Final Exam: New Affiliates
The Agreement to Show Property is what kind of listing agreement? A.A type of limited open listing B.An exclusive right to sell C.An exclusive agency agreement D.An agency agreement
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How should the names of the buyers appear on a purchase and sale contract? A.Fully spelled out, including middle names. B.The same as they will appear on the title. C.First name and last name. D.Form should conform to that of the seller's name.
A.Fully spelled out, including middle names.
All adjustable rate mortgages originated by a federally-insured lender must A.comply with Regulation Z. B.have a term longer than 15 years. C.comply with FGMH guidelines. D.include a step-rate program.
A.comply with Regulation Z.
If a contract requires one of the parties to perform illegal activities, the contract would be A.void. B.voidable. C.unenforceable. D.caveat emptor.
A.void.
A lender uses a 36% debt ratio to estimate the maximum loan payment an applicant will qualify for. The applicant's annual income is $120,000. Significant monthly debt obligations amount to $1,400. What is the qualified monthly housing expense? A.$2,200 B.$3,600 C.$3,888 D.$4,320
B.$3,600
If a lender's maximum loan-to-value ratio is 80%, how much would the lender finance on a $250,000 purchase? A.$50,000 B.$100,000 C.$200,000 D.$250,000
C.$200,000
On an FHA loan, seller-paid points and closing costs may not exceed A.3% of the sales price. B.4% of the sales price. C.6% of the sales price. D.7% of the sales price.
C.6% of the sales price.
Which of the following activities requires a real estate license? A.Making cold calls to solicit listings B.Answering phone calls requesting information about a listing C.Assembling documents to be distributed at a closing D.Making a deposit to an escrow account
D.Making a deposit to an escrow account
__________ is the measurement of a property boundary along a river or other body of water.
Frontage
What are the two special duties a licensee owes only to a client? A.Honesty and fair dealing B.No undisclosed agency relationships or conflicts of interest C.Disclosure of adverse facts and proper accounting for funds D.Obedience to lawful instructions and loyalty to client interests
A.Honesty and fair dealing
When can implied agency arise in Tennessee? A.If the parties act as if they have an agency agreement. B.It can't. Agency agreements must be explicit and in writing. C.If a seller deals directly with a buyer. D.If an agreement expires without being terminated.
A.If the parties act as if they have an agency agreement.
How much is a discount point? A.One percent of the amount of a loan. B.One-tenth of a percent of the amount of a loan. C.A percentage of a loan amount based on a discount rate. D.A percentage of a loan amount based on the lender's origination cost
A.One percent of the amount of a loan.
As a buyer's agent, which of the following duties are owed to all parties in a real estate transaction? A.Professional skill and care B.Obedience and honesty C.Disclosure and loyalty D.Proper accounting and confidentiality
A.Professional skill and care
In real estate agency duty, what does "reasonable care and skill" refer to? A.Professional standards a reasonable person would find adequate. B.Professional standards commonly maintained by other agents in an area. C.The level of service required of a licensee in any profession. D.The maximum level of competence a client can expect from an agent.
A.Professional standards a reasonable person would find adequate.
Which of the following is an example of a tying arrangement? A.The leading brokerage firm in a town requires clients to use its title company. B.Two firms agree to coordinate their offers on a property they both want to acquire. C.A brokerage firm requires cooperating brokers to get listing information from their web site. D.Competing firms agree to list and sell properties in different geographical areas.
A.The leading brokerage firm in a town requires clients to use its title company.
What is the "adjustment period" of an adjustable rate loan? A.The regular interval when the loan's interest rate may change B.The number of days between payments C.The loan term D.The regular interval when the loan's index adjusts
A.The regular interval when the loan's interest rate may change
Which of the following conditions is necessary to show reasonable cause for soliciting a referral fee from another licensee? A.There must be a subagency, referral, or cooperative relationship between the licensees. B.The listing agent and the selling agent must not have the same principal broker. C.The one soliciting the fee must do so before closing. D.The one soliciting the fee must have an exclusive agency agreement with one of the transaction parties.
A.There must be a subagency, referral, or cooperative relationship between the licensees.
If there is a dispute over whether a commission is due, one of the determining factors is A.who has the listing agreement with the earliest date of signing. B.who can document the most time spent on marketing the property. C.who was first to find the customer. D.who is demanding the smallest commission amount.
A.who has the listing agreement with the earliest date of signing.
Why is it sometimes necessary to include a bill of sale with a purchase contract? A.The bill of sale confirms that the sale has been concluded. B.A bill of sale confirms that all promised inclusions are in fact part of the conveyance. C.A bill of sale provides a paper trail for lawyers in case there is a default by one of the principals. D.A bill of sale is necessary for an all-cash purchase to be legal.
B.A bill of sale confirms that all promised inclusions are in fact part of the conveyance.
How long does a person have after an alleged violation of Tennessee fair housing law to file a written complaint? A.Two years B.One year C.Six months D.180 days
B.One year
Anyone who feels discriminated against on the basis of race in the selling or renting of residential real estate may seek legal recourse as a result of A.Executive Order 11090. B.the Amendments Act of 1866. C.HUD ruling 76. D.the Jones v. Mayer Supreme Court ruling.
B.the Amendments Act of 1866. (Also known as the Civil Rights Act of 1866)
Which of the following is true of a fully amortized loan? A.It has a zero balance at the end of the loan term. B.The monthly payment amount varies. C.It requires a balloon payment at the end. D.The amount due can actually increase over the loan term.
D.The amount due can actually increase over the loan term.
Real estate in Tennessee is NOT designated as commercial if it A.consists of shops. B.contains offices. C.is held by its owners as an investment. D.consists of one to four residential units.
D.consists of one to four residential units.
If a licensee signs a listing contract with a home seller and then seller has a disabling care accident, the contract: A.may terminate for infeasibility. B.is automatically assigned to another licensee in the same firm. C.is automatically extended for a longer listing period. D.is invalidated.
D.is invalidated.
Agency relationships in Tennessee A.can be implied through the actions of a licensee without a signed agreement. B.are given facilitator status after a written agreement is approved by the managing broker. C.are a suggested practice by the Tennessee Real Estate Commission. D.must have a written agreement because there is no such thing as implied agency.
D.must have a written agreement because there is no such thing as implied agency.
Regarding relationships with other real estate professionals, it is a general standard to A.praise all professionals. B.share clients with other licensees. C.help other licensees find clients. D.refrain from disparaging competitors.
D.refrain from disparaging competitors.
When would an owner not be held liable for an omission in the property condition disclosure? A.The owner received information from a public agency but failed to disclose it. B.The owner did not have actual knowledge of the omitted fact. C.The owner believed the omitted fact was insignificant. D.The owner's agent advised the owner to omit the fact.
.B.The owner did not have actual knowledge of the omitted fact.
Tennessee fair housing law is _____ federal law in granting exemptions. A.more restrictive than B.less restrictive than C.the same as D.completely unlike
A.more restrictive than
Newspapers are good sources for listings because they contain A.rental ads. B.active listings of other brokers. C.obituaries. D.local people in the news.
A.rental ads.
If a loan has a due-on-sale clause A.the loan cannot be assumed without lender permission. B.the loan is fully assumable if it is a conforming loan. C.the borrower must pay a premium for paying off the loan early. D.the lender cannot sell the loan to another loan servicer.
A.the loan cannot be assumed without lender permission.
According to the Statute of Frauds, a contract must be in writing if it involves A.the sale of real estate. B.a lease. C.a transfer of ownership. D.a cash payment.
A.the sale of real estate.
If a lender's income ratio is 28% and a borrower's monthly income is $3,000, what is the maximum monthly PITI payment the borrower can qualify for? A.670 B.840 C.2160 D.2330
B.840
If an offeree presents a counteroffer, the original offer A.amended. B.is killed. C.is accepted. D.is modified.
B.is killed.
A licensee is exempt from the general requirements for advertising a property for sale if A.the property is owned by the firm's principal broker and is listed with the firm. B.the licensee is the owner, uses the "owner/agent" designation, and does not list the property. C.the licensee has filed an agency agreement with his broker stating that he is representing himself. D.the licensee is the owner and lists the property with a firm other than the one he is affiliated with.
B.the licensee is the owner, uses the "owner/agent" designation, and does not list the property.
If you have a signed buyer agency agreement with a client, your managing broker is also the buyer's agent in a transaction unless A.you also have an exclusive agency agreement with the seller. B.the managing broker appoints a designated agent for the seller if the property is listed by your firm. C.the buyer agrees not to look at any properties listed with your firm. D.you are an independent contractor, and not an employee, of the broker.
B.the managing broker appoints a designated agent for the seller if the property is listed by your firm.
A listing agreement on a property may terminate if A.the inspection contingency does not name a home inspector. B.the property is foreclosed. C.the owner misses a loan payment. D.the licensee who signs it is not a lawyer.
B.the property is foreclosed.
The earliest federal fair housing law was A.The Civil Rights Act of 1866. B.The Civil Rights Act of 1868. C.The Civil Rights Act of 1968. D.The Fair Housing Act of 1988.
C.The Civil Rights Act of 1968.
The illegal practice of scaring owners into selling by saying their neighborhood is changing racially is called A.steering. B.redistricting. C.blockbusting. D.peddling.
C.blockbusting.
Honestly representing property condition is a duty a licensee owes to A.clients alone. B.customers alone. C.clients and customers. D.real estate commissioners and other licensees.
C.clients and customers.
Successful managers are continually alert to factors such as rental amount, ineffective advertising and inattentive staff because failure to manage these factors may lead to A.higher tenant retention. B.owner goal achievement. C.higher vacancies. D.going over the property's budget.
C.higher vacancies.
When a counteroffer is presented A.it may never be revoked by the offeror. B.the original offer is still valid until the licensee gives approval. C.it nullifies the original offer. D.it amends the original offer.
C.it nullifies the original offer.
In the area of job performance, most real estate codes of ethics support all of the following EXCEPT A.exclusive listings. B.written agreements. C.maximum commission rates. D.arbitration of disputes.
C.maximum commission rates.
To be considered as a recent sale in a CMA, a property usually will have sold within A.the past two years. B.the past year. C.the past three to six months. D.the current month.
C.the past three to six months.
Choose the best definition of "comparable" in a CMA. A.A recently sold property that is identical to the seller's property. B.A property that has the same or almost the same characteristics as the seller's property. C.A property feature that is roughly of the same quality as a similar feature of the seller's property. D.A property that is for sale in the same neighborhood as the seller's property.
D.A property that is for sale in the same neighborhood as the seller's property.
Why is it always advisable in taking over management of a property to review all existing policies? A.The TREC requires an annual review. B.New management needs to establish authority by throwing out old policies. C.Existing policies will control how the property is managed. D.Market conditions and other factors may have changed since the policies were instituted.
D.Market conditions and other factors may have changed since the policies were instituted.
On Wednesday, Broker Billy receives a written full-price offer for a property he has listed. He presents this offer to his client. On Thursday, he receives a second offer of 90% of asking price. What must he do with the second offer? A.Hold it until his client accepts or rejects the first offer B.Return it to the offeror with advice that he raise his offer C.Present it at any time within the next 72 hours D.Present it promptly
D.Present it promptly
Which of the following is NOT a required disclosure (if applicable), either by the seller or by the agent? A.Confirmation of property measurement B.Confirmation of agency C.Lead-based paint D.Property condition
D.Property condition
Which of the following would be considered trust funds a property manager has to account for according to trust fund procedures? A.Maintenance reserve funds B.Operating funds C.Payroll funds D.Security deposits
D.Security deposits
If a licensee misrepresents facts about a listing without the owner's knowledge, who can be held liable for a violation under the Licensing Act? A.The owner and the managing broker B.The owner and the licensee C.The owner, the licensee, and the managing broker D.The licensee and the managing broker
D.The licensee and the managing broker
Which of the following is a feature of a contract for deed that distinguishes it from a purchase and sale agreement? A.The buyer has the option of purchasing the property but the seller is obligated to sell. B.The buyer takes over the seller's mortgage payments. C.Payment of the sale price is partially deferred. D.The seller retains equitable title.
D.The seller retains equitable title.
When several houses that are equal in size, quality and appeal are for sale, the valuation principle that says a buyer will not pay more for one than for another is A.progression. B.substitution. C.restitution. D.supply and demand.
D.supply and demand.
A novation is A.a new contingency added to an existing contract. B.an amendment to the contract made by making a notation in the margin. C.an extension to a contract's termination date. D.the contract that follows a contract terminated by mutual agreement.
D.the contract that follows a contract terminated by mutual agreement.
What is the impact of the practice of steering?
It limits the choices available to buyers.
Licensees are required to carry Errors and Omissions insurance to cover liability for licensed activities and/or A.may deposit $100,000 with the Commission in lieu of purchasing an insurance policy. B.must obtain the E&O insurance from an independent agent in Tennessee. C..may obtain the insurance independently as long as it meets or exceeds the coverage of the Commission's policy. D.must obtain the E&O insurance from the Commission.
C..may obtain the insurance independently as long as it meets or exceeds the coverage of the Commission's policy.
Bob likes to refer clients to the services of his friend Larry, who operates Larry's Home Inspection. Larry shows his appreciation by giving Bob a share of the fees he charges. What is the legal status of this arrangement? A.It is unethical but not illegal. B.It is legal as long as Bob is consistent in referring all customers to Larry. C.It is considered improper dealing under the License Act. D.It is legal if Bob and Larry have a signed agreement.
C.It is considered improper dealing under the License Act.
Of the following risk management strategies, the one that aims at minimizing both the severity and the likelihood of loss is A.avoidance. B.reduction. C.transference. D.retention.
A.avoidance.
When may the seller provide a buyer with a property condition disclaimer instead of a disclosure? A.When the property is offered "as is." B.When the buyer waives the right to a disclosure. C.When the seller is unaware of any conditions requiring disclosure. D.When the improvements are less than one year old.
A.When the property is offered "as is."
In Tennessee, what happens if an owner sells a property while under contract to pay management fees to a manager of the property? A.If the new owner knew of the contract and is receiving rents from tenants signed by the manager, he is liable for the fees. B.The original owner is solely liable for the fees until the expiration of the contract. C.The new owner must honor the contract and pay the fees even if he did not know of the contract. D.The property manager is out of luck. The fees are uncollectible.
A.If the new owner knew of the contract and is receiving rents from tenants signed by the manager, he is liable for the fees.
If a mortgage loan is being provided by a lending institution, the lender must give the borrower a A.Truth-in-Lending statement. B.credit score report. C.income tax form. D.escrow statement.
A.Truth-in-Lending statement.
A licensee risks violating antitrust law by A.being present at a conversation where the setting of commission rates is discussed. B.being present at a discussion of antitrust laws. C.charging a commission rate that happens to be the same as that charged by another firm. D.cooperating with another firm to do market research.
A.being present at a conversation where the setting of commission rates is discussed.
A broker who fails to deposit earnest money into an escrow account in a timely manner may be considered to be committing A.commingling of funds. B.diversion of funds. C.conversion of funds. D.misprision of funds.
A.commingling of funds.
A broker risks forfeiting compensation by A.exceeding the scope of authority in the listing agreement. B.referring clients to affiliated business partners. C.cooperating with brokers from other firms. D.refusing to give a client legal advice.
A.exceeding the scope of authority in the listing agreement.
A non-conforming loan is one that A.falls outside Fannie Mae and Freddie Mac underwriting standards. B.does not use any underwriting standards. C.is originated by a lender that is not federally insured. D.has any term other than 30- years.
A.falls outside Fannie Mae and Freddie Mac underwriting standards.
Housing for older persons is exempt from the federal prohibition against family status discrimination if A.half the units have at least one person 55 years or older. B.all the occupants are at least 62 years old. C.it advertises that it is not designed for senior citizens. D.it has significant services for older persons.
A.half the units have at least one person 55 years or older.
In the title and conveyance section of a standard purchase and sale agreement, the seller promises to deliver A.marketable title. B.equitable title. C.title subject to a title search. D.title insurance.
A.marketable title.
An option contract conveys A.the right to purchase at a future time. B.the right to exclusive possession and use for a period. C.the right to encumber. D.the right to sell.
A.the right to purchase at a future time.
What kind of license is required to deal in commercial real estate in Tennessee? A.A Certified Commercial-Investment license B.A real estate broker's or affiliate broker's license C.A Certified Appraiser license D.A Certified Financial Advisor license
B.A real estate broker's or affiliate broker's license
Which of the following is NOT a risk relating to the agency relationship? A.Neglecting to give verbal disclosure at the right time. B.Acting as a facilitator in the absence of an agency agreement. C.Acting as an agent without a written agency agreement. D.Forgetting to obtain a signed receipt of written disclosure.
B.Acting as a facilitator in the absence of an agency agreement.
Which of the following is a source of the professional code? A.Banking Laws B.Trade Associations C.Trade Unions D.Investment Guidelines
B.Trade Associations
In addition to being a contract between a licensee and a seller or buyer, a listing agreement is A.an independent contractor agreement. B.an agency agreement. C.a sales contract. D.a contract for deed.
B.an agency agreement.
One difference between an appraisal and a comparative market analysis is A.a comparative market analysis can be done only by a real estate licensee. B.an appraisal can be done only by a licensed appraiser. C.an appraisal is an estimate of market price. D.an appraisal compares prices of homes on the market.
B.an appraisal can be done only by a licensed appraiser.
A sales contract becomes enforceable when A.the buyer signs and the agent delivers the offer. B.an offer is made and accepted. C.the seller does not reject the offer before the expiration date. D.the seller accepts the offer at any time.
B.an offer is made and accepted.
Of the possible owner goals a property manager needs to understand, the one most likely to cause resistance to making property improvements is A.utility. B.cash flow. C.prestige. D.appreciation.
B.cash flow.
To avoid the unauthorized practice of law, licensees should only complete A.mortgages or deeds of trust. B.deeds and installment sales contracts. C.offers and counteroffers using approved forms. D.title documents.
B.deeds and installment sales contracts
If an agent assists a buyer in a transaction without having a signed representation agreement with buyer or seller, the agent's status is A.managing broker. B.facilitator. C.buyer agent. D.general agent.
B.facilitator.
A listing agreement will be invalid if it A.has a termination date. B.is not a TREC-approved form. C.specifies a selling price. D.omits a termination date.
B.is not a TREC-approved form.
The best way to minimize the risk of violating fair housing laws is to A.deal only with consumers who do not belong to a protected class. B.obtain education in the content and intent of the laws. C.make sure there is always a witness present at all meetings with consumers. D.stay away from transactions involving public housing.
B.obtain education in the content and intent of the laws.
The sales comparison approach is based on the principle of A.contribution. B.substitution. C.conformity. D.anticipation.
B.substitution. (as well as supply and demand)
A sale in which a buyer used conventional financing is considered to be A.unusable as a comparable without an adjustment for financing terms. B.suitable as a comparable only if the seller is willing to accept conventional financing. C.a cash equivalent sale requiring no adjustment for financing terms. D.the only possible sale to be used as a comparable.
B.suitable as a comparable only if the seller is willing to accept conventional financing.
If a principal misses a "time is of the essence" clause in a sales contract A.the party who missed the deadline can ask for the 48-hour waiver as outlined in state statutes. B.the party can be declared in default, provided the other party has performed. C.the contract is void. D.escrow funds are frozen until the principal remedies the failure.
B.the party can be declared in default, provided the other party has performed.
What is a recommended method to keeping all principals informed during a transaction? A.Using a personal recording device B.Recording all phone contacts C.Maintaining a checklist for each transaction D.Maintaining files for at least 3 years
C.Maintaining a checklist for each transaction
What is the principle behind 'highest and best use"? A.The best use of a property is that which is for the greatest profit and public good. B.There is a point at which continued improvements will not add to market value. C.There is a particular use for a property that will generate the property's maximum value or income. D.Zoning and other land use controls will optimize a property's value.
C.There is a particular use for a property that will generate the property's maximum value or income.
There are three proper ways of making a counteroffer. Which of the following is NOT one of them? A.Write a new offer on a clean form. B.Attach an addendum to the original offer. C.Use a marker or eradication fluid to block out an item and write the change over it. D.Draw a single line through an item to be changed and write the change next to it.
C.Use a marker or eradication fluid to block out an item and write the change over it.
Lisa sells real estate and her husband Mike sells homeowner's insurance. Does Lisa face any risk by referring clients to Mike? A.No, they are in two different industries and there is no conflict of interest. B.No, as long as she discloses the relationship to her clients. C.Yes, because Lisa will benefit financially, she has a personal interest in the referral and should not make it. D.Yes, it is unwise for any real estate agent to refer a client to other service providers.
C.Yes, because Lisa will benefit financially, she has a personal interest in the referral and should not make it.
In order for an action to be an antitrust violation, there must be A.a written complaint. B.a specific victim. C.a contract or conspiracy. D.an attempt to establish a monopoly.
C.a contract or conspiracy.
Buyer Marc asks a Broker Buell to create a custom purchase offer. Broker Buell should A.follow Marc's instructions. B.inform Marc that custom forms are forbidden by the Tennessee Real Estate Commission. C.advise Marc to seek legal counsel. D.advise Marc against creating a custom form, but if he insists comply; the customer is always right.
C.advise Marc to seek legal counsel.
The fiduciary duties of agency in Tennessee A.are replaced by statutory rules. B.prevail over state law. C.apply universally around the state. D.have the status of constitutional law.
C.apply universally around the state.
Typical disclaimers by the real estate firms and licensees who are party to the purchase transaction would include A.not responsible for violations of the Licensing Act. B.not liable for damages caused by inspectors. C.not responsible for representations made about suitability of the property for a particular use. D.not responsible for the performance of buyer or seller.
C.not responsible for representations made about suitability of the property for a particular use.
When questioned about an inspection report, the best course of action for a licensee to take is to A.answer the question to the best of his or her understanding. B.answer the question without bias. C.refer the question to the reporting inspector. D.seek illumination from a non-interested party.
C.refer the question to the reporting inspector.
NAR's position on exclusive brokerage agreements is to A.refrain from contacting owners of expired listings. B.openly solicit only MLS listed home sellers. C.refrain from interfering between other agents and their clients. D.openly solicit any and all listed home sellers.
C.refrain from interfering between other agents and their clients.
Good etiquette in showing a property would include A.explaining to the owner what the buyer doesn't like about the house. B.notifying the owner when you are leaving the property. C.remaining no more than fifteen minutes in the house. D.parking across the street rather than in front of the house.
C.remaining no more than fifteen minutes in the house.
When is the latest an agent may make a verbal disclosure of agency status to a buyer who has no agent? A.Before asking the buyer any qualifying questions. B.Before answering any questions from the buyer about listings. C.Before conveying to the seller any information about the buyer. D.Before providing any real estate services to the buyer.
D.Before providing any real estate services to the buyer.
The best description of a contract for deed is A.an agreement to purchase a property in which all or part of the sale price is deferred. B.an agreement to purchase a property at an agreed price at some time in the future. C.a sale contract that transfers the deed to a property without conveying equitable title. D.a kind of lease that transfers the deed to a property after a certain amount of rent has been paid.
D.a kind of lease that transfers the deed to a property after a certain amount of rent has been paid.
The purpose of the standard of practice is to A.allow non-member citizens to provide feedback. B.clarify, interpret, or give examples of the intent of the article itself. C.outline the governing power of trade organizations. D.explain the punitive ramifications of not following state laws.
D.explain the punitive ramifications of not following state laws.
An affiliate broker may only work in an office where a principal broker A.is engaged primarily in the real estate business. B.has no more than ten affiliates under his supervision. C.provides Errors and Omissions insurance for all employees. D.is accessible around the clock.
D.is accessible around the clock.
It is important to consider the reputation of local schools in collecting information for a comparative market analysis because A.sellers often have inaccurate ideas about local schools and need help learning the facts. B.school quality is one of the market factors the seller and seller's agent will be required to disclose to a buyer. C.school quality is just one of many bits of information buyers need to know about. D.school quality is the top priority for some home buyers; good schools raise property values in the district.
D.school quality is the top priority for some home buyers; good schools raise property values in the district.
Prepayment penalties are standard on conventional loans. are not allowed on conforming loans. are required with assumable loans. are prohibited if there is also a private mortgage insurance requirement.
are standard on conventional loans.
Retail properties are often classified according to A.their height. B.the size of the area they are designed to draw customers from. C.the quality of their construction. D.the number of tenants.
the number of tenants.
