrs. Peach manages a complex with 30 apartments. Rents range from $500 to $1,500 a month. She always seems tight on cash and plans to raise rent as much as possible when the current tenants' leases expire. The following statements are true:

-Mrs. Peach, as the property manager in charge of the building, decides what maximum base rent should be for each apartment. -Mrs. Peach is allowed to raise the rent on every apartment in the complex by $200. -Paula is a tenant in one of the units. If Paula moves out when her lease is up, Mrs. Peach is allowed to increase the rent on that unit for the new tenant.

a benefit of a VA loan

-No mortgage insurance required -No prepayment penalty

A written eviction notice should include:

-Notice date -Tenant's name and address -Amount of past due rent (if applicable) and to whom and where it should be paid -Reason for notice (i.e. nonpayment of rent, breach of lease) -Timeline tenant has to cure the issue (i.e. pay rent, remove breach), after which the landlord will proceed --with eviction if no action is taken Statement regarding how the landlord issued the notice

Vince has already done a lot of work, but he still has a few more responsibilities to take care of before crossing the homeownership threshold. Read the scenario again if you need to and decide which three items Vince still needs to complete before the closing.

-Obtain a cashier's check, certified check, or wire transfer for the amount of funds due. -Set up utilities. -Review the settlement statement.

Which types of property can be created as condominiums?

-Office park -Boat dock -High-rise apartment building -Townhouse

More About Option Clauses

-Option clauses specify the purchase price and the amount of the rent that will apply toward the purchase price. -A lease option can also be known as a lease with an option to buy. -Leases with options to extend the term are beneficial for commercial tenants.

Mitch noted that co-ops may take several actions when it comes to subletting. They base these actions on what they believe to be in the best interest of their cooperative community. Which four of these are actions a co-op may take toward subletting?

-Prohibit subletting -Limit length of subletting agreements -Limit subletting to % of units -Require shareholder occupancy before subletting

The mission of the Fair Housing Division is to:

-Promote broader housing choices in Georgia. -Promote understanding of the Georgia Fair Housing Act and the Federal Fair Housing Act. -Encourage integrated communities and/or neighborhoods. -Secure compliance with state and federal fair housing laws. -Establish justice and equal opportunity for all persons whose housing rights have been violated.

Paul is a disabled vet. He lost his job and can't keep up with the bills. He decides to apply for the Georgia property tax exemptions for disabled veterans. To apply, he must supply the Georgia Department of Veterans Services with certain documentation. Identify which types of documentation are required. This documentation is required:

-Proof of qualifying service -Proof of residency -VA disability rating letter

What good is a room with a view if that room is full of water because it's in a flood zone? As Sarah mentioned, there are certain locations that may cause issues. Which of these may be an issue?

-Property is located in a flood zone -Property is located in a conservation area -Property is a registered historic building -Property borders a wetland

As a licensee, what requirements does the Residential Lead-Based Paint Hazard Reduction Act place on you when working with clients interested in buying or selling a home built before 1978?

-Provide a lead safety pamphlet to prospective buyers -Disclose any known lead hazards in the home

these actions would be a way to mitigate the effects of title issues

-Purchase title insurance -Initiate an action to quiet title

Which two of the following statements are true about RESPA?

-RESPA ensures that consumers are provided specific disclosures when applying for a real estate loan. -RESPA requires that lenders disclose all loan fees and the loan payment schedule to the borrower before the borrower commits to the loan.

Buyer's Closing Expenses The buyer's list of expenses is a long one—the biggest expense being the house itself, of course!

-Recording fees -GRMA mortgage fee -Property tax and homeowners insurance reserves -Intangible tax -Origination fees

each statement about the seller's closing costs are true

-Recording fees in Georgia vary from one county to the next. -Only after satisfying all liens against a property can a seller turn over a clear title to the buyer at conveyance. -Who will pay which closing costs is negotiable when the purchase contract is negotiated.

Now switch hats and assume you are representing tenants in a commercial lease transaction. What three things can they expect you to do for them?

-Represent their interests in all negotiations and transactions regarding the lease of the property. -Assist them in locating a suitable space to lease. -Assist them in reviewing and preparing the lease agreement.

the following are clues to look for as evidence of an underground storage tank on a property

-Research showing an underground tank had been registered -Oil line (crimped off rusty pipe) -Plate covering an oil fill area

You're a licensee representing a client who wants to buy a condo. She'd like to buy a unit in a small complex near her work. You discover that the complex does have an available unit, and you contact the broker. You ask if you can show your client the unit, but the broker refuses, saying he can't sell to your client. Under what two circumstances would this be allowed under fair housing law?

-Residency in the condo complex is restricted to members of the organization that owns the complex. -The property is owned by a religious organization or a private club.

General Rules for Security Deposits

-Residential security deposits must be returned within 30 days of the tenant vacating the property. -If deductions are taken from the security deposit, the reasons need to be in writing and given to the tenant within 30 days. -The security deposits for properties using a property manager must be kept in an escrow account.

Common MLS Violations

-Rex has been holding off submitting his latest property listing to the MLS. He's convinced that if he waits just a little longer, he'll be able to find his own buyer. Is this a violation? -Business has been hopping lately, and Margo hasn't had time to update several of her MLS listings. She's sold a few homes, one home was taken off the market, and the price on another has been reduced, but she's not updated the listings yet. What difference will a few days make? She'll get to it when she has time. Is this a violation? -Jared misses the good old days of face-to-face contact with potential buyers. He's a very personable guy and knows that if he can create a relationship with a potential buyer, his chances of making the sale are greater, so he decides to add his email address to the MLS property listing in the public remarks section. Is this a violation? -Tim just picked up a listing for a house that's on a nice chunk of land. Frankly, the house is a pit inside and out, and the yard could use a little TLC, as well. Tim knows if he posts any photos of the home, no one will even consider the place, so he decides not to include any photos in the MLS listing. Is this a violation? -Leslie is thrilled to list a property for a client who lives in an upscale part of the city and is an avid expensive art collector. Leslie just finished taking photos of the home and knows the interior shots are going to look great with the artwork in the background of practically every room. Leslie can't wait to post the photos on the MLS and to begin showing the property. Is this a violation?

According to Sarah and the EPA, what are some actions homeowners can take to clean up mold?

-Scrub moldy surfaces with water and detergent and allow to dry completely. -Discard porous items that have mold. -Hire a professional to remove mold.

full seller disclosure responsibilities

-Seller's licensee must notify the seller of the seller's duty to disclose all known material defects. -Sellers must disclose the condition of all items on a seller disclosure form, plus any known material defects not listed on the form.

Sponsors may not be required to follow the same rules as shareholders when it comes to subletting or selling a unit. Cooperative owners receive shares in the corporation, and the sponsor's shares are different than those provided to shareholders. There are other shares, too, which Mitch described in the resource. the following are cooperative shares

-Sponsor -Unsold -Sold

You've identified the different types of shares associated with cooperative ownership. Let's wrap up this lesson by reviewing some facts related to these shares and subletting. Remember, you can refer to the resource for the information Mitch provided. These statements are true:

-Sponsors may be able to sublet even if shareholders are not. -Unsold shares can be held by the sponsor or any person the sponsor designates. -When sold shares change hands, board approval is required.

Sellers are responsible for certain closings costs. Some of these costs are standard regardless of the state where the property is being sold, and some costs are different depending on the state or sometimes even the locality. Identify whether it's traditionally the seller's responsibility to pay each of these costs.

-State and local transfer taxes -Attorney fees -Satisfaction of existing liens

Abatement programs aim to:

-Stimulate community revitalization -Retain residents of a community -Attract new homeowners -Reduce development costs for homeownership and rental projects

example of involuntary special assessment

-Street paving, from gravel to asphalt -Public water lines -New curbs and storm drains for subdivision

Prepaid Items

-Taxes that have been paid in advance -Rent paid by the seller under a lease assigned to the buyer -Utilities that have been billed and paid in advance

Spot the Fair Housing Violation of a Protected Class (all are violations)

-Telling a family a property's already sold because the licensee felt they wouldn't fit in with the neighborhood's ethnic make-up -Increasing the rent and security deposit for a family with seven children -Charging higher monthly rent to a divorced single woman who's also pregnant -Advertising housing specifically to couples with no children

Georgia Fair Housing Act

-The Georgia Fair Housing Act mirrors the federal fair housing laws. -If a real estate professional is involved in a transaction, there are no fair housing exemptions. -For fair housing purposes "disabilities" includes both mental and physical disabilities.

Property Management Certification

-The Institute of Real Estate Management (IREM), which is an affiliate of the National Association of REALTORS®, offers a certification program. -To apply for a Certified Property Manager designation, you must first complete the Institute of Real Estate Management program.

Your buyer clients will receive Loan Estimate and Closing Disclosure forms. How much do you know about these documents?

-The Loan Estimate displays the total principal the borrower will pay. -The Loan Estimate discloses mortgage loan key features, costs, and risks.

Assume you have a young couple as clients who are less interested in owning real estate and more interested in living in a place with other like-minded individuals. What are some of the advantages and disadvantages of co-op living? These statements are an advantage of this type of housing

-The board is responsible for all the financial and policy decisions of the corporation. -Own a share in the cooperative's corporation

these statements are true regarding the requirements of the Right to Repair Act.

-The buyer must send written notice to the builder stating the defect. -The buyer should provide professional inspections to the builder, showing evidence of the defect.

Many activities occur during a title closing, both prior to and at the closing itself. Match each activity to the time frame in which it occurs during the closing process. Prior to closing

-The buyer obtains a binder for insurance coverage on the new home. -The buyer's agent, attorney, or lender contacts the buyer and tells the buyer how much money will be needed to close.

true about the maximum loan amount for an FHA insured loan

-The dollar amount varies depending on the area. -In most parts of the country, the amount is the same.

The Title Search

-The legal description of the property: Can the property that is being transferred be correctly and accurately identified through a legal property description? -Ownership: Who rightfully owns the property, and how is title held? -Encumbrances: Are there any existing liens, easements, or restrictions against the property? -Judgments: Are there any outstanding judgments against the property at the municipal, state, or federal level? Is there any pending civil litigation? Is the property under foreclosure proceedings? -Divorce: Are there any pending divorce proceedings? Secured transactions: Has the property owner entered into any agreements that give a creditor or creditors ownership rights to the property should the current owner be in default?

Georgia Fair Housing Exemptions

-The owner of a duplex who lives in one unit and rents out the other and advertises for a new tenant by word of mouth -A senior housing community which only accepts members over the age of 62

In Georgia, what five things is a landlord required to disclose to a tenant?

-The owner's identity -Whether or not the home is prone to flooding (three or more times in five years) -Whether or not any crimes have been committed on the property, such as homicide or other felonies -The listing agent's identity -Pre-existing property damage

Brown vs. Board of Education was a major turning point for civil rights law in the U.S. These are the main points of the case:

-The primary issue was whether public schools should be allowed to be segregated. -The result overturned the Plessy vs. Ferguson precedent.

The ECOA

-The purpose of the ECOA is to prevent lending discrimination. -Consumers who feel they've experienced lending discrimination can file a complaint with HUD. -The Department of Justice can file a lawsuit under both the Fair Housing Act and ECOA.

the following statements about the R-value Rule are true

-The rule covers advertising and disclosure requirements for insulation products. -Penalties for noncompliance with the R-value Rule can include fines of up to $11,000.

Tax Assessor's Role in Reassessing Property

-The tax assessor will usually reassess a property after a major improvement. -The tax assessor is alerted to property improvements when a building permit is pulled or if the tax assessor receives a report suggesting that improvements are being made. -Property is reassessed annually at the county level by the Board of Tax Assessors. -In Georgia, which entity is responsible for inspecting the counties' reports to ensure that property is assessed uniformly and equally between and within the counties?

reasons why tax rate variations

-The tax rate varies from location to location, based on the county's budget needs -Services provided to residents -Number of taxable properties -Local government debt load

facts about tax liens

-The taxing authority will offer a number of potential remedies to the taxpayer to assist in getting a property tax debt paid. -As long as a tax lien is in force, the taxing authority has a legal claim to the property and, if necessary, can force a sale of the property to satisfy the tax debt. -A tax lien will show up on your credit report. -Tax liens are a means of getting taxpayers to pay their property taxes.

What three things happen after a claim is submitted on a title policy?

-The title insurance company will either pay the debt or challenge the claimant in court. -The title company reserves the right to collect payment from whoever caused the loss. -The amount of a loss the insurance company pays is deducted from the coverage amount.

a contributing factor to why property taxes are a reliable source of income for the municipality

-The value of the underlying property remains relatively steady. -People tend to pay their property taxes.

The safety of our public drinking water is a concern at the federal, state, and local levels. One primary concern is the quantity of contaminants in the water. How is this concern being addressed in Georgia?

-There are local minimum safety standards for drinking water. -Public water is regularly tested for contaminants. -The higher the pH level, the more alkaline the water is, and the harder it is. The lower the pH, the softer and the more acidic it is.

If you were working with a family purchasing a home built prior to 1978, how would you explain their options regarding renovations to their home or making the home lead-free?

-This work is done with the intention of making the home lead-free. -This intervention involves a government agency.

You overhear a conversation about a newly renovated condo for sale in a building constructed in 1975. It's located in an area where one of your clients is interested in buying, so you head over to check it out with your buyers. Bingo! It's just what they're looking for at a price of $1.2 million. What costs can they expect at closing?

-Title insurance -Appraisal -Transfer tax -Mortgage recording tax -Lead paint testing fee

Which three of these statements about title insurance are correct?

-Title insurance protects the buyer against loss resulting from previously unreported title defects. -Title insurance protects the lender from loss due to defective title. -Title insurance provides assurance that the property owner has marketable title.

What types of problems can title issues cause if they're not cleared before closing?

-Title issues put ownership in question. -Title issues can cause financing difficulties for a prospective buyer. -Title issues can make it difficult to resell a property later.

the following are characteristics of tract indexes

-Tract indexes direct users to the recordation book and page where documents are located. -Tract indexing involves grouping several parcels of land. -Each property is indexed onto a page that includes all corresponding mortgages, deeds and other documents.

Georgia takes mortgage fraud seriously, and penalties for violators are stiff. What are the possible consequences?

-Up to 10 years' imprisonment and/or a fine of up to $5,000 -Imprisonment of five to 20 years and/or a fine of up to the greater of $25,000 or three times the amount of monetary gain from the violation if prosecuted under Georgia's RICO statute

Housing built after March 13, 1991, that has four or more dwelling units is required to meet seven design and construction requirements. Do you know what these requirements are? We'll provide the first . It's up to you to complete the remaining six:

-Usable kitchens and bathrooms -Accessible entrance -Accessible public and common use areas -Usable doors -Accessible route into and through the dwelling unit -Accessible light switches, electrical outlets, thermostats, and environmental controls -Reinforced walls in the bathrooms

New Condominium Risks

-Verbal promises about amenities and inclusions are not followed through -Hidden costs -Delays to closing date -Undetermined property tax amount

Property owner Walter decides to sell his complex with 30 apartments. The following statement is true:

-Walter can decide to refund the security deposits to the tenants.

the following is true about waste disposal sites

-Waste disposal sites are also referred to as landfills. -Special purpose landfills are usually located in remote areas away from human contact and are subject to strict regulation to prevent the escape of toxic substances. -To ensure public safety, health, and welfare, the construction, location, and content of landfills are regulated at the federal, state, and local levels. -According to the EPA, the biggest health and environmental concerns surrounding landfills are related to the uncontrolled surface emissions of landfill gases into the air.

By establishing an MLS policy for the firm, brokers can help their licensees avoid, or at least minimize, MLS violations. What are three of the areas the policy should cover?

-When and if listing data should be submitted for broker approval -When MLS listings should be updated -How and when MLS listings may be posted

these statements about protesting assessments and the appeal process are true

-When taxpayers have questions or concerns about the accuracy of their property tax assessment, the first step they should take is to contact the local tax assessor. -A hearing officer must be a state-certified general real property or state-certified residential real property appraiser. -An appeal of value may be filed with an arbitrator within 45 days of the notice's date.

the following statements are true regarding requirements for acknowledging a document

-When the person signing and the person accepting the acknowledgement know each other, this information must be disclosed. -If the person acknowledging and the person witnessing the acknowledgement are strangers, the signer must provide identification. -The person taking the acknowledgement must make a notation in a log book and keep it for safekeeping. Once this happens, the acknowledgement becomes official.

A licensee does have responsibilities when it comes to helping clients understand the tax implications of their real estate decisions.

-You should know what income tax options exist so that you can answer any basic questions your clients might have. -You should point your clients to a tax professional for specific advice. -You should know how and when taxes and real estate interact.

Property Manager Real Estate License Requirements

-You're managing multiple properties for one owner as an employee (collecting rent is involved). -You're managing properties for more than one owner for a fee (collecting rent is involved).

Assume that you have a client who's using water from a private water supply (his own well), and your client wants to know what he can do to ensure that the water is safe to drink. What can you tell him?

-Your client is responsible for having his own water supply treated and tested regularly. -Property owners with private water supplies should keep sources of pollutants away.

Which of the following are distinguishing characteristics of PUD and MUD living?

-Zoned for a mix of residential and commercial -Ownership profile varies depending on the type of housing

In Buchanan vs. Warley,....

...Warley had planned to buy Buchanan's house. When Warley learned that he wouldn't be allowed to live there because of a city ordinance banning blacks from moving to a block where the majority of residents were white, he backed out of the sale. The seller sued him for backing out, but Warley said the city ordinance was a valid reason to not complete the sale. Buchanan then fought the city ordinance, claiming it violated the 14th Amendment. The Supreme Court agreed with Buchanan. The city ordinance was not constitutional.

You referred a buyer to a colleague in a neighboring state. The buyer found her dream home for a price of $325,000. A couple of weeks after closing, you receive a check for $3,250 from your broker as a referral fee from this transaction. Shown as a percentage, at what rate did your referral pay off? ($325,000) sale price × (?) commission rate = $3,250 earned commission

1% (.01) $3,250 is 1% of the sale price.... find this by dividing 3,250/325000

Before we jump into a calculation, let's define a point. What does a point equal? Refer to your video or the transcript, if needed.

1% of loan amount

Related to real estate financing, how much is a point?

1% of loan value

From Application to Funding in Georgia

1. Pre-qualification—borrowers work with lender to determine approximate amount they can spend on a home 2. Find home—borrowers work with real estate broker to find that perfect home and negotiate an offer 3. Pre-approval—borrowers work with lender to complete Uniform Residential Loan Application and provide supporting documentation (note that in some "hot" markets, borrowers should seek pre-approval before beginning the house-hunting process) 4. Loan estimate—lender provides borrowers with estimate of loan costs within three business days of making the loan application 5. Processing—lender assembles application packet and documentation for processing 6. Appraisal—lender schedules a property appraisal with an appraiser 7. Underwriting—underwriter evaluates application packet and property appraisal 8. Recommendation—underwriter makes recommendation (yes, no, or maybe) related to application 9. Approval—approved application heads toward closing 10. Closing documents—lender's closing department prepares documents for closing and provides closing attorney with necessary documents 11. Title work—closing attorney orders title search, survey (if needed), and title insurance (The title search is generally done weeks or months before the closing, but a second search of the title record is done right before closing to ensure that no new encumbrances have been added to the record, which is espe- cially important when seller is financially distressed.) 12. Title insurance—Title insurance company performs title search and issues title insurance commitment 13. Closing documents—closing attorney prepares the settlement statement and deed for closing 14. Closing Disclosure—borrowers receive Closing Disclosure from closing attorney at least three business days before closing 15. Closing—borrowers attend closing conducted by closing attorney 16. Funding, recording, and keys after closing documents are signed and closing attorney has everything in place, borrowers receive keys to their new home

A duplex is selling for $550,000. Each unit can gross $2,500 in monthly rent for the owner. What is the GRM?

110x The sales price divided by the total monthly rent of $5,000 is 110. Hint: A duplex has TWO units, so the total monthly gross rental income would be $5,000. And $550,000 divided by $5,000 gives you a GRM of 110x.

Based on capitalization rate alone, which investment involves more risk: one with a 12% cap rate or one with a 8% cap rate?

12%

A property valued at $950,000 is returning a net annual income of $115,000. What's the cap rate for this investment?

12.1% $115,000 divided by $950,000 is 12.1%.

Calculating GIM: A 20-unit apartment building sold for $5 million. The property can gross $400,000 in annual gross income. What is the GIM?

12.5x Sales price divided by annual gross income= Gross income multiplier

An existing tenant has how long to purchase the unit in a condominium conversion?

120 days

When an apartment building is converted to condominiums, existing tenants have dibs on purchasing their units. How long do existing tenants have this exclusive right to buy?

120 days

A 30-unit income-producing property has a sales price of $9 million. Annual gross income is estimated at $750,000. What's the gross income multiplier?

12x

Tom, an investor, is thinking about buying a $200,000 commercial property. He has $100,000 saved up for a down payment and wants to finance the remaining $100,000. Annual cash flow is projected to be $13,000. What is the potential rate of return?

13%

A property has a rectangular patio that is 10 feet by 15 feet. What's the area of this patio?

150 square feet *multiple length x width

Determine the ROR: Shelly, an investor, is thinking about buying a $500,000 house to use as a rental property. She has $100,000 saved up for a down payment and will mortgage the remaining $400,000. The annual cash flow is projected to be $25,000. What's the potential rate of return?

25%

What's the typical high end of the housing ratio to qualify for a conventional loan?

28 To qualify for a conventional loan, the housing ratio generally can't exceed 25% to 28%. So, if a lender is using 28% as its threshold, the borrower's house payment can't exceed 28% of gross income.

Now, instead of calculating the amount, let's determine the ratio. What if your clients have total monthly debt of $1,000 and a gross income of $3,500 and wants to figure out their debt-to-income ratio? You'll need to work backwards! Take their monthly debt obligations ÷ monthly gross income. Go ahead and give it a try now.

28.6% *divide 1,000/3500

Francine moved out of the property she was renting, and she left it in pristine condition. How long after she moves out does the property manager have to return her security deposit?

30 days

A lot measuring three-fourths of an acre is for sale. How many square feet is this?

32,670

For many consumers, a house payment won't be their only debt. They may also have car payments, student loans, and credit card debt. While the housing debt-to-income ratio looks at housing debt against the borrower's income, total debt-to-income takes into account all of a borrower's debt. What's the typical total debt-to-income ratio to qualify for a conventional loan?

33-36 To qualify for a conventional loan, the total debt-to-income ratio generally can't exceed 33% to 36%. This means that all of the borrower's debt (house, car, loans, etc.) can't exceed 33 to 36% of gross income.

Your buyer client wants to replace the crown molding in the living room of the house he's planning to buy, so he wants to find out how many linear feet the room has so he can determine the cost of new molding. The room is a 9-foot by 10-foot rectangle. What's the total linear feet?

38 linear feet **so you need to add the length of the four sides together to determine the total linear feet.

Occasionally, you may be provided with a measurement that's in a different unit than you need. Suppose a legal description describes one of the property's boundaries as being 13.5 yards long, but you want to know what this is in feet. Since you know how many feet are in a yard (it's on your cheat sheet if you don't remember), you can convert the measurement to the unit you need. So, how many feet is this?

40.5 feet *multiply 13.5 by 3 because there are 3 feet in a yard.

You may see several variations of an amortization chart or table throughout your career. Let's take a look at an amortization chart, which is located in your resources. We'll assume an interest rate of 5% and a mortgage term of 30 years on a $200,000 loan. What is the correct corresponding factor according to the chart?

5.36822 We have a factor of 5.36822 for a 30-year mortgage term with 5% interest. So, what do we do with this number?

In Georgia, how many years do we have to go back to trace the chain perfectly, with no gaps in ownership?

50 years

In Georgia, what is the time limit on title claims?

50 years

The property you're going to list has an addition that was built a few years ago. The addition is a master bedroom measuring 20 feet by 30 feet and a master bath that measures 10 feet by 10 feet. What's the total square footage of the entire addition?

700 square feet *get the area of each room and add

Glenn is purchasing a home for $400,000. The property appraised at $415,000 and Glenn is financing $300,000. What's the loan-to-value ratio?

75%

Charlie and Wendy are purchasing a property with a sales price of $350,000. They'll be financing $335,000. What is their LTVR?

95.7%

Kim and Lloyd are purchasing a property with a sales price of $350,000. They made a down payment of $15,000, and will be financing $335,000. What is their LTVR?

95.7%

Caroline's monthly mortgage payment includes principal, interest, taxes, and insurance. She has a 30-year mortgage at a consistent 3.75% interest. What type of loan does she have?

A budget mortgage

What's a dry closing?

A closing where documents are signed, but no funds are disbursed until a later date when the delay has been resolved

Before we go too far, what's a pre-payment penalty?

A consequence for paying off a loan before its intended time

What Is an Installment Sale?

A contractual agreement in which the buyer pays the seller the purchase price over time in a series of installments until the buyer has paid the contract in full, and the seller turns over the deed to the buyer

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

A cooperative

As the property is inspected, several items are noticed. Which of these are items home inspectors would likely include in their report?

A crack in the foundation Damaged shingles A leaky faucet Standing water

Which option best describes an abstract of title?

A document that provides a summary of the title history of a property

Which of these statements best represents what happens after a federal fair housing complaint is made?

A fair housing specialist will review the complaint.

What type of gain is considered long term?

A gain on a property owned more than one year

Which of the following raises carbon monoxide levels in a home?

A gas furnace

Jon and Talia are artists who are looking for a home with a backyard that is big enough for them to build a studio. Which of the following properties might they want to stay away from?

A lot that is adjacent to or partially on wetlands

Which of these actions is legal?

A man advertises for a roommate to share his two-bedroom apartment and specifies that he prefers female roommates.

The possible outcome or outcomes of an appeal hearing would be which of the following?

A partial reduction, a full reduction, or no reduction

Roy and Alyssa's mortgage calls for regular PITI payments for three years and then a lump sum payment at the end of the three-year period. What kind of mortgage loan do they have?

A partially amortized (balloon) mortgage

Which of the following is an example of an easement?

A path providing neighborhood access to a pond cuts through part of Hillary's property.

Graduated payment:

A payment that gradually adjusts (usually upward) based on a pre-determined schedule and amount. The initial payments are less than what would be a fully amortizing payment, which creates negative amortization. This type of payment plan can make payments easier in the beginning when income is often lower.

At closing on June 1, a property tax bill of $450 for the current tax year remains unpaid and is not yet due. A portion of this expense is the seller's responsibility and the remainder is the buyer's responsibility. How will it appear on the settlement sheet?

A portion of the total taxes due will appear as a debit to the seller and a credit to the buyer.

Which of the following is a way in which property taxes could impact your clients?

A sale in the area may prompt a reassessment, impacting new buyers.

Bridge loan (swing loan):

A temporary (usually 90-day) loan that provides funds in addition to an existing loan until permanent financing can be obtained. A bridge loan is often used for buyers who haven't yet sold one property, but want to purchase a new one. Best used when the buyer's current home is already under contract.

Lease with Option to Buy

A unilateral contract between property owner and lessee in which the owner and lessee agree on a sales price and (usually) a portion of lease or rent payments go toward the purchase price. The lessee may or may not choose to exercise the option to buy, but the owner must allow exercise of the option based on the agreed-upon terms.

Georgia licensee Chloe is writing some ads for her broker to review. Per Georgia's fair housing laws, which of the following terms is unacceptable to use in real estate advertising?

Able-bodied

Although the credit reports from each of the major reporting agencies may vary, you can expect to find the same type of information. Which of these items can be found on our sample credit report?

Accounts in good standing Contact information for the credit reporting company Credit history inquiries Personal information Potentially negative items

Points deduction

Acquisition

Notice that's been expressly given directly to a party

Actual notice

This means "according to value" in Latin. The real property tax is based on the fair market value of real property.

Ad valorem

Which type of property tax is based on the value of the property?

Ad valorem

Assume you have a client who wants the convenience of living in an area that has shopping, recreation, and mass transit nearby. What are some of the advantages and disadvantages of PUD and MUD living? Review each statement about mixed-use developments and determine if the statement reflects an advantage or disadvantage of this type of housing.

Advantage: -Residential and commercial are in the same building or group of buildings. -Convenience and security of having neighbors, shops, medical facilities, and mass transit nearby. Disadvantage: -There is a higher density of people, homes, shops, and traffic. -There is nearby traffic congestion and noise.

Payment history, credit usage, inquiries, and types of accounts are factors considered in calculating a credit score. Which of the following options is also a factor?

Age of accounts

Who Closes Which Contracts? Close on the compensation agreement based on terms of their agreement

Agents' brokerage firms

front foot

Aka frontage; the linear measurement of a property that abuts a street, highway, waterway, etc. Ex. Seamus's property had 200 feet of river frontage, which made it more valuable than his neighbor's property, which only had 40 feet of river frontage.

Income may come from a variety of sources, some viewed more favorably than others. Which of these are sources of income a lender might consider?

Alimony Bonuses Child support Government entitlement funds Normal wages and earnings Pensions

Which of these landlord policies is discriminatory?

All residents must show a U.S. birth certificate as part of the application process.

Ron can give his client the name and contact number for at least three mortgage brokers.

Allowed under RESPA

capital asset

Almost everything you own and use for personal purposes, pleasure, or investment is

Reverse mortgage:

Also called a reverse annuity mortgage, this is designed for those who want to use the equity in their homes to stay in their homes. With a reverse mortgage, the lender makes payments to the homeowner for a specified period of time and gains corresponding ownership.

Your client, Amber, asks you for more information about the tax implications of buying real estate. What should you tell Amber?

Amber should see her tax advisor for the specific tax implications of either buying or selling real estate.

Which act sets guidelines for public and common use areas at housing developments?

Americans with Disabilities Act The Americans with Disabilities Act generally applies to commercial facilities and facilities with public accommodation, but does cover public and common spaces in residential housing.

The process of paying a loan off over time

Amortization

Debt is paid off by making periodic payments toward both principal and interest.

Amortized

Residental loans

Amortized loan Renegotiable rate: Budget mortgage: Interest-only: Graduated payment: Low documentation (low-doc):

what is a brownfield?

An abandoned or otherwise unused commercial or industrial site

Tariq knew that his upcoming trip to Vegas would be his turning point; the first thing he'd do with his winnings is pay the three months' rent he owed his landlord. Pleased with his plan, he'd just started to put his key in the door when he noticed the piece of paper taped to it. It listed his name and address, the date, the amount of past rent he owed, and that he had 10 days to cure the nonpayment or else he'd be kicked out. What did Tariq receive?

An eviction notice

As ______ property manager, you need to negotiate favorable leases with businesses. Longer-term leases are great for the owner, but you want to make sure you build in stepped-up increases in leasing rates.

An office

Rate of interest for the loan

Annual interest rate

How often should well water be tested for contaminants, such as coliform bacteria and nitrates?

Annually

What does the FTC consider to be a deceptive ad?

Any ad likely to mislead consumers acting reasonably under the circumstances

What is linear measurement?

Any system for measuring length

Several parties have a role in completing parts of the form (verification of employment). Which of these parties are involved?

Applicant Lender Applicant's employer

Provides lender with estimated property value. If paid outside of closing, won't appear on settlement sheet.

Appraisal fees

After owning their home for five years, Charlie and Wendy have $125,000 in equity built up. How's equity calculated?

Appraised home value minus the amount of any indebtedness against the home

Authorization for how funds are spent and collected within a taxing district, resulting in the adoption of the tax law or ordinance.

Appropriation

Reasons to Approve or Deny: There are many reasons a board may approve or deny an application. Check out this web resource that lists the top dozen reasons for cooperative rejections and some advice for avoiding these. Take a look at these characteristics and determine whether the board would approve or deny the applicant. Keeping in mind, of course, that these decisions are subjective and may vary from one board to the next.

Approved: -Has equivalent to three years of mortgage and maintenance payments saved -Has worked for the same employer for 12 years -Buyer has an information technology job and works from home Denied: -Mortgage and maintenance payments would account for 33% of income -Has worked for their last three employers an average of nine months each -Plans to use cooperative once every few months

Ray purchased a new home and soon discovered an issue with one of the windows. He filed a claim with the warranty provider, but it was denied. After mediation, the issue still remains unresolved. What is the most common next step?

Arbitration

Some pieces of information belong in the articles of incorporation you will file with the secretary of state to form your condo corporation. Other information belongs in the bylaws, which don't need to be filed. Can you distinguish between the two?

Articles of Incorporation: -Initial board of directors -Registered agent Bylaws: -Board meeting specifics -Voting requirements -Number and terms of board members -Authority of board members

What is the name of the fibrous material found in rocks and soil worldwide that was used in construction of older homes and causes chronic lung disease and cancer?

Asbestos

A percentage of market value; the amount of property value to which the tax rate is applied.

Assessed value

Reassessment of an individual property due to a homeowner's appeal and agreement by a review board that a reassessment is warranted.

Assessment review

Items of value belonging to the borrower

Assets

When completing a loan application, applicants must list any items of value they own. What's another term for these items?

Assets

When are the mortgage loan commitment and title insurance contract signed?

At the closing

When is the seller paid the full amount of the purchase price for the property?

At the closing

Marketing Plan: Measurement section

At year's end, we'll measure how we did against our goals to determine what we need to do differently to achieve our stated goals.

This expense can be paid separately to the seller's lawyer; if paid from the closing proceeds, it appears as a debit.

Attorney fees

Property Management Responsibilities Retail property manager

Attracts anchor store tenants and focuses on the right tenant mix to promote longevity and draw customers.

The association that represents the owners and managers of commercial property in the U.S., Canada, and abroad

BOMA The Building Owners and Managers Association International

Borrowers provide a lot of unsubstantiated information on the loan application. As easy as it'd be to just take the borrower's word for it, that's not how lending works. Which of these items might a lender use to verify the information provided by borrowers?

Bank statements Credit report Pay stubs Verification of deposit Verification of employment

It is necessary to know the ______ in a home to determine any gain or loss when it is sold.

Basis

Carol works for a property management company that manages properties for multiple owners. One of her responsibilities is collecting rent. Which one of the statements about Carol is true?

Because Carol works for a property management company that manages properties for more than one owner, she's required to have a real estate license to collect rent and perform other real estate functions.

Equivalent to an extra payment each year

Biweekly payments

Encouraging residents to sell now and avoid declining house values that could accompany minorities moving to the area.

Blockbusting

Contract Types and Resulting Actions The selling agent's broker will pay the buyer agent's commission to the buying agent's broker.

Brokerage agreement

At closing, who pays for and receives clear title for the property being purchased?

Buyer

Before closing, who should get a home inspection?

Buyer

In caveat emptor states, which party carries the burden related to a property's condition?

Buyer

Who is usually responsible for ordering and reviewing the survey of the property?

Buyer

Betty moved out of her rental house on June 2. How long until her property manager must refund her security deposit?

By the second of the next month *Betty will have been gone for 30 days as of July 2.

Where are a condominium owner's rights detailed?

Bylaws

The business networking organization dedicated to advancing the achievements of women in commercial real estate

CREW Network Commercial Real Estate Women Network

The owner buys the right to use the developer's facilities and may use the designated area at any time during the year.

Campground membership

What are some common wood-eating pests that may threaten buildings?

Capenter ant Powderpost beetle Termite

Costs for improvements and major maintenance

Capital expenses

Using Capitalization Rate to Derive Value

Capitalization is the process of using a property's income to calculate its value. Investors looking to determine approximate value of their income producing properties do so by calculating: Net operating income ÷ capitalization rate = approximate value A lower cap rate translates into lower risk and higher property value. It's an indicator, not an appraisal. It can work in reverse, as well, for investors looking to buy property: Value (purchase price) × cap rate = net operating income

Who is most vulnerable to lead poisoning and its effects?

Children

A sloping hearth is a common ______ issue.

Chimney/fireplace

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Civil Rights Act of 1866

Technology poses risks for everyone, but real estate licensees need to be especially careful. Which of the following is true about risks related to computer systems?

Client data can be exposed when a brokerage's computer system is compromised.

Several parties are involved in the loan approval process. Who are the major players in a typical financing arrangement?

Closing attorney Underwriter Borrower Lender

What Kind of Discrimination? She requires a $1,000 deposit from all black South African tenants, but only $500 from all white South African tenants.

Color

What protected class is involved when there is discrimination due to a person being lighter-skinned or darker-skinned?

Color

Raul has entered into a gross lease with a property owner. What type of property manager will he be working with?

Commercial

Tyler is a developer who renovates a long-abandoned warehouse in a low-income neighborhood into a community center, complete with space for after-school programs, a daycare, and a gym. Tyler is able to complete the renovation with a loan funded by a local bank. Which act requires financial institutions to make credit available for this type of development?

Community Reinvestment Act The Community Reinvestment Act requires lenders to meet the needs of their communities by investing in development and rehabilitation efforts including those that enable low and moderate income neighborhoods meet the needs of the community.

Reassessment of multiple properties due to market values having increased or decreased.

Community-wide reassessment

Margaret has received her Closing Disclosure from the lender. To best protect her interests, what should she do with it?

Compare it to the Loan Estimate. Margaret should compare the Closing Disclosure figures with those on the Loan Estimate to ensure that no undisclosed changes in loan costs have been made.

An improvement district is formed when a needed improvement results in a special assessment tax. Who or what entity can form an improvement district?

Concerned citizens City council School board Homeowner association member

You've done great so far in identifying the differences between condos and co-ops, but we have a few more differences we want to cover. Identify whether the statements apply to condos or co-ops.

Condo: -Financing is similar to other real property. -Mortgage recording tax applies to purchases. -Ownership is very easy—you pay, you're in. Co-Op -This one may be difficult to resell because applicants need to obtain board approval. -This one tends to have higher monthly maintenance fees because taxes, fees, and mortgage payments are included.

the differences between a condo and a co-op.

Condo: -Real property ownership -Often permits subletting (with some restrictions) -Own airspace within unit and an undivided share of common areas Co-Op: -Own shares of the corporation -Often prohibits subletting -Personal property ownership

Tom finally owns his slice of the American Dream. Technically, he owns the airspace in the unit and shares the common areas with other owners, but he owns it just like any other piece of real property. Sure, he paid a little more than other properties on the market, but the monthly maintenance fees are reasonable and worth every penny if it means never shoveling a sidewalk. Plus, his best friend is already asking to sublet it if Tom is able to realize another one of his dreams: spending a year in Europe.

Condominium

Many lawsuits have been filed against companies that fail to protect the security of what?

Confidential client data

Notice given to the world by recorded documents, whether or not the party has personally examined them

Constructive notice

Karla does go to her broker to report the suspected mortgage fraud, but her broker urges her not to get involved. What should Karla do?

Contact the Georgia Department of Banking and Finance.

Soroush and Vince have just completed the final walk-through of the home. Unfortunately, the two discovered that several appliances that were supposed to remain have been removed from the property. As the buyer's agent, what course of action should Soroush take?

Contact the seller's agent immediately to try to get the issue resolved before closing.

The right to determine how the property's used, and who may enter the property

Control

Juan's credit score is being pulled. Which of these actions would have a positive effect on his score?

Credit accounts with low or no balances

Credit score, information about late payments, and number of open accounts

Credit report

Credit scores are calculated using information from which of these items?

Credit report

A real estate transaction has a closing date of May 20. The seller, who's responsible for closing costs up to but not including the day of closing, has already paid annual property taxes of $1,949. How will the closing statement reflect the proration for the seller? Use a calendar year proration, and round to the nearest dollar.

Credited $742 The seller is required to cover the property taxes for January 1 through May 19, which is 139 days. The seller will be credited $1,207, because $1,949 ÷ 365 = $5.34, and $5.34 × 226 days (the number of days the buyer will own the property and have to cover property taxes) = $1,206.84. That's $1,207 when rounded to the nearest whole dollar.

Day-to-day cleaning and maintenance

Custodial

Ben has been paying his $750 mortgage payment every month for five years on a level payment plan. Each month, the amount he pays toward interest ____________ and the amount he pays toward the principal ___________.

Decreases; increases

Includes an undivided interest in the common areas

Deed

Patricia is 62 years old and has an income of $13,000. She would like to defer taxes on $35,000 of the home's assessed value. For which program might Patricia qualify?

Deferred Tax Payment

May defer state and county property taxes of all or part of the taxes on up to $50,000 of the home's assessed value.

Deferred tax payment

Requires property owner to prove that their property has been categorized incorrectly as non-homestead for assessment purposes.

Denial of homestead exemption

Because our sources of drinking water can become contaminated, measures have been put in place to ensure that the water is safe to drink. Do you know which authorities set standards and guidelines for drinking water safety?

Department of Public Health Safe Drinking Water Act Environmental Protection Division Environmental Protection Agency

Acme Development Corporation wants to build a planned unit development for seniors. What do they need to file with the planning board?

Detailed plat maps with all uses defined

Karla is the salesperson in a real estate transaction. She overhears her clients, Terry and Tanya, talking about working with their lender and Tanya's boss to report a non-existent large salary increase. What should Karla do first?

Discuss the situation with her broker

After the deed's been recorded, and existing loans have been paid off, what's left for the closing attorney to do?

Distribute closing proceeds. File form 1099-S

Which federal act makes phone solicitation to numbers on the Do Not Call Registry illegal unless a prior relationship or permission exists?

Do Not Call Implementation Act of 2003

There are some right and wrong ways to use the MLS. Using it incorrectly can negatively impact your clients. What are some dos and don'ts related to listing properties in the MLS?

Do: -Enhance the listing content with quality, detailed information. -Check for typos, misspellings, and poor grammar. -Accentuate the positive and soften the negative. -Use emotion-evoking words. -Include good photographs.

The Owner/Property Manager Relationship: Property management proposal

Document that's the precursor of the owner and the property manager entering into a formal agreement

Age 65 or older with a family income of less than $10,000 for the year in which the exemption applies.

Double Homestead Exemption

Homestead exemption, plus may claim an additional exemption from all state ad valorem taxes on their principle residence.

Double homestead exemption

Which of the following is an advantage of living in a PUD or MUD?

Easy access to amenities

Assuming a fully leased property and deducting for vacancy and losses, income is $241,105.

Effective gross income

Income after losses from vacancies and credit losses are deducted

Effective gross income

The Real Estate Settlement Procedures Act protects consumers by _______.

Eliminating illegal kickbacks and referral fees among settlement service providers and requiring lender disclosures as part of a residential real estate transaction involving credit

Hunter Green is getting ready to move into a new apartment in a small town in west Atlanta. The landlord's already informed Hunter that she needs his Social Security number and current landlord's contact information. What else might the landlord request?

Employment record for the last three years In Georgia, landlords normally ask for a potential tenant's name and Social Security number, current landlord's name and contact information, and employment record for the last five years.

Turns information into indecipherable code

Encryption

Ted's property is in foreclosure, but he has some equity in his property. An investor suggests that she and Ted enter into a sales contract for a substantially higher price than the investor would actually pay. The investor pockets the cash and allows the house to be foreclosed on. What sort of scheme is this?

Equity skimming Equity skimming occurs when an investor receives title to a property, and usually rents out the home but doesn't make the mortgage payments. When equity skimming fraud like this occur, houses usually end up in foreclosure.

A lease without an established time period that may be terminated at will by either party and isn't inheritable.

Estate at will

A lease that ends on a specific date, survives either party's death, and is inheritable.

Estate for years

In Georgia, which type of leasehold lasts for a defined time period and automatically terminates when that period ends

Estate for years

Mrs. Peach is excited to get rid of John, who consistently pays his rent either late or not at all. She's gone through proper channels to legally end his lease before the contract end date. What method of termination is Mrs. Peach using?

Eviction

GAFLA targets predatory lending by prohibiting which of the following?

Excessive late fees and financing of credit insurance

In most cases, you're required to be a licensed real estate salesperson, associate broker, or broker in Georgia to sell timeshares. There are some exceptions. Determine whether these people must be licensed or are exempt from licensing.

Exempt from Licensing: -Phil owns 14 acres of lakefront property and plans to develop and sell timeshare townhouses. -Phil hires his niece to serve as a full time sales agent for the timeshares he is developing on his 14 acres. Must Be Licensed: -Kerry has been hired by Resort Condos International, a multi-national firm that manages the sales of timeshare properties. -Daniela is a broker whose best friend has asked Daniela to help her sell her timeshare condo. -Martin has just been hired by Special Properties Inc., a brokerage that focuses on timeshare sales and purchases.

Mike's been friends with Tim since college. They often work together: Mike flips houses and Tim's an appraiser that he uses frequently. It works out great for both friends and Mike definitely gets a better appraised value on the flips Tim handles. For every appraisal Tim handles for him, Mike gives him a $100 gift card. In what illegal practice does it sound like they're engaging?

Falsely inflating appraisals

FTC

Federal Trade Commission

Understanding the Eviction Process In what order must Mrs. Peach follow the steps to evict John?

First: The landlord files an affidavit in court. Second: The tenant has the opportunity to file a response with the court. Third: A judge rules in favor of either the landlord or tenant.

available under the VA loan program

Fixed-rate mortgage Adjustable-rate mortgage

Damage or water leaks

Flashing

______ around pipes, vents, or other protrusions is a prime spot for roof damage or water leaks.

Flashing

Why might a business owner opt to lease a building rather than purchase it?

Flexibility in moving

States that the agreement will be construed in accordance with the laws of the state in which the agreement is being executed.

Force of the agreement

Francisco's daughter, Martha, is applying for a mortgage loan. Francisco and Martha agree to provide documentation stating that Martha has a second part-time job working for Francisco's company in order to make her income qualify for the loan. Who's liable for fraud in this situation?

Francisco Martha Both Francisco and Martha are in violation of GRMFA provisions. If the lender is aware of the deception and allows it to go to underwriting, the lender is also in violation.

Georgia Residential Mortgage Fraud Act

GRMFA . This act focuses on a wide range of fraudulent activities, including fraudulent appraisals and sales contracts, intentional misrepresentation of financial information by a purchaser, and foreclosure fraud.

Sarah mentioned several ways that carbon monoxide can be introduced into a home. Which of these might result in the introduction of carbon monoxide into a home?

Gas furnace Gas stove Attached garage

What does the acronym GAFLA stand for?

Georgia Fair Lending Act

Which entity is responsible for ensuring that all timeshare rules are followed for timeshares located in Georgia?

Georgia Real Estate Commission

Right to Repair Act

Georgia's Right to Repair Act states that a buyer of a new construction home must follow a specific process prior to initiating litigation against the builder for a defect in workmanship or materials. The process should be spelled out in the purchase agreement with the builder, but in sum: At least 90 days before initiating a lawsuit, the buyer must send written notice to the builder stating the defect, the buyer's suggested remedy, and the fact that the notice is being provided in order to meet Georgia statutory requirements. Included with the notice, the buyer should provide any professional inspections, reports, photos, and other substantiating evidence of the defect.

Allows individuals in some service professions to buy deeply discounted homes in specially identified areas.

Good Neighbor Next Door

Payments gradually adjust upward. Initial payments result in negative amortization.

Graduated payment

Income received before expenses are deducted

Gross income

GRM or GIM: 20-unit apartment complex

Gross income multiplier

Brandy contracted with Gwen to rent a unit in her large apartment building. Gwen hadn't maintained the property well and was an absentee owner, but rent was cheap. And the bonus was that Gwen covered all utilities, garbage, water, and sewer, not to mention taxes, maintenance, and insurance. What kind of lease does Brandy have?

Gross lease

Landlord pays all expenses related to the property (not the tenant).

Gross lease

Water build-up and ice damming

Gutter

Lisa purchased an older home with a large backyard that's perfect for her pack of collies to romp in. Six months after she bought the property, a total stranger knocked on her door and told her he's the true property owner. After investigating, it turns out the person who sold Lisa the property had forged the deed without the true owner's knowledge. What's true about Lisa's situation?

Her title insurance policy may protect her from loss.

So, how can you determine whether there is asbestos in a home?

Hire an accredited individual to test for asbestos.

Jamal has a loan-to-value ratio of 75/25. This means ______.

His loan is 75% of the value of the real estate used as collateral and he's putting 25% down

The Morgans are about to close on their home. They're meeting with the lender to complete all the necessary paperwork. They've requested that none of their demographic information be shared with anyone. Which act would they need to be made aware of?

Home Mortgage Disclosure Act

About 50% of the borrowers in Neighborhood One are Hispanic, while only 4% in Neighborhood Two are Hispanic. The median home price in both neighborhoods is the same. However, statistics show that there is a significantly greater percentage of minority and low-income borrows who were denied financing for loans on properties in Neighborhood Two and were offered lower rates to live in Neighborhood One. What act is intended to prevent this type of potentially discriminatory lending pattern?

Home Mortgage Disclosure Act The Home Mortgage Disclosure Act requires many financial institutions to publicly disclose information about mortgages, allowing public officials to make informed policy decisions and revealing potentially discriminatory lending patterns.

Which of these is actually an amendment to the Truth in Lending Act (TILA)?

Home Ownership and Equity Protection Act

Which of the following specifies a requirement of pre-loan counseling for consumers?

Homeowner and Equity Protection Act

Funds construction or renovation in a regular first mortgage so borrowers don't have to refinance.

Homestyle Renovation

Which of the following is acceptable to include in an MLS listing?

House includes an alarm system.

A debt-to-income ratio (often abbreviated as "DTI") is quite simply the percentage of a borrower's monthly gross income that goes toward paying debts. Lenders focus on two specific ratios:

Housing debt-to-income ratio Total debt-to-income ratio

The Facts About Disability Rights

Housing providers are required to allow a person with disabilities to make reasonable modifications to a structure if it allows the person to enjoy the housing and its related facilities.

Discrimination often happens out of the public eye, which is one reason it continues to occur. Take a few minutes to watch the video in your resources, then determine which of these statements describes a standard process currently used to discover discriminatory practices.

Human rights advocates test real estate and mortgage professionals using pairs of testers that match in everything except their protected classes.

The organization that offers the Certified Property Management (CPM) certificate

IREM The Institute of Real Estate Management

When an individual is self-employed, proving income and finances to a lender may take a little extra effort than for other individuals who are not self-employed. According to the resource, what additional documents may a self-employed individual need to provide when obtaining a loan?

IRS Form 4506-T Profit-and-loss statement Tax returns

Greg and Neha are interested in buying a ranch-style home in a suburban family neighborhood. The sellers have only lived there for 19 months, so they have no information about the addition that was put on 20 or 30 years ago. Why does it matter whether the owners at the time got permits to do the addition?

If the addition WAS NOT permitted, it may need to be inspected to ensure it meets code and perhaps even be taken down.

Lot and Block Realty received a cease-and-desist order from the FTC due to misleading ads the firm was running. When does the order become effective?

Immediately upon issuance

true

Improvements for which special assessments are levied must benefit the properties they are levied against.

Reassessment of an individual property because tax authorities discovered renovations have been made to the property.

Improvements to a property

State Revenue Commissioner

In Georgia, which entity is responsible for inspecting the counties' reports to ensure that property is assessed uniformly and equally between and within the counties?

Asbestos

In accordance with OSHA regulations, property owners and managers must: -Determine the where asbestos is present (presumed to be part of structures built before 1981). -Either remove the asbestos or develop procedures for safely working in areas that are known to contain the material.

Sharla received an eviction notice from her landlord and quickly responded when the court sent her a summons. At the hearing, she told the judge about the malfunctioning water heater, producing documentation to prove that she'd notified her landlord in writing five times. What type of eviction challenge is this?

Incomplete repairs

What can occur when taxing jurisdictions fail to keep property assessments up to date?

Inequities in assessments can occur.

Adverse

Information is considered adverse if it is negative, usually regarded as any information that would reduce a property's value. Therefore, adverse material information would be considered any information that would cause an ordinary person to choose not to go through with the real estate transaction.

Material

Information is considered material if it is important in deciding what course of action the buyer takes regarding the real estate transaction.

Five factors are used to determine a FICO® credit score. What are they?

Inquiries Payment history Types of accounts Age of accounts Credit usage

Notice a reasonable person could obtain by making inquiries

Inquiry notice

What's the term for notice a reasonable person would obtain by inquiring into a property?

Inquiry notice

Usually paid for outside of closing, these fees help the buyer avoid purchasing a property and later having to pay for various repairs.

Inspection fees

As with other contributors to indoor air quality issues, there are some actions homeowners can take to prevent carbon monoxide issues in their homes. Which of the following can homeowners do?

Install carbon monoxide detectors Annually check carbon monoxide detectors Annually check any gas appliances or systems

Property manager Dawson was reviewing a property management agreement and was happy to learn that he would be indemnified for any losses due to tenant negligence. Where is this likely found in the property management agreement?

Insurance provision

States that the property manager is named on the owner's insurance policy.

Insurance provisions

Amount of payment that will be paid toward interest

Interest

The cost of borrowing money from someone else

Interest

With a straight mortgage, what type of payments are made up until the end of the loan term?

Interest

Which one of the following is a true statement about asbestos?

It is not safe at any level.

What three things happen after a document is recorded?

It is photocopied. It is filed in chronological order. It is bound in a book.

What does recording a document accomplish?

It makes the document a matter of public record.

the following statements are true of the Georgia Fair Lending Act as revised in 2003

It requires compliance from the originating lender to Fannie Mae, Freddie Mac, and other secondary market organizations.

The claims for loss statement is a pretty important part of the title policy. What is its purpose?

It states how the company will handle any claims that arise after purchase.

How does data encryption protect your and your clients' personal information?

It turns information into indecipherable code.

Which one of the following statements is true about groundwater?

It's a source of drinking water.

Derrick recently earned his real estate license, and he's eager to find new clients. He tells you that he plans to promote his services by sending an unsolicited fax to 100 potential clients. What should you advise him?

It's illegal to send commercial faxes unless he has the recipient's permission or an established relationship with the recipient.

the story about warranties is true

James bought the house, with the home warranty in place, and has lived there for two months. A severe thunderstorm rolled through the area and James noticed a leak around one of his windows. The first thing James should do is file a claim according to the warranty. The builder says the window is defective and James needs to contact the window's manufacturer. The manufacturer says the window isn't defective and refuses to fix the problem. To address this disputed claim, James must first engage in mediation to attempt a resolution. If a resolution isn't found, arbitration may be the next step. Usually, litigation is a last resort if the arbitration decision isn't binding.

Modified Gross Lease: Who pays the following expenses related to the property?

Landlord: Maintenance, Utilities Tenant: Rent

Georgia leases have an implied covenant of quiet enjoyment. What does this mean?

Landlords must ensure tenants are able to use the property for the purpose outlined in the lease agreement.

The contract that allows a tenant to live on the property and establishes the rights and obligations of the tenant.

Lease

A lease with an option to buy is also known as a ______.

Lease option

Cynthia is leasing her commercial space. Part of her monthly payment may go toward the purchase price. What type of contract does Cynthia have?

Lease with an option clause

The right that allows a tenant to live on the property.

Leasehold estate

Everything in your office is potentially at risk from thieves and other criminals. Because of this, what should you never do?

Leave clients unattended in the office.

The Owner/Property Manager Relationship: Property management agreement

Legal and binding contract that spells out the duties of both the owner and the property manager

We know the title company substantiates claims of divorce, secured transactions, and judgments when it does a title search. What three other things will a title search verify?

Legal property description Ownership Encumbrances

The parties to a valid lease contract must be __________.

Legally competent and over age 18

Who is responsible for providing the Loan Estimate?

Lender

-Evidence that the buyers will be able to sell or use the property as collateral to obtain a loan -Proof that the property is free and clear of all obligations and debts Proof of title insurance for buyers who are taking out a loan

Lender requirement before extending a loan on a property

Loan Origination Fee

Lenders often receive compensation by charging loan origination fees. If you heard that "ABC Bank charges a 1% loan origination fee," this would mean that ABC charged 1% of the loan up front, which is paid by the borrower at closing. Loan origination fees are especially common with mortgage brokers. They may vary between 1% and 3%. Loan fees higher than 3% no longer qualify as qualified mortgages, so very few lenders charge anything above 3%. Example: Let's say that XYZ Lender charges a 2% loan origination fee. Kelly and Bob are buying a home that cost $250,000, and they are obtaining a 90% loan and paying the loan origination fee. Their loan origination fee could be calculated like this: $250,000 x .9 = 225,000 x .02 = 4,500 origination loan fee

What is the formal action to impose the property tax?

Levy

Obligations or debts the borrower owes

Liabilities

Which of these would most likely be found in the "potentially negative items" section of a credit report?

Lien

In addition to reducing settlement costs, RESPA helps protect the consumer by requiring clarity around settlement fees. The borrower in a real estate transaction must receive certain disclosures. Which two of these are the names of the disclosure forms related to RESPA?

Loan Estimate Closing Disclosure

Points calculation

Loan amount × points = points amount

LTVR Formula

Loan amount ÷ property value x 100

Once completed, which of the following tasks initiates the loan process?

Loan application

Sarah is buying a condominium with cash. Which of the following won't be part of her closing costs?

Loan application fee

Which lenders are covered by GAFLA?

Loan brokers, servicers, and purchasers or assignees

No good banker would write a loan without these!

Loan fees

A calculation that describes the amount being borrowed compared to the value of a property is called ______ ratio.

Loan-to-value

Loan-to-value equation

Loan-to-value = (loam amount/appraised property value) x 100 *the answer is a percentage

What are advances? *to using Farmer Mac

Loans the Federal Home Loan Bank makes to member banks

Increase in capital resulting from the sale of property owned more than one year -Prior to 2013, the highest rate paid on this calculation of sold property was 15%. -As of 2013, a new rate of up to 20% for taxpayers in the new 39.6% income tax bracket applies. -An additional 3.8% may apply on net investment income for those in the highest tax bracket, making an effective tax rate calculation of 23.8%.

Long-term capital gain

Designed for borrowers who have irregular or more difficult to document income. Requires excellent credit.

Low documentation (low doc)

Mortgage Electronic Registration System

MERS MERS is a computerized registration system of tracking that records all of the beneficial interests connected to a mortgage.

An online database of active, under contract, sold, expired, and withdrawn listings is known as a what?

MLS

This covers the tenant's promise to prevent any undue harm to the property.

Maintenance and disrepair General maintenance is usually the landlord's responsibility. However, sometimes a tenant will take care of the maintenance in exchange for reduced rent. Disrepair information usually states that the tenant will be held financially responsible for any damage done to the property that's more extensive than normal wear and tear.

Nancy has been a real estate salesperson for a couple of years, and she's still building her business. She has been noticing a demographic shift in the neighborhood where she lives. Many of the long-time residents are elderly white people and she's overheard them complaining several times about all the African Americans moving into the neighborhood. The demographic shift plus the chatter around the neighborhood makes Nancy think there may be an opportunity to drum up business. What should she do?

Make sure that all the listings mention each property's proximity to parks, walking trails, and the community center.

Nancy's been a real estate salesperson for a couple of years and she's still building her business. She's noticed a demographic shift in the neighborhood where she lives. Many of the long-time residents are elderly African Americans and she's overheard them complaining about all the Latinos moving into the neighborhood. The demographic shift plus the chatter around the neighborhood makes Nancy think there may be an opportunity to drum up business. What should she do?

Make sure that all the listings mention each property's proximity to parks, walking trails, and the community center.

Property Management Responsibilities PUD property manager

Manages the maintenance, landscaping, security issues and concerns, and enforcement of the homeowners association's regulations.

You want to become a planned unit development (PUD) property manager. What is an area of responsibility that you will undertake?

Managing maintenance, landscaping, security issues, and concerns, and enforcing the regulations

The probable sales price of a property if the property were listed today, and a willing seller and buyer were both involved in the transfer.

Market value

Property Management Proposal Sections Duties provided

Marketing and advertising

How is the tax assessor involved in renovations to a property?

May make a surprise inspection on a single property

This is 1/10 of a cent ($0.001). Using this type of rate, tax rates are expressed as either per $100 or per $1,000 of assessed value.

Mill

Julia is trying to buy a house and is going through the loan application process. As part of the process, her credit score was run. Which of these issues would harm her score?

Missed payments

Inspectors look for a variety of things when they perform inspections.. Here they are:

Moisture intrusion Evidence of pest intrusion Safety or health hazards Roof condition Drainage issues

Which environmental and health issue is best addressed by property owners and managers educating employees and tenants on how to both prevent it and to clean it up if it appears?

Mold Property owners and managers should document their mold prevention and cleaning policies and share them with both employees and tenants.

Property Management Proposal Sections Reporting provided

Monthly and preventive maintenance reports

What primary issues did the 2003 revision of GAFLA address, reducing concerns held by primary and secondary mortgage market players?

More clearly defined "predatory lending." & Added "knowing or willful" to violation terms.

Carly, the property manager for several large apartment complexes, would like to control her tenant base just like Mrs. Murphy does. Why is Mrs. Murphy allowed to discriminate, when Carly isn't?

Mrs. Murphy lives in the property, which has fewer than four rental units.

Home inspector Maura was walking Thad through a property inspection. The frame house, on a slab foundation, had mulch piled up about 18 inches next to the house. Why was Maura noting this as a concern?

Mulch next to wood siding may lead to wood rot.

Jan has been a model tenant, living in her apartment for almost five years when she lands her dream job in London. Because Joseph, her landlord, is so fond of her, he's accepted her six weeks' notice. It's the prime time of year for apartment rentals, so he releases her from her lease six months before it expires. The lease was terminated by _________.

Mutual agreement

The personal information section includes either information you reported to the credit reporting agency, or information your creditors or other sources reported to the agency. What information can you find in this section?

Name and name variations Year of birth Employers Spouse or co-applicant name Addresses

It's a bad idea to include information about your loved ones and pets in your personal marketing because it's a safety risk to your loved ones. From a safety standpoint, there's also another reason to avoid including this information in your personal marketing. What is it?

Names and birth dates of children and pets can be used as clues to your passwords.

Which one of these commercial property manager's duties requires the property manager to secure a profitable deal for the landlord and also to negotiate a lease the commercial tenant can afford?

Negotiate leases.

GRMFA impacts anyone who knowingly misleads someone else during the mortgage lending process. Which of the following processes are included?

Negotiation of terms Underwriting Appraisal Loan application

Bonita rented a large warehouse space for her art classes. Taxes, maintenance, and insurance were included in the space, but she was responsible for her utilities. What kind of lease does Bonita have?

Net lease

What do you get when you subtract operating expenses from effective gross income?

Net operating income

The difference between assets and liabilities

Net worth

Who might be impacted by the expiration of abatements?

New buyers

Which four federally related lending transactions does RESPA cover?

New first mortgage loan Refinance loan Second mortgage Home equity loan

What's the Better Deal? Shelly's also considering a commercial property that is leased by an ice cream store because she really loves a good banana split. This building is much older, so it costs only $200,000. She wants to put down the $100,000 she has saved, so she would only have a $100,000 mortgage. After the cost of repairs, she will have an annual cash flow of $13,000. Is this a better investment than the rental house from the last slide?

No

Tilly is a high school teacher who's decided to purchase a home nearer to the school where she works. She looks through a "Homes for Sale" magazine to see if there are any homes she can afford, and she sees a listing for a cute two-bedroom with a fenced yard big enough for both of her dogs! The price is a little high, but the ad excitedly proclaims, "Financing available!" Does TILA require that Tilly see additional terms of credit with this ad?

No "Financing available" doesn't count as a specific credit offer, so you're right; this ad isn't required to provide any additional credit information. If the ad had listed a specific credit term, then all the relevant credit terms would also have to be stated in the ad.

Some differences emerge. Now you're worried if the applicants will be compatible with the current tenants. One of the applicants has a nine-year-old child, and the other doesn't have any kids. You know that the tenant in the unit next to the vacant one hates kids. Can you deny the applicant with a child based on this fact?

No Property owners and managers must follow fair housing laws, and can't participate in behaviors that discriminate against any of the protected classes based on potential tenants' race, color, religion, sex, disability, familial status, or national origin.

Your potential tenant, Ruby, has some questions. If the townhouse Ruby is considering renting is unfurnished and the monthly rent is $2,500, what's the maximum security deposit you may collect?

No limit Yep, in Georgia there's no limit on how much the security deposit can be, though the equivalent of one month's rent is typical. Let's cover a few more general security deposit questions.

One common predatory lending practice is to charge fees for unnecessary or ______ loan products or services.

Non-existent

Ron can offer cash back to his client if his client goes with the mortgage broker he recommends.

Not allowed under RESPA

Bo's real estate ad states: "Custom homes for sale with scenic mountain views. Easy financing and low down payments." What else must be included in the ad in order for it to comply with TILA?

Nothing Under TILA, ads that mention general financing terms, such as "low down payment" or "easy financing," do not require additional disclosure. If Bo had gotten more specific (e.g., "10-year loan with 0% down") he would need to include more information.

What two types of property information are included in HMDA data?

Occupancy Property type

A couple of places where you'll most likely encounter an underground storage tank were mentioned (go back to the previous slide if you need to read this again). Which two of these properties may house an underground storage tank?

Older homes to store heating oil Commercial or industrial buildings to store heating oil

We know that the title commitment is a title insurance company's promise to issue an insurance policy on a property, but when will this issuance happen?

Once the final settlement on the property has occurred and conditions named in the binder have been satisfied.

Contains a description of the property and information about the legal owner and holder of the title.

Owner's covenants

The property management agreement cements the agency relationship between the owner and the property manager, and, as such, is a very important document. How familiar are you with the agreement and its contents? these are the five items that should be included in a property management agreement.

Owner's covenants Property manager's scope of authority Description and location of property Insurance provision Property manager's fee

Springs and Things water landscaping store opened up in the strip mall. To keep rents low, the store owner agreed to pay the building owner 5% of his gross sales above $20,000 per quarter. What kind of lease does Springs and Things have?

Percentage lease

A lease that ends on, say, December 31, but will be automatically renewed for another negotiated time period.

Periodic estate

What type of leasehold involves a possessory interest that's automatically renewed at the end of each period specified in the lease?

Periodic estate

Which type of reassessment occurs on a regular basis established by statutes?

Periodic reassessment

Reassessment to multiple properties due to statutes requiring regularly scheduled assessments.

Periodic reassessments

Property Management Proposal Sections Property description

Photos of the street and aerial views of the property

If a property owner fails to pay taxes, what can the government do?

Place a lien on the property.

Property Management Responsibilities Development property manager

Plans the construction of large projects and works with municipal agencies and other local organizations to embrace the development project.

Which decision stated that separate facilities for blacks and whites were constitutional as long as they were "equal"?

Plessy vs. Ferguson

The income from property taxes benefits the community. Which three of these are examples of these benefits?

Police department Roadways State aid

Maintenance Categories

Preventative Care Routine/Custodial Maintenance Corrective/Repair Work Commercial Properties: Tenant Improvements

It's time to change the air filters in a 10-unit apartment complex. What type of maintenance will you be performing?

Preventive A lot of long-term damage can be avoided or delayed by performing preventive maintenance, such as changing a furnace filter.

What's the purpose of PMI?

Private Mortgage Insurance To protect the lender in case of borrower default when the borrower has put down less than 20% -conventional loans

The Owner/Property Manager Relationship: Owner/manager relationship

Property manager and owner agree on duties within the authority the owner grants that will be carried out by both with honesty and trust

You've identified the information needed to calculate commission and showed how those pieces come together in the commission formula. Let's go a step further and play around with some numbers a bit. You have a property listed at $160,000. The commission rate listed in the listing agreement is 6%, which you will split evenly with the buyer's representative. This would earn you a commission of $4,800.

Property sale price=$160,000 Total commission rate=.06 (6%) Commission split=.5 (50%) Earned commission=$4,800 First you need to find the total commission by multiplying the sales price by the commission rate ($160,000 × .06). Next, take the total commission and multiple by the percentage that you keep ($9,600 × 0.5).

"Or another example," Teddy continued, "is a contractor who placed a $50,000 mechanic's lien against the house when Sam Crane didn't pay him for the new roof he installed, resulting in a broken link in the chain of title." Where will Sam find what he needs to repair the broken link?

Public records or onsite inspection

The Hendersons don't have enough money to make the full 20% down payment their institutional lender requires. To close the sale, the seller is willing to finance a loan for the amount between the home's list price and what the institutional lender is willing to loan. What's this type of financing called?

Purchase money mortgage

This gives the tenant the right to use a property for the purpose that's outlined in the lease agreement. Although this is a lease provision, it's often not in the lease, but is assumed.

Quiet enjoyment Quiet enjoyment is the tenant's right to use a property for the purpose that's outlined in the lease agreement. If this right is violated and the landlord doesn't correct it, a tenant has the right to vacate the property with no financial responsibilities.

Which of the following is the largest MLS available in the U.S.?

REALTOR.com

Craig is applying for a federally related loan from his bank to buy a large ranch house on five acres.

RESPA applies

Letitia and Marla have purchased a fixer-upper. They borrowed enough on an FHA loan to pay for the property and the renovation costs.

RESPA applies

Chance and Maury are purchasing a farm house on 100 acres.

RESPA doesn't apply

Donna is purchasing a home using all cash from her lottery winnings.

RESPA doesn't apply

Kendra is buying an auto repair business, including the building and land.

RESPA doesn't apply

Smitty and Kate are financing a 40-acre lot upon which they hope one day to build their dream home.

RESPA doesn't apply RESPA doesn't apply to transactions for land tracts of 25 or more acres.

HDMA requires financial institutions to collect and share data about lending practices. The data consists of information on loans, applicants, the financial institution, and the property. What three types of information are included in HMDA data about loan applicants?

Race Ethnicity Sex

As a licensee, you're helping a couple buy a new home. The title company discovers a cloud on the home's title. Which one of these is your best course of action?

Recommend the couple find another property or get the seller to quiet title.

These filing fees are nominal and are required to clear all defects, so that the buyer can be presented with a clear title.

Recording fees

A lending company denies all loans for properties south of the river because of that area's demographics.

Redlining

What's the term for a lender refusing to lend in a specific area, often based on the area's minority make-up?

Redlining

Higher monthly payments, less total interest

Reduced term mortgage

The Community Reinvestment Act requires lenders to invest in development and ______ efforts that will enable low- and moderate-income individuals and families to afford a home.

Rehabilitation

A lender may calculate the pre-payment penalty based on a percentage of the interest that would be owed or the _______.

Remaining balance

Property Management Proposal Sections Reporting provided

Rental contracts, including expiration dates

What's the best way for a property manager to assess an applicant's financial status?

Request a rent-related credit history from a credit reporting company.

With a cooperative, the transfer of ownership ______.

Requires board approval

The lessor's right to reclaim possession of a rented property

Reversion

Take a minute to read through the scenario and then decide which items Karen can cross off her checklist.

Review the sales agreement and closing statement. Make all requested repairs. Have her agent verify buyer financing is secured. Clear any deficiencies in title.

Which person in the following scenarios holds a real estate license?

Richard works for more than one owner for a fee.

Jane is selling her condo. What allows her condo association to purchase her unit before she puts it on the market?

Right of first refusal

Provides funding for rural residential housing as well as community service-type facilities.

Rural Housing Service

In Georgia, upon what amount is the transfer tax calculated?

Sales price

In the video, we mentioned that you can calculate commission once you have a couple of pieces of information. Which two of the following items do you need to calculate total commission?

Sales price Commission rate

How are GRM and GIM calculated?

Sales price divided by monthly gross rent = Gross rent multiplier Sales price divided by annual gross income= Gross income multiplier

Shelly really wants to buy the building that's leased by the ice cream store and wants to know how she can get a better ROR. Crunch the numbers for her and match the scenarios with the ROR. Scenario 1: Shelly puts down $10,000 toward the purchase price, finances the rest, and has a cash flow of $2,800 after repairs and (much higher) debt services. Scenario 2: Shelly puts down $50,000 toward the purchase price, finances the rest, and has a cash flow of $10,000 after repairs and debt services. Scenario 3: Shelly pays $80,000 cash toward the purchase price, finances the rest, and has a cash flow of $11,000 after repairs and debt services.

Scenario 3: 14% Scenario 1: 28% Scenario 2: 20%

When property managers take matters into their own hands and evict a tenant without going through the proper legal procedures, what type of eviction is it?

Self-help eviction

Who grants title to the property being sold and receives payment?

Seller

Purchase money mortgage:

Seller financing in which a mortgage is given by the buyer to the seller toward the purchase price. Buyers use this as down payment financing. The seller is the mortgagee and the buyer is the mortgagor. The purchase money mortgage may be a first mortgage, a junior mortgage, or a junior wrap-around (explained below) mortgage.

Wrap-around mortgage:

Seller financing that wraps the new buyer's mortgage around the seller's existing mortgage. The seller continues to make payments on the first mortgage, and the buyer makes the payments to the seller on the wrap-around mortgage.

Provides client support, bring transactional files, and collect commissions from the their brokers after closing.

Seller's or buyer's agent

When a taxpayer files a property tax appeal with the local tax assessor, which of the following steps is included?

Sending a copy of the PT-311-A to the tax assessor

To help you determine what wording to use in your advertising, we've included a resource from the Georgia REALTORS® website that outlines words and phrases that are outright prohibited, those that should be approached with caution, and those that are deemed A-OK. Which of these phrases is acceptable to use in a housing advertisement?

Senior discount

The first case is Plessy vs. Ferguson from the 1890s. This case set the stage for what would commonly be known as the " " doctrine.

Separate but equal

Elizabeth is financing a new home. She submitted her loan application on Monday, August 3. She's set to close on Thursday, September 21. By what date must her lender provide the Closing Disclosure?

September 18

If a landlord refuses to rent an apartment to two single women who live together, this is discrimination on the basis of what federally protected class?

Sex

Gina is a tax assessor. Which of the following is true about her job?

She compares nearby property sales to determine market value.

There are a handful of exemptions to federal fair housing laws. For example, let's say Mrs. Murphy is planning to rent out a room in her home. She's very concerned about the idea of a man in her home, and she thinks a family will be too boisterous, so she wants to rent only to a single young woman. Technically, she's allowed to screen people accordingly. But even in this scenario, she can cross the line into violating fair housing laws. Which two of these actions would violate fair housing laws?

She puts an ad on Craigslist that specifies "young, single woman only." She hires a real estate agent to help find a single, white tenant.

Increase in capital resulting from the sale of property owned one year or less -Taxed at the taxpayers' marginal tax rate.

Short-term capital gain

Signifies in writing that both the owner and the property manager agree to the terms of the contract.

Signatures

the benefit(s) of an interest-only loan.

Small monthly payment for the first few years

The original owner or developer of a condo project is also known as its ________.

Sponsor Yes, the owner or developer is called the sponsor and is also responsible for appointing the initial board of directors and manager.

There are several types of shares in a cooperative unit. Which type of share allows the holder to sell shares without approval?

Sponsor shares

The Federal Housing Administration's mission includes ______ through the establishment of lending standards and by insuring mortgages.

Stabilizing the mortgage market

Title insurance that protects the buyer from basic title defects

Standard coverage policy

This expense results when real property is sold and title switches from the seller to the buyer.

State and local transfer taxes

You're posting a listing on the MLS. Which of the following are you allowed to do according to most MLS guidelines?

State that a property is "one block" from downtown, if it is

Early in its history, the Federal Housing Administration officially supported keeping "incompatible" racial groups out of the newly developed white suburbs. What is this practice known as?

Steering

When working with an African American client, Nancy makes an effort to show them homes in primarily African American communities.

Steering

Calculating Housing and Total Debt-to-Income Ratios

Step 1 Let's say you're working with a family whose lending institution uses a housing debt-to-income ratio of 25%, and 33% for total debt to income. This family has a monthly gross income of $5,000 and expenses of $500. To find the maximum house payment they'd qualify for, multiply their gross income of $5,000 by the 25% housing debt-to-income ratio, and you get $1,250. Step 2 But this is only part of the qualifying process. We want to make sure that they still fall within the total debt-to-income ratio. Take their gross income again and multiply by the total debt-to-income ratio of 33%, and we get $1,650. Result Looking at their monthly expenses of $500 and a maximum house expense of $1,250 per month does put them above $1,650. Either cutting monthly expenses or keeping the house expense below $1,150 are options for this family. *You'll find these formulas and others on your Real Estate Math Cheat Sheet.

Samuel and Yoshi have worked at the same firm for a few months and get along well. Samuel mentions he has a credit score in the low 800s. Yoshi, who's just starting out, persuades Samuel to sign for a loan to help Yoshi buy a property, since his credit isn't good enough. Yoshi promises to make the mortgage payments, but two months after the deal closes, Yoshi moves across the country. Samuel's now stuck with a $400,000 mortgage. What type of scheme is this?

Straw buyer

A description of the premises is also required on a lease contract, because it's hard to rent out a place if you don't know where it is. What does a property description include?

Street address Unit number (if applicable)

Gives the title company permission to pursue the party who caused a title insurance loss or claim payout

Subrogation

Title defects can stall closings. But if a title defect is revealed after closing, what recourse does the buyer have?

Sue the seller Once a deal has been signed, sealed, and delivered, the only recourse a buyer has is to sue the property seller for any damages accrued. Reselling the property would potentially expose the new owners to the lawsuit.

If there are any concerns about a seller's honesty, or if a buyer wishes to have a more objective perspective on various physical condition issues, the buyer may want to ask the seller to obtain a CLUE report for the buyer's review before making an offer. What's the purpose of a CLUE report?

Summarize all insurance claims filed relative to the property within the last seven years

Property managers spend a good deal of their time overseeing and managing others: maintenance workers, staff, contractors, and sometimes even tenants. To be effective in this area, a property manager needs to have what type of skills?

Supervisory

What is TRID?

TILA-RESPA Integrated Disclosures

Ken, a licensee, has published an ad claiming that he can sell homes for 25% more than any of his competitors. The Federal Trade Commission determined this to be a deceptive ad. What might the FTC require Ken to do as a penalty for his deception?

Take out new ads correcting the misinformation in his original ad.

Charles just learned that the master bath addition on the home he purchased was built without obtaining permits. It's actually situated too close to the lot line. What might Charles have to do to his master bath?

Take the addition down.

When presented with a dangerous situation, saying something like, "My office knows where I am and who I am with" is an example of _________.

Talking your way out

Formal action by a taxing district to impose the tax amount on real property required to address budgetary needs for the upcoming year.

Tax levy

Determined by the budgetary needs of local government that's used, along with the assessed value, to calculate the amount of real property.

Tax rate

what's the main reason that property tax bills vary from one county to the next?

Tax rate

Which two of the following items are used as the basis for calculating a property's real estate tax?

Tax rate Assessed value

Verify income from all sources and verify consistency of income over multiple years

Tax returns

Requires property owners to prove that the property is not taxable.

Taxability

Age 62 or older with a family income less than $30,000 for the preceding year.

Taxes Frozen at Base Amount

Now that you're familiar with the exemptions, let's see if you can determine which programs your client might qualify for. Olin is 70 years old and has an income of $9,000. For which program(s) might Olin qualify? Select all that apply.

Taxes Frozen at Base Amount Deferred Tax Payment Double Homestead Exemption

Exemption doesn't apply to school taxes or bond debt.

Taxes frozen at base amount

What calculation is used to determine the accrued taxes owed by a seller at closing? Assume the closing is held on the last day of the month, the seller owns the day of closing, and you're using a statutory year.

Taxes owed ÷ 12 months = taxes owed per month AND taxes owed per month × number of full months passed = accrued taxes owed by the seller at closing

Construction mortgage:

Temporary financing for construction purposes. The developer submits plans for a proposed project, and the lender makes a loan based on the property appraisal value and the construction plans. The entire loan isn't given at once; disbursements are made at intervals as phases of construction are completed. Upon completion, the lender makes a final inspection, closes the construction loan, and converts the loan into permanent, long-term financing. Construction loans involve risk for the lender (they are essentially loaning on land, air, and a promise to build) and usually come with a higher rate.

Which of the following reasons for eviction could be categorized as discrimination?

Tenant's familial status

Net Leases: Who pays the following expenses related to the property?

Tenant: Taxes, Insurance, Maintenance, utilities Landlord: Mortgage

The ______ should clearly state the dates a lease begins and ends.

Term

The length of the loan

Term

Marla's excited about closing on a cute lakefront cottage. But when she reads the report from the home inspection, she learns that the chimney leaks and that there is water damage in several places. This wasn't on any of the seller's disclosures. Which of these is the best option for Marla?

Terminate the agreement and ask for a refund of her earnest money.

What's the most common type of wood eating pest?

Termites

PUDs and MUDs

Terry and Tom are siblings in their early to mid-30s. Terry, the oldest, is married with three kids. She and her husband both work and enjoy living in a community that has everything their family needs in a relatively small area. They live in a planned unit development (PUD). Tom, the younger sibling, lives with his partner above a retail space in a nice neighborhood with a mix of homes and shops. Tom and his partner live in a mixed-use development (MUD).

Put Them in Order If you struggle with keeping these straight, try boiling them down to one bullet point each and putting them in context of other events happening in the U.S. at that time.

The Civil Rights Act in the 1860s was a result of the Civil War (race and color). The 1960s civil rights movement was largely responsible for the federal Fair Housing Act of 1968 (race, religion, national origin). Feminism was in full swing in the 1970s, when sex was added via the Housing and Community Development Act. Changing family structures, single women in the workforce, and additional opportunities for people with disabilities led to further changes in 1988, requiring amendments to the original Fair Housing Act. Outdated houses with staircases and small bathrooms proved to be a hindrance for wheelchairs, and rights for people with disabilities were strengthened in 1990. After everything was implemented, exemptions were required to allow seniors specific housing.

Which of these groups is responsible for receiving fair housing complaints?

The Office of Fair Housing and Equal Opportunity

What's an outstanding principal balance?

The amount that's still owed to the lender

Interest-only:

The borrower only pays the interest on the loan for a set number of years—usually between five and seven. After the term is over, the borrower must either pay off the entire loan principal in a lump-sum payment, or will need to finance the principal through another loan. Also known as term or straight-term loan.

Lease with option to buy:

The buyer and seller negotiate a sale price, which is written into the lease. Sellers will often apply a portion of the rent toward the purchase to entice the buyers to close more quickly.

In a cooperative, who owns the land and buildings?

The co-op corporation

If there's more than one recorded deed on a specific property, which one takes priority?

The deed that was recorded first

Final approval:

The final approval is communicated to all interested parties through a loan commitment letter, stating that the lender has approved the loan and has committed to issue the loan. The loan commitment is only good for a short time. If there is a delay in the closing, the buyer may need to resubmit the loan application and start over.

Examines all documents and ensures that the property has clear title if a loan is involved.

The lender's representative

Actual

The licensee must have actual knowledge about the physical condition of the property; this means that even if the seller knows that the basement leaks and does not tell you about the leak, if you can plainly notice evidence of a leak you can't just turn a blind eye to it and claim ignorance. You must disclose what you know!

What is a licensee's first line of defense when mortgage fraud is suspected?

The licensee's broker

Debt Service

The monthly mortgage payment multiplied by the number of months in a year is called the annual debt service on a mortgage. So if a person is paying $2,000 per month on a mortgage, the debt service is $24,000. To get debt service, simply multiply the monthly payment by 12. Lenders use debt service to determine how much additional debt a person can reasonably take on. Debt servicing isn't simply for mortgage payments, but also for credit card debt, auto loan, etc.

What happens when a municipality completes an "in rem" foreclosure?

The municipality obtains title to the property.

Esly Carmona is over the moon! She just purchased her first home that is set to close at the same time her lease ends next month—perfect timing! She was really counting on using her security deposit refund of $1,500 toward moving expenses. However, her apartment complex just got bought out by a large property management company. Which of the following is true regarding this scenario?

The new property management company has Esly's security deposit and will honor the terms of her lease regarding the return of the money.

Which of the following information in a report would NOT help your owner assess whether your rental rates are competitive?

The number of occupants in each of your units

the following statements are true about making bi-weekly mortgage loan payments

The payment plan reduces a loan's amortization period by making the equivalent of one extra payment every year.

To calculate anticipated annual rent for a property, a property manager should take into account two primary factors, which are ______.

The per-unit rate and the occupancy/vacancy situation *Rental calculations should take into account the per-unit rate (along with any anticipated increases) and the occupancy situation from the previous year to obtain anticipated annual rental income.

Within the tax lien sale process, which of the following occurs?

The property owner may redeem the property before the tax lien sale occurs by paying delinquent taxes and any penalty owed.

Who is ultimately responsible for ensuring that any hazardous waste produced at an apartment complex is properly disposed of?

The property owner or manager

Ad valorem taxes are based on what?

The property's market value

Now that you know about public records, can you tell us who maintains them?

The public recorder's office

Under RESPA, a rebate of a licensee's commission may be offered to a transaction party, provided which of the following is true?

The rebate is not required for referral of business.

When a landlord sells a rental property or transfers title in any way, ________________.

The renter's lease must be renegotiated with the new owner

In commercial lease agreements, tenants pay the owner in exchange for ______.

The right to operate their business on the property

If home repairs are agreed upon in the sales contract, who's responsible for making them?

The seller

Prior to closing, who should request a loan payoff statement?

The seller

When the buyer has a lead inspection performed and lead paint is discovered in the home, what options may the contingency clause offer?

The seller can correct the conditions. The buyer can accept property "as is." The seller can make a counter-offer.

Many activities occur during a title closing, both prior to and at the closing itself. Match each activity to the time frame in which it occurs during the closing process. At closing

The seller is paid the purchase price balance.

Who selects a condominium association's initial board of directors?

The sponsor

With percentage leases, tenants pay their landlord a percentage of their sales once their sales exceed a certain point (natural break-even point).

The tenant wants to keep base rent low.

Assuming licensee Shannon has actual knowledge of all of the following property issues, which of these issues should she disclose to prospective buyers?

The upstairs bathroom has a leaky toilet.

Certain homes and other buildings are designated as "target" dwellings by the EPA. What does this mean?

There are specific requirements for contractors performing lead abatement or remodeling these homes.

what's R-value?

Thermal resistance of insulation

Grantor and Grantee Indexes

These indexes are much more common—in fact, every state uses them. Also stored chronologically, they're an alphabetized list of all property grantors recorded in a year. So if John P. Smith sold a property in 2007, you could find the 2007 index book, look in the "S" section, and be directed to the corresponding recordation book and page to find that deed. The index also lists the grantee's name next to the grantor's. Similarly, the grantee index lists grantee's names for a given year and shows where to locate their corresponding documents.

tax abatement.

These programs can bring consumers significant savings, allow them to buy more home for the same price, or improve their chances of qualifying for a mortgage by putting a home's total monthly payment within reach.

Why are galvanized pipes a problem in older homes?

They can rust and cause leaks and low water pressure.

When a brokerage chooses an MLS, which of the following is true?

They may choose several MLS systems.

Which of the following is true about affordable housing loan programs?

They tend to come and go and change fairly regularly depending on funding and other factors. Affordable housing loan programs, offered through federal, state, and local governments, as well as private and not-for-profit organizations, tend to change, appear, and disappear over time. They target low- to moderate-income borrowers, as well as first time homebuyers and some rural borrowers.

Julia and her husband, Mark, are financing the purchase of their new home. Their lender requires that they have title insurance. When and how often will they need to pay the title insurance?

They will only pay once, at the time that the policy is issued.

George and June Dobson are a married couple who bought their home three years ago, though they lived in it for only 18 months before traveling abroad and renting it out. Now they've been offered a price that's $300,000 more than they paid for it, so they've decided to sell. What's true about this situation?

They won't be allowed to exclude the capital gains from the sale when they file their income taxes because they lived in the home for fewer than two of the preceding five years.

Let's assume a buyer in a full disclosure state received the disclosure form from the seller, who reported she wasn't aware of any material defects with the property. However, an inspection uncovered some hail damage to the roof. The seller was unaware of this defect. True: Even though the property's already under contract, the buyer can ask the seller to make necessary repairs and/or provide the buyer with a credit to cover the cost of repairing the roof.

This highlights the importance of home inspections (and an inspection contingency in the contract). Even if sellers are truthful, they may be unaware that a material defect exists. And, in caveat emptor states, they can state that they make no representations about the property's condition. It's up to the buyer to investigate.

Tract Indexes

This indexing method involves grouping one or more parcels of land into a tract, and the properties that fall into that tract are indexed onto a page—all corresponding mortgages, deeds, etc for those properties are indexed on that page, which directs users to the recordation book and page where the documents can be located. Tract indexes are only used in nine states.

Mortgage tax:

This is a $10 tax imposed on any loan subject to the Georgia Residential Mortgage Act, and is payable to the Georgia Department of Banking and Finance.

Intangibles tax:

This is a charge on the value of any mortgage debt created by a transaction and is a tax imposed at a rate of $3 per $1,000 of the amount of the loan amount (e.g., a property that financed $80,000 would realize an intangible tax of $240.

Estate for Years

This is a leasehold of definite duration that terminates automatically and is inheritable, meaning that if either party to the lease (usually the owner or the tenant) dies, the lease isn't automatically terminated. "Estate for years" is a bit of a misnomer: it simply means for a definite duration, and can be for any length of time, even days or weeks. In Georgia, any lease that's for a term of five years or longer is considered an estate for years, unless otherwise specified in the lease. Example Lisa has a notions shop in a commercial building. Her lease, which is in writing, is for three years. If Lisa or the building owner dies, the terms of the lease survive. At the end of three years, the parties may negotiate new terms or Lisa may vacate.

Estate at Will

This is a type of month-to-month tenancy. This leasehold estate may be terminated at will by either party with proper notice. It isn't inheritable. In Georgia, a lessor must give a lessee at least 60 days' notice before increasing rent or asking the tenant to vacate. The tenant must give the lessor at least 30 days' notice to terminate or change a lease agreement. If either party to the lease dies, the leasehold automatically terminates. Example Josephine is leasing a parking lot between her shop and the store next door. The owner hasn't decided yet whether to keep the parking lot or sell it, so he signs an estate at will lease with Josephine. Either Josephine or the owner may terminate with notice. If either Josephine or the owner dies, the lease terminates.

Title search:

This is performed to determine a clear title.

Credit report:

This is pulled to verify income and work history. A tri-merge credit report contains data from all three major reporting firms. From this report, the credit score is determined (generally, the lender will base rates on the middle score).

Complete the Uniform Residential Loan Application:

This is the formal loan application that lists all assets (items of value) and liabilities (items of debt) in order to determine the borrower's net worth (how much an individual is worth).

Underwriting:

This is the process of comparing the borrower's credit, assets, and other financial factors, together with the property's appraised value, against the lender's standards. Underwriting occurs after the loan package is complete and results in the loan being approved or rejected. If the loan is approved, the loan documents are sent to the closing agent.

Shared equity mortgage (equity sharing):

This is used most often in commercial lending. The borrower agrees to the lender's participation in the net income from the commercial property or enterprise in order to obtain the loan. The lender may receive interest and a share of the profits.

Periodic Estate

This leasehold estate is for a specified period of time, and automatically renews itself for the same length of time unless one party terminates. The length of the lease may be any negotiated period of time. Example Fred has a barber shop in a commercial building. He has a one-year lease that automatically renews unless either Fred or the landlord terminates.

Tenancy at Sufferance

This type of estate occurs when a tenant continues to occupy property after her lawful authority has expired. The tenant is known as a holdover tenant. If a tenant under a lease stays beyond the lease's terms, and the landlord continues to accept rent from that tenant, that tenant becomes an estate at will. Alternatively, the landlord may remove the tenant by initiating eviction proceedings. Example Bill and Ted own an Adventure Gear store and have leased space in Martin's building. Their lease expired a month ago, and Martin wants them out because he has another tenant who will pay twice what Bill and Ted are paying. Although Bill and Ted sent their usual rent to Martin, he didn't deposit their check. Instead, he returned it and threatened to have them evicted if they didn't vacate immediately.

Property Manager Types Real estate asset manager

This type of manager might work for a team of investors and focus on long-term financial planning.

A ______ is a piece of real estate owned by multiple unrelated individuals who, in addition to their ownership rights, each hold the right to occupy the dwelling unit based on the specific terms of a timeshare agreement, usually in one- to two-week intervals during the year.

Timeshare estate

Pieces of real estate owned by multiple unrelated individuals who occupy the dwelling unit in one- to two-week intervals during the year.

Timeshare estate

A group of 26 different families have shared ownership of a vacation condominium. Each family spends two weeks annually at the condominium. Legally, the condominium is considered a ______.

Timeshare property

A ______ gives the purchaser the right to possess the property at given times for a given duration but doesn't convey ownership.

Timeshare use

Gives the purchaser the right to possess the property at given times for a given duration, but does not convey ownership.

Timeshare use

What type of insurance is a form of indemnity insurance that can protect both the buyer and the buyer's lender?

Title insurance

calculate Amortization

To calculate a monthly principal and interest payment using an amortization chart, determine the loan term and the loan's interest rate. Find the interest rate in the Rate (%) column and select the factor (it's a decimal number) in the column that represents the term of the loan. (Note that each factor is per $1,000 of mortgage.) (loan amount ÷ 1,000) × factor Examples: 2.000 (rate %) and 15-year (loan term) = 6.43509 (the factor) 2.375 and 25-year = 4.42348

James is buying his first home. In fact, it's the first time anyone is buying this house, a newly constructed single-family home. Although confident in an inspector's ability to find any material defects with the property, James is still a little uneasy. Quality isn't what it used to be. James' uneasiness fades somewhat when his agent tells him that the builder has provided a home warranty. What's the purpose of this warranty?

To protect the buyer from expenses related to unforeseen defects and repair issues

So why do you think landlords ask for so much money and personal information up front?

To protect themselves from unexpected mishaps or default

What's the purpose of the loan commitment?

To provide notice from the lender that the loan has been approved

What's the purpose of a home inspection?

To provide the buyer with a true picture of a property's condition

(monthly debt payments / gross monthly income) x 100

Total debt ratio

What formula is used to compute the tax rate for a taxing district?

Total funds required ÷ assessed value of all real property = tax rate

(monthly housing expenses / gross monthly income) x 100

Total housing ratio

A quitclaim deed does which one of the following?

Transfers without warranty any interest or title the grantor has when conveying it. A quitclaim deed provides no warranties or covenants; it only guarantees that the grantor is transferring any interest or title he or she may have in the property.

In Georgia, it is legal for a landlord to use a tenant's belongings as security for payment of rent owed after an eviction.

True After the courts have successfully removed a tenant from the premises after an eviction, the landlord has the right to request a lien on the tenant's belongings as security for payment of rent owed.

Which of the following acts created regulations for advertising credit services?

Truth in Lending Act

(HUD)

U.S. Department of Housing and Urban Development

Blended rate loan:

Usually applies during refinancing. Lender charges less than the prevailing interest rate, but more than the original interest rate. Typically used if current interest rates are higher than original rates. Benefits lender by raising the return on older loans, and benefits the borrower by allowing them to refinance and potentially take cash out while maintaining a lower interest rate than the current market provides. Some lenders will use a blended rate option for buyers assuming a previous loan. Blended loans are available on FHA, VA, and some conventional loans.

Despite Frasier's apparent disinterest, Teddy went on. "We start by finding out who the present owner is. Say it's a guy who bought it 10 years ago on a dare, Sam Crane. We go into the public records under the grantee index and find Sam's name. But we need to make sure it's still his, that he hasn't sold it to anyone else. So we check the grantor index for the 10 years between now and when he bought it, and his name doesn't show up—so we know it's still his." What happens next?

We track the chain back in time 50 years.

Marketing Plan: Budget section

We'll need to increase our budgeted expenses by 2% to accommodate our marketing strategy.

Which of these is an example of unrecorded interest?

When a property right is too unsubstantial to need to be recorded. Lesser rights are rarely recorded and are often only discovered through on-site inspection. Month-to-month leases and leases for less than a year are often included in this category.

Which of these might bring a charge of illegal steering against a licensee?

When working with single female clients, Cassandra is careful to promote properties in neighborhoods she considers safe.

Seth and Temperance are looking to move their family. They have a four-year-old son starting school next year and want a home that will allow their son to attend a certain school. Which of these items would be the most important to them?

Whether school boundaries will be changing Buyers looking to move to a certain school zone or district are likely to have researched the boundaries. However, as their agent, you should do the same. You'd hate to show them a perfect property only to later discover it's not in the district they want.

As a part of a buyer's due diligence, which location-related issues should be researched?

Whether the property is insurable, located in a wetland, or located in an historic area

define these common land measurements: Three feet

Yard

Jane and Charley are very upset. They just received a letter from a lender stating that their application for a mortgage loan has been denied. No specific reason was given for the rejection, but the letter stated that they did not meet the lender's minimum standards. Jane and Charley are left wondering if it was because their combined income was too low, or because Jane has only been at her current job a short time. Has the lender violated the Equal Credit Opportunity Act?

Yes

After the credit reports come back, you like what you see. The applicants are neck-and-neck at this point, so you decide to check out their occupancy stability by checking their references. Can you do this?

Yes Absolutely, this is something that you can do. Property owners want tenants who are likely to renew their lease, because it means less marketing and advertising costs to find a replacement.

William just purchased a newly constructed home from the Residential Building Construction Company. William noticed a crack in the foundation and sent notification to the builder. Thirty days passed without a response from the construction company. Can William file a lawsuit at this point?

Yes William may pursue a lawsuit because the Residential Building Construction Company failed to acknowledge the buyer's notice within the 30-day response deadline.

You ask both applicants to provide you with permission to pull a rent-related credit history. Is this allowed?

Yes You can (and should) do this. But if you're going to get the credit history for one applicant, you must get it for the other to avoid claims of discrimination.

You decide to dismiss one of the applicants because he has some trouble understanding English, and you don't want to have to repeat yourself all the time or risk misunderstandings. Is this a violation of fair housing law?

Yes, this appears to be discrimination based on national origin.

When writing a listing, you should be mindful of the information you include. Some information should not be displayed for the public. Let's review some statements. Is it okay to include the following statements in the listing's public comments?

Yes: -No showings before 2 p.m. -No showings from 2 to 4 p.m. -The house includes an alarm system.

Suppose you're gearing up for the next quarter. You really want to push yourself to improve on the results from last quarter. You set a target of $21,000 in total commission for the quarter. Assuming average total commission rate is 6% for each sale, and you'll likely split that evenly with the person representing the other party in the transaction, what is the total value in sales you must reach to hit your target? There's one unused number in your options, so put that next to the unused text below. Goal earnings formula: $21,000 earned commissions ÷ 50% split (.5) ÷ 6% commission rate (.06) = total sales value: $700,000 Unused: $500,000

You got it! You need to sell $700,000 worth of property to earn $21,000 in commission this quarter. Again, remember that to take into account that your real estate firm may take a portion of all your earned commissions. This is something you'll want to discuss with your broker.

Assume you have a client who's on public water, and the client wants to know if her water is safe to drink. What can you tell them?

Your client can contact the Environmental Protection Division and ask for a copy of the latest test results.

What will you need to calculate your commission on a sale?

Your commission rate The formula for total commission A calculator The sale price of the property

You should always make sure this is secure (locked) when not in use.

Your computer

Radon

adon has natural origins. It's a colorless, odorless, radioactive gas that's released when uranium decays. It can end up in soil and well water. It's not a problem walking around outside, because it's released into the atmosphere. But when it enters a home, which is closed up, for the most part, it can cause health problems. The gas breaks down into radioactive particles that stay behind as an unwelcome visitor. The particles, when breathed, can lead to lung cancer. In fact, it's the second-leading cause of lung cancer. Homeowners can purchase a radon test kit and set it up where it won't be disturbed. Radon enters the home through the cracks and crevices of the building—floor joints, floor drains, cracks in the concrete, the sump pump opening, wall joints, and porous walls.

Discount points

are used to lower the interest rate. If you purchase discount points, they're good for the entire term of the loan.

Regulation Z

covers all of the ins and outs about who, when, and what needs to happen to properly disclose credit in an advertisement. In general, the goals are to make credit information "clear and conspicuous" to consumers, and to allow informed decision-making.

Real Estate Settlement Procedures Act (RESPA)

creates a level playing field for real estate licensees and protects consumers from increased costs due to illegal kickbacks and referral fees among settlement service providers.

How can you avoid creating advertisements that are deceptive or unfair? Well, to start, you need to know what's considered deceptive and what's considered unfair.

deceptive: Omits material information or contains statements that are important and are likely to mislead consumers acting reasonably. unfair: Causes or is likely to cause substantial consumer injury that couldn't be reasonably avoided and that isn't outweighed by the benefits.

Usufruct

describes a tenant's rights to a leasehold estate.

Eviction

is a legal action by the courts to remove the tenant and the tenant's belongings from the premises.

easement

is a right to cross over or otherwise use another person's land for a specified purpose.

A quiet tile

is a suit to shut down any potential opposition to the title. ex. -Trevor deals in foreclosures and is never quite sure of the ownership history of his investments. -Shannon isn't sure if there are any other heirs who might have an interest in the family property.

Property Tax Abatements

is a temporary reduction in the level of taxation for a specified number of years—often 3, 5, 7 or 10. Jurisdictions sometimes enable property tax abatements for revitalization of an area—either for new construction or for improvements on existing housing.

loan-to-value ratio (LTVR)

is the amount loaned against a property compared to that property's value on the market. This ratio has nothing to do with the borrower's ability to repay the loan, just the property's value compared to the loan. A lender will want the ratio to be as low as possible—that gives it more security in case borrowers stop paying their mortgage. For example, if a borrower takes out a loan of $100,000 on a home worth $120,000 (the remaining $20,000 was paid up front as a down payment), the LTVR would be 83%. Want to know how we got that number? Read on, friend!

Fair market value

is the price one would expect a buyer and a seller to agree upon in a normal open market transaction. *In Georgia, property is required to be assessed at 40% of the fair market value unless otherwise specified by law (O.C.G.A. 48-5-7). Georgia assess taxes per mill instead of per $100. Just remember that a mill is the assessed property value divided by 1,000. For example: A home with a fair market value of $180,000 was assessed at $72,000 ($180,000 x .40). Next, we'd find the mill value (assessed value ÷ 1000 = per mill value). So, if we divide $72,000 by 1,000, we get a mill value of $72 ($72,000 ÷ 1,000 = $72). Let's say the average millage rate is 30 mills for the area. To find the annual tax amount we'd take the mill value and multiple by the millage rate ($72 x 30 mills = $2,160).

Abandonment

is yet another way for a lease to terminate, but it doesn't relieve the tenant from the terms of the lease. A tenant cannot simply vacate and expect to be relieved of the obligation to pay rent. A landlord who chooses not to accept the return of the premises may pursue the tenant for unpaid rent. A landlord who does accept the return of the premises may also pursue the tenant for lost rent under the old lease, but must make best efforts to re-rent the unit. A landlord could not, for instance, pursue a tenant for six months' lost rent if the landlord does not attempt to find new tenants during that time.

Federal Trade Commission's Do Not Call Registry

it's illegal to make a phone solicitation to any household that has listed its number

define these common land measurements: 5,280 feet

mile

Net to Seller Formula

net to seller = sale price × (100% - commission rate )

stigmatized properties do you HAVE to disclose?

nope, not for ghosts, illnesses or crime.

The CLUE report

not only helps home insurance underwriters, but it can also help buyers determine whether a particular property has hidden issues (and whether it may be difficult or expensive to obtain insurance). A CLUE report contains: -Insurance company names and policy numbers -Claim information, including dates, loss types, and loss payments

Assignment of a Georgia lease

releases all of the tenant's obligations unless the landlord expressly reserves the right to hold the original tenant responsible for the assignee's breach. For example, let's say that Tenant Amy (assignor) can no longer afford the rent because she lost her job, and her new job has a much lower salary. However, if Amy breaks the lease, she's considered to be breaching the lease. The landlord could charge Amy a re-letting fee, and then hold her responsible for the rent until that property is rented to someone else. However, with the landlord's approval, Amy can find a potential renter (assignee) for the place. Provided this new renter checks out and is able to pay the rent, the landlord may decide to release Amy (the original tenant) and make the new tenant liable.

CAN-SPAM Act of 2003

serves to protect consumers from being bombarded with unwanted email solicitations.

How Special Assessments Are Paid

special assessments become liens against the property on which they're imposed. Special assessments, however, are apportioned according to benefits received rather than by the value of the land and building being assessed. If the cost to a landowner is less than $100, the landowner pays in full. If cost is larger, the landowner may pay it in full, or the amount can go to bond, allowing the assessment to be paid over time.

finding perimeter of square

square = 4 x length

define these common land measurements: 144 square inches

square foot

define these common land measurements: Square mile

square mile

Before the deed can be recorded in the office of the clerk of the superior court...

the transfer tax must be paid by the person who executes the deed, instrument, or other writing, or the person for whose use or benefit the deed, instrument, or other writing is executed. The seller is liable for the real estate transfer tax, though the parties may agree in the sales contract that the buyer will pay the tax, or some portion of the tax.

Conventional loans are called conforming when

they meet Fannie Mae and Freddie Mac guidelines.

Two of the most commonly used indexing systems are

tract indexes and grantor and grantee indexes.

Georgia Fair Lending Act (GAFLA)

was deemed "noteworthy" by the Federal Reserve Bank of Georgia because it was considered to be "the most restrictive in the country for home mortgage loans" and imposed "severe penalties" for violations. -Imposes liability on loan brokers, servicers, and purchasers or assignees -Places restrictions on loans secured by a borrower's principal residence, including manufactured homes (second residences aren't subject to this Act) -Prohibits excessive late charges and financing of credit insurance or debt cancellation charges -Expands high cost loan processes to protect borrowers -Prohibits fees for providing loan payoff quotes -Requires documentation of late payment charges in loan documents and limits amount of such charges to no more than 5% of the amount of the late payment -Imposes stiff penalties for violation of the bill's requirements

National Flood Insurance Program (NFIP)

which is administered by the Federal Emergency Management Agency (FEMA), was established to help homeowners in flood hazard areas obtain insurance.

planned unit development

which is also mixed use with both residential and commercial in the same building or group of buildings. In her case, it's a retirement community with shopping, recreation, and, of course, the residential units—all in one fell swoop

covenants, conditions and restrictions,

which state the rules and rights of condominium owners. The CC&Rs will be provided to you before your purchase, but also in your title report there will be a notation as to the book and page where these documents are recorded in the official county records.

A discount point is calculated at 1% of the loan amount. The lender is charging the borrower two points to buy down the interest rate on his loan. He's borrowing $250,000. What's the dollar value of the points the borrower will pay?

*points are a percent. 1 = 1% *Remember that a discount point is 1% of the loan value. The borrower's lender is charging two points and the buyer is borrowing $250,000. *A discount point is 1% of the loan value, and the borrower's lender is charging two points on a $250,000 loan, so $250,000 x .02 = $5,000. Answer is $5,000

these statements are true about adjustable-rate mortgages

-ARM interest rates can fluctuate with the national economy. -Often, an ARM will have a below-market rate for the loan's first year.

PMI automatically terminates when LTVR reaches 78%. Under what other circumstances may PMI be cancelled?

-By borrower petition, when appraisal shows LTVR of 80% or less -When borrower reaches the mid-point of amortization

What are the characteristics of low documentation mortgage?

-Designed for self-employed or commission-based borrowers who have a less consistent, or more difficult to prove, income source -Rarely available today due to more stringent mortgage qualifying standards

Which three of the following statements apply to a home equity line of credit?

-No interest is paid by the borrower until funds are drawn on the loan. -An appraisal is often required. The draw period varies.

these statements are true about conventional loans

-Originators of conventional loans usually package and sell groups of loans on the secondary mortgage market. -Conventional loans can vary in length and terms. -Originators of conventional loans usually don't service the loans once they've been sold.

A buydown usually results in a temporary reduction in interest rates. The buydown may be structured in many ways, but one method is a 3-2-1 buydown. Select the statements that are true of interest rates in a 3-2-1 buydown.

-Reduced by 3% the first year, 2% the second year, and 1% the third year -Returns to original interest rate in the fourth year

Keira called Mike with questions about Fannie Mae and Freddie Mac. What three things did she learn?

-They buy mortgages, package them, and resell them as mortgage-backed securities. -They act as a link between banks, the government, and Wall Street. -They're publicly traded.

piggyback financing

-or split financing is a legal way for borrowers to avoid having to purchase private mortgage insurance (PMI) when they put less than 20% down. -conventional loans require PMI on loans where the amount exceeds 80% of the purchase price -the borrower will take out a first mortgage for 80% of the amount needed for purchase and a second, subordinate loan for an additional 10%. the remaining 10% comes from the borrowers down payment. -because neither loan exceeds 80% of LTV, PMI is not required.

Home equity loan:

A loan from the equity of a home. If the property is owned free and clear, the home equity loan is a first mortgage. If not, it's a second or junior mortgage. Rates on home equity loans tend to be higher than conventional loans, and their term rates shorter.

Adjustable rate mortgage (ARM):

A loan where the rate is adjusted, usually annually, based on the behavior of the economic index with which it's associated (e.g., the consumer price index). The margin is the number of percentage points added to the index to determine the rate and is constant throughout the life of the mortgage; the index value is the variable. If the index is 5% and the margin is 2%, the fully indexed rate is 7%. If the index is 8%, the margin is still 2%, so the indexed rate is 10%. An adjustable rate mortgage with a lifetime cap has a maximum rate that may be charged at any point over the life of the mortgage. So if an ARM has an interest rate of 5% and a lifetime cap of 7%, the maximum that may be charged is 12%. Lifetime caps are part of the mortgage's interest cap structure, which includes an initial, periodic, and lifetime cap. The initial cap is the value that limits the amount that interest can adjust at the mortgage's first interest rate adjustment. The period cap (or periodic cap) limits the amount the rate can adjust at subsequent adjustment dates. An adjustable rate loan is typically an amortized loan.

Balloon loan:

A loan with a lump sum payment, usually at the end of a loan period. The balloon payment on a loan may be paid as an interest-only loan for a period of time and then be paid off all at once. It may also be a partially amortized loan, in which case it's paid off through a series of amortized payments with a balloon payment at the end of the term. For example, a lender may agree to amortize the loan over a 30-year period with a balloon payment at the end of 10 years. This equates to lower monthly payments, but borrowers must be able to pay off the entire loan at the end of 10 years.

Renegotiable rate:

A mortgage loan alternative that allows the interest rate to be renegotiated periodically. The loan can be either long-term with periodic adjustments or short-term with more frequent rate adjustments.

Land contract:

Also known as a contract for deed, land installment contract, or installment sale agreement, this is a contract between a seller and buyer in which the seller acts as the lender for the buyer, who purchases the property for an agreed-upon price. Just as with a traditional lender, the buyer makes installment payments to the seller, who retains the title to the property while the buyer gets the right of possession. Often, there's both a down payment, and at the end of the contract, a balloon payment. When the loan balance is paid in full, the seller gives the buyer title.

Sam has a mortgage payment that includes his property taxes and property insurance. What type of mortgage does Sam have?

Budget

What type of loan is neither guaranteed nor insured by government agencies?

Conventional

Conventional Loans

Conventional lenders offer a broad range of loan products that vary in length and carry terms that do not include any insurance or guarantee from a federal agency. Rarely, originators will hold onto and service a conventional loan from start to finish. Usually, though, conventional loans are bundled together and sold on the secondary mortgage market.

The two most common types of government loans are

Federal Housing Administration (FHA)-insured and U.S. Department of Veterans Affairs (VA)-guaranteed loans. Other government loans include loans provided by the U.S. Department of Agriculture (USDA), or through state or local homebuyer programs.

MIP

Mortgage Insurance Premium Protects Lender/FHA (FHA insures the lender against default; MIP allows FHA to recover losses) -it's in place for the life of the loan -FHA loan

Growing equity mortgage:

This is a fixed-rate mortgage where the monthly payments increase over time according to a set schedule. The interest rate remains the same, and there's no negative amortization. The first payment is a fully amortizing payment. As the payments increase, the amount greater than a fully amortizing payment is applied directly to the principal balance, reducing the life of the term and increasing the borrower's interest savings.

This type can be obtained with no down payment.

VA

A couple is purchasing a house for $350,000 and financing $335,000. If the couple's lender charges an origination fee of 1%, what will the fee amount be?

step 1: find the loan to value ratio (the answer is .95) step 2: multiply the property value by .95 and then multiply THAT number by the decimal loan original fee %. Answer : $3,350