Nation Exam Study Questions
Your client Faye is buying a condo downtown for $565,000 and financing 60% of the purchase. Her lender is charging a one-point loan origination fee and two discount points. Can you help Faye calculate the dollar amount for points she's going to pay on her loan? $10,170 $16,950 $4,520 $6,780
$10,170
A property generates $30,000 in net operating income and has a 15% cap rate. Using the income approach, what is its value? $100,000 $20,000 $200,000 $25,000
$200,000
Using the capitalization formula, what is the value if the net operating income is $20,000 and the rate of capitalization is 10%? $2,000 $20,000 $200,000 $2 million
$200,000 The formula is value = income divided by rate of capitalization or $20,000 / .10 = $200,000.
A 4-bedroom, 4-bath 4,875 square feet house was listed at $445,000. Andreas, the seller, accepted an offer that was 95% of the listing price. What price per square foot did he get for the house? $45.64 $82.15 $86.72 $93.00
$86.72
Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here? -Agency after the fact, because Kennie Mae continued to perform tasks for Buzz through the closing date. -Law of agency, because Kennie Mae defined her agency relationship with Buzz through the tasks she performed. -The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz. -The ratification doctrine states that Kennie Mae ratified her relationship with Buzz by signing the closing paperwork.
-The doctrine of estoppel keeps Kennie Mae from disavowing the agency relationship because she provided agency tasks for Buzz.
A 20-unit apartment building sells for $5 million. The property can bring in $400,000 in annual gross income. What is the gross income multiplier (GIM)? 0.125 125 1.25 12.5
12.5 (5,000,000/400,000=12.5)
A strip mall valued at $850,000 has a $67,500 annual net operating income. What is the capitalization rate for the strip mall? 12.59% 7.9% 8.67% 9.2%
7.9% R=I/v
Which of the following may be considered a stigmatized property? A home that has been on the market for more than one year A home where a homicide, suicide, or haunting occurred A home with a panic room A home with no basement
A home where a homicide, suicide, or haunting occurred
When Shauna looked at the legal description of the property she was interested in purchasing, she read the following: "Beginning at the corner of State Route 61 and Hallowell Road, north for 314 feet, then southwest for 193 feet." In this description, what does "north for 314 feet" represent? A benchmark A bound A mete A monument
A mete
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. Neighbors may be jealous about favorable tax rates. Tax abatements could harm buyers financially. Tax refunds are not possible if property tax deductions are taken.
A sale in the area may prompt a reassessment, impacting new buyers. A sale can prompt a reassessment, resulting in higher property taxes.
What does the Federal Trade Commission regulate? Advertising Commission disbursements Federal real estate transactions Listing trades
Advertising The Federal Trade Commission Act includes rules to encourage truthful, non-deceptive, and fair advertising, and require advertisers to have evidence to back up any claims made.
The appraisal on Jean's property came in at $22,000 less than the agreed-upon sales price, so the buyer, Thomas, wants to renegotiate the terms. If they can come up with a new price that is satisfactory to both parties, what will they use to document this? Addendum Amendment Annotation Appendix
Amendment
What information about a property is the licensee required to disclose to potential buyers? Any known or assumed information about a property Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property Only information that the seller wants the licensee to share with prospective buyers Only information that would make the property sell more quickly
Any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property **A licensee is required to disclose any material, adverse information that the licensee has actual knowledge of concerning the physical condition of the property.
Through the divorce process, Gail was granted ownership of the couple's vacation timeshare. Gail is ready to sell the timeshare but discovers that her ex-husband Daniel's name is still on the deed, creating a cloud on the title. What should Gail do? Ask Daniel to sign a general warranty deed so the new buyers enjoy all the deed covenants. Ask Daniel to sign a quitclaim deed to release his ownership share. File a quiet title suit against Daniel. Purchase a title insurance policy for the new owners to cover any eventual ownership issues.
Ask Daniel to sign a quitclaim deed to release his ownership share.
Margot and Steve owned several rental properties at the time of their divorce. The divorce decree gave ownership to Margot in return for a cash payment by Steve. Fast forward six years, and Margot is ready to sell the properties. She soon discovers, though, that Steve's name is still on the title. What's her best course of action? Ask Steve to generate quit-claim deeds on the properties. File a suit to quiet title. Show the title company a copy of the divorce decree granting her ownership.
Ask Steve to generate quit-claim deeds on the properties.
You're performing a market analysis for the Swansons. Comparable A has an adjusted sales price of $251,250. Comparable B has an adjusted sales price of $265,000. What would be a good way to use this data to arrive at a suggested list price range? -Average the adjusted sales prices of comparable A and B. -Base list price on comparable A, because the subject property will likely sell more quickly at this lower price. -Base list price on comparable B, because it's higher. -Base list price on the comparable most similar to the subject property.
Base list price on the comparable most similar to the subject property.
Appraiser Niles uses ______ to determine a range of values based on comparing a subject property to comparable sales. He makes sure to use some comparable that lack features of his subject property, and others that have even more desirable features, to balance out the comparison. Bracketing Competition Correlation Substituting
Bracketing
Monica received a promotion at work that requires her to relocate. Because of the timing of her promotion, she'll need to buy a new house in her new city before her current one is sold. So, she won't have any equity from her current home to make a down payment on the new house. What loan option would allow her to make the purchase before selling the old house? Amortized loan Bridge loan Fixed rate loan Wrap-around mortgage
Bridge loan
Which of the following is most likely to establish workmanship standards when someone is building an addition to their property? Building code Planning commission State regulations Zoning ordinance
Building code
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 Deed restriction Safety laws Zoning regulation
Building code **Building codes specify construction standards to ensure the health and safety of those using the buildings. Sanitary drainage and disposal are a common building code standard.
Which of the following is an action borrowers take to temporarily lower the interest rate on their mortgage loan? Buydown Down payment Gap financing Usury
Buydown
What does the metes and bounds system use to develop a property's legal description? Compass headings and directions Plat references Principal meridians and base lines Townships and sections
Compass headings and directions
Which of the following is an example of a universal agent? Buyer's agent Conservator Escrow officer Listing agent
Conservator
Which of the following could be an indication of a foundation problem? Crack in a basement wall Doors that open and close easily Lack of moisture in the basement Windows that open and close properly
Crack in a basement wall
Don and Becky realized too late that the contract they signed for the sale of their home didn't include any language about a rent-back if the home they're building isn't ready in time. What can their listing agent do? Create a contract addendum with the required language. Create a contract amendment with the required language. Create a counter-offer to present to the buyers. Terminate the contract on Becky and Don's behalf.
Create a contract amendment with the required language.
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 settlement, has already paid annual property taxes of $1,949. Using calendar year proration, the seller will be ______ on the closing statement (round to the nearest dollar). Credited $1,207 Credited $742 Debited $1,207 Debited $742
Credited $1,207
Private mortgage insurance protects the lender in case the borrower takes which of the following actions? Chooses to prepay Decides to sell Defaults on the loan Refinances
Defaults on the loan **PMI protects the lender in case the borrower defaults on the loan. Should default occur, the insurance kicks in and covers the amount of the loan over 80% LTV ratio.
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? Bethany Both Bethany and Derrick Derrick The state
Derrick
Morgan has agreed to sell his home to Dierks, and they've signed a contract. Which of these actions changes the contract from executory to executed? Dierks delivered the earnest money to Morgan's broker. Dierks' lender funded the loan, and closing took place. Dierks's lender approved the mortgage loan. Morgan completed the inspection repairs that Dierks requested.
Dierks' lender funded the loan, and closing took place.
Gerard has been offered a 4% interest rate on a $300,000 mortgage. His monthly mortgage payment would run about $950 per month. He plans to pay $2,000 up front to drop his interest rate to 3.75% and his payment to $920 per month. What is this upfront charge called? Discount point Interest Notes Usury
Discount point
Leonard is offered a loan at 5.75%. Because he plans to be in his home for several years, he chooses to pay points up front to have the rate reduced to 5.25%. What's this an example of? Discount points Down payment Gap financing Usury
Discount points
Margaret has an L-shaped living room. How would you calculate the area of this room? Divide the room into two rectangles, calculate the area of each, and add those together. Measure the room as if it were a single rectangle and compute the total square footage. Measure the room as if it were a single rectangle, compute the total square footage, and divide by two. Select the larger of the two rectangles that form this room, calculate its area, and multiply by two.
Divide the room into two rectangles, calculate the area of each, and add those together. **To calculate the square footage of irregular shapes, divide the shape into familiar shapes (typically triangles and rectangles for exam purposes), calculate the area of each, then add the areas together.
How are principal meridians and baselines used in the rectangular government survey system? -All legal descriptions in this system use a single principal meridian and multiple baselines. -A principal meridian separates each township from the next and baseline separates each tier from the next. -Each legal description in this system originates at the intersection of a principal meridian and a baseline. -The boundary formed by two principal meridians and two baselines forms a township.
Each legal description in this system originates at the intersection of a principal meridian and a baseline.
When it comes to earnest money, which one of the following statements is true? Earnest money is rarely the subject of lawsuits against real estate licensees. Earnest money must be placed in a trust account. The amount of earnest money is non-negotiable between the buyer and seller. The seller dictates the amount of earnest money in the MLS listing.
Earnest money must be placed in a trust account.
Without this easement—usually involving access to a road—the owner requiring the right of passage would be landlocked. Easement appurtenant Easement by necessity Easement by prescription Easement in gross
Easement by necessity
Because of the topography of Elsie's and Lawrence's respective yards, Elsie had to install her fence at the top of a hill, which is actually two feet over Lawrence's property line. What word or phrase best describes Elsie's fence? Easement in gross Encroachment Servient estate Visible easement
Encroachment
Justin decided to build a privacy fence around his yard. He thought the fence was along the property line, but it turns out he built it one foot inside his neighbor's property. What will an inspector document as existing on the neighboring property? Easement Eminent domain Encroachment Necessity
Encroachment
Which of the following statements about escrow accounts is correct? -An escrow account is a temporary account that's opened for use with a single transaction and closed after the transaction closes. -An escrow account is held by either the buyer or seller, and houses the buyer's earnest money until closing. -Escrow accounts are managed by brokerage firms, and hold funds used to pay operating expenses and agent commissions. -Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.
Escrow accounts are managed by escrow agents, and are used to hold funds belonging to others, such as earnest money deposits.
The Nettles have accepted the Briars' purchase offer, and both parties have signed the sales contract. What type of contract do the Nettles and the Briars have? Executed Executory Unilateral Voidable
Executory **The Nettles and Briars have a valid contract that's in the process of being completed. Because one or more terms of the contract must still be completed, they have an executory contract.
What's the most common indicator of illegal property flipping? Falsely inflated appraisal Underwriting hassles Unrepresented seller Violation of fair housing laws
Falsely inflated appraisal
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? Age status Familial status Marital status Partnership status
Familial status **Familial status, included in the federally protected classes, includes discrimination when someone lives with (or is about to live with, in the case of pregnancy and pending adoption) a child under the age of 18 and is treated differently from others.
Which act created an agency to investigate antitrust practices? Attorney General Act Clayton Act Federal Trade Commission Act Sherman Antitrust Act
Federal Trade Commission Act
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? Estate for life Fee simple Leasehold estate Periodic estate
Fee simple
When you're using the sales comparison approach to value a property, which of the following is considered a category of adjustment? Area demographics Financing terms and cash equivalency Seller motivation Types of obsolescence
Financing terms and cash equivalency **Categories of adjustment include financing terms and cash equivalency, conditions of sale, market conditions at time of contract and closing, location, and physical characteristics.
Another term for a valuation is ______. Assessment Comparative market analysis Evaluation Formal appraisal
Formal appraisal
Basement wall cracks and leaks can be indicators of ______ problems. Chimney/fireplace Foundation Roof Window
Foundation
Johnstone's Realty is a new discount, menu-based brokerage firm. Its approach usually results in a lower listing commission rate than other firms offer. Johnstone's also offers a lower cooperating brokerage split than most other firms. Business is booming for Johnstone's, and the remaining firms in town are concerned. These brokers agree to not show Johnstone's listings to their buyer clients. What is this an example of? Blockbusting Group boycotting Market allocation Steering
Group boycotting
The Office of Fair Housing and Equal Opportunity is a part of which federal department? CIA HHS HUD NHA
HUD
Homestead Realty had a listing agreement with Gertrude. The listing expired, and Gertrude moved the listing to another firm. Another licensee at Homestead Realty has a buyer client who's interested in Gertrude's property. What restrictions are in place for Homestead Realty? Homestead may not represent a buyer for the previously listed property. Homestead may represent the buyer but may not disclose any information about the property or previous offers on it. Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality. No restrictions are in place since the previous property listing expired.
Homestead may represent the buyer, must disclose material facts about the property, and must maintain Gertrude's confidentiality.
Juan has decided to invest his small inheritance in real estate. He is drawn to the fact that he can add a building where there wasn't one previously and immediately increase the value of his investment. Which economic characteristic of real property is this? Area preference Improvements Permanence Scarcity
Improvements
Which of the following is the cost of replacing a building in the case of total loss? Insured value Investment value Mortgage value Value in use
Insured value
Which of these situations addresses the fiduciary duty of confidentiality? Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness. Mark discloses the commission split he receives from his broker to a colleague at another firm. Regina tells her seller client that he's required to disclose the roof damage. Todd's lender shares Todd's financial information with the loan underwriter.
Jeanette, a seller's agent, tells the buyer's agent that her client must sell his home because of an illness. **The fiduciary duty of confidentiality prohibits licensees from disclosing confidential information about a client, even after the agency relationship ends.
Which ownership type is defined by four unities: time, title, interest, and possession? Freehold estate Joint tenancy Tenancy by the entirety Tenancy in common
Joint tenancy
Luci's client Kaden wants to purchase a new construction property, and he wants to get as much house as he can afford. Which of the following does Luci need to advise Kaden about regarding interest rates when purchasing a newly built home? If Kaden uses his builder's lender, he can get a better interest rate and won't have to worry about market fluctuations between now and closing. Kaden doesn't need to worry about interest rates for his long-term mortgage until 90 days prior to closing when he can lock in the best rate. Kaden needs to allow for the possibility of an interest rate increase between now and closing because lenders aren't likely to lock in an interest rate for more than 90 days before closing. Kaden needs to lock in the interest rate on his long-term mortgage now to avoid unexpected increases that could put his loan amount over his approval amount.
Kaden needs to allow for the possibility of an interest rate increase between now and closing because lenders aren't likely to lock in an interest rate for more than 90 days before closing.
To be an effective property manager, a licensee must be familiar with a variety of ______. Agency disclosures Employment contracts Independent contractor agreements Lease agreements
Lease agreements
Which of these circumstances does NOT require agent disclosure? As part of his corporation, Sean, a licensee, owns several investment properties. He's selling one. Gary represents the buyer. He's a shareholder in the title insurance company the buyer has selected. Marty is representing Dwayne in both the sale of his current home and the purchase of his new home. Megan has listed her brother's townhome for sale.
Marty is representing Dwayne in both the sale of his current home and the purchase of his new home. **A licensee must disclose any situation that presents a conflict of interest. There's no inherent conflict of interest with one licensee representing a client in both the sale and purchase of property.
The Bransons have a conventional loan for which they were required to obtain private mortgage insurance. Their local real estate market has been going like gangbusters, and their house is now appraised at twice their loan balance! Will their PMI be cancelled? Maybe, but they'll have to petition their lender No, because PMI lasts for the life of the loan Yes, because their equity is over 20% Yes, because their equity position is at least 50%
Maybe, but they'll have to petition their lender **Cancellation of PMI happens once the borrower reaches a 22% equity position. This is determined by loan-to-value ratio at the time of the purchase. Unless loan-to-value ratio is now 78% or lower, the Bransons would have to petition to get PMI cancelled.
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 is a flammable substance. Mulch isn't a sustainable material. Mulch next to wood siding may lead to wood rot. That amount of mulch might kill the plants it's meant to protect.
Mulch next to wood siding may lead to wood rot. **Too much dirt, mulch, or other material up against wood frame siding is problematic because it can hold moisture against the siding for long periods of time, leading to wood rot.
John's property is shaped like a triangle. The street side is 185 feet, and from the street to the longest point of the triangle is 225 feet. How do you calculate the square footage of John's property? Add 185 to 225. Multiply 185 by 225, then divide by four. Multiply 185 by .5; multiply your answer by 225. Multiply 185 x 225.
Multiply 185 by .5; multiply your answer by 225.
Leases may be terminated by expiration, eviction, or ______. Death Extermination Mutual agreement Relocation
Mutual agreement
Taxes, insurance, and maintenance are property expenses that are sometimes covered in a tenant's lease payment. These are collectively referred to as the _______. Doubles Extras Nets Utilities
Nets **These three items together are known as the nets—or you can use the acronym TIM for taxes, insurance, and maintenance.
Gregory is a widower who subsequently remarried. The couple lives in a large house Gregory owns in severalty. When they decide to downsize, Gregory grants an ordinary life estate in the property to his daughter from his first marriage, Giselle. He names Giselle's son Will as remainderman. When will the property revert to Gregory's current wife, Dora? Never Upon Giselle's death Upon Gregory's death When Giselle violates the condition of ownership Gregory specified
Never
Which one of the following statements about asbestos is true? Homeowners can safely remove it. It's harmful only if left in place. It's not harmful at low levels. No amount of it is considered safe.
No amount of it is considered safe.
he parcel of land Monty just bought is 43,891 square feet. Approximately how many acres does Monty have? Four One Three Two
One
In what way is a townhome similar to a single-family detached home? It often has a detached garage. It's also detached. Ownership includes both the structure and the land. They're always multi-story.
Ownership includes both the structure and the land.
How are fines assessed for violations of the CAN-SPAM Act? Daily Monthly Per complaint Per violation, which can be a single email
Per violation, which can be a single email
Jacob is a developer who purchased 78 acres and had it subdivided into half-acre lots. He decided to install sewer and underground electric for the entire subdivision, because he thinks that he will easily recoup his initial infrastructure investment. This is an example of which economic characteristic of real property? Area preference Improvements Permanence Scarcity
Permanence
The loss in value caused by deterioration in physical condition is called _______. Economic obsolescence External depreciation Functional obsolescence Physical depreciation
Physical depreciation
Marcus bought two adjoining pieces of land that were zoned for commercial use. When he realized that combining the two parcels would dramatically increase the land's value, he jumped at the opportunity. What's this an example of? Contribution Eminent domain Plottage Zoning
Plottage
Which of the following situations may result in inverse condemnation? Property taxes rise because of an increase in property value. Property values decrease because adjacent property was rezoned. Property values decrease because the property was rezoned. The government takes private property for public use and compensates the owner.
Property values decrease because adjacent property was rezoned.
According to UETA, an electronic signature is defined as "an electronic sound, symbol, or process attached to or logically associated with a(n) _________ and executed or adopted by a person with the intent to sign." Computer Email Real estate broker Record
Record
Which of the following is a buyer's agent's task or duty? Advocating for the seller Negotiating for the seller Representing the buyer's interests Reviewing transactional documents with the seller
Representing the buyer's interests
As a licensee, you'll have several tasks you must perform for your buyer client. One of these tasks is to ______. Coach the buyer on how to negotiate the terms of the sales contract to be completely in the buyer's favor Explain to the buyer why it's unnecessary to have a professional inspection done on a new home Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license Show properties the buyer might qualify for if he would put down more earnest money
Review transaction documents with the buyer, clarifying anything that could be confusing, without stepping outside the scope of your license
Greta is working with agent Brandon to sell some property. Nelson represents the buyer, Rigby. Of these four parties, who will pay the earnest money? Brandon Greta Nelson Rigby
Rigby
Stan and Margo want to redevelop an old industrial site in order to create a microbrewery and event space. However, an environmental review found that hazardous chemicals were once used on site, and there is a possibility they will be released during redevelopment. Stan and Margo may not be liable for cleanup, under what federal law? CERCLA EIS SARA Wetlands Conservation Act
SARA
Gina is in the county assessor's office looking at the maps of her county. She sees several areas that are one mile square, or 640 acres each. What are these areas? Quarter-quarter sections Quarter sections Sections Townships
Sections **Townships are divided into 36 one-mile-square sections.
David lost his job and can no longer afford the payments on his home. His sister suggested a short sale. Since you were his real estate agent when he bought the house, he called you to find out as much as he can about short sales. Which of the following is a true statement? A short sale will help improve his credit rating. He can proceed with a short sale without the lender's approval. He will receive the full amount due on the loan as a result of the sale. Short sales are sometimes used as an alternative to foreclosure, but could negatively impact his credit rating.
Short sales are sometimes used as an alternative to foreclosure, but could negatively impact his credit rating. (Short sales are sometimes used as an alternative to foreclosure, but require both the seller's and the lender's approval.)
Tom and Martha live in a neighborhood where lawn ornaments are prohibited. They want to put up a nativity scene at Christmas and argue that the covenant doesn't apply to temporary decorations but only to permanent ones. Their homeowners association disagrees. Which entity enforces subdivision covenants? The civil court system The homeowners association The municipal code enforcement agency The original developer of the neighborhood
The civil court system **Covenants are enforced through the court system if an agreement can't otherwise be reached.
Shira bought a condominium in a planned unit development. The development has a small playground, tennis and basketball courts, and a putting green. Who owns these recreational facilities? The businesses located in the PUD The condo owners The development investors The PUD developer
The condo owners
All of the homes on Elm Street are currently on septic systems. However, the county plans to extend the sewer lines to Elm Street within the next two years. What's the biggest reason why it's important for your buyers to know this? Public sewers have a better safety record than septic systems. Sewer installation means construction traffic. Some people prefer septic systems to having to tie into public sewers. The county will likely impose an installation fee on Elm Street residents to cover the costs.
The county will likely impose an installation fee on Elm Street residents to cover the costs.
Which of the following statements about the number of contingencies in a sales contract is true? Every sales contract should contain a minimum of three contingencies. The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted. The more contingencies, the better from the seller's perspective. The number of contingencies is directly related to the cost of the home. The higher the asking price, the greater number of contingencies.
The inclusion of numerous contingencies makes it less likely that the buyer's offer will be accepted.
Jorge accepted a seller's offer of insurable title. The transaction hasn't reached closing, and a previously unknown title defect has been revealed. What happens now? Jorge has to take steps to remove the defect before he can close. The seller is still required to clear the title defect before closing. The seller may not be required to attempt to clear the defect before closing. The title insurance company is required to cover the title defect.
The seller may not be required to attempt to clear the defect before closing. The seller may not be required to clear the defect before closing; depending on the type of defect (e.g., an easement) it may not impact closing. Other types of defects may require action before closing.
The seller disclosure indicates that the central air conditioning unit is 26 years old. Why might this worry Margot's buyers? Central air conditioning isn't a sustainable technology. Older units are bigger and more unsightly. The unit may need to be replaced. They were hoping for window air conditioning.
The unit may need to be replaced.
Marcy listed her property with Jennings Homes in March. The market was slow, and Marcy's property isn't in great condition—though she's sure she can get top dollar for it because of its location. Her agent encouraged her to either reduce the price or fix the property up, but she refused. Both Marcy and her agent are frustrated. What's the best option for both of them? Bring in another agent to help price the property. Let the listing expire. One party or the other should terminate the listing. They can mutually agree to terminate the listing.
They can mutually agree to terminate the listing.
Why are galvanized pipes a problem in older homes? They are not a problem. They are out of date and can lead to a variety of electrical problems. They can rust and cause leaks and low water pressure. They indicate the heating and cooling system(s) are outdated.
They can rust and cause leaks and low water pressure. Galvanized pipes can be a problem if they start to rust. The rust can cause the pipe to deteriorate, causing leaks and low water pressure
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'll need a 90% loan-to-value ratio. They'll need to put down at least 25%. They should have a loan-to-value ratio of 80% or less. They will need to qualify for an FHA loan.
They should have a loan-to-value ratio of 80% or less. Primary mortgage insurance may kick in when the loan-to-value ratio exceeds 80%; that is, the borrower is borrowing more than 80% of the property's value. To be sure they can avoid paying PMI, Sophia and Antonio need to put at least 20% down.
What's the purpose of a chain of title? To determine whether encroachments exist and to determine the boundaries of the property To establish history of past ownership To establish proof of insurance To insure the policy owner against financial loss if the title to the real estate has covered defects
To establish history of past ownership **A chain of title shows ownership records from as far back as the title search is conducted and records can be obtained.
The ______ can offer direct loans to farmers and ranchers. The loans are funded by congressional appropriation. American Agricultural Lending Service Farm Credit System USDA Farm Service Agency USDA Rural Development Program
USDA Farm Service Agency
While walking around the exterior of a rural home she's inspecting, Juanita noticed a metal vent pipe sticking out of the ground 25 feet from the house. She documents this because it may be a sign of what potential environmental hazard? Capped well Radon vent system Septic system Underground storage tank
Underground storage tank
Which one of the following property features could contaminate the soil? Brick pavers Irrigation system Multi-car garage Underground storage tanks
Underground storage tanks
What's a good policy that a buyer's agent should employ regarding contingencies? Avoid contingencies because they tend to put sellers off. Maximize the number of contingencies allowed. Use a standard set of contingencies with each buyer to avoid missing any. Use contingencies judiciously to protect the clients and the deal.
Use contingencies judiciously to protect the clients and the deal. **Contingencies should be used where warranted to protect the buyer, but shouldn't be overused. You don't want to kill the deal with too many contingencies.
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? Lifelong Permanent Renewable Vacation
Vacation
Starla, 35, and Gwen, 32, are going into business! Gwen is buying a share of Starla's franchise. Their attorneys drew up a contract that had Gwen providing $45,000 to Starla in return for 50% ownership. Gwen and Starla happily signed the contract, Gwen paid Starla the $45,000, and Starla presented Gwen with a notarized certificate showing Gwen's 50% ownership in the company. What type of contract is this? Executory Valid Void Voidable
Valid
Which of the following terms means the price a property is worth to its owner as currently enjoyed? Appraisal Insured value Investment value Value in use
Value in use
While showing your buyers through a home, you flipped on the light in the powder room and were concerned because the light switch felt warm. Why is this a concern? Warm light switches might mean the house doesn't cool well. Warm light switches might mean the house doesn't heat well. Warm light switches might mean there is an electrical problem. Warm light switches might mean there is a structural problem.
Warm light switches might mean there is an electrical problem.
Roberto, a licensee, filled in the blanks on a standard form used in his brokerage firm. Is this okay? No, because he's not an attorney, he shouldn't prepare contracts. No, he should have his client complete any forms. Yes, licensees can use standard forms originally created or approved by an attorney. Yes, real estate licensees may draft contracts and fill in blanks on existing contracts.
Yes, licensees can use standard forms originally created or approved by an attorney.
Paul and Blake are touring an open house when they notice that the glass on the sliding patio door is very foggy. Is this a concern, and if so, why? No, this is not a concern, as it only indicates poor cleaning habits. No, this is not a concern as it's common in cold climates. Yes, this could be a sign of fire damage. Yes, this is a sign of a leaky seal which reduces efficiency.
Yes, this is a sign of a leaky seal which reduces efficiency.
Victor bought a property from Yolanda for $200,000. Under the terms of a land contract, Victor agreed to pay Yolanda in monthly installments of $4,000 over the course of 50 months. Until Victor pays Yolanda the $200,000, who retains the title? A trustee Victor Victor's beneficiary Yolanda
Yolanda
What happens when your client asks you to do something that's against the law? According to the duty of obedience, you must obey, but document the request. You must break your duty of obedience. You must obey, but ask your client to sign a disclaimer for your actions. You must report your client to the authorities.
You must break your duty of obedience.
When you're representing a client in a real estate transaction, what's your responsibility regarding tax advice? You must be able to advise your clients on the best way to minimize their tax liability related to a purchase or sale. You must not address tax aspects of a transaction in any way, since this would be working outside your area of expertise. You're obligated to answer all questions the clients have regarding property taxes and general tax advice. You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.
You should tell clients the typical ways that taxes will apply and encourage them to seek advice from a tax professional.
