CESHOP NY practice exam 2

Gunther's gross monthly income is $3,800, and he has no monthly debt payments. The lender's qualifying ratios are 28% for the housing ratio and 36% for the total DTI ratio. What's the maximum housing payment Gunther can afford?

$1,064. Calculate the debt and housing ratios that buyers need to meet both lending ratios. ($3,800 x 28%).

Your clients are first-time home buyers. They can access up to _________ of their Roth IRA accounts, penalty free, for their down payment.

$10,000

A seller wants to break even after the broker's commission of 5% and loan balance of $300,000 are paid. At what price must the house sell?

$315,789 (start with 100%-5% commission which is 95% or .95. Take 300,000 and divide by .95)

What percentage of a VA loan is guaranteed?

25%

Your client, a builder, is considering buying three adjacent lots. They each have the same depth: 275 feet. Lot A is 35,750 s.f., Lot B 53,900 s.f., and Lot C is 33,000 s.f. If your client buys all three lots, what total street frontage will he have?

446 feet. Add up the square footage of the three lots and divide by the lot depth (275) to get the total street frontage. (35,750 + 53,900 + 33,000) ÷ 275 = 446

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

8.5%. Divide net operating income by value.

Which of the following is a true statement about loan types?

A graduated payment is one where loan payments ratchet up at predetermined intervals.

What's a buyer representation agreement?

A legal document that formalizes the working relationship between the agent and buyer client

As part of his job, Mitchell determines a loan's rate and terms. What is Mitchell's job?

A mortgage broker; they set the terms and rates of the loan

Which of the following license types involves charging a fee to connect people looking for roommates with each other

Apartment sharing agent

Rick wants to remodel his home located in the New York town of Greenville. He'll need approval for his plans from the ______, which is responsible for ensuring that any building work meets the standards for design and maintains the beauty of the neighborhood

Architectural review board; preserves and upholds quality and beauty of the environment.

Which type of loan has a lump sum payment due at the end of the loan because the installment payments aren't sufficient for paying off the principal and interest?

Balloon mortgage

The New York City Department of Housing Preservation and Development (HPD) established the HomeFirst Down Payment Assistance Program. The criteria for the program includes what?

Be a first time homebuyer.

Martin placed all of his real estate investments in a trust, and the proceeds will be distributed through the trust to his son Nathan. In this situation, Nathan is the _______.

Beneficiary

Standard practice is to provide what length of time following offer acceptance for the buyer to secure financing?

Between 45-60 days

Bill is a seller who tells his neighbor, "I got lucky! My listing agent is buying my house from me." What could be the danger to Bill?

Bill's agent might not have marketed the property well, hoping to get a reduced price (also makes it a conflict of interest)

What is another name for a blueprint?

Building plan

Which act was the first to prohibit any exceptions for discrimination based on race or color?

Civil Rights Act of 1866

When the buyer and seller both have costs to pay, which form shows who pays what?

Closing disclosure

Broker Zeke is busy and doesn't have time to go to the bank, so he deposits his client's earnest money funds into his personal account. He plans to move the funds to the appropriate account within a week. This violation is an example of ______.

Commingling

When a government authority takes private property under the power of eminent domain, what must the property owner receive in exchange?

Compensation; the government is required to provide the property owner with enough compensation to equal property value

Your buyer client, Ben Dalton, tells you two weeks before closing that he's lost his job. He doesn't have any other income at the moment, and may not be able to follow through on his purchase of the house you're helping him buy. However, he doesn't want to miss out on his dream home and is optimistic that he'll find something soon, so he asks you to keep it confidential. What should you do?

Disclose this fact to all parties to the transaction if Ben refuses to do so.

What is the purpose of building codes?

Ensure a safe, properly functioning environment for the building's occupants

Which clause allows a landlord to increase the lease payment during the lease term?

Escalation

Who may borrow money from a Roth IRA to obtain down payment funds?

FIrst time homebuyers who've held a Roth IRA account for at least five years

What type of discrimination is occurring when a policy prohibits children from living in rental housing and places conditions on a tenant's residency based on the ability to find alternate accommodations for underage children?

Familial status

Which type of mortgage has an interest rate that remains constant over the life of the loan?

Fixed rate

What strategy can a licensee use when a seller client is presented with reasonable offers, but refuses to budge on price or terms?

Help the seller remember the goal of a closed transaction.

What is the best way to reduce debt while maintaining cash reserves?

Increase tax deductions

Why do investors have a special interest in the impact income taxes have?

Investors want to maximize deductions, and income tax is a significant factor in an investor's return on investment.

Which of the following statements about an easement appurtenant is TRUE?

It's a permanent right that runs with the land. It involves adjoining property.

The earth's surface extending downward to the center of the earth and upward to infinity including permanently attached natural objects is called ________.

Land

What is used accurately identify property for transfer?

Legal description

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

Offer and acceptance

The ability of water to drain through the ground" is the definition of what

Percolation

Which of the following occurs when the property is damaged or just has normal wear and tear?

Physical depreciation

Which one of the following is income that comes from investments, which includes capital gains, interest, and dividends?

Portfolio

Lending institutions who lend directly to consumers operate in the __________ market.

Primary

The Fair and Accurate Credit Transactions Act of 2003 requires the credit bureaus to

Provide consumers with a free copy of their credit report annually

When a buyer is financing the purchase of a cooperative unit, which agreement acknowledges the lender's lien interest in the shares being purchased through the loan?

Recognition agreement. This must be signed by the co-op, the prospective member, and the lender to acknowledge the lender's lien interest in the shares being purchased through the loan. The coop may agree to notify the lender if the shareholder defaults on maintenance fees.

It's the policy of Kathleen's brokerage to only practice single agency. Which of the following best describes this?

Representing either the buyer or the seller in a transaction, but never both at the same time

When a licensee publishes a false or misleading advertisement, the New York Department of State may do ALL of the following for a single occurrence.

Reprimand, fine up to $1,000, license revocation

Marsha leases a ranch house in a bedroom community. When the owner decided to sell the house, Marsha was given the opportunity to purchase it but declined. What does Marsha have?

Right of first refusal

Which term refers to the tenant's right to live in a rental property without harassment or trespass by the landlord?

Right of quiet enjoyment

When it's second nature for you to consider the risks before doing anything—even marketing yourself—you've adopted a "_____________" mindset.

Safety first

What is the term for a vacation home, an investment property, or even a seasonal home a taxpayer uses for a few months every year?

Second home property

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

What's an advantage an in-person meeting has over another way of communicating with a potential buyer client?

Since they've had face time with the licensee, buyers are more likely to stay with that broker.

A community that undertakes a comprehensive master plan is ______.

Taking the first step in urban planning

Which organization establishes relationships with financial institutions to offer home ownership programs that include down payment assistance through grants and favorable terms?

The National Homebuyer's Fund (NHF) offers all of this and more to first-time home buyers and others.

Who is responsible for paying for homeowners insurance?

The buyer

Which of these statements accurately represents one of the required elements in a deed?

The deed includes an act of conveyance.

Shakira is attending an association meeting when, in a small group breakout, her group begins discussing how to deal with the new kid in town: a real estate firm that charges a flat $500 to list properties, then lets the sellers fend for themselves. Why should Shakira leave the discussion?

This conversation sounds like it might become an antitrust violation

What is off-gassing?

Toxic chemicals released from products after manufacturing

Most lenders like to see at least _______ months of cash reserves in addition to the buyers' down payment.

Two

If someone steals this, they could have access to your family, personal information, contacts, photos, email, and social media accounts. What is it?

Your cell phone

An underground storage tank has been in place for 15 years. What is its remaining useful life, on average?

Zero years (typical life of underground storage tank is 15 years)

Historically, buyer representation has ______

increased

Sherman, who owns property in a life estate, neglects the property, significantly diminishing its value. This is called ______.

An act of waste

Which type of investor will find a property in disrepair, make the required repairs, then sell the property for a profit?

Flipper

Katy's home that was listed for sale was destroyed by fire. Under which of these methods will her listing agreement terminate?

Force of law

What is a deficiency judgment?

The mortgagee goes after the mortgagor for the amount owed and not covered by an auction sale.

Can a licensee who represented seller Smith in one transaction represent a different seller, Jones, in another transaction where Smith is the buyer?

Yes, but confidential information learned during the former relationship cannot be disclosed.

Congratulations! The crowd funding worked. Now you can start manufacturing your own line of yoga clothing. But first, you need a location to do all of that sewing. Which building would you select?

Light manufacturing

Many buyer agency agreements contain a provision which comes into play if the buyers let the agreement expire and then try to contact a seller directly. What is this provision called?

Protection clause; prevents buyers from reaching an agreement with a seller independent of the agent if the seller was identified during the term of the representation agreement.

Tom, the seller, is helping the buyer with financing. Tom will give this mortgage to the buyer, and the money will go toward the down payment. What kind of mortgage is this?

Purchase money mortgage

Which of the following is true regarding real estate licensee responsibilities when preparing contract riders?

Real estate licensees must use pre-printed riders and refrain from using their own language or they can be found guilty of practicing law without a license.

What's the main point of the statute of frauds?

Real estate purchase and sale contracts must be in writing to be enforceable.

When Sam and Lisa first signed their buyer representation agreement, they filled it out based on the three-bedroom ranch home they had their eyes on. Then they found a four-bedroom converted barn that they fell in love with. If they want to make an offer on the barn home, does their representation agreement still stand?

Yes, the agreement serves as a commitment to the agency representation, not a specific home.

A licensee sells a property for $525,000. The total commission rate is 6%, which is split evenly with the cooperating agent. What amount goes to the listing broker after this split?

$15,750. The listing broker receives 3% of commission rate

Your client Frank is interested in selling a 54,450-square-foot lot. A comparable property in the vicinity sold for $3,500 per acre. What would be reasonable list price for Frank's property?

$4,375

Rich, a licensee, was always on the lookout for nonverbal cues in clients and customers to help him gauge situations. So, when Stan, a buyer customer looking at a condo with Rich, suddenly dropped his voice from light, conversational quality to a much deeper level, Rich's guard went up and he made sure his mobile phone was in his hand. Why?

A lower vocal pitch can indicate aggressive or threatening behavior

A landlord leases Unit B. As long as the tenant who signed the lease (or that tenant's lawful spouse) lives there, who else must the landlord allow to occupy Unit B?

If the lease-signing tenant or that tenant's spouse occupies the property as his or her primary residence, the landlord must allow occupancy for members of the tenant's immediate family, one additional occupant, and the occupant's dependent children.

What is a wraparound mortgage?

One that may involve seller financing

Licensee Randy has a written listing agreement with Brent, a seller. The buyer is Tim. Who is Randy's client?

The seller (Brent) In listing agreement, the seller is the broker's client

If there is some kind of defect on a property's title, what effect does this level of transferability have on the property's value?

The value falls

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

There was no agency in place to enforce the laws

Without notice, Carla moved out of her apartment for five months, leaving her belongings behind. She didn't pay rent during her absence, and when she returned for her belongings, her landlord, Petra, who knew Carla was gone but didn't know where, asked her to pay up. Which of the following is a true statement?

Unless Petra tried to find a new tenant to occupy the apartment during Carla's absence, she can't force Carla to pay the back rent

By researching comparable properties that have sold recently and using them for comparison purposes, making adjustments for differences in age, amenities, lot size, location, square footage and the like, you are doing what?

Using the market value approach to valuation

You represent a seller who has just received an offer on the property you've listed. When you present the offer, which of the following should you make sure you review with your client?

Which items, such as appliances and window treatments, the buyers have asked for in their offer.

Which of the following is NOT a right of the government to take private property?

Zoning refers to government restrictions on how land may be used.