real estate

Ed is a licensee who's always eager to help his clients in any way he can. One of his current clients has received an offer that will give her a tidy profit on her home. She tells Ed she's worried about her tax liability when the home sells. What can Ed tell her that will be most helpful?

"I believe you'll be allowed to exclude some of that profit from your taxable income, but you should definitely consult with a tax professional to find out the best way to handle it."

While explaining the benefits of representation to a potential buyer, the buyer asks if you can help get a good rate on a mortgage. How should you respond?

"Sorry, that's outside the scope of my expertise."

What is the maximum penalty for a first-degree misdemeanor in Florida?

$1,000 and one year in jail

What's the annual interest on a $20,000 loan on which the interest rate is 6.5%?

$1,300

A buyer with a 15-year, $250,000 loan at a 5.5% interest rate has a monthly principal and interest payment totaling $2,042.71. What is the total amount of interest the borrower will pay over the course of the loan?

$117,687.80

Patel and Rakhi just had twins, so they need a bigger home. The loan amount on their new home is $205,000, and their interest rate is 3.7%. Their lender is charging them a 2% loan commitment fee, and when they close in two weeks they expect to pay $6,150 in closing costs. Patel and Rakhi will pay a ______ commitment fee.

$4,100

Charley's loan amount is $212,000, his appraised value is $275,000, and his interest rate is 4.375%. What is his annual interest?

$9,275

Which section of the Internal Revenue Code allows the owner of real property to sell that property, then reinvest the proceeds in a "like-kind" property and defer paying any capital gains taxes?

1031

Homebuyers who withdraw individual retirement account (IRA) funds under the first-time homebuyer program must use those funds within how long to acquire, build, or improve a residence, or to contribute toward closing costs?

120 days

Samuel wants to do a 1031 exchange. He sold his investment property and has identified the property he'd like to buy next. Within how many days must he close on this property in order for it to qualify as part of the exchange?

180

Margie needs to know the square footage for the first floor of the condo her client is interested in buying. The kitchen is 10 feet by 15 feet, the living/dining combo is 20 feet by 25 feet, and the office and bedroom are each 10 feet by 10 feet. What's the total square footage?

850 square feet

Which of these statements best represents what happens after a federal fair housing complaint is made?

A fair housing specialist will review the complaint.

Danny is a sales associate working for Jay, the owner/developer for both Shirley Homes and Laverne Estates. To sell real estate for both business entities, what must Danny have?

A group license

What is another name for an installment sale contract?

A land contract

Which one of the following options best describes a sales contract?

A legally binding, written contract between a property's potential buyer and seller

What is a bound?

A physical feature that defines the boundaries of the land

What is the difference between a variance and a special use permit?

A variance requires a show of hardship; a special use permit doesn't.

Which one of the following could apply to closing costs for an investment property?

Amortized over the life of the loan

The seller net sheet is _______ of closing costs.

An estimate

In which of the following situations does a new tenant take the place of a departing tenant, thereby becoming responsible for the lease?

Assignment

Which type of analysis is a broad estimate of price in case the lender must take over the property and sell it to an investor or on the market?

Broker's price opinion

Jackson Elementary School is undergoing some major renovations during the summer while school is out of session. The renovation crew has a detailed list of requirements for the disposal and drainage of wastewater and sewage. These requirements are likely part of the ________ with which the renovators must comply.

Building code

In what way could the Fed make it harder for people to obtain mortgages?

By increasing reserve requirements

In terms of investment, liquidity means an investment ______.

Can easily be converted to cash

Charles is a broker who is moving his place of business across town. Charles will need to remember to register this change of business address with the DBPR within 10 days. What classification describes why Charles can't conduct real estate business until he registers his change of business address?

Cease to be in force

Which of the following provides an opinion of list price range by looking at recently sold properties, comparing current competing properties and properties that didn't sell, and estimating buyer appeal regarding the style, location, and size?

Comparative market analysis

When prices go down because there are too many homes on the market and too few buyers, what economic principle is at work?

Competition

A ______ is a mixed-use building where the developer retains ownership of the 20% of the building used for commercial purposes and allows the remaining 80% to operate as a cooperative.

Condop

Which act was created to safeguard the consumer in the use of credit by requiring full disclosure of the terms and conditions of that credit?

Consumer Credit Protection Act

Which of these principles of value is related to how a change to a portion of a property impacts the value as a whole?

Contribution

Which of the following describes a listing agreement termination by completion/performance?

Dean lists his property on August 1. After just a few showings, he accepts an offer on August 12. The closing takes place on September 22.

You've just received a trio from a title company. It contains an assessor's map, property profile, and ______.

Deed

Which of the duties owed in any authorized relationship is missing from this string? Account for all funds, deal honestly and fairly, and ______.

Disclose all material facts

You get a call from another sales associate at your brokerage firm who's frantic because her child is sick and her buyer client wants to see a property. Before you can show the listing, you _______________________.

Don't need to disclose your relationship to the buyer in writing

Your client tells you to do something. It would violate fair housing laws, but it will earn you an amazing commission. What should you do?

Explain that you cannot do it, because it's a fair housing violation, and you could both get into trouble for doing what she's asked.

What type of title insurance covers defects of an incorrect survey and boundary encroachments?

Extended title insurance

Lauren obtained a loan that's insured and that only required a down payment of 3.5%. Which of these is most likely the type of loan Lauren has?

FHA

Jericho and Cindy, an unmarried couple, have three children, ages 3, 5, and 12. A seller's broker refuses to show them a house in a neighborhood where residents tend to be older, and no one else has children. Which protected class status applies?

Familial status

What institution was established in 1938 to purchase FHA-insured loans from individual lenders, group the loans together, and sell them as mortgage-backed securities to investors?

Fannie Mae (FNMA)

Leon and Beth own 1/13 of a timeshare estate. They own weeks 20 and 21, and also weeks 40 and 41. These weeks are inheritable. What type of ownership is this?

Fee simple

Florida administrative code codifies the rules of state agencies, such as the ______, which establishes the rules for real estate licensure.

Florida Real Estate Commission

Which of the following individuals would be a competent party to a contract?

Graciella, a 28-year-old unemployed parolee

John just sold the home where he's lived for eight years and made a nice profit. Which of these statements about the profit he made is FALSE?

He can include depreciation costs in the adjusted basis he uses to calculate the amount of his capital gains.

Which kind of industrial property is typically located away from residential and central commercial areas?

Heavy industrial

Identifying the purpose of the appraisal leads the appraiser to do what next?

Identify data needed.

How can lenders offer mortgage loans with down payments as low as 3.5%?

If the loan is FHA-approved, the lender is protected by mortgage insurance, paid by the borrower.

Which of the following is a contract that exists based on an understanding or assumption, rather than on specifically defined terms?

Implied contract

What does the parol evidence rule state?

In certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract.

Why would an investor purchase a tax certificate for a property?

In order to earn interest on the amount due.

Which one of these would NOT be an element of comparison an appraiser would use when applying the sales comparison approach to a property valuation?

Income generated

You're walking through a property with a new seller client. The seller tells you that the property is serviced by the public sewer system, but when walking up the drive you noticed the access hatch for a septic system. What should you do?

Inquire about the homeowner's claim to ensure the property really is on public sewer.

Which one of the following actions is a recommended (and in some states, required) method for protecting occupants of a home from carbon monoxide poisoning?

Install a carbon monoxide alarm.

Which of the following is considered unauthorized practice of law?

Interpreting the legal consequences of a client's actions

As demand decreases, what happens to the price?

It decreases.

From a buyer's perspective, what's the primary benefit of signing a buyer agency agreement?

It ensures a higher level of service.

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

It's a naturally occurring gas.

Your client, Eric, is interested in purchasing an industrial property to start a new business. You've recommended that soil, air, and water testing be done, but Eric is on a tight budget and doesn't feel these tests are necessary. What should you do?

Keep records of your recommendations and a written response from Eric.

Ideally, what guides real estate licensees' behavior?

Laws and ethics

What is borrowing money to finance an investment known as?

Leverage

An adjustable rate mortgage has an initial interest rate of 5%. When the first interest rate adjustment date arrives, the rate can be adjusted a maximum of 1%. At all subsequent adjustment dates, the interest rate can be adjusted a maximum of 2%. The highest rate of interest that may be charged at any given time is 9%. What does the 9% rate represent?

Lifetime cap

John works in an industrial park on the outside of town. He loves his job because he doesn't have to commute, and he gets to drive a forklift all day. The company he works for stores its inventory in this off-site location prior to shipping it out to customers. What kind of industrial space does John work in?

Loft/warehouse building

You're speaking to a potential buyer client who thinks agents just drive up the price of the house in order to increase their commission. Which fiduciary duty should you mention when explaining why that wouldn't happen in an agency relationship?

Loyalty

What is the best definition for "the time value of money"?

Money gains or loses value over time.

How long can a license remain in involuntary inactive status?

No more than two years

Carrying out a client's instructions describes the duty of ______.

Obedience

Which element of a valid contract is established by getting the signatures of all parties?

Offer and acceptance

How is the Florida real estate sales associate examination administered?

On an electronic testing system

Chevy is an optionee. What's his sole responsibility?

Pay the option fee.

Which of the following activities would constitute a breach of the duty to use skill, care, and diligence?

Performing an appraisal to determine the value of a home

Mortgages may still, but only rarely, contain which of the following clauses?

Prepayment penalty clause

Brandon is the listing agent for Jane's property. After a couple of weeks on the market, two formal written offers come through. One is for well below the listing price, and another is a bit closer, but still under the list price. What should Brandon do with the offers?

Present both offers to Jane.

Condominiums involve what type of ownership?

Real property

The chance that an investor might lose money is known as _______.

Risk

Which type of lender specializes in taking in savings deposits and then lending money out to consumers through mortgages and other loans?

Savings and loan

RESPA prohibits kickbacks between which parties?

Settlement service providers

Beverly is a new licensee. She's at a listing appointment and notices some stains on the ceiling and cracks in the basement walls. What should she do related to these items?

She should ask the sellers about these issues and ensure that they are disclosed to buyers.

Elisa agreed to list Simone's house for sale. After the listing contract was signed, Simone lost her job, and her father, George, offered to help Simone by paying Elisa's listing commission. The buyer's agent, Carl, also reduced his commission by a quarter percent to help Simone. Who is Elisa's client?

Simone

What kind of tax could be levied on property owners for a public project that benefited the property owners only in that district?

Special assessment tax

What's the term for the illegal practice of nudging buyers away from or toward a specific area based on the presence or absence of protected class members?

Steering

What type of ownership has the right of survivorship and requires that the co-owners be married when they take title?

Tenancy by entirety

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.

Two large local brokerage firms agreed to lower their commission rates to the same amount—approximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?

The agreement between the two firms

What could be a potential drawback to not getting a home inspection done before closing on the home if the buyer has an FHA loan?

The buyer would be unable to sell the home back to the FHA if there are problems found after closing.

Which individual is responsible for ordering, preparing, and reviewing closing-related documents, such as the title policy and settlement statement?

The closing agent

Rex has a reputation in the community for being a bit odd. He listed his ranch for sale and insisted on the low price he's placed on it, though his agent told him it's underpriced. Rex's distant family hears of the potential sale, and they go through the courts to present evidence that Rex isn't legally competent to manage his business affairs; the judge agrees. What's the status of the listing agreement?

The listing agreement is terminated by force of law.

Which of the following is NOT a characteristic of intentional misrepresentation?

The person who falsely represented the material fact did it innocently

What's market value?

The probable sales price if the property were listed today and a willing seller and buyer were involved in the transfer of ownership

Paula is bidding on a property that's being sold at a foreclosure auction. She's excited about the great deal she's getting on the property after she finds out she submitted the winning bid. What could cause Paula's great deal to turn into a nightmare?

The title to the property may have hidden issues that could cost her a lot of money to clear.

Why did the Civil Rights Act of 1866 fail to have an immediate impact on practice?

There was no agency put in place to enforce the laws.

Which of the following statements is true of investment properties?

They can be leveraged.

Julie and Tim have inherited some money. They have decided to purchase some agricultural land as an investment. Which of the following is true?

They may have a long holding period.

Kellan and Stacy are in the midst of a property dispute. Each party has a legal description and survey that show conflicting boundaries between their properties. What may be the best way to resolve this dispute?

They must take the dispute to court.

Where are mortgages recorded?

They're recorded at the recorder's office in the county where the property is located.

How many duties are owed in a "no brokerage" relationship in Florida?

Three

Which statement describes the purpose of the Interstate Land Sales Full Disclosure Act?

To protect consumers from fraudulent purchases.

Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?

Void

What is the name for a type of asset which cannot be touched?

What is the name for a type of asset which cannot be touched?

How is priority determined in cases where more than one judgment lien is filed against a property?

Whoever filed their claim first receives priority.

What's the difference between reversionary interest and remainder interest in a property?

With reversionary interest, the property reverts to the owner after the death of the life tenant. With remainder interest, the title to the property goes to a named third party following the death of the life tenant.

Christina purchased a house from Thomas. When did she officially gain ownership of the property?

With the transfer of deed from the seller to the buyer